SEC. 303. QUALIFICATIONS FOR COMPREHENSIVE HEALTH
SERVICE ORGANIZATIONS.
(a) IN GENERAL.—For purposes of this Act, a com-
prehensive health service organization (in this section re-
ferred to as a ‘‘CHSO’’) is a public or private organization
which, in return for a capitated payment amount, under-
takes to furnish, arrange for the provision of, or provide
payment with respect to—
(1) a full range of health services (as identified
by the Board), including at least hospital services
and physicians services, and
(2) out-of-area coverage in the case of urgently
needed services,
to an identified population which is living in or near a
specified service area and which enrolls voluntarily in the
organization.
(b) ENROLLMENT.—
(1) IN GENERAL.—All eligible persons living in
or near the specified service area of a CHSO are eli-
gible to enroll in the organization; except that the
number of enrollees may be limited to avoid overtax-
ing the resources of the organization.
(2) MINIMUM ENROLLMENT PERIOD.—Subject
to paragraph (3), the minimum period of enrollment
with a CHSO shall be twelve months, unless the en-
rolled individual becomes ineligible to enroll with the
organization.
(3) WITHDRAWAL
FOR
CAUSE.—Each CHSO
shall permit an enrolled individual to disenroll from
the organization for cause at any time.
(c) REQUIREMENTS FOR CHSOS.—
(1) ACCESSIBLE
SERVICES.—Each CHSO, to
the maximum extent feasible, shall make all services
readily and promptly accessible to enrollees who live
in the specified service area.
(2) CONTINUITY OF CARE.—Each CHSO shall
furnish services in such manner as to provide con-
tinuity of care and (when services are furnished by
different providers) shall provide ready referral of
patients to such services and at such times as may
be medically appropriate.
(3) BOARD OF DIRECTORS.—In the case of a
CHSO that is a private organization—
(A) 
CONSUMER
REPRESENTATION.—At
least one-third of the members of the CHSO’s
board of directors must be consumer members
with no direct or indirect, personal or family
financial relationship to the organization.
(B) PROVIDER
REPRESENTATION.—The
CHSO’s board of directors must include at
least one member who represents health care
providers.
(4) PATIENT
GRIEVANCE
PROGRAM.—Each
CHSO must have in effect a patient grievance pro-
gram and must conduct regularly surveys of the sat-
isfaction of members with services provided by or
through the organization.
(5) MEDICAL STANDARDS.—Each CHSO must
provide that a committee or committees of health
care practitioners associated with the organization
will promulgate medical standards, oversee the pro-
fessional aspects of the delivery of care, perform the
functions of a pharmacy and drug therapeutics com-
mittee, and monitor and review the quality of all
health services (including drugs, education, and pre-
ventive services).
(6) PREMIUMS.—Premiums or other charges by
a CHSO for any services not paid for under this Act
must be reasonable.
(7) UTILIZATION AND BONUS INFORMATION.—
Each CHSO must—
(A) comply with the requirements of sec-
tion 1876(i)(8) of the Social Security Act (re-
lating to prohibiting physician incentive plans
that provide specific inducements to reduce or
limit medically necessary services), and
(B) make available to its membership utili-
zation information and data regarding financial
performance, including bonus or incentive pay-
ment arrangements to practitioners.
(8) PROVISION OF SERVICES TO ENROLLEES AT
INSTITUTIONS
OPERATING
UNDER
GLOBAL
BUDG-
ETS.—The organization shall arrange to reimburse
for hospital services and other facility-based services
(as identified by the Board) for services provided to
members of the organization in accordance with the
global operating budget of the hospital or facility ap-
proved under section 611.
(9) BROAD
MARKETING.—Each CHSO must
provide for the marketing of its services (including
dissemination of marketing materials) to potential
enrollees in a manner that is designed to enroll indi-
viduals representative of the different population
groups and geographic areas included within its
service area and meets such requirements as the
Board or a State health security program may
specify.
(10) 
ADDITIONAL
REQUIREMENTS.—Each
CHSO must meet—
(A) such requirements relating to mini-
mum enrollment,
(B) such requirements relating to financial
solvency,
(C) such requirements relating to quality
and availability of care, and
(D) such other requirements,
as the Board or a State health security program
may specify.
(d) PROVISION OF EMERGENCY SERVICES TO NON-
ENROLLEES.—A CHSO may furnish emergency services
to persons who are not enrolled in the organization. Pay-
ment for such services, if they are covered services to eligi-
ble persons, shall be made to the organization unless the
organization requests that it be made to the individual
provider who furnished the services.
SEC. 304. LIMITATION ON CERTAIN PHYSICIAN REFERRALS.
(a) APPLICATION TO AMERICAN HEALTH SECURITY
PROGRAM.—Section 1877 of the Social Security Act, as
amended by subsections (b) and (c), shall apply under this
Act in the same manner as it applies under title XVIII
of the Social Security Act; except that in applying such
section under this Act any references in such section to
the Secretary or title XVIII of the Social Security Act are
deemed references to the Board and the American Health
Security Program under this Act, respectively.
(b) EXPANSION OF PROHIBITION TO CERTAIN ADDI-
TIONAL DESIGNATED SERVICES.—Section 1877(h)(6) of
the Social Security Act (42 U.S.C. 1395nn(h)(6)) is
amended by adding at the end the following:
‘‘(L) Ambulance services.
‘‘(M) Home infusion therapy services.’’.
(c) CONFORMING AMENDMENTS.—Section 1877 of
such Act is further amended—
(1) in subsection (a)(1)(A), by striking ‘‘for
which payment otherwise may be made under this
title’’ and by inserting ‘‘for which a charge is
imposed’’;
(2) in subsection (a)(1)(B), by striking ‘‘under
this title’’;
(3) by amending paragraph (1) of subsection
(g) to read as follows:
‘‘(1) DENIAL OF PAYMENT.—No payment may
be made under a State health security program for
a designated health service for which a claim is pre-
sented in violation of subsection (a)(1)(B). No indi-
vidual, third party payor, or other entity is liable for
payment for designated health services for which a
claim is presented in violation of such subsection.’’;
and
(4) in subsection (g)(3), by striking ‘‘for which
payment may not be made under paragraph (1)’’
and by inserting ‘‘for which such a claim may not
be presented under subsection (a)(1)’’.
TITLE IV—ADMINISTRATION
Subtitle A—General Administrative
Provisions
SEC. 
401. 
AMERICAN 
HEALTH 
SECURITY 
STANDARDS
BOARD.
(a) ESTABLISHMENT.—There is hereby established
an American Health Security Standards Board.
(b) APPOINTMENT AND TERMS OF MEMBERS.—
(1) IN
GENERAL.—The Board shall be com-
posed of—
(A) the Secretary of Health and Human
Services, and
(B) 6 other individuals (described in para-
graph (2)) appointed by the President with the
advice and consent of the Senate.
The President shall first nominate individuals under
subparagraph (B) on a timely basis so as to provide
for the operation of the Board by not later than
January 1, 1998.
(2) SELECTION
OF
APPOINTED
MEMBERS.—
With respect to the individuals appointed under
paragraph (1)(B):
(A) They shall be chosen on the basis of
backgrounds in health policy, health economics,
the healing professions, and the administration
of health care institutions.
(B) They shall provide a balanced point of
view with respect to the various health care in-
terests and at least two of them shall represent
the interests of individual consumers.
(C) Not more than three of them shall be
from the same political party.
(D) To the greatest extent feasible, they
shall represent the various geographic regions
of the United States and shall reflect the racial,
ethnic, and gender composition of the popu-
lation of the United States.
(3) TERMS OF APPOINTED MEMBERS.—Individ-
uals appointed under paragraph (1)(B) shall serve
for a term of 6 years, except that the terms of 5 of
the individuals initially appointed shall be, as des-
ignated by the President at the time of their ap-
pointment, for 1, 2, 3, 4, and 5 years. During a
term of membership on the Board, no member shall
engage in any other business, vocation or employ-
ment.
(c) VACANCIES.—
(1) IN GENERAL.—The President shall fill any
vacancy in the membership of the Board in the same
manner as the original appointment. The vacancy
shall not affect the power of the remaining members
to execute the duties of the Board.
(2) VACANCY
APPOINTMENTS.—Any member
appointed to fill a vacancy shall serve for the re-
mainder of the term for which the predecessor of the
member was appointed.
(3) REAPPOINTMENT.—The President may re-
appoint an appointed member of the Board for a
second term in the same manner as the original ap-
pointment. A member who has served for two con-
secutive 6-year terms shall not be eligible for re-
appointment until two years after the member has
ceased to serve.
(4) REMOVAL FOR CAUSE.—Upon confirmation,
members of the Board may not be removed except
by the President for cause.
(d) CHAIR.—The President shall designate one of the
members of the Board, other than the Secretary, to serve
at the will of the President as Chair of the Board.
(e) COMPENSATION.—Members of the Board (other
than the Secretary) shall be entitled to compensation at
a level equivalent to level II of the Executive Schedule,
in accordance with section 5313 of title 5, United States
Code.
(f) GENERAL DUTIES OF THE BOARD.—
(1) IN
GENERAL.—The Board shall develop
policies, procedures, guidelines, and requirements to
carry out this Act, including those related to—
(A) eligibility;
(B) enrollment;
(C) benefits;
(D) provider participation standards and
qualifications, as defined in title III;
(E) national and State funding levels;
(F) methods for determining amounts of
payments to providers of covered services, con-
sistent with subtitle B of title VI;
(G) the determination of medical necessity
and appropriateness with respect to coverage of
certain services;
(H) assisting State health security pro-
grams with planning for capital expenditures
and service delivery;
(I) planning for health professional edu-
cation funding (as specified in title VI);
(J) allocating funds provided under title
VII; and
(K) encouraging States to develop regional
planning mechanisms (described in section
404(a)(3)).
(2) REGULATIONS.—Regulations authorized by
this Act shall be issued by the Board in accordance
with the provisions of section 553 of title 5, United
States Code.
(g) UNIFORM REPORTING STANDARDS; ANNUAL RE-
PORT; STUDIES.—
(1) UNIFORM REPORTING STANDARDS.—
(A) IN GENERAL.—The Board shall estab-
lish uniform reporting requirements and stand-
ards to ensure an adequate national data base
regarding health services practitioners, services
and finances of State health security programs,
approved plans, providers, and the costs of fa-
cilities and practitioners providing services.
Such standards shall include, to the maximum
extent feasible, health outcome measures.
(B) REPORTS.—The Board shall analyze
regularly information reported to it, and to
State health security programs pursuant to
such requirements and standards.
(2) ANNUAL REPORT.—Beginning January 1,
of the second year beginning after the date of the
enactment of this Act, the Board shall annually
report to Congress on the following:
(A) The status of implementation of the
Act.
(B) Enrollment under this Act.
(C) Benefits under this Act.
(D) Expenditures and financing under this
Act.
(E) 
Cost-containment 
measures 
and
achievements under this Act.
(F) Quality assurance.
(G) Health care utilization patterns, in-
cluding any changes attributable to the pro-
gram.
(H) Long-range plans and goals for the de-
livery of health services.
(I) Differences in the health status of the
populations of the different States, including in-
come and racial characteristics.
(J) Necessary changes in the education of
health personnel.
(K) Plans for improving service to medi-
cally underserved populations.
(L) Transition problems as a result of im-
plementation of this Act.
(M) Opportunities for improvements under
this Act.
(3) STATISTICAL ANALYSES AND OTHER STUD-
IES.—The Board may, either directly or by con-
tract—
(A) make statistical and other studies, on
a nationwide, regional, state, or local basis, of
any aspect of the operation of this Act, includ-
ing studies of the effect of the Act upon the
health of the people of the United States and
the effect of comprehensive health services upon
the health of persons receiving such services;
(B) develop and test methods of providing
through payment for services or otherwise, ad-
ditional incentives for adherence by providers to
standards of adequacy, access, and quality;
methods of consumer and peer review and peer
control of the utilization of drugs, of laboratory
services, and of other services; and methods of
consumer and peer review of the quality of serv-
ices;
(C) develop and test, for use by the Board,
records and information retrieval systems and
budget systems for health services administra-
tion, and develop and test model systems for
use by providers of services;
(D) develop and test, for use by providers
of services, records and information retrieval
systems useful in the furnishing of preventive
or diagnostic services;
(E) develop, in collaboration with the phar-
maceutical profession, and test, improved ad-
ministrative practices or improved methods for
the reimbursement of independent pharmacies
for the cost of furnishing drugs as a covered
service; and
(F) make such other studies as it may con-
sider necessary or promising for the evaluation,
or for the improvement, of the operation of this
Act.
(4) REPORT
ON
USE
OF
EXISTING
FEDERAL
HEALTH CARE FACILITIES.—Not later than one year
after the date of the enactment of this Act, the
Board shall recommend to the Congress one or more
proposals for the treatment of health care facilities
of the Federal Government.
(h) EXECUTIVE DIRECTOR.—
(1) APPOINTMENT.—There is hereby estab-
lished the position of Executive Director of the
Board. The Director shall be appointed by the
Board and shall serve as secretary to the Board and
perform such duties in the administration of this
title as the Board may assign.
(2) DELEGATION.—The Board is authorized to
delegate to the Director or to any other officer or
employee of the Board or, with the approval of the
Secretary of Health and Human Services (and sub-
ject to reimbursement of identifiable costs), to any
other officer or employee of the Department of
Health and Human Services, any of its functions or
duties under this Act other than—
(A) the issuance of regulations; or
(B) the determination of the availability of
funds and their allocation to implement this
Act.
(3) COMPENSATION.—The Executive Director
of the Board shall be entitled to compensation at a
level equivalent to level III of the Executive Sched-
ule, in accordance with section 5314 of title 5,
United States Code.
(i) INSPECTOR GENERAL.—The Inspector General
Act of 1978 (5 U.S.C. App.) is amended—
(1) in section 11(1) by inserting after ‘‘Cor-
poration;’’ the following: ‘‘the Chair of the American
Health Security Standards Board;’’;
(2) in section 11(2) by inserting after ‘‘Infor-
mation Agency,’’ the following: ‘‘the American
Health Security Standards Board,’’; and
(3) by inserting after the second section 8G the
following:
‘‘§ 8I. Special provisions concerning American Health
Security Standards Board
‘‘The Inspector General of the American Health Se-
curity Standards Board, in addition to the other authori-
ties vested by this Act, shall have the same authority, with
respect to the Board and the American Health Security
Program under this Act, as the Inspector General for the
Department of Health and Human Services has with re-
spect to the Secretary of Health and Human Services and
the medicare and medicaid programs, respectively.’’.
(j) STAFF.—The Board shall employ such staff as the
Board may deem necessary.
(k) ACCESS
TO INFORMATION.—The Secretary of
Health and Human Services shall make available to the
Board all information available from sources within the
Department or from other sources, pertaining to the
duties of the Board.
SEC. 402. AMERICAN HEALTH SECURITY ADVISORY COUN-
CIL.
(a) IN GENERAL.—The Board shall provide for an
American Health Security Advisory Council (in this sec-
tion referred to as the ‘‘Council’’) to advise the Board on
its activities.
(b) MEMBERSHIP.—The Council shall be composed
of—
(1) the Chair of the Board, who shall serve as
Chair of the Council, and
(2) twenty members, not otherwise in the em-
ploy of the United States, appointed by the Board
without regard to the provisions of title 5, United
States Code, governing appointments in the competi-
tive service.
The appointed members shall include, in accordance with
subsection (e), individuals who are representative of State
health security programs, public health professionals, pro-
viders of health services, and of individuals (who shall con-
stitute a majority of the Council) who are representative
of consumers of such services, including a balanced rep-
resentation of employers, unions, consumer organizations,
and population groups with special health care needs. To
the greatest extent feasible, the membership of the Council
shall represent the various geographic regions of the Unit-
ed States and shall reflect the racial, ethnic, and gender
composition of the population of the United States.
(c) TERMS OF MEMBERS.—Each appointed member
shall hold office for a term of four years, except that—
(1) any member appointed to fill a vacancy oc-
curring during the term for which the member’s
predecessor was appointed shall be appointed for the
remainder of that term; and
(2) the terms of the members first taking office
shall expire, as designated by the Board at the time
of appointment, five at the end of the first year, five
at the end of the second year, five at the end of the
third year, and five at the end of the fourth year
after the date of enactment of this Act.
(d) VACANCIES.—
(1) IN GENERAL.—The Board shall fill any va-
cancy in the membership of the Council in the same
manner as the original appointment. The vacancy
shall not affect the power of the remaining members
to execute the duties of the Council.
(2) VACANCY
APPOINTMENTS.—Any member
appointed to fill a vacancy shall serve for the re-
mainder of the term for which the predecessor of the
member was appointed.
(3) REAPPOINTMENT.—The Board may re-
appoint an appointed member of the Council for a
second term in the same manner as the original
appointment.
(e) QUALIFICATIONS.—
(1) PUBLIC
HEALTH
REPRESENTATIVES.—
Members of the Council who are representative of
State health security programs and public health
professionals shall be individuals who have extensive
experience in the financing and delivery of care
under public health programs.
(2) PROVIDERS.—Members of the Council who
are representative of providers of health care shall
be individuals who are outstanding in fields related
to medical, hospital, or other health activities, or
who are representative of organizations or associa-
tions of professional health practitioners.
(3) CONSUMERS.—Members who are represent-
ative of consumers of such care shall be individuals,
not engaged in and having no financial interest in
the furnishing of health services, who are familiar
with the needs of various segments of the population
for personal health services and are experienced in
retarial, clerical, or other assistance as may be authorized
by the Board for carrying out their respective functions.
(h) MEETINGS.—The Council shall meet as fre-
quently as the Board deems necessary, but not less than
four times each year. Upon request by seven or more mem-
bers it shall be the duty of the Chair to call a meeting
of the Council.
(i) COMPENSATION.—Members of the Council shall
be reimbursed by the Board for travel and per diem in
lieu of subsistence expenses during the performance of du-
ties of the Board in accordance with subchapter I of chap-
ter 57 of title 5, United States Code.
(j) FACA NOT APPLICABLE.—The provisions of the
Federal Advisory Committee Act shall not apply to the
Council.
SEC. 403. CONSULTATION WITH PRIVATE ENTITIES.
The Secretary and the Board shall consult with pri-
vate entities, such as professional societies, national asso-
ciations, nationally recognized associations of experts,
medical schools and academic health centers, consumer
groups, and labor and business organizations in the for-
mulation of guidelines, regulations, policy initiatives, and
information gathering to assure the broadest and most in-
formed input in the administration of this Act. Nothing
in this Act shall prevent the Secretary from adopting
guidelines developed by such a private entity if, in the Sec-
retary’s and Board’s judgment, such guidelines are gen-
erally accepted as reasonable and prudent and consistent
with this Act.
SEC. 404. STATE HEALTH SECURITY PROGRAMS.
(a) SUBMISSION OF PLANS.—
(1) IN GENERAL.—Each State shall submit to
the Board a plan for a State health security pro-
gram for providing for health care services to the
residents of the State in accordance with this Act.
(2) REGIONAL PROGRAMS.—A State may join
with one or more neighboring States to submit to
the Board a plan for a regional health security pro-
gram instead of separate State health security
programs.
(3) REGIONAL
PLANNING
MECHANISMS.—The
Board shall provide incentives for States to develop
regional planning mechanisms to promote the ration-
al distribution of, adequate access to, and efficient
use of, tertiary care facilities, equipment, and
services.
(b) REVIEW AND APPROVAL OF PLANS.—
(1) IN
GENERAL.—The Board shall review
plans submitted under subsection (a) and determine
whether such plans meet the requirements for ap-
proval. The Board shall not approve such a plan un-
less it finds that the plan (or State law) provides,
consistent with the provisions of this Act, for the
following:
(A) Payment for required health services
for eligible individuals in the State in accord-
ance with this Act.
(B) Adequate administration, including the
designation of a single State agency responsible
for the administration (or supervision of the
administration) of the program.
(C) The establishment of a State health
security budget.
(D) Establishment of payment methodolo-
gies (consistent with subtitle B of title VII).
(E) Assurances that individuals have the
freedom to choose practitioners and other
health care providers for services covered under
this Act.
(F) A procedure for carrying out long-term
regional management and planning functions
with respect to the delivery and distribution of
health care services that—
(i) ensures participation of consumers
of health services and providers of health
services, and
(ii) gives priority to the most acute
shortages and maldistributions of health
personnel and facilities and the most seri-
ous deficiencies in the delivery of covered
services and to the means for the speedy
alleviation of these shortcomings.
(G) The licensure and regulation of all
health providers and facilities to ensure compli-
ance with Federal and State laws and to
promote quality of care.
(H) Establishment of a quality review sys-
tem in accordance with section 503.
(I) Establishment of an independent om-
budsman for consumers to register complaints
about the organization and administration of
the State health security program and to help
resolve complaints and disputes between con-
sumers and providers.
(J) Publication of an annual report on the
operation of the State health security program,
which report shall include information on cost,
progress towards achieving full enrollment, pub-
lic access to health services, quality review,
health outcomes, health professional training,
and 
the 
needs 
of 
medically 
underserved
populations.
(K) Provision of a fraud and abuse preven-
tion and control unit that the Inspector General
determines meets the requirements of section
412(a).
(L) Prohibit payment in cases of prohib-
ited physician referrals under section 304.
(2) CONSEQUENCES OF FAILURE TO COMPLY.—
If the Board finds that a State plan submitted
under paragraph (1) does not meet the requirements
for approval under this section or that a State
health security program or specific portion of such
program, the plan for which was previously ap-
proved, no longer meets such requirements, the
Board shall provide notice to the State of such fail-
ure and that unless corrective action is taken within
a period specified by the Board, the Board shall
place the State health security program (or specific
portions of such program) in receivership under the
jurisdiction of the Board.
(c) STATE HEALTH SECURITY ADVISORY COUN-
CILS.—
(1) IN GENERAL.—For each State, the Gov-
ernor shall provide for appointment of a State
Health Security Advisory Council to advise and
make recommendations to the Governor and State
with respect to the implementation of the State
health security program in the State.
(2) MEMBERSHIP.—Each State Health Security
Advisory Council shall be composed of at least 11 in-
dividuals. The appointed members shall include indi-
viduals who are representative of the State health
security program, public health professionals, provid-
ers of health services, and of individuals (who shall
constitute a majority) who are representative of con-
sumers of such services, including a balanced
representation of employers, unions and consumer
organizations. To the greatest extent feasible, the
membership of each State Health Security Advisory
Council shall represent the various geographic re-
gions of the State and shall reflect the racial, ethnic,
and gender composition of the population of the
State.
(3) DUTIES.—
(A) IN GENERAL.—Each State Health Se-
curity Advisory Council shall review, and sub-
mit comments to the Governor concerning the