I
103D CONGRESS
1ST SESSION
H. R. 101
To improve access to health insurance and contain health care costs, and
for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 5, 1993
Mr. MICHEL (for himself, Mr. GINGRICH, Mr. HUNTER, Mr. MCCOLLUM, Mr.
ARCHER, Mr. CRAPO, Mr. KASICH, Mr. MCDADE, Mr. MCMILLAN, Mr.
SOLOMON, Mr. BILIRAKIS, Mr. BLILEY, Mr. GOSS, Mr. GRADISON, Mr.
GRANDY, Mr. GUNDERSON, Mr. HASTERT, Mr. HOBSON, Mrs. JOHNSON
of Connecticut, Mr. ROBERTS, Mr. WALKER, Mr. BAKER of Louisiana,
Mr. BARRETT of Nebraska, Mr. DOOLITTLE, Mrs. FOWLER, Mr. GEKAS,
Mr. GILLMOR, Mr. GOODLING, Mr. KOLBE, Mr. MCCRERY, Mr.
MCHUGH, Mr. MOORHEAD, Mr. OXLEY, Mr. PETRI, Mr. SANTORUM, Mr.
SENSENBRENNER, Mr. SHAW, Mr. SHAYS, Mr. SMITH of Oregon, Ms.
SNOWE, Mr. TAYLOR of North Carolina, Mr. THOMAS of Wyoming, and
Mr. WOLF) introduced the following bill; which was referred jointly to the
Committees on Energy and Commerce, Ways and Means, Education and
Labor, and the Judiciary
MARCH 24, 1993
Additional sponsors: Mr. HOUGHTON, Mr. SUNDQUIST, Mr. EWING, Mr.
GALLEGLY, Mr. INGLIS of South Carolina, Mr. SKEEN, Mr. FRANKS of
Connecticut, Mr. MANZULLO, Mr. BALLENGER, Mr. CUNNINGHAM, Mr.
LINDER, Mr. QUINN, Mr. BARTLETT of Maryland, Mrs. MEYERS of Kan-
sas, Mr. LEWIS of Florida, Mr. SAM JOHNSON of Texas, Mr. CALVERT,
Mr. UPTON, Mr. YOUNG of Alaska, Mr. GRAMS, Mr. BARTON of Texas,
Mr. ROTH, Mr. KYL, and Mr. HANCOCK
A BILL
To improve access to health insurance and contain health
care costs, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Action Now Health Care Reform Act of 1993’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—IMPROVED ACCESS TO AFFORDABLE HEALTH
CARE COVERAGE
Subtitle A—Increased Affordability and Availability for
Employees
Sec. 101. Establishment and enforcement of standards for health benefit plans.
Sec. 102. Preemption of State benefit mandates for small employer health bene-
fit plans that meet consumer protection standards.
Sec. 103. Requirement for small employer carrier offering of MedAccess plans.
Sec. 104. Limitation on pre-existing condition clauses; assurance of continuity
of coverage.
Sec. 105. Limits on premiums and miscellaneous consumer protections.
Sec. 106. Requirements relating to renewability generally.
Sec. 107. Limitation on annual premium increases.
Sec. 108. Establishment of reinsurance or allocation of risk mechanisms for
high risk individuals.
Sec. 109. Registration of all health benefit plans.
Sec. 110. Office of Private Health Care Coverage; annual reports on evaluation
of health care coverage reform.
Sec. 111. Research and demonstration projects; development of a health risk
pooling model.
Sec. 112. General definitions.
Subtitle B—Improved Small Employer Purchasing Power of
Affordable Health Insurance
Sec. 121. Preemption from insurance mandates for qualified small employer
purchasing groups.
Subtitle C—Health Deduction Fairness
Sec. 131. Permanent extension and increase in health insurance tax deduction
for self-employed individuals.
Subtitle D—Improved Access to Community Health Services
PART 1—INCREASED AUTHORIZATION FOR COMMUNITY AND MIGRANT
HEALTH CENTERS
Sec. 141. Grant program to promote primary health care services for under-
served populations.
PART 2—GRANTS FOR PROJECTS FOR COORDINATING DELIVERY OF
SERVICES
Sec. 151. Projects for coordinating delivery of outpatient primary health serv-
ices.
Subtitle E—Improved Access to Rural Health Services
PART 1—RURAL EMERGENCY MEDICAL SERVICES AMENDMENTS
Sec. 171. Office of Emergency Medical Services.
Sec. 172. State offices of emergency medical services.
Sec. 173. Programs for rural areas.
Sec. 174. Funding.
Sec. 175. Conforming amendments.
Sec. 176. Effective date.
PART 2—AIR TRANSPORT FOR RURAL VICTIMS OF MEDICAL EMERGENCIES
Sec. 181. Grants to States regarding aircraft for transporting rural victims of
medical emergencies.
PART 3—EXTENSION OF SPECIAL TREATMENT RULES FOR MEDICARE-
DEPENDENT, SMALL RURAL HOSPITALS
Sec. 191. Extension of special treatment rules for medicare-dependent, small
rural hospitals.
TITLE II—HEALTH CARE COST CONTAINMENT AND
QUALITY ENHANCEMENT
Subtitle A—Medical Malpractice Liability Reform
PART 1—GENERAL PROVISIONS
Sec. 201. Federal reform of medical malpractice liability actions.
Sec. 202. Definitions.
Sec. 203. Effective date.
PART 2—UNIFORM STANDARDS FOR MEDICAL MALPRACTICE LIABILITY
ACTIONS
Sec. 211. Statute of limitations.
Sec. 212. Requirement for initial resolution of action through alternative dis-
pute resolution.
Sec. 213. Establishment of process for resolution of claims against United
States.
Sec. 214. Mandatory pre-trial settlement conference.
Sec. 215. Calculation and payment of damages.
Sec. 216. Treatment of attorney’s fees and other costs.
Sec. 217. Joint and several liability.
Sec. 218. Uniform standard for determining negligence.
Sec. 219. Application of medical practice guidelines in malpractice liability ac-
tions.
Sec. 220. Special provision for certain obstetric services.
Sec. 221. Preemption.
PART 3—REQUIREMENTS FOR ALTERNATIVE DISPUTE RESOLUTION SYSTEMS
(ADR)
Sec. 231. Basic requirements for ADR.
Sec. 232. Certification of State systems; applicability of alternative Federal sys-
tem.
Sec. 233. Reports on implementation and effectiveness of alternative dispute
resolution systems.
PART 4—OTHER REQUIREMENTS AND PROGRAMS
Sec. 241. Facilitating development and use of medical practice guidelines.
Sec. 242. Permitting State professional societies to participate in disciplinary
activities.
Sec. 243. Requirements for risk management programs.
Sec. 244. Grants for medical safety promotion.
Sec. 245. Study of barriers to voluntary service by physicians.
Subtitle B—Administrative Cost Savings
PART 1—STANDARDIZATION OF CLAIMS PROCESSING
Sec. 251. Adoption of data elements, uniform claims, and uniform electronic
transmission standards.
Sec. 252. Application of standards.
Sec. 253. Periodic review and revision of standards.
Sec. 254. Health benefit plan defined.
PART 2—ELECTRONIC MEDICAL DATA STANDARDS
Sec. 261. Medical data standards for hospitals and other providers.
Sec. 262. Application of electronic data standards to certain hospitals.
Sec. 263. Electronic transmission to Federal agencies.
Sec. 264. Limitation on data requirements where standards in effect.
Sec. 265. Advisory commission.
PART 3—DEVELOPMENT AND DISTRIBUTION OF COMPARATIVE VALUE
INFORMATION
Sec. 271. State comparative value information programs for health care pur-
chasing.
Sec. 272. Federal implementation.
Sec. 273. Comparative value information concerning Federal programs.
Sec. 274. Development of model systems.
PART 4—ADDITIONAL STANDARDS AND REQUIREMENTS; RESEARCH AND
DEMONSTRATIONS
Sec. 281. Standards relating to use of Medicare and Medicaid magnetized
health benefit cards; secondary payor data bank.
Sec. 282. Preemption of State quill pen laws.
Sec. 283. Use of standard identification numbers.
Sec. 284. Coordination of benefit standards.
Sec. 285. Research and demonstrations.
Subtitle C—Medical Savings Accounts (Medisave)
Sec. 291. Medical savings accounts.
Subtitle D—Medicaid Program Flexibility
Sec. 301. Modification of Federal requirements to allow States more flexibility
in contracting for coordinated care services under medicaid.
Sec. 302. Period of certain waivers.
Subtitle E—Limitations on Physician Self-Referrals
Sec. 311. Extension of physician self-referral limitations to all payors.
Sec. 312. Extension of physician self-referral limitations to certain additional
services.
Sec. 313. Changes in exceptions.
Sec. 314. Study and report on changes in costs.
Sec. 315. Effective date.
Subtitle F—Removing Restrictions on Managed Care
Sec. 321. Removing restrictions on managed care.
Subtitle G—Medicare Payment Changes
Sec. 331. Revisions to methodology for determining updates to Medicare hos-
pital payments.
Sec. 332. Reduction in Medicare payment for clinical diagnostic laboratory
tests.
Subtitle H—Limitation of Antitrust Recovery for Certain
Hospital Joint Ventures
Sec. 341. Purpose.
Sec. 342. Definitions.
Sec. 343. Limitation on damages for antitrust violations.
Sec. 344. Disclosure of hospital joint venture.
Sec. 345. Interagency committee on competition, antitrust policy, and health
care.
Subtitle I—Encouraging Enforcement Activities of Medical
Self-Regulatory Entities
PART 1—APPLICATION OF THE CLAYTON ACT TO MEDICAL SELF-
REGULATORY ENTITIES
Sec. 351. Antitrust exemption for medical self-regulatory entities.
Sec. 352. Definitions.
PART 2—CONSULTATION BY FEDERAL AGENCIES
Sec. 357. Consultation with medical self-regulatory entities respecting medical
professional guidelines and standards.
TITLE I—IMPROVED ACCESS TO
AFFORDABLE HEALTH CARE
COVERAGE
Subtitle A—Increased Affordability
and Availability for Employees
SEC. 101. ESTABLISHMENT AND ENFORCEMENT OF STAND-
ARDS FOR HEALTH BENEFIT PLANS.
(a) ESTABLISHMENT OF GENERAL STANDARDS.—
(1) ROLE OF NAIC.—The Secretary of Health
and Human Services shall request the National As-
sociation of Insurance Commissioners (in this sub-
title referred to as the ‘‘NAIC’’) to develop, within
9 months after the date of the enactment of this
Act, model regulations that specify standards with
respect to each of the following:
(A) MEDACCESS STANDARDS.—(i) The re-
quirement, under section 103(a), that small em-
ployer carriers make available MedAccess plans.
(ii) The uniform benefit levels to be in-
cluded in MedAccess basic and standard plans
under section 103(b).
(iii) The requirements of guaranteed avail-
ability of MedAccess plans to small employers
under section 103(c).
(B) 
CONSUMER
PROTECTION
STAND-
ARDS.—(i) The requirements of section 104 (re-
lating to limitations on treatment of pre-exist-
ing conditions and assurance of continuity of
coverage).
(ii) The requirements of section 105 (relat-
ing to limits on premiums and miscellaneous
consumer protections).
(iii) The requirements of section 106 (re-
lating to renewability generally).
(iv) The requirement of section 107 (relat-
ing to limitation on annual premium increases).
If the NAIC develops recommended regulations
specifying such standards within such period, the
Secretary shall review the standards. Such review
shall be completed within 60 days after the date the
regulations are developed. Unless the Secretary de-
termines within such period that the standards do
not meet the requirements, such standards shall
serve as the standards under this section, with such
amendments as the Secretary deems necessary.
(2) CONTINGENCY.—If the NAIC does not de-
velop such model regulations within such period or
the Secretary determines that such regulations do
not specify standards that meet the requirements de-
scribed in paragraph (1), the Secretary shall specify,
within 15 months after the date of the enactment of
this Act, standards to carry out those requirements.
(3) EFFECTIVE DATES.—
(A) 
MEDACCESS
STANDARDS.—The
MedAccess standards (as defined in section
112(8)) shall apply to carriers in a State on or
after the date the standards are implemented in
the State under subsection (b).
(B) 
CONSUMER
PROTECTION
STAND-
ARDS.—For employer health benefit plans other
than MedAccess plans, the consumer protection
standards (as defined in section 112(2)) shall
apply to plans offered or renewed on or after 4
years after the date such standards are imple-
mented in the State under subsection (b).
(b) 
APPLICATION
OF
STANDARDS
THROUGH
STATES.—
(1) APPLICATION
OF
MEDACCESS
STAND-
ARDS.—
(A) IN GENERAL.—Each State shall sub-
mit to the Secretary, by the deadline specified
in subparagraph (B), a report on steps the
State is taking to implement and enforce the
MedAccess standards with respect to small em-
ployer carriers, and small employer health bene-
fit plans offered, not later than such deadline.
(B) DEADLINE FOR REPORT.—
(i) 1 YEAR AFTER STANDARDS ESTAB-
LISHED.—Subject to clause (ii), the dead-
line under this subparagraph is 1 year
after the date the MedAccess standards
are established under subsection (a).
(ii) EXCEPTION FOR LEGISLATION.—
In the case of a State which the Secretary
identifies, in consultation with the NAIC,
as—
(I) requiring State legislation
(other than legislation appropriating
funds) in order for carriers and health
benefit plans offered to small employ-
ers to meet the MedAccess standards
established under subsection (a), but
(II) having a legislature which is
not scheduled to meet in 1994 in a
legislative session in which such legis-
lation may be considered,
the date specified in this subparagraph is
the first day of the first calendar quarter
beginning after the close of the first legis-
lative session of the State legislature that
begins on or after January 1, 1996. For
purposes of the previous sentence, in the
case of a State that has a 2-year legislative
session, each year of such session shall be
deemed to be a separate regular session of
the State legislature.
(2) APPLICATION OF CONSUMER PROTECTION
STANDARDS
TO
NON-MEDACCESS
EMPLOYER
HEALTH BENEFIT PLANS.—Each State shall submit
to the Secretary, by not later than 4 years after the
date consumer protection standards are established
under subsection (a), a report on steps the State is
taking to implement and enforce the consumer pro-
tection standards with respect to all employer health
benefit plans (other than MedAccess plans) which
are subject to regulation by the State and which are
offered or renewed not later than 4 years after the
date the standards were established.
(3) FEDERAL ROLE.—
(A) SECRETARIAL AUTHORITY.—
(i) IN GENERAL.—If the Secretary de-
termines that a State has failed to submit
a report by the deadline specified under
paragraph (1) or (2) or finds that the
State has not implemented and provided
adequate enforcement of the MedAccess
standards or consumer protection stand-
ards under the respective paragraph, the
Secretary shall notify the State and pro-
vide the State a period of 60 days in which
to submit such report or to implement and
enforce such standards under the respec-
tive paragraph. If, after such 60-day pe-
riod, the Secretary finds that such a fail-
ure has not been corrected, the Secretary
shall provide for such mechanism for the
implementation and enforcement of the ap-
plicable standards in the State as the Sec-
retary determines to be appropriate. Such
implementation and enforcement shall take
effect with respect to carriers, and health
benefit plans offered or renewed, on or
after 3 months after the date of the Sec-
retary’s finding under the previous sen-
tence, and until the date the Secretary
finds that such a failure has been cor-
rected. In exercising authority under this
subparagraph, the Secretary shall deter-
mine whether the use of a risk-allocation
mechanism, described in section 103(d),
would be more consistent with the small
employer group health coverage market in
the State than the guaranteed availability
provisions of section 103(c).
(ii) NON-STATE
REGULATED
ENTI-
TIES.—In the case of carriers that are not
subject to State regulation, the Secretary
shall be responsible for implementation and
enforcement of standards under this sub-
title.
(B) 
ENFORCEMENT
THROUGH
EXCISE
TAX.—
(i) IN GENERAL.—Chapter 43 of the
Internal Revenue Code of 1986 (relating to
qualified pension, etc., plans) is amended
by adding at the end thereof the following
new section:
‘‘SEC. 
4980C. 
FAILURE 
TO 
COMPLY 
WITH 
EMPLOYER
HEALTH BENEFIT PLAN STANDARDS.
‘‘(a) IMPOSITION OF TAX.—
‘‘(1) IN GENERAL.—There is hereby imposed a
tax on the failure of a carrier or an employer health
benefit plan to comply with the applicable standards
established under section 101(a) of the Action Now
Health Care Reform Act of 1993.
‘‘(2) EXCEPTION.—Paragraph (1) shall not
apply to a failure by a small employer carrier or
plan in a State if the Secretary of Health and
Human Services determines that the State has in ef-
fect a regulatory enforcement mechanism that pro-
vides adequate sanctions with respect to such a fail-
ure by such a carrier or of such a plan.
‘‘(b) AMOUNT OF TAX.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
the tax imposed by subsection (a) shall be an
amount not to exceed 25 percent of the amounts re-
ceived by the carrier or under the plan for coverage
during the period such failure persists.
‘‘(2) LIMITATION IN CASE OF INDIVIDUAL FAIL-
URES.—In the case of a failure that only relates to
specified individuals or employers (and not to the
plan generally), the amount of the tax imposed by
subsection (a) shall not exceed the aggregate of
$100 for each day during which such failure persists
for each individual to which such failure relates. A
rule similar to the rule of section 4980B(b)(3) shall
apply for purposes of this section.
‘‘(c) LIABILITY FOR TAX.—The tax imposed by this
section shall be paid by the carrier.
‘‘(d) EXCEPTIONS.—
‘‘(1) CORRECTIONS WITHIN 30 DAYS.—No tax
shall be imposed by subsection (a) by reason of any
failure if—
‘‘(A) such failure was due to reasonable
cause and not to willful neglect, and
‘‘(B) such failure is corrected within the
30-day period beginning on earliest date the
carrier knew, or exercising reasonable diligence
would have known, that such failure existed.
‘‘(2) WAIVER BY SECRETARY.—In the case of a
failure which is due to reasonable cause and not to
willful neglect, the Secretary may waive part or all
of the tax imposed by subsection (a) to the extent
that payment of such tax would be excessive relative
to the failure involved.
‘‘(e) DEFINITIONS.—For purposes of this section, the
terms ‘carrier’, ‘employer health benefit plan’, and ‘small
employer carrier’ have the respective meanings given such
terms in section 112 of the Action Now Health Care Re-
form Act of 1993.’’
(ii) 
CLERICAL
AMENDMENT.—The
table of sections for chapter 43 of such
Code is amended by adding at the end
thereof the following new items:
‘‘Sec. 4980C. Failure to comply with employer health plan stand-
ards.’’.
(iii) EFFECTIVE DATE.—The amend-
ments made by this subparagraph shall
apply to plan years beginning after Decem-
ber 31, 1993.
SEC. 102. PREEMPTION OF STATE BENEFIT MANDATES FOR
SMALL EMPLOYER HEALTH BENEFIT PLANS
THAT MEET CONSUMER PROTECTION STAND-
ARDS.
(a) FINDING.—Congress finds that health benefit
plans offered with respect to small employers affect inter-
state commerce.
(b) PREEMPTION.—In the case of a MedAccess plan
or other small employer health benefit plan that meets the
consumer protection standards, no provision of State law
shall apply that requires the offering, as part of the health
benefit plan with respect to such an employer, of any serv-
ices, category of care, or services of any class or type of
provider.
SEC. 103. REQUIREMENT FOR SMALL EMPLOYER CARRIER
OFFERING OF MEDACCESS PLANS.
(a) IN GENERAL.—
(1) IN
GENERAL.—Each carrier that makes
available in a State any small employer health bene-
fit plan shall make available to each small employer
in the State—
(A) a MedAccess basic plan, and
(B) a MedAccess standard plan.
(2) EXCEPTION
IF
ALTERNATE
PLAN
IN
A
STATE.—Paragraph (1) shall not apply to a carrier
in a State if the State is providing access to each
small employer in the State to a MedAccess basic
plan and to a MedAccess standard plan under a risk
allocation mechanism described in subsection (d).
(b) MEDACCESS PLAN DEFINED.—In this subtitle:
(1) IN GENERAL.—The term ‘‘MedAccess plan’’
means a health benefits plan (whether a managed-
care plan, indemnity plan, or other plan) that—
(A) subject to paragraph (3)—
(i) is designed to provide benefits typi-
cal of the benefits offered in the small em-
ployer health coverage market, or
(ii)(I) is designed to provide only ben-
efits for essential preventive and medical
services and (II) has an average actuarial
value (in the overall small employer group
market for the same type of coverage)
which does not exceed 60 percent of the
average actuarial value of the benefits de-
scribed in clause (i) for such type of cov-
erage;
(B) meets the applicable requirements of
subsection (c) (relating to guaranteed issue);
and
(C) meets the consumer protection stand-
ards.
(2) 
MEDACCESS
BASIC
AND
STANDARD
PLANS.—The terms ‘‘MedAccess basic plan’’ and
‘‘MedAccess standard plan’’ mean a MedAccess plan
that provides for benefit levels described in clause
(ii) or clause (i), respectively, of paragraph (1)(A).
(3) SPECIAL
RULES
FOR
HEALTH
MAINTE-
NANCE ORGANIZATIONS.—With respect to a carrier
that—
(A) is a Federally qualified health mainte-
nance organization (as defined in section
1301(a) of the Public Health Service Act), the
benefits required under paragraphs (1)(A) or
(2)(A) shall be modified to the extent required
to be consistent with the requirements for the
plans of such an organization under title XIII
of such Act, or
(B) is not such an organization but is rec-
ognized under State law as a health mainte-
nance organization, the benefits required under
paragraph (1)(A) shall be modified to the ex-
tent required to be consistent with the require-
ments for the plans of such an organization
under State law.
(4) REVIEW
OF
BENEFIT
STANDARDS.—The
NAIC is requested to periodically review the stand-
ards for benefits described in paragraph (1)(A). The
NAIC is requested to submit to the Secretary and
the Congress its recommendations on changes that
should be made in such standards.
(c) GUARANTEED AVAILABILITY
OF MEDACCESS
PLANS.—Subject to subsection (d)—
(1) IN GENERAL.—Subject to paragraph (2),
each MedAccess plan in a State—
(A) must accept every small employer in
the State that applies for coverage under the
plan; and
(B) must accept for enrollment every eligi-
ble individual (as defined in paragraph (4)) who
applies for enrollment on a timely basis (con-
sistent with paragraph (3)) and may not place
any restriction on the eligibility of an individual
to enroll so long as such individual is an eligible
individual.
(2) SPECIAL
RULES
FOR
HEALTH
MAINTE-
NANCE ORGANIZATIONS.—In the case of a plan of-
fered by a health maintenance organization, the plan
shall—
(A) limit the employers that may apply for
coverage to those with eligible individuals resid-
ing in the service area of the plan,
(B) limit the individuals who may be en-
rolled under the plan to those who reside in the
service area of the plan, and
(C) within the service area of the plan,
deny coverage to such employers if the plan
demonstrates that—
(i) it will not have the capacity to de-
liver services adequately to enrollees of any
additional groups because of its obligations
to existing group contract holders and en-
rollees, and
(ii) it is applying this subparagraph
uniformly to all employers without regard
to the health status, claims experience, or
duration of coverage of those employers
and their employees.
(3) 
CLARIFICATION
OF
TIMELY
ENROLL-
MENT.—
(A) GENERAL INITIAL ENROLLMENT RE-
QUIREMENT.—Except as provided in this para-
graph, a MedAccess plan may consider enroll-
ment of an eligible individual not to be timely
if the eligible employee or dependent fails to en-
roll in the plan during an initial enrollment pe-
riod, if such period is at least 30 days long.
(B) ENROLLMENT DUE TO LOSS OF PRE-
VIOUS EMPLOYER COVERAGE.—Enrollment in a
MedAccess plan is considered to be timely in
the case of an eligible individual who—
(i) was covered under another em-
ployer health benefit plan at the time of
the individual’s initial enrollment period,
(ii) stated at the time of initial enroll-
ment period that coverage under another
employer health benefit plan was the rea-
son for declining enrollment,
(iii) lost coverage under another em-
ployer health benefit plan (as a result of
the termination of the other plan’s cov-
erage, termination or reduction of employ-
ment, or other reason), and
(iv) requests enrollment within 30
days after termination of coverage under
another employer health benefit plan.
(C) REQUIREMENT APPLIES DURING OPEN
ENROLLMENT PERIODS.—Each MedAccess plan
shall provide for at least one period (of not less
than 30 days) each year during which enroll-
ment under the plan shall be considered to be
timely.
(D) EXCEPTION
FOR
COURT
ORDERS.—
Enrollment of spouse or minor child of an em-
ployee shall be considered to be timely if—
(i) a court has ordered that coverage
be provided for the spouse or child under
a covered employee’s health benefit plan,
and
(ii) a request for enrollment is made
within 30 days after the date the court is-
sues the order.
(E) ENROLLMENT OF SPOUSES AND DE-
PENDENTS.—
(i) IN GENERAL.—Enrollment of the
spouse (including a child of the spouse)
and any child (including an adopted child)
of an eligible employee shall be considered
to be timely if a request for enrollment is
made either—
(I) within 30 days of the date of
the marriage or of the date of the
birth or adoption of a child, if family
coverage is available as of such date,
or
(II) within 30 days of the date
family coverage is first made avail-
able.
(ii) COVERAGE.—If a plan makes
family coverage available and enrollment is
made under the plan on a timely basis
under clause (i)(I), the coverage shall be-
come effective not later than the first day
of the first month beginning after the date
of the marriage or the date of birth or
adoption of the child (as the case may be).
(4) ELIGIBLE INDIVIDUAL DEFINED.—In this
subsection, the term ‘‘eligible individual’’ means,
with respect to a small employer—
(A) an individual who is a full-time em-
ployee of the employer, and
(B) if family coverage is offered, the em-
ployee’s spouse and the employee’s dependents
who are under 19 years of age or who are full-
time students and under 25 years of age.
(d) STATE OPTION OF GUARANTEED AVAILABILITY
THROUGH
ALLOCATION
OF
RISK
(RATHER
THAN
THROUGH GUARANTEED ISSUE).—The requirement of
subsection (c) shall not apply in a State if the State has
provided (in accordance with standards established under
this subtitle) a mechanism under which—
(1) each carrier offering a health benefit plan
to a small employer in the State must participate in
a program for assigning high-risk small employer
groups (or individuals within such a group) among
some or all such carriers, and
(2) the carriers to which such high-risk small
employer groups or individuals are so assigned com-
plies with the requirement of subsection (c).
SEC. 
104. 
LIMITATION 
ON 
PRE-EXISTING 
CONDITION
CLAUSES; ASSURANCE OF CONTINUITY OF
COVERAGE.
(a) LIMITATIONS ON TREATMENT OF PRE-EXISTING
CONDITIONS.—A carrier may not impose (or require an
employer to impose through a waiting period for coverage
under a health benefit policy or similar requirement) a
limitation or exclusion of benefits under an employer
health benefit plan relating to treatment of a condition
based on the fact that the condition pre-existed the effec-
tiveness of the policy if—
(1) the condition relates to a condition that was
not diagnosed or treated within 3 months before the
date of coverage under the plan;
(2) the limitation or exclusion extends over
more than 6 months after the date of coverage
under the plan;
(3) the limitation or exclusion applies to an in-
dividual who, as of the date of birth, was covered
under the plan; or
(4) the limitation or exclusion relates to preg-
nancy.
In the case of an individual who is eligible for coverage
under an employer health benefit plan but for a waiting
period imposed by the employer, in applying paragraphs
(1) and (2), the individual shall be treated as have been
covered under the plan as of the earliest date of the begin-
ning of the waiting period.
(b) ASSURANCE
OF
CONTINUITY
OF
COVERAGE
THROUGH PREVIOUS SATISFACTION
OF PRE-EXISTING
CONDITION REQUIREMENT.—
(1) IN GENERAL.—Each carrier shall waive any
period applicable to a preexisting condition for simi-
lar benefits with respect to an individual to the ex-
tent that the individual was covered for the condi-
tion under any health benefit plan (as defined in
paragraph (3)) that was in effect before the date of
the enrollment under the carrier’s plan.
(2) CONTINUOUS COVERAGE REQUIRED.—
(A) IN GENERAL.—Paragraph (1) shall no
longer apply if there is a continuous period of
more than 60 days (or, in the case of an indi-
vidual described in subparagraph (C), 6
months) on which the individual was not cov-
ered under an health benefit plan.
(B) TREATMENT OF WAITING PERIODS.—
In applying subparagraph (A), any waiting pe-
riod imposed by an employer before an em-
ployee is eligible to be covered under a policy
shall be treated as a period in which the em-
ployee was covered under a health benefit plan.
(C) JOB TERMINATION.—An individual is
described in this subparagraph if the individual
loses coverage under an employer health plan
due to termination of employment.
(3) EXCLUSION
OF
CASH-ONLY
AND
DREAD
DISEASE
POLICIES.—In this subsection, the term
‘‘health benefit plan’’ does not include any insurance
which is offered primarily to provide—
(A) coverage for a specified disease or ill-
ness, or
(B) hospital or fixed indemnity policy, un-
less the Secretary (or in the case of a plan in
a State, the State) determines that such a pol-
icy provides sufficiently comprehensive coverage
of a benefit so that it should be treated as a
health benefit plan under this subsection.
SEC. 105. LIMITS ON PREMIUMS AND MISCELLANEOUS
CONSUMER PROTECTIONS.
(a) LIMITS ON PREMIUMS.—
(1) LIMIT ON VARIATION OF INDEX RATES BE-
TWEEN CLASSES OF BUSINESS.—
(A) IN GENERAL.—As a standard under
section 101(a)(1)(B)(ii), the index rate for a
rating period for any class of business of a
small employer carrier may not exceed by more
than 20 percent the index rate for any other
class of business.
(B) EXCEPTIONS.—The limitation of sub-
paragraph (A) shall not apply to a class of busi-
ness if—
(i) the class is one for which the car-
rier does not reject, and never has rejected,
small employers included within the defini-
tion of employers eligible for the class of
business or otherwise eligible employees
and dependents who enroll on a timely
basis, based upon their claim experience or
health status,
(ii) the carrier does not involuntarily
transfer, and never has involuntarily trans-
ferred, a health benefit plan into or out of
the class of business, and
(iii) the class of business is currently
available for purchase.
(2) LIMIT ON VARIATION OF PREMIUM RATES
WITHIN A CLASS OF BUSINESS.—For a class of busi-
ness of a small employer carrier, as a standard
under section 101(a)(1)(B)(ii), the premium rates
charged during a rating period to small employers
with similar demographic or other objective charac-
teristics (not relating to claims experience, health
status, or duration of coverage) for the same or
similar coverage, or the rates which could be charged
to such employers under the rating system for that
class of business, shall not vary from the index rate
by more than 25 percent of the index rate.
(3) OBJECTIVE
BASIS
FOR
DIFFERENCES
IN
PREMIUMS FOR STANDARD AND BASIC MEDACCESS
PLANS.—The difference between the index rate for
the MedAccess basic plan and the index rate for the
MedAccess standard plan shall be reasonable and
shall reflect the difference in plan design and shall
not take into account differences due to the nature
of the groups assumed to select particular health
plans.
(4) LIMIT
ON
TRANSFER
OF
EMPLOYERS
AMONG
CLASSES
OF
BUSINESS.—As a standard
under section 101(a)(1)(B)(ii), a small employer car-
rier may not involuntarily transfer a small employer
into or out of a class of business. A small employer
carrier may not offer to transfer a small employer
into or out of a class of business unless such offer
is made to transfer all small employers in the class
of business without regard to demographic charac-
teristics, claim experience, health status, or duration
since issue.
(5) DEFINITIONS.—In this subsection:
(A) BASE
PREMIUM
RATE.—The term
‘‘base premium rate’’ means, for each class of
business for each rating period, the lowest pre-
mium rate charged or which could have been
charged under a rating system for that class of
business by the small employer carrier to small
employers with similar demographic or other
objective characteristics (not relating to claims
experience, health status, or duration of cov-
erage) for health benefit plans with the same or
similar coverage.
(B) CLASS
OF
BUSINESS.—The term
‘‘class of business’’ means, with respect to a
carrier, all (or a distinct group of) small em-
ployers as shown on the records of the carrier.
(C) RULES
FOR
ESTABLISHING
CLASSES
OF BUSINESS.—For purposes of subparagraph
(B)—
(i) a carrier may establish, subject to
clause (ii), a distinct group of small em-
ployers on the basis that the applicable
health benefit plans either—
(I) 
are 
marketed 
and 
sold
through individuals and organizations
which are not participating in the
marketing or sale of other distinct
groups of small employers for the car-
rier,
(II) have been acquired from an-
other carrier as a distinct group, or
(III) are provided through an as-
sociation that has a membership of
not less than 100 small employers and
that has been formed for purposes
other than obtaining health coverage;
(ii) a carrier may not establish more
than 2 groupings under each class of busi-
ness based on the carrier’s use of man-
aged-care techniques if the techniques are
expected to produce substantial variation
in health care costs; and
(iii) notwithstanding clauses (i) and
(ii), a State commissioner of Insurance of
a State, upon application and if authorized
under State law, may approve additional
distinct groups upon a finding that such
approval would enhance the efficiency and
fairness of the small employer marketplace.
(D) INDEX RATE.—The term ‘‘index rate’’
means, with respect to a class of business, the
arithmetic average of the applicable base pre-
mium rate and the corresponding highest pre-
mium rate for the class.
(E) DEMOGRAPHIC
CHARACTERISTICS.—
Except as otherwise permitted under the stand-
ard under section 101(b)(1)(B)(ii), the term
‘‘demographic characteristics’’ means age, gen-
der, industry, geographic area, family composi-
tion, and group size.
(b) FULL DISCLOSURE OF RATING PRACTICES.—At
the time a carrier offers a health benefit plan to a small
employer, the carrier shall fully disclose to the employer
rating practices for small employer health benefit plans,
including rating practices for different industries, popu-
lations, and benefit designs.
(c) ACTUARIAL CERTIFICATION.—Each carrier shall
file annually with the State commissioner of insurance a
written statement by a member of the American Academy
of Actuaries (or other individual acceptable to the commis-
sioner) that, based upon an examination by the individual
which includes a review of the appropriate records and of
the actuarial assumptions of the carrier and methods used
by the carrier in establishing premium rates for applicable
small employer health benefit plans—
(1) the carrier is in compliance with the appli-
cable provisions of this section, and
(2) the rating methods are actuarially sound.
Each carrier shall retain a copy of such statement for ex-
amination at its principal place of business.
(d) REGISTRATION AND REPORTING.—Each carrier
that issues any small employer health benefit plan in a
State shall be registered or licensed with the State com-
missioner of insurance and shall comply with any report-
ing requirements of the commissioner relating to such a
plan.
(e) USE
OF MINIMUM PARTICIPATION REQUIRE-
MENT.—A carrier may condition issuance, or renewal, of
a health benefit plan to a small employer on the enroll-
ment of a minimum number (or percentage) of its full-
time employees, only in accordance with standards estab-
lished to carry out this section. Such standards shall re-
quire that any such conditions be imposed uniformly on
employers of the same size.
SEC. 106. REQUIREMENTS RELATING TO RENEWABILITY
GENERALLY.
(a) IN GENERAL.—A carrier may not cancel an em-
ployer health benefit plan or deny renewal of coverage
under such a plan other than—
(1) for nonpayment of premiums,
(2) for fraud or other misrepresentation by the
insured,
(3) for noncompliance with plan provisions,
(4) for failure to maintain (in accordance with
standards established under section 105(e)) the
number of enrollees under the plan at the number
(or percentage) required under the plan,
(5) for misuse of a provider network provision,
or
(6) because the carrier is ceasing to provide any
employer health benefit plan in a State, or, in the
case of a health maintenance organization, in a geo-
graphic area.
(b) LIMITATION ON MARKET REENTRY.—If a carrier
terminates the offering of employer health benefit plans
in an area, the carrier may not offer such a health benefit
plan to any employer in the area until 5 years have elapsed
since the date of the termination.
SEC. 107. LIMITATION ON ANNUAL PREMIUM INCREASES.
A carrier may not provide for an increase in the pre-
mium charged a small employer for a small employer
health benefit plan in a percentage that exceeds the per-
centage change in the premium charged under the plan
for a newly covered employer within the same class of busi-
ness rate plus 15 percentage points.
SEC. 108. ESTABLISHMENT OF REINSURANCE OR ALLOCA-
TION OF RISK MECHANISMS FOR HIGH RISK
INDIVIDUALS.
(a) ESTABLISHMENT OF STANDARDS.—
(1) ROLE OF NAIC.—The Secretary of Health
and Human Services shall request the NAIC to de-
velop, within 9 months after the date of the enact-
ment of this Act, models for reinsurance or alloca-
tion of risk mechanisms (each in this section re-
ferred to as a ‘‘reinsurance or allocation of risk
mechanism’’) for individuals and small employers
who are enrolled under a small employer health ben-
efit plan that meets the consumer protection stand-
ards and for whom a carrier is at risk of incurring
high costs under the plan. If the NAIC develops
such models within such period, the Secretary shall
review such models to determine if they provide for
an effective reinsurance or allocation of risk mecha-
nism. Such review shall be completed within 30 days
after the date the models are developed. Unless the
Secretary determines within such period that such a
model is not an effective reinsurance or allocation of
risk mechanism, such remaining models shall serve
as the models under this section, with such amend-
ments as the Secretary deems necessary.
(2) CONTINGENCY.—If the NAIC does not de-
velop such models within such period or the Sec-
retary determines that all such models do not pro-
vide for an effective reinsurance or allocation of risk
mechanism, the Secretary shall specify, within 15
months after the date of the enactment of this Act,
models to carry out this section.
(b) IMPLEMENTATION OF REINSURANCE OR ALLOCA-
TION OF RISK MECHANISMS.—
(1) BY
STATES.—Each State shall establish
and fund one or more reinsurance or allocation of
risk mechanisms that are consistent with a model es-
tablished under subsection (a) by not later than the
deadline specified in section 101(b)(1)(B). In order
to assure the financial solvency of the mechanism,
the State may, notwithstanding any provision of law
to the contrary, impose charges on any entity pro-
viding employee-related health benefits, so long as
such charges do not discriminate with respect to en-
tities that would (but for this provision) not be sub-
ject to such charges.
(2) FEDERAL ROLE.—
(A) IN GENERAL.—If the Secretary deter-
mines that a State has failed to establish a re-
insurance or allocation of risk mechanism in ac-
cordance with paragraph (1), the Secretary
shall establish such a reinsurance or allocation
of risk mechanism meeting the requirements of
this paragraph.
(B) REINSURANCE
MECHANISM.—Unless
the Secretary determines under subparagraph
(C) that an allocation of risk mechanism is the
appropriate mechanism to use in a State under
this paragraph, the Secretary shall establish for
use under this section for each State an appro-
priate reinsurance mechanism.
(C) ALLOCATION OF RISK MECHANISM.—If
the Secretary determines that, due to the na-
ture of the health coverage market in the State
(including a relatively small number of small
employer health benefit plans offered or a rel-
atively small number of uninsurable small em-
ployers or individuals), an allocation of risk
mechanism would be a better mechanism than
a reinsurance mechanism, the Secretary shall
establish for use under this section for a State
an allocation of risk mechanism under which
uninsurable individuals and small employers
would be equitably assigned among small em-
ployer health benefit plans.
(D) FINANCING
DEFICIT
FOR
REINSUR-
ANCE MECHANISMS.—
(i) IN GENERAL.—Chapter 43 of the
Internal Revenue Code of 1986 (relating to
qualified pension plans, etc.) is amended
by adding at the end thereof the following
new section:
‘‘SEC. 4980D. ADDITIONAL TAX TO FUND REINSURANCE IN
STATES UNDER FEDERAL REINSURANCE.
‘‘(a) IMPOSITION OF TAX.—There is hereby imposed
a tax on the providing of any health benefit plan which
covers any employee in a Federal reinsurance State.
‘‘(b) AMOUNT OF TAX.—
‘‘(1) IN GENERAL.—The tax imposed by sub-
section (a) shall be equal to the applicable percent-
age of the amount received by the carrier for provid-
ing such plan in such Federal reinsurance State.
‘‘(2) APPLICABLE PERCENTAGE.—For purposes
of paragraph (1), the term ‘applicable percentage’
means, with respect to any State for any period, the
lowest percentage estimated by the Secretary as gen-
erating sufficient revenues to carry out section
108(b)(2) of the Action Now Health Care Reform
Act of 1993 in such State for such period.
‘‘(c) LIABILITY FOR TAX.—The tax imposed by this
section shall be paid by the carrier.
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) CARRIER.—The term ‘carrier’ has the
meaning given such term in section 112(2) of the
Action Now Health Care Reform Act of 1993.
‘‘(2) FEDERAL
REINSURANCE
STATE.—The
term ‘Federal reinsurance State’ means any State
with respect to which a determination is in effect
under section 108(b)(2) of the Action Now Health
Care Reform Act of 1993 and for which the Sec-
retary of Health and Human Services has estab-
lished a reinsurance mechanism under subparagraph
(B) of such section for the State.’’
(ii) 
CLERICAL
AMENDMENT.—The
table of sections for chapter 43 of such
Code is amended by adding at the end
thereof the following new item:
‘‘Sec. 4980D. Additional tax to fund reinsurance in States under
Federal reinsurance.’’
(c) CONSTRUCTION.—Nothing in this section shall be
construed to prohibit reinsurance or allocation of risk ar-
rangements, whether on a State or regional basis, not re-
quired under this section.
SEC. 109. REGISTRATION OF ALL HEALTH BENEFIT PLANS.
(a) IN GENERAL.—Notwithstanding any other provi-
sion of law, each State commissioner of insurance may,
under State law, require each employer health benefit plan
(including a self-insured plan)—
(1) to be registered with such official, if the
plan is not otherwise required to be registered or li-
censed with the official under section 105(d), and
(2) to provide the official with such information
on the plan as may be necessary to carry out section
108.
Insofar as the Secretary is exercising authority under sec-
tion 108(b)(2), the Secretary may impose the requirement
under the previous sentence in the same manner as a
State commissioner of insurance may impose the require-
ment.
(b) PROVISION OF LIST TO SECRETARY.—By not
later than the deadline specified in section 101(b)(1)(B),
each State shall provide the Secretary with a list of all
employer health benefit plans registered in the State under
subsection (a).
SEC. 110. OFFICE OF PRIVATE HEALTH CARE COVERAGE;
ANNUAL 
REPORTS 
ON 
EVALUATION 
OF
HEALTH CARE COVERAGE REFORM.
(a) IN GENERAL.—In order to carry out the respon-
sibilities of the Secretary under this subtitle, the Secretary
shall establish an Office of Private Health Care Coverage,
to be headed by a Director appointed by the Secretary.
(b) ANNUAL REPORT.—
(1) IN GENERAL.—The Director shall submit to
Congress an annual report on the implementation of
this subtitle.
(2) INFORMATION TO BE INCLUDED.—Each an-
nual report shall include information concerning at
least the following:
(A) Implementation and enforcement of
the 
applicable 
MedAccess 
standards 
and
consumer protection standards under this sub-
title by the States and by the Secretary.
(B) An evaluation of the impact of the re-
forms under this subtitle on the availability of
affordable health coverage for small employers
that purchase group health coverage and for
their employees, and, in particular, the impact
of—
(i) guaranteed availability of health
coverage,
(ii) limitations of restrictions from
coverage of preexisting conditions,
(iii) requirement for continuity of cov-
erage,
(iv) risk-management mechanisms for
health coverage,
(v) limits on premium variations,
(vi) limits on annual premium in-
creases, and
(vii) preemption of State benefit man-
dates.
In performing such evaluation, the Secretary
shall seek to discount the effect of the insur-
ance cycle on health insurance premiums.
(C) An assessment of the implications of
the reforms on adverse selection among small
employer health benefit plans and the distribu-
tion of risk among small employer health bene-
fit plans.
(c) ADVISORY COMMITTEE.—The Secretary shall pro-
vide for appointment of an advisory committee to advise
the Director concerning activities of the Office under this
subtitle. Membership on the committee shall consist of 17
individuals and shall include individuals from the general
public, small and large business, labor, insurance and
other health benefit plans, and health care providers, and
shall include experts in the fields of the actuarial science,
health economics, and health services research. The Sec-
retary may include, as additional, ex officio members of
the committee, such representatives of government agen-
cies as the Secretary deems appropriate. The chairperson
of the committee shall not be a health care provider or
receive any direct or indirect compensation from an in-
surer, health benefit plan, or a health care provider.
SEC. 111. RESEARCH AND DEMONSTRATION PROJECTS; DE-
VELOPMENT OF A HEALTH RISK POOLING
MODEL.
(a) RESEARCH AND DEMONSTRATIONS.—The Direc-
tor is authorized, directly, by contract, and through grants
and cooperative agreements within the Department of
Health and Human Services and outside the Depart-
ment—
(1) to conduct research on the the impact of
this subtitle on the availability of affordable health
coverage for employees and dependents in the small
employers group health care coverage market and
other topics described in section 110(b), and
(2) to conduct demonstration projects relating
to such topics.
(b) DEVELOPMENT
OF METHODS
OF MEASURING
RELATIVE HEALTH RISK.—
(1) IN GENERAL.—The Director shall develop
methods for measuring, in terms of the expected
costs of providing benefits under small employer
health benefit plans and, in particular, MedAccess
plans, the relative health risks of eligible individuals.
(2) METHODOLOGY.—The methods—
(A) shall rely on diagnosis or other health-
related information that is predictive of individ-
ual health care needs,
(B) may rely upon information routinely
collected in the process of making payments
under health benefit plans, and
(C) may provide for such random, sample
audits of records as may be necessary to verify
the accuracy of measurements.
(c) DEVELOPMENT OF A HEALTH RISK POOLING
MODEL.—
(1) IN GENERAL.—The Director shall develop a
model, based on the methods of measuring risks
under subsection (b), for equitably distributing
health risks among carriers in the small employer
health care coverage market.
(2) REDISTRIBUTION
OF
RISK.—Under such
model, carriers with below average health risks
would be required to contribute to a common fund
for payment to carriers with above average health
risks, each in relation to the degree of their favor-
able or adverse risk selection.
(3) INCENTIVES.—Such model shall include in-
centives to encourage continuous coverage of eligible
individuals and small employers.
(d) CONSULTATION.—The methods and model under
this section shall be developed in consultation with the
NAIC and the advisory committee established under sec-
tion 110(c).
(e) REPORT.—By not later than January 1, 1995,
the Director shall submit to Congress a report on the
methods and model developed under this section (as well
as on research and demonstration projects conducted
under subsection (a)). The Director shall include in the
report such recommendations respecting the application of
the model to small employer carriers (and, in particular,
to MedAccess plans) under this subtitle as the Director
deems appropriate.
(f) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated to carry out this section,
$5,000,000 in each of fiscal years 1994 through 1998.
SEC. 112. GENERAL DEFINITIONS.
In this subtitle:
(1) The term ‘‘carrier’’ means any entity which
provides health insurance or health benefits in a
State, and includes a licensed insurance company, a
prepaid hospital or medical service plan, a health
maintenance organization, the plan sponsor of a
multiple employer welfare arrangement or an em-
ployee benefit plan (as defined under the Employee
Retirement Income Security Act of 1974), or any
other entity providing a plan of health insurance
subject to State insurance regulation, but such term
does not include for purposes of section 103 an en-
tity that provides health insurance or health benefits
under a multiple employer welfare arrangement.
(2) The term ‘‘consumer protection standards’’
means the standards established under section
101(a) to carry out the requirements of the follow-
ing sections:
(A) Section 104 (relating to limitation on
pre-existing condition clauses; assurance of con-
tinuity of coverage).
(B) Section 106 (relating to renewability
generally).
(C) With respect only to small employer
health benefit plans—
(i) section 105 (relating to limits on
premiums and other requirements for ini-
tial writing of plans), and
(ii) section 107 (relating to limits on
annual premium increases).
(3) The term ‘‘Director’’ means the Director of
the Office of Private Health Care Coverage estab-
lished under section 110(a).
(4)(A) Subject to subparagraph (B), the term
‘‘employer health benefit plan’’ means a health bene-
fit plan (including an employee welfare benefit plan,
as defined in section 3(1) of the Employee Retire-
ment Income Security Act of 1974) which is offered
to employees through an employer and for which the
employer provides for any contribution to such plan
or any premium for such plan are deducted by the
employer from compensation to the employee.
(B) A State may provide (for a plan in a State)
that the term ‘‘employer health benefit plan’’ does
not include an association plan (as defined in sub-
paragraph (C)) for purposes of some or all of the
provisions of this subtitle.
(C) For purposes of subparagraph (B), the
term ‘‘association plan’’ means a health benefit plan
offered by an organization to its members if the or-
ganization was formed other than for purposes of
purchasing insurance.
(5) The term ‘‘full-time employee’’ means, with
respect to an employer, an individual who normally
is employed for at least 30 hours per week by the
employer.
(6) The term ‘‘health benefit plan’’ means any
hospital or medical expense incurred policy or certifi-
cate, hospital or medical service plan contract, or
health maintenance subscriber contract, or a mul-
tiple employer welfare arrangement or employee ben-
efit plan (as defined under the Employee Retirement
Income Security Act of 1974) which provides bene-
fits with respect to health care services, but does not
include—
(A) coverage only for accident, dental, vi-
sion, disability income, or long-term care insur-
ance, or any combination thereof,
(B) medicare supplemental health insur-
ance,
(C) coverage issued as a supplement to li-
ability insurance,
(D) worker’s compensation or similar in-
surance, or
(E) automobile medical-payment insurance,
or any combination thereof.
(7) The term ‘‘health maintenance organiza-
tion’’ includes, as defined in standards established
under section 101, a carrier that meets specified
standards and that offers to provide health services
on a prepaid, at-risk basis primarily through a de-
fined set of providers.
(8) The term ‘‘MedAccess standards’’ means
the standards established under section 101(a)(1)(A)
relating to the requirements of section 103, and in-
cludes the consumer protection standards insofar as
such standards apply to MedAccess plans.
(9) The term ‘‘Secretary’’ means the Secretary
of Health and Human Services.
(10) The term ‘‘small employer’’ means an en-
tity actively engaged in business which, on at least
50 percent of its working days during the preceding
year, employed at least 2, but fewer than 36, full-
time employees. For purposes of determining if an
employer is a small employer, rules similar to the
rules of subsection (b) and (c) of section 414 of the
Internal Revenue Code of 1986 shall apply.
(11) The term ‘‘small employer carrier’’ means
a carrier with respect to the issuance of a small em-
ployer health benefit plan.
(12) The term ‘‘small employer health benefit
plan’’ means an employer health benefit plan which
provides coverage to one or more full-time employees
of a small employer.
(13) The term ‘‘State’’ means the 50 States,
the District of Columbia, Puerto Rico, the Virgin Is-
lands, Guam, and American Samoa.
(14) The term ‘‘State commissioner of insur-
ance’’ includes a State superintendent of insurance.
Subtitle 
B—Improved 
Small
Employer Purchasing Power of
Affordable Health Insurance
SEC. 121. PREEMPTION FROM INSURANCE MANDATES FOR
QUALIFIED SMALL EMPLOYER PURCHASING
GROUPS.
(a) QUALIFIED
SMALL
EMPLOYER
PURCHASING
GROUP DEFINED.—For purposes of this section, an asso-
ciation is a qualified small employer purchasing group if—
(1) the association submits an application to
the Secretary of Health and Human Services at such
time and in such form as the Secretary may require;
and
(2) on the basis of information contained in the
application and any other information the Secretary
may require, the Secretary determines that—
(A) the association is administered solely
under the authority and control of its member
employers,
(B) the association’s membership consists
solely of employers with not more than 100 em-
ployees (except that an employer member of the
group may retain its membership in the group
if, after the Secretary determines that the asso-
ciation meets the requirements of this para-
graph, the number of employees of the employer
member increases to more than 100),
(C) with respect to each State in which its
members are located, the association consists of
not fewer than 100 employers, and
(D) at the time the association submits its
application, the health benefit plans with re-
spect to the employer members of the associa-
tion are in compliance with applicable State
laws relating to health benefit plans.
(b) PREEMPTION FROM INSURANCE MANDATES.—
(1) FINDING.—Congress finds that employer
purchasing groups organized for the purpose of ob-
taining health insurance for employer members af-
fect interstate commerce.
(2) PREEMPTION OF STATE MANDATES.—In the
case of a qualified small employer purchasing group
described in subsection (a), no provision of State law
shall apply that requires the offering, as part of the
health benefit plan with respect to an employer
member of such a group, of any services, category
of care, or services of any class or type of provider.
(3) PREEMPTION OF PROVISIONS PROHIBITING
EMPLOYER GROUPS FROM PURCHASING HEALTH IN-
SURANCE.—In the case of a qualified small employer
purchasing group described in subsection (a), no
provision of State or local law shall apply that pro-
hibits a group of employers from purchasing health
insurance with respect to member employers of the
group or their employees.
(c) EFFECTIVE DATE.—This section shall take effect
60 days after the date of the enactment of this Act.
Subtitle C—Health Deduction
Fairness
SEC. 131. PERMANENT EXTENSION AND INCREASE IN
HEALTH INSURANCE TAX DEDUCTION FOR
SELF-EMPLOYED INDIVIDUALS.
(a) PERMANENT EXTENSION OF DEDUCTION.—
(1) IN GENERAL.—Subsection (l) of section 162
of the Internal Revenue Code of 1986 (relating to
special rules for health insurance costs of self-em-
ployed individuals) is amended by striking paragraph
(6).
(2) CONFORMING AMENDMENT.—Paragraph (2)
of section 110(a) of the Tax Extension Act of 1991
is hereby repealed.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to taxable years begin-
ning after December 31, 1991.
(b) INCREASE IN AMOUNT OF DEDUCTION.—
(1) IN
GENERAL.—Paragraph (1) of section
162(l) of such Code is amended by striking ‘‘25 per-
cent of’’ and inserting ‘‘100 percent (50 percent in
the case of taxable years beginning in 1995 or 1996)
of’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to taxable years begin-
ning after December 31, 1994.
Subtitle D—Improved Access to
Community Health Services
PART 1—INCREASED AUTHORIZATION FOR COMMUNITY
AND MIGRANT HEALTH CENTERS
SEC. 
141. 
GRANT 
PROGRAM 
TO 
PROMOTE 
PRIMARY
HEALTH CARE SERVICES FOR UNDERSERVED
POPULATIONS.
(a) AUTHORIZATION.—The Secretary of Health and
Human Services shall provide for a program of grants to
migrant and community health centers (receiving grants
or contracts under section 329, 330, or 340 of the Public
Health Service Act) in order to promote the provision of
primary health care services for underserved individuals.
Such grants may be used—
(1) to promote the provision of off-site services
(through means such as mobile medical clinics);
(2) to improve birth outcomes in areas with
high infant mortality and morbidity;
(3) to establish primary care clinics in areas
identified as in need of such clinics; and
(4) for recruitment and training costs of nec-
essary providers and operating costs for unreim-
bursed services.
(b) CONDITIONS.—(1) Grants under this subsection
shall only be made upon application, approved by the Sec-
retary.
(2) The amount of grants made under this section
shall be determined by the Secretary.
(c) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated—
(1) in fiscal year 1994, $100,000,000,
(2) in fiscal year 1995, $200,000,000,
(3) in fiscal year 1996, $300,000,000,
(4) in fiscal year 1997, $400,000,000, and
(5) in fiscal year 1998, $500,000,000,
to carry out this section. Of the amounts appropriated
each fiscal year under this section, at least 10 percent
shall be used for grants described in subsection (a)(1) and
at least 10 percent shall be used for grants described in
subsection (a)(2).
(d) STUDY AND REPORT.—The Secretary shall con-
duct a study of the impact of the grants made under this
section to migrant and community health centers on ac-
cess to health care, birth outcomes, and the use of emer-
gency room services. Not later than 2 years after the date
of the enactment of this Act, the Secretary shall submit
to Congress a report on such study and on recommenda-
tions for changes in the programs under this section in
order to promote the appropriate use of cost-effective out-
patient services.
PART 2—GRANTS FOR PROJECTS FOR COORDINATING
DELIVERY OF SERVICES
SEC. 151. PROJECTS FOR COORDINATING DELIVERY OF
OUTPATIENT PRIMARY HEALTH SERVICES.
Part D of title III of the Public Health Service Act
(42 U.S.C. 254b et seq.) is amended by adding at the end
the following new subpart:
‘‘Subpart VII—Delivery of Services
‘‘PROJECTS FOR COORDINATING DELIVERY OF SERVICES
‘‘SEC. 340E. (a) AUTHORITY FOR GRANTS.—
‘‘(1) IN GENERAL.—The Secretary may make
grants to public and nonprofit private entities to
carry out demonstration projects for the purpose of
increasing access to outpatient primary health serv-
ices in geographic areas described in subsection (b)
through coordinating the delivery of such services
under Federal, State, local, and private programs.
‘‘(2) REQUIREMENT
REGARDING
PLAN.—The
Secretary may make a grant under paragraph (1)
only if—
‘‘(A) the applicant involved has received a
grant under subsection (l) and the Secretary
has approved the plan developed with such
grant; and
‘‘(B) the applicant agrees to carry out the
project under paragraph (1) in accordance with
the plan.
‘‘(b) QUALIFIED HEALTH SERVICE AREAS.—
‘‘(1) IN
GENERAL.—A geographic area de-
scribed in this subsection is a geographic area
that—
‘‘(A) is a rational area for the delivery of
health services;
‘‘(B) has a population of not more than
500,000 individuals; and
‘‘(C)(i) has been designated by the Sec-
retary as an area with a shortage of personal
health services; or
‘‘(ii) has a significant number of individ-
uals who have low incomes or who have insuffi-
cient insurance regarding health care.
‘‘(2) AUTHORITY REGARDING MULTIPLE POLIT-
ICAL SUBDIVISIONS.—The Secretary shall make a
determination of whether a geographic area is a geo-
graphic area described in paragraph (1) without re-
gard to whether the area is a political subdivision,
without regard to whether the area is located in 2
or more political subdivisions or States, and without
regard to whether the area encompasses 2 or more
political subdivisions.
‘‘(c) PREFERENCES IN MAKING GRANTS.—In making
grants under subsection (a), the Secretary shall give pref-
erence to applicants demonstrating that, with respect to
the outpatient primary health services that will be the sub-
ject of the project conducted by the applicant under such
subsection—
‘‘(1)(A) the project will result in the reduction
of administrative expenses associated with such serv-
ices by increasing the efficiency of the administrative
processes of the providers participating in the
project, and (B) the resulting savings will be ex-
pended for the direct provision of such services for
the designated population; or
‘‘(2) the services that will be the subject of the
project will be provided in facilities that are
underutilized.
‘‘(d) ACTIVITIES OF PROJECT MUST SERVE DES-
IGNATED POPULATION.—The Secretary may make a
grant under subsection (a) to an applicant only if the ap-
plicant demonstrates that carrying out the project under
such subsection will increase access to outpatient primary
health services for a significant segment of the designated
population.
‘‘(e) MATCHING FUNDS.—
‘‘(1) IN GENERAL.—With respect to the costs of
the project to be carried out under subsection (a) by
an applicant, the Secretary may make a grant under
such subsection only if the applicant agrees to make
available (directly or through donations from public
or private entities) non-Federal contributions toward
such costs in an amount that is not less than 50
percent of such costs.
‘‘(2) DETERMINATION
OF
AMOUNT
CONTRIB-
UTED.—Non-Federal contributions required in para-
graph (1) may be in cash or in kind, fairly evalu-
ated, including plant, equipment, or services.
Amounts provided by the Federal Government, or
services assisted or subsidized to any significant ex-
tent by the Federal Government, may not be in-
cluded in determining the amount of such non-Fed-
eral contributions.
‘‘(f) CERTAIN LIMITATIONS REGARDING GRANTS.—
‘‘(1) PROVISION OF HEALTH SERVICES; CON-
STRUCTION
OF
FACILITIES.—The Secretary may
make a grant under subsection (a) only if the appli-
cant involved agrees that the grant will not be ex-
pended for the direct provision of any health service
or for the construction or renovation of facilities.
‘‘(2) DURATION AND AMOUNT OF GRANT.—The
period during which payments are made for a
project under subsection (a) may not exceed 4 years,
and the aggregate amount of such payments for the
period may not exceed $200,000. The provision of
such payments shall be subject to annual approval
by the Secretary of the payments and subject to the
availability of appropriations for the fiscal year in-
volved to make the payments.
‘‘(3) FINANCIAL CAPACITY FOR CONTINUATION
OF PROJECT AFTER TERMINATION OF GRANT.—The
Secretary may make a grant under subsection (a)
only if the Secretary determines that there is a rea-
sonable basis for believing that, after termination of
payments under such subsection pursuant to para-
graph (2), the project under such subsection will
have the financial capacity to continue operating.
‘‘(g) 
AGREEMENTS
AMONG
PARTICIPANTS
IN
PROJECTS.—
‘‘(1) REQUIRED PARTICIPANTS.—The Secretary
may make a grant under subsection (a) only if the
applicant for the grant has, for purposes of carrying
out a project under such subsection, entered into
agreements with—
‘‘(A) the chief public health officers, and
the chief health officers for the elementary and
secondary schools, of each of the political sub-
divisions of the qualified health service area in
which the project under such subsection is to be
carried out (or, in the case of a political sub-
division that does not have such an official,
with another appropriate official of such sub-
division);
‘‘(B) each hospital in the qualified health
service area;
‘‘(C) representatives of entities in such
area that provide outpatient primary health
168
‘‘(1) IN GENERAL.—Any amount paid or dis-
tributed out of a medical savings account shall be in-
cluded in the gross income of the individual for
whose benefit such account was established unless—
‘‘(A) such amount is used exclusively to
pay the medical expenses with respect to such
individual, or
‘‘(B) such amount is treated as a payment
or distribution of amounts which are, or have
been, includible in the gross income of the indi-
vidual under subsection (i).
‘‘(2) EXCESS CONTRIBUTIONS RETURNED BE-
FORE DUE DATE OF RETURN.—Paragraph (1) shall
not apply to the distribution of any contribution paid
during a taxable year to a medical savings account
to the extent that such contribution exceeds the
amount excludable under subsection (a) if—
‘‘(A) such distribution is received by the
individual on or before the last day prescribed
by law (including extensions of time) for filing
such individual’s return for such taxable year,
and
‘‘(B) such distribution is accompanied by
the amount of net income attributable to such
excess contribution.