I

103D CONGRESS

1ST SESSION H. R. 191

To reform the United States health care delivery and financing system,

to increase access to health care and affordable health insurance, to

contain costs of health care in a manner that improves health care,

and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 5, 1993

Mr. GEKAS introduced the following bill; which was referred jointly to the

Committees on Energy and Commerce, Ways and Means, the Judiciary,

Education and Labor, and Rules

A BILL

To reform the United States health care delivery and financing system, to increase access to health care and affordable health insurance, to contain costs of health care

in a manner that improves health care, and for other

purposes.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

5 ‘‘American Consumers Health Care Reform Act of 1993’’.

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—IMMEDIATE HEALTH CARE REFORMS

Subtitle A—Expansion of Medicaid Program

Sec. 101. Transition of State medicaid programs to State long-term care programs.

Sec. 102. Establishment of Federal medical assistance program for acute care.

Subtitle B—Medicare Reform

Sec. 111. Improved efficiency through consolidation of administration of parts

A and B.

Sec. 112. Provider payment reforms to address inconsistent incentives.

Subtitle C—Health Benefit Plan Reform

PART 1—PREEMPTION OF STATE MANDATORY BENEFIT LAWS AND ANTIMANAGED CARE LAWS

Sec. 121. Preemption from insurance mandates for qualified small employer

purchasing groups.

Sec. 122. Removing restrictions on managed care.

PART 2—RESTRICTION ON PRE-EXISTING CONDITION PROVISIONS FOR

EMPLOYER HEALTH INSURANCE

Sec. 123. Limitation on pre-existing condition clauses; assurance of continuity

of coverage.

PART 3—SMALL EMPLOYER INSURANCE MARKET REFORMS

Sec. 124. Acceptance of all small employers seeking coverage; offering of minimum benefit package.

Sec. 125. Use of community-rated premiums.

PART 4—ESTABLISHMENT OF STANDARDS; ENFORCEMENT; GENERAL

DEFINITIONS

Sec. 126. Establishment of standards.

Sec. 127. Enforcement.

Subtitle D—Medical Malpractice Reform

PART 1—GENERAL PROVISIONS

Sec. 131. Federal reform of medical malpractice liability actions.

Sec. 132. Definitions.

Sec. 133. Effective date.

PART 2—UNIFORM STANDARDS FOR MEDICAL MALPRACTICE LIABILITY

ACTIONS

Sec. 141. Statute of limitations.

Sec. 142. Requirement for initial resolution of action through alternative dispute resolution.

Sec. 143. Relation to alternative dispute resolution of Federal agencies.

Sec. 144. Mandatory pre-trial settlement conference.
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Sec. 145. Calculation and payment of damages.

Sec. 146. Treatment of attorney’s fees and other costs.

Sec. 147. Joint and several liability.

Sec. 148. Uniform standard for determining negligence.

Sec. 149. Application of medical practice guidelines in malpractice liability actions.

Sec. 150. Special provision for certain obstetric services.

Sec. 151. Preemption.

PART 3—REQUIREMENTS FOR STATE ALTERNATIVE DISPUTE RESOLUTION

SYSTEMS (ADR)

Sec. 161. Basic requirements for ADR.

Sec. 162. Certification of State systems.

Sec. 163. Reports on implementation and effectiveness of alternative dispute

resolution systems.

PART 4—OTHER REQUIREMENTS AND PROGRAMS

Sec. 171. Facilitating development and use of medical practice guidelines.

Sec. 172. Permitting State professional societies to participate in disciplinary

activities.

Sec. 173. Requirements for risk management programs.

Sec. 174. Grants for medical safety promotion.

Sec. 175. Study of barriers to voluntary service by physicians.

Subtitle E—Medical Education Reform

Sec. 181. Limitation on medicare hospital payment for direct and indirect graduate medical education support and Federal assistance for insured medical student loans for non-primary care physicians.

Sec. 182. State comprehensive health professions education plans.

Subtitle F—Public Delivery System

Sec. 183. Identification of medically underserved populations.

Sec. 184. State comprehensive plans for medically underserved populations.

Sec. 185. Publicly-funded health centers serving medically underserved areas.

Sec. 186. Office of disease prevention and health promotion.

Sec. 187. Consolidation of Federal activities relating to nutrition.

Sec. 188. Demonstration projects on health care decisionmaking.

Sec. 189. Action plan on health promotion and disease prevention.

Subtitle G—Public Disclosure

Sec. 191. Development of national standards for disclosure of health care information; implementation by States.

Sec. 192. Data submission and collection.

Sec. 193. Data dissemination and publication.

Sec. 194. Access to data.

Sec. 195. Definitions.

Subtitle H—Tax Incentives to Provide Only Minimum Benefits

Sec. 198. Denial of employer tax deduction for providing health care coverage

in excess of minimum benefits and denial of employee exclusion

for such excess coverage.
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Sec. 199. Deduction for health insurance costs of self-employed individuals

made permanent and increased to extent of costs for minimum

benefits.

TITLE II—NATIONAL HEALTH CARE REFORM PROPOSALS

Subtitle A—National Health Care Reform Commission

Sec. 201. Establishment.

Sec. 202. Establishment of national goals; consultations; improved coordination;

evaluation and recommendations on demonstration projects.

Sec. 203. Establishment of minimum benefit package.

Subtitle B—Demonstration Projects on Alternative Financing and Delivery

Systems

Sec. 211. Establishment of demonstration projects.

Sec. 212. Process.

Sec. 213. Priorities.

Sec. 214. Scope and duration of projects.

Sec. 215. Waivers of certain laws.

Sec. 216. Reports and evaluations.

1 TITLE I—IMMEDIATE HEALTH

2 CARE REFORMS

3 Subtitle A—Expansion of Medicaid

4 Program

5 SEC. 101. TRANSITION OF STATE MEDICAID PROGRAMS TO

6 STATE LONG-TERM CARE PROGRAMS.

7 (a) IN GENERAL.—Title XIX of the Social Security

8 Act is amended by adding at the end the following new

9 section:

10 ‘‘ACUTE CARE TRANSITION TO FEDERAL MEDICAL

11 ASSISTANCE PROGRAM

12 ‘‘SEC. 1931. (a) PHASE-IN OF EXPANDED ELIGI13 BILITY.—

14 ‘‘(1) 2-YEAR PHASE IN.—

15 ‘‘(A) IN GENERAL.—Notwithstanding any

16 other provision of this title, subject to sub-
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1 section (e), for calendar quarters beginning on

2 or after the first day of the first effective fiscal

3 year (as defined in subparagraph (C)), each

4 State medical assistance plan under section

5 1902 shall provide for medical assistance under

6 the plan to all eligible individuals (as defined in

7 paragraph (2)) who are residents of the State.

8 ‘‘(B) TRANSFER OF COVERAGE.—Notwith9 standing any other provision of this title, effec10 tive on the first day of the third effective fiscal

11 year—

12 ‘‘(i) no payment shall be made to a

13 State under section 1903(a) for medical

14 assistance, other than—

15 ‘‘(I) medical assistance with re16 spect to outpatient prescription drugs

17 and biologicals, and

18 ‘‘(II) medical assistance with re19 spect to home health care services,

20 nursing facility services, home and

21 community care (under section 1929),

22 community supported living arrange23 ments services (described in section

24 1930), home and community-based

25 services (described in section 1915),
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1 and other items and services that re2 late to long-term care and are not

3 covered under part B of this title; and

4 ‘‘(ii) no State is obligated to make

5 available medical assistance under this

6 part for items and services for which pay7 ment may not be made under clause (i).

8 ‘‘(C) FIRST, SECOND, AND THIRD EFFEC9 TIVE FISCAL YEARS DEFINED.—In this section,

10 the terms ‘first effective fiscal year’, ‘second ef11 fective fiscal year’, and ‘third effective fiscal

12 year’ means the first, second, and third fiscal

13 years, respectively, that begin more than 180

14 days after the date of the enactment of this sec15 tion.

16 ‘‘(2) ELIGIBLE INDIVIDUAL DEFINED.—

17 ‘‘(A) IN GENERAL.—In this section, the

18 term ‘eligible individual’ means an individual—

19 ‘‘(i) is a citizen or national of the

20 United States, an alien lawfully admitted

21 for permanent residence, or an alien other22 wise permanently residing in the United

23 States under color of law;

24 ‘‘(ii) whose income (as determined

25 under section 1612 for purposes of the
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1 supplemental security income program,

2 subject to subparagraph (C)) does not ex3 ceed the applicable income level (specified

4 in subparagraph (B)); and

5 ‘‘(iii) whose resources (as determined

6 under section 1613 for purposes of the

7 supplemental security income program) do

8 not exceed the maximum amount of re9 sources that an individual may have and

10 obtain benefits under that program.

11 ‘‘(B) APPLICABLE INCOME LEVEL.—

12 ‘‘(i) IN GENERAL.—Subject to clause

13 (ii), the applicable income level is, for serv14 ices furnished in—

15 ‘‘(I) the first effective fiscal year,

16 60 percent of the Federal poverty

17 level (as defined in subparagraph

18 (D)), and

19 ‘‘(II) the second effective fiscal

20 year, 70 percent of the Federal pov21 erty level.

22 ‘‘(ii) SPECIAL RULES FOR PREGNANT

23 WOMEN AND CHILDREN.—With respect to

24 services related to pregnancy and children
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1 under 19 years of age, the applicable in2 come level is, for services furnished in—

3 ‘‘(I) the first effective fiscal year,

4 150 percent of the Federal poverty

5 level (as defined in subparagraph

6 (C)), and

7 ‘‘(II) the second effective fiscal

8 year, 170 percent of the Federal pov9 erty level.

10 ‘‘(C) INCOME DETERMINATION.—In deter11 mining income, costs incurred for medical care

12 or for any other type of remedial care shall be

13 taken into account and deducted from income

14 otherwise determined.

15 ‘‘(D) FEDERAL POVERTY LEVEL DE16 FINED.—In this section, the term ‘Federal pov17 erty level’ means the official poverty line (as de18 fined by the Office of Management and Budget,

19 and revised annually in accordance with section

20 673(2) of the Omnibus Budget Reconciliation

21 Act of 1981) applicable to a family of the size

22 involved.

23 ‘‘(3) RELATION TO ALTERNATIVE ELIGI24 BILITY.—Nothing in this section shall be construed

25 as restricting the eligibility under other provisions of
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1 this title of individuals for medical assistance under

2 this part.

3 ‘‘(b) SERVICES FOR WHICH MEDICAL ASSISTANCE

4 PROVIDED.—Notwithstanding any other provision of this

5 title, the medical assistance made available under this sec6 tion—

7 ‘‘(1) subject to paragraph (2), shall include

8 medical assistance for the same amount, duration,

9 and scope of services as are provided under the

10 State plan to individuals described in section

11 1902(a)(10)(A)(i), but

12 ‘‘(2) shall not include medical assistance for

13 nursing facility services or home health care services.

14 ‘‘(c) COST-SHARING.—

15 ‘‘(1) NO COST-SHARING FOR PREGNANCY-RE16 LATED SERVICES, PREVENTIVE SERVICES, AND CHIL17 DREN.—There shall be no cost-sharing imposed with

18 respect to—

19 ‘‘(A) services related to pregnancy,

20 ‘‘(B) preventive services, or

21 ‘‘(C) services furnished to children under

22 19 years of age.

23 ‘‘(2) NOMINAL COST-SHARING FOR THE POOR24 EST INDIVIDUALS.—There shall be no cost-sharing

25 (other than nominal cost-sharing, within the mean-
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1 ing of section 1916(a)(3)) imposed with respect to

2 services furnished to individuals whose income is de3 termined to be less than 50 percent of the Federal

4 poverty level.

5 ‘‘(3) COST-SHARING FOR OTHER SERVICES AND

6 POPULATIONS.—

7 ‘‘(A) IN GENERAL.—With respect to eligi8 ble individuals not described in paragraph (2)

9 with respect to services not described in para10 graph (1), there shall be imposed the following

11 cost-sharing:

12 ‘‘(i) For outpatient services, there

13 shall be a copayment of $5 for each visit,

14 or $10 in the case of a nonemergency visit

15 to a hospital emergency room.

16 ‘‘(ii) For inpatient hospital services,

17 there shall be a copayment of $50 for each

18 inpatient hospital admission.

19 ‘‘(B) LIMIT ON COST-SHARING.—In no

20 case shall the cost-sharing imposed under sub21 paragraph (A)—

22 ‘‘(i) for an individual (whether or not

23 the individual is a member of a family) ex24 ceed $500 in any calendar year, or
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1 ‘‘(ii) collectively for all members of a

2 family exceed $1,000 in any calendar year.

3 ‘‘(d) CHANGES IN FEDERAL MEDICAL ASSISTANCE

4 PERCENTAGE.—

5 ‘‘(1) INCREASE FOR ACUTE CARE SERVICES.—

6 Subject to subsection (e), the Federal medical assist7 ance percentage for each of the 50 States and the

8 District of Columbia for medical assistance for acute

9 care services (described in paragraph (3)) shall be

10 increased, for calendar quarters occurring in—

11 ‘‘(A) the first effective fiscal year, by a

12 percentage equal to 20 percent of the difference

13 between 100 percentage points and the Federal

14 medical assistance percentage otherwise applica15 ble (without regard to this subsection), or

16 ‘‘(B) the second effective fiscal year, by a

17 percentage equal to 40 percent of the difference

18 between 100 percentage points and the Federal

19 medical assistance percentage otherwise applica20 ble (without regard to this subsection).

21 ‘‘(2) DECREASE IN FMAP FOR OUTPATIENT

22 PRESCRIPTION DRUGS AND LONG-TERM CARE SERV23 ICES.—The Federal medical assistance percentage

24 for each of the 50 States and the District of Colum25 bia for medical assistance for items and services
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1 (other than assistance for acute care services), for

2 calendar quarters occurring in—

3 ‘‘(A) the first effective fiscal year, by a

4 percentage equal to 5 percent of the Federal

5 medical assistance percentage otherwise applica6 ble (without regard to this subsection), or

7 ‘‘(B) the second effective fiscal year, by a

8 percentage equal to 10 percent of the Federal

9 medical assistance percentage otherwise applica10 ble (without regard to this subsection).

11 ‘‘(3) ASSISTANCE FOR ACUTE CARE SERVICES

12 DEFINED.—In this subsection, the term ‘assistance

13 for acute care services’ means—

14 ‘‘(A) medical assistance for services de15 scribed in section 1905(a), other than for serv16 ices described in subclause (I) or (II) of sub17 section (a)(1)(B)(i) of this section, and

18 ‘‘(B) medical assistance relating to medi19 care cost-sharing.

20 ‘‘(4) CONSTRUCTION.—The changes in the Fed21 eral medical assistance percentage provided under

22 this subsection shall only apply for purposes of this

23 title.

24 ‘‘(e) REQUIREMENT FOR CONTINUATION OF LONG25 TERM CARE ASSISTANCE.—No individual residing in a
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1 State shall be eligible for medical assistance under this

2 section, and the State shall not be eligible for an increase

3 in the Federal medical assistance percentage under sub4 section (d)(1) for a calendar quarter, unless—

5 ‘‘(1) the State continues to provide for medical

6 assistance under this part with respect to home

7 health care services and nursing facility services, and

8 ‘‘(2) such assistance is provided consistent with

9 standards adopted under section 205 of the Amer10 ican Consumers Health Care Reform Act of 1992.’’.

11 (b) FEDERAL STANDARDS FOR STATE LONG-TERM

12 CARE PROGRAMS.—The Secretary of Health and Human

13 Services, in consultation with representatives of States, in14 dustry, and the beneficiary community, shall develop

15 standards that shall apply, pursuant to section 1931(e)(2)

16 of the Social Security Act, to State long-term care plans

17 under part A of title XIX of such Act at the end of the

18 10-year transition period provided under the amendment

19 made by subsection (a).

20 (c) REPORT ON IMPACT OF DECREASE IN FMAP FOR

21 OUTPATIENT PRESCRIPTION DRUGS.—The Secretary of

22 Health and Human Services shall submit to Congress, not

23 later than 2 years after the date of the enactment of this

24 Act, a report that—
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1 (1) evaluates the impact on the States of the

2 decrease, provided under the amendment made by

3 subsection (a), in the Federal medical assistance

4 percentage for medical assistance for outpatient pre5 scription drugs, and

6 (2) makes such recommendations for changes in

7 this Act (including the amendments made by this

8 Act) in order to avoid any significant adverse impact

9 on States that continue to provide medical assistance

10 for outpatient prescription drugs to individuals in

11 need of such assistance.

12 (d) CONFORMING AMENDMENTS.—

13 (1) Section 1905(a) of such Act (42 U.S.C.

14 1396d(a)) is amended, in the matter before para15 graph (1), by striking ‘‘or’’ at the end of clause (ix),

16 by inserting ‘‘or’’ at the end of clause (x), and by

17 inserting after clause (x) the following new clause:

18 ‘‘(xi) individuals described in section 1931(a),’’.

19 (2) Section 1905(b) of such Act is amended by

20 striking ‘‘The term’’ and inserting ‘‘Subject to sec21 tion 1931(d), the term’’.

22 SEC. 102. ESTABLISHMENT OF FEDERAL MEDICAL ASSIST23 ANCE PROGRAM FOR ACUTE CARE.

24 (a) IN GENERAL.—Title XIX of the Social Security

25 Act is amended—
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1 (1) by inserting after the heading the following:

2 ‘‘PART A—STATE MEDICAL ASSISTANCE PROGRAMS’’;

3 AND

4 (2) by adding at the end the following new part:

5 ‘‘PART B—FEDERAL MEDICAL ASSISTANCE PROGRAM

6 ‘‘ESTABLISHMENT OF PROGRAM

7 ‘‘SEC. 1951. (a) IN GENERAL.—This part establishes

8 a Federal medical assistance program to provide medical

9 assistance for acute care services to all poor individuals

10 in the United States and to provide medical assistance for

11 medicare cost-sharing for certain medicare beneficiaries.

12 ‘‘(b) APPROPRIATIONS.—There are authorized to be

13 appropriated, without fiscal year limitation, such sums as

14 may be necessary to carry out this part.

15 ‘‘(c) EFFECTIVE DATE.—The provisions of this part

16 shall first apply to medical assistance for services or medi17 care cost-sharing furnished during calendar quarters be18 ginning on or after the first day of the third effective fiscal

19 year (as defined in subsection (d)).

20 ‘‘(d) THIRD AND FOURTH EFFECTIVE FISCAL YEARS

21 DEFINED.—In this part, the terms ‘third effective fiscal

22 year’ and ‘fourth effective fiscal year’ mean the third and

23 fourth fiscal years, respectively, that begin more than 180

24 days after the date of the enactment of this part.

25 ‘‘ELIGIBILITY

26 ‘‘SEC. 1952. (a) IN GENERAL.—
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1 ‘‘(1) GENERAL MEDICAL ASSISTANCE.—Subject

2 to section 1957, the Secretary shall provide for pay3 ment under this part for costs of the items and serv4 ices described in section 1953 furnished to eligible

5 individuals (as defined in subsection (b)).

6 ‘‘(2) MEDICAL ASSISTANCE WITH MEDICARE

7 COST-SHARING FOR CERTAIN MEDICARE BENE8 FICIARIES.—

9 ‘‘(A) IN GENERAL.—The Secretary shall

10 provide for payment under this part for—

11 ‘‘(i) medicare cost-sharing (as defined

12 in section 1905(p)(3)) for qualified medi13 care beneficiaries who reside in one of the

14 50 States or the District of Columbia;

15 ‘‘(ii) medicare cost-sharing described

16 in section 1905(p)(3)(A)(i) for qualified

17 disabled and working individuals described

18 in section 1905(s) residing in one of the 50

19 States or the District of Columbia; and

20 ‘‘(iii) for medicare cost-sharing de21 scribed in section 1905(p)(3)(A)(ii) for in22 dividuals residing in one of the 50 States

23 or the District of Columbia who would be

24 qualified medicare beneficiaries described

25 in section 1905(p)(1) but for the fact that
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1 their income exceeds 100 percent, but is

2 less than 120 percent, of the official pov3 erty line (referred to in such section) for a

4 family of the size involved.

5 ‘‘(B) SPECIAL RULES.—In applying sub6 paragraph (A)—

7 ‘‘(i) the income level that is deemed to

8 be applied under section 1905(p)(1)(B) is

9 100 percent of the official poverty line (as

10 defined by the Office of Management and

11 Budget, and revised annually in accord12 ance with section 673(2) of the Omnibus

13 Budget Reconciliation Act of 1981) appli14 cable to a family of the size involved, and

15 ‘‘(ii) the term ‘medicare cost-sharing’

16 described in section 1905(p)(3)(A) may in17 clude, as determined by the Secretary and

18 for purposes of clauses (i) and (iii) of sub19 paragraph (A) only, premiums for enroll20 ment of a qualified medicare beneficiary

21 with an eligible organization under section

22 1876.

23 ‘‘(b) ELIGIBLE INDIVIDUAL DEFINED.—

24 ‘‘(1) IN GENERAL.—In this section, the term

25 ‘eligible individual’ means an individual—
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1 ‘‘(A) is a citizen or national of the United

2 States, an alien lawfully admitted for perma3 nent residence, or an alien otherwise perma4 nently residing in the United States under color

5 of law;

6 ‘‘(B) whose income (as determined under

7 section 1612 for purposes of the supplemental

8 security income program, subject to paragraph

9 (3)) does not exceed the applicable income level

10 (specified in paragraph (2)); and

11 ‘‘(C) whose resources (as determined under

12 section 1613 for purposes of the supplemental

13 security income program) do not exceed the

14 maximum amount of resources that an individ15 ual may have and obtain benefits under that

16 program.

17 ‘‘(2) APPLICABLE INCOME LEVEL.—

18 ‘‘(A) IN GENERAL.—Subject to subpara19 graph (B), the applicable income level is, for

20 services furnished in—

21 ‘‘(i) the third effective fiscal year, 80

22 percent of the Federal poverty level (as de23 fined in paragraph (4)),

24 ‘‘(ii) the fourth effective fiscal year,

25 90 percent of the Federal poverty level, or
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1 ‘‘(iii) any subsequent fiscal year, is

2 100 percent of the Federal poverty level.

3 ‘‘(B) SPECIAL RULES FOR PREGNANT

4 WOMEN AND CHILDREN.—With respect to serv5 ices related to pregnancy and children under 19

6 years of age, the applicable income level is 185

7 percent of the Federal poverty level (as defined

8 in paragraph (4)).

9 ‘‘(3) INCOME DETERMINATION.—In determining

10 income, costs incurred for medical care or for any

11 other type of remedial care (recognized by the Sec12 retary) shall be taken into account and deducted

13 from income otherwise determined.

14 ‘‘(4) FEDERAL POVERTY LEVEL DEFINED.—In

15 this section, the term ‘Federal poverty level’ means

16 the official poverty line (as defined by the Office of

17 Management and Budget, and revised annually in

18 accordance with section 673(2) of the Omnibus

19 Budget Reconciliation Act of 1981) applicable to a

20 family of the size involved.

21 ‘‘SERVICES COVERED

22 ‘‘SEC. 1953. (a) IN GENERAL.—Subject to subsection

23 (b), items and services described in this section are the

24 care and services listed in paragraphs (1) through (5),

25 (17), and (21) of section 1905(a).
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1 ‘‘(b) EXCLUSION OF LONG-TERM CARE SERVICES.—

2 Items and services described in this section do not in3 clude—

4 ‘‘(1) nursing facility services described in sec5 tion 1905(a)(4)(A), and

6 ‘‘(2) home health care services described in sec7 tion 1905(a)(7).

8 ‘‘(c) AMOUNT, DURATION, AND SCOPE.—There shall

9 be no fixed limitation on the amount, duration, and scope

10 of medically necessary services described in subsection (a).

11 ‘‘PAYMENTS; COST-SHARING

12 ‘‘SEC. 1954. (a) PAYMENT LEVEL.—

13 ‘‘(1) IN GENERAL.—Subject to cost-sharing

14 under subsection (c) and the succeeding provisions

15 of this subsection, the payment amount for services

16 under this part for medical assistance under section

17 1952(a)(1) shall be the same as the payment

18 amount that would be made under title XVIII for

19 such services (determined without regard to

20 deductibles and coinsurance and copayments under

21 such title).

22 ‘‘(2) PHASE-IN OF PAYMENT RATES.—During

23 the first 2 fiscal years in which this part applies, the

24 Secretary shall provide for such adjustment in pay25 ment rates so that—
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1 ‘‘(A) during the first fiscal year, the rates

2 are based—

‘‘(i) 2 3 ⁄3 on the rates applied under

4 part A during the previous fiscal year (in5 creased by the same percentage as the per6 centage increase in payment rates under

7 title XVIII from the previous fiscal year to

8 such first fiscal year), and

‘‘(ii) 1 9 ⁄3 on the rates applied under

10 title XVIII (as adjusted under paragraph

11 (3)) during such first fiscal year; and

12 ‘‘(B) during the second fiscal year, the

13 rates are based—

‘‘(i) 1 14 ⁄3 on the rates applied under

15 part A during the second previous fiscal

16 year (increased by the same percentage as

17 the percentage increase in payment rates

18 under title XVIII from the second previous

19 fiscal year to such second), and

‘‘(ii) 2 20 ⁄3 on the rates applied under

21 title XVIII (as adjusted under paragraph

22 (3)) during such second fiscal year.

23 ‘‘(3) ADJUSTMENT OF MEDICARE PAYMENT

24 RATES.—The Secretary shall adjust the payment

25 rates established under title XVIII and applied
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1 under this part in order to take into account dif2 ferences in the demographic and geographic charac3 teristics between the individuals covered under such

4 title and the individuals covered under this part.

5 ‘‘(b) PARTICIPATION AND MANDATORY ASSIGN6 MENT.—In the case of medical assistance made available

7 under section 1952(a)(1), payment may only be made

8 under this part for services furnished by a provider that—

9 ‘‘(1) meets such conditions as the Secretary es10 tablishes, based on conditions of participation of pro11 viders, physicians, and suppliers established for pur12 poses of title XVIII, and

13 ‘‘(2) has entered into a participation agreement

14 under which the provider agrees to accept the pay15 ment amounts established under this section (includ16 ing cost-sharing under subsection (c)) as payment in

17 full for covered services.

18 ‘‘(c) COST-SHARING.—In the case of medical assist19 ance made available under section 1952(a)(1)—

20 ‘‘(1) NO COST-SHARING FOR PREGNANCY-RE21 LATED SERVICES, PREVENTIVE SERVICES, AND CHIL22 DREN.—There shall be no cost-sharing imposed with

23 respect to—

24 ‘‘(A) services related to pregnancy,

25 ‘‘(B) preventive services, or
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1 ‘‘(C) services furnished to children under

2 19 years of age.

3 ‘‘(2) NOMINAL COST-SHARING FOR THE POOR4 EST INDIVIDUALS.—There shall be no cost-sharing

5 (other than nominal cost-sharing, within the mean6 ing of section 1916(a)(3)) imposed with respect to

7 services furnished to individuals whose income is de8 termined to be less than 50 percent of the Federal

9 poverty level.

10 ‘‘(3) COST-SHARING FOR OTHER SERVICES AND

11 POPULATIONS.—

12 ‘‘(A) IN GENERAL.—With respect to eligi13 ble individuals not described in paragraph (2)

14 with respect to services not described in para15 graph (1), there shall be imposed the following

16 cost-sharing:

17 ‘‘(i) For outpatient services, there

18 shall be a copayment of $5 for each visit,

19 or $10 in the case of a nonemergency visit

20 to a hospital emergency room.

21 ‘‘(ii) For inpatient hospital services,

22 there shall be a copayment of $50 for each

23 inpatient hospital admission.
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1 ‘‘(B) LIMIT ON COST-SHARING.—In no

2 case shall the cost-sharing imposed under sub3 paragraph (A)—

4 ‘‘(i) for an individual (whether or not

5 the individual is a member of a family) ex6 ceed $500 in any calendar year, or

7 ‘‘(ii) collectively for all members of a

8 family exceed $1,000 in any calendar year.

9 ‘‘ADMINISTRATION

10 ‘‘SEC. 1955. (a) ELIGIBILITY DETERMINATIONS.—

11 The Secretary shall provide for determinations of eligi12 bility for benefits under this part for individuals residing

13 in a State to be made through the same administrative

14 entity that provides for determinations of eligibility for

15 supplemental security income benefits under title XVI for

16 residents of that State.

17 ‘‘(b) PAYMENTS.—The Secretary shall provide for

18 payments to providers under this part through the single

19 entity (or entities) responsible under section 111 of the

20 American Consumers Health Care Reform Act of 1992 for

21 administrative functions under title XVIII, in the same

22 manner as such entities provide for payments to providers

23 under such title.

24 ‘‘USE OF ALTERNATIVE DELIVERY SYSTEMS

25 ‘‘SEC. 1956. (a) IN GENERAL.—The Secretary shall

26 take such steps as may be appropriate to encourage the
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1 development and application of managed care arrange2 ments to the provision of covered services under this part

3 to individuals eligible under section 1952(a)(1).

4 ‘‘(b) TYPES OF MANAGED CARE ARRANGEMENTS.—

5 ‘‘(1) IN GENERAL.—Managed care arrange6 ments under this section shall include—

7 ‘‘(A) primary care case-management ar8 rangements (which meet standards established

9 by the Secretary), and

10 ‘‘(B) health maintenance organizations and

11 competitive medical plans (which meet stand12 ards established by the Secretary).

13 In establishing standards for primary care case-man14 agement arrangements and for maintenance organi15 zations and competitive medical plans, the Secretary

16 shall take into account the standards established for

17 such arrangements and for such organizations and

18 plans under this title and title XVIII, respectively.

19 ‘‘(2) CAPITATION PAYMENTS.—Comprehensive

20 managed care arrangements (including health main21 tenance organizations and competitive medical

22 plans) shall include capitation payments at a level

23 equivalent to the level of payments which would be

24 made for individuals covered under this part and not

25 enrolled under such an arrangement.
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1 ‘‘(3) CONSTRUCTION.—Nothing in this sub2 section shall be construed as limiting the number or

3 proportion of individuals covered under this part

4 who may be enrolled under a managed care arrange5 ment under this subsection.

6 ‘‘STATE MAINTENANCE OF EFFORT REQUIRED;

7 REDUCTION IN FMAP FOR LONG-TERM CARE SERVICES

8 ‘‘SEC. 1957. (a) IN GENERAL.—No individual resid9 ing in a State shall be eligible for medical assistance under

10 this part (other than under section 1952(a)(2)), unless—

11 ‘‘(1) the State continues to provide for medical

12 assistance under part A with respect to home health

13 care services and nursing facility services; and

14 ‘‘(2) the State provides for payment to the Sec15 retary of the amount specified under subsection (b).

16 Payments shall be made under paragraph (2) by States

17 on a quarterly basis based on estimates made by the Sec18 retary and subsequent payments shall be adjusted to re19 flect amounts by which previous payments were greater,

20 or less than, the amount of payment which should have

21 been made.

22 ‘‘(b) MAINTENANCE OF EFFORT AMOUNT.—

23 ‘‘(1) IN GENERAL.—The amount specified

24 under this subsection for a State for a calendar

25 quarter is the greater of—
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1 ‘‘(A) the State share (as specified under

2 paragraph (2)) of the total amount of expendi3 tures made by the Secretary for residents of the

4 State during the quarter under this part, or

5 ‘‘(B) the State amount specified under

6 paragraph (3), reduced by the amount of pay7 ments made by the State (less any Federal pay8 ments to the State) under part A for the quar9 ter.

10 ‘‘(2) STATE SHARE.—

11 ‘‘(A) IN GENERAL.—Subject to subpara12 graph (C), the ‘State share’ for a State for a

13 calendar quarter is 100 percent less the Federal

14 percentage specified in subparagraph (B) for

15 the State for the quarter.

16 ‘‘(B) FEDERAL PERCENTAGE DEFINED.—

17 The Federal percentage specified in this sub18 paragraph for a State or the District of Colum19 bia for a quarter is—

20 ‘‘(i) the Federal medical assistance

21 percentage specified in section 1905(b)

22 (determined without regard to section

23 1931(d)) for the State for the quarter, in24 creased by
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1 ‘‘(ii) a percentage equal to the per2 centage specified in subparagraph (C) of

3 the difference between 100 percentage

4 points and the Federal medical assistance

5 percentage described in clause (i).

6 ‘‘(C) PHASE IN.—The percentage specified

7 in this subparagraph for calendar quarters oc8 curring in—

9 ‘‘(i) the third effective fiscal year is

10 50 percent;

11 ‘‘(ii) each of the next 3 succeeding fis12 cal years, is the percentage specified in

13 this subparagraph for the calendar quar14 ters occurring in the previous fiscal year

15 increased by 10 percent;

16 ‘‘(iii) each of the next 3 succeeding

17 fiscal years, is the percentage specified in

18 this subparagraph for the calendar quar19 ters occurring in the previous fiscal year

20 increased by 5 percent; and

21 ‘‘(iv) each succeeding fiscal year, is

22 100 percent.

23 ‘‘(3) PAYMENT AMOUNT.—

24 ‘‘(A) IN GENERAL.—The payment amount

25 specified under this paragraph for a State for
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1 a quarter in a fiscal year is equal to the prod2 uct of—

3 ‘‘(i) the average, per capita payment

4 level made under this title for the last full

5 fiscal year before the first effective fiscal

6 year, increased by the percentage specified

7 in subparagraph (B), and

8 ‘‘(ii) the population of the State.

9 ‘‘(B) PERCENTAGE INCREASE.—The per10 centage specified in this subparagraph for a fis11 cal year is the percentage increase in the

12 consumer price index for all urban consumers

13 (all items; U.S. city average) between the mid14 point of the fiscal year described in subpara15 graph (A)(i) to the midpoint of the fiscal year

16 involved.

17 ‘‘(c) DECREASE IN FMAP FOR SERVICES NOT COV18 ERED UNDER PART.—

19 ‘‘(1) IN GENERAL.—Notwithstanding any other

20 provision of law, the Federal medical assistance per21 centage for each of the 50 States and the District

22 of Columbia for medical assistance for services for

23 which benefits are not available under this part shall

24 be, for calendar quarters occurring in a fiscal year

25 (beginning with the third effective fiscal year), the
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1 percentage specified in paragraph (2) of the Federal

2 medical assistance percentage otherwise applicable

3 (without regard to this part).

4 ‘‘(2) PHASE OUT PERCENTAGE.—The percent5 age specified in this paragraph for calendar quarters

6 occurring in—

7 ‘‘(A) the third and fourth effective fiscal

8 years is 85 and 80 percent, respectively;

9 ‘‘(B) each of the next 4 succeeding fiscal

10 years, is the percentage specified in this para11 graph for the calendar quarters occurring in the

12 previous fiscal year decreased by 10 percentage

13 points;

14 ‘‘(C) the next succeeding fiscal year, is 20

15 percent; and

16 ‘‘(D) each succeeding fiscal year, is 0 per17 cent.’’.

18 (b) STUDY AND REPORT MAINTENANCE OF EFFORT

19 FORMULA.—

20 (1) STUDY.—The Secretary of Health and

21 Human Services shall provide for a study on the ef22 fect of the State maintenance-of-effort requirements

23 (under subsections (a) and (b) of section 1957(b) of

24 the Social Security Act, as added by subsection (a))

25 on different States and on the relation of the total
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1 amount of maintenance of effort to the long-term

2 care needs in each State.

3 (2) REPORT.—Not later than 2 years after the

4 date of the enactment of this Act, the Secretary

5 shall submit to Congress a report on such study.

6 The Secretary shall include in such report such rec7 ommendations for adjustments in the requirements

8 of such subsections as may be appropriate to limit

9 the effort required of States to some indicator based

10 on the needs for long-term care services in each

11 State.

12 Subtitle B—Medicare Reform

13 SEC. 111. IMPROVED EFFICIENCY THROUGH CONSOLIDA14 TION OF ADMINISTRATION OF PARTS A AND

15 B.

16 (a) IN GENERAL.—The Secretary of Health and

17 Human Services shall take such steps as may be necessary

18 to consolidate the administration of parts A and B of the

19 medicare program over a 5-year period.

20 (b) COMBINATION OF INTERMEDIARY AND CARRIER

21 FUNCTIONS.—In taking such steps, the Secretary shall

22 contract with a single entity that combines the

23 intermediary and carrier functions in each area except

24 where the Secretary finds that special regional or national

25 contracts are appropriate.
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1 (c) REPORT ON LEGISLATION REQUIRED.—Not later

2 than 1 year after the date of the enactment of this Act,

3 the Secretary shall submit to Congress a report specifying

4 such legislative changes as may be required in order to

5 carry out this section.

6 SEC. 112. PROVIDER PAYMENT REFORMS TO ADDRESS IN7 CONSISTENT INCENTIVES.

8 (a) DEVELOPMENT OF PAYMENT PROPOSALS.—The

9 Secretary of Health and Human Services shall develop

10 payment proposals that eliminate inconsistent incentives

11 that now exist under the medicare program. Such payment

12 proposals shall include the following:

13 (1) Proposals that ensure appropriate, consist14 ent, and complimentary payment incentives for pay15 ments for hospital services and payments for physi16 cian services.

17 (2) Proposals that eliminate inconsistent pay18 ment policies for the same service at different sites.

19 (3) Proposals that instill appropriate incentives

20 as regards the growth in service capacity and appro21 priate use of services.

22 (4) Proposals that are consistent with the goals

23 of ensuring both access to appropriate high quality

24 of care throughout an episode of illness and cost ef25 ficiency in the care delivered.
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1 (b) REPORT.—Not later than 1 year after the date

2 of the enactment of this Act, the Secretary shall submit

3 to Congress a description of such proposals. The Secretary

4 shall include in the report such recommendations with re5 spect to such proposals as the Secretary determines to be

6 appropriate and shall specify such legislative changes as

7 may be required in order to implement such recommenda8 tions.

9 Subtitle C—Health Benefit Plan

10 Reform

11 PART 1—PREEMPTION OF STATE MANDATORY BENEFIT

12 LAWS AND ANTI-MANAGED CARE LAWS

13 SEC. 121. PREEMPTION FROM INSURANCE MANDATES FOR

14 QUALIFIED SMALL EMPLOYER PURCHASING

15 GROUPS.

16 (a) QUALIFIED SMALL EMPLOYER PURCHASING

17 GROUP DEFINED.—For purposes of this section, an asso18 ciation is a qualified small employer purchasing group if—

19 (1) the association submits an application to

20 the Secretary of Health and Human Services at such

21 time and in such form as the Secretary may require;

22 and

23 (2) on the basis of information contained in the

24 application and any other information the Secretary

25 may require, the Secretary determines that—
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1 (A) the association is administered solely

2 under the authority and control of its member

3 employers,

4 (B) the association’s membership consists

5 solely of employers with not more than 100 em6 ployees (except that an employer member of the

7 group may retain its membership in the group

8 if, after the Secretary determines that the asso9 ciation meets the requirements of this para10 graph, the number of employees of the employer

11 member increases to more than 100),

12 (C) with respect to each State in which its

13 members are located, the association consists of

14 not fewer than 100 employers, and

15 (D) at the time the association submits its

16 application, the health benefit plans with re17 spect to the employer members of the associa18 tion are in compliance with applicable State

19 laws relating to health benefit plans.

20 (b) PREEMPTION FROM INSURANCE MANDATES.—

21 (1) FINDING.—Congress finds that employer

22 purchasing groups organized for the purpose of ob23 taining health insurance for employer members af24 fect interstate commerce.
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1 (2) PREEMPTION OF STATE MANDATES.—In the

2 case of a qualified small employer purchasing group

3 described in subsection (a), no provision of State law

4 shall apply that requires the offering, as part of the

5 health benefit plan with respect to an employer

6 member of such a group, of any services, category

7 of care, or services of any class or type of provider.

8 (3) PREEMPTION OF PROVISIONS PROHIBITING

9 EMPLOYER GROUPS FROM PURCHASING HEALTH IN10 SURANCE.—In the case of a qualified small employer

11 purchasing group described in subsection (a), no

12 provision of State or local law shall apply that pro13 hibits a group of employers from purchasing health

14 insurance with respect to member employers of the

15 group or their employees.

16 (c) EFFECTIVE DATE.—This section shall take effect

17 60 days after the date of the enactment of this Act.

18 SEC. 122. REMOVING RESTRICTIONS ON MANAGED CARE.

19 (a) PREEMPTION OF STATE LAW PROVISIONS.—Sub20 ject to subsection (c), the following provisions of State law

21 are preempted and may not be enforced:

22 (1) RESTRICTIONS ON REIMBURSEMENT RATES

23 OR SELECTIVE CONTRACTING.—Any law that re24 stricts the ability of a carrier to negotiate reimburse-
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1 ment rates with providers or to contract selectively

2 with one provider or a limited number of providers.

3 (2) RESTRICTIONS ON DIFFERENTIAL FINAN4 CIAL INCENTIVES.—Any law that limits the financial

5 incentives that a health benefit plan may require a

6 beneficiary to pay when a non-plan provider is used

7 on a non-emergency basis.

8 (3) RESTRICTIONS ON UTILIZATION REVIEW

9 METHODS.—Any law that—

10 (A) prohibits utilization review of any or

11 all treatments and conditions,

12 (B) requires that such review be made (i)

13 by a resident of the State in which the treat14 ment is to be offered or by an individual li15 censed in such State, or (ii) by a physician in

16 any particular specialty or with any board cer17 tified specialty of the same medical specialty as

18 the provider whose services are being reviewed,

19 (C) requires the use of specified standards

20 of health care practice in such reviews or re21 quires the disclosure of the specific criteria used

22 in such reviews,

23 (D) requires payments to providers for the

24 expenses of responding to utilization review re25 quests, or
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1 (E) imposes liability for delays in perform2 ing such review.

3 Nothing in subparagraph (B) shall be construed as

4 prohibiting a State from (i) requiring that utilization

5 review be conducted by a licensed health care profes6 sional or (ii) requiring that any appeal from such a

7 review be made by a licensed physician or by a li8 censed physician in any particular specialty or with

9 any board certified specialty of the same medical

10 specialty as the provider whose services are being re11 viewed.

12 (b) GAO STUDY.—

13 (1) IN GENERAL.—The Comptroller General

14 shall conduct a study of the benefits and cost effec15 tiveness of the use of managed care in the delivery

16 of health services.

17 (2) REPORT.—By not later than 4 years after

18 the date of the enactment of this Act, the Comptrol19 ler General shall submit a report to Congress on the

20 study conducted under paragraph (1) and shall in21 clude in the report such recommendations (including

22 whether the provisions of subsection (a) should be

23 extended) as may be appropriate.
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1 (c) SUNSET.—Unless otherwise provided, subsection

2 (a) shall not apply 5 years after the date of the enactment

3 of this Act.

4 PART 2—RESTRICTION ON PRE-EXISTING CONDITION

5 PROVISIONS FOR EMPLOYER HEALTH INSURANCE

6 SEC. 123. LIMITATION ON PRE-EXISTING CONDITION

7 CLAUSES; ASSURANCE OF CONTINUITY OF

8 COVERAGE.

9 (a) LIMITATIONS ON TREATMENT OF PRE-EXISTING

10 CONDITIONS.—A carrier may not impose (or require an

11 employer to impose through a waiting period for coverage

12 under a health benefit policy or similar requirement) a

13 limitation or exclusion of benefits under an employer

14 health benefit plan relating to treatment of a condition

15 based on the fact that the condition pre-existed the effec16 tiveness of the policy if—

17 (1) the condition relates to a condition that was

18 not diagnosed or treated within 6 months before the

19 date of coverage under the plan;

20 (2) the limitation or exclusion extends over

21 more than 6 months after the date of coverage

22 under the plan;

23 (3) the limitation or exclusion applies to an in24 dividual who, as of the date of birth, was covered

25 under the plan or is under 19 years of age; or
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1 (4) the limitation or exclusion relates to preg2 nancy.

3 In the case of an individual who is eligible for coverage

4 under an employer health benefit plan but for a waiting

5 period imposed by the employer, in applying paragraphs

6 (1) and (2), the individual shall be treated as have been

7 covered under the plan as of the earliest date of the begin8 ning of the waiting period.

9 (b) ASSURANCE OF CONTINUITY OF COVERAGE

10 THROUGH PREVIOUS SATISFACTION OF PRE-EXISTING

11 CONDITION REQUIREMENT.—

12 (1) IN GENERAL.—Each carrier shall waive any

13 period applicable to a pre-existing condition for simi14 lar benefits with respect to an individual to the ex15 tent that the individual was covered for the condi16 tion under any health benefit plan (as defined in

17 paragraph (3)) that was in effect before the date of

18 the enrollment under the carrier’s plan.

19 (2) CONTINUOUS COVERAGE REQUIRED.—

20 (A) IN GENERAL.—Paragraph (1) shall no

21 longer apply if there is a continuous period of

22 more than 60 days (or, in the case of an indi23 vidual described in subparagraph (C), 6

24 months) on which the individual was not cov25 ered under a health benefit plan.
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1 (B) TREATMENT OF WAITING PERIODS.—

2 In applying subparagraph (A), any waiting pe3 riod imposed by an employer before an em4 ployee is eligible to be covered under a policy

5 shall be treated as a period in which the em6 ployee was covered under a health benefit plan.

7 (C) JOB TERMINATION.—An individual is

8 described in this subparagraph if the individual

9 loses coverage under an employer health plan

10 due to termination of employment.

11 (3) EXCLUSION OF CASH-ONLY AND DREAD

12 DISEASE POLICIES.—In this subsection, the term

13 ‘‘health benefit plan’’ does not include any insurance

14 which is offered primarily to provide—

15 (A) coverage for a specified disease or ill16 ness, or

17 (B) hospital or fixed indemnity policy, un18 less the Secretary (or in the case of a plan in

19 a State, the State) determines that such a pol20 icy provides sufficiently comprehensive coverage

21 of a benefit so that it should be treated as a

22 health benefit plan under this subsection.
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1 PART 3—SMALL EMPLOYER INSURANCE MARKET

2 REFORMS

3 SEC. 124. ACCEPTANCE OF ALL SMALL EMPLOYER SEEKING

4 COVERAGE; OFFERING OF MINIMUM BENEFIT

5 PACKAGE.

6 (a) ACCEPTANCE OF ALL SMALL EMPLOYER GROUPS

7 SEEKING COVERAGE.—Subject to the succeeding provi8 sions of this section, a carrier that offers a small employer

9 health plan to small employers located in a State—

10 (1) must offer the same plan to any other small

11 employer located in the State, and

12 (2) may refuse to issue or renew or terminate

13 such a plan for a small employer only for—

14 (A) nonpayment of premiums, or

15 (B) fraud or misrepresentation.

16 The requirement of paragraph (1) shall apply on a contin17 uous, year-round basis.

18 (b) OFFERING OF MINIMUM BENEFIT PACKAGE.—

19 At such time as a minimum benefit package is established

20 under section 203, each carrier that makes available in

21 a State any small employer health benefit plan shall make

22 available to each small employer in the State such a plan

23 that only provides benefits for the minimum benefit pack24 age established under such section.
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1 (c) RESTRICTIONS OF ENROLLMENT PERMITTED IN

2 THE CASE OF CERTAIN ASSOCIATION COVERAGE.—In the

3 case of an health benefit plan offered through an associa4 tion which is composed exclusively of employers (which

5 may include self-employed individuals) and which has been

6 formed for purposes other than obtaining health insur7 ance, the carrier is not required to offer the plan with re8 spect to individuals who are not employees of such employ9 ers or self-employed members of the association, or their

10 dependents.

11 (d) TREATMENT OF HEALTH MAINTENANCE ORGA12 NIZATIONS.—

13 (1) GEOGRAPHIC LIMITATIONS.—A health

14 maintenance organization may deny enrollment with

15 respect to an individual if the individual is residing

16 outside the service area of the organization, but only

17 if such denial is applied uniformly without regard to

18 health status or insurability.

19 (2) SIZE LIMITS.—A health maintenance orga20 nization may apply to the Secretary to cease enroll21 ing new employer groups or individuals in its in22 sured health benefit plan (or in a geographic area

23 served by the plan) if—

24 (A) it ceases to enroll any new employer

25 groups or individuals, and
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1 (B) it can demonstrate that its financial or

2 administrative capacity to serve previously en3 rolled groups and individuals (and additional in4 dividuals who will be expected to enroll because

5 of affiliation with such previously enrolled

6 groups) will be impaired if it is required to en7 roll new employer groups or individuals.

8 SEC. 125. USE OF COMMUNITY-RATED PREMIUMS.

9 (a) COHESIVE RATING SYSTEM AND ACTUARIAL

10 CERTIFICATION.—

11 (1) IN GENERAL.—The premiums (including

12 reference premium rate, as defined in subsection

13 (b)(2)) and age-sex adjustments under subsection (c)

14 for all small employer health plans of the same car15 rier shall—

16 (A) be established based on a single cohe17 sive rating system which is applied consistently

18 for all small employers and is designed not to

19 treat small employers differently based on

20 health status or risk status; and

21 (B) be actuarially certified annually.

22 (2) ACTUARIAL CERTIFIED DEFINED.—For

23 purposes of paragraph (1)(B), a plan is considered

24 to be ‘‘actuarially certified’’ if there is a written

25 statement, by a member of the American Academy
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1 of Actuaries or other individual acceptable to the

2 Secretary that a small employer carrier is in compli3 ance with this section, based upon the individual’s

4 examination, including a review of the appropriate

5 records and of the actuarial assumptions and meth6 ods utilized by the carrier in establishing premium

7 rates for applicable health plans.

8 (b) USE OF COMMUNITY-RATED REFERENCE PRE9 MIUM RATES.—

10 (1) IN GENERAL.—The reference premium rate

11 charged for a small employer health plan with simi12 lar benefits in a community for a type of family en13 rollment (described in subsection (d)) shall be the

14 same for all small employers.

15 (2) REFERENCE PREMIUM RATE.—In this sec16 tion, the term ‘‘reference premium rate’’ means, for

17 a rating period in a community, the lowest premium

18 rate charged or which could have been charged by

19 the small employer carrier to small employers under

20 a rating system in the community for health plans

21 with the same or similar coverage. The reference

22 premium rate is determined without regard to any

23 adjustment for age or sex described in subsection

24 (c).
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1 (c) AGE AND SEX ADJUSTMENT TO COMMUNITY2 RATING.—

3 (1) IN GENERAL.—Subject to paragraph (2), a

4 small employer health plan may provide for an ad5 justment to the reference premium rate based on

6 age and gender of covered individuals. Any such ad7 justment shall be applied consistently to all small

8 employers.

9 (2) LIMITATION ON ADJUSTMENT.—The adjust10 ment under paragraph (1) may not result, with re11 spect to small employer health plans with similar

12 benefits in a community, in a premium rate for the

13 most expensive age-sex group exceeding 133 percent

14 of the premium rate for the least expensive age-sex

15 group.

16 (d) TYPES OF FAMILY ENROLLMENT.—Each small

17 employer health plan shall permit enrollment of (and shall

18 compute premiums separately for) individuals based on

19 each of the following beneficiary classes:

20 (1) 1 adult.

21 (2) A married couple without children.

22 (3) A married couple with 1 or more children,

23 or 1 adult with 1 or more children.
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1 (e) COMMUNITY.—For purposes of this section, the

2 term ‘‘community’’ means a geographic area designated

3 by the Secretary as—

4 (1) encompassing one or more adjacent metro5 politan statistical areas, or

6 (2) the remaining area within each State (that

7 is not designated within any community under para8 graph (1));

9 except that the Secretary may designate an entire State

10 as a community if such a designation would better carry

11 out the purposes of this title. The Secretary from time

12 to time may change the boundaries of communities des13 ignated under paragraph (1) or (2) for such purposes.

14 There shall be no administrative or judicial review of the

15 designation of communities under this subsection.

16 PART 4—ESTABLISHMENT OF STANDARDS;

17 ENFORCEMENT; GENERAL DEFINITIONS

18 SEC. 126. ESTABLISHMENT OF STANDARDS.

19 (a) ROLE OF NAIC.—The Secretary shall request the

20 National Association of Insurance Commissioners to de21 velop, within 9 months after the date of the enactment

22 of this Act, model regulations that specify standards to

23 carry out parts 2 and 3 of this subtitle. If the Association

24 develops such regulations specifying such standards within

25 such period, the Secretary shall review such standards to
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•HR 191 IH

1 determine if they meet such requirements. Such review

2 shall be completed within 30 days after the date the regu3 lations are developed. Unless the Secretary determines

4 within such period that the standards do not meet the re5 quirements, such standards shall serve as the standards

6 under section 127.

7 (b) CONTINGENCY.—If the Association does not de8 velop such model regulations within such period or the

9 Secretary determines that such regulations do not meet

10 the requirements described in subsection (a), the Sec11 retary shall specify, within 15 months after the date of

12 the enactment of this Act, standards to carry out parts

13 2 and 3 of this subtitle.

14 (c) EFFECTIVE DATE.—The standards provided

15 under this section shall apply to small employer health

16 benefit plans offered in a State on or after the date the

17 standards are implemented in the State under section 127

18 and to such plans renewed on or after 4 years after the

19 date such standards are implemented in the State under

20 such section.

21 SEC. 127. ENFORCEMENT.

22 (a) PRIMARY APPLICATION OF STANDARDS TO IN23 SURED PLANS THROUGH STATES.—

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

25 the Secretary, by the deadline specified in paragraph
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1 (B), a report on the implementation and enforce2 ment of the standards established under section 126

3 with respect to insured employer health benefit plans

4 offered not later than such deadline.

5 (2) DEADLINE FOR REPORT.—

6 (A) 1 YEAR AFTER STANDARDS ESTAB7 LISHED.—Subject to subparagraph (B), the

8 deadline under this paragraph is 1 year after

9 the date standards are established under section

10 126.

11 (B) EXCEPTION FOR LEGISLATION.—In

12 the case of a State which the Secretary identi13 fies, in consultation with the National Associa14 tion of Insurance Commissioners, as—

15 (i) requiring State legislation (other

16 than legislation appropriating funds) in

17 order for carriers and health benefit plans

18 offered to small employers to meet the

19 standards established under section 126,

20 but

21 (ii) having a legislature which is not

22 scheduled to meet in 1993 in a legislative

23 session in which such legislation may be

24 considered,
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1 the date specified in this paragraph is the first

2 day of the first calendar quarter beginning after

3 the close of the first legislative session of the

4 State legislature that begins on or after Janu5 ary 1, 1993. For purposes of the previous sen6 tence, in the case of a State that has a 2-year

7 legislative session, each year of such session

8 shall be deemed to be a separate regular ses9 sion of the State legislature.

10 (b) MORE STRINGENT STATE STANDARDS PER11 MITTED.—A State may, under this section, implement

12 standards that are more stringent than the standards es13 tablished under section 126.

14 (c) FEDERAL ROLE.—

15 (1) INSURED PLANS.—If the Secretary deter16 mines that a State has failed to submit a report by

17 the deadline specified under subsection (a) or finds

18 that the State no longer is carrying out its respon19 sibility under the respective subsection, the Sec20 retary shall notify the State and provide the State

21 a period of 30 days in which to submit such report

22 or to carry out its responsibilities under the respec23 tive subsection. If, after such 30-day period, the Sec24 retary finds that such a failure has not been cor25 rected, the Secretary shall provide for such mecha-
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1 nism for the implementation and enforcement of the

2 standards established under section 126 in the State

3 with respect to insured employer health benefit plans

4 as the Secretary determines to be appropriate. Such

5 standards shall apply to health benefit plans offered

6 or renewed on or after 3 months after the applicable

7 deadlines established under section 126(c).

8 (2) SELF-INSURED PLANS.—The Secretary

9 shall provide for such mechanism for the implemen10 tation and enforcement of the standards established

11 under section 126 in the State with respect to em12 ployer health benefit plans that are not subject to

13 regulation by a State (or by the Secretary under

14 paragraph (1)) as the Secretary determines to be ap15 propriate. Such standards shall apply to such health

16 benefit plans offered or renewed on or after 1 year

17 after the date standards are established under sec18 tion 126.

19 (d) FEDERAL ENFORCEMENT THROUGH EXCISE

20 TAX.—

21 (1) IN GENERAL.—Chapter 43 of the Internal

22 Revenue Code of 1986 (relating to qualified pension,

23 etc., plans) is amended by adding at the end thereof

24 the following new section:
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1 ‘‘SEC. 4980C. FAILURE BY CARRIER TO COMPLY WITH EM2 PLOYER HEALTH INSURANCE STANDARDS.

3 ‘‘(a) IMPOSITION OF TAX.—There is hereby imposed

4 a tax on the failure of—

5 ‘‘(1) any carrier to comply with the standards

6 established under section 126 of the American Con7 sumers Health Care Reform Act of 1993 to carry

8 out part 2 of subtitle B of such Act, or

9 ‘‘(2) any small employer carrier in any Federal

10 standard State to comply with the standards estab11 lished under such section to carry out part 3 of such

12 subtitle.

13 ‘‘(b) AMOUNT OF TAX.—The tax imposed by—

14 ‘‘(1) subsection (a)(1) shall be equal to 25 per15 cent of the amounts received by the health benefit

16 plan (during the period such failure persists), or

17 ‘‘(2) subsection (a)(2) shall be equal to 25 per18 cent of the amounts received by the carrier (during

19 the period such failure persists) for providing any

20 health benefit plan with respect to any employer in

21 the Federal standard State.

22 ‘‘(c) LIABILITY FOR TAX.—The tax imposed by—

23 ‘‘(1) subsection (a)(1) shall be paid by the per24 son issuing the health benefit plan, or

25 ‘‘(2) subsection (a)(2) shall be paid by the car26 rier.
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1 ‘‘(d) EXCEPTIONS.—

2 ‘‘(1) CORRECTIONS WITHIN 30 DAYS.—No tax

3 shall be imposed by subsection (a) by reason of any

4 failure if—

5 ‘‘(A) such failure was due to reasonable

6 cause and not to willful neglect, and

7 ‘‘(B) such failure is corrected within the

8 30-day period beginning on earliest date the

9 carrier knew, or exercising reasonable diligence

10 would have known, that such failure existed.

11 ‘‘(2) WAIVER BY SECRETARY.—In the case of a

12 failure which is due to reasonable cause and not to

13 willful neglect, the Secretary may waive part or all

14 of the tax imposed by subsection (a) to the extent

15 that payment of such tax would be excessive relative

16 to the failure involved.

17 ‘‘(e) DEFINITIONS.—For purposes of this section—

18 ‘‘(1) CARRIER; ETC.—The terms ‘carrier’,

19 ‘small employer carrier’, ‘health benefit plan’, and

20 ‘small employer’ have the meanings given such terms

21 in section 128 of the American Consumers Health

22 Care Reform Act of 1993.

23 ‘‘(2) FEDERAL STANDARD STATE.—The term

24 ‘Federal standard State’ means any State with re25 spect to which a determination is in effect under sec-
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1 tion 127(c)(1)) of the American Consumers Health

2 Care Reform Act of 1993.’’.

3 (2) CLERICAL AMENDMENT.—The table of sec4 tions for chapter 43 of such Code is amended by

5 adding at the end thereof the following new items:

‘‘Sec. 4980C. Failure by carrier to comply with employer health

insurance standards in States.’’.

6 SEC. 128. DEFINITIONS.

7 In this subtitle (except as otherwise provided):

8 (1) The term ‘‘carrier’’ means any entity which

9 provides health insurance or health benefits in a

10 State, and includes a licensed insurance company, a

11 prepaid hospital or medical service plan, a health

12 maintenance organization, the plan sponsor of a

13 multiple employer welfare arrangement or an em14 ployee benefit plan (as defined under the Employee

15 Retirement Income Security Act of 1974), or any

16 other entity providing a plan of health insurance

17 subject to State insurance regulation.

18 (2)(A) Subject to subparagraph (B), the term

19 ‘‘employer health benefit plan’’ means a health bene20 fit plan (including an employee welfare benefit plan,

21 as defined in section 3(1) of the Employee Retire22 ment Income Security Act of 1974) which is offered

23 to employees through an employer and for which the

24 employer provides for any contribution to such plan
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1 or any premium for such plan are deducted by the

2 employer from compensation to the employee.

3 (B) A State may provide (for a plan in a State)

4 that the term ‘‘employer health benefit plan’’ does

5 not include an association plan (as defined in sub6 paragraph (C)).

7 (C) For purposes of subparagraph (B), the

8 term ‘‘association plan’’ means a health benefit plan

9 offered by an organization to its members if the or10 ganization was formed other than for purposes of

11 purchasing insurance.

12 (3) The term ‘‘full-time employee’’ means, with

13 respect to an employer, an individual who normally

14 is employed for at least 30 hours per week by the

15 employer.

16 (4) The term ‘‘health benefit plan’’ means any

17 hospital or medical expense incurred policy or certifi18 cate, hospital or medical service plan contract, or

19 health maintenance subscriber contract, or a mul20 tiple employer welfare arrangement or employee ben21 efit plan (as defined under the Employee Retirement

22 Income Security Act of 1974) which provides bene23 fits with respect to health care services, but does not

24 include—
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1 (A) coverage only for accident, dental, vi2 sion, disability income, or long-term care insur3 ance, or any combination thereof,

4 (B) medicare supplemental health insur5 ance,

6 (C) coverage issued as a supplement to li7 ability insurance,

8 (D) worker’s compensation or similar in9 surance, or

10 (E) automobile medical-payment insurance,

11 or any combination thereof.

12 (5) The term ‘‘health maintenance organiza13 tion’’ includes a carrier that meets specified stand14 ards and that offers to provide health services on a

15 prepaid, at-risk basis primarily through a defined set

16 of providers.

17 (6) The term ‘‘insured health benefit plan’’

18 means any health benefit plan provided through in19 surance, and includes a prepaid hospital or medical

20 service plan, the health benefit plan of a health

21 maintenance organization, and a multiple employer

22 welfare arrangement.

23 (7) The term ‘‘Secretary’’ means the Secretary

24 of Health and Human Services.
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1 (8) The term ‘‘small employer’’ means an entity

2 actively engaged in business which, on at least 50

3 percent of its working days during the preceding

4 year, employed fewer than 100 full-time employees,

5 and includes a self-employed individual. For pur6 poses of determining if an employer is a small em7 ployer, rules similar to the rules of subsection (b)

8 and (c) of section 414 of the Internal Revenue Code

9 of 1986 shall apply.

10 (9) The term ‘‘small employer carrier’’ means a

11 carrier with respect to the issuance of a small em12 ployer health benefit plan.

13 (10) The term ‘‘small employer health benefit

14 plan’’ means an employer health benefit plan which

15 provides coverage to one or more full-time employees

16 of a small employer.

17 (11) The term ‘‘State’’ means the 50 States,

18 the District of Columbia, Puerto Rico, the Virgin Is19 lands, Guam, and American Samoa.

20 (12) The term ‘‘State commissioner of insur21 ance’’ includes a State superintendent of insurance.
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1 Subtitle D—Medical Malpractice

2 Reform

3 PART 1—GENERAL PROVISIONS

4 SEC. 131. FEDERAL REFORM OF MEDICAL MALPRACTICE

5 LIABILITY ACTIONS.

6 (a) CONGRESSIONAL FINDINGS.—

7 (1) EFFECT ON INTERSTATE COMMERCE.—

8 Congress finds that the health care and insurance

9 industries are industries affecting interstate com10 merce and the medical malpractice litigation systems

11 existing throughout the United States affect inter12 state commerce by contributing to the high cost of

13 health care and premiums for malpractice insurance

14 purchased by health care providers.

15 (2) EFFECT ON FEDERAL SPENDING.—Con16 gress finds that the medical malpractice litigation

17 systems existing throughout the United States have

18 a significant effect on the amount, distribution, and

19 use of Federal funds because of—

20 (A) the large number of individuals who

21 receive health care benefits under programs op22 erated or financed by the Federal Government;

23 (B) the large number of individuals who

24 benefit because of the exclusion from Federal
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1 taxes of the amounts spent by their employers

2 to provide them with health insurance benefits;

3 (C) the large number of health care provid4 ers and health care professionals who provide

5 items or services for which the Federal Govern6 ment makes payments; and

7 (D) the large number of such providers

8 and professionals who have received direct or

9 indirect financial assistance from the Federal

10 Government because of their status as such

11 professionals or providers.

12 (b) APPLICABILITY.—This subtitle shall apply with

13 respect to any medical malpractice liability claim and to

14 any medical malpractice liability action brought in any

15 State or Federal court, except that this subtitle shall not

16 apply to—

17 (1) a claim or action for damages arising from

18 a vaccine-related injury or death to the extent that

19 title XXI of the Public Health Service Act applies to

20 the action; or

21 (2) a claim or action in which the plaintiff’s

22 sole allegation is an allegation of an injury arising

23 from the use of a medical product.

24 (c) PREEMPTION OF STATE LAW.—Subject to section

25 151, this subtitle supersedes State law only to the extent
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1 that State law differs from any provision of law estab2 lished by or under this subtitle. Any issue that is not gov3 erned by any provision of law established by or under this

4 subtitle shall be governed by otherwise applicable State or

5 Federal law.

6 (d) FEDERAL COURT JURISDICTION NOT ESTAB7 LISHED ON FEDERAL QUESTION GROUNDS.—Nothing in

8 this subtitle shall be construed to establish any jurisdiction

9 in the district courts of the United States over medical

10 malpractice liability actions on the basis of sections 1331

11 or 1337 of title 28, United States Code.

12 SEC. 132. DEFINITIONS.

13 As used in this subtitle:

14 (1) ALTERNATIVE DISPUTE RESOLUTION SYS15 TEM; ADR.—The term ‘‘alternative dispute resolution

16 system’’ or ‘‘ADR’’ means a system established by

17 a State that provides for the resolution of medical

18 malpractice liability claims in a manner other than

19 through medical malpractice liability actions.

20 (2) CLAIMANT.—The term ‘‘claimant’’ means

21 any person who alleges a medical malpractice liabil22 ity claim, or, in the case of an individual who is de23 ceased, incompetent, or a minor, the person on

24 whose behalf such a claim is alleged.
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1 (3) ECONOMIC DAMAGES.—The term ‘‘economic

2 damages’’ means damages paid to compensate an in3 dividual for losses for hospital and other medical ex4 penses, lost wages, lost employment, and other pecu5 niary losses.

6 (4) HEALTH CARE PROFESSIONAL.—The term

7 ‘‘health care professional’’ means any individual who

8 provides health care services in a State and who is

9 required by State law or regulation to be licensed or

10 certified by the State to provide such services in the

11 State.

12 (5) HEALTH CARE PROVIDER.—The term

13 ‘‘health care provider’’ means any organization or

14 institution that is engaged in the delivery of health

15 care services in a State and that is required by State

16 law or regulation to be licensed or certified by the

17 State to engage in the delivery of such services in

18 the State.

19 (6) INJURY.—The term ‘‘injury’’ means any ill20 ness, disease, or other harm that is the subject of

21 a medical malpractice liability action or claim.

22 (7) MEDICAL MALPRACTICE LIABILITY AC23 TION.—The term ‘‘medical malpractice liability ac24 tion’’ means a civil action (other than an action in

25 which the plaintiff’s sole allegation is an allegation
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1 of an intentional tort) brought in a State or Federal

2 court against a health care provider or health care

3 professional (regardless of the theory of liability on

4 which the action is based) in which the plaintiff al5 leges a medical malpractice liability claim.

6 (8) MEDICAL MALPRACTICE LIABILITY

7 CLAIM.—The term ‘‘medical malpractice liability

8 claim’’ means a claim in which the claimant alleges

9 that injury was caused by the provision of (or the

10 failure to provide) health care services.

11 (9) MEDICAL PRODUCT.—The term ‘‘medical

12 product’’ means a device (as defined in section

13 201(h) of the Federal Food, Drug, and Cosmetic

14 Act) or a drug (as defined in section 201(g)(1) of

15 the Federal Food, Drug, and Cosmetic Act).

16 (10) NONECONOMIC DAMAGES.—The term

17 ‘‘noneconomic damages’’ means damages paid to

18 compensate an individual for losses for physical and

19 emotional pain, suffering, inconvenience, physical

20 impairment, mental anguish, disfigurement, loss of

21 enjoyment of life, loss of consortium, and other

22 nonpecuniary losses, but does not include punitive

23 damages.

24 (11) SECRETARY.—The term ‘‘Secretary’’

25 means the Secretary of Health and Human Services.
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1 (12) STATE.—The term ‘‘State’’ means each of

2 the several States, the District of Columbia, the

3 Commonwealth of Puerto Rico, the Virgin Islands,

4 Guam, and American Samoa.

5 SEC. 133. EFFECTIVE DATE.

6 (a) IN GENERAL.—Except as provided in subsection

7 (b) and sections 149, 172, and 173, this subtitle shall

8 apply with respect to claims accruing or actions brought

9 on or after the expiration of the 3-year period that begins

10 on the date of the enactment of this Act.

11 (b) EXCEPTION FOR STATES REQUESTING EARLIER

12 IMPLEMENTATION OF REFORMS.—

13 (1) APPLICATION.—A State may submit an ap14 plication to the Secretary requesting the early imple15 mentation of this subtitle with respect to claims or

16 actions brought in the State.

17 (2) DECISION BY SECRETARY.—The Secretary

18 shall issue a response to a State’s application under

19 paragraph (1) not later than 90 days after receiving

20 the application. If the Secretary determines that the

21 State meets the requirements of this subtitle at the

22 time of submitting its application, the Secretary

23 shall approve the State’s application, and this sub24 title shall apply with respect to actions brought in

25 the State on or after the expiration of the 90-day
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1 period that begins on the date the Secretary issues

2 the response. If the Secretary denies the State’s ap3 plication, the Secretary shall provide the State with

4 a written explanation of the grounds for the deci5 sion.

6 PART 2—UNIFORM STANDARDS FOR MEDICAL

7 MALPRACTICE LIABILITY ACTIONS

8 SEC. 141. STATUTE OF LIMITATIONS.

9 (a) IN GENERAL.—No medical malpractice liability

10 claim may be brought after the expiration of the 2-year

11 period that begins on the date the alleged injury that is

12 the subject of the action should reasonably have been dis13 covered, but in no event after the expiration of the 4-year

14 period that begins on the date the alleged injury occurred.

15 (b) EXCEPTION FOR MINORS.—In the case of an al16 leged injury suffered by a minor who has not attained 6

17 years of age, no medical malpractice liability claim may

18 be brought after the expiration of the 2-year period that

19 begins on the date the alleged injury that is the subject

20 of the action should reasonably have been discovered, but

21 in no event after the date on which the minor attains 10

22 years of age.
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1 SEC. 142. REQUIREMENT FOR INITIAL RESOLUTION OF AC2 TION THROUGH ALTERNATIVE DISPUTE RES3 OLUTION.

4 (a) IN GENERAL.—No medical malpractice liability

5 action may be brought in any State court unless the medi6 cal malpractice liability claim that is the subject of the

7 action has been initially resolved under an alternative dis8 pute resolution system certified by the Secretary under

9 section 162(b).

10 (b) INITIAL RESOLUTION OF CLAIMS UNDER

11 ADR.—For purposes of subsection (a), an action is ‘‘ini12 tially resolved’’ under an alternative dispute resolution

13 system if—

14 (1) the ADR reaches a decision on whether the

15 defendant is liable to the plaintiff for damages; and

16 (2) if the ADR determines that the defendant

17 is liable, the ADR determines the amount of dam18 ages assessed against the defendant.

19 (c) PROCEDURES FOR FILING ACTIONS.—

20 (1) DEADLINE.—No medical malpractice liabil21 ity action may be brought unless the action is filed

22 in a court of competent jurisdiction not later than

23 90 days after an opinion resolving the medical mal24 practice liability claim that is the subject of the ac25 tion is issued under the applicable alternative dis26 pute resolution system.
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1 (2) COURT OF COMPETENT JURISDICTION.—

2 For purposes of paragraph (1), the term ‘‘court of

3 competent jurisdiction’’ means—

4 (A) with respect to actions filed in a State

5 court, the appropriate State trial court; and

6 (B) with respect to actions filed in a Fed7 eral court, the appropriate United States dis8 trict court.

9 (d) STATUS OF ADR DECISION.—The decision

10 reached under an alternative dispute resolution system

11 shall, for purposes of enforcement by a court of competent

12 jurisdiction, have the same status in the court as the ver13 dict of a medical malpractice liability action adjudicated

14 in a State or Federal trial court.

15 (e) TREATMENT OF ADR DECISION.—

16 (1) REQUIREMENTS FOR GOING FORWARD WITH

17 ACTION.—In order to bring a medical malpractice li18 ability action to contest the decision made under the

19 previous alternative dispute resolution system with

20 respect to a medical malpractice liability claim, the

21 party contesting the decision must—

22 (A) show that—

23 (i) the decision was procured by cor24 ruption, fraud, or undue means,
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1 (ii) there was partiality or corruption

2 under the system,

3 (iii) there was other misconduct under

4 the system that materially prejudiced the

5 party’s rights, or

6 (iv) the decision was based on an

7 error of law; or

8 (B) present new evidence before the trier

9 of fact that was not available for presentation

10 under the ADR system.

11 (2) BURDEN OF PROOF.—In any medical mal12 practice liability action, the trier of fact shall uphold

13 the decision made under the previous alternative dis14 pute resolution system with respect to the claim that

15 is the subject of the action unless the party contest16 ing the decision proves by a preponderance of the

17 evidence that the decision was incorrect.

18 SEC. 143. RELATION TO ALTERNATIVE DISPUTE RESOLU19 TION OF FEDERAL AGENCIES.

20 (a) MANDATORY APPLICATION OF FEDERAL ADR IN

21 MALPRACTICE CLAIMS AGAINST UNITED STATES.—Sec22 tion 2672 of title 28, United States Code, is amended by

23 striking the period at the end of the first paragraph and

24 inserting the following: ‘‘, except that each Federal agency

25 shall use arbitration or such alternative means of dispute
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1 resolution to settle any tort claim against the United

2 States consisting of a medical malpractice liability claim

3 (as defined in section 132(8) of the American Consumers

4 Health Care Reform Act of 1992).’’.

5 (b) TRANSMITTAL OF INFORMATION OF MAL6 PRACTICE CLAIMS RESOLVED UNDER FEDERAL ADR.—

7 Section 584 of title 5, United States Code, as added by

8 section 4(b) of the Administrative Dispute Resolution Act

9 (Public Law 101–552), is amended by adding at the end

10 the following new subsection:

11 ‘‘(k) Each agency shall transmit on a regular basis

12 to the Administrator for Health Care Policy and Research

13 information on issues in controversy consisting of medical

14 malpractice liability claims (as defined in section 132(8)

15 of the American Consumers Health Care Reform Act of

16 1992) that are resolved under the agency’s dispute resolu17 tion proceeding under this subchapter, in a manner that

18 assures that the identity of the parties to such proceedings

19 shall not be revealed.’’.

20 SEC. 144. MANDATORY PRE-TRIAL SETTLEMENT CON21 FERENCE.

22 (a) IN GENERAL.—Before the beginning of the trial

23 phase of any medical malpractice liability action, the par24 ties shall attend a conference called by the court for pur-
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1 poses of determining whether grounds exist upon which

2 the parties may negotiate a settlement for the action.

3 (b) REQUIRING PARTIES TO SUBMIT SETTLEMENT

4 OFFERS.—At the conference called pursuant to subsection

5 (a), each party to a medical malpractice liability action

6 shall present an offer of settlement for the action.

7 SEC. 145. CALCULATION AND PAYMENT OF DAMAGES.

8 (a) LIMITATION ON NONECONOMIC DAMAGES.—The

9 total amount of noneconomic damages that may be award10 ed to a plaintiff and the members of the plaintiff’s family

11 for losses resulting from the injury which is the subject

12 of a medical malpractice liability action may not exceed

13 $250,000, regardless of the number of parties against

14 whom the action is brought or the number of actions

15 brought with respect to the injury.

16 (b) TREATMENT OF PUNITIVE DAMAGES.—

17 (1) LIMITATION ON AMOUNT.—The total

18 amount of punitive damages that may be imposed

19 under a medical malpractice liability action may not

20 exceed twice the total of the damages awarded to the

21 plaintiff and the members of the plaintiff’s family.

22 (2) PAYMENTS TO STATE FOR MEDICAL QUAL23 ITY ASSURANCE ACTIVITIES.—

24 (A) IN GENERAL.—Any punitive damages

25 imposed under a medical malpractice liability
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1 action shall be paid to the State in which the

2 action is brought.

3 (B) ACTIVITIES DESCRIBED.—A State

4 shall use amount paid pursuant to subpara5 graph (A) to carry out activities to assure the

6 safety and quality of health care services pro7 vided in the State, including (but not limited

8 to)—

9 (i) licensing or certifying health care

10 professionals and health care providers in

11 the State;

12 (ii) operating alternative dispute reso13 lution systems;

14 (iii) carrying out public education pro15 grams relating to medical malpractice and

16 the availability of alternative dispute reso17 lution systems in the State; and

18 (iv) carrying out programs to reduce

19 malpractice-related costs for retired provid20 ers or other providers volunteering to pro21 vide services in medically underserved

22 areas.

23 (C) MAINTENANCE OF EFFORT.—A State

24 shall use any amounts paid pursuant to sub25 paragraph (A) to supplement and not to replace
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1 amounts spent by the State for the activities

2 described in subparagraph (B).

3 (c) PERIODIC PAYMENTS FOR FUTURE LOSSES.—If

4 more than $100,000 in damages for expenses to be in5 curred in the future is awarded to the plaintiff in a medi6 cal malpractice liability action, the defendant shall provide

7 for payment for such damages on a periodic basis deter8 mined appropriate by the court (based upon projections

9 of when such expenses are likely to be incurred), unless

10 the court determines that it is not in the plaintiff’s best

11 interests to receive payments for such damages on such

12 a periodic basis.

13 (d) MANDATORY OFFSETS FOR DAMAGES PAID BY

14 A COLLATERAL SOURCE.—

15 (1) IN GENERAL.—The total amount of dam16 ages received by a plaintiff in a medical malpractice

17 liability action shall be reduced (in accordance with

18 paragraph (2)) by any other payment that has been

19 or will be made to the individual to compensate the

20 plaintiff for the injury that was the subject of the

21 action, including payment under—

22 (A) Federal or State disability or sickness

23 programs;

24 (B) Federal, State, or private health insur25 ance programs;
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1 (C) private disability insurance programs;

2 (D) employer wage continuation programs;

3 and

4 (E) any other source of payment intended

5 to compensate the plaintiff for such injury.

6 (2) AMOUNT OF REDUCTION.—The amount by

7 which an award of damages to a plaintiff shall be re8 duced under paragraph (1) shall be—

9 (A) the total amount of any payments

10 (other than such award) that have been made

11 or that will be made to the plaintiff to com12 pensate the plaintiff for the injury that was the

13 subject of the action; minus

14 (B) the amount paid by the plaintiff (or by

15 the spouse, parent, or legal guardian of the

16 plaintiff) to secure the payments described in

17 subparagraph (A).

18 SEC. 146. TREATMENT OF ATTORNEY’S FEES AND OTHER

19 COSTS.

20 (a) LIMITATION ON ATTORNEY’S FEES.—If the

21 plaintiff in a medical malpractice liability action has en22 tered into an agreement with the plaintiff’s attorney to

23 pay the attorney’s fees on a contingency basis, the attor24 ney’s fees for the action may not exceed—
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1 (1) 25 percent of the first $150,000 of any

2 award or settlement paid to the plaintiff; or

3 (2) 15 percent of any additional amounts paid

4 to the plaintiff.

5 (b) AWARDING ATTORNEY’S FEES AND OTHER

6 COSTS TO WINNING PARTY.—

7 (1) IN GENERAL.—If the court in a medical

8 malpractice liability action upholds a ruling of the

9 alternative dispute resolution system with respect to

10 whether or not a health care professional or health

11 care provider committed malpractice or with respect

12 to the amount of damages awarded, the court shall

13 require the party that contested the ruling to pay to

14 the opposing party the costs incurred by the oppos15 ing party under the action, including attorney’s fees,

16 fees paid to expert witnesses, and other litigation ex17 penses (but not including court costs, filing fees, or

18 other expenses paid directly by the party to the

19 court, or any fees or costs associated with the reso20 lution of the claim that is the subject of the action

21 under the alternative dispute resolution system).

22 (2) PERMITTING COURT TO WAIVE OR MODIFY

23 IMPOSITION OF COSTS.—A court may issue a written

24 order waiving or modifying the application of para25 graph (1) to a party if the court finds that the appli-
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1 cation of such paragraph to the party would con2 stitute an undue hardship, or if the medical mal3 practice liability action raised a novel issue of law.

4 The order shall specify the grounds for the court’s

5 decision to waive or modify the application of such

6 paragraph.

7 SEC. 147. JOINT AND SEVERAL LIABILITY.

8 The liability of each defendant in a medical mal9 practice liability action shall be several only and shall not

10 be joint, and each defendant shall be liable only for the

11 amount of damages allocated to the defendant in direct

12 proportion to the defendant’s percentage of responsibility

13 (as determined by the trier of fact).

14 SEC. 148. UNIFORM STANDARD FOR DETERMINING NEG15 LIGENCE.

16 A defendant in a medical malpractice liability action

17 may not be found to have acted negligently unless the de18 fendant’s conduct at the time of providing the health care

19 services that are the subject of the action was not reason20 able.

21 SEC. 149. APPLICATION OF MEDICAL PRACTICE GUIDE22 LINES IN MALPRACTICE LIABILITY ACTIONS.

23 (a) USE OF GUIDELINES AS AFFIRMATIVE DE24 FENSE.—In any medical malpractice liability action, it

25 shall be a complete defense to any allegation that the de-
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1 fendant was negligent that, in the provision of (or the fail2 ure to provide) the services that are the subject of the

3 action, the defendant followed the appropriate practice

4 guideline.

5 (b) RESTRICTION ON GUIDELINES CONSIDERED AP6 PROPRIATE.—

7 (1) GUIDELINES SANCTIONED BY SEC8 RETARY.—For purposes of subsection (a), a practice

9 guideline may not be considered appropriate with re10 spect to actions brought during a year unless the

11 Secretary has sanctioned the use of the guideline for

12 purposes of an affirmative defense to medical mal13 practice liability actions brought during the year in

14 accordance with paragraph (2) or (3).

15 (2) PROCESS FOR SANCTIONING GUIDELINES.—

16 Not less frequently than October 1 of each year (be17 ginning with 1993), the Secretary, shall review the

18 practice guidelines and standards developed by the

19 Administrator for Health Care Policy and Research

20 pursuant to section 1142 of the Social Security Act,

21 and shall sanction those guidelines which the Sec22 retary considers appropriate for purposes of an af23 firmative defense to medical malpractice liability ac24 tions brought during the next calendar year as ap-
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1 propriate practice guidelines for purposes of sub2 section (a).

3 (3) USE OF STATE GUIDELINES.—Upon the ap4 plication of a State, the Secretary may sanction

5 practice guidelines selected by the State for purposes

6 of an affirmative defense to medical malpractice li7 ability actions brought in the State as appropriate

8 practice guidelines for purposes of subsection (a) if

9 the guidelines meet such requirements as the Sec10 retary may impose.

11 (c) PROHIBITING APPLICATION OF FAILURE TO FOL12 LOW GUIDELINES AS PRIMA FACIE EVIDENCE OF NEG13 LIGENCE.—No plaintiff in a medical malpractice liability

14 action may be deemed to have presented prima facie evi15 dence that a defendant was negligent solely by showing

16 that the defendant failed to follow the appropriate practice

17 guideline.

18 SEC. 150. SPECIAL PROVISION FOR CERTAIN OBSTETRIC

19 SERVICES.

20 (a) IMPOSITION OF HIGHER STANDARD OF PROOF.—

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

22 malpractice liability action relating to services pro23 vided during labor or the delivery of a baby, if the

24 defendant health care professional did not previously

25 treat the plaintiff for the pregnancy, the trier of fact
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1 may not find that the defendant committed mal2 practice and may not assess damages against the de3 fendant unless the malpractice is proven by clear

4 and convincing evidence.

5 (2) APPLICABILITY TO GROUP PRACTICES OR

6 AGREEMENTS AMONG PROVIDERS.—For purposes of

7 paragraph (1), a health care professional shall be

8 considered to have previously treated an individual

9 for a pregnancy if the professional is a member of

10 a group practice whose members previously treated

11 the individual for the pregnancy or is providing serv12 ices to the individual during labor or the delivery of

13 a baby pursuant to an agreement with another pro14 fessional.

15 (b) CLEAR AND CONVINCING EVIDENCE DEFINED.—

16 In subsection (a), the term ‘‘clear and convincing evi17 dence’’ is that measure or degree of proof that will

18 produce in the mind of the trier of fact a firm belief or

19 conviction as to the truth of the allegations sought to be

20 established, except that such measure or degree of proof

21 is more than that required under preponderance of the evi22 dence, but less than that required for proof beyond a rea23 sonable doubt.

24 (c) EFFECTIVE DATE.—This section shall apply to

25 claims accruing or actions brought on or after the expira-
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1 tion of the 2-year period that begins on the date of the

2 enactment of this Act.

3 SEC. 151. PREEMPTION.

4 (a) IN GENERAL.—This part supersedes any State

5 law only to the extent that State law—

6 (1) permits the recovery of a greater amount of

7 damages by a plaintiff;

8 (2) permits the collection of a greater amount

9 of attorneys’ fees by a plaintiff’s attorney;

10 (3) establishes a longer period during which a

11 medical malpractice liability claim may be initiated;

12 or

13 (4) establishes a stricter standard for determin14 ing whether a defendant was negligent or for deter15 mining the liability of defendants described in sec16 tion 150(a) in actions described in such section.

17 (b) EFFECT ON SOVEREIGN IMMUNITY AND CHOICE

18 OF LAW OR VENUE.—Nothing in subsection (a) shall be

19 construed to—

20 (1) waive or affect any defense of sovereign im21 munity asserted by any State under any provision of

22 law;

23 (2) waive or affect any defense of sovereign im24 munity asserted by the United States;
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1 (3) affect the applicability of any provision of

2 the Foreign Sovereign Immunities Act of 1976;

3 (4) preempt State choice-of-law rules with re4 spect to claims brought by a foreign nation or a citi5 zen of a foreign nation; or

6 (5) affect the right of any court to transfer

7 venue or to apply the law of a foreign nation or to

8 dismiss a claim of a foreign nation or of a citizen

9 of a foreign nation on the ground of inconvenient

10 forum.

11 PART 3—REQUIREMENTS FOR STATE ALTERNATIVE

12 DISPUTE RESOLUTION SYSTEMS (ADR)

13 SEC. 161. BASIC REQUIREMENTS FOR ADR.

14 (a) IN GENERAL.—A State’s alternative dispute reso15 lution system meets the requirements of this section if the

16 system—

17 (1) applies to all medical malpractice liability

18 claims under the jurisdiction of the State courts;

19 (2) requires that a written opinion resolving the

20 dispute be issued that contains findings of fact relat21 ing to the dispute;

22 (3) requires individuals who hear and resolve

23 claims under the system to meet such qualifications

24 as the State may require (in accordance with regula25 tions of the Secretary);
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1 (4) is approved by the State or by local govern2 ments in the State;

3 (5) with respect to a State system that consists

4 of multiple dispute resolution procedures—

5 (A) permits the parties to a dispute to se6 lect the procedure to be used for the resolution

7 of the dispute under the system, and

8 (B) if the parties do not agree on the pro9 cedure to be used for the resolution of the dis10 pute, assigns a particular procedure to the par11 ties;

12 (6) provides for the transmittal to the State

13 agency responsible for monitoring or disciplining

14 health care professionals and health care providers

15 of any findings made under the system that such a

16 professional or provider committed malpractice, un17 less, during the 90-day period beginning on the date

18 the system resolves the claim against the profes19 sional or provider, the professional or provider

20 brings a medical malpractice liability action contest21 ing the decision made under the system; and

22 (7) provides for the regular transmittal to the

23 Administrator for Health Care Policy and Research

24 of information on disputes resolved under the sys-
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1 tem, in a manner that assures that the identity of

2 the parties to a dispute shall not be revealed.

3 (b) APPLICATION OF MALPRACTICE LIABILITY

4 STANDARDS TO ALTERNATIVE DISPUTE RESOLUTION.—

5 The provisions of part 2 shall apply with respect to claims

6 brought under a State’s alternative dispute resolution sys7 tem in the same manner as such provisions apply with

8 respect to medical malpractice liability actions brought in

9 the State.

10 SEC. 162. CERTIFICATION OF STATE SYSTEMS.

11 (a) IN GENERAL.—Not later than October 1 of each

12 year (beginning with 1993), the Secretary, in consultation

13 with the Attorney General, shall determine whether a

14 State’s alternative dispute resolution system meets the re15 quirements of this part for the following calendar year.

16 (b) BASIS FOR CERTIFICATION.—The Secretary shall

17 certify a State’s alternative dispute resolution system

18 under this subsection if the Secretary determines under

19 subsection (a) that the system meets the requirements of

20 section 161.

21 SEC. 163. REPORTS ON IMPLEMENTATION AND EFFECTIVE22 NESS OF ALTERNATIVE DISPUTE RESOLU23 TION SYSTEMS.

24 (a) IN GENERAL.—Not later than 5 years after the

25 date of the enactment of this Act, the Secretary shall pre-
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1 pare and submit to Congress a report describing and eval2 uating State alternative dispute resolution systems oper3 ated pursuant to this part.

4 (b) CONTENTS OF REPORT.—The Secretary shall in5 clude in the report prepared and submitted under sub6 section (a)—

7 (1) information on—

8 (A) the effect of such systems on the cost

9 of health care within the State,

10 (B) the impact of such systems on the ac11 cess of individuals to health care within the

12 State, and

13 (C) the effect of such systems on the qual14 ity of health care provided within such State;

15 and

16 (2) to the extent that such report does not pro17 vide information on no-fault systems operated by

18 States as alternative dispute resolution systems pur19 suant to this part, an analysis of the feasibility and

20 desirability of establishing a system under which

21 medical malpractice liability claims shall be resolved

22 on a no-fault basis.
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1 PART 4—OTHER REQUIREMENTS AND PROGRAMS

2 SEC. 171. FACILITATING DEVELOPMENT AND USE OF

3 MEDICAL PRACTICE GUIDELINES.

4 (a) INCREASE IN AUTHORIZATION OF APPROPRIA5 TIONS.—Section 1142(i)(1) of the Social Security Act (42

6 U.S.C. 1320b–12(i)(1)) is amended by striking subpara7 graphs (D) and (E) and inserting the following:

8 ‘‘(D) $158,000,000 for fiscal year 1993 (of

9 which $10,000,000 shall be used for sanction10 ing practice guidelines for purposes of an af11 firmative defense in medical malpractice liabil12 ity actions);

13 ‘‘(E) $200,000,000 for fiscal year 1994 (of

14 which $20,000,000 shall be used for sanction15 ing practice guidelines for purposes of an af16 firmative defense in medical malpractice liabil17 ity actions); and

18 ‘‘(F) $20,000,000 for fiscal year 1995, to

19 be used for sanctioning practice guidelines for

20 purposes of an affirmative defense in medical

21 malpractice liability actions.’’.

22 (b) CONSIDERATION OF MALPRACTICE LIABILITY

23 DATA IN DEVELOPING AND UPDATING GUIDELINES.—

24 Section 1142(c)(5) of such Act (42 U.S.C. 1320b–

25 12(c)(5)) is amended by striking ‘‘claims data’’ and all
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1 that follows through ‘‘patients’’ and inserting the follow2 ing: ‘‘claims data, data on clinical and functional status

3 of patients, and data on medical malpractice liability ac4 tions’’.

5 (c) DEVELOPMENT OF REPORTING FORMS FOR

6 STATE ADR SYSTEMS.—The Secretary, in consultation

7 with the Administrator for Health Care Policy and Re8 search, shall develop a standard reporting form to be used

9 by State alternative dispute resolution systems in trans10 mitting information to the Administrator pursuant to sec11 tion 161(a)(6) on disputes resolved under such systems.

12 (d) STUDY OF EFFECT OF GUIDELINES ON MEDICAL

13 MALPRACTICE.—

14 (1) STUDY.—The Secretary shall conduct a

15 study of the effect of the use of the medical practice

16 guidelines developed by the Administrator for Health

17 Care Policy and Research on the incidence of and

18 the costs associated with medical malpractice.

19 (2) REPORTS.—(A) Not later than 1 year after

20 the date of the enactment of this Act, the Secretary

21 shall submit an interim report to Congress describ22 ing the availability and use of medical practice

23 guidelines and the aggregate costs associated with

24 medical malpractice.
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1 (B) Not later than 5 years after the date of the

2 enactment of this Act, the Secretary shall submit a

3 report to Congress on the study conducted under

4 paragraph (1), together with recommendations re5 garding expanding the use of medical practice guide6 lines for determining the liability of health care pro7 fessionals and health care providers for medical mal8 practice.

9 SEC. 172. PERMITTING STATE PROFESSIONAL SOCIETIES

10 TO PARTICIPATE IN DISCIPLINARY ACTIVI11 TIES.

12 (a) ROLE OF PROFESSIONAL SOCIETIES.—Notwith13 standing any other provision of State or Federal law, a

14 State agency responsible for the conduct of disciplinary

15 actions for a type of health care practitioner may enter

16 into agreements with State or county professional societies

17 of such type of health care practitioner to permit such so18 cieties to participate in the licensing of such health care

19 practitioner, and to review any health care malpractice ac20 tion, health care malpractice claim or allegation, or other

21 information concerning the practice patterns of any such

22 health care practitioner. Any such agreement shall comply

23 with subsection (b).

24 (b) REQUIREMENTS OF AGREEMENTS.—Any agree25 ment entered into under subsection (a) for licensing activi-
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1 ties or the review of any health care malpractice action,

2 health care malpractice claim or allegation, or other infor3 mation concerning the practice patterns of a health care

4 practitioner shall provide that—

5 (1) the health care professional society conducts

6 such activities or review as expeditiously as possible;

7 (2) after the completion of such review, such so8 ciety shall report its findings to the State agency

9 with which it entered into such agreement;

10 (3) the conduct of such activities or review and

11 the reporting of such findings be conducted in a

12 manner which assures the preservation of confiden13 tiality of health care information and of the review

14 process; and

15 (4) no individual affiliated with such society is

16 liable for any damages or injury directly caused by

17 the individual’s actions in conducting such activities

18 or review.

19 (c) AGREEMENTS NOT MANDATORY.—Nothing in

20 this section may be construed to require a State to enter

21 into agreements with societies described in subsection (a)

22 to conduct the activities described in such subsection.

23 (d) EFFECTIVE DATE.—This section shall take effect

24 2 years after the date of the enactment of this Act.
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1 SEC. 173. REQUIREMENTS FOR RISK MANAGEMENT PRO2 GRAMS.

3 (a) REQUIREMENTS FOR PROVIDERS.—Each State

4 shall require each health care professional and health care

5 provider providing services in the State to participate in

6 a risk management program to prevent and provide early

7 warning of practices which may result in injuries to pa8 tients or which otherwise may endanger patient safety.

9 (b) REQUIREMENTS FOR INSURERS.—Each State

10 shall require each entity which provides health care profes11 sional or provider liability insurance to health care profes12 sionals and health care providers in the State to—

13 (1) establish risk management programs based

14 on data available to such entity or sanction pro15 grams of risk management for health care profes16 sionals and health care providers provided by other

17 entities; and

18 (2) require each such professional or provider,

19 as a condition of maintaining insurance, to partici20 pate in one program described in paragraph (1) at

21 least once in each 3-year period.

22 (c) EFFECTIVE DATE.—This section shall take effect

23 2 years after the date of the enactment of this Act.

24 SEC. 174. GRANTS FOR MEDICAL SAFETY PROMOTION.

25 (a) RESEARCH ON MEDICAL INJURY PREVENTION

26 AND COMPENSATION.
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1 (1) IN GENERAL.—The Secretary shall make

2 grants for the conduct of basic research in the pre3 vention of and compensation for injuries resulting

4 from health care professional or health care provider

5 malpractice, and research of the outcomes of health

6 care procedures.

7 (2) PREFERENCE FOR RESEARCH ON CERTAIN

8 ACTIVITIES.—In making grants under paragraph

9 (1), the Secretary shall give preference to applica10 tions for grants to conduct research on the behavior

11 of health care providers and health care profes12 sionals in carrying out their professional duties and

13 of other participants in systems for compensating in14 dividuals injured by medical malpractice, the effects

15 of financial and other incentives on such behavior,

16 the determinants of compensation system outcomes,

17 and the costs and benefits of alternative compensa18 tion policy options.

19 (3) APPLICATION.—The Secretary may not

20 make a grant under paragraph (1) unless an appli21 cant submits an application to the Secretary at such

22 time, in such form, in such manner, and containing

23 such information as the Secretary may require.

24 (b) GRANTS FOR LICENSING AND DISCIPLINARY AC25 TIVITIES.—
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1 (1) IN GENERAL.—The Secretary shall make

2 grants to States to assist States in improving the

3 State’s ability to license and discipline health care

4 professionals.

5 (2) USES FOR GRANTS.—A State may use a

6 grant awarded under subsection (a) to develop and

7 implement improved mechanisms for monitoring the

8 practices of health care professionals or for conduct9 ing disciplinary activities.

10 (3) TECHNICAL ASSISTANCE.—The Secretary

11 shall provide technical assistance to States receiving

12 grants under paragraph (1) to assist them in evalu13 ating their medical practice acts and procedures and

14 to encourage the use of efficient and effective early

15 warning systems and other mechanisms for detecting

16 practices which endanger patient safety and for dis17 ciplining health care professionals.

18 (4) APPLICATIONS.—The Secretary may not

19 make a grant under paragraph (1) unless the appli20 cant submits an application to the Secretary at such

21 time, in such form, in such manner, and containing

22 such information as the Secretary shall require.

23 (c) GRANTS FOR PUBLIC EDUCATION PROGRAMS.—

24 (1) IN GENERAL.—The Secretary shall make

25 grants to States and to local governments, private
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1 nonprofit organizations, and health professional

2 schools (as defined in paragraph (3)) for—

3 (A) educating the general public about the

4 appropriate use of health care and realistic ex5 pectations of medical intervention;

6 (B) educating the public about the re7 sources and role of health care professional li8 censing and disciplinary boards in investigating

9 claims of incompetence or health care mal10 practice; and

11 (C) developing programs of faculty train12 ing and curricula for educating health care pro13 fessionals in quality assurance, risk manage14 ment, and medical injury prevention.

15 (2) APPLICATIONS.—The Secretary may not

16 make a grant under paragraph (1) unless the appli17 cant submits an application to the Secretary at such

18 time, in such form, in such manner, and containing

19 such information as the Secretary shall require.

20 (3) HEALTH PROFESSIONAL SCHOOL DE21 FINED.—In paragraph (1), the term ‘‘health profes22 sional school’’ means a school of nursing (as defined

23 in section 853(2) of the Public Health Service Act)

24 or a school or program described in section 799(1)

25 of such Act.
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1 (d) AUTHORIZATION OF APPROPRIATIONS.—There

2 are authorized to be appropriated not more than

3 $15,000,000 for each of the first 5 fiscal years beginning

4 on or after the date of the enactment of this Act for grants

5 under this section.

6 SEC. 175. STUDY OF BARRIERS TO VOLUNTARY SERVICE BY

7 PHYSICIANS.

8 (a) STUDY.—The Secretary shall conduct a study to

9 determine the factors preventing or discouraging physi10 cians (whether practicing or retired) from volunteering to

11 provide health care services in medically underserved

12 areas.

13 (b) REPORTS.—(1) Not later than 1 year after the

14 date of the enactment of this Act, the Secretary shall sub15 mit an interim report to Congress on the study conducted

16 under subsection (a), together with the Secretary’s rec17 ommendations for actions to increase the number of physi18 cians volunteering to provide health care services in medi19 cally underserved areas.

20 (2) Not later than 5 years after the date of the enact21 ment of this Act, the Secretary shall submit a final report

22 to Congress on the study conducted under subsection (a)

23 (taking into account the effects of this subtitle on the inci24 dence and costs of medical malpractice), together with the

25 Secretary’s recommendations for actions to increase the
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1 number of physicians volunteering to provide health care

2 services in medically underserved areas.

3 Subtitle E—Medical Education

4 Reform

5 SEC. 181. LIMITATION ON MEDICARE HOSPITAL PAYMENT

6 FOR DIRECT AND INDIRECT GRADUATE MED7 ICAL EDUCATION SUPPORT AND FEDERAL

8 ASSISTANCE FOR INSURED MEDICAL STU9 DENT LOANS FOR NON-PRIMARY CARE PHY10 SICIANS.

11 (a) MEDICARE DIRECT GRADUATE MEDICAL EDU12 CATION FUNDING.—Section 1886(h) of the Social Secu13 rity Act (42 U.S.C. 1395ww(h)) is amended—

14 (1) in paragraph (1), by inserting ‘‘subject to

15 paragraph (6),’’ after ‘‘1861(v),’’, and

16 (2) by adding at the end the following new

17 paragraph:

18 ‘‘(6) TRANSITION TO EQUAL ASSISTANCE FOR

19 PRIMARY CARE.—

20 ‘‘(A) PLAN.—The Secretary shall develop a

21 plan for adjusting payments made under this

22 section in a manner that—

23 ‘‘(i) results, for each fiscal year begin24 ning more than 10 years after the date of

25 the enactment of this paragraph, in aggre-
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1 gate expenditures under this subsection for

2 approved medical residency training pro3 grams in primary care fields equal to 50

4 percent of the aggregate expenditures

5 under this subsection for all training pro6 grams, and

7 ‘‘(ii) does not result in expenditures

8 under this section exceeding the expendi9 tures that would otherwise have been made

10 under this subsection without regard to

11 this paragraph.

12 Within 1 year after the date of the enactment

13 of this paragraph, the Secretary shall submit a

14 report to Congress on the plan developed under

15 this subparagraph.

16 ‘‘(B) IMPLEMENTATION.—Unless the Con17 gress otherwise provides by law, the Secretary

18 is authorized to implement the plan developed

19 under subparagraph (A).’’.

20 (b) MEDICARE INDIRECT MEDICAL EDUCATION

21 FUNDING.—Section 1886(d)(5)(B) of such Act is amend22 ed by adding at the end the following new clause:

23 ‘‘(v) Notwithstanding the previous provisions of

24 this subparagraph, the Secretary shall develop a
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1 plan for adjusting additional payments made under

2 this subparagraph in a manner that—

3 ‘‘(I) results, for each fiscal year beginning

4 more than 10 years after the date of the enact5 ment of this clause, in aggregate expenditures

6 under this subparagraph for indirect costs of

7 medical education of physicians in primary care

8 fields equal to 50 percent of the aggregate addi9 tional payments under this subparagraph, and

10 ‘‘(II) does not result in additional pay11 ments under this subparagraph exceeding the

12 payments that would otherwise have been made

13 under this subparagraph without regard to this

14 clause.

15 Within 1 year after the date of the enactment of this

16 clause, the Secretary shall submit a report to Con17 gress on the plan developed under this clause. Un18 less the Congress otherwise provides by law, the Sec19 retary is authorized to implement the plan developed

20 under this clause.’’.

21 (c) INSURED STUDENT LOANS.—Section 702 of the

22 Public Health Service Act is amended by adding at the

23 end the following new subsection:

24 ‘‘(d)(1) The Secretary shall develop and implement

25 a plan for the insuring of loans under this subpart in a
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1 manner that results in aggregate new loans made for each

2 fiscal year beginning more than 10 years after the date

3 of the enactment of this subsection and for installments

4 with respect to such loans pursuant to lines of credit under

5 this subpart for students at schools of medicine for stu6 dents in primary care fields equal to 50 percent of the

7 aggregate of such loans and installments for students in

8 any medical field at such schools of medicine.

9 ‘‘(2) Within 1 year after the date of the enactment

10 of this subsection, the Secretary shall submit a report to

11 Congress on the plan developed under paragraph (1). Un12 less the Congress otherwise provides by law, the Secretary

13 is authorized to implement the plan developed under para14 graph (1).’’.

15 SEC. 182. STATE COMPREHENSIVE HEALTH PROFESSIONS

16 EDUCATION PLANS.

17 Each State shall develop a comprehensive plan to

18 identify the health personnel needs of the residents of the

19 State, addressing shortages of and specialty requirements

20 for health care providers.

21 Subtitle F—Public Delivery System

22 SEC. 183. IDENTIFICATION OF MEDICALLY UNDERSERVED

23 POPULATIONS.

24 The Secretary of Health and Human Services,

25 through the Public Health Service, shall develop national
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1 standards to identify medically underserved populations

2 and the areas in which such populations are.

3 SEC. 184. STATE COMPREHENSIVE PLANS FOR MEDICALLY

4 UNDERSERVED POPULATIONS.

5 (a) IN GENERAL.—Each State shall develop a com6 prehensive plan for addressing the health care needs of

7 populations identified, under the standards established

8 under section 183, as medically underserved.

9 (b) USE OF RESOURCES.—Each such plan shall uti10 lize, in the most efficient manner possible, the current re11 sources of Federal, State, and local governments, includ12 ing local public health clinics.

13 SEC. 185. PUBLICLY-FUNDED HEALTH CENTERS SERVING

14 MEDICALLY UNDERSERVED AREAS.

15 (a) OBJECTIVE.—It is the policy of the Congress to

16 provide for at least one publicly-funded health center in

17 each area identified, under section 186, as serving medi18 cally underserved populations.

19 (b) ADDITIONAL AUTHORIZATION OF APPROPRIA20 TIONS.—In addition to the amounts otherwise authorized,

21 there are authorized to be appropriated such additional

22 amounts to provide for such additional grants under sec23 tions 329, 330, and 340 of the Public Health Service Act

24 (relating to migrant health, community health centers,

25 and grant programs for certain health services for the
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1 homeless) as may be required to carry out the policy stat2 ed in subsection (a).

3 SEC. 186. OFFICE OF DISEASE PREVENTION AND HEALTH

4 PROMOTION.

5 (a) IN GENERAL.—Section 1701(a)(11) of the Public

6 Health Service Act (42 U.S.C. 300u(a)(11)) is amended—

7 (1) by striking ‘‘and’’ at the end of subpara8 graph (C),

9 (2) by redesignating subparagraph (D) as sub10 paragraph (E), and

11 (3) by inserting after subparagraph (C) the fol12 lowing new subparagraph:

13 ‘‘(D) promote individual responsibility in

14 personal health care and in the use of valuable

15 health care resources; and’’.

16 (b) FUNDING.—It is the sense of the Congress that

17 the amounts that are appropriated pursuant to section

18 1701(b) of the Public Health Service Act should be in19 creased for fiscal year 1993 and each fiscal year thereafter

20 in a manner sufficient to permit the Office of Disease Pre21 vention and Health Promotion to carry out—

22 (1) its duties under section 1701(a)(1)(D) of

23 such Act (as amended by subsection (a)), and

24 (2) the activities for which additional funding

25 was requested in the President’s request for appro-
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1 priations for the Office for fiscal year 1993, includ2 ing implementation the initiatives to ‘‘Put Preven3 tion into Practice’’, for ‘‘Healthy Schools’’, and for

4 ‘‘Health Communication Technology’’.

5 SEC. 187. CONSOLIDATION OF FEDERAL ACTIVITIES RELAT6 ING TO NUTRITION.

7 (a) IN GENERAL.—The President shall provide for

8 the coordination and, to the extent appropriate, consolida9 tion of all Federal activities and programs relating to nu10 trition.

11 (b) PURPOSES.—The coordination and consolidation

12 required by subsection (a) shall—

13 (1) eliminate confusing and contradictory Fed14 eral policies with respect to nutritional issues,

15 (2) place greater emphasis on the relevance of

16 nutrition to disease prevention and health pro17 motion, and

18 (3) promote public education on the effects of

19 nutrition on personal health.

20 SEC. 188. DEMONSTRATION PROJECTS ON HEALTH CARE

21 DECISIONMAKING.

22 (a) IN GENERAL.—Not later than one year after the

23 date of the enactment of this Act, the Secretary of Health

24 and Human Services shall establish under section

25 1701(a)(11) of the Public Health Service Act at least 4
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1 demonstration projects to test alternative ways of promot2 ing informed decisionmaking by providers and patients on

3 the appropriate utilization of expensive life-sustaining

4 technology.

5 (b) PRIORITIES.—The demonstration projects under

6 subsection (a) shall include at least the following dem7 onstrations projects:

8 (1) A demonstration project, based on the

9 ‘‘Health Decisions U.S.A.’’ demonstration, to edu10 cate the public about the implications of utilizing

11 new medical technologies and to measure the effects

12 of such education on individual behavior.

13 (2) A demonstration project to improve the va14 lidity and reliability of computerized data systems

15 designed to permit patients and their families to as16 sess the likely outcomes of using particular medical

17 technologies.

18 (3) A demonstration project to test the efficacy

19 of educating individuals in various settings, includ20 ing—

21 (A) the home,

22 (B) a physician’s office, and

23 (C) upon admission to a health care facil24 ity,
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1 about their rights under State law to make decisions

2 regarding their medical treatment.

3 (4) A demonstration project that provides for

4 participation by experts on medical ethics in the de5 velopment of clinical practice guidelines.

6 (c) REPORTS AND EVALUATIONS.—The Secretary

7 shall submit to Congress—

8 (1) an annual report on the status of each dem9 onstration project conducted under this section, and

10 (2) a final report to the Congress on each such

11 project not later than one year after the close of the

12 project.

13 The reports required by paragraph (2) shall be accom14 panied by such recommendations for legislation as the

15 Secretary determines to be appropriate to promote in16 formed decisionmaking by physicians and patients on the

17 utilization of medical technologies.

18 (d) FUNDING.—There are authorized to be appro19 priated such sums as may be necessary to carry out this

20 section.

21 SEC. 189. ACTION PLAN ON HEALTH PROMOTION AND DIS22 EASE PREVENTION.

23 (a) IN GENERAL.—The Secretary of Health and

24 Human Services shall develop an action plan for reducing

25 the incidence in the United States of the following health
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1 risk factors which have been identified in the publication

2 Healthy People, 2000:

3 (1) Smoking.

4 (2) High blood pressure.

5 (3) High blood cholesterol.

6 (4) Overweight.

7 (5) Sedentary lifestyle.

8 (6) High fat diet.

9 (7) Inadequate childhood immunization.

10 (8) Heavy use of alcohol.

11 (9) Failure to use seat belts.

12 (b) REVIEW OF FEDERAL POLICIES.—In developing

13 the action plan under subsection (a), the Secretary shall

14 identify current Federal policies that may hinder attain15 ment of the goals of the plan and shall consult with the

16 agencies responsible for the implementation of these poli17 cies.

18 (c) REPORTS.—The Secretary shall—

19 (1) transmit the action plan required by sub20 section (a) to the Congress not later than one year

21 after the date of the enactment of this Act, and

22 (2) submit to the Congress at least every 2

23 years thereafter a report that—
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1 (A) describes progress made toward reduc2 ing the incidence of the health risk factors spec3 ified in such subsection, and

4 (B) includes recommendations for such

5 regulatory and legislative changes and other ac6 tions that should be taken to reduce further the

7 incidence of these health risk factors.

8 Subtitle G—Public Disclosure

9 SEC. 191. DEVELOPMENT OF NATIONAL STANDARDS FOR

10 DISCLOSURE OF HEALTH CARE INFORMA11 TION; IMPLEMENTATION BY STATES.

12 (a) NATIONAL STANDARDS.—

13 (1) IN GENERAL.—The Secretary of Health and

14 Human Services shall establish standards for the

15 collection and disclosure of health care data pursu16 ant to this subtitle.

17 (2) ELEMENTS OF STANDARDS.—In establish18 ing such standards, the Secretary shall develop—

19 (A) a computerized system for use in the

20 collection, analysis, and disclosure of data col21 lected pursuant to this subtitle;

22 (B) a uniform claims format for use by all

23 data sources and providers in billing for health

24 care services for which data are required to be

25 submitted pursuant to this subtitle;
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1 (C) a mechanism—

2 (i) to avoid duplicative reporting of

3 data for health care services furnished

4 under titles XVIII and XIX of the Social

5 Security Act, and

6 (ii) to coordinate and integrate the

7 data collected for such services with the

8 data collected for other health care serv9 ices; and

10 (D) a methodology for use in measuring

11 the quality and effectiveness of health care serv12 ices furnished by providers.

13 (b) STATE IMPLEMENTATION.—

14 (1) APPLICATION.—Any State desiring to per15 form the data collection and disclosure functions

16 specified in this subtitle for data sources and provid17 ers in the State may submit an application to the

18 Secretary. Such application shall be in a form and

19 manner specified by the Secretary.

20 (2) APPROVAL AND FINANCIAL ASSISTANCE.—If

21 the Secretary determines that the State has dem22 onstrated in its application that it has the ability to

23 carry out such functions and to comply with the

24 standards and other requirements of this subtitle—
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1 (A) the Secretary shall approve such appli2 cation,

3 (B) the State shall become responsible for

4 the performance of the data collection and dis5 closure functions specified in this subtitle for

6 data sources and providers in the State, and

7 (C) the Secretary shall provide the State

8 with financial assistance in such amount as is

9 reasonably sufficient to carry out such functions

10 in the State.

11 (3) IMPLEMENTATION IN CASE OF NO QUALIFY12 ING STATE.—If, with respect to a State, an applica13 tion has not been approved under paragraph (2), the

14 Secretary shall become responsible for the perform15 ance of the data collection and disclosure functions

16 specified in this subtitle for data sources and provid17 ers in the State.

18 (4) RESPONSIBLE GOVERNMENTAL ENTITY DE19 FINED.—In this subtitle, the term ‘‘responsible gov20 ernmental entity’’ means for data sources and pro21 viders in a State—

22 (A) the State, if it has been granted such

23 responsibility under paragraph (2), or

24 (B) the Secretary, if the State has not

25 been granted such responsibility.
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1 (c) AUTHORIZATION OF APPROPRIATIONS.—There

2 are authorized to be appropriated such sums as may be

3 necessary to carry out this subtitle (including providing

4 financial assistance to qualifying States under subsection

5 (b)(2)).

6 SEC. 192. DATA SUBMISSION AND COLLECTION.

7 (a) SUBMISSION OF DATA.—The responsible govern8 mental entity shall collect, and data sources shall submit

9 to such entity, all data required in this section, according

10 to uniform submission formats, coding systems and other

11 technical specifications necessary to render the incoming

12 data substantially valid, consistent, compatible and man13 ageable using electronic data processing according to data

14 submission schedules, such schedules to avoid, to the ex15 tent possible, submission of identical data from more than

16 one data source, established and promulgated by the Sec17 retary pursuant to section 191(a)(2).

18 (b) UNIFORM CLAIMS FORMAT.—The Secretary shall

19 adopt, within 180 days of the date of the enactment of

20 this Act, a uniform claims format. The Secretary shall fur21 nish such format to all data sources and the form shall

22 be utilized and maintained by all data sources for all serv23 ices covered under this subtitle. Such form shall have such

24 fields as may be necessary to provide all of the data set

25 forth in subsections (c) and (d).
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1 (c) DATA ELEMENTS.—For each covered service, the

2 responsible governmental entity shall collect the following

3 data elements:

4 (1) Uniform patient identifier, continuous

5 across multiple episodes and providers.

6 (2) Patient date of birth.

7 (3) Patient sex.

8 (4) Patient ZIP Code number.

9 (5) Date of admission.

10 (6) Date of discharge.

11 (7) Principal and up to four secondary diag12 noses by standard code.

13 (8) Principal procedure by standard code and

14 date.

15 (9) Up to three secondary procedures by stand16 ard codes and dates.

17 (10) Uniform health care facility identifier, con18 tinuous across episodes, patients, and providers.

19 (11) Uniform identifier of admitting physician,

20 by unique physician identification number estab21 lished by the Secretary, continuous across episodes,

22 patients, and providers.

23 (12) Uniform identifier of consulting physi24 cians, by unique physician identification number es-
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1 tablished by the Secretary, continuous across epi2 sodes, patients, and providers.

3 (13) Total charges of health care facility, seg4 regated into major categories, including room and

5 board, radiology, laboratory, operating room, drugs,

6 medical supplies and other goods and services ac7 cording to guidelines specified by the Secretary.

8 (14) Actual payments to health care facility,

9 segregated, if available, according to the categories

10 specified in paragraph (13).

11 (15) Charges of each physician or professional

12 rendering service relating to an incident of hos13 pitalization or treatment in an ambulatory service

14 facility.

15 (16) actual payments to each physician or pro16 fessional rendering service pursuant to paragraph

17 (15).

18 (17) Uniform identifier of primary payor.

19 (18) ZIP Code number of facility where health

20 care service is rendered.

21 (19) Uniform identifier for payor group con22 tract number.

23 (20) Patient discharge status.
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1 (21) Provider service effectiveness and provider

2 quality pursuant to section 191(a)(2)(D) and sub3 section (d).

4 (d) PROVIDER QUALITY AND PROVIDER SERVICE EF5 FECTIVENESS DATA ELEMENTS.—In carrying out its duty

6 to collect data on provider quality and provider service ef7 fectiveness under subsection (c)(21), the responsible gov8 ernmental entity shall utilize the methodology developed

9 under section 191(a)(2)(D).

10 (e) RESERVE FIELD UTILIZATION AND ADDITION OR

11 DELETION OF DATA ELEMENTS.—The Secretary shall in12 clude in the uniform claims format a reserve field. The

13 Secretary may utilize the reserve field by adding other

14 data elements beyond those specified in subsection (d) or

15 the Secretary may delete data elements from the format

16 pursuant to regulation after obtaining a cost-benefit anal17 ysis of the proposed addition or deletion which shall in18 clude the cost to data sources of any proposed additions.

19 (f) OTHER DATA REQUIRED TO BE SUBMITTED.—

20 Providers are hereby required to submit and the respon21 sible governmental entity shall collect the following addi22 tional data, if such data is not available to the entity from

23 public records:
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1 (1) Audited annual financial reports of all hos2 pitals and ambulatory service facilities providing cov3 ered services.

4 (2) Additional data including data which can be

5 used to provide at least the following information:

6 (A) The incidence of medical and surgical

7 procedures in the population for individual pro8 viders.

9 (B) Physicians who provide covered serv10 ices and accept medical assistance patients.

11 (C) Physicians who provide covered serv12 ices and accept medicare assignment as full

13 payment.

14 (D) Status of licensure and accreditation

15 of hospitals and ambulatory service facilities.

16 (E) Mortality rates for specified diagnoses

17 and treatments, grouped by severity, for indi18 vidual providers.

19 (F) Rates of infection for specified diag20 noses and treatments, grouped by severity, for

21 individual providers.

22 (G) Morbidity rates for specified diagnoses

23 and treatments, grouped by severity, for indi24 vidual providers.
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1 (H) Readmission rates for specified diag2 noses and treatments, grouped by severity, for

3 individual providers.

4 (I) Rate of incidence of postdischarge pro5 fessional care for selected diagnoses and treat6 ments, grouped by severity, for individual pro7 viders.

8 (g) ALLOWANCE FOR CLARIFICATION OR DIS9 SENTS.—The responsible governmental entity shall main10 tain a file of written statements submitted by data sources

11 who wish to provide an explanation of data that they feel

12 might be misleading or misinterpreted. The entity shall

13 provide access to such file to any person and shall, where

14 practical, in the entity’s reports and data files indicate the

15 availability of such statements. When the entity agrees

16 with such statements, the entity shall correct the appro17 priate data and comments in its data files and subsequent

18 reports.

19 (h) AVAILABILITY OF DATA.—Nothing in this sub20 title shall prohibit a purchaser from obtaining from its

21 health care insurer, nor relieve such a health care insurer

22 from the obligation of providing such purchaser, on terms

23 consistent with past practices, data previously provided or

24 additional data not currently provided to such provider by
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1 such insurer pursuant to any existing or future arrange2 ment, agreement, or understanding.

3 SEC. 193. DATA DISSEMINATION AND PUBLICATION.

4 (a) PUBLIC REPORTS.—Subject to the restrictions on

5 access to data in section 194 and utilizing the data col6 lected under section 192 as well as other data, records,

7 and matters of record available to it, the responsible gov8 ernmental entity shall prepare and issue public reports ac9 cording to the following provisions:

10 (1) The responsible governmental entity shall,

11 for every provider and within appropriate geographic

12 areas (approved by the Secretary) and for those in13 patient and outpatient services which, when ranked

14 by order of frequency, account for at least 65 per15 cent of all covered services and which, when ranked

16 by order of total payments account for at least 65

17 percent of total payments, prepare and issue quar18 terly reports that at least provide information on the

19 following:

20 (A) Comparisons among all providers of

21 payments received, charges, population-based

22 admission or incidence rates, and provider serv23 ice effectiveness, such comparisons to be

24 grouped according to diagnosis and severity,
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1 and to identify each provider by name and type

2 or specialty.

3 (B) Comparisons among all providers, ex4 cept physicians, of inpatient and outpatient

5 charges and payments for room and board, an6 cillary services, drugs, equipment and supplies

7 and total services, such comparisons to be

8 grouped according to provider quality and pro9 vider service effectiveness and according to di10 agnosis and severity, and to identify each health

11 care facility by name and type.

12 (C) Until the methodology to measure pro13 vider quality and provider service effectiveness

14 is developed under section 191(a)(2)(D), com15 parisons among all providers, grouped accord16 ing to diagnosis, procedure, and severity, which

17 identify facilities by name and type and physi18 cians by name and specialty, of charges and

19 payment received, readmission rates, mortality

20 rates, morbidity rates, and infection rates.

21 (D) The incidence rate of selected medical

22 or surgical procedures, the provider service ef23 fectiveness and the payments received for other

24 providers, identified by the name and type of
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1 specialty, for which these elements vary signifi2 cantly from the norms for all providers.

3 (2) In preparing reports under paragraph (1),

4 the responsible governmental entity shall ensure that

5 factors which have the effect of either reducing pro6 vider revenue or increasing provider costs, and other

7 factors beyond a provider’s control which reduce the

8 provider competitiveness in the market place, are ex9 plained in the reports. The entity shall also ensure

10 that any clarifications and dissents submitted by in11 dividual providers under section 192(g) are noted in

12 any reports that include release of data on that indi13 vidual provider.

14 (3) The responsible governmental entity shall,

15 for all providers and within appropriate geographic

16 areas approved under paragraph (1), prepare and

17 issue quarterly reports that at least provide informa18 tion on the following:

19 (A) The number of physicians, by spe20 cialty, on the staff of each hospital or ambula21 tory service facility and those physicians on the

22 staff that accept medicare assignment as full

23 payment and that accept medical assistance pa24 tients.
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1 (B) The status of hospitals respecting ac2 creditation and licensure.

3 If such entity is not the Secretary, the entity shall

4 transmit a copy of each report under this paragraph

5 to the Secretary.

6 (4) The responsible governmental entity shall

7 publish all reports issued under paragraph (3) in the

8 same periodical publication in which regulations of

9 the governmental entity are published and shall pub10 lish, in at least one newspaper of general circulation

11 in each approved geographic area, reports on the

12 providers in that area and areas adjacent to it. In

13 addition, the responsible governmental entity shall

14 advertise the availability of these reports and the

15 charge for duplication in such periodical publication

16 and in at least one newspaper of general circulation

17 in each such approved geographic area at least once

18 in each calendar quarter.

19 (b) RAW DATA REPORTS AND CONSUMER ACCESS TO

20 DATA.—The responsible governmental entity shall provide

21 special reports derived from raw data and a means for

22 computer-to-computer access to raw data to any pur23 chaser, pursuant to section 194(f). The responsible gov24 ernmental entity shall provide such reports and computer25 to-computer access, at the entity’s discretion, to other par-
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1 ties, pursuant to section 194(g). The entity shall provide

2 these special reports and computer-to-computer access in

3 as timely a fashion as the entity’s responsibilities to pub4 lish the public reports required in this section will allow.

5 Any such provision of special reports or computer-to-com6 puter access by the council shall be made only subject to

7 the restrictions on access to raw data set forth in section

8 194(b) and only after payment for costs of preparation

9 or duplication pursuant to section 194 (f) or (g).

10 SEC. 194. ACCESS TO DATA.

11 (a) PUBLIC ACCESS.—The information and data re12 ceived by a responsible governmental entity under this

13 subtitle shall be utilized by the entity for the benefit of

14 the public. Subject to the specific limitations set forth in

15 this section, the entity shall make determinations on re16 quests for information in favor of access.

17 (b) LIMITATIONS ON ACCESS.—Unless specifically

18 provided in this subtitle, the responsible governmental en19 tity shall not release—

20 (1) any raw data that does not simultaneously

21 disclose payment, as well as provider quality and

22 provider service effectiveness information;

23 (2) any raw data of the entity which could rea24 sonably be expected to reveal the identity of an indi25 vidual patient;
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1 (3) any raw data which could reasonably be ex2 pected to reveal the identity of any purchaser, other

3 than a purchaser requesting data on its own group

4 or an entity entitled to such purchaser’s data pursu5 ant to subsection (f);

6 (4) any raw data relating to actual payments to

7 any identified provider made by any purchaser, ex8 cept that this paragraph shall not apply to access by

9 a purchaser requesting data on the group for which

10 it purchases or otherwise provides covered services

11 or to access to that same data by an entity entitled

12 to the purchaser’s data pursuant to subsection (f);

13 and

14 (5) any raw data disclosing discounts or dif15 ferentials between payments accepted by providers

16 for services and their billed charges obtained by

17 identified payors from identified providers unless

18 comparable data on all other payors is also released

19 and the entity determines that the release of such

20 information is not prejudicial or inequitable to any

21 individual payor or provider or group thereof.

22 In making determinations under paragraph (5), the entity

23 shall consider that the purpose of this subtitle is primarily

24 concerned with the analysis and dissemination of pay25 ments to providers, not with discounts.
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1 (c) UNAUTHORIZED USE OF DATA.—Any person who

2 knowingly releases data violating the patient confidential3 ity, actual payments, discount data or raw data safeguards

4 set forth in this section to an unauthorized person is sub5 ject to imprisonment of not more than 5 years, or fine

6 according to title 18, United States Code.

7 (d) UNAUTHORIZED ACCESS TO DATA.—Should any

8 person inadvertently or by error of a responsible govern9 mental entity gain access to data that violates the safe10 guards set forth in this section, the data must immediately

11 be returned, without duplication, to the entity with proper

12 notification.

13 (e) PUBLIC ACCESS TO RECORDS.—All public records

14 prepared by the entity shall be available to the public for

15 a reasonable fee, not to exceed the cost of duplication.

16 (f) ACCESS TO RAW DATA BY PURCHASERS.—Sub17 ject to the limitations on access set forth in subsection

18 (b), the responsible governmental entity shall provide ac19 cess to its raw data to purchasers in accordance with the

20 following procedure:

21 (1) Special reports derived from raw data of the

22 entity shall be provided by the entity to any pur23 chaser requiring such reports.

24 (2) A means to enable computer-to-computer

25 access by any purchaser to raw data shall be devel-
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1 oped, adopted, and implemented by the entity, and

2 the entity shall provide such access to raw data to

3 any purchaser upon request.

4 (3) In the event that any employer obtains from

5 the entity, pursuant to paragraph (1) or (2), data

6 pertaining to the employer’s employees and their de7 pendents for whom the employer purchases or other8 wise provides covered services and who are rep9 resented by a certified collective bargaining rep10 resentative, such collective bargaining representative

11 shall be entitled to that same data, after payment of

12 fees as specified in paragraph (4). Likewise, should

13 a certified collective bargaining representative obtain

14 from the entity, pursuant to paragraph (1) or (2),

15 data pertaining to members of the collective bargain16 ing unit and their dependents who are employed by

17 and for whom covered services are purchased or oth18 erwise provided by any employer, the employer shall

19 be entitled to that same data, after payment of fees

20 as specified in paragraph (4).

21 (4) In providing for access to raw data, the re22 sponsible governmental entity shall charge the pur23 chasers which originally obtained such access a fee

24 sufficient to cover the costs to prepare and provide

25 special reports requested pursuant to paragraph (1)
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1 or to provide computer-to-computer access to its raw

2 data requested pursuant to paragraph (2). Should a

3 second or subsequent party or parties request this

4 same information pursuant to paragraph (3), the en5 tity shall charge such party a fee sufficient to cover

6 only the costs of duplicating the original access.

7 (g) ACCESS TO RAW DATA BY OTHER PARTIES.—

8 Subject to the limitations on access to raw data set forth

9 in subsection (b), the responsible governmental entity may

10 provide special reports derived from raw data or computer11 to-computer access to parties other than purchasers. The

12 entity shall publish regulations that set forth the criteria

13 and the procedure the entity shall use in making deter14 minations on such access. In providing such access, the

15 entity shall charge the party requesting the access a fee

16 sufficient to cover the entity’s costs of providing such ac17 cess.

18 SEC. 195. DEFINITIONS.

19 In this subtitle:

20 (1) The term ‘‘ambulatory service facility’’

21 means a licensed facility, not part of a hospital,

22 which provides medical, diagnostic, or surgical treat23 ment to patients not requiring hospitalization, in24 cluding ambulatory surgical facilities, ambulatory

25 imaging or diagnostic centers, birthing centers, free-
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1 standing emergency rooms, and any other facilities

2 providing ambulatory care which charge a separate

3 facility charge. Such term does not include the of4 fices of private physicians or dentists, whether for

5 individual or group practices.

6 (2) The terms ‘‘charge’’ and ‘‘rate’’ means

7 amounts billed by a provider for specific goods or

8 services provided to a patient, prior to any adjust9 ment for contractual allowances.

10 (3) The term ‘‘covered services’’ means any

11 health care services or procedures connected with

12 episodes of illness that require either inpatient hos13 pital care or major ambulatory service such as sur14 gical, medical, or major radiological procedures, in15 cluding any initial and followup outpatient services

16 associated with the episode of illness before, during,

17 or after inpatient hospital care or major ambulatory

18 service. The term does not include routine outpatient

19 services connected with episodes of illness that do

20 not require hospitalization or major ambulatory serv21 ice.

22 (4) The term ‘‘data source’’ means a hospital,

23 ambulatory service facility, physician, health mainte24 nance organization, hospital or medical service plan,

25 commercial insurer, self-insured employer providing
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1 health or accident coverage, administrator of a self2 insured or partially self-insured health or accident

3 plan providing covered services, any health and wel4 fare fund that provides health or accident benefits or

5 insurance pertaining to covered services, and any

6 other payor for covered services in the United States

7 other than an individual.

8 (5) The term ‘‘health care facility’’ means a

9 general or special hospital, including tuberculosis

10 and psychiatric hospitals, kidney disease treatment

11 centers, including freestanding hemodialysis units,

12 and ambulatory service facilities, and hospices (both

13 profit and nonprofit).

14 (6) The term ‘‘health maintenance organiza15 tion’’ means an organized system which combines

16 the delivery and financing of health care and which

17 provides basic health care services to voluntarily en18 rolled subscribers for a fixed prepaid fee.

19 (7) The term ‘‘hospital’’ means any institution

20 licensed in a State as a hospital, including hospitals

21 for tuberculosis, mental disease or chronic illness.

22 (8) The term ‘‘major ambulatory service’’

23 means surgical or medical procedures, including di24 agnostic and therapeutic radiological procedures,

25 commonly performed in hospitals or ambulatory
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1 service facilities, which are not of a type commonly

2 performed or which cannot be safely performed in

3 physicians’ offices and which require special facilities

4 such as operating rooms or suites or special equip5 ment such as fluoroscopic equipment or computed

6 tomographic scanners, or a postprocedure recovery

7 room or short-term convalescent room.

8 (9) The term ‘‘medical procedure incidence var9 iation’’ means a variation in the incidence in the

10 population of specific medical, surgical, and radio11 logical procedures in any given year, expressed as a

12 deviation from the norm, as these terms are defined

13 in the classical statistical definition of ‘‘variation,’’

14 ‘‘incidence,’’ ‘‘deviation’’, and ‘‘norm’’.

15 (10) The term ‘‘payment’’ means payments that

16 providers actually accept for their services, exclusive

17 of charity care, rather than the charges they bill.

18 (11) The term ‘‘payor’’ means any person or

19 entity, including health care insurers and pur20 chasers, that make direct payments to providers for

21 covered services.

22 (12) The term ‘‘physician’’ means an individual

23 licensed under State law to practice medicine and

24 surgery.
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1 (13) The term ‘‘provider’’ means a hospital, an

2 ambulatory service facility, or a physician.

3 (14) The term ‘‘provider quality’’ means the ex4 tent to which a provider renders care that, within

5 the capabilities of modern medicine, obtains for pa6 tients medically acceptable outcomes and prognoses,

7 adjusted for patient severity, and treats patients

8 compassionately and responsively.

9 (15) The term ‘‘provider service effectiveness’’

10 means the effectiveness of services rendered by a

11 provider, determined by measurement of the medical

12 outcome of patients grouped by severity receiving

13 those services.

14 (16) The term ‘‘purchaser’’ means any corpora15 tion, labor organization or other entity that pur16 chases benefits which provide covered services for an

17 employee or member, either through a health care

18 insurer or by means of a self-funded program of

19 benefits, and a certified bargaining representative

20 that represents a group or groups of employees for

21 whom employers purchase a program of benefits

22 which provide covered services, but excluding health

23 care insurers.
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1 (17) The terms ‘‘raw data’’ and ‘‘data’’ mean

2 data collected by a responsible governmental entity

3 under section 192 in the form initially received.

4 (18) The term ‘‘responsible governmental en5 tity’’ has the meaning given such term in section

6 191(b)(4).

7 (19) The term ‘‘severity’’ means, in any patient,

8 the measurable degree of the potential for failure of

9 one or more vital organs.

10 (20) The term ‘‘Secretary’’ means the Secretary

11 of Health and Human Services.

12 (21) The term ‘‘State’’ means the 50 States

13 and the District of Columbia.

14 Subtitle H—Tax Incentives to

15 Provide Only Minimum Benefits

16 SEC. 198. DENIAL OF EMPLOYER TAX DEDUCTION FOR PRO17 VIDING HEALTH CARE COVERAGE IN EXCESS

18 OF MINIMUM BENEFITS AND DENIAL OF EM19 PLOYEE EXCLUSION FOR SUCH EXCESS COV20 ERAGE.

21 (a) DENIAL OF DEDUCTION.—Section 162 of the In22 ternal Revenue Code of 1986 (relating to trade or business

23 expenses) is amended by redesignating subsection (m) as

24 subsection (n) and by inserting after subsection (l) the fol25 lowing new subsection:
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1 ‘‘(m) EXPENSES FOR PROVIDING HEALTH CARE IN

2 EXCESS OF MINIMUM BENEFITS.—No deduction shall be

3 allowed under this chapter for expenses incurred to pro4 vide health care for any employee of the taxpayer (or any

5 beneficiary of such employee) to the extent such expenses

6 are attributable to benefits that are not within the mini7 mum benefit package which has become effective under

8 section 203(a)(2) of the American Consumers Health Care

9 Reform Act of 1993.’’

10 (b) DENIAL OF EXCLUSION.—The text of section 106

11 of such Code is amended to read as follows:

12 ‘‘(a) IN GENERAL.—Gross income of an employee

13 does not include employer-provided coverage under an ac14 cident or health plan.

15 ‘‘(b) NO EXCLUSION FOR HEALTH CARE COVERAGE

16 IN EXCESS OF MINIMUM BENEFITS.—Subsection (a) shall

17 not apply to the extent coverage is provided for benefits

18 that are not within the minimum benefit package which

19 has become effective under section 203(a)(2) of the Amer20 ican Consumers Health Care Reform Act of 1993.’’

21 (c) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to taxable years beginning on or

23 after the first day of the second calendar year beginning

24 after the date of the enactment of this Act, but shall not

25 apply to taxable years beginning before the date the mini-
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1 mum benefit package has become effective under section

2 203(a)(2) of this Act.

3 SEC. 199. DEDUCTION FOR HEALTH INSURANCE COSTS OF

4 SELF-EMPLOYED INDIVIDUALS MADE PERMA5 NENT AND INCREASED TO EXTENT OF COSTS

6 FOR MINIMUM BENEFITS.

7 (a) DEDUCTION MADE PERMANENT.—

8 (1) IN GENERAL.—Subsection (l) of section 162

9 of the Internal Revenue Code of 1986 (relating to

10 special rules for health insurance costs of self-em11 ployed individuals) is amended by striking paragraph

12 (6).

13 (2) TECHNICAL AMENDMENT.—Paragraph (2)

14 of section 110(a) of the Tax Extension Act of 1991

15 is hereby repealed.

16 (3) EFFECTIVE DATE.—The amendments made

17 by this subsection shall apply to taxable years begin18 ning after December 31, 1991.

19 (b) INCREASE IN DEDUCTION FOR MINIMUM BENE20 FITS.—

21 (1) IN GENERAL.—Subsection (l) of section 162

22 of such Code is amended by adding at the end there23 of the following new paragraph:

24 ‘‘(6) FULL DEDUCTION FOR COSTS OF MINIMUM

25 BENEFIT PACKAGE.—Paragraph (1) shall be applied
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1 without regard to ‘25 percent of’ with respect to

2 costs attributable to benefits that are within the

3 minimum benefit package which has become effec4 tive under section 203(a)(2) of the American Con5 sumers Health Care Reform Act of 1993.’’

6 (2) EFFECTIVE DATE.—The amendment made

7 by paragraph (1) shall apply to taxable years begin8 ning on or after the first day of the second calendar

9 year beginning after the date of the enactment of

10 this Act, but shall not apply to taxable years begin11 ning before the date the minimum benefit package

12 has become effective under section 203(a)(2) of this

13 Act.

14 TITLE II—NATIONAL HEALTH

15 CARE REFORM PROPOSALS

16 Subtitle A—National Health Care

17 Reform Commission

18 SEC. 201. ESTABLISHMENT.

19 (a) ESTABLISHMENT.—There is established an inde20 pendent commission to be known as the National Health

21 Care Reform Commission (in this title referred to as the

22 ‘‘Commission’’).

23 (b) DUTIES.—The Commission shall carry out the

24 duties specified for it in this subtitle.

25 (c) APPOINTMENT.—
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1 (1) COMPOSITION.—

2 (A) SIZE AND MANNER OF APPOINT3 MENT.—The Commission shall consist of—

4 (i) five members to be appointed by

5 the President, by and with the advice and

6 consent of the Senate, one of whom shall,

7 at the time of appointment, be designated

8 as Chairperson of the Commission;

9 (ii) two members to be appointed by

10 the Speaker of the House of Representa11 tives upon the recommendations of the Ma12 jority Leader and Minority Leader of the

13 House of Representatives; and

14 (iii) two members to be appointed by

15 the President pro tempore of the Senate

16 upon the recommendations of the Majority

17 Leader and Minority Leader of the Senate.

18 (B) POLITICAL AFFILIATION.—At no time

19 shall more than three of the members appointed

20 by the President, one of the members appointed

21 by the Speaker of the House of Representatives,

22 or one of the members appointed by the Presi23 dent pro tempore of the Senate be members of

24 the same political party.
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1 (C) MEMBERSHIP QUALIFICATIONS.—The

2 membership of the Commission shall consist of

3 individuals who are of recognized standing and

4 distinction and who possess the demonstrated

5 capacity to discharge the duties imposed on the

6 Commission, and shall include persons possess7 ing substantial knowledge or expertise in health

8 care delivery, health care insurance, or health

9 care economics. No individual who is otherwise

10 an officer or full-time employee of the United

11 States shall serve as a member of the Commis12 sion. No member while serving on the Commis13 sion may receive financial gain from direct in14 vestments, employment or associations from

15 any entity with demonstrable financial interest

16 in matters over which the Commission has ju17 risdiction.

18 (D) CHAIRPERSON.—The Chairperson of

19 the Commission shall designate a member of

20 the Commission to act as Vice Chairperson of

21 the Commission.

22 (E) QUORUM.—A majority of the members

23 of the Commission shall constitute a quorum,

24 but a lesser number may conduct hearings.
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1 (F) TERM.—Members of the Commission

2 shall be appointed for a term of 5 years, except

3 that with respect to the members first ap4 pointed—

5 (i) the Chairperson and 2 members, 1

6 each appointed under clauses (ii) and (iii)

7 of paragraph (1)(A), respectively, shall be

8 appointed for a term of 5 years;

9 (ii) 3 members, 1 each appointed

10 under clauses (i), (ii) and (iii) of para11 graph (1)(A), respectively, shall be ap12 pointed for a term of 4 years; and

13 (iii) the remaining members shall be

14 appointed for a term of 3 years.

15 (G) VACANCY.—A vacancy in the Commis16 sion shall not affect its powers, but shall be

17 filled in the same manner as the original ap18 pointment, but the individual appointed shall

19 serve only for the unexpired portion of the term

20 for which the individual’s predecessor was ap21 pointed.

22 (2) EFFECTIVE DATE.—Appointments to the

23 Commission shall be made no later than 90 days

24 after the date of enactment of this Act.
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1 (d) MEETINGS.—The Commission shall meet at the

2 call of the Chairperson, or at the call of a majority of the

3 members of the Commission; but meetings shall not be

4 held less frequently than once in each calendar month

5 which begins after a majority of the membership of the

6 Commission has been appointed.

7 (e) HEARINGS.—In carrying out its duties under this

8 section, the Commission, or any duly authorized commit9 tee thereof, is authorized to hold such hearings, sit and

10 act at such times and places, and take such testimony,

11 with respect to matters with respect to which it has a re12 sponsibility under this title, as the Commission or such

13 committee may deem advisable. The Chairperson of the

14 Commission or any member authorized by the Chairperson

15 may administer oaths or affirmations to witnesses appear16 ing before the Commission or before any committee there17 of.

18 (f) PAY AND TRAVEL EXPENSES.—

19 (1) PAY.—

20 (A) MEMBERS.—Each member, other than

21 the Chairperson, shall be paid at a rate equal

22 to the daily equivalent of the minimum annual

23 rate of basic pay payable for level IV of the Ex24 ecutive Schedule under section 5315 of title 5,

25 United States Code, for each day (including
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1 travel time) during which the member is en2 gaged in the actual performance of duties vest3 ed in the Commission.

4 (B) CHAIRPERSON.—The Chairperson

5 shall be paid for each day referred to in sub6 paragraph (A) at a rate equal to the daily

7 equivalent of the minimum annual rate of basic

8 pay payable for level III of the Executive

9 Schedule under section 5314 of title 5, United

10 States Code.

11 (2) TRAVEL EXPENSES.—Members shall receive

12 travel expenses, including per diem in lieu of subsist13 ence, in accordance with sections 5702 and 5703 of

14 title 5, United States Code.

15 (g) STAFF.—

16 (1) APPOINTMENT.—The Commission may em17 ploy and fix the compensation of an Executive Direc18 tor and such other personnel (not to exceed 25) as

19 may be necessary to carry out the duties of the

20 Commission. The employment and compensation of

21 such Director and personnel are not subject to the

22 provisions of title 5, United States Code, governing

23 appointments in the competitive service.

24 (2) DETAIL OF PERSONNEL FROM FEDERAL

25 AGENCIES.—Upon request of the Commission, the
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1 head of any Federal department or agency may de2 tail any of the personnel of that department or agen3 cy to the Commission to assist the Commission in

4 carrying out its duties under this title.

5 (3) FEDERAL AGENCY ASSISTANCE.—The

6 Comptroller General of the United States, the Sec7 retary of Health and Human Services, and the Ad8 ministrator of General Services shall provide assist9 ance on a reimbursable basis, including the detailing

10 of employees, to the Commission in accordance with

11 an agreement entered into with the Commission.

12 (h) OTHER AUTHORITY.—

13 (1) CONSULTANT SERVICES.—The Commission

14 may procure by contract, to the extent funds are

15 available, the temporary or intermittent services of

16 experts or consultants pursuant to section 3109 of

17 title 5, United States Code.

18 (2) PROPERTY MATTERS.—The Commission

19 may lease space and acquire personal property to the

20 extent funds are available.

21 (i) AUTHORIZATION OF APPROPRIATIONS.—There

22 are authorized to be appropriated such sums as may be

23 necessary to carry out the purposes of this section.
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1 SEC. 202. ESTABLISHMENT OF NATIONAL GOALS; CON2 SULTATIONS; IMPROVED COORDINATION;

3 EVALUATION AND RECOMMENDATIONS ON

4 DEMONSTRATION PROJECTS.

5 (a) IN GENERAL.—The Commission shall develop na6 tional health care goals in order to—

7 (1) improve access to necessary health care

8 services;

9 (2) safeguard and improve the quality of health

10 care services; and

11 (3) control the cost of health care services.

12 (b) CONSULTATIONS.—In carrying out the respon13 sibilities assigned to it under this Act, the Commission

14 shall seek out and consider recommendations from a broad

15 range of interested individuals and organizations, includ16 ing organizations representing health care consumers,

17 health care providers, health care carriers, representatives

18 of State health programs, public health professionals, and

19 the general public.

20 (c) IMPROVEMENT IN COORDINATION.—The Com21 mission shall examine steps that can be taken to better

22 coordinate the activities of the Secretary of Health and

23 Human Services and other Departments and agencies in

24 promotion of the national health care goals developed

25 under subsection (a) in order to meet the goals stated in

26 the report ‘‘Healthy People, 2000’’.
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1 (d) EVALUATION AND RECOMMENDATIONS CON2 CERNING DEMONSTRATION PROJECTS.—The Commission

3 shall—

4 (1) advise the Secretary on the demonstration

5 projects established under subtitle B,

6 (2) assist the Secretary in the evaluation of

7 such projects, and

8 (3) make recommendations regarding changes

9 that should be made in laws or regulations as a re10 sult of such evaluations.

11 SEC. 203. ESTABLISHMENT OF MINIMUM BENEFIT PACK12 AGE.

13 (a) PROPOSAL.—

14 (1) SUBMISSION.—Not later than 1 year after

15 the date of the enactment of this Act, the Commis16 sion shall develop and submit to Congress a legisla17 tive proposal that specifies a minimum benefit pack18 age consistent with this section to be used for pur19 poses of—

20 (A) the demonstration project established

21 under section 211(c)(1),

22 (B) implementing subtitle C of title I, and

23 (C) determining the tax treatment under

24 the Internal Revenue Code of 1986 (as amend25 ed by section 198) of amounts paid by an em-
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1 ployer on behalf of an employee for health in2 surance benefits in excess of the minimum ben3 efit package.

4 (2) IMPLEMENTATION.—The minimum benefit

5 package submitted under this paragraph (1) shall

6 not become effective for the purposes specified in

7 subparagraphs (B) and (C) of such paragraph un8 less a joint resolution approving such package is en9 acted in accordance with the procedures set forth in

10 subsection (d).

11 (b) BENEFITS.—The services included in the benefit

12 package shall include—

13 (1) coverage for preventive, diagnostic, and

14 therapeutic services found to be medically appro15 priate and cost effective, and

16 (2) cost-sharing that provides an appropriate

17 incentive to avoid unnecessary care while avoiding

18 excessive cost-sharing by individuals with cata19 strophic illnesses.

20 (c) CONGRESSIONAL CONSIDERATION OF COMMIS21 SION PROPOSAL.—

22 (1) RULES OF HOUSE OF REPRESENTATIVES

23 AND SENATE.—This subsection is enacted by the

24 Congress—
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1 (A) as an exercise of the rulemaking power

2 of the House of Representatives and the Sen3 ate, respectively, and as such is deemed a part

4 of the rules of each House, respectively, but ap5 plicable only with respect to the procedure to be

6 followed in that House in the case of approval

7 resolutions described in paragraph (2), and su8 persedes other rules only to the extent that

9 such rules are inconsistent therewith; and

10 (B) with full recognition of the constitu11 tional right of either House to change the rules

12 (so far as relating to the procedure of that

13 House) at any time, in the same manner and

14 to the same extent as in the case of any other

15 rule of that House.

16 (2) TERMS OF THE RESOLUTION.—For pur17 poses of subsection (a), the term ‘‘approval resolu18 tion’’ means only a joint resolution of the two

19 Houses of the Congress, providing in—

20 (A) the matter after the resolving clause of

21 which is as follows: ‘‘That the Congress ap22 proves the recommendations of the National

23 Commission on Health Care Reform as submit24 ted by the Commission on

25 llllllllllllll’’, the blank
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1 space being filled in with the appropriate date;

2 and

3 (B) the title of which is as follows: ‘‘Joint

4 Resolution approving the recommendation of

5 the National Commission on Health Care Re6 form’’.

7 (3) INTRODUCTION AND REFERRAL.—On the

8 day on which the recommendation of the Commis9 sion is transmitted to the House of Representatives

10 and the Senate, an approval resolution with respect

11 to such recommendation shall be introduced (by re12 quest) in the House of Representatives by the Ma13 jority Leader of the House, for himself and the Mi14 nority Leader of the House, or by Members of the

15 House designated by the Majority Leader of the

16 House, for himself and the Minority Leader of the

17 House, or by Members of the House designated by

18 the Majority Leader and Minority Leader of the

19 House; and shall be introduced (by request) in the

20 Senate by the Majority Leader of the Senate, for

21 himself and the Minority Leader of the Senate, or

22 by Members of the Senate designated by the Major23 ity Leader and Minority Leader of the Senate. If ei24 ther House is not in session on the day on which

25 such recommendation is transmitted, the approval
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1 resolution with respect to such recommendation shall

2 be introduced in the House, as provided in the pre3 ceding sentence, on the first day thereafter on which

4 the House is in session. The approval resolution in5 troduced in the House of Representatives and the

6 Senate shall be referred to the appropriate commit7 tees of each House.

8 (4) AMENDMENTS PROHIBITED.—No amend9 ment to an approval resolution shall be in order in

10 either the House of Representatives or the Senate;

11 and no motion to suspend the application of this

12 subsection shall be in order in either House, nor

13 shall it be in order in either House for the Presiding

14 Officer to entertain a request to suspend the appli15 cation of this subsection by unanimous consent.

16 (5) PERIOD FOR COMMITTEE AND FLOOR CON17 SIDERATION.—

18 (A) IN GENERAL.—Except as provided in

19 subparagraph (B), if the committee or commit20 tees of either House to which an approval reso21 lution has been referred have not reported it at

22 the close of the 45th day after its introduction,

23 such committee or committees shall be auto24 matically discharged from further consideration

25 of the approval resolution and it shall be placed
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1 on the appropriation calendar. A vote on final

2 passage of the approval resolution shall be

3 taken in each House on or before the close of

4 the 45th day after the approval resolution is re5 ported by the committees or committee of that

6 House to which it was referred, or after such

7 committee or committees have been discharged

8 from further consideration of the approval reso9 lution. If prior to the passage by one House of

10 an approval resolution of that House, that

11 House receives the same approval resolution

12 from the other House then—

13 (i) the procedure in that House shall

14 be the same as if no approval resolution

15 had been received from the other House;

16 but

17 (ii) the vote on final passage shall be

18 on the approval resolution of the other

19 House.

20 (B) COMPUTATION OF DAYS.—For pur21 poses of subparagraph (A), in computing a

22 number of days in either House, there shall be

23 excluded any day on which the House is not in

24 session.
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1 (6) FLOOR CONSIDERATION IN THE HOUSE OF

2 REPRESENTATIVES.—

3 (A) MOTION TO PROCEED.—A motion in

4 the House of Representatives to proceed to the

5 consideration of an approval resolution shall be

6 highly privileged and not debatable. An amend7 ment to the motion shall not be in order, nor

8 shall it be in order to move to reconsider the

9 vote by which the motion is agreed to or dis10 agreed to.

11 (B) DEBATE.—Debate in the House of

12 Representatives on an approval resolution shall

13 be limited to not more than 20 hours, which

14 shall be divided equally between those favoring

15 and those opposing the bill or resolution. A mo16 tion further to limit debate shall not be debat17 able. It shall not be in order to move to recom18 mit an approval resolution or to move to recon19 sider the vote by which an approval resolution

20 is agreed to or disagreed to.

21 (C) MOTION TO POSTPONE.—Motions to

22 postpone, made in the House of Representatives

23 with respect to the consideration of an approval

24 resolution, and motions to proceed to the con-
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1 sideration of other business, shall be decided

2 without debate.

3 (D) APPEALS.—All appeals from the deci4 sions of the Chair relating to the application of

5 the Rules of the House of Representatives to

6 the procedure relating to an approval resolution

7 shall be decided without debate.

8 (E) GENERAL RULES APPLY.—Except to

9 the extent specifically provided in the preceding

10 provisions of this paragraph, consideration of

11 an approval resolution shall be governed by the

12 Rules of the House of Representatives applica13 ble to other bills and resolutions in similar cir14 cumstances.

15 (7) FLOOR CONSIDERATION IN THE SENATE.—

16 (A) MOTION TO PROCEED.—A motion in

17 the Senate to proceed to the consideration of an

18 approval resolution shall be privileged and not

19 debatable. An amendment to the motion shall

20 not be in order, nor shall it be in order to move

21 to reconsider the vote by which the motion is

22 agreed to or disagreed to.

23 (B) GENERAL DEBATE.—Debate in the

24 Senate on an approval resolution, and all debat25 able motions and appeals in connection there-
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1 with, shall be limited to not more than 20

2 hours. The time shall be equally divided be3 tween, and controlled by, the Majority Leader

4 and the Minority Leader or their designees.

5 (C) DEBATE OF MOTIONS AND APPEALS.—

6 Debate in the Senate on any debatable motion

7 or appeal in connection with an approval resolu8 tion shall be limited to not more than 1 hour,

9 to be equally divided between, and controlled

10 by, the mover and the manager of the approval

11 resolution, except that in the event the manager

12 of the approval resolution is in favor of any

13 such motion or appeal, the time in opposition

14 thereto, shall be controlled by the Minority

15 Leader or his designee. Such leaders, or either

16 of them, may, from time under their control on

17 the passage of an approval resolution, allot ad18 ditional time to any Senator during the consid19 eration of any debatable motion or appeal.

20 (D) OTHER MOTIONS.—A motion in the

21 Senate to further limit debate is not debatable.

22 A motion to recommit an approval resolution is

23 not in order.
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1 (8) POINT OF ORDER REQUIRING

2 SUPERMAJORITY FOR MODIFICATIONS TO REC3 OMMENDATION ONCE APPROVED.—

4 (A) IN GENERAL.—It shall not be in order

5 in the House of Representatives or the Senate

6 to consider any amendment to the provisions of

7 this Act except as provided in subparagraph

8 (B).

9 (B) WAIVER.—The point of order de10 scribed in subparagraph (A) may be waived or

11 suspended in the House of Representatives or

12 the Senate only, by the affirmative vote of

13 three-fifths of the Members duly chosen and

14 sworn.

15 Subtitle B—Demonstration

16 Projects on Alternative Financ17 ing and Delivery Systems

18 SEC. 211. ESTABLISHMENT OF DEMONSTRATION

19 PROJECTS.

20 Not later than 1 year after the date of the enactment

21 of this Act, the Secretary of Health and Human Services

22 (in this subtitle referred to as the ‘‘Secretary’’) shall es23 tablish such demonstration projects as may be necessary

24 to test alternative methods for organizing the structure
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1 of the health care financing and delivery system of the

2 United States.

3 SEC. 212. PROCESS.

4 (a) IN GENERAL.—In carrying out section 211, the

5 Secretary—

6 (1) may initiate demonstration projects under

7 this subtitle, and

8 (2) may seek applications from States desiring

9 to test alternative health care financing and delivery

10 systems within their jurisdictions.

11 (b) STATE APPLICATIONS.—

12 (1) IN GENERAL.—A State seeking approval of

13 a demonstration project under this subtitle shall file

14 an application in such form, in such manner, and at

15 such time as the Secretary may require.

16 (2) EVALUATION.—In evaluating an application

17 submitted under paragraph (1) for a project, the

18 Secretary shall take into account support for the

19 project by the citizens of a State as evidenced by the

20 enactment of legislation providing for implementa21 tion of an alternative health care financing and de22 livery system in every political subdivision of the

23 State.
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1 (c) CONSULTATION.—Before making a final deter2 mination on approving a demonstration project under this

3 subtitle, the Secretary shall—

4 (1) consult with policy experts about any waiv5 ers necessary under section 215(a),

6 (2) consult with the Secretary of Labor and the

7 Attorney General about any waivers necessary under

8 subsections (b) and (c) of section 215, respectively,

9 (3) provide an opportunity for all parties that

10 would be affected by the demonstration project to

11 express their views, and

12 (4) in the case of a project initiated by the Sec13 retary, obtain the approval of the State regarding

14 any changes in the rules applicable to the State plan

15 approved under title XIX of the Social Security Act.

16 (d) NO INCREASE IN FEDERAL EXPENDITURES.—

17 The Secretary may not establish or approve a demonstra18 tion project under this subtitle unless the Secretary deter19 mines that the total amount expended by the Federal gov20 ernment under titles XVIII and XIX of the Social Security

21 Act for such project (other than amounts expended for the

22 evaluation of the projects under section 216(b)) will not

23 exceed the total amount that would have been expended

24 under such titles but for such project.
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1 SEC. 213. PRIORITIES.

2 In establishing and approving demonstration projects

3 under this subtitle, the Secretary shall make it a priority

4 to work cooperatively with States to secure locations to

5 conduct the following:

6 (1) BASICARE HEALTH ACCESS DEMONSTRA7 TION PROJECT.—A demonstration project under

8 which—

9 (A) the costs associated with the purchase

10 of coverage for the minimum benefit package

11 established under section 203 would be fully

12 tax-deductible, and

13 (B) the costs associated with the purchase

14 of coverage not included in the minimum bene15 fit package would be deductible by the employer

16 but not the employee.

17 (2) MANAGED COMPETITION DEMONSTRATION

18 PROJECT.—A demonstration project that—

19 (A) provides for competition among com20 munity health partnerships offered to individ21 uals and employers through health insurance

22 purchasing cooperatives;

23 (B) provides for premiums that are com24 munity-rated and for the adjustment of pre25 miums paid to plans based on the risk charac26 teristics of individuals enrolled in the plan;
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1 (C) limits the tax benefits for employer

2 contributions to the lowest price of a commu3 nity health partnership offered in an area; and

4 (D) provides for the systematic reporting

5 and public dissemination of information on the

6 performance of plans in meeting the health care

7 needs of enrollees.

8 (3) MEDICAL SAVINGS ACCOUNT DEMONSTRA9 TION PROJECT.—A demonstration project that pro10 vides that—

11 (A) contributions made by an employer on

12 behalf of an employee to a medical savings ac13 count, in lieu of payment for health insurance

14 premiums, are treated as excludable from in15 come for purposes of determining the income

16 tax and employment tax liability of the em17 ployee, and

18 (B) such account may be used for the pur19 chase of health care insurance or out-of-pocket

20 health care expenses.

21 (4) COORDINATED CARE NETWORKS DEM22 ONSTRATION PROJECT.—A demonstration project

23 that provides health care services through a network

24 of regional health care providers in a manner that
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1 promotes the greatest efficiencies in the utilization

2 of expensive services and technology.

3 SEC. 214. SCOPE AND DURATION OF PROJECTS.

4 The demonstration projects conducted under this

5 subtitle shall be of such scope and duration as may be

6 necessary to test and evaluate the approach tested under

7 the project.

8 SEC. 215. WAIVERS OF CERTAIN LAWS.

9 (a) MEDICARE AND MEDICAID LAWS.—The Sec10 retary may waive such provisions of titles XVIII (other

11 than provisions relating to the eligibility for, and the scope

12 of, benefits under such title) and XIX of the Social Secu13 rity Act as may be necessary to implement a demonstra14 tion project under this subtitle.

15 (b) ERISA.—The Secretary of Labor may waive sec16 tion 514(a) of the Employee Retirement Income Security

17 Act of 1974 (as that provision limits the application of

18 State laws to employee benefit plans) to the extent nec19 essary to permit a State to implement a demonstration

20 project under this subtitle.

21 (c) ANTITRUST LAWS.—

22 (1) IN GENERAL.—Subject to paragraph (2),

23 the Attorney General may waive such provisions

24 of—

25 (A) the Sherman Act,
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1 (B) the Clayton Act, and

2 (C) the Federal Trade Commission Act,

3 as may be necessary to permit a State to implement

4 a demonstration project under this subtitle.

5 (2) DETERMINATION REQUIRED.—A provision

6 specified in paragraph (1) may be waived only if the

7 Attorney General determines that the demonstration

8 project would reduce health care costs on a system9 wide basis.

10 SEC. 216. REPORTS AND EVALUATIONS.

11 (a) CONGRESSIONAL REPORTS.—The Secretary shall

12 submit to the Congress—

13 (1) annually a report on the status of each

14 demonstration project being conducted under this

15 subtitle, and

16 (2) a final report on each such project not later

17 than 1 year after the close of the project.

18 (b) INDEPENDENT EVALUATION.—

19 (1) IN GENERAL.—The Secretary shall arrange

20 for an independent evaluation of each demonstration

21 project conducted under this subtitle and for the

22 submission of the evaluation to the National Health

23 Care Reform Commission (established under section

24 201) not later than 1 year after the close of the

25 project.
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1 (2) TRANSFER OF FUNDS.—The Secretary shall

2 provide for the transfer from the Federal Hospital

3 Insurance Trust Fund of such sums as may be nec4 essary to provide for the evaluation of demonstration

5 projects conducted under this subtitle (without re6 gard to amounts appropriated in advance in appro7 priation Acts).

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