I

103D CONGRESS

1ST SESSION H. R. 2610

To amend the Social Security Act and the Internal Revenue Code of 1986

to provide for a Mediplan that assures the provision of health insurance

coverage to all residents, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JULY 1, 1993

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

Committees on Ways and Means and Energy and Commerce

SEPTEMBER 29, 1993

Additional sponsors: Mr. COYNE, Mr. SABO, and Mr. YATES

A BILL

To amend the Social Security Act and the Internal Revenue

Code of 1986 to provide for a Mediplan that assures

the provision of health insurance coverage to all residents, 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

5 ‘‘Mediplan Health Care 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—HEALTH CARE ELIGIBILITY AND BENEFITS

Sec. 101. Eligibility and benefits.

‘‘TITLE XXI—MEDIPLAN HEALTH BENEFITS

‘‘PART A—ELIGIBILITY

‘‘Sec. 2101. Eligibility.

‘‘Sec. 2102. Enrollment and Mediplan cards.

‘‘PART B—BENEFITS

‘‘Sec. 2121. Scope of benefits.

‘‘Sec. 2122. Exclusions.

‘‘PART C—PAYMENT FOR BENEFITS AND FINANCING

‘‘Sec. 2141. Payments for benefits.

‘‘Sec. 2142. Mediplan Trust Fund.

‘‘PART D—ADMINISTRATIVE SIMPLIFICATION

‘‘Sec. 2151. Requirement for entitlement verification system.

‘‘Sec. 2152. Requirements for uniform claims and electronic claims data

set.

‘‘Sec. 2153. Electronic medical records and reporting.

‘‘Sec. 2154. Uniform hospital cost reporting.

‘‘Sec. 2155. Health service provider defined.

‘‘PART E—GENERAL PROVISIONS

‘‘Sec. 2161. Definitions relating to beneficiaries and income.

‘‘Sec. 2162. Incorporation of certain medicare provisions and other provisions.

‘‘Sec. 2163. State maintenance of effort payments.

‘‘Sec. 2164. Modification of medicaid and other programs to avoid duplication of benefits.

‘‘Sec. 2165. Maintenance of additional benefits for current beneficiaries

under group health plans.

‘‘PART F—REGULATION OF MEDIPLAN SUPPLEMENTAL POLICIES

‘‘Sec. 2171. Standards and requirements for Mediplan supplemental policies.

‘‘Sec. 2172. Establishment of standards.

‘‘Sec. 2173. Requirements applicable to all Mediplan supplemental policies.

‘‘Sec. 2174. Standards applicable only to insured Mediplan supplemental

policies.

‘‘Sec. 2175. Prohibition of duplication.

‘‘Sec. 2176. Additional prohibitions.

‘‘Sec. 2177. Information disclosure.

‘‘Sec. 2178. Limitations on sales commissions.

‘‘Sec. 2179. Definitions.

‘‘PART G—STATE OPT OUT
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‘‘Sec. 2181. Election.

‘‘Sec. 2182. Requirements for State alternative health care programs.

‘‘Sec. 2183. Control of aggregate expenditures.

‘‘Sec. 2184. Termination of approval of State election.

‘‘Sec. 2185. Payments to States.

‘‘Sec. 2186. No impact on medicare benefits.

TITLE II—COST CONTAINMENT

Sec. 201. National Mediplan expenditure budget.

Sec. 202. Classes of health care services.

Sec. 203. Allocation of health budget by class of service.

Sec. 204. National health expenditures reporting system.

Sec. 205. Conforming medicare payment rates to Mediplan health expenditure

allocations; transition.

Sec. 206. Adjustments to medicare payments for graduate medical education.

Sec. 207. Definitions.

TITLE III—FINANCING PROVISIONS

Sec. 301. Income taxes for Mediplan health care.

1 TITLE I—HEALTH CARE

2 ELIGIBILITY AND BENEFITS

3 SEC. 101. ELIGIBILITY AND BENEFITS.

4 (a) IN GENERAL.—The Social Security Act is amend5 ed by adding at the end the following new title:

6 ‘‘TITLE XXI—MEDIPLAN HEALTH BENEFITS

7 ‘‘PART A—ELIGIBILITY

8 ‘‘SEC. 2101. ELIGIBILITY.

9 ‘‘(a) UNIVERSAL ELIGIBILITY FOR RESIDENTS.—Ex10 cept as provided in section 2163(a), each individual who

11 is a resident of the United States is entitled to health in12 surance benefits under this title.

13 ‘‘(b) SPECIAL ELIGIBILITY GROUPS.—For purposes

14 of this title, an individual described in subsection (a) may

15 obtain special benefits under this title on the basis of one

16 or more of the following special eligibility groups:
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1 ‘‘(1) Children (as defined in section

2 2161(a)(1)).

3 ‘‘(2) Low-income individuals (as defined in sec4 tion 2161(a)(2)).

5 ‘‘(3) Pregnant women (as defined in section

6 2161(a)(3)).

7 ‘‘(c) RECIPROCAL COVERAGE OF NONRESIDENTS.—

8 An individual who—

9 ‘‘(1) is not a resident of the United States,

10 ‘‘(2) is in the United States, and

11 ‘‘(3) is a national of a foreign state which pro12 vides health benefits to nationals of the United

13 States who are nonresidents in that state,

14 is entitled to such health insurance benefits under this

15 title, but only to the extent the Secretary determines that

16 such benefits would be available to nationals of the United

17 States similarly situated as a nonresident in the foreign

18 state.

19 ‘‘SEC. 2102. ENROLLMENT AND MEDIPLAN CARDS.

20 ‘‘(a) ENROLLMENT.—The Secretary shall provide a

21 mechanism for the enrollment of individuals entitled to

22 benefits under this title and, in conjunction with such en23 rollment, the issuance of a Mediplan card which may be

24 used for purposes of identification and processing of

25 claims for benefits under this title. Mediplan cards shall
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1 identify (as appropriate) if the individual is a child, a preg2 nant woman, or a low-income individual.

3 ‘‘(b) ENROLLMENT AT BIRTH.—The mechanism

4 under subsection (a) shall include a process for the auto5 matic enrollment of individuals at the time of birth in the

6 United States.

7 ‘‘PART B—BENEFITS

8 ‘‘SEC. 2121. SCOPE OF BENEFITS.

9 ‘‘(a) IN GENERAL.—Except as provided in the suc10 ceeding provisions of this part, the benefits provided to

11 an individual described in section 2101(a) by the program

12 established by this title shall consist of entitlement to the

13 same benefits as are provided under title XVIII to individ14 uals entitled to benefits under part A, and enrolled under

15 part B, of title XVIII.

16 ‘‘(b) CHANGE IN THE DEDUCTIBLE AND LIMIT ON

17 COST-SHARING.—

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

19 succeeding provisions of this part, the amount of ex20 penses (other than expenses for benefits described in

21 subsection (c)) with respect to which an individual is

22 entitled to have payment made under this title for

23 any year shall first be reduced by a deductible of

24 $350, except that in no case shall the amount of the

25 deductible for all the members of a family exceed
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1 $500. Such deductible shall be instead of the deduct2 ible for inpatient hospital services under the first

3 sentence of section 1813(a)(1) and the deductible

4 under section 1833(b).

5 ‘‘(2) LIMIT ON OUT-OF-POCKET EXPENSES.—

6 Whenever in a calendar year an individual’s ex7 penses for deductibles, coinsurance, and copayments

8 with respect to services covered under this title (in9 cluding expenses for benefits described in subsection

10 (c)) and furnished during the year equals $2,500, or

11 $3,000 for all the members of a family, payment of

12 benefits under this title for the individual (or for the

13 members of such family, respectively) for services

14 furnished during the remainder of the year shall be

15 paid without the application of any coinsurance or

16 copayments.

17 ‘‘(c) PRESCRIPTION DRUGS.—

18 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

19 benefits shall also be made available under this title

20 for outpatient prescription drugs and biologicals

21 (based on a formulary developed by the Secretary).

22 ‘‘(2) SEPARATE DEDUCTIBLE.—With respect to

23 benefits under this subsection, instead of applying

24 the cost-sharing described in subsection (b), except

25 as provided in the succeeding provisions of this sec-
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1 tion and subsection (b)(2), such benefits shall be

2 subject to an annual individual deductible of $800

3 and coinsurance of 20 percent of the recognized pay4 ment amount under section 2141(g).

5 ‘‘(d) CHILDREN.—

6 ‘‘(1) NO DEDUCTIBLES OR COINSURANCE.—In

7 the case of children (as defined in section

8 2161(a)(1)), there shall be no coinsurance,

9 deductibles, or copayments applicable to covered

10 benefits (including benefits described in paragraphs

11 (2) and (3)).

12 ‘‘(2) ADDITIONAL PREVENTIVE BENEFITS.—

13 ‘‘(A) IN GENERAL.—Subject to the perio14 dicity schedule established with respect to the

15 services under subparagraph (B), for children

16 benefits shall be available under this title for

17 the following items and services:

18 ‘‘(i) Newborn and well-baby care, in19 cluding normal newborn care and pediatri20 cian services for high-risk deliveries.

21 ‘‘(ii) Well-child care, including routine

22 office visits, routine immunizations (includ23 ing the vaccine itself), routine laboratory

24 tests, and preventive dental care.
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1 ‘‘(B) PERIODICITY SCHEDULE.—The Sec2 retary, in consultation with the American Acad3 emy of Pediatrics and the American Dental As4 sociation, shall establish a schedule of periodic5 ity which reflects the general, appropriate fre6 quency with which services listed in subpara7 graph (A) should be provided to healthy chil8 dren.

9 ‘‘(3) OTHER ADDITIONAL SERVICES FOR CHIL10 DREN.—For children, benefits also shall be available

11 under this title for the following:

12 ‘‘(A) Inpatient hospital services (without

13 regard to the restrictions described in sub14 sections (a)(1) and (b)(1) of section 1812 and

15 the coinsurance described in section

16 1813(a)(1)).

17 ‘‘(B) Eyeglasses and hearing aids, and ex18 aminations therefor.

19 ‘‘(e) PREGNANCY-RELATED SERVICES.—

20 ‘‘(1) IN GENERAL.—In the case of a pregnant

21 woman (as defined in section 2161(a)(3)), benefits

22 under this title shall include entitlement to have pay23 ment made for the following, without the application

24 of deductibles, coinsurance, or copayments, subject

25 to the periodicity schedule established with respect
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1 to the services under paragraph (2) and prior au2 thorization of certain services under paragraph (3):

3 ‘‘(A) Prenatal care, including care for all

4 complications of pregnancy.

5 ‘‘(B) Inpatient labor and delivery services.

6 ‘‘(C) Postnatal care.

7 ‘‘(D) Postnatal family planning services.

8 ‘‘(2) PERIODICITY SCHEDULE.—The Secretary,

9 in consultation with the American College of Obstet10 rics and Gynecology, shall establish a schedule of pe11 riodicity which reflects the general, appropriate fre12 quency with which services listed in paragraph (1)

13 should be provided to pregnant women without com14 plications of pregnancy.

15 ‘‘(3) PRIOR AUTHORIZATION REQUIRED FOR

16 CERTAIN SERVICES.—

17 ‘‘(A) IN GENERAL.—Except in the case of

18 items and services specified under subpara19 graph (B), benefits are not available with re20 spect to an item or service under paragraph (1)

21 unless the provision of the item or service has

22 been approved by a utilization and quality con23 trol peer review organization before the provi24 sion of the item or service.
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1 ‘‘(B) EXCEPTION FOR ROUTINE OR COM2 MON ITEMS AND SERVICES.—Subparagraph (A)

3 shall not apply to items and services which the

4 Secretary has specified on a list as being ei5 ther—

6 ‘‘(i) related to normal pregnancy, or

7 ‘‘(ii) related to a highly prevalent

8 complication of pregnancy,

9 or in the case of emergency services.

10 ‘‘(4) MULTIPLE BASES FOR ELIGIBILITY.—In

11 the case of a pregnant woman who is also a child

12 or a low-income individual, the benefits under this

13 subsection shall be in addition or supplementation to

14 the benefits otherwise available to the individual.

15 ‘‘(f) LOWER-INCOME INDIVIDUALS.—

16 ‘‘(1) LIMITATIONS ON DEDUCTIBLES AND COIN17 SURANCE.—

18 ‘‘(A) NONE FOR LOW-INCOME INDIVID19 UALS.—In the case of a low-income individual,

20 there shall be no coinsurance, deductibles, or

21 copayments under this title.

22 ‘‘(B) PHASE-IN FOR OTHER LOWER-IN23 COME INDIVIDUALS.—In the case of an individ24 ual whose applicable modified gross income (as

25 defined in section 2161(b)(1)) exceeds the pov-
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1 erty level (as defined in section 2161(b)(2)) but

2 does not exceed twice the poverty level, the co3 insurance, deductibles, and copayments applica4 ble under this title shall bear the same ratio to

5 the coinsurance, deductibles, and copayments

6 otherwise applicable as—

7 ‘‘(i) the excess of the applicable modi8 fied gross income over the poverty level,

9 bears to

10 ‘‘(ii) the poverty level.

11 If the ratio determined under the preceding

12 sentence is not a multiple of 25 percentage

13 points, such ratio shall be rounded to the near14 est 25 percentage points.

15 ‘‘(2) ADDITIONAL BENEFITS FOR LOW-INCOME

16 INDIVIDUALS.—In the case of low-income individuals

17 (as defined in section 2161(a)(2)), benefits under

18 this title shall also include entitlement to have pay19 ment made for the following, without the application

20 of deductibles, coinsurance, or copayments:

21 ‘‘(A) Inpatient hospital services (without

22 regard to the restrictions described in sub23 sections (a)(1) and (b)(1) of section 1812 and

24 the coinsurance described in section

25 1813(a)(1)).
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1 ‘‘(B) Eyeglasses and hearing aids and ex2 aminations therefor.

3 ‘‘SEC. 2122. EXCLUSIONS.

4 ‘‘(a) IN GENERAL.—Except as provided in this sec5 tion, section 1862 shall apply to expenses incurred for

6 items and services provided under this title the same man7 ner as such section applies to items and services provided

8 under title XVIII.

9 ‘‘(b) BENEFITS EXCEPTION.—

10 ‘‘(1) CHILDRENS’ SERVICES.—In applying sec11 tion 1862(a) with respect to services described in

12 section 2121(d)(2)(A) (relating to well-child serv13 ices), payment shall not be denied under paragraph

14 (1), (7), or (12) of such section 1862(a) if the serv15 ices are provided in accordance with the periodicity

16 schedule described in section 2121(d)(2)(B).

17 ‘‘(2) SERVICES FOR PREGNANT WOMEN.—In

18 applying section 1862(a) with respect to services de19 scribed in section 2121(e)(1) (other than subpara20 graph (A) thereof), payment shall not be denied

21 under paragraph (1) or (7) of such section 1862(a)

22 if the services are provided in accordance with the

23 periodicity schedule described in section 2121(e)(2).

24 ‘‘(3) TREATMENT OF EYEGLASSES AND HEAR25 ING AIDS FOR CHILDREN AND LOW-INCOME INDIVID-
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1 UALS.—Payment shall not be denied under this title

2 under section 1862(a)(7) with respect to eyeglasses

3 and hearing aids and examinations therefor in the

4 case of children and low-income individuals.

5 ‘‘(c) COORDINATION OF PAYMENTS.—

6 ‘‘(1) PRIMARY TO GROUP HEALTH PLANS.—

7 Section 1862(b)(1) (relating to requirements of

8 group health plans) shall not apply under this title.

9 ‘‘(2) SECONDARY TO MEDICARE.—Payment

10 shall not be made under this title with respect to

11 benefits to the extent that payment for such benefits

12 may be made under title XVIII.

13 ‘‘PART C—PAYMENT FOR BENEFITS AND FINANCING

14 ‘‘SEC. 2141. PAYMENTS FOR BENEFITS.

15 ‘‘(a) IN GENERAL.—Except as otherwise provided in

16 this section and in section 2121—

17 ‘‘(1) payment of benefits under this title with

18 respect to benefits shall be made in an amount con19 sistent with subsection (h) and on the same basis as

20 payment is made with respect to such benefits under

21 title XVIII, and

22 ‘‘(2) the provisions of sections 1814, 1833,

23 1834, 1842, 1848, and 1886 shall apply to payment

24 of benefits under this title in the same manner as

25 they apply to benefits under title XVIII.
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1 ‘‘(b) NO COST-SHARING FOR CERTAIN SERVICES.—

2 No deductibles, coinsurance, copayments, or other cost3 sharing shall be imposed with respect to—

4 ‘‘(1) well-child care services described in section

5 2121(d)(1),

6 ‘‘(2) items and services for which an individual

7 is entitled under this title as a pregnant woman, and

8 ‘‘(3) items and services for qualified low-income

9 individuals.

10 For provision limiting the deductibles, coinsurance, and

11 copayments under this title in any year, see section

12 2121(b)(2).

13 ‘‘(c) NO EXTRA BILLING PERMITTED.—Payment

14 under this title may only be made on an assignment-relat15 ed basis (as defined in section 1842(i)(1)). If an entity

16 knowingly and willfully presents or causes to be presented

17 a claim or bills an individual enrolled under this title for

18 charges for services other than on an assignment-related

19 basis, the Secretary may apply sanctions against such en20 tity in accordance with section 1842(j)(2).

21 ‘‘(d) ADJUSTMENT OF PAYMENTS.—

22 ‘‘(1) ESTABLISHMENT OF NEW DRGS AND

23 WEIGHTS.—In making payment under this title with

24 respect to inpatient hospital services, the Secretary

25 shall establish such additional diagnosis-related
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1 groups (and weighting factors with respect to dis2 charges within such groups) and make such adjust3 ments in the diagnosis-related groups and weighting

4 factors with respect to discharges within such groups

5 otherwise established under section 1886(d)(4) as

6 may be necessary—

7 ‘‘(A) to reflect the types of discharges oc8 curring under this title which are not occurring

9 under title XVIII, and

10 ‘‘(B) to provide for a weighting factor, for

11 cesarean section deliveries, which is 95 percent

12 of the weighting factor that otherwise would be

13 established.

14 ‘‘(2) PAYMENT FOR OBSTETRICAL SERVICES.—

15 ‘‘(A) GLOBAL FEE.—In making payment

16 under this title with respect to the group of ob17 stetrical services typical of treatment through18 out a course of pregnancy, the Secretary shall

19 establish, as a schedule under section 1848, a

20 global fee with respect to such group of serv21 ices.

22 ‘‘(B) BONUS FOR EARLY PRESEN23 TATION.—The fee schedule amount with respect

24 to obstetrical services under this title shall be

25 increased by 5 percent in the case of services
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1 furnished to women who have presented for pre2 natal care during the first trimester.

3 ‘‘(C) DISINCENTIVE FOR CESAREAN SEC4 TIONS.—The fee schedule amount otherwise es5 tablished with respect to a cesarean section

6 shall be 95 percent of the fee schedule amount

7 otherwise established.

8 ‘‘(e) CONDITIONS OF AND LIMITATIONS ON PAY9 MENTS.—The provisions of sections 1814 and 1835 shall

10 apply to payment for services under this title in the same

11 manner as they apply to payment for services under parts

12 A and B, respectively, of title XVIII.

13 ‘‘(f) USE OF TRUST FUND.—In carrying out this sec14 tion, any reference in title XVIII to a trust fund shall be

15 treated as a reference to the Mediplan Trust Fund estab16 lished under section 2142.

17 ‘‘(g) PAYMENT FOR OUTPATIENT PRESCRIPTION

18 DRUGS AND BIOLOGICALS.—The Secretary, taking into

19 account the payment methodology that was described in

20 the amendments made by section 202 of the Medicare Cat21 astrophic Coverage Act of 1988 (as in effect before its re22 peal), shall establish a prospective payment methodology

23 for the payment for outpatient prescription drugs and

24 biologicals under this title. Such methodology shall be es25 tablished in a manner so as to meet the assurance de-
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1 scribed in subsection (h) with respect to the class of serv2 ices that includes outpatient prescription drugs and

3 biologicals.

4 ‘‘(h) COMPUTATION OF APPROPRIATE REFERENCE

5 RATES OR CONVERSION FACTORS TO STAY WITHIN

6 BUDGET.—In computing the amount of payment with re7 spect to services (within a class of services) for which a

8 standardized amount, conversion factor, or other rate

9 basis is established under title XVIII, such standardized

10 amount, conversion factor, or other rate basis shall be es11 tablished in such a manner as will assure that—

12 ‘‘(1) the aggregate Mediplan expenditures (as

13 defined in section 201(d) of the Mediplan Health

14 Care Act of 1993) for all the services within such

15 class which are not attributable to services furnished

16 to individuals who are enrolled in a staff or group

17 model health maintenance organization (as defined

18 in section 207(b)(2)(B) of such Act) with respect to

19 health care services covered under the subscriber

20 agreement, is equal to

21 ‘‘(2) the allocation to such class for the year

22 under section 202 of such Act with respect to the

23 national Mediplan expenditure budget, less the prod24 uct of such allocation and the proportion of such al25 location that the Secretary estimates is attributable
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1 to services furnished to individuals who are enrolled

2 in such a staff or group model health maintenance

3 organization with respect to health care services cov4 ered under the subscriber agreement.

5 In computing the aggregate Mediplan expenditures under

6 paragraph (1), there shall be taken into account the ad7 justment in medicare payment rates under section 205 of

8 such Act.

9 ‘‘SEC. 2142. MEDIPLAN TRUST FUND.

10 ‘‘(a) ESTABLISHMENT.—(1) There is hereby created

11 on the books of the Treasury of the United States a trust

12 fund to be known as the ‘Mediplan Trust Fund’ (in this

13 section referred to as the ‘Trust Fund’). The Trust Fund

14 shall consist of such gifts and bequests as may be made

15 as provided in section 201(i)(1) and amounts appropriated

16 under paragraph (2).

17 ‘‘(2) There are hereby appropriated to the Trust

18 Fund amounts equivalent to 100 percent of the taxes im19 posed by sections 59B and 59C of the Internal Revenue

20 Code of 1986. The amounts appropriated by the preceding

21 sentence shall be transferred from time to time from the

22 general fund in the Treasury to the Trust Fund, such

23 amounts to be determined on the basis of estimates by

24 the Secretary of the Treasury of the taxes, paid to or de25 posited into the Treasury; and proper adjustments shall
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1 be made in amounts subsequently transferred to the extent

2 prior estimates were in excess of or were less than the

3 taxes specified in such sentence.

4 ‘‘(b) INCORPORATION OF PROVISIONS.—

5 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

6 the provisions of subsections (b) through (e) and (g)

7 through (i) of section 1817 shall apply to the Trust

8 Fund in the same manner as they apply to the

9 Federal Hospital Insurance Trust Fund.

10 ‘‘(2) EXCEPTIONS.—In applying paragraph

11 (1)—

12 ‘‘(A) the Board of Trustees and Managing

13 Trustee of the Trust Fund shall be composed of

14 the members of the Board of Trustees and the

15 Managing Trustee, respectively, of the Federal

16 Hospital Insurance Trust Fund; and

17 ‘‘(B) any reference in section 1817 to the

18 Federal Hospital Insurance Trust Fund or to

19 title XVIII (or part A thereof) is deemed a ref20 erence to the Trust Fund under this section

21 and this title, respectively.

22 ‘‘PART D—ADMINISTRATIVE SIMPLIFICATION

23 ‘‘SEC. 2151. REQUIREMENT FOR ENTITLEMENT VERIFICA24 TION SYSTEM.

25 ‘‘(a) IN GENERAL.—
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1 ‘‘(1) REQUIREMENT.—Each Mediplan supple2 mental plan (as defined in section 2166(d)) and the

3 Secretary, with respect to the plan provided under

4 this title, shall provide for an electronic system, that

5 is certified by the Secretary as meeting the stand6 ards established under subsection (c), for the ver7 ification of an individual’s entitlement to benefits

8 under such plan.

9 ‘‘(2) DEADLINE FOR APPLICATION OF REQUIRE10 MENT.—The deadline specified under this paragraph

11 for the requirement under paragraph (1) is 6

12 months after the date the standards are established

13 under subsection (c).

14 ‘‘(b) ENFORCEMENT THROUGH CIVIL MONEY PEN15 ALTIES.—

16 ‘‘(1) IN GENERAL.—In the case of a Mediplan

17 supplemental plan that fails to provide for an elec18 tronic verification system that is certified by the

19 Secretary as meeting the standards established

20 under subsection (c), the plan is subject to a civil

21 money penalty of not to exceed $100 for each day

22 in which such failure persists. The provisions of sec23 tion 1128A of the Social Security Act (other than

24 subsections (a) and (b)) shall apply to a civil money

25 penalty under this subsection in the same manner as
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1 such provisions apply to a penalty or proceeding

2 under section 1128A(a) of such Act.

3 ‘‘(2) EFFECTIVE DATE.—No penalty may be

4 imposed under paragraph (1) for any failure occur5 ring before the deadline specified in subsection

6 (a)(2).

7 ‘‘(c) STANDARDS FOR ENTITLEMENT VERIFICATION

8 SYSTEMS.—

9 ‘‘(1) IN GENERAL.—The Secretary shall estab10 lish standards consistent with this subsection re11 specting the requirements for certification of entitle12 ment verification systems.

13 ‘‘(2) INFORMATION AVAILABLE.—Such stand14 ards shall require a system to provide information,

15 with respect to individuals, concerning the following:

16 ‘‘(A) The specific benefits to which the in17 dividual is entitled under the plan.

18 ‘‘(B) Current status of the individual with

19 respect to fulfillment of deductibles,

20 copayments, and out-of-pocket limits on cost21 sharing.

22 ‘‘(C) Restrictions on providers who may

23 provide covered services, including utilization

24 controls (such as preadmission certification).
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1 ‘‘(3) FORM OF INQUIRY.—Each verification sys2 tem shall be capable of accepting inquiries under

3 this subsection from health care providers in a vari4 ety of electronic and other forms, including—

5 ‘‘(A) through electronic transmission of in6 formation on the uniform health claims card (in

7 a manner similar to that for verification of

8 credit card purchases),

9 ‘‘(B) through the use of a touch-tone tele10 phone line, and

11 ‘‘(C) through the use of a computer

12 modem.

13 The system shall also provide, for an additional fee,

14 for the acceptance of inquiries in a nonelectronic

15 form.

16 ‘‘(4) FORM OF RESPONSE.—Each such system

17 shall be capable of responding to such inquiries

18 under this subsection in a variety of electronic and

19 other forms, including—

20 ‘‘(A) through modem transmission of infor21 mation,

22 ‘‘(B) through computer synthesized voice

23 communication, and

24 ‘‘(C) through transmission of information

25 to a facsimile (fax) machine.
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1 The system shall also provide, for an additional fee,

2 for the response to inquiries in a nonelectronic form.

3 ‘‘(5) LIMITATION ON FEES.—Neither the Sec4 retary nor a Mediplan supplemental may impose a

5 fee for the acceptance or response to an inquiry

6 under this subsection except where the acceptance or

7 response is in a nonelectronic form.

8 ‘‘(6) PUBLIC DOMAIN SOFTWARE TO PROVID9 ERS.—The Secretary shall provide for the develop10 ment, and shall make available without charge to

11 health service providers and Mediplan supplemental

12 plans, such computer software as will enable—

13 ‘‘(A) such providers to make inquiries, and

14 receive responses, electronically respecting the

15 eligibility and benefits of an individual under

16 plans, and

17 ‘‘(B) such plans to make inquiries, and re18 ceive responses, electronically respecting liability

19 of other plans for the provision or payment of

20 benefits.

21 ‘‘(7) DEADLINE.—The Secretary shall first es22 tablish the standards under this subsection (and

23 shall develop and make available the software under

24 paragraph (6)) by not later than 12 months after

25 the date of the enactment of this title.
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1 ‘‘(d) APPLICATION TO MEDICARE AND MEDICAID

2 PROGRAMS.—

3 ‘‘(1) MEDICARE PROGRAM.—The Secretary

4 shall provide, in regulations promulgated to carry

5 out the medicare program, that there is established

6 an entitlement verification system that meets the

7 standards established under subsection (c), by not

8 later than the deadline specified in subsection (a)(2).

9 ‘‘(2) STATE MEDICAID PLANS.—As a condition

10 for the approval of a State plan under the medicaid

11 program, effective for calendar quarters beginning

12 on or after the deadline specified in subsection

13 (a)(2), each such plan shall provide, in accordance

14 with regulations of the Secretary, that there is es15 tablished an entitlement verification system that

16 meets the standards established under subsection

17 (c).

18 ‘‘SEC. 2152. REQUIREMENTS FOR UNIFORM CLAIMS AND

19 ELECTRONIC CLAIMS DATA SET.

20 ‘‘(a) REQUIREMENTS.—

21 ‘‘(1) SUBMISSION OF CLAIMS.—Each health

22 service provider that furnishes services in the United

23 States for which payment may be made under this

24 title or under a Mediplan supplemental plan shall

25 submit any claim for payment for such services only
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1 in a form and manner consistent with standards es2 tablished under subsection (c).

3 ‘‘(2) ACCEPTANCE OF CLAIMS.—The Secretary

4 and a Mediplan supplemental plan may not reject a

5 claim for payment under this title or the plan on the

6 basis of the form or manner in which the claim is

7 submitted if the claim is submitted in accordance

8 with the standards established under subsection (c).

9 ‘‘(3) EFFECTIVE DATE.—This subsection shall

10 apply to claims for services furnished on or after the

11 date that is 6 months after the date standards are

12 established under subsection (c).

13 ‘‘(b) ENFORCEMENT THROUGH CIVIL MONEY PEN14 ALTIES.—

15 ‘‘(1) IN GENERAL.—

16 ‘‘(A) PROVIDERS.—In the case of a health

17 service provider that submits a claim in viola18 tion of subsection (a)(1), the provider is subject

19 to a civil money penalty of not to exceed $100

20 (or, if greater, the amount of the claim) for

21 each such violation.

22 ‘‘(B) PLANS.—In the case of a Mediplan

23 supplemental plan that rejects a claim in viola24 tion of subsection (a)(2), the plan is subject to

25 a civil money penalty of not to exceed $100 (or,
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1 if greater, the amount of the claim) for each

2 such violation.

3 ‘‘(2) PROCESS.—The provisions of section

4 1128A of the Social Security Act (other than sub5 sections (a) and (b)) shall apply to a civil money

6 penalty under paragraph (1) in the same manner as

7 such provisions apply to a penalty or proceeding

8 under section 1128A(a) of such Act.

9 ‘‘(3) SUNSET FOR PENALTY.—No civil money

10 penalty may be imposed under this subsection for

11 submission (or rejection) of any claim on or after

12 the date that is 36 months after the effective date

13 specified in subsection (a)(3).

14 ‘‘(c) STANDARDS RELATING TO UNIFORM CLAIMS

15 AND ELECTRONIC CLAIMS DATA SET.—

16 ‘‘(1) ESTABLISHMENT OF STANDARDS.—The

17 Secretary shall establish standards that—

18 ‘‘(A) relate to the form and manner of sub19 mission of claims for benefits under this title

20 and under a Mediplan supplemental plan, and

21 ‘‘(B) define the data elements to be con22 tained in a uniform electronic claims data set to

23 be used with respect to such claims.

24 ‘‘(2) SCOPE OF INFORMATION.—
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1 ‘‘(A) IN GENERAL.—The standards under

2 this subsection are intended to cover substan3 tially most claims that are filed under this title

4 and under Mediplan supplemental plans. Such

5 information need not include all elements that

6 may potentially be required to be reported

7 under utilization review provisions of such

8 plans.

9 ‘‘(B) ENSURING ACCOUNTABILITY FOR

10 CLAIMS SUBMITTED ELECTRONICALLY.—In es11 tablishing such standards, the Secretary, in

12 consultation with appropriate agencies, shall in13 clude such methods of ensuring provider re14 sponsibility and accountability for claims sub15 mitted electronically that are designed to con16 trol fraud and abuse in the submission of such

17 claims.

18 ‘‘(C) COMPONENTS.—In establishing such

19 standards the Secretary shall—

20 ‘‘(i) with respect to data elements, de21 fine data fields, formats, and medical no22 menclature, and plan benefit and insurance

23 information;
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•HR 2610 SC

1 ‘‘(ii) develop a single, uniform coding

2 system for diagnostic and procedure codes;

3 and

4 ‘‘(iii) provide for standards for the

5 uniform electronic transmission of such

6 elements.

7 ‘‘(3) COORDINATION WITH STANDARDS FOR

8 ELECTRONIC MEDICAL RECORDS.—In establishing

9 standards under this subsection, the Secretary shall

10 assure that—

11 ‘‘(A) the development of such standards is

12 coordinated with the development of the stand13 ards for electronic medical records under sec14 tion 2153, and

15 ‘‘(B) the coding of data elements under the

16 uniform electronic claims data set and the cod17 ing of the same elements in the uniform hos18 pital clinical data set are consistent.

19 ‘‘(4) USE OF TASK FORCES.—In adopting

20 standards under this subsection—

21 ‘‘(A) the Secretary shall take into account

22 the recommendations of current task forces, in23 cluding at least the Workgroup on Electronic

24 Data Interchange, National Uniform Billing

25 Committee, the Uniform Claim Task Force, and
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1 the Computer-based Patient Record Institute,

2 and

3 ‘‘(B) the Secretary shall provide that the

4 electronic transmission standards are consist5 ent, to the extent practicable, with the applica6 ble standards established by the Accredited

7 Standards Committee X–12 of the American

8 National Standards Institute.

9 ‘‘(5) UNIFORM, UNIQUE PROVIDER IDENTIFICA10 TION CODES.—In establishing standards under this

11 subsection—

12 ‘‘(A) the Secretary shall provide for a

13 unique identifier code for each health service

14 provider that furnishes services for which a

15 claim may be submitted under this title or

16 under a Mediplan supplemental plan, and

17 ‘‘(B) in the case of a provider that has a

18 unique identifier issued for purposes of title

19 XVIII, the code provided under subparagraph

20 (A) shall be the same as such unique identifier.

21 ‘‘(6) PUBLIC DOMAIN SOFTWARE TO PROVID22 ERS.—The Secretary shall provide for the develop23 ment, and shall make available without charge to

24 health service providers, such computer software as
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1 will enable the providers to submit claims and to re2 ceive verification of claims status electronically.

3 ‘‘(7) STANDARDS FOR PAPER CLAIMS.—The

4 standards shall provide for a uniform paper claims

5 form which is consistent with data elements required

6 for the submission of claims electronically.

7 ‘‘(8) STANDARDS FOR CLAIMS FOR CLINICAL

8 LABORATORY TESTS.—The standards shall provide

9 that claims for clinical laboratory tests for which

10 benefits are provided under this title or under a

11 Mediplan supplemental plan shall be submitted di12 rectly by the person or entity that performed (or su13 pervised the performance of) the tests to the plan in

14 a manner consistent with (and subject to such excep15 tions as are provided under) the requirement for di16 rect submission of such claims under title XVIII.

17 ‘‘(9) DEADLINE.—The Secretary shall first pro18 vide for the standards for the uniform claims under

19 this subsection (and shall develop and make avail20 able the software under paragraph (6)) by not later

21 than 1 year after the date of the enactment of this

22 title.

23 ‘‘(d) USE UNDER THIS TITLE AND MEDICARE AND

24 MEDICAID PROGRAMS.—
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1 ‘‘(1) REQUIREMENT FOR PROVIDERS.—In the

2 case of a health service provider that submits a

3 claim for services furnished under this title in viola4 tion of subsection (a)(1), no payment shall be made

5 under this title for such services.

6 ‘‘(2) REQUIREMENTS OF INTERMEDIARIES AND

7 CARRIERS UNDER MEDICARE PROGRAM.—The Sec8 retary shall provide, in regulations promulgated to

9 carry out this title, that the claims process provided

10 under this title conforms to the standards estab11 lished under subsection (c).

12 ‘‘(3) REQUIREMENTS OF STATE MEDICAID

13 PLANS.—As a condition for the approval of State

14 plans under the medicaid program, effective as of

15 the effective date specified in subsection (a)(3), each

16 such plan shall provide, in accordance with regula17 tions of the Secretary, that the claims process pro18 vided under the plan is modified to the extent re19 quired to conform to the standards established under

20 subsection (c).

21 ‘‘SEC. 2153. ELECTRONIC MEDICAL RECORDS AND REPORT22 ING.

23 ‘‘(a) STANDARDS FOR ELECTRONIC MEDICAL

24 RECORDS FOR HOSPITALS.—

25 ‘‘(1) PROMULGATION OF STANDARDS.—
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1 ‘‘(A) IN GENERAL.—Between July 1,

2 1994, and January 1, 1995, the Secretary shall

3 promulgate standards described in paragraph

4 (2) for hospitals concerning electronic medical

5 records.

6 ‘‘(B) REVISION.—The Secretary may from

7 time to time revise the standards promulgated

8 under this paragraph.

9 ‘‘(2) CONTENTS OF STANDARDS.—The stand10 ards promulgated under paragraph (1) shall include

11 at least the following:

12 ‘‘(A) A definition of a uniform hospital

13 clinical data set, including a definition of the

14 set of comprehensive data elements, for use by

15 utilization and quality control peer review orga16 nizations.

17 ‘‘(B) Standards for an electronic patient

18 care information system with data obtained at

19 the point of care.

20 ‘‘(C) A specification of, and manner of

21 presentation of, the individual data elements of

22 the set and system under this paragraph.

23 ‘‘(D) Standards concerning the trans24 mission of electronic medical data.
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•HR 2610 SC

1 ‘‘(E) Standards relating to confidentiality

2 of patient-specific information, which include

3 the physical security of electronic data and the

4 use of keys, passwords, encryption, and other

5 means to ensure the protection of the confiden6 tiality and privacy of electronic data.

7 ‘‘(3) COORDINATION WITH STANDARDS FOR

8 UNIFORM ELECTRONIC CLAIMS DATA SET.—In es9 tablishing standards under this subsection, the Sec10 retary shall assure that—

11 ‘‘(A) the development of such standards is

12 coordinated with the development of the stand13 ards for the uniform electronic claims data set

14 under subsection (b), and

15 ‘‘(B) the coding of data elements under the

16 uniform hospital clinical data set and the cod17 ing of the same elements under the uniform

18 electronic claims data set are consistent.

19 ‘‘(4) CONSULTATION.—In establishing stand20 ards under this subsection, the Secretary shall—

21 ‘‘(A) consult with the American National

22 Standards Institute, hospitals, health benefit

23 plans, and other interested parties, and

24 ‘‘(B) take into consideration, in developing

25 standards under paragraph (2)(A), the data set
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1 used by the utilization and quality control peer

2 review program under part B of title XI.

3 ‘‘(b) REQUIREMENT FOR APPLICATION OF ELEC4 TRONIC RECORDS STANDARDS TO HOSPITALS.—

5 ‘‘(1) AS CONDITION OF MEDICARE PARTICIPA6 TION.—As of January 1, 1996, each hospital, as a

7 requirement of each participation agreement under

8 this title, shall, in accordance with the standards

9 promulgated under subsection (a)(1)—

10 ‘‘(A) maintain clinical data included in the

11 uniform hospital clinical data set under sub12 section (a)(2)(A) in electronic form on all inpa13 tients,

14 ‘‘(B) upon request of the Secretary or of a

15 utilization and quality control peer review orga16 nization (with which the Secretary has entered

17 into a contract under part B of title XI), trans18 mit electronically data requested from such

19 data set, and

20 ‘‘(C) upon request of the Secretary, or of

21 a fiscal intermediary or carrier, transmit elec22 tronically any data (with respect to a claim)

23 from such data set.

24 ‘‘(2) APPLICATION OF PRESENTATION AND

25 TRANSMISSION STANDARDS TO ELECTRONIC TRANS-
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1 MISSION TO FEDERAL AGENCIES.—Effective Janu2 ary 1, 1996, if a hospital is required under a Fed3 eral program to transmit a data element that is sub4 ject to a standard, promulgated under subsection

5 (a)(1), described in subparagraph (C) or (D) of sub6 section (a)(2), the head of the Federal agency re7 sponsible for such program (if not otherwise author8 ized) is authorized to require the provider to present

9 and transmit the data element electronically in ac10 cordance with such a standard.

11 ‘‘(c) LIMITATION ON DATA REQUIREMENTS WHERE

12 STANDARDS IN EFFECT.—

13 ‘‘(1) IN GENERAL.—On or after January 1,

14 1996, the Secretary under this title or under title

15 XVIII (including any carrier or fiscal intermediary

16 or nor any utilization and quality control peer review

17 organization) and a Mediplan supplemental plan

18 may not require, for the purpose of utilization review

19 or as a condition of providing benefits or making

20 payments under this title, title XVIII, or the plan,

21 that a hospital—

22 ‘‘(A) provide any data element not in the

23 uniform hospital clinical data set specified

24 under the standards promulgated under sub25 section (a), or
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1 ‘‘(B) transmit or present any such data

2 element in a manner inconsistent with such

3 standards applicable to such transmission or

4 presentation.

5 ‘‘(2) COMPLIANCE.—The Secretary may impose

6 a civil money penalty on any Mediplan supplemental

7 plan that fails to comply with paragraph (1) in an

8 amount not to exceed $100 for each such failure.

9 The provisions of section 1128A of the Social Secu10 rity Act (other than the first sentence of subsection

11 (a) and other than subsection (b)) shall apply to a

12 civil money penalty under this paragraph in the

13 same manner as such provisions apply to a penalty

14 or proceeding under section 1128A(a) of such Act.

15 ‘‘(3) APPLICATION TO MEDICAID PROGRAM.—As

16 a condition for the approval of State plans under the

17 medicaid program and in accordance with regula18 tions of the Secretary, effective as of January 1,

19 1996, each such plan may not require that a hos20 pital, for the purpose of utilization review or as a

21 condition of providing benefits or making payments

22 under the plan—

23 ‘‘(A) provide any data element not in the

24 uniform hospital clinical data set specified
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•HR 2610 SC

1 under the standards promulgated under sub2 section (a), or

3 ‘‘(B) transmit or present any such data

4 element in a manner inconsistent with such

5 standards applicable to such transmission or

6 presentation.

7 ‘‘(d) PREEMPTION OF STATE QUILL PEN LAWS.—

8 ‘‘(1) IN GENERAL.—Any provision of State law

9 that requires medical or health insurance records

10 (including billing information) to be maintained in

11 written, rather than electronic, form shall deemed to

12 be satisfied if the records are maintained in an elec13 tronic form that meets standards established by the

14 Secretary under paragraph (2).

15 ‘‘(2) SECRETARIAL AUTHORITY.—Not later

16 than 1 year after the date of the enactment of this

17 title, the Secretary shall issue regulations to carry

18 out paragraph (1). The regulations shall provide for

19 an electronic substitute that is in the form of a

20 unique identifier (assigned to each authorized indi21 vidual) that serves the functional equivalent of a sig22 nature. The regulations may provide for such excep23 tions to paragraph (1) as the Secretary determines

24 to be necessary to prevent fraud and abuse, to pre25 vent the illegal distribution of controlled substances,
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1 and in such other cases as the Secretary deems ap2 propriate.

3 ‘‘(3) EFFECTIVE DATE.—Paragraph (1) shall

4 take effect on the first day of the first month that

5 begins more than 30 days after the date the Sec6 retary issues the regulations referred to in para7 graph (2).

8 ‘‘SEC. 2154. UNIFORM HOSPITAL COST REPORTING.

9 ‘‘Each hospital, as a requirement under a participa10 tion agreement under this title for each cost reporting pe11 riod beginning during or after fiscal year 1993, shall pro12 vide for the reporting of information to the Secretary with

13 respect to any hospital care provided in a uniform manner

14 consistent with standards established by the Secretary to

15 carry out section 4007(c) of the Omnibus Budget Rec16 onciliation Act of 1987 and in an electronic form consist17 ent with standards established by the Secretary.

18 ‘‘SEC. 2155. HEALTH SERVICE PROVIDER DEFINED.

19 ‘‘In this part, the term ‘health service provider’ in20 cludes a provider of services (as defined in section

21 1861(u)), physician, supplier, and other person furnishing

22 health care services.
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1 ‘‘PART E—GENERAL PROVISIONS

2 ‘‘SEC. 2161. DEFINITIONS RELATING TO BENEFICIARIES

3 AND INCOME.

4 ‘‘(a) TERMS RELATING TO BENEFICIARIES.—In this

5 title:

6 ‘‘(1) CHILD.—The term ‘child’ means an indi7 vidual who throughout a month has not attained 23

8 years of age.

9 ‘‘(2) LOW-INCOME INDIVIDUAL.—The term

10 ‘low-income individual’ means an individual whose

11 applicable modified gross income (as defined in sub12 section (b)(1)) is less than 100 percent of the pov13 erty level (as defined in subsection (b)(2)).

14 ‘‘(3) PREGNANT WOMAN.—The term ‘pregnant

15 woman’ means a woman who has been certified by

16 a physician (in a manner specified by the Secretary)

17 as being pregnant, until the last day of the month

18 in which the 60-day period (beginning on the date

19 of termination of the pregnancy) ends.

20 ‘‘(b) TERMS RELATING TO INCOME.—In this title:

21 ‘‘(1) APPLICABLE MODIFIED GROSS INCOME.—

22 ‘‘(A) IN GENERAL.—Except as provided in

23 this paragraph, the term ‘applicable modified

24 gross income’ means, for a calendar year for an

25 individual, the modified gross income (as de-
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1 fined in section 59B(c) of the Internal Revenue

2 Code of 1986) of the taxpayer (or the taxpayer

3 for whom the individual may be claimed as a

4 dependent) for the taxable year ending in the

5 second previous calendar year.

6 ‘‘(B) APPLICATION OF CURRENT YEAR

7 MODIFIED GROSS INCOME.—

8 ‘‘(i) IN GENERAL.—Subject to clause

9 (ii), the Secretary shall establish a proce10 dure under which an individual may file a

11 declaration of estimated modified gross in12 come for a taxable year ending in a cal13 endar year, which modified gross income

14 will apply under this subsection as the ap15 plicable modified gross income for the cal16 endar year. Subject to clause (ii), such pro17 cedure shall be applicable regardless of

18 whether or not the individual filed a tax

19 return for the taxable year ending in the

20 second previous calendar year.

21 ‘‘(ii) LIMITATION ON APPLICATION.—

22 The Secretary may limit the application of

23 clause (i), in the case of individuals who

24 have filed tax returns for the taxable year

25 ending in the second previous calendar
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1 year, to individuals with respect to whom

2 the applicable modified gross income will

3 be reduced by at least 20 percent as a re4 sult of the application of such clause.

5 ‘‘(iii) REQUIREMENT FOR RETURN.—

6 Any individual who has filed a declaration

7 under clause (i) for a calendar year is re8 quired to file an income tax return for the

9 taxable year in the calendar year, regard10 less of whether any income tax is actually

11 owed for the year. The failure of the indi12 vidual to file such a return makes the indi13 vidual liable for overpayments under this

14 title under clause (iv) in the same manner

15 as if this paragraph had not applied.

16 ‘‘(iv) COLLECTION FOR OVERPAY17 MENTS.—If a declaration of estimated

18 modified gross income is made applicable

19 to a calendar year under clause (i) and the

20 actual modified gross income for that tax21 able year exceeds such estimated modified

22 gross income, the individual shall be liable

23 to the United States for 110 percent of the

24 amount of additional payments made

25 under this title as a result of the use of
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1 such estimated modified gross income in2 stead of the actual modified gross income

3 for that taxable year.

4 ‘‘(C) TRANSMITTAL OF INFORMATION.—By

5 not later than October 1 of each year, the Sec6 retary of the Treasury shall transmit to the

7 Secretary such information relating to the ap8 plicable modified gross income of individuals for

9 the taxable year ending in the previous year as

10 may be necessary to apply this title in the suc11 ceeding calendar year.

12 ‘‘(2) POVERTY LEVEL.—The term ‘poverty

13 level’ means, for an individual in a family, the offi14 cial poverty line (as defined by the Office of Man15 agement and Budget, and revised annually in ac16 cordance with section 673(2) of the Omnibus Budget

17 Reconciliation Act of 1981) applicable to a family of

18 the size involved.

19 ‘‘SEC. 2162. INCORPORATION OF CERTAIN MEDICARE PRO20 VISIONS AND OTHER PROVISIONS.

21 ‘‘(a) USE OF CARRIERS AND INTERMEDIARIES.—The

22 Secretary shall provide for the administration of this title

23 through the use of fiscal intermediaries and carriers in

24 the same manner as title XVIII is carried out through

25 the use of such fiscal intermediaries and carriers, except
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1 that no payment shall be made under this title except on

2 the basis of bills or charges that are submitted electroni3 cally in a manner specified by the Secretary.

4 ‘‘(b) DEFINITIONS.—Except as otherwise provided in

5 this title, the definitions contained in section 1861 shall

6 apply for purposes of this title in the same manner as they

7 apply for purposes of title XVIII.

8 ‘‘(c) CERTIFICATION, PROVIDER QUALIFICATION,

9 ETC.—The provisions of sections 1863 through 1875, sec10 tions 1877 through 1880, section 1883, section 1885, and

11 sections 1887 through 1892 shall apply to this title in the

12 same manner as they apply to title XVIII.

13 ‘‘(d) HEALTH MAINTENANCE ORGANIZATIONS AND

14 COMPETITIVE MEDICAL PLANS.—

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

16 subsection, section 1876 shall apply to individuals

17 entitled to benefits under this title in the same man18 ner as such section applies to individuals entitled to

19 benefits under part A, and enrolled under part B, of

20 title XVIII.

21 ‘‘(2) APPLICATION.—In applying section 1876

22 under this section—

23 ‘‘(A) the provisions of such section relating

24 only to individuals enrolled under part B of title

25 XVIII shall not apply;
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1 ‘‘(B) any reference to a Trust Fund estab2 lished under title XVIII and to benefits under

3 such title is deemed a reference to the Mediplan

4 Trust Fund and to benefits under this title;

5 ‘‘(C) the adjusted average per capita cost

6 and the adjusted community rate shall be deter7 mined on the basis of benefits and payment

8 rates under this title; and

9 ‘‘(D) subsection (f) shall not apply.

10 ‘‘(e) TITLE XI PROVISIONS.—The following provi11 sions shall apply to this title in the same manner as they

12 apply to title XVIII:

13 ‘‘(1) Sections 1124, 1126, and 1128 through

14 1128B (relating to fraud and abuse).

15 ‘‘(2) Section 1134 (relating to nonprofit hos16 pital philanthropy).

17 ‘‘(3) Section 1138 (relating to hospital proto18 cols for organ procurement and standards for organ

19 procurement agencies).

20 ‘‘(4) Section 1142 (relating to research on out21 comes of health care services and procedures), ex22 cept that any reference in such section to a Trust

23 Fund is deemed a reference to the Mediplan Trust

24 Fund.
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1 ‘‘(5) Part B of title XI (relating to peer review

2 of the utilization and quality of health care services).

3 ‘‘(f) OTHER PROVISIONS.—The provisions of section

4 201(i) shall apply to this title and the Mediplan Trust

5 Fund in the same manner as they apply to title XVIII

6 and the Federal Hospital Insurance Trust Fund.

7 ‘‘SEC. 2163. STATE MAINTENANCE OF EFFORT PAYMENTS.

8 ‘‘(a) CONDITION OF COVERAGE.—Notwithstanding

9 any other provision of this title, no individual who is a

10 resident of a State is eligible for benefits under this title

11 for a month in a calendar year, unless the State provides

12 (in a manner and at a time specified by the Secretary)

for payment to the Mediplan Trust Fund of 1 13 ⁄12th of the

14 amount specified in subsection (b) for the year.

15 ‘‘(b) MAINTENANCE OF EFFORT AMOUNT.—The

16 amount of payment specified in this subsection for a State

17 for a year is equal to the amount of payment (net of Fed18 eral payments) made by a State under its State plan under

19 title XIX for 1993 for medical assistance with respect to

20 which benefits would have been payable under this title

21 for low-income individuals if this title were in effect in that

22 year, increased to the year involved by the compounded

23 sum of the increase in the consumer price index for all

24 urban consumers (U.S. City average, as published by the
46

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1 Bureau of Labor Statistics of the Department of Labor)

2 for each year after 1993 and up to the year involved.

3 ‘‘SEC. 2164. MODIFICATION OF MEDICAID AND OTHER PRO4 GRAMS TO AVOID DUPLICATION OF BENE5 FITS.

6 ‘‘Notwithstanding any other provision of law—

7 ‘‘(1) a State plan under title XIX shall not pro8 vide any medical assistance for benefits with respect

9 to which any payments may be made under this

10 title;

11 ‘‘(2) a health benefits plan under chapter 89 of

12 title 5, United States Code, shall not provide bene13 fits for which any payment may be made under this

14 title; and

15 ‘‘(3) health benefits shall not be available under

16 the Civilian Health and Medical Program of the

17 Uniformed Services (as defined in section 1072(4) of

18 title 10, United States Code) for services for which

19 payment may be made under this title.

20 ‘‘SEC. 2165. MAINTENANCE OF ADDITIONAL BENEFITS FOR

21 CURRENT BENEFICIARIES UNDER GROUP

22 HEALTH PLANS.

23 ‘‘(a) IN GENERAL.—In the case of a group health

24 plan (as defined in section 5000(b)(1) of the Internal Rev25 enue Code of 1986) that, as of the date of the enactment
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1 of this title, provides any health benefit to an employee

2 or former employee or a family member of an employee

3 or former employee that is additional to the benefits pro4 vided under this title, the group health plan must continue

5 to make available such an additional benefit to such an

6 individual notwithstanding the enactment of this title.

7 ‘‘(b) LIMITATION TO CURRENT BENEFICIARIES.—

8 Subsection (a) shall not apply to an individual who is not

9 entitled to benefits under the group health plan as of the

10 date of the enactment of this title.

11 ‘‘(c) ENFORCEMENT.—There is established a private

12 cause of action for damages (which shall be in an amount

13 triple the amount otherwise provided) in the case of a

14 group health plan that fails to continue to provide benefits

15 in accordance with subsection (a).

16 ‘‘PART F—REGULATION OF MEDIPLAN SUPPLEMENTAL

17 POLICIES

18 ‘‘SEC. 2171. STANDARDS AND REQUIREMENTS FOR

19 MEDIPLAN SUPPLEMENTAL POLICIES.

20 ‘‘(a) CERTIFICATION REQUIRED.—

21 ‘‘(1) IN GENERAL.—No Mediplan supplemental

22 policy (as defined in section 2179(4)) may be issued

23 on or after the effective date specified in subsection

24 (d) (and no new contract may be offered under such

25 policy with respect to any individual or group begin-
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1 ning on or after such effective date) unless the pol2 icy has been certified—

3 ‘‘(A) by the Secretary (in accordance with

4 such procedures as the Secretary establishes),

5 or

6 ‘‘(B) by a State regulatory program (ap7 proved under subsection (b)),

8 as meeting the standards established under section

9 2172 by such effective date.

10 ‘‘(2) POLICY DISAPPROVED.—If the Secretary

11 (or, in the case of a policy certified by a State regu12 latory program, the State) determines that a

13 Mediplan supplemental policy does not meet the ap14 plicable standards of this title on or after such effec15 tive date, no coverage may be provided under the

16 plan to individuals not enrolled as of the date of the

17 determination and the policy may not be continued

18 for policy years beginning after the date of such de19 termination until the Secretary (or program) deter20 mines that such policy is in compliance with such

21 standards.

22 ‘‘(b) STATE APPROVED PROGRAMS.—

23 ‘‘(1) IN GENERAL.—If the Secretary determines

24 that a State has in effect an effective regulatory pro25 gram for the application of the standards established
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1 under section 2172 to Mediplan supplemental poli2 cies, the Secretary may approve such program for

3 purposes of certification of Mediplan supplemental

4 policies under this title.

5 ‘‘(2) ANNUAL REPORTS.—As a condition for the

6 continued approval of such a regulatory program,

7 the State shall report to the Secretary annually such

8 information as the Secretary may require with re9 spect to the performance of the program. Such infor10 mation shall include a list of the Mediplan supple11 mental policies certified under the program, the

12 compliance of such policies with the standards estab13 lished under section 2172, and enforcement actions

14 taken to ensure such compliance.

15 ‘‘(3) PERIODIC SECRETARIAL REVIEW OF STATE

16 REGULATORY PROGRAMS.—The Secretary annually

17 shall review State regulatory programs approved

18 under paragraph (1) to determine if they continue to

19 apply and enforce the standards. If the Secretary

20 initially determines that a State regulatory program

21 no longer is applying and enforcing such standards,

22 the Secretary shall provide the State an opportunity

23 to adopt such a plan of correction that would bring

24 such program into compliance. If the Secretary

25 makes a final determination that the State regu-
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1 latory program, fails to apply and enforce such

2 standards after such an opportunity, the Secretary

3 shall disapprove such program and reassume respon4 sibility for certification of all Mediplan supplemental

5 policies in that State.

6 ‘‘(4) GAO AUDITS.—The Comptroller General

7 shall conduct periodic reviews on a sample of State

8 regulatory programs approved under paragraph (1)

9 to determine their compliance with the requirements

10 of such paragraph. The Comptroller General shall

11 report to the Secretary and Congress on the findings

12 of such reviews.

13 ‘‘(c) EXCISE TAX SANCTIONS.—Nonqualified

14 Mediplan supplemental policies are subject to an excise tax

15 under section 5000A of the Internal Revenue Code of

16 1986.

17 ‘‘(d) EFFECTIVE DATE SPECIFIED.—

18 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

19 the effective date specified in this subsection for a

20 State is the earlier of—

21 ‘‘(A) the date the State changes its stat22 utes or regulations to establish a regulatory

23 program that meets the requirements of this

24 part, or
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1 ‘‘(B) 1 year after the date the Secretary

2 first publishes standards under section 2172.

3 ‘‘(2) ADDITIONAL LEGISLATIVE ACTION RE4 QUIRED.—In the case of a State which the Secretary

5 identifies as—

6 ‘‘(A) requiring State legislation (other than

7 legislation appropriating funds) to establish a

8 regulatory program that meets the require9 ments of this part, but

10 ‘‘(B) having a legislature which is not

11 scheduled to meet in 1994 in a legislative ses12 sion in which such legislation may be consid13 ered,

14 the effective date specified in this subsection is the

15 first day of the first calendar quarter beginning

16 after the close of the first legislative session of the

17 State legislature that begins on or after January 1,

18 1994. For purposes of the previous sentence, in the

19 case of a State that has a 2-year legislative session,

20 each year of such session shall be deemed to be a

21 separate regular session of the State legislature.

22 ‘‘SEC. 2172. ESTABLISHMENT OF STANDARDS.

23 ‘‘(a) ESTABLISHMENT OF STANDARDS.—The Sec24 retary shall develop and publish, by not later than 9

25 months after the the date of the enactment of this title,
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•HR 2610 SC

1 specific standards to implement the requirements of this

2 title and to be applied under section 5000A of the Internal

3 Revenue Code of 1986.

4 ‘‘(b) MORE STRINGENT STATE STANDARDS PER5 MITTED.—In the case of insured Mediplan supplemental

6 policies (as defined in section 2174(c)(2)), a State may

7 implement standards that are more stringent than the

8 standards established under this section.

9 ‘‘(c) APPLICATION TO ERISA.—The Secretary shall

10 consult with the Secretary of Labor concerning the appli11 cation of the requirements of this title to employee welfare

12 benefit plans under title I of the Employee Retirement In13 come Security Act of 1974.

14 ‘‘SEC. 2173. REQUIREMENTS APPLICABLE TO ALL

15 MEDIPLAN SUPPLEMENTAL POLICIES.

16 ‘‘(a) NO DISCRIMINATION BASED ON HEALTH STA17 TUS.—

18 ‘‘(1) PROVISION OF SERVICES.—Except as pro19 vided under subsection (b), a Mediplan supplemental

20 policy may not deny, limit, or condition the coverage

21 under (or benefits of) the plan based on the health

22 status, claims experience, receipt of health care,

23 medical history, or lack of evidence of insurability,

24 of an individual.
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•HR 2610 SC

1 ‘‘(2) PREMIUM CHARGES.—A Mediplan supple2 mental policy may not vary premiums charged based

3 on the health status, claims experience, receipt of

4 health care, medical history, or lack of evidence of

5 insurability, of an individual.

6 ‘‘(b) TREATMENT OF PRE-EXISTING CONDITION EX7 CLUSIONS FOR ALL SERVICES.—

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

9 provisions of this subsection, a Mediplan supple10 mental policy may exclude coverage with respect to

11 services related to treatment of a pre-existing condi12 tion, but the period of such exclusion may not ex13 ceed 6 months.

14 ‘‘(2) NONAPPLICATION TO NEWBORNS.—The

15 exclusion of coverage permitted under paragraph (1)

16 shall not apply to services furnished to newborns.

17 ‘‘(3) CREDITING OF PREVIOUS COVERAGE.—

18 ‘‘(A) IN GENERAL.—If an individual is in

19 a period of continuous coverage (as defined in

20 subparagraph (B)(i)) with respect to particular

21 services as of the date of initial coverage under

22 a plan, any period of exclusion of coverage with

23 respect to a pre-existing condition for such serv24 ices or type of services shall be reduced by 1
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•HR 2610 SC

1 month for each month in the period of continu2 ous coverage.

3 ‘‘(B) DEFINITIONS.—In this paragraph:

4 ‘‘(i) PERIOD OF CONTINUOUS COV5 ERAGE.—The term ‘period of continuous

6 coverage’ means, with respect to particular

7 services, the period beginning on the date

8 an individual is enrolled under a Mediplan

9 supplemental policy or health benefit plan

10 or program (including the medicare pro11 gram, a State plan under title XIX, con12 tinuation coverage under section 4980B of

13 the Internal Revenue Code of 1986, or a

14 State general medical assistance program)

15 which provides the same or substantially

16 similar benefits with respect to such serv17 ices and ends on the date the individual is

18 not so enrolled for a continuous period of

19 more than 3 months.

20 ‘‘(ii) PRE-EXISTING CONDITION.—The

21 term ‘pre-existing condition’ means, with

22 respect to coverage under a policy, a condi23 tion which has been diagnosed or treated

24 during the 3-month period ending on the

25 day before the first date of such coverage,
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•HR 2610 SC

1 except that such term does not include a

2 condition which was first diagnosed or

3 treated during a period of continuous cov4 erage.

5 ‘‘(C) STANDARDS FOR SIMILAR BENE6 FITS.—The Secretary shall establish such cri7 teria for determining if benefits are substan8 tially similar as may be necessary to carry out

9 this subsection.

10 ‘‘(c) SIMPLIFICATION OF BENEFITS.—

11 ‘‘(1) IN GENERAL.—Each Mediplan supple12 mental policy shall only offer benefits consistent with

13 the standards promulgated under paragraph (2).

14 ‘‘(2) STANDARDS.—The Secretary shall promul15 gate standards providing for—

16 ‘‘(A) limitations on the groups or packages

17 of benefits that may be offered under a

18 Mediplan supplemental policy consistent with

19 paragraphs (3) and (4) of this subsection,

20 ‘‘(B) uniform language and definitions to

21 be used with respect to such benefits, and

22 ‘‘(C) uniform format to be used in the pol23 icy with respect to such benefits.

24 ‘‘(3) BASIS.—The standards under paragraph

25 (2) shall provide—
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•HR 2610 SC

1 ‘‘(A) for such groups or packages of bene2 fits as may be appropriate taking into account

3 the considerations specified in paragraph (4)

4 and the requirements of the succeeding sub5 paragraphs,

6 ‘‘(B) for identification of a core group of

7 basic benefits common to all policies, and

8 ‘‘(C) that, subject to paragraph (5), the

9 total number of different benefit packages

10 (counting the core group of basic benefits de11 scribed in subparagraph (B) and each other

12 combination of benefits that may be offered as

13 a separate benefit package) that may be estab14 lished in all the States and by all issuers shall

15 not exceed 10.

16 ‘‘(4) INNOVATION.—With the approval of the

17 Secretary, the issuer of a Mediplan supplemental

18 policy may offer new or innovative benefits in addi19 tion to the benefits provided in a policy that other20 wise complies with the standards. Any such new or

21 innovative benefits may include benefits that are not

22 otherwise available and are cost effective and shall

23 be offered in a manner which is consistent with the

24 goal of simplification of Mediplan supplemental poli25 cies.
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•HR 2610 SC

1 ‘‘(5) FURTHER LIMITATIONS.—

2 ‘‘(A) IN GENERAL.—Except as provided in

3 subparagraph (B), this subsection shall not be

4 construed as preventing a State from restricting

5 the groups of benefits that may be offered in

6 Mediplan supplemental policies in the State.

7 ‘‘(B) LIMITATION.—A State with a regu8 latory program approved under section

9 2171(b)(1) may not restrict under subpara10 graph (A) the offering of a Mediplan supple11 mental policy consisting only of the core group

12 of benefits described in paragraph (3)(B).

13 ‘‘(6) CONSTRUCTION.—This subsection shall

14 not be construed as preventing an issuer of a

15 Mediplan supplemental policy who otherwise meets

16 the requirements of this section from providing,

17 through an arrangement with a vendor, for dis18 counts from that vendor to the policyholder or

19 certificateholders for the purchase of items or serv20 ices not covered under its Mediplan supplemental

21 policies.

22 ‘‘(7) MAKING BASIC POLICY AVAILABLE.—

23 ‘‘(A) IN GENERAL.—Anyone who sells a

24 Mediplan supplemental policy to an individual

25 shall make available for sale to the individual a
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•HR 2610 SC

1 Mediplan supplemental policy with only the core

2 group of basic benefits (described in paragraph

3 (3)(B)).

4 ‘‘(B) OUTLINE OF COVERAGE.—Anyone

5 who sells a Mediplan supplemental policy to an

6 individual shall provide the individual, before

7 the sale of the policy, an outline of coverage

8 which describes the benefits under the policy.

9 Such outline shall be on a standard form ap10 proved by the Secretary consistent with the

11 standards promulgated under this subsection.

12 ‘‘(8) PENALTY.—Whoever sells or issues a

13 Mediplan supplemental policy in violation of the re14 quirements of this subsection is subject to a civil

15 money penalty of not to exceed $25,000 (or $15,000

16 in the case of a seller who is not the issuer of the

17 policy) for each such violation.

18 ‘‘(d) MINIMUM LOSS RATIO REQUIRED.—

19 ‘‘(1) IN GENERAL.—A Mediplan supplemental

20 policy, a specific disease policy (as defined by the

21 Secretary), or a hospital confinement indemnity pol22 icy (as defined by the Secretary) may not be issued

23 or renewed (or otherwise provide coverage after the

24 effective date specified in section 2171(d)) unless—
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1 ‘‘(A) the policy can be expected for periods

2 after the effective date of these provisions (as

3 estimated for the entire period for which rates

4 are computed to provide coverage, on the basis

5 of incurred claims experience and earned pre6 miums for such periods, and in accordance with

7 a uniform methodology, including uniform re8 porting standards, developed by the Secretary)

9 to return to policyholders in the form of aggre10 gate benefits provided under the policy, at least

11 80 percent of the aggregate amount of pre12 miums collected in the case of group policies or

13 at least 70 percent in the case of individual

14 policies; and

15 ‘‘(B) the issuer of the policy provides for

16 the issuance of a proportional refund, or a cred17 it against future premiums of a proportional

18 amount, based on the premium paid and in ac19 cordance with paragraph (2), of the amount of

20 premiums received necessary to assure that the

21 ratio of aggregate benefits provided to the ag22 gregate premiums collected (net of such refunds

23 or credits) complies with the expectation re24 quired under subparagraph (A), treating poli-
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•HR 2610 SC

1 cies of the same type as a single policy for each

2 standard package.

3 For purposes of subparagraph (A) only, policies is4 sued as a result of solicitations of individuals

5 through the mails or by mass media advertising (in6 cluding both print and broadcast advertising) shall

7 be deemed to be individual policies. For the purpose

8 of calculating the refund or credit required under

9 paragraph (1)(B) for a policy issued before the ef10 fective date specified in section 2171(d), the refund

11 or credit calculation shall be based on the aggregate

12 benefits provided and premiums collected under all

13 such policies issued by an insurer in a State (sepa14 rated as to individual and group policies) and shall

15 be based only on aggregate benefits provided and

16 premiums collected under such policies after such

17 date.

18 ‘‘(2) APPLICATION.—Paragraph (1)(B) shall be

19 applied with respect to each type of policy by stand20 ard package. Paragraph (1)(B) shall not apply to a

21 policy until 12 months following issue. In the case

22 of a policy issued before the effective date specified

23 in section 2171(d), paragraph (1)(B) shall not apply

24 until 1 year after such date.

25 ‘‘(3) TIMING OF REFUND OR CREDIT.—
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1 ‘‘(A) IN GENERAL.—A refund or credit re2 quired under paragraph (1)(B) shall be made to

3 each policyholder insured under the applicable

4 policy as of the last day of the year involved.

5 ‘‘(B) INTEREST.— Such a refund shall in6 clude interest from the end of the calendar year

7 involved until the date of the refund or credit

8 at a rate as specified by the Secretary for this

9 purpose from time to time which is not less

10 than the average rate of interest for 13-week

11 Treasury notes.

12 ‘‘(C) DEADLINE.— For purposes of this

13 paragraph and paragraph (1)(B), refunds or

14 credit against premiums due shall be made,

15 with respect to a calendar year, not later than

16 the third quarter of the succeeding calendar

17 year.

18 ‘‘(4) NO PREEMPTION.—The provisions of this

19 subsection do not preempt a State from requiring a

20 higher percentage than that specified in paragraph

21 (1)(A).

22 ‘‘(5) AUDITS.—The Comptroller General shall

23 periodically, not less often than every 3 years, per24 form audits with respect to the compliance of

25 Mediplan supplemental policies and dread disease
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•HR 2610 SC

1 policies with the loss ratio requirements of this sub2 section and shall report the results of such audits to

3 any State involved and to the Secretary.

4 ‘‘(6) SANCTIONS.—

5 ‘‘(A) IN GENERAL.—A person who fails to

6 provide refunds or credits as required in para7 graph (1)(B) is subject to a civil money penalty

8 of not to exceed $25,000 for each policy issued

9 for which such failure occurred.

10 ‘‘(B) LIABILITY.—Each issuer of a policy

11 subject to the requirements of paragraph (1)(B)

12 shall be liable to the policyholder or, in the case

13 of a group policy, to the certificateholder for

14 credits required under such paragraph.

15 ‘‘(e) GUARANTEED RENEWABILITY.—

16 ‘‘(1) IN GENERAL.—Each Mediplan supple17 mental policy shall be guaranteed renewable and—

18 ‘‘(A) the issuer may not cancel or

19 nonrenew the policy solely on the ground of

20 health status of the individual, and

21 ‘‘(B) the issuer shall not cancel or

22 nonrenew the policy for any reason other than

23 nonpayment of premium or material misrepre24 sentation.
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•HR 2610 SC

1 ‘‘(2) RIGHT OF CONVERSION UPON TERMI2 NATION OF GROUP POLICY.—If the Mediplan supple3 mental policy is terminated by the group policy4 holder and is not replaced as provided under para5 graph (4), the issuer shall offer certificateholders an

6 individual Mediplan supplemental policy which (at

7 the option of the certificateholder)—

8 ‘‘(A) provides for continuation of the bene9 fits contained in the group policy, or

10 ‘‘(B) provides for such benefits as other11 wise meets the requirements of this part.

12 ‘‘(3) RIGHT OF CONVERSION UPON TERMI13 NATION OF MEMBERSHIP IN A GROUP.—If an indi14 vidual is a certificateholder in a group Mediplan sup15 plemental policy and the individual terminates mem16 bership in the group, the issuer shall—

17 ‘‘(A) offer the certificateholder the conver18 sion opportunity described in paragraph (2), or

19 ‘‘(B) at the option of the group policy20 holder, offer the certificateholder continuation

21 of coverage under the group policy.

22 ‘‘(4) REPLACEMENT.—If a group Mediplan sup23 plemental policy is replaced by another group

24 Mediplan supplemental policy purchased by the same

25 policyholder, the succeeding issuer shall offer cov-
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•HR 2610 SC

1 erage to all persons covered under the old group pol2 icy on its date of termination. Coverage under the

3 new group policy shall not result in any exclusion for

4 preexisting conditions that would have been covered

5 under the group policy being replaced.

6 ‘‘(5) SUSPENSION OF POLICY FOR CERTAIN

7 LOW-INCOME INDIVIDUALS.—

8 ‘‘(A) IN GENERAL.—Each Mediplan sup9 plemental policy shall provide that benefits and

10 premiums under the policy shall be suspended

11 at the request of the policyholder for the period

12 (not to exceed 24 months) in which the policy13 holder is determined to be entitled for benefits

14 under this title as a low-income individual, but

15 only if the policyholder notifies the issuer of

16 such policy within 90 days after the date the in17 dividual becomes so entitled. If such suspension

18 occurs and if the policyholder or

19 certificateholder loses such entitlement, such

20 policy shall be automatically reinstituted (effec21 tive as of the date of termination of such enti22 tlement) under the following terms, if the pol23 icyholder provides notice of such loss of entitle24 ment within 90 days after the date of such loss:
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1 ‘‘(i) There is no waiting period with

2 respect to treatment of pre-existing condi3 tions.

4 ‘‘(ii) Coverage is substantially equiva5 lent to coverage in effect before the date of

6 the termination.

7 ‘‘(iii) The classification of premiums

8 are on terms which are at least as favor9 able to the policyholder or certificateholder

10 as the premium classification terms that

11 would have applied to the policyholder or

12 certificateholder had the coverage never

13 terminated.

14 ‘‘(B) PENALTY.—Any person who issues a

15 Mediplan supplemental policy and fails to com16 ply with the requirements of subparagraph (A)

17 is subject to a civil money penalty of not to ex18 ceed $25,000 for each such violation.

19 ‘‘SEC. 2174. STANDARDS APPLICABLE ONLY TO INSURED

20 MEDIPLAN SUPPLEMENTAL POLICIES.

21 ‘‘(a) OPEN ENROLLMENT.—

22 ‘‘(1) IN GENERAL.—Subject to the succeeding

23 provisions of this subsection, a carrier that offers an

24 insured Mediplan supplemental policy (as defined in

25 subsection (c)) to individuals residing (or to groups
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•HR 2610 SC

1 located) in a State must offer the same policy to any

2 other resident of (or group located in) the State.

3 Such requirement shall apply on a continuous, year4 round basis.

5 ‘‘(2) RESTRICTIONS OF ENROLLMENT IN THE

6 CASE OF CERTAIN ASSOCIATION COVERAGE.—In the

7 case of an insured Mediplan supplemental policy of8 fered through an association which is composed ex9 clusively of employers (which may include self-em10 ployed individuals) and which has been formed for

11 purposes other than obtaining health insurance, the

12 carrier is not required to offer the policy to individ13 uals or employers who are not employees of such

14 employers or self-employed members of the associa15 tion, or their dependents.

16 ‘‘(3) TREATMENT OF HEALTH MAINTENANCE

17 ORGANIZATIONS.—

18 ‘‘(A) GEOGRAPHIC LIMITATIONS.—A

19 health maintenance organization may deny en20 rollment with respect to an individual if the in21 dividual is residing outside the service area of

22 the organization, but only if such denial is ap23 plied uniformly without regard to health status

24 or insurability.
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1 ‘‘(B) SIZE LIMITS.—A health maintenance

2 organization may apply to the Secretary to

3 cease enrolling new employer groups or individ4 uals in its insured Mediplan supplemental policy

5 (or in a geographic area served by the policy)

6 if—

7 ‘‘(i) it ceases to enroll any new em8 ployer groups or individuals, and

9 ‘‘(ii) it can demonstrate that its finan10 cial or administrative capacity to serve pre11 viously enrolled groups and individuals

12 (and additional individuals who will be ex13 pected to enroll because of affiliation with

14 such previously enrolled groups) will be im15 paired if it is required to enroll new em16 ployer groups or individuals.

17 ‘‘(b) NOTICES AND RENEWAL PERIODS.—

18 ‘‘(1) NOTICE AND SPECIFICATION OF RATES

19 AND ADMINISTRATIVE CHANGES.—

20 ‘‘(A) NOTICE.—The carrier of an insured

21 Mediplan supplemental policy shall provide for

22 notice, at least 30 days before the date of expi23 ration of the policy, of the terms for renewal of

24 the policy. Except with respect to rates and ad25 ministrative changes, the terms of renewal (in-
68

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1 cluding benefits) shall be the same as the terms

2 of issuance.

3 ‘‘(B) RENEWAL RATES SAME AS ISSUANCE

4 RATES.—The carrier may change the terms for

5 such renewal, but the premium rates charged

6 with respect to such renewal shall be the same

7 as that for a new issue.

8 ‘‘(2) PERIOD OF RENEWAL.—The period of re9 newal of each insured Mediplan supplemental policy

10 shall be for a period of not less than 12 months.

11 ‘‘(c) DEFINITIONS.—In this section (and section

12 2172):

13 ‘‘(1) CARRIER.—The term ‘carrier’ means any

14 person that offers a Mediplan supplemental policy,

15 whether through insurance or otherwise, including a

16 licensed insurance company, a prepaid hospital or

17 medical service plan, a health maintenance organiza18 tion, and a multiple employer welfare arrangement

19 (as defined in section 3(40) of the Employee Retire20 ment Income Security Act of 1974).

21 ‘‘(2) INSURED MEDIPLAN SUPPLEMENTAL POL22 ICY.—The term ‘insured Mediplan supplemental pol23 icy’ means any Mediplan supplemental policy pro24 vided through insurance, and includes a prepaid hos25 pital or medical service plan, a health maintenance
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1 organization, and a multiple employer welfare ar2 rangement (as defined in section 3(40) of the Em3 ployee Retirement Income Security Act of 1974).

4 ‘‘SEC. 2175. PROHIBITION OF DUPLICATION.

5 ‘‘(a) IN GENERAL.—

6 (1) IN GENERAL.—It is unlawful for a person

7 to sell or issue to an individual entitled to benefits

8 under this title—

9 ‘‘(A) a health insurance policy with knowl10 edge that the policy duplicates health benefits

11 to which the individual is otherwise entitled

12 under this title (including special benefits as a

13 low-income individual),

14 ‘‘(B) a Mediplan supplemental policy with

15 knowledge that the individual is entitled to ben16 efits under another Mediplan supplemental pol17 icy, or

18 ‘‘(C) a health insurance policy (other than

19 a Mediplan supplemental policy) with knowledge

20 that the policy duplicates health benefits to

21 which the individual is otherwise entitled, other

22 than benefits to which the individual is entitled

23 under a requirement of State or Federal law.

24 ‘‘(2) EXCEPTION.—Paragraph (1) shall not

25 apply with respect to—
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1 ‘‘(A) the sale or issuance of a group policy

2 or plan of one or more employers or labor orga3 nizations, or of the trustees of a fund estab4 lished by one or more employers or labor orga5 nizations (or combination thereof), for employ6 ees or former employees (or combination there7 of) or for members or former members (or com8 bination thereof) of the labor organizations,

9 ‘‘(B) the sale or issuance of a policy de10 scribed in paragraph (1)(A) (other than a

11 Mediplan supplemental policy to an individual

12 entitled to benefits as a low-income individual)

13 under which all the benefits are fully payable

14 directly to or on behalf of the individual without

15 regard to other health benefit coverage of the

16 individual but only if there is disclosed in a

17 prominent manner as part of (or together with)

18 the application the applicable statement (speci19 fied under subsection (d)) of the extent to

20 which benefits payable under the policy dupli21 cate benefits under this title, or

22 ‘‘(C) the sale or issuance of a policy de23 scribed in paragraph (1)(C) under which all the

24 benefits are fully payable directly to or on be-
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1 half of the individual without regard to other

2 health benefit coverage of the individual.

3 ‘‘(b) ADDITIONAL PROHIBITION.—Whoever violates

4 subsection (a) shall be fined under title 18, United States

5 Code, or imprisoned not more than 5 years, or both, and,

6 in addition to or in lieu of such a criminal penalty, is sub7 ject to a civil money penalty of not to exceed $25,000 (or

8 $15,000 in the case of a seller who is not the issuer of

9 the policy) for each such prohibited act.

10 ‘‘(c) RULE.—A seller (who is not the issuer of a

11 health insurance policy) shall not be considered to violate

12 subsection (a) with respect to the sale of a Mediplan sup13 plemental policy if the policy is sold in compliance with

14 subsection (d).

15 ‘‘(d) DISCLOSURE.—

16 ‘‘(1) IN GENERAL.—It is unlawful for a person

17 to issue or sell a Mediplan supplemental policy to an

18 individual entitled to benefits under this title, wheth19 er directly, through the mail, or otherwise, unless—

20 ‘‘(A) the person obtains from the individ21 ual, as part of the application for the issuance

22 or purchase and on a form described in sub23 paragraph (B), a written statement (in a form

24 specified by the Secretary) signed by the indi25 vidual stating, to the best of the individual’s
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1 knowledge, what health insurance policies the

2 individual has, from what source, and whether

3 the individual is a low-income individual, and

4 ‘‘(B) the written statement is accompanied

5 by a written acknowledgment (in a form speci6 fied by the Secretary), signed by the seller of

7 the policy, of the request for and receipt of such

8 statement.

9 ‘‘(2) STATEMENT.—The statement required by

10 paragraph (1) shall be made on a form that—

11 ‘‘(A) states in substance that an individual

12 entitled to benefits under this title does not

13 need more than one Mediplan supplemental pol14 icy,

15 ‘‘(B) states in substance that low-income

16 individuals usually do not need a Mediplan sup17 plemental policy and that benefits and pre18 miums under any such policy shall be sus19 pended upon request of the policyholder during

20 the period (of not longer than 24 months) of

21 entitlement to benefits under this title as a low22 income individual and may be reinstated upon

23 no longer being a low-income individual, and

24 ‘‘(C) states that counseling services may be

25 available in the State to provide advice concern-
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•HR 2610 SC

1 ing the purchase of Mediplan supplemental poli2 cies and may provide the telephone number for

3 such services.

4 ‘‘(3) NEED FOR STATEMENT.—

5 ‘‘(A) IN GENERAL.—Except as provided in

6 subparagraph (B), if the statement required by

7 paragraph (2) is not obtained or indicates that

8 the individual has another Mediplan supple9 mental policy or indicates that the individual is

10 entitled to benefits under this title as a low-in11 come individual, the sale of a Mediplan supple12 mental policy shall be considered to be a viola13 tion of subsection (a).

14 ‘‘(B) EXCEPTION.—Subparagraph (A)

15 shall not apply in the case of an individual who

16 has a Mediplan supplemental policy, if the indi17 vidual indicates in writing, as part of the appli18 cation for purchase, that the policy being pur19 chased replaces such other policy and indicates

20 an intent to terminate the policy being replaced

21 when the new policy becomes effective and the

22 issuer or seller certifies in writing that such

23 policy will not, to the best of the issuer’s or sell24 er’s knowledge, duplicate coverage (taking into

25 account any such replacement).
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1 ‘‘(C) PENALTY.—Whoever issues or sells a

2 Mediplan supplemental policy in violation of

3 this paragraph shall be fined under title 18,

4 United States Code, or imprisoned not more

5 than 5 years, or both, and, in addition to or in

6 lieu of such a criminal penalty, is subject to a

7 civil money penalty of not to exceed $25,000 (or

8 $15,000 in the case of a seller who is not the

9 issuer of the policy) for each such violation.

10 ‘‘SEC. 2176. ADDITIONAL PROHIBITIONS.

11 ‘‘(a) IN GENERAL.—Whoever knowingly and willfully

12 makes or causes to be made or induces or seeks to induce

13 the making of any false statement or representation of a

14 material fact with respect to compliance of any policy with

15 the standards and requirements set forth in section 2173

16 or in regulations promulgated pursuant to such section

17 shall be fined under title 18, United States Code, or im18 prisoned not more than 5 years, or both, and, in addition

19 to or in lieu of such a criminal penalty, is subject to a

20 civil money penalty of not to exceed $5,000 for each such

21 prohibited act.

22 ‘‘(b) FALSE REPRESENTATION.—Whoever falsely as23 sumes or pretends to be acting, or misrepresents in any

24 way that he is acting, under the authority of or in associa25 tion with, the program of health insurance established
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•HR 2610 SC

1 under this title, or any Federal agency, for the purpose

2 of selling or attempting to sell insurance, or in such pre3 tended character demands, or obtains money, paper, docu4 ments, or anything of value, shall be fined under title 18,

5 United States Code, or imprisoned not more than 5 years,

6 or both, and, in addition to or in lieu of such a criminal

7 penalty, is subject to a civil money penalty of not to exceed

8 $5,000 for each such prohibited act.

9 ‘‘(c) APPLICATION OF CIVIL MONEY PENALTY PRO10 CEDURES.— The provisions of section 1128A (other than

11 the first sentence of subsection (a) and other than sub12 section (b)) shall apply to a civil money penalty under this

13 part in the same manner as such provisions apply to a

14 penalty or proceeding under section 1128A(a).

15 ‘‘SEC. 2177. INFORMATION DISCLOSURE.

16 ‘‘(a) IN GENERAL.—The Secretary shall provide, to

17 all individuals entitled to benefits under this title such in18 formation as will permit such individuals to evaluate the

19 value of Mediplan supplemental policies to them and the

20 relationship of any such policies to benefits provided under

21 this title.

22 ‘‘(b) INFORMATION ON PROHIBITIONS.—The Sec23 retary shall—

24 ‘‘(1) inform all individuals entitled to benefits

25 under this title of—
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1 ‘‘(A) the actions and practices that are

2 subject to sanctions under this part and

3 ‘‘(B) the manner in which they may report

4 any such action or practice to an appropriate

5 official of the Department of Health and

6 Human Services (or to an appropriate State of7 ficial), and

8 ‘‘(2) publish the toll-free number for individuals

9 to report suspected violations of the provision of this

10 part.

11 ‘‘(c) COUNSELING NUMBERS.—The Secretary shall

12 provide individuals entitled to benefits under this title with

13 a listing of the addresses and telephone numbers of State

14 and Federal agencies and offices that provide information

15 and assistance to individuals with respect to the selection

16 of Mediplan supplemental policies.

17 ‘‘SEC. 2178. LIMITATIONS ON SALES COMMISSIONS.

18 ‘‘(a) IN GENERAL.—It is unlawful for a person who

19 provides for a commission or other compensation to an

20 agent or other representatives with respect to the sale of

21 a Mediplan supplemental policy (or certificate)—

22 ‘‘(1) to provide for a first year commission or

23 other first year compensation that exceeds 200 per24 cent of the commission or other compensation for
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1 the selling or servicing of the policy or certificate in

2 a second or subsequent year, or

3 ‘‘(2) to provide for compensation with respect

4 to replacement of such a policy or certificate that is

5 greater than the compensation that would apply to

6 the renewal of the policy or certificate.

7 ‘‘(b) PENALTY.—Whoever violates subsection (a)

8 shall be fined under title 18, United States Code, or im9 prisoned not more than 5 years, or both, and, in addition

10 to or in lieu of such a criminal penalty, is subject to a

11 civil money penalty of not to exceed $25,000 for each such

12 prohibited act.

13 ‘‘(c) DEFINITION.—In this section, the term ‘com14 pensation’ includes pecuniary and nonpecuniary com15 pensation of any kind relating to the sale or renewal of

16 a policy or certificate and specifically includes bonuses,

17 gifts, prizes, awards, and finders’ fees.

18 ‘‘SEC. 2179. DEFINITIONS.

19 ‘‘In this part:

20 ‘‘(1) GROUP.—The term ‘group’ means 2 or

21 more employees of the same employer who normally

perform on a monthly basis at least 171 22 ⁄2 hours of

23 service per week for that employer.

24 ‘‘(2) HEALTH MAINTENANCE ORGANIZATION.—

25 The term ‘health maintenance organization’ has the
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1 meaning given the term ‘eligible organization’ in sec2 tion 1876(b).

3 ‘‘(3) MEDIPLAN SUPPLEMENTAL POLICY.—The

4 term ‘Mediplan supplemental policy’ is a health in5 surance policy or other health benefit plan offered by

6 a private entity to individuals who are entitled to

7 have payment made under this title, which provides

8 reimbursement for expenses incurred for services

9 and items for which payment may be made under

10 this title but which are not reimbursable by reason

11 of the application of deductibles, coinsurance

12 amounts, or other limitations imposed pursuant to

13 this title; but does not include—

14 ‘‘(A) any such policy or plan of the trust15 ees of a fund established by one or more em16 ployers or labor organizations (or combination

17 thereof) if the policy or plan offers benefits as

18 a direct service organization under section

19 1833, or

20 ‘‘(B) a policy or plan of a health mainte21 nance organization which offers benefits under

22 this title under section 2162(d).

23 For purposes of this title, the term ‘policy’ includes

24 a certificate issued under such policy.
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1 ‘‘(4) STATE.—The term ‘State’ means the 50

2 States and the District of Columbia.

3 ‘‘PART G—STATE OPT OUT

4 ‘‘SEC. 2181. ELECTION.

5 ‘‘(a) IN GENERAL.—A State may elect, in accordance

6 with this part, to have health care benefits made available

7 to residents of the State under a State alternative health

8 care program under this part instead of under the other

9 provisions of this title. Such an election shall not be effec10 tive unless—

11 ‘‘(1) the State submits to the Secretary an ap12 plication for election, in a form and manner specified

13 by the Secretary, and

14 ‘‘(2) the Secretary determines that the proposed

15 health care program meets the requirements speci16 fied in sections 2182 and 2183.

17 ‘‘(b) NO APPLICATION OF ELECTION ON OUT-OF18 STATE RESIDENTS.—An election of a State under this

19 part shall not affect the entitlement of individuals who are

20 not residents of the State to receive benefits under this

21 title for services furnished in the State on the same terms

22 and conditions as though such an election had not been

23 made.
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1 ‘‘SEC. 2182. REQUIREMENTS FOR STATE ALTERNATIVE

2 HEALTH CARE PROGRAMS.

3 ‘‘The requirements, with respect to a State alter4 native health care program are as follows:

5 ‘‘(1) ELIGIBILITY.—Each individual who is a

6 resident of the State (as determined by the Sec7 retary) is entitled to benefits under the program.

8 ‘‘(2) ENROLLMENT AND MEDIPLAN CARDS.—

9 The program provides for enrollment of eligible indi10 viduals, and the issuance of Mediplan cards, in a

11 manner consistent with section 2102.

12 ‘‘(3) SCOPE OF BENEFITS.—

13 ‘‘(A) IN GENERAL.—The scope of benefits

14 under the program shall not be less than the

15 scope of benefits specified in section 2121 (in16 cluding additional services for children, preg17 nancy-related services and special provisions for

18 lower-income individuals).

19 ‘‘(B) EXCLUSIONS.—The exclusions from

20 benefits shall be no more restrictive than the

21 exclusions specified in section 2122. Pursuant

22 to section 2122(b)(2), payments under the pro23 gram shall be secondary to payments under the

24 medicare program.

25 ‘‘(C) OUT-OF-STATE BENEFITS.—The pro26 gram shall provide for coverage of medically
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1 necessary services furnished outside the State,

2 except in such cases as the Secretary may

3 specify. In specifying such cases, the Secretary

4 shall take into account the requirements of

5 health maintenance organization for coverage of

6 services outside the organization’s service area.

7 Any such out-of-State coverage shall be pro8 vided in a manner consistent with the provision

9 of benefits under this title to individuals who

10 are not residents of the State.

11 ‘‘(4) LIMITATION ON COST-SHARING.—The pro12 gram does not impose cost-sharing in excess of the

13 cost-sharing that would be permitted under section

14 2141.

15 ‘‘(5) ENTITLEMENT VERIFICATION SYSTEM.—

16 The program provides for an entitlement verification

17 system that meets the requirements of section

18 2151(c).

19 ‘‘(6) UNIFORM CLAIMS AND ELECTRONIC DATA

20 SET.—The program provides for use of uniform

21 claims and electronic data set in accordance with the

22 standards established under section 2152(c).

23 ‘‘(7) ELECTRONIC MEDICAL RECORDS AND RE24 PORTING; UNIFORM HOSPITAL COST REPORTING.—

25 The program requires hospitals in the State to meet
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1 the standards for electronic medical records and uni2 form hospital cost reporting in accordance with sec3 tions 2153 and 2154.

4 ‘‘(8) REPORTING SYSTEM.—The program pro5 vides for such reporting of information on the pro6 gram as the Secretary may require in order to as7 sure that the program meets the requirements of

8 this section.

9 ‘‘(9) MAINTENANCE OF EFFORT PAYMENTS.—

10 The State is providing for payment to the Mediplan

11 Trust Fund in accordance with section 2163.

12 ‘‘(10) USE OF FUNDS AND SAVINGS.—The

13 State will comply with the requirements of section

14 2185(b).

15 ‘‘SEC. 2183. CONTROL OF AGGREGATE EXPENDITURES.

16 ‘‘(a) ASSURANCES REQUIRED.—

17 ‘‘(1) IN GENERAL.—A State election under this

18 part may not be approved until the Secretary has

19 been provided satisfactory assurances that under the

20 program, during a 3-year period (the first such pe21 riod beginning with the first month in which this

22 section applies to that program in the State) the ag23 gregate expenditures for required health care serv24 ices under the program will not exceed the applicable

25 total limit specified in paragraph (2).
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1 ‘‘(2) APPLICABLE TOTAL LIMIT.—The applica2 ble total limit specified in this paragraph is the total

3 of the maximum amount of payments that would be

4 payable in the State for the required health care

5 services under this title if the State election were not

6 in effect.

7 ‘‘(3) SPECIAL RULE FOR EXPENDITURES FOR

8 HMOS.—In determining aggregate expenditures for

9 purposes of paragraph (1), the Secretary shall ex10 clude expenditures for services of staff or group

11 model health maintenance organizations if the State

12 program provides that such organizations may nego13 tiate directly with providers of services covered

14 under the program with respect to the organization’s

15 rate of payment for such services and, in determin16 ing the applicable limits under paragraph (2), the

17 Secretary shall exclude payments for services of such

18 organizations.

19 ‘‘(b) ANNUAL DETERMINATION BY SECRETARY.—

20 The Secretary shall annually determine whether a State

21 program met the assurances required under subsection (a)

22 for the most recent 3-year period for which the State

23 election was in effect.

24 ‘‘(c) TREATMENT OF STATES FAILING TO CONTROL

25 AGGREGATE EXPENDITURES.—
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1 ‘‘(1) IN GENERAL.—The Secretary shall termi2 nate approval of a State election under this part or

3 impose a sanction described in paragraph (2) on a

4 State if the Secretary determines that, with respect

5 to a State program under this part for a 3-year pe6 riod the aggregate expenditures for required health

7 care services under the program exceeded the appli8 cable total limit specified in subsection (a)(2).

9 ‘‘(2) SANCTIONS.—The sanction described in

10 this paragraph is a reduction in the aggregate

11 amount otherwise payable to the State under section

12 2185 for the following year (or for the following 3-

13 year period, if the Secretary determines that a re14 duction for such period is appropriate in the case of

15 a State) in an amount equal to the amount by which

16 the aggregate expenditures for the preceding 3-year

17 period under the program exceeded the applicable

18 total limit.

19 ‘‘(3) NOTICE.—The Secretary may not impose

20 any sanction against a state under paragraph (2)

21 unless the Secretary has provided the State with no22 tice of the Secretary’s determination under para23 graph (1) and intent to impose the sanction under

24 paragraph (2).
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1 ‘‘SEC. 2184. TERMINATION OF APPROVAL OF STATE ELEC2 TION.

3 ‘‘(a) PROCESS REQUIREMENTS.—

4 ‘‘(1) NOTICE.—The Secretary may terminate

5 the approval of a State’s election under this part

6 only after the expiration of a 90-day period begin7 ning on the date the Secretary informs the State of

8 the Secretary’s intention to terminate such approval,

9 unless, during such 90-day period, the State re10 quests a hearing with the Secretary.

11 ‘‘(2) HEARING.—If the State requests a hearing

12 during the 90-day period described in paragraph (1),

13 the Secretary shall conduct a hearing during which

14 the State may present evidence showing that the

15 Secretary should not terminate the approval of the

16 election. If the Secretary decides to reject such evi17 dence, the Secretary shall terminate the approval of

18 the State’s election beginning with the first day of

19 the first month that begins after the Secretary’s

20 decision.

21 ‘‘(3) JUDICIAL REVIEW PROHIBITED.—There

22 shall be no administrative or judicial review of a de23 cision by the Secretary to terminate the approval of

24 a State election under this subsection.

25 ‘‘(b) EFFECT OF TERMINATION ON PAYMENT RATES

26 APPLICABLE TO SERVICES IN STATE.—
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1 ‘‘(1) IN GENERAL.—If the Secretary terminates

2 the approval of a State election under this section,

3 the maximum payment rates applicable to required

4 health services shall be the maximum payment rates

5 otherwise applicable to the services subject to the

6 adjustment described in paragraph (2).

7 ‘‘(2) RECAPTURE OF EXCESS SPENDING.—The

8 Secretary shall reduce the maximum payment rates

9 applicable under this title to required health services

10 by such factor as the Secretary determines necessary

11 to decrease the amount of aggregate expenditures

12 that would otherwise be made for services provided

13 in the State by the amount by which the aggregate

14 expenditures for the preceding 3-year period under

15 the program exceeded the applicable total limit spec16 ified in section 2183(a)(2).

17 ‘‘SEC. 2185. PAYMENTS TO STATES.

18 ‘‘(a) IN GENERAL.—In the case of a State with a

19 State alternative health care program approved under this

20 part, the Secretary shall provide for payment to the State,

21 on a monthly basis, of such amounts as the Secretary de22 termines to be equivalent to the payments that would have

23 been made under this title with respect to residents in the

24 State if the program had not been so approved. Such pay25 ments shall not include any amount attributable to
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1 amounts paid under the medicare program under title

2 XVIII for residents of the State.

3 ‘‘(b) USE OF FUNDS AND SAVINGS.—

4 ‘‘(1) USE OF FUNDS.—A State alternative

5 health care program may only use funds provided

6 under subsection (a) for payment of covered bene7 fits, for the administration of the program under

8 this part, and, if applicable, for the expansion of

9 benefits or reduction of cost-sharing under para10 graph (2).

11 ‘‘(2) APPLICATION OF SAVINGS.—In the case of

12 a State for which the aggregate expenditures (de13 scribed in section 2183) for required health services

14 are less than the applicable total limit specified in

15 section 2183(a)(2), the State shall provide for such

16 increase in the scope of benefits (which may include

17 a reduction in cost-sharing) as will assure the ex18 penditure of funds consistent with paragraph (1).

19 ‘‘SEC. 2186. NO IMPACT ON MEDICARE BENEFITS.

20 ‘‘Nothing in this part shall be construed as affecting

21 the entitlement of individuals to medicare benefits under

22 title XVIII.’’.

23 (b) EFFECTIVE DATE FOR BENEFITS.—Title XXI of

24 the Social Security Act shall apply to items and services

25 furnished on or after January 1, 1995.
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1 (c) EXCISE TAX ON PREMIUMS RECEIVED ON

2 MEDIPLAN SUPPLEMENTAL POLICIES WHICH DO NOT

3 MEET CERTAIN REQUIREMENTS.—

4 (1) IN GENERAL.—Chapter 47 of the Internal

5 Revenue Code of 1986 (relating to taxes on group

6 health plans) is amended by adding at the end there7 of the following new section:

8 ‘‘SEC. 5000A. FAILURE TO SATISFY CERTAIN STANDARDS

9 FOR MEDIPLAN SUPPLEMENTAL POLICIES.

10 ‘‘(a) IMPOSITION OF TAX.—

11 ‘‘(1) GENERAL RULE.—There is hereby imposed

12 a tax on any nonqualified Mediplan supplemental

13 policy.

14 ‘‘(2) NONQUALIFIED MEDIPLAN SUPPLE15 MENTAL POLICY DEFINED.—For purposes of this

16 section, the term ‘nonqualified Mediplan supple17 mental policy’ means any Mediplan supplemental

18 policy that—

19 ‘‘(A) is not certified under section 21711

20 of the Social Security Act, or

21 ‘‘(B) the Secretary of Health and Human

22 Services determines is providing coverage in vio23 lation of section 2171(a) of such Act.

24 ‘‘(b) AMOUNT OF TAX.—
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1 ‘‘(1) IN GENERAL.—The amount of tax imposed

2 by subsection (a) shall be equal to—

3 ‘‘(A) in the case of an insured Mediplan

4 supplemental policy, 50 percent of the gross

5 premiums received by the issuer which are at6 tributable to the period during which the policy

7 is a nonqualified Mediplan supplemental policy,

8 and

9 ‘‘(B) in the case of a self-insured Mediplan

10 supplemental policy, 50 percent of the expendi11 tures under such policy during the period that

12 the policy is a nonqualified Mediplan supple13 mental policy.

14 ‘‘(2) GROSS PREMIUMS.—For purposes of para15 graph (1)(A), gross premiums shall include any con16 sideration received with respect to any insured

17 Mediplan supplemental policy.

18 ‘‘(3) CONTROLLED GROUPS.—For purposes of

19 paragraph (1)—

20 ‘‘(A) CONTROLLED GROUP OF CORPORA21 TIONS.—All corporations which are members of

22 the same controlled group of corporations shall

23 be treated as 1 person. For purposes of the pre24 ceding sentence, the term ‘controlled group of
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1 corporations’ has the meaning given to such

2 term by section 1563(a), except that—

3 ‘‘(i) ‘more than 50 percent’ shall be

4 substituted for ‘at least 80 percent’ each

5 place it appears in section 1563(a)(1), and

6 ‘‘(ii) the determination shall be made

7 without regard to subsections (a)(4) and

8 (e)(3)(C) of section 1563.

9 ‘‘(B) PARTNERSHIPS, PROPRIETORSHIPS,

10 ETC., WHICH ARE UNDER COMMON CONTROL.—

11 Under regulations prescribed by the Secretary,

12 all trades or business (whether or not incor13 porated) which are under common control shall

14 be treated as 1 person. The regulations pre15 scribed under this subparagraph shall be based

16 on principles similar to the principles which

17 apply in the case of subparagraph (A).

18 ‘‘(c) LIABILITY FOR TAX.—

19 ‘‘(1) INSURED POLICY.—In the case of an in20 sured Mediplan supplemental policy, the issuer of

21 the insurance or subscriber contract under which

22 such policy is provided shall be liable for the tax im23 posed by this section.

24 ‘‘(2) SELF-INSURED POLICY.—In the case of a

25 self-insured policy—
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1 ‘‘(A) IN GENERAL.—Except as provided in

2 subparagraph (B), the employer maintaining

3 such policy shall be liable for the tax imposed

4 by this section.

5 ‘‘(B) MULTIEMPLOYER POLICIES, ETC.—In

6 the case of a multiemployer policy or any other

7 policy not maintained by an employer, the is8 suer of the policy shall be liable for the tax im9 posed by this section.

10 ‘‘(d) INCORPORATION OF DEFINITIONS.—For pur11 poses of this section, the terms ‘Mediplan supplemental

12 policy’, ‘insured Mediplan supplemental policy’, and ‘self13 insured Mediplan supplemental policy’ have the meanings

14 given such terms in section 2175 of the Social Security

15 Act.’’.

16 (2) NONDEDUCTIBILITY OF TAX.—Subsection

17 (a) of section 275 of such Code (relating to

18 nondeductibility of certain taxes) is amended by add19 ing at the end thereof the following new paragraph:

20 ‘‘(7) Taxes imposed by section 5000A (failure

21 to satisfy certain standards for Mediplan supple22 mental policies).’’

23 (3) CLERICAL AMENDMENTS.—
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1 (A) So much of chapter 47 of such Code

2 as precedes subsection (a) of section 5000 is

3 amended to read as follows:

4 ‘‘CHAPTER 47—TAXES RELATING TO

5 HEALTH BENEFIT PLANS

‘‘Sec. 5000. Contributions to nonconforming large group health

plans.

‘‘Sec. 5000A. Failure to satisfy certain standards for Mediplan

supplemental policies.

6 ‘‘SEC. 5000. CONTRIBUTIONS TO NONCONFORMING LARGE

7 GROUP HEALTH PLANS.’’

8 (B) The table of chapters for subtitle D of

9 such Code is amended by striking the item re10 lating to chapter 47 and inserting the following

11 new item:

‘‘Chapter 47. Taxes relating to health benefit plans.’’

12 TITLE II—COST CONTAINMENT

13 SEC. 201. NATIONAL MEDIPLAN EXPENDITURE BUDGET.

14 (a) ESTABLISHMENT.—

15 (1) IN GENERAL.—For each calendar year (be16 ginning with 1995), there is established a national

17 Mediplan expenditure budget (in the amount speci18 fied under paragraph (2)).

19 (2) AMOUNT.—

20 (A) 1995.—The total amount of the na21 tional Mediplan expenditure budgets for 1995 is

22 equal to the Mediplan budget baseline (deter-
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1 mined under subsection (b) for 1994) multiplied

2 by the applicable adjustment factor (specified

3 under subsection (c)) for 1995.

4 (B) SUBSEQUENT YEARS.—The total

5 amount of such budget for each year after 1995

6 is equal to the budget determined under this

7 paragraph for the previous year multiplied by

8 the applicable adjustment factor (specified

9 under subsection (c)) for the year involved.

10 (3) PUBLICATION.—The Secretary of Health

11 and Human Services shall publish in the Federal

12 Register and report to the Congress, by not later

13 than April 1 before each year, the amount of the na14 tional Mediplan expenditure budget for the year.

15 (b) MEDIPLAN BUDGET BASELINE.—The Secretary

16 shall compute a Mediplan budget baseline under this sub17 section for 1994 as follows:

18 (1) 1993 ACTUAL EXPENDITURES.—The Sec19 retary shall determine (on the basis of the best data

20 available) the amount of the aggregate Mediplan ex21 penditures (as defined in subsection (d)(1)) during

22 1993.

23 (2) PROJECTION FOR 1994.—The Secretary

24 shall increase such amount by the Secretary’s esti25 mate of the percentage increase in the aggregate
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1 Mediplan expenditures between the midpoint of 1993

2 and the midpoint of 1994.

3 (c) APPLICABLE ADJUSTMENT FACTOR.—The appli4 cable adjustment factor under this subsection for each

5 year is 1 plus the sum (expressed as a fraction) of—

6 (1) the average annual percentage increase in

7 the gross domestic product (in current dollars, as

8 published by the Secretary of Commerce) during the

9 5-year period ending with the second previous year;

10 plus

11 (2)(A) for 1995, 3.5 percentage points,

12 (B) for 1996, 2.5 percentage points,

13 (C) for 1997, 1.5 percentage points,

14 (D) for 1998, 0.5 percentage point, and

15 (E) for each year thereafter, 0 percentage

16 points.

17 (d) AGGREGATE MEDIPLAN EXPENDITURES DE18 FINED.—In this Act, the term ‘‘aggregate Mediplan ex19 penditures’’ means, with respect to health care services or

20 a class of services, expenditures made under the medicare

21 program or under Mediplan with respect to the provision

22 of such services or class of services, and also includes re23 ceipts of providers with respect to amounts payable as

24 deductibles, coinsurance, or other amounts for which the

25 beneficiary is liable with respect to items and services cov-
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1 ered under either such program provided to a beneficiary,

2 and including payments made under a contract under sec3 tion 1833(a)(1) or section 1876 of the Social Security Act,

4 or comparable provisions of title XXI of such Act (other

5 than the portion of such payments that is attributable to

6 administrative costs).

7 SEC. 202. CLASSES OF HEALTH CARE SERVICES.

8 (a) ESTABLISHMENT OF CLASSES.—

9 (1) IN GENERAL.—

10 (A) SPECIFIED SERVICES.—In the case of

11 items and services specified in a subparagraph

12 under paragraph (2), all of the items and serv13 ices described in that subparagraph shall be

14 considered to be a ‘‘separate’’ class of health

15 care services.

16 (B) OVERLAPPING SERVICES.—Except as

17 the Secretary may provide, items and services

18 specified in a subparagraph of paragraph (2)

19 shall be considered to be excluded from the sub20 sequent subparagraphs of that paragraph.

21 (2) SPECIFIED HEALTH CARE SERVICES.—The

22 items and services specified in this paragraph are as

23 follows:

24 (A) Inpatient hospital services, other than

25 mental health services.
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1 (B) Outpatient hospital services and ambu2 latory facility services (including renal dialysis

3 facility services), other than mental health serv4 ices.

5 (C) Diagnostic testing services (including

6 clinical laboratory services and x-ray services).

7 (D) Physicians’ services and other profes8 sional medical services, other than mental

9 health services.

10 (E) Home health services and hospice care.

11 (F) Rehabilitation services, such as phys12 ical therapy, occupational and speech therapy.

13 (G) Durable medical equipment and sup14 plies.

15 (H) Prescription drugs and biologicals and

16 insulin.

17 (I) Nursing facility services, including

18 skilled nursing facility services and intermediate

19 care facility services, other than mental health

20 services.

21 (J) Mental health services.

22 (K) Other covered services.

23 (b) PUBLICATION.—

24 (1) IN GENERAL.—The Secretary shall pub25 lish—
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1 (A) by not later than April 1, 1994, pro2 posed regulations defining the health care serv3 ices and establishing the classes of services

4 under this section, and

5 (B) by not later than June 1, 1994, final

6 regulations defining the health care services and

7 establishing such classes.

8 (2) ITEMS INCLUDED IN REGULATIONS.—In

9 such regulations, the Secretary shall define—

10 (A) the class or classes to be established

11 under subsection (a)(1),

12 (B) the services to be included within each

13 class, and

14 (C) the methods and sources of data for

15 computing, for purposes of this title, aggregate

16 Mediplan expenditures for services within the

17 class.

18 (3) CHANGES.—

19 (A) NO CHANGES AUTHORIZED.—After the

20 Secretary has established classes of services

21 under paragraph (1)(B), the Secretary may not

22 change such classes (or the services included in

23 such classes), except in the case of services not

24 previously classified. Any such services not pre-
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1 viously classified shall be classified within one

2 of the classes previously established.

3 (B) RECOMMENDED CHANGES.—If the

4 Secretary determines that a change in the clas5 sification established under this section may be

6 appropriate, the Secretary shall submit to the

7 Congress a report proposing such change. The

8 Secretary shall include in the report an expla9 nation of—

10 (i) the rationale for such change, and

11 (ii) the impact of such change on the

12 total aggregate Mediplan expenditures per13 mitted for classes of services that would be

14 affected by the change.

15 (4) COMMISSION REPORTS.—

16 (A) INITIAL REPORTS.—With respect to

17 the establishment of classes of services under

18 this section, each applicable Commission (as de19 fined in section 208(1))—

20 (i) by not later than March 1, 1994,

21 shall report its recommendations to the

22 Secretary and Congress concerning such

23 classes, and

24 (ii) by not later than May 1, 1994,

25 shall report to the Secretary and the Con-
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1 gress its comments concerning the classi2 fication proposed by the Secretary under

3 paragraph (1)(A).

4 (B) PERIODIC REPORTS.—Each applicable

5 Commission shall periodically report to Con6 gress on changes in the system of classification

7 under this section that should be made to pro8 mote the more efficient provision of medically

9 appropriate health care services.

10 SEC. 203. ALLOCATION OF HEALTH BUDGET BY CLASS OF

11 SERVICE.

12 (a) ALLOCATION.—

13 (1) IN GENERAL.—The Secretary shall allocate

14 the national Mediplan expenditure budget under sec15 tion 201 for a year among classes of services speci16 fied under section 202.

17 (2) PROPORTIONAL ALLOCATION BASED ON

18 HISTORICAL PROJECTED EXPENDITURES.—The per19 cent of the budget allocated to each class for a year

20 shall be equal to the quotient (expressed as a per21 centage) of—

22 (A) the historical projected Mediplan ex23 penditures for the class for the year (as deter24 mined under subsection (b)(1)), divided by
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1 (B) the sum of such historical projected

2 Mediplan expenditures for all the classes for the

3 year.

4 (3) PUBLICATION.—

5 (A) IN GENERAL.—The Secretary shall, in

6 conjunction with the publication of budget

7 under section 201(a)(3) for a year and by not

8 later than April 1 before the year, publish in

9 the Federal Register and report to the Congress

10 the allocation of the budget among the classes

11 of services under this subsection.

12 (B) EXCEPTION FOR 1995.—For 1995,

13 the Secretary shall publish and report the allo14 cation of the budget among the classes of

15 services under this subsection not later than

16 August 1, 1994.

17 (b) HISTORICAL PROJECTED EXPENDITURES.—

18 (1) DETERMINATION.—For purposes of sub19 section (a)—

20 (A) FOR 1994.—The historical projected

21 Mediplan expenditures for a class of services for

22 1994 is equal to the portion of the amount of

23 aggregate Mediplan expenditures during 1993

24 (as determined under section 201(b)(1)) which

25 is attributable to the class of services, multi-
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1 plied by the trend factor (described in para2 graph (2)) for the class for 1994.

3 (B) SUBSEQUENT YEARS.—The historical

4 projected Mediplan expenditures for a class of

5 services for a year after 1994 is equal to the

6 amount of the allocation for the class under

7 subsection (a)(2) for the preceding year multi8 plied by the trend factor (described in subpara9 graph (B)) for the class for the year involved.

10 (2) TREND FACTOR.—In paragraph (1), the

11 ‘‘trend factor’’, for a class of services, is 1 plus the

12 average annual rate of increase in aggregate

13 Mediplan expenditures for the class of services dur14 ing the 5-year period ending with 1993.

15 (3) PUBLICATION OF TREND FACTORS.—The

16 Secretary shall publish, by not later than August 1,

17 1994, the trend factors for the different classes of

18 services.

19 (c) REVIEW AND CHANGES IN ALLOCATION.—

20 (1) IN GENERAL.—

21 (A) NO ADMINISTRATIVE AUTHORITY TO

22 CHANGE.—Except as specifically provided by

23 law enacted after the enactment of this Act, the

24 Secretary has no authority to change the alloca-
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1 tion or trend factors from the allocation and

2 trend factors provided under this section.

3 (B) RECOMMENDED CHANGES.—If the

4 Secretary determines that a change in the allo5 cation of the budget among classes is appro6 priate, the Secretary shall submit to the Con7 gress a report proposing such change. The Sec8 retary shall include in the report an explanation

9 of—

10 (i) the rationale for such change, and

11 (ii) the impact of such change on the

12 total aggregate Mediplan expenditures per13 mitted for classes of services that would be

14 affected by the change.

15 (2) COMMISSION REVIEW.—Each applicable

16 Commission shall annually review and report to Con17 gress, in its report submitted under section

18 202(b)(4), on the effect of the trend factors used in

19 the allocation of the budget among classes of serv20 ices. Such report shall include such recommenda21 tions for appropriate adjustments in the trend fac22 tors as the applicable Commission considers appro23 priate to properly take into account at least—

24 (A) changes in health care technology,
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1 (B) changes in the patterns and practices

2 relating to health care delivery found to be ap3 propriate,

4 (C) changes in the distribution of health

5 care services, and

6 (D) the special health care needs of under7 served rural and inner city populations.

8 SEC. 204. NATIONAL HEALTH EXPENDITURES REPORTING

9 SYSTEM.

10 (a) IN GENERAL.—The Secretary shall establish a

11 national health expenditures reporting system (in this sec12 tion referred to as the ‘‘system’’) for purposes of—

13 (1) establishing the national health expendi14 tures budget,

15 (2) allocating the health budgets among classes

16 of services,

17 (3) determining payment rates, and

18 (4) monitoring expenditures in States which

19 have elections in effect under part G.

20 (b) INFORMATION REPORTING.—

21 (1) BY PROVIDER.—Under the system, provid22 ers of health care services shall report (beginning

23 not later than January 1, 1995) such information

24 relating to the provision of health care services (in25 cluding the volume and receipts for such services) in
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1 such form and manner (including the use of elec2 tronic transmission), by such classification, and at

3 such periodic intervals, as the Secretary shall specify

4 in regulation.

5 (2) USE OF REPORTING MECHANISMS.—To the

6 maximum extent practicable and appropriate, report7 ing under such system shall be done through report8 ing mechanisms (such as uniform hospital reports

9 provided under section 2255 of the Social Security

10 Act) and using data bases otherwise in use.

11 (3) USE OF SURVEYS.—The Secretary may,

12 where appropriate, provide for the collection of infor13 mation under the system through surveys of a sam14 ple of health care providers or with respect to a sam15 ple of information with respect to such providers.

16 (4) CONFIDENTIALITY.—Information gathered

17 pursuant to the authority provided under this sec18 tion shall not be disclosed in a manner that identi19 fies individual providers of services.

20 (5) TRANSITION.—Before January 1, 1995, for

21 purposes of this title, the Secretary may use such

22 other data collection and estimation techniques as

23 may be appropriate for purposes described in sub24 section (a).
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1 (c) ENFORCEMENT.—If a provider of health services

2 is required, under the system under this section, to report

3 information and refuses, after being requested by the Sec4 retary, to provide the information required, or deliberately

5 provides information that is false, the Secretary may im6 pose a civil money penalty of not to exceed $10,000 for

7 each such refusal or provision of false information. The

8 provisions of section 1128A of the Social Security Act

9 (other than subsections (a) and (b)) shall apply to civil

10 money penalties under the previous sentence in the same

11 manner as such provisions apply to a penalty or proceed12 ing under section 1128A(a) of such Act.

13 (d) INCLUSION OF HEALTH MAINTENANCE ORGANI14 ZATIONS.—In this section, the term ‘‘provider of health

15 care services’’ includes health maintenance organizations.

16 SEC. 205. CONFORMING MEDICARE PAYMENT RATES TO

17 MEDIPLAN HEALTH EXPENDITURE ALLOCA18 TIONS; TRANSITION.

19 (a) IN GENERAL.—Notwithstanding any other provi20 sion of law, the Secretary shall substitute for the payment

21 rate or allowance (or, in the absence of such a rate, pay22 ment amount) otherwise applied under the medicare pro23 gram (and any maximum charge limits or payment limits

24 imposed under such program) for any health care service
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1 in a class of services the amount specified by the Secretary

2 under subsection (b) for the class for the year involved.

3 (b) AMOUNT.—

4 (1) IN GENERAL.—At the same time as the

5 Secretary establishes payment rates under section

6 2141 of the Social Security Act, the Secretary shall

7 compute and publish, for each class of services for

8 each year, an amount under this subsection deter9 mined as follows:

10 (A) FIRST YEAR.—During the first year in

11 which benefits are available under title XXI of

12 the Social Security Act, the amount shall be the

13 sum of—

14 (i) 20 percent of the payment amount

15 established under such title for the class of

16 services, and

17 (ii) 80 percent of the amount estab18 lished under title XVIII of such Act.

19 (B) SECOND YEAR.—During the second

20 year in which benefits are available under title

21 XXI of the Social Security Act, the amount

22 shall be the sum of—

23 (i) 40 percent of the payment amount

24 established under such title for the class of

25 services, and
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1 (ii) 60 percent of the amount estab2 lished under title XVIII of such Act.

3 (C) THIRD YEAR.—During the third year

4 in which benefits are available under title XXI

5 of the Social Security Act, the amount shall be

6 the sum of—

7 (i) 60 percent of the payment amount

8 established under such title for the class of

9 services, and

10 (ii) 40 percent of the amount estab11 lished under title XVIII of such Act.

12 (D) FOURTH YEAR.—During the fourth

13 year in which benefits are available under title

14 XXI of the Social Security Act, the amount

15 shall be the sum of—

16 (i) 80 percent of the payment amount

17 established under such title for the class of

18 services, and

19 (ii) 20 percent of the amount estab20 lished under title XVIII of such Act.

21 (E) FIFTH AND SUBSEQUENT YEARS.—

22 During the fifth year in which benefits are

23 available under title XXI of the Social Security

24 Act, and any subsequent year the amount shall

25 be the 100 percent of the payment amount es-
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1 tablished under such title for the class of serv2 ices.

3 (2) INDIRECT APPLICATION TO HEALTH MAIN4 TENANCE ORGANIZATIONS.—Nothing in this sub5 section shall be construed as affecting the payment

6 of amounts to health maintenance organizations

7 under the medicare program under a risk-sharing

8 contract under section 1876 of the Social Security

9 Act. However, adjustments in payment rates under

10 paragraph (1) may affect the computation of the av11 erage adjusted per capita cost under such section.

12 (c) PUBLICATIONS.—In publishing payment rates

13 under the medicare program, the Secretary shall take into

14 account the adjustment in rates under this section.

15 SEC. 206. ADJUSTMENTS TO MEDICARE PAYMENTS FOR

16 GRADUATE MEDICAL EDUCATION.

17 (a) DETERMINATION OF FULL-TIME-EQUIVALENT

18 RESIDENTS DURING INITIAL RESIDENCY PERIOD.—

19 (1) EMPHASIS ON PRIMARY CARE.—Paragraph

20 (4)(C)(ii) of section 1886(h) of the Social Security

21 Act (42 U.S.C. 1395ww(h)) is amended by striking

22 ‘‘is 1.00,’’ and inserting the following: ‘‘is—

23 ‘‘(I) 1.1, in the case of a resident

24 who is a primary care resident (as de25 fined in paragraph (5)(H)),
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1 ‘‘(II) 1.0, in the case of a resi2 dent who is not a primary care resi3 dent and who specializes in internal

4 medicine or pediatrics,

5 ‘‘(III) .9, in the case of a resi6 dent who is not described in subclause

7 (I) or (II) and who is in the initial 3

8 years of the residency period, or

9 ‘‘(IV) .8, in the case of a resident

10 not described in subclause (I), (II), or

11 (III),’’.

12 (2) PRIMARY CARE RESIDENT DEFINED.—Para13 graph (5) of such section is amended—

14 (A) by redesignating subparagraph (H) as

15 subparagraph (I), and

16 (B) by inserting after subparagraph (G)

17 the following new subparagraph:

18 ‘‘(H) PRIMARY CARE RESIDENT.—The

19 term ‘primary care resident’ means (in accord20 ance with criteria established by the Secretary)

21 a resident being trained in a distinct program

22 of family practice medicine, general practice,

23 general internal medicine, or general pediat24 rics.’’.
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1 (b) EFFECTIVE DATE.—The amendments made by

2 subsection (a) shall apply to cost reporting periods begin3 ning on or after October 1, 1993.

4 SEC. 207. DEFINITIONS.

5 In this title:

6 (1) APPLICABLE COMMISSION.—The term ‘‘ap7 plicable Commission’’ means—

8 (A) with respect to services included in a

9 class of services furnished by a hospital, other

10 institutional provider, or home health provider,

11 the Prospective Payment Assessment Commis12 sion, and

13 (B) with respect to other health care serv14 ices, the Physician Payment Review Commis15 sion.

16 (2) CLASS OF SERVICES.—The term ‘‘class’’

17 means, with respect to health care services, a class

18 established under section 202.

19 (3) HEALTH CARE SERVICES.—The term

20 ‘‘health care services’’ means the items and services

21 described in section 202(a)(2).

22 (4) HEALTH MAINTENANCE ORGANIZATION.—

23 The term ‘‘health maintenance organization’’ means

24 an eligible organization with a contract under sec25 tion 1876 of the Social Security Act or a qualified
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1 health maintenance organization (as defined in sec2 tion 1310(d) of the Public Health Service Act).

3 (5) MEDICARE PROGRAM; MEDICARE BENE4 FICIARY.—(A) The term ‘‘medicare program’’ means

5 the programs established under parts A and B of

6 title XVIII of the Social Security Act.

7 (B) The term ‘‘medicare beneficiary’’ means an

8 individual entitled to benefits under part A or B, or

9 both, of the medicare program.

10 (6) MEDICAID PROGRAM.—The term ‘‘medicaid

11 program’’ means any State plan approved under title

12 XIX of the Social Security Act and includes a State

13 program operating under a waiver under section

14 1115 of such Act.

15 (7) NATIONAL MEDIPLAN EXPENDITURE BUDG16 ET.—The term ‘‘national Mediplan expenditure

17 budget’’ means the budget established under section

18 201.

19 (8) SECRETARY.—The term ‘‘Secretary’’ means

20 the Secretary of Health and Human Services.

21 (9) STATE.—The term ‘‘State’’ means the 50

22 States and the District of Columbia.

23 (10) UNITED STATES.—The term ‘‘United

24 States’’ means the 50 States and the District of

25 Columbia.
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1 TITLE III—FINANCING

2 PROVISIONS

3 SEC. 301. INCOME TAXES FOR MEDIPLAN HEALTH CARE.

4 (a) IN GENERAL.—Subchapter A of chapter 1 of the

5 Internal Revenue Code of 1986 is amended by adding at

6 the end thereof the following new part:

7 ‘‘PART VIII—INCOME TAXES FOR MEDIPLAN

8 HEALTH CARE

‘‘Sec. 59B. Tax on individuals.

‘‘Sec. 59C. Tax on gross receipts of health service providers from

providing covered benefits.

9 ‘‘SEC. 59B. TAX ON INDIVIDUALS.

10 ‘‘(a) IMPOSITION OF TAX.—In the case of an individ11 ual, there is hereby imposed (in addition to other taxes)

12 for each taxable year on the modified gross income of the

13 taxpayer a tax equal to the Mediplan health care premium

14 determined under subsection (b) for such year.

15 ‘‘(b) MEDIPLAN HEALTH CARE PREMIUM.—The

16 Mediplan health care premium for the taxable year shall

17 be equal the lesser of—

18 ‘‘(1) $1,500 ($3,000 in the case of a joint re19 turn), or

20 ‘‘(2) 12.5 percent of the excess (if any) of the

21 modified gross income of the taxpayer over $8,000

22 ($16,000 in the case of a joint return).
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1 ‘‘(c) MODIFIED GROSS INCOME.—For purposes of

2 this section, the term ‘modified gross income’ means the

3 adjusted gross income of the taxpayer for the taxable year

4 determined—

5 ‘‘(1) without regard to paragraphs (6), (7), and

6 (11) of section 62(a) and without regard to sections

7 911, 931, and 933, and

8 ‘‘(2) increased by—

9 ‘‘(A) the amount of interest received or ac10 crued by the taxpayer during the taxable year

11 which is exempt from tax,

12 ‘‘(B) the amount of social security benefits

13 (as defined in section 86(d)) received during the

14 taxable year which is not includible in gross in15 come under section 86,

16 ‘‘(C) the amount of qualified military bene17 fits (as defined in section 134(b)) received dur18 ing the taxable year, and

19 ‘‘(D) the amounts described in paragraphs

20 (7) and (8) of section 6051(a) which are not in21 cludible in gross income.

22 ‘‘(d) MEDICARE BENEFICIARIES EXEMPT FROM

23 TAX.—

24 ‘‘(1) IN GENERAL.—The tax imposed by this

25 section shall not apply to any individual who is a
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1 medicare-eligible individual for more than 6 full

2 months beginning in the taxable year.

3 ‘‘(2) MEDICARE-ELIGIBLE INDIVIDUAL.—For

4 purposes of this subsection, the term ‘medicare-eligi5 ble individual’ means, with respect to any month,

6 any individual who is entitled to (or, on application

7 without the payment of an additional premium,

8 would be entitled to) benefits under part A of title

9 XVIII of the Social Security Act.

10 ‘‘(3) SPECIAL RULES FOR JOINT RETURNS

11 WHERE ONLY 1 SPOUSE IS MEDICARE-ELIGIBLE.—In

12 the case of a joint return where only 1 spouse is a

13 medicare-eligible individual, this section shall be ap14 plied—

15 ‘‘(A) as if such return were the return of

16 an unmarried individual, and

17 ‘‘(B) by taking into account one-half of the

18 modified gross income determined under the

19 joint return.

20 ‘‘(e) COST-OF-LIVING ADJUSTMENT.—In the case of

21 any taxable year beginning in a calendar year after 1995,

22 the $8,000 and $16,000 amounts contained in this section

23 shall be increased by an amount equal to—

24 ‘‘(1) such dollar amount, multiplied by
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1 ‘‘(2) the cost-of-living adjustment determined

2 under section 1(f)(3), for the calendar year in which

3 the taxable year begins, by substituting ‘calendar

4 year 1993’ for ‘calendar year 1987’ in subparagraph

5 (B) thereof.

6 ‘‘(f) COORDINATION WITH OTHER PROVISIONS.—

7 ‘‘(1) NOT TREATED AS MEDICAL EXPENSE.—

8 For purposes of section 213, the tax imposed by this

9 section shall not be treated as an expense for medi10 cal care.

11 ‘‘(2) NOT TREATED AS TAX FOR CERTAIN PUR12 POSES.—The taxes imposed by this section shall not

13 be treated as taxes imposed by this chapter for pur14 poses of determining—

15 ‘‘(A) the amount of any credit allowable

16 under this chapter, or

17 ‘‘(B) the amount of the minimum tax im18 posed by section 55.

19 ‘‘SEC. 59C. TAX ON GROSS RECEIPTS OF HEALTH SERVICE

20 PROVIDERS FROM PROVIDING COVERED

21 BENEFITS.

22 ‘‘(a) TAX IMPOSED.—In addition to other taxes,

23 there is hereby imposed a tax on every health service pro24 vider for the taxable year an amount equal to 10 percent
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1 of the gross receipts of such provider for such taxable year

2 attributable to covered benefits provided by such provider.

3 ‘‘(b) HEALTH SERVICE PROVIDER.—For purposes of

4 this section—

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

6 provider’ means any person entitled to submit a

7 claim under section 2152 of the Social Security Act

8 for services provided by such person.

9 ‘‘(2) PERSON.—The term ‘person’ includes—

10 ‘‘(A) any entity exempt from tax under

11 section 501(a), and

12 ‘‘(B) the United States, any State or polit13 ical subdivision thereof, the District of Colum14 bia, and any agency or instrumentality of the

15 foregoing.

16 ‘‘(c) COVERED BENEFITS.—The term ‘covered bene17 fit’ means any benefit to which an individual is entitled

18 by reason of section 2121 of the Social Security Act.

19 ‘‘(d) NOT TREATED AS TAX FOR CERTAIN PUR20 POSES.—The taxes imposed by this section shall not be

21 treated as taxes imposed by this chapter for purposes of

22 determining—

23 ‘‘(1) the amount of any credit allowable under

24 this chapter, or
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1 ‘‘(2) the amount of the minimum tax imposed

2 by section 55.’’

3 (b) TAXES INCLUDED IN ESTIMATED TAX.—

4 (1) Subparagraph (A) of section 6655(g)(1) of

5 such Code is amended by striking ‘‘plus’’ at the end

6 of clause (iii), by redesignating clause (iv) as clause

7 (v), and by inserting after clause (iii) the following

8 new clause:

9 ‘‘(iv) the tax imposed by section 59C,

10 plus’’.

11 (2) Section 6655 of such Code is amended by

12 redesignating subsection (j) as subsection (k) and by

13 inserting after subsection (i) the following new sub14 section:

15 ‘‘(j) EXEMPT ENTITIES TREATED AS CORPORATIONS

16 FOR MEDIPLAN TAX.—Each entity referred to in section

17 59C(b)(2) shall be treated as a corporation for purposes

18 of applying this section with respect to the tax imposed

19 by section 59C.’’

20 (c) CERTAIN INFORMATION INCLUDED ON W–2.—

21 Subsection (a) of section 6051 of such Code is amended

22 by striking ‘‘and’’ at the end of paragraph (8), by striking

23 the period at the end of paragraph (9) and inserting ‘‘,

24 and’’, and by inserting after paragraph (9) the following

25 new paragraph:
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1 ‘‘(10) the total amount of qualified military

2 benefits (as defined in section 134(b)).’’

3 (d) CLERICAL AMENDMENT.—The table of parts for

4 such subchapter A of chapter 1 of such Code is amended

5 by adding at the end thereof the following new item:

‘‘Part VIII. Income taxes for Mediplan health care.’’

6 (e) EFFECTIVE DATE.—The amendments made by

7 this section shall apply to taxable years beginning after

8 December 31, 1994.

9 (f) SECTION 15 NOT TO APPLY.—Section 15 of the

10 Internal Revenue Code of 1986 shall not apply to the taxes

11 imposed by part VIII of subchapter A of chapter 1 of such

12 Code.

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