839
Title V, Subtitle A
(f) CHAIR.—The President shall designate an indi-
vidual to serve as the chair of the Council.
(g) MEETINGS.—The Council shall meet not less than
once during each 4-month period and shall otherwise meet
at the call of the President or the chair.
(h) COMPENSATION AND REIMBURSEMENT OF EX-
PENSES.—Members of the Council shall receive compensa-
tion for each day (including travel time) engaged in car-
rying out the duties of the Council. Such compensation
may not be in an amount in excess of the maximum rate
of basic pay payable for level IV of the Executive Schedule
under section 5315 of title 5, United States Code.
(i) STAFF.—The National Health Board shall provide
to the Council such staff, information, and other assist-
ance as may be necessary to carry out the duties of the
Council.
(j) HEALTH CARE PROVIDER.—For purposes of this
subtitle, the term ‘‘health care provider’’ means an indi-
vidual who, or entity that, provides an item or service to
an individual that is covered under the health plan (as
defined in section 1400) in which the individual is en-
rolled.
840
Title V, Subtitle A
SEC. 5003. NATIONAL MEASURES OF QUALITY PERFORM-
ANCE.
(a) IN GENERAL.—The National Quality Manage-
ment Council shall develop a set of national measures of
quality performance, which shall be used to assess the pro-
vision of health care services and access to such services.
(b) SUBJECT OF MEASURES.—National measures of
quality performance shall be selected in a manner that
provides information on the following subjects:
(1) Access to health care services by consumers.
(2) Appropriateness of health care services pro-
vided to consumers.
(3) Outcomes of health care services and proce-
dures.
(4) Health promotion.
(5) Prevention of diseases, disorders, and other
health conditions.
(6) Consumer satisfaction with care.
(c) SELECTION OF MEASURES.—
(1) CONSULTATION.—In developing and select-
ing the national measures of quality performance,
the National Quality Management Council shall con-
sult with appropriate interested parties, including—
(A) States;
(B) health plans;
841
Title V, Subtitle A
(C) employers and individuals purchasing
health care through regional and corporate alli-
ances;
(D) health care providers;
(E) the National Quality Consortium es-
tablished under section 5009;
(F) individuals distinguished in the fields
of law, medicine, economics, public health, and
health services research;
(G) the Administrator for Health Care
Policy and Research;
(H) the Director of the National Institutes
of Health; and
(I) the Administrator of the Health Care
Financing Administration.
(2) CRITERIA.—The following criteria shall be
used in developing and selecting national measures
of quality performance:
(A) SIGNIFICANCE.—When a measure re-
lates to a specific disease, disorder, or other
health condition, the disease, disorder, or condi-
tion shall be of significance in terms of preva-
lence, morbidity, mortality, or the costs associ-
ated with the prevention, diagnosis, treatment,
842
Title V, Subtitle A
or clinical management of the disease, disorder,
or condition.
(B) RANGE
OF
SERVICES.—The set of
measures, taken as a whole, shall be representa-
tive of the range of services provided to con-
sumers of health care.
(C) RELIABILITY
AND
VALIDITY.—The
measures shall be reliable and valid.
(D) UNDUE BURDEN.—The data needed to
calculate the measures shall be obtained with-
out undue burden on the entity or individual
providing the data.
(E) VARIATION.—Performance with re-
spect to a measure shall be expected to vary
widely among the individuals and entities whose
performance is assessed using the measure.
(F) LINKAGE
TO
HEALTH
OUTCOME.—
When a measure is a rate of a process of care,
the process shall be linked to a health outcome
based upon the best available scientific evi-
dence.
(G) PROVIDER
CONTROL
AND
RISK
AD-
JUSTMENT.—When a measure is an outcome of
the provision of care, the outcome shall be with-
in the control of the provider and one with re-
843
Title V, Subtitle A
spect to which an adequate risk adjustment can
be made.
(H) PUBLIC HEALTH.—The measures may
incorporate standards identified by the Sec-
retary of Health and Human Services for meet-
ing public health objectives.
(d) UPDATING.—The National Quality Management
Council shall review and update the set of national meas-
ures of quality performance annually to reflect changing
goals for quality improvement. The Council shall establish
and maintain a priority list of performance measures that
within a 5-year period it intends to consider for inclusion
within the set through the updating process.
SEC. 5004. CONSUMER SURVEYS.
(a) IN GENERAL.—The National Quality Manage-
ment Council shall conduct periodic surveys of health care
consumers to gather information concerning access to
care, use of health services, health outcomes, and patient
satisfaction. The surveys shall monitor consumer reaction
to the implementation of this Act and be designed to as-
sess the impact of this Act on the general population of
the United States and potentially vulnerable populations.
(b) SURVEY ADMINISTRATION.—The National Qual-
ity Management Council shall develop and approve a
standard design for the surveys, which shall be adminis-
844
Title V, Subtitle A
tered by the Administrator for Health Care Policy and Re-
search on a plan-by-plan and State-by-State basis. A State
may add survey questions on quality measures of local in-
terest to surveys conducted in the State.
(c) SAMPLING STRATEGIES.—The National Quality
Management Council shall develop sampling strategies
that ensure that survey samples adequately measure popu-
lations that are considered to be at risk of receiving inad-
equate health care and may be difficult to reach through
consumer-sampling methods, including individuals who—
(1) fail to enroll in a health plan;
(2) resign from a plan; or
(3) are members of a vulnerable population.
SEC. 5005. EVALUATION AND REPORTING OF QUALITY PER-
FORMANCE.
(a) NATIONAL GOALS.—In subject matter areas with
respect to which the National Quality Management Coun-
cil determines that sufficient information and consensus
exist, the Council shall recommend to the Board that the
Board establish goals for performance by health plans and
health care providers on a subset of the set of national
measures of quality performance.
(b) IMPACT
OF REFORM.—The National Quality
Management Council shall evaluate the impact of the im-
plementation of this Act on the quality of health care serv-
846
Title V, Subtitle A
(B) discusses State-level and national
trends relating to health care quality; and
(C) presents data for each health alliance
from consumer surveys described in section
5004 that were conducted during the year that
is the subject of the report.
(d) PUBLIC AVAILABILITY OF INFORMATION IN NA-
TIONAL PRACTITIONER DATA BANK ON DEFENDANTS,
AWARDS, AND SETTLEMENTS.—
(1) IN GENERAL.—Section 427(a) of the Health
Care 
Quality 
Improvement 
Act 
(42 
U.S.C.
11137(a)) is amended by adding at the end the fol-
lowing new sentence: ‘‘Not later than January 1,
1996, the Secretary shall promulgate regulations
under which individuals seeking to enroll in health
plans under the Health Security Act may obtain in-
formation reported under this part with respect to
physicians and other licensed health practitioners
participating in such plans for whom information
has been reported under this part on repeated occa-
sions.’’.
(2) ACCESS
TO
DATA
BANK
FOR
POINT-OF-
SERVICE CONTRACTORS UNDER MEDICARE.—Section
427(a) of such Act (42 U.S.C. 11137(a)) is
amended—
847
Title V, Subtitle A
(A) by inserting ‘‘to sponsors of point-of-
service networks under section 1890 of the So-
cial Security Act,’’ after ‘‘State licensing
boards,’’, and
(B) in the heading, by inserting ‘‘RE-
LATED’’ after ‘‘CARE’’.
SEC. 5006. DEVELOPMENT AND DISSEMINATION OF PRAC-
TICE GUIDELINES.
(a) DEVELOPMENT OF GUIDELINES.—
(1) IN GENERAL.—The National Quality Man-
agement Council shall direct the Administrator for
Health Care Policy and Research to develop and pe-
riodically review and update clinically relevant guide-
lines that may be used by health care providers to
assist in determining how diseases, disorders, and
other health conditions can most effectively and ap-
propriately be prevented, diagnosed, treated, and
managed clinically.
(2) 
CERTAIN
REQUIREMENTS.—Guidelines
under paragraph (1) shall—
(A) be based on the best available research
and professional judgment regarding the effec-
tiveness and appropriateness of health care
services and procedures;
848
Title V, Subtitle A
(B) be presented in formats appropriate
for use by health care providers, medical edu-
cators, medical review organizations, and con-
sumers of health care;
(C) include treatment-specific or condition-
specific practice guidelines for clinical treat-
ments and conditions in forms appropriate for
use in clinical practice, for use in educational
programs, and for use in reviewing quality and
appropriateness of medical care;
(D) include information on risks and bene-
fits of alternative strategies for prevention, di-
agnosis, treatment, and management of a given
disease, disorder, or other health condition;
(E) include information on the costs of al-
ternative strategies for the prevention, diag-
nosis, treatment, and management of a given
disease, disorder, or other health condition,
where cost information is available and reliable;
and
(F) be developed in accordance with prior-
ities that shall be established by the National
Quality Management Council based on the re-
search priorities that are established under sec-
tion 5007(b) and the 5-year priority list of per-
849
Title V, Subtitle A
formance 
measures 
described 
in 
section
5003(d).
(3) HEALTH
SERVICE
UTILIZATION
PROTO-
COLS.—The National Quality Management Council
shall establish standards and procedures for evalu-
ating the clinical appropriateness of protocols used
to manage health service utilization.
(4) USE IN MEDICAL MALPRACTICE LIABILITY
PILOT PROGRAM.—Guidelines developed under this
subsection may be used by the Secretary of Health
and Human Services in the pilot program applying
practice guidelines to medical malpractice liability
under section 5312.
(b) EVALUATION
AND CERTIFICATION
OF OTHER
GUIDELINES.—
(1) METHODOLOGY.—The National Quality
Management Council shall direct the Administrator
for Health Care Policy and Research to develop and
publish standards relating to methodologies for de-
veloping the types of guidelines described in sub-
section (a)(1).
(2) EVALUATION
AND
CERTIFICATION.—The
National Quality Management Council shall direct
the Administrator for Health Care Policy and Re-
search to establish a procedure by which individuals
850
Title V, Subtitle A
and entities may submit guidelines of the type de-
scribed in subsection (a)(1) to the Council for eval-
uation and certification by the Council using the
standards developed under paragraph (1).
(3) USE IN MEDICAL MALPRACTICE LIABILITY
PILOT PROGRAM.—Guidelines certified under para-
graph (2) may be used by the Secretary of Health
and Human Services in the pilot program applying
practice guidelines to medical malpractice liability
under section 5312.
(c) GUIDELINE
CLEARINGHOUSE.—The National
Quality Management Council shall direct the Adminis-
trator for Health Care Policy and Research to establish
and oversee a clearinghouse and dissemination program
for practice guidelines that are developed or certified
under this section.
(d) DISSEMINATION OF INFORMATION ON INEFFEC-
TIVE TREATMENTS.—The National Quality Management
Council shall collect and disseminate information docu-
menting clinically ineffective treatments and procedures.
SEC. 5007. RESEARCH ON HEALTH CARE QUALITY.
(a) RESEARCH SUPPORT.—The National Quality
Management Council shall direct the Administrator for
Health Care Policy and Research to support research di-
rectly related to the 5-year priority list of performance
851
Title V, Subtitle A
measures described in section 5003(d), including research
with respect to—
(1) outcomes of health care services and proce-
dures;
(2) effective and efficient dissemination of in-
formation, standards, and guidelines;
(3) methods of measuring quality and shared
decisionmaking; and
(4) design and organization of quality of care
components of automated health information sys-
tems.
(b) RESEARCH PRIORITIES.—The National Quality
Management Council shall establish priorities for research
with respect to the quality, appropriateness, and effective-
ness of health care and make recommendations concerning
research projects. In establishing the priorities, the Na-
tional Quality Management Council shall emphasize re-
search involving diseases, disorders, and health conditions
as to which—
(1) there is the highest level of uncertainty con-
cerning treatment;
(2) there is the widest variation in practice pat-
terns;
852
Title V, Subtitle A
(3) the costs associated with prevention, diag-
nosis, treatment, or clinical management are signifi-
cant; and
(4) the rate of incidence or prevalence is high
for the population as a whole or for particular sub-
populations.
SEC. 5008. REGIONAL PROFESSIONAL FOUNDATIONS.
(a) ESTABLISHMENT.—The National Health Board
shall establish and oversee regional professional founda-
tions to perform the duties specified in subsection (c).
(b) STRUCTURE AND MEMBERSHIP.—
(1) IN GENERAL.—The National Quality Con-
sortium established under section 5009 shall oversee
the establishment of regional professional founda-
tions, the membership requirements for each founda-
tion, and any other requirement for the internal op-
eration of each foundation.
(2) ENTITIES ELIGIBLE FOR MEMBERSHIP.—
Each regional professional foundation shall include
at least one academic health center (as defined in
section 3101(c)). The following entities also shall be
eligible to serve as members of the regional profes-
sional foundation for the region in which the entity
is located:
853
Title V, Subtitle A
(A) Schools of public health (as defined in
section 799 of the Public Health Service Act).
(B) Other schools and programs defined in
such section.
(C) Health plans.
(D) Regional alliances.
(E) Corporate alliances.
(F) Health care providers.
(c) DUTIES.—A regional professional foundation
shall carry out the following duties for the region in which
the foundation is located (such region to be demarcated
by the National Health Board with the advice of the Na-
tional Quality Consortium established under section
5009):
(1) Developing programs in lifetime learning for
health 
professionals 
(as 
defined 
in 
section
1112(c)(1)) to ensure the delivery of quality health
care.
(2) Fostering collaboration among health plans
and health care providers to improve the quality of
primary and specialized health care.
(3) Disseminating information about successful
quality improvement programs, practice guidelines,
and research findings.
854
Title V, Subtitle A
(4) Disseminating information on innovative
uses of health professionals.
(5) Developing innovative patient education sys-
tems that enhance patient involvement in decisions
relating their health care.
(6) Applying for and conducting research de-
scribed in section 5007.
(d) PROGRAMS IN LIFETIME LEARNING.—The pro-
grams described in subsection (c)(1) shall ensure that
health professionals remain abreast of new knowledge, ac-
quire new skills, and adopt new roles as technology and
societal demands change.
SEC. 5009. NATIONAL QUALITY CONSORTIUM.
(a) ESTABLISHMENT.—The National Health Board
shall establish a consortium to be known as the National
Quality Consortium.
(b) DUTIES.—The Consortium shall—
(1) establish programs for continuing education
for health professionals;
(2) advise the National Quality Management
Council and the Administrator for Health Care Pol-
icy and Research on research priorities;
(3) oversee the development of the regional pro-
fessional foundations established under section 5008;
855
Title V, Subtitle A
(4) advise the National Quality Management
Council with respect to the funding of proposals to
establish such foundations;
(5) consult with the National Quality Manage-
ment Council regarding the selection of national
measures of quality performance under section
5003(c); and
(6) advise the National Health Board and the
National Quality Management Council with respect
to any other duty of the Board or the Council under
this subtitle.
(c) MEMBERSHIP.—The Consortium shall be com-
posed of 11 members appointed by the National Health
Board. The members of the Consortium shall include—
(1) 5 individuals representing the interests of
academic health centers; and
(2) 6 other individuals representing the inter-
ests of one of the following persons:
(A) Schools of public health.
(B) Other schools and programs defined in
section 799 of the Public Health Service Act
(including medical schools, nursing schools, and
allied health professional schools).
(d) TERMS.—
856
Title V, Subtitle A
(1) IN GENERAL.—Except as provided in para-
graph (2), members of the Consortium shall serve
for a term of 3 years.
(2) STAGGERED ROTATION.—Of the members
first appointed to the Consortium under subsection
(c), the National Health Board shall appoint 4 mem-
bers to serve for a term of 3 years, 3 members to
serve for a term of 2 years, and 4 members to serve
for a term of 1 year.
(e) CHAIR.—The National Health Board shall des-
ignate an individual to serve as the chair of the Consor-
tium.
SEC. 5010. ELIMINATING CLIA REQUIREMENT FOR CERTIFI-
CATE OF WAIVER FOR SIMPLE LABORATORY
EXAMINATIONS AND PROCEDURES.
(a) IN GENERAL.—Section 353 of the Public Health
Service Act (42 U.S.C. 263a) is amended—
(1) in subsection (b), by inserting before the pe-
riod at the end the following: ‘‘or unless the labora-
tory is exempt from the certificate requirement
under subsection (d)(2)’’;
(2) by amending paragraph (2) of subsection
(d) to read as follows:
‘‘(2) EXEMPTION FROM CERTIFICATE REQUIRE-
MENT FOR LABORATORIES PERFORMING ONLY SIM-
857
Title V, Subtitle A
PLE EXAMINATIONS AND PROCEDURES.—A labora-
tory which performs only laboratory examinations
and procedures described in paragraph (3) is not re-
quired to have in effect a certificate under this sec-
tion.’’;
(3) by striking paragraph (4) of subsection (d);
and
(4) in subsection (m)(1), by striking ‘‘, except
that the Secretary’’ and all that follows and insert-
ing a period.
(b) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the first day of the first
month beginning after the date of the enactment of this
Act.
SEC. 5011. UNIFORM STANDARDS FOR HEALTH CARE INSTI-
TUTIONS.
(a) DEVELOPMENT OF STANDARDS.—Not later than
3 years after the date of the enactment of this Act, the
National Health Board shall develop demonstration stand-
ards for the licensing of health care institutions that ad-
dress essential performance requirements related to pa-
tient care. The standards shall be developed in a manner
that permits them to be applied uniformly to all such insti-
tutions, except in the areas of fire safety, sanitation, and
858
Title V, Subtitle A
patient rights, and so as not to undermine ongoing nurs-
ing home reforms.
(b) DEMONSTRATION PROJECTS.—By January 1,
1996, the National Quality Management Council shall
complete demonstration projects for the standards devel-
oped under subsection (a) and shall revise the standards
according to the findings of such projects. The demonstra-
tion projects shall evaluate the impact of these standards
in ensuring quality of care, reducing cost, and reducing
burdens on health care providers.
(c) PREEMPTIVE EFFECT OF FULLY IMPLEMENTED
STANDARD.—After a standard developed under this sec-
tion is tested, evaluated, revised, and fully implemented,
it shall replace existing standards, except in cases in which
statutory changes are necessary to implement such stand-
ards. In such cases, the National Quality Management
Council shall recommend to the President and the Con-
gress revisions in Federal statutes to conform the statutes
to the standards.
(d) CONSOLIDATED AUDIT AND INSPECTION.—The
National Quality Management Council shall undertake re-
search efforts designed to develop a system for carrying
out through grant or contract a single, consolidated an-
nual audit and inspection of each health care institution
and health care provider for the combined purposes of
859
Title V, Subtitle A
Federal, State, local, and private licensure, accreditation,
and certification.
SEC. 5012. ROLE OF ALLIANCES IN QUALITY ASSURANCE.
Each regional alliance and each corporate alliance
shall—
(1) disseminate to consumers information re-
lated to quality and access to aid in their selection
of plans in accordance with section 1325;
(2) disseminate information on the quality of
health plans and health care providers contained in
reports of the National Quality Management Council
section 5005(c)(2);
(3) ensure through negotiations with health
plans that performance and quality standards are
continually improved; and
(4) conduct educational programs in coopera-
tion with regional professional foundations to assist
consumers in using quality and other information in
choosing health plans.
SEC. 5013. ROLE OF HEALTH PLANS IN QUALITY MANAGE-
MENT.
Each health plan shall—
(1) measure and disclose performance on qual-
ity measures used by—
860
Title V, Subtitle A
(A) participating States in which the plan
does business;
(B) regional alliances and corporate alli-
ances that offer the plan; and
(C) the National Quality Management
Council;
(2) furnish information required under subtitle
B of this title and provide such other reports and in-
formation on the quality of care delivered by health
care providers who are members of a provider net-
work of the plan (as defined in section 1402(f)) as
may be required under this Act; and
(3) maintain quality management systems
that—
(A) use the national measures of quality
performance developed by the National Quality
Management Council under section 5003; and
(B) measure the quality of health care fur-
nished to enrollees under the plan by all health
care providers who are members of a provider
network of the plan.
861
Title V, Subtitle B
Subtitle B—Information Systems,
Privacy, 
and 
Administrative
Simplification
PART 1—HEALTH INFORMATION SYSTEMS
SEC. 5101. ESTABLISHMENT OF HEALTH INFORMATION SYS-
TEM.
(a) IN GENERAL.—Not later than 2 years after the
date of the enactment of this Act, the National Health
Board shall develop and implement a health information
system by which the Board shall collect, report, and regu-
late the collection and dissemination of the health care in-
formation described in subsection (e) pursuant to stand-
ards promulgated by the Board and (if applicable) con-
sistent with policies established as part of the National
Information Infrastructure Act of 1993.
(b) PRIVACY.—The health information system shall
be developed and implemented in a manner that is con-
sistent with the privacy and security standards established
under section 5120.
(c) REDUCTION IN ADMINISTRATIVE COSTS.—The
health information system shall be developed and imple-
mented in a manner that is consistent with the objectives
of reducing wherever practicable and appropriate—
(1) the costs of providing and paying for health
care;
862
Title V, Subtitle B
(2) the time, effort, and financial resources ex-
pended by persons to provide information to States,
the Federal Government, health alliances, and health
plans.
(d) USES OF INFORMATION.—The health care infor-
mation described in subsection (e) shall be collected and
reported in a manner that facilitates its use for the fol-
lowing purposes:
(1) Health care planning, policy development,
policy evaluation, and research by Federal, State,
and local governments and regional and corporate
alliances.
(2) Establishing and monitoring payments for
health services by the Federal Government, States,
regional alliances, and corporate alliances.
(3) Assessing and improving the quality of
health care.
(4) Measuring and optimizing access to health
care.
(5) Evaluating the cost of specific clinical or
administrative functions.
(6) Supporting public health functions and ob-
jectives.
863
Title V, Subtitle B
(7) Improving the ability of health plans, health
care providers, and consumers to coordinate, im-
prove, and make choices about health care.
(8) Managing and containing costs at the alli-
ance and plan levels.
(e) HEALTH CARE INFORMATION.—The health care
information referred to in subsection (a) shall include data
on—
(1) enrollment and disenrollment in health
plans;
(2) clinical encounters and other items and
services provided by health care providers;
(3) administrative and financial transactions
and activities of participating States, regional alli-
ances, corporate alliances, health plans, health care
providers, employers, and individuals that are nec-
essary to determine compliance with this Act or an
Act amended by this Act;
(4) the characteristics of regional alliances, in-
cluding the number, and demographic characteristics
of eligible individuals residing in each alliance area;
(5) the characteristics of corporate alliances, in-
cluding the number, and demographic characteristics
of individuals who are eligible to be enrolled in each
corporate alliance health plan and individuals with
864
Title V, Subtitle B
respect to whom a large employer has exercised an
option under section 1311 to make ineligible for
such enrollment;
(6) terms of agreement between health plans
and the health care providers who are members of
provider networks of the plans (as defined in section
1402(f));
(7) payment of benefits in cases in which bene-
fits may be payable under a health plan and any
other insurance policy or health program;
(8) utilization management by health plans and
health care providers;
(9) the information collected and reported by
the Board or disseminated by other individuals or
entities as part of the National Quality Management
Program under subtitle A;
(10) grievances filed against regional alliances,
corporate alliances, and health plans and the resolu-
tions of such grievances; and
(11) any other fact that may be necessary to
determine whether a health plan or a health care
provider has complied with a Federal statute per-
taining to fraud or misrepresentation in the provi-
sion or purchasing of health care or in the submis-
865
Title V, Subtitle B
sion of a claim for benefits or payment under a
health plan.
SEC. 5102. ADDITIONAL REQUIREMENTS FOR HEALTH IN-
FORMATION SYSTEM.
(a) CONSULTATION.—The health information system
shall be developed in consultation with—
(1) Federal agencies that—
(A) collect health care information;
(B) oversee the collection of information or
records management by other Federal agencies;
(C) directly provide health care services;
(D) provide for payments for health care
services; or
(E) enforce a provision of this Act or any
Act amended by this Act;
(2) the National Quality Management Council
established under section 5002;
(3) participating States;
(4) regional alliances and corporate alliances;
(5) health plans;
(6) representatives of health care providers;
(7) representatives of employers;
(8) representatives of consumers of health care;
(9) experts in public health and health care in-
formation and technology; and
866
Title V, Subtitle B
(10) representatives of organizations furnishing
health care supplies, services, and equipment.
(b) COLLECTION
AND
TRANSMISSION
REQUIRE-
MENTS.—In establishing standards under section 5101,
the National Health Board shall specify the form and
manner in which individuals and entities are required to
collect or transmit health care information for or to the
Board. The Board also shall specify the frequency with
which individuals and entities are required to transmit
such information to the Board. Such specifications shall
include, to the extent practicable—
(1) requirements for use of uniform paper
forms containing standard data elements, defini-
tions, and instructions for completion in cases where
the collection or transmission of data in electronic
form is not specified by the Board;
(2) requirements for use of uniform health data
sets with common definitions to standardize the col-
lection and transmission of data in electronic form;
(3) uniform presentation requirements for data
in electronic form; and
(4) electronic data interchange requirements for
the exchange of data among automated health infor-
mation systems.
867
Title V, Subtitle B
(c) PREEMPTION OF STATE ‘‘PEN & QUILL’’ LAWS.—
A standard established by the National Health Board re-
lating to the form in which medical or health plan records
are required to be maintained shall supercede any contrary
provision of State law, except where the Board determines
that the provision is necessary to prevent fraud and abuse,
with respect to controlled substances, or for other pur-
poses.
SEC. 5103. ELECTRONIC DATA NETWORK.
(a) IN GENERAL.—As part of the health information
system, the National Health Board shall oversee the estab-
lishment of an electronic data network consisting of re-
gional centers that collect, compile, and transmit informa-
tion.
(b) CONSULTATION.—The electronic data network
shall be developed in consultation with—
(1) Federal agencies that—
(A) collect health care information;
(B) oversee the collection of information or
records management by other Federal agencies;
(C) directly provide health care services;
(D) provide for payments for health care
services; or
(E) enforce a provision of this Act or any
Act amended by this Act;
868
Title V, Subtitle B
(2) the National Quality Management Council
established under section 5002;
(3) participating States;
(4) regional alliances and corporate alliances;
(5) health plans;
(6) representatives of health care providers;
(7) representatives of employers;
(8) representatives of consumers of health care;
(9) experts in public health and health care in-
formation and technology; and
(10) representatives of organizations furnishing
health care supplies, services, and equipment.
(c) DEMONSTRATION
PROJECTS.—The electronic
data network shall be tested prior to full implementation
through the establishment of demonstration projects.
(d) DISCLOSURE OF INDIVIDUALLY IDENTIFIABLE
INFORMATION.—The electronic data network may be used
to disclose individually identifiable health information (as
defined in section 5123(3)) to any individual or entity only
in accordance with the health information system privacy
standards promulgated by the National Health Board
under section 5120.
869
Title V, Subtitle B
SEC. 5104. UNIQUE IDENTIFIER NUMBERS.
(a) IN GENERAL.—As part of the health information
system, the Board shall establish a system to provide for
a unique identifier number for each—
(1) eligible individual;
(2) employer;
(3) health plan; and
(4) health care provider.
(b) IMPERMISSIBLE DATA LINKS.—In establishing
the system under subsection (a), the National Health
Board shall ensure that a unique identifier number may
not be used to connect individually identifiable health in-
formation (as defined in section 5123(3)) that is collected
as part of the health information system or that otherwise
may be accessed through the number with individually
identifiable information from any other source, except in
cases where the National Health Board determines that
such connection is necessary to carry out a duty imposed
on any individual or entity under this Act.
(c) PERMISSIBLE USES OF IDENTIFIER.—The Na-
tional Health Board shall by regulation establish the pur-
poses for which a unique identifier number provided pur-
suant to this section may be used.
SEC. 5105. HEALTH SECURITY CARDS.
(a) PERMISSIBLE USES OF CARD.—A health security
card that is issued to an eligible individual under section
870
Title V, Subtitle B
1001(b) may be used by an individual or entity, in accord-
ance with regulations promulgated by the Board, only for
the purpose of providing or assisting the eligible individual
in obtaining an item or service that is covered under—
(1) the applicable health plan in which the indi-
vidual is enrolled (as defined in section 1902);
(2) a policy consisting of a supplemental health
benefit policy (described in part 2 of subtitle E of
title I), a cost sharing policy (described in such
part), or both;
(3) a FEHBP supplemental plan (described in
subtitle C of title VIII);
(4) a FEHBP medicare supplemental plan (de-
scribed in such subtitle); or
(5) such other programs as the Board may
specify.
(b) FORM OF CARD AND ENCODED INFORMATION.—
The National Health Board shall establish standards re-
specting the form of health security cards and the infor-
mation to be encoded in electronic form on the cards. Such
information shall include—
(1) the identity of the individual to whom the
card is issued;
(2) the applicable health plan in which the indi-
vidual is enrolled;
871
Title V, Subtitle B
(3) any policy described in paragraph (2), (3),
or (4) of subsection (a) in which the individual is en-
rolled; and
(4) any other information that the National
Health Board determines to be necessary in order
for the card to serve the purpose described in sub-
section (a).
(c) UNIQUE IDENTIFIER NUMBERS.—The unique
identifier number system developed by the National
Health Board under section 5104 shall be used in encod-
ing the information described in subsection (b).
(d) REGISTRATION OF CARD.—The Board shall take
appropriate steps to register the card, the name of the
card, and other indicia relating to the card as a trademark
or service mark (as appropriate) under the Trademark Act
of 1946. For purposes of this subsection, the ‘‘Trademark
Act of 1946’’ refers to the Act entitled ‘‘An Act to provide
for the registration and protection of trademarks used in
commerce, to carry out the provisions of international con-
ventions, and for other purposes’’, approved July 5, 1946
(15 U.S.C. et seq.).
(e) REFERENCE TO CRIME.—For a provision relating
to criminal penalties for misuse of a health security card
or a unique identifier number, see section 5438.
872
Title V, Subtitle B
SEC. 5106. TECHNICAL ASSISTANCE IN THE ESTABLISH-
MENT OF HEALTH INFORMATION SYSTEMS.
The National Health Board shall provide information
and technical assistance to participating States, regional
alliances, corporate alliances, health plans, and health care
providers with respect to the establishment and operation
of automated health information systems. Such assistance
shall focus on—
(1) the promotion of community-based health
information systems; and
(2) the promotion of patient care information
systems that collect data at the point of care or as
a by-product of the delivery of care.
PART 2—PRIVACY OF INFORMATION
SEC. 
5120. 
HEALTH 
INFORMATION 
SYSTEM 
PRIVACY
STANDARDS.
(a) HEALTH INFORMATION SYSTEM STANDARDS.—
Not later than 2 years after the date of the enactment
of this Act, the National Health Board shall promulgate
standards respecting the privacy of individually identifi-
able health information that is in the health information
system described in part 1 of this subtitle. Such standards
shall include standards concerning safeguards for the se-
curity of such information. The Board shall develop and
periodically revise the standards in consultation with—
(1) Federal agencies that—
873
Title V, Subtitle B
(A) collect health care information;
(B) oversee the collection of information or
records management by other Federal agencies;
(C) directly provide health care services;
(D) provide for payments for health care
services; or
(E) enforce a provision of this Act or any
Act amended by this Act;
(2) the National Quality Management Council
established under section 5002;
(3) participating States;
(4) regional alliances and corporate alliances;
(5) health plans; and
(6) representatives of consumers of health care.
(b) INFORMATION COVERED.—The standards estab-
lished under subsection (a) shall apply to individually iden-
tifiable health information collected for or by, reported to
or by, or the dissemination of which is regulated by, the
National Health Board under section 5101.
(c) PRINCIPLES.—The standards established under
subsection (a) shall incorporate the following principles:
(1) UNAUTHORIZED
DISCLOSURE.—All disclo-
sures of individually identifiable health information
by an individual or entity shall be unauthorized
unless—
874
Title V, Subtitle B
(A) the disclosure is by the enrollee identi-
fied in the information or whose identity can be
associated with the information;
(B) the disclosure is authorized by such
enrollee in writing in a manner prescribed by
the Board;
(C) the disclosure is to Federal, State, or
local law enforcement agencies for the purpose
of enforcing this Act or an Act amended by this
Act; or
(D) the disclosure otherwise is consistent
with this Act and specific criteria governing dis-
closure established by the Board.
(2) MINIMAL DISCLOSURE.—All disclosures of
individually identifiable health information shall be
restricted to the minimum amount of information
necessary to accomplish the purpose for which the
information is being disclosed.
(3) RISK ADJUSTMENT.—No individually identi-
fiable health information may be provided by a
health plan to a regional alliance or a corporate alli-
ance for the purpose of setting premiums based on
risk adjustment factors.
(4) REQUIRED
SAFEGUARDS.—Any individual
or entity who maintains, uses, or disseminates indi-
875
Title V, Subtitle B
vidually identifiable health information shall imple-
ment administrative, technical, and physical safe-
guards for the security of such information.
(5) RIGHT TO KNOW.—An enrollee (or an en-
rollee representative of the enrollee) has the right to
know—
(A) whether any individual or entity uses
or maintains individually identifiable health in-
formation concerning the enrollee; and
(B) for what purposes the information may
be used or maintained.
(6) RIGHT TO ACCESS.—Subject to appropriate
procedures, an enrollee (or an enrollee representative
of the enrollee) has the right, with respect to individ-
ually identifiable health information concerning the
enrollee that is recorded in any form or medium—
(A) to see such information;
(B) to copy such information; and
(C) to have a notation made with or in
such information of any amendment or correc-
tion of such information requested by the en-
rollee or enrollee representative.
(7) RIGHT TO NOTICE.—An enrollee and an en-
rollee representative have the right to receive a writ-
ten statement concerning—
876
Title V, Subtitle B
(A) the purposes for which individually
identifiable health information provided to a
health care provider, a health plan, a regional
alliance, a corporate alliance, or the National
Health Board may be used or disclosed by, or
disclosed to, any individual or entity; and
(B) the right of access described in para-
graph (6).
(8) USE OF UNIQUE IDENTIFIER.—When indi-
vidually identifiable health information concerning
an enrollee is required to accomplish the purpose for
which information is being transmitted between or
among the National Health Board, regional and cor-
porate alliances, health plans, and health care pro-
viders, the transmissions shall use the unique identi-
fier number provided to the enrollee pursuant to sec-
tion 5104 in lieu of the name of the enrollee.
(9) USE FOR EMPLOYMENT DECISIONS.—Indi-
vidually identifiable health care information may not
be used in making employment decisions.
SEC. 5121. OTHER DUTIES WITH RESPECT TO PRIVACY.
(a) RESEARCH AND TECHNICAL SUPPORT.—The Na-
tional Health Board may sponsor—
(1) research relating to the privacy and security
of individually identifiable health information;
877
Title V, Subtitle B
(2) the development of consent forms governing
disclosure of such information; and
(3) the development of technology to implement
standards regarding such information.
(c) EDUCATION.—The National Health Board shall
establish education and awareness programs—
(1) to foster adequate security practices by
States, regional alliances, corporate alliances, health
plans, and health care providers;
(2) to train personnel of public and private en-
tities who have access to individually identifiable
health information respecting the duties of such per-
sonnel with respect to such information; and
(3) to inform individuals and employers who
purchase health care respecting their rights with re-
spect to such information.
SEC. 5122. COMPREHENSIVE HEALTH INFORMATION PRI-
VACY PROTECTION ACT.
(a) IN GENERAL.—Not later than 3 years after the
date of the enactment of this Act, the National Health
Board shall submit to the President and the Congress a
detailed proposal for legislation to provide a comprehen-
sive scheme of Federal privacy protection for individually
identifiable health information.
878
Title V, Subtitle B
(b) CODE OF FAIR INFORMATION PRACTICES.—The
proposal shall include a Code of Fair Information Prac-
tices to be used to advise enrollees to whom individually
identifiable health information pertains of their rights with
respect to such information in an easily understood and
useful form.
(c) ENFORCEMENT.—The proposal shall include pro-
visions to enforce effectively the rights and duties that
would be created by the legislation.
SEC. 5123. DEFINITIONS.
For purposes of this part:
(1) ENROLLEE.—The term ‘‘enrollee’’ means
an individual who enrolls or has enrolled under a
health plan. The term includes a deceased individual
who was enrolled under a health plan.
(2) ENROLLEE
REPRESENTATIVE.—The term
‘‘enrollee representative’’ means any individual le-
gally empowered to make decisions concerning the
provision of health care to an enrollee or the admin-
istrator or executor of the estate of a deceased en-
rollee.
(3) INDIVIDUALLY IDENTIFIABLE HEALTH IN-
FORMATION.—The term ‘‘individually identifiable
health information’’ means any information, whether
oral or recorded in any form or medium, that—
879
Title V, Subtitle B
(A) identifies or can readily be associated
with the identity of an enrollee; and
(B) relates to—
(i) the past, present, or future phys-
ical or mental health of the enrollee;
(ii) the provision of health care to the
enrollee; or
(iii) payment for the provision of
health care to the enrollee.
PART 3—INTERIM REQUIREMENTS FOR
ADMINISTRATIVE SIMPLIFICATION
SEC. 5130. STANDARD BENEFIT FORMS.
(a) DEVELOPMENT.—Not later than 1 year after the
date of the enactment of this Act, the National Health
Board shall develop, promulgate, and publish in the Fed-
eral Register the following standard health care benefit
forms:
(1) An enrollment and disenrollment form to be
used to record enrollment and disenrollment in a
health benefit plan.
(2) A clinical encounter record to be used by
health benefit plans and health service providers.
(3) A claim form to be used in the submission
of claims for benefits or payment under a health
benefit plan.
880
Title V, Subtitle B
(b) INSTRUCTIONS, DEFINITIONS, AND CODES.—
Each standard form developed under subsection (a) shall
include instructions for completing the form that—
(1) specifically define, to the extent practicable,
the data elements contained in the form; and
(2) standardize any codes or data sets to be
used in completing the form.
(c) REQUIREMENTS FOR ADOPTION OF FORMS.—
(1) HEALTH SERVICE PROVIDERS.—On or after
the date that is 270 days after the publication of the
standard forms developed under subsection (a), a
health service provider that furnishes items or serv-
ices in the United States for which payment may be
made under a health benefit plan may not—
(A) maintain records of clinical encounters
involving such items or services that are re-
quired to be maintained by the National Health
Board in a paper form that is not the clinical
encounter record promulgated by the Board; or
(B) submit any claim for benefits or pay-
ment for such services to such plan in a paper
form that is not the claim form promulgated by
the National Health Board.
(2) HEALTH BENEFIT PLANS.—On or after the
date that is 270 days after the publication of the
881
Title V, Subtitle B
standard forms developed under subsection (a), a
health benefit plan may not—
(A) record enrollment and disenrollment in
a paper form that is not the enrollment and
disenrollment form promulgated by the Na-
tional Health Board;
(B) maintain records of clinical encounters
that are required to be maintained by the Na-
tional Health Board in a paper form that is not
the clinical encounter record promulgated by
the Board; or
(C) reject a claim for benefits or payment
under the plan on the basis of the form or me-
dium in which the claim is submitted if—
(i) the claim is submitted on the claim
form promulgated by the National Health
Board; and
(ii) the plan accepts claims submitted
in paper form.
(d) DEFINITIONS.—For purposes of this subtitle:
(1) HEALTH BENEFIT PLAN.—
(A) IN GENERAL.—The term ‘‘health ben-
efit plan’’ means, except as provided in sub-
paragraphs (B) through (D), any public or pri-
882
Title V, Subtitle B
vate entity or program that provides for pay-
ments for health care services, including—
(i) a group health plan (as defined in
section 5000(b)(1) of the Internal Revenue
Code of 1986); and
(ii) any other health insurance ar-
rangement, including any arrangement
consisting of a hospital or medical expense
incurred policy or certificate, hospital or
medical service plan contract, or health
maintenance organization subscriber con-
tract.
(B) PLANS EXCLUDED.—Such term does
not include—
(i) accident-only, credit, or disability
income insurance;
(ii) coverage issued as a supplement
to liability insurance;
(iii) an individual making payment on
the individual’s own behalf (or on behalf of
a 
relative 
or 
other 
individual) 
for
deductibles, coinsurance, or services not
covered under a health benefit plan; and
(iv) such other plans as the National
Health Board may determine, because of
883
Title V, Subtitle B
the limitation of benefits to a single type
or kind of health care, such as dental serv-
ices or hospital indemnity plans, or other
reasons should not be subject to the re-
quirements of this section.
(C) 
PLANS
INCLUDED.—Such 
term
includes—
(i) workers compensation or similar
insurance insofar as it relates to workers
compensation medical benefits (as defined
in section 10000(3)) provided by or
through health plans; and
(ii) automobile medical insurance in-
sofar as it relates to automobile insurance
medical benefits (as defined in section
10100(2)) provided by or through health
plans.
(D) TREATMENT OF DIRECT PROVISION OF
SERVICES.—Such term does not include a Fed-
eral or State program that provides directly for
the provision of health services to beneficiaries.
(2) HEALTH
SERVICE
PROVIDER.—The term
‘‘health service provider’’ includes a provider of serv-
ices (as defined in section 1861(u) of the Social Se-
curity Act), physician, supplier, and other person
884
Title V, Subtitle B
furnishing health care services. Such term includes
a Federal or State program that provides directly
for the provision of health services to beneficiaries.
(e) INTERIM NATURE OF REQUIREMENTS.—The Na-
tional Health Board may modify, update, or supercede any
standard form or requirement developed, promulgated, or
imposed under this section through the establishment of
a standard under section 5101.
PART 4—GENERAL PROVISIONS
SEC. 5140. NATIONAL PRIVACY AND HEALTH DATA ADVI-
SORY COUNCIL.
(a) ESTABLISHMENT.—There is established an advi-
sory council to be known as the National Privacy and
Health Data Advisory Council.
(b) DUTIES.—The Council shall advise the National
Health Board with respect to its duties under this subtitle.
(c) NUMBER AND APPOINTMENT.—The Council shall
be composed of 15 members appointed by the National
Health Board. The members of the Council shall include—
(1) individuals representing the interests of con-
sumers, employers, and other purchasers of health
care;
(2) individuals representing the interests of
health plans, health care providers, corporate alli-
885
Title V, Subtitle B
ances, regional alliances, public health agencies, and
participating States; and
(3) individuals distinguished in the fields of
data collection, data protection and privacy, law,
ethics, medical and health services research, public
health, and civil liberties and patient advocacy.
(d) TERMS.—
(1) IN GENERAL.—Except as provided in para-
graph (2), members of the Council shall serve for a
term of 3 years.
(2) STAGGERED ROTATION.—Of the members
first appointed to the Council under subsection (c),
the National Health Board shall appoint 5 members
to serve for a term of 3 years, 5 members to serve
for a term of 2 years, and 5 members to serve for
a term of 1 year.
(3) SERVICE BEYOND TERM.—A member of the
Council may continue to serve after the expiration of
the term of the member until a successor is ap-
pointed.
(e) VACANCIES.—If a member of the Council does not
serve the full term applicable under subsection (d), the in-
dividual appointed to fill the resulting vacancy shall be ap-
pointed for the remainder of the term of the predecessor
of the individual.
886
Title V, Subtitle B
(f) CHAIR.—The National Health Board shall des-
ignate an individual to serve as the chair of the Council.
(g) MEETINGS.—The Council shall meet not less than
once during each 4-month period and shall otherwise meet
at the call of the National Health Board or the chair.
(h) COMPENSATION AND REIMBURSEMENT OF EX-
PENSES.—Members of the Council shall receive compensa-
tion for each day (including travel time) engaged in car-
rying out the duties of the Council. Such compensation
may not be in an amount in excess of the maximum rate
of basic pay payable for level IV of the Executive Schedule
under section 5315 of title 5, United States Code.
(i) STAFF.—The National Health Board shall provide
to the Council such staff, information, and other assist-
ance as may be necessary to carry out the duties of the
Council.
(j) DURATION.—Notwithstanding section 14(a) of the
Federal Advisory Committee Act, the Council shall con-
tinue in existence until otherwise provided by law.
SEC. 5141. CIVIL MONEY PENALTIES.
(a) VIOLATION OF HEALTH INFORMATION SYSTEM
STANDARDS.—Any person who the Secretary of Health
and Human Services determines—
887
Title V, Subtitle B
(1) is required, but has substantially failed, to
comply with a standard established by the National
Health Board under section 5101 or 5120;
(2) has required the display of, has required the
use of, or has used a health security card for any
purpose other than a purpose described in section
5105(a); or
(3) has required the disclosure of, has required
the use of, or has used a unique identifier number
provided pursuant to section 5104 for any purpose
that is not authorized by the National Health Board
pursuant to such section
shall be subject, in addition to any other penalties that
may be prescribed by law, to a civil money penalty of not
more than $10,000 for each such violation.
(b) STANDARD BENEFIT FORMS.—Any health service
provider or health benefit plan that the Secretary of
Health and Human Services determines is required, but
has substantially failed, to comply with section 5130(c)
shall be subject, in addition to any other penalties that
may be prescribed by law, to a civil money penalty of not
more than $10,000 for each such violation.
(c) PROCESS.—The process for the imposition of a
civil money penalty under the All-Payer Health Care
Fraud and Abuse Control Program under part 1 of sub-
888
Title V, Subtitle C
title E of this title shall apply to a civil money penalty
under this section in the same manner as such process
applies to a penalty or proceeding under such program.
SEC. 5142. RELATIONSHIP TO OTHER LAWS.
(a) COURT ORDERS.—Nothing in this title shall be
construed to invalidate or limit the power or authority of
any court of competent jurisdiction with respect to health
care information.
(b) PUBLIC HEALTH REPORTING.—Nothing in this
title shall be construed to invalidate or limit the authori-
ties, powers, or procedures established under any law that
provides for the reporting of disease, child abuse, birth,
or death.
Subtitle C—Remedies and
Enforcement
PART 1—REVIEW OF BENEFIT DETERMINATIONS
FOR ENROLLED INDIVIDUALS
Subpart A—General Rules
SEC. 5201. HEALTH PLAN CLAIMS PROCEDURE.
(a) DEFINITIONS.—For purposes of this section—
(1) CLAIM.—The term ‘‘claim’’ means a claim
for payment or provision of benefits under a health
plan or a request for preauthorization of items or
services which is submitted to a health plan prior to
receipt of the items or services.
889
Title V, Subtitle C
(2) INDIVIDUAL CLAIMANT.—The term ‘‘indi-
vidual claimant’’ with respect to a claim means any
individual who submits the claim to a health plan in
connection with the individual’s enrollment under
the plan, or on whose behalf the claim is submitted
to the plan by a provider.
(3) PROVIDER CLAIMANT.—The term ‘‘provider
claimant’’ with respect to a claim means any pro-
vider who submits the claim to a health plan with
respect to items or services provided to an individual
enrolled under the plan.
(b) GENERAL RULES GOVERNING TREATMENT OF
CLAIMS.—
(1) ADEQUATE
NOTICE
OF
DISPOSITION
OF
CLAIM.—In any case in which a claim is submitted
in complete form to a health plan, the plan shall
provide to the individual claimant and any provider
claimant with respect to the claim a written notice
of the plan’s approval or denial of the claim within
30 days after the date of the submission of the
claim. The notice to the individual claimant shall be
written in language calculated to be understood by
the typical individual enrolled under the plan and in
a form which takes into account accessibility to the
information by individuals whose primary language
890
Title V, Subtitle C
is not English. In the case of a denial of the claim,
the notice shall be provided within 5 days after the
date of the determination to deny the claim, and
shall set forth the specific reasons for the denial.
The notice of a denial shall include notice of the
right to appeal the denial under paragraph (2). Fail-
ure by any plan to comply with the requirements of
this paragraph with respect to any claim submitted
to the plan shall be treated as approval by the plan
of the claim.
(2) PLAN’S DUTY TO REVIEW DENIALS UPON
TIMELY REQUEST.—The plan shall review its denial
of the claim if an individual claimant or provider
claimant with respect to the claim submits to the
plan a written request for reconsideration of the
claim after receipt of written notice from the plan of
the denial. The plan shall allow any such claimant
not less than 60 days, after receipt of written notice
from the plan of the denial, to submit the claimant’s
request for reconsideration of the claim.
(3) TIME LIMIT FOR REVIEW.—The plan shall
complete any review required under paragraph (2),
and shall provide the individual claimant and any
provider claimant with respect to the claim written
notice of the plan’s decision on the claim after re-
891
Title V, Subtitle C
consideration pursuant to the review, within 30 days
after the date of the receipt of the request for recon-
sideration.
(4) DE NOVO REVIEWS.—Any review required
under paragraph (2)—
(A) shall be de novo,
(B) shall be conducted by an individual
who did not make the initial decision denying
the claim and who is authorized to approve the
claim, and
(C) shall include review by a qualified phy-
sician if the resolution of any issues involved re-
quires medical expertise.
(c) TREATMENT OF URGENT REQUESTS TO PLANS
FOR PREAUTHORIZATION.—
(1) IN GENERAL.—This subsection applies in
the case of any claim submitted by an individual
claimant or a provider claimant consisting of a re-
quest for preauthorization of items or services (other
than emergency services which under section
1406(b) may not be subject to preauthorization)
which is accompanied by an attestation that—
(A) failure to immediately provide the
items or services could reasonably be expected
to result in—
892
Title V, Subtitle C
(i) placing the health of the individual
claimant (or, with respect to an individual
claimant who is a pregnant woman, the
health of the woman or her unborn child)
in serious jeopardy,
(ii) serious impairment to bodily func-
tions, or
(iii) serious dysfunction of any bodily
organ or part,
or
(B) immediate provision of the items or
services is necessary because the individual
claimant has made or is at serious risk of mak-
ing an attempt to harm such individual claim-
ant or another individual.
(2) SHORTENED TIME LIMIT FOR CONSIDER-
ATION
OF
REQUESTS
FOR
PREAUTHORIZATION.—
Notwithstanding subsection (b)(1), a health plan
shall approve or deny any claim described in para-
graph (1) within 24 hours after submission of the
claim to the plan. Failure by the plan to comply with
the requirements of this paragraph with respect to
the claim shall be treated as approval by the plan of
the claim.
893
Title V, Subtitle C
(3) EXPEDITED
EXHAUSTION
OF
PLAN
REM-
EDIES.—Any claim described in paragraph (1) which
is denied by the plan shall be treated as a claim with
respect to which all remedies under the plan pro-
vided pursuant to this section are exhausted, irre-
spective of any review provided under subsection
(b)(2).
(4) DENIAL
OF
PREVIOUSLY
AUTHORIZED
CLAIMS NOT PERMITTED.—In any case in which a
health plan approves a claim described in paragraph
(1)—
(A) the plan may not subsequently deny
payment or provision of benefits pursuant to
the claim, unless the plan makes a showing of
an intentional misrepresentation of a material
fact by the individual claimant, and
(B) in the case of a violation of subpara-
graph (A) in connection with the claim, all rem-
edies under the plan provided pursuant to this
section with respect to the claim shall be treat-
ed as exhausted.
(d) TIME LIMIT FOR DETERMINATION OF INCOM-
PLETENESS OF CLAIM.—For purposes of this section—
(1) any claim submitted by an individual claim-
ant and accepted by a provider serving under con-
894
Title V, Subtitle C
tract with a health plan and any claim described in
subsection (b)(1) shall be treated with respect to the
individual claimant as submitted in complete form,
and
(2) any other claim for benefits under the plan
shall be treated as filed in complete form as of 10
days after the date of the submission of the claim,
unless the plan provides to the individual claimant
and any provider claimant, within such period, a
written notice of any required matter remaining to
be filed in order to complete the claim.
Any filing by the individual claimant or the provider claim-
ant of additional matter requested by the plan pursuant
to paragraph (2) shall be treated for purposes of this sec-
tion as an initial filing of the claim.
(e) ADDITIONAL NOTICE
AND DISCLOSURE RE-
QUIREMENTS FOR HEALTH PLANS.—In the case of a de-
nial of a claim for benefits under a health plan, the plan
shall include, together with the specific reasons provided
to the individual claimant and any provider claimant
under subsection (b)(1)—
(1) if the denial is based in whole or in part on
a determination that the claim is for an item or
service which is not covered by the comprehensive
benefit package or exceeds payment rates under the
895
Title V, Subtitle C
applicable alliance or State fee schedule, the factual
basis for the determination,
(2) if the denial is based in whole or in part on
exclusion of coverage with respect to services be-
cause the services are determined to comprise an ex-
perimental treatment or investigatory procedure, the
medical basis for the determination and a descrip-
tion of the process used in making the determina-
tion, and
(3) if the denial is based in whole or in part on
a determination that the treatment is not medically
necessary or appropriate or is inconsistent with the
plan’s practice guidelines, the medical basis for the
determination, the guidelines used in making the de-
termination, and a description of the process used in
making the determination.
(f) WAIVER OF RIGHTS PROHIBITED.—A health plan
may not require any party to waive any right under the
plan or this Act as a condition for approval of any claim
under the plan, except to the extent otherwise specified
in a formal settlement agreement.
SEC. 5202. REVIEW IN REGIONAL ALLIANCE COMPLAINT
REVIEW OFFICES OF GRIEVANCES BASED ON
ACTS OR PRACTICES BY HEALTH PLANS.
(a) COMPLAINT REVIEW OFFICES.—
896
Title V, Subtitle C
(1) IN
GENERAL.—In accordance with rules
which shall be prescribed by the Secretary of Labor,
each State shall establish and maintain a complaint
review office for each regional alliance established by
such State. According to designations which shall be
made by each State under regulations of the Sec-
retary of Labor, the complaint review office for a re-
gional alliance established by such State shall also
serve as the complaint review office for corporate al-
liances operating in the State with respect to indi-
viduals who are enrolled under plans described in
subsection (b) maintained by such corporate alli-
ances and who reside within the area of the regional
alliance.
(2) REGIONAL
ALLIANCES
NOT
ESTABLISHED
BY STATES.—In the case of any regional alliance es-
tablished in any State by the Secretary of Health
and Human Services, the Secretary of Health and
Human Services shall assume all duties and obliga-
tions of such State under this part in accordance
with the applicable regulations of the Secretary of
Labor under this part.
(b) FILINGS OF COMPLAINTS BY AGGRIEVED PER-
SONS.—In the case of any person who is aggrieved by—
897
Title V, Subtitle C
(1) any act or practice engaged in by any
health plan which consists of or results in denial of
payment or provision of benefits under the plan or
delay in the payment or provision of benefits, or
(2) any act or practice engaged in by any other
plan maintained by a regional alliance or a corporate
alliance which consists of or results in denial of pay-
ment or provision of benefits under a supplemental
benefit policy described in section 1421(b)(1) or a
cost sharing policy described in section 1421(b)(2)
or delay in the payment or provision of the benefits,
if the denial or delay consists of a failure to comply with
the terms of the plan (including the provision of benefits
in full when due in accordance with the terms of the plan),
or with the applicable requirements of this Act, such per-
son may file a complaint with the appropriate complaint
review office.
(c) EXHAUSTION OF PLAN REMEDIES.—Any com-
plaint including a claim to which section 5201 applies may
not be filed until the complainant has exhausted all rem-
edies provided under the plan with respect to the claim
in accordance with such section.
(d) EXCLUSIVE MEANS
OF REVIEW
FOR PLANS
MAINTAINED
BY
CORPORATE
ALLIANCES.—Notwith-
standing part 2, proceedings under sections 5203 and
898
Title V, Subtitle C
5204 pursuant to complaints filed under subsection (b),
and review under section 5205 of determinations made
under section 5204, shall be the exclusive means of review
of acts or practices described in subsection (b) which are
engaged in by a corporate alliance health plan or by any
plan maintained by a corporate alliance with respect to
benefits under a supplemental benefit policy described in
section 1421(b)(1) or a cost sharing policy described in
section 1421(b)(2).
(e) FORM OF COMPLAINT.—The complaint shall be
in writing under oath or affirmation, shall set forth the
complaint in a manner calculated to give notice of the na-
ture of the complaint, and shall contain such information
as may be prescribed in regulations of the Secretary of
Labor.
(f) NOTICE OF FILING.—The complaint review office
shall serve by certified mail a notice of the complaint (in-
cluding the date, place, and circumstances of the alleged
violation) on the person or persons alleged in the com-
plaint to have committed the violation within 10 days after
the filing of the complaint.
(g) TIME LIMITATION.—Complaints may not be
brought under this section with respect to any violation
later than one year after the date on which the violation
899
Title V, Subtitle C
occurs. This subsection shall not prevent the subsequent
amending of a complaint.
SEC. 5203. INITIAL PROCEEDINGS IN COMPLAINT REVIEW
OFFICES.
(a) ELECTIONS.—Whenever a complaint is brought
to the complaint review office under section 5202(b), the
complaint review office shall provide the complainant with
an opportunity, in such form and manner as shall be pre-
scribed in regulations of the Secretary of Labor, to elect
one of the following:
(1) to forego further proceedings in the com-
plaint review office and rely on remedies available in
a court of competent jurisdiction, with respect to
any matter in the complaint with respect to which
proceedings under this section and section 5204, and
review under section 5205, are not under section
5202(d) the exclusive means of review,
(2) to submit the complaint as a dispute under
the Early Resolution Program established under
subpart B and thereby suspend further review pro-
ceedings under this section pending termination of
proceedings under the Program, or
(3) in any case in which an election under para-
graph (2) is not made, or such an election was made
but resolution of all matters in the complaint was
900
Title V, Subtitle C
not obtained upon termination of proceedings pursu-
ant to the election by settlement agreement or other-
wise, to proceed with the complaint to a hearing in
the complaint review office under section 5204 re-
garding the unresolved matters.
(b) EFFECT OF PARTICIPATION IN EARLY RESOLU-
TION PROGRAM.—Any matter in a complaint brought to
the complaint review office which is included in a dispute
which is timely submitted to the Early Resolution Pro-
gram established under subpart B shall not be assigned
to a hearing under section 5204 unless the proceedings
under the Program with respect to the dispute are termi-
nated without settlement or resolution of the dispute with
respect to such matter. Upon termination of any pro-
ceedings regarding a dispute submitted to the Program,
the applicability of this section to any matter in a com-
plaint which was included in the dispute shall not be af-
fected by participation in the proceedings, except to the
extent otherwise required under the terms of any settle-
ment agreement or other formal resolution obtained in the
proceedings.
SEC. 5204. HEARINGS BEFORE HEARING OFFICERS IN COM-
PLAINT REVIEW OFFICES.
(a) HEARING PROCESS.—
901
Title V, Subtitle C
(1) ASSIGNMENT OF COMPLAINTS TO HEARING
OFFICERS AND NOTICE TO PARTIES.—
(A) IN GENERAL.—In the case of an elec-
tion under section 5203(a)(3)—
(i) the complaint review office shall
assign the complaint, and each motion in
connection with the complaint, to a hearing
officer employed by the State in the office;
and
(ii) the hearing officer shall have the
power to issue and cause to be served upon
the plan named in the complaint a copy of
the complaint and a notice of hearing be-
fore the hearing officer at a place fixed in
the notice, not less than 5 days after the
serving of the complaint.
(B) QUALIFICATIONS FOR HEARING OFFI-
CERS.—No individual may serve in a complaint
review office as a hearing officer unless the in-
dividual meets standards which shall be pre-
scribed by the Secretary of Labor. Such stand-
ards shall include experience, training, affili-
ations, diligence, actual or potential conflicts of
interest, and other qualifications deemed rel-
evant by the Secretary of Labor. At no time
902
Title V, Subtitle C
shall a hearing officer have any official, finan-
cial, or personal conflict of interest with respect
to issues in controversy before the hearing offi-
cer.
(2) AMENDMENT OF COMPLAINTS.—Any such
complaint may be amended by the hearing officer
conducting the hearing, upon the motion of the com-
plainant, in the hearing officer’s discretion at any
time prior to the issuance of an order based thereon.
(3) ANSWERS.—The party against whom the
complaint is filed shall have the right to file an an-
swer to the original or amended complaint and to
appear in person or otherwise and give testimony at
the place and time fixed in the complaint.
(b) ADDITIONAL PARTIES.—In the discretion of the
hearing officer conducting the hearing, any other person
may be allowed to intervene in the proceeding and to
present testimony.
(c) HEARINGS.—
(1) DE NOVO HEARING.—Each hearing officer
shall hear complaints and motions de novo.
(2) TESTIMONY.—The testimony taken by the
hearing officer shall be reduced to writing. There-
after, the hearing officer, in his or her discretion,
903
Title V, Subtitle C
upon notice may provide for the taking of further
testimony or hear argument.
(3) AUTHORITY OF HEARING OFFICERS.—The
hearing officer may compel by subpoena the attend-
ance of witnesses and the production of evidence at
any designated place or hearing. In case of contu-
macy or refusal to obey a subpoena lawfully issued
under this paragraph and upon application of the
hearing officer, an appropriate district court of the
United States may issue an order requiring compli-
ance with the subpoena and any failure to obey the
order may be punished by the court as a contempt
thereof. The hearing officer may also seek enforce-
ment of the subpoena in a State court of competent
jurisdiction.
(4) EXPEDITED
HEARINGS.—Notwithstanding
section 5203 and the preceding provisions of this
section, upon receipt of a complaint containing a
claim described in section 5201(c)(1), the complaint
review office shall promptly provide the complainant
with the opportunity to make an election under sec-
tion 5203(a)(3) and assignment to a hearing on the
complaint before a hearing officer. The complaint re-
view office shall ensure that such a hearing com-
904
Title V, Subtitle C
mences not later than 24 hours after receipt of the
complaint by the complaint hearing office.
(d) DECISION OF HEARING OFFICER.—
(1) IN GENERAL.—The hearing officer shall de-
cide upon the preponderance of the evidence whether
to decide in favor of the complainant with respect to
each alleged act or practice. Each such decision—
(A) shall include the hearing officer’s find-
ings of fact, and
(B) shall constitute the hearing officer’s
final disposition of the proceedings.
(2) DECISIONS
FINDING
IN
FAVOR
OF
COM-
PLAINANT.—If the hearing officer’s decision includes
a determination that any party named in the com-
plaint has engaged in or is engaged in an act or
practice described in section 5202(b), the hearing of-
ficer shall issue and cause to be served on such
party an order which requires such party—
(A) to cease and desist from such act or
practice,
(B) to provide the benefits due under the
terms of the plan and to otherwise comply with
the terms of the plan and the applicable re-
quirements of this Act,
905
Title V, Subtitle C
(C) to pay to the complainant prejudgment
interest on the actual costs incurred in obtain-
ing the items and services at issue in the com-
plaint, and
(D) to pay to the prevailing complainant a
reasonable attorney’s fee, reasonable expert wit-
ness fees, and other reasonable costs relating to
the hearing on the charges on which the com-
plainant prevails.
(3) DECISIONS NOT IN FAVOR OF COMPLAIN-
ANT.—If the hearing officer’s decision includes a de-
termination that the party named in the complaint
has not engaged in or is not engaged in an act or
practice referred to in section 5202(b), the hearing
officer—
(A) shall include in the decision a dismissal
of the charge in the complaint relating to the
act or practice, and
(B) upon a finding that such charge is
frivolous, shall issue and cause to be served on
the complainant an order which requires the
complainant to pay to such party a reasonable
attorney’s fee, reasonable expert witness fees,
and other reasonable costs relating to the pro-
ceedings on such charge.
906
Title V, Subtitle C
(4) SUBMISSION AND SERVICE OF DECISIONS.—
The hearing officer shall submit each decision to the
complaint review office at the conclusion of the pro-
ceedings and the office shall cause a copy of the de-
cision to be served on the parties to the proceedings.
(e) REVIEW.—
(1) IN GENERAL.—The decision of the hearing
officer shall be final and binding upon all parties.
Except as provided in paragraph (2), any party to
the complaint may, within 30 days after service of
the decision by the complaint review office, file an
appeal of the decision with the Federal Health Plan
Review Board under section 5205 in such form and
manner as may be prescribed by such Board.
(2) EXCEPTION.—The decision in the case of
an expedited hearing under subsection (c)(4) shall
not be subject to review.
(f) COURT ENFORCEMENT OF ORDERS.—
(1) IN GENERAL.—If a decision of the hearing
officer in favor of the complainant is not appealed
under section 5205, the complainant may petition
any court of competent jurisdiction for enforcement
of the order. In any such proceeding, the order of
the hearing officer shall not be subject to review.
907
Title V, Subtitle C
(2) AWARDING OF COSTS.—In any action for
court enforcement under this subsection, a prevailing
complainant shall be entitled to a reasonable attor-
ney’s fee, reasonable expert witness fees, and other
reasonable costs relating to such action.
SEC. 5205. REVIEW BY FEDERAL HEALTH PLAN REVIEW
BOARD.
(a) ESTABLISHMENT AND MEMBERSHIP.—The Sec-
retary of Labor shall establish by regulation a Federal
Health Plan Review Board (hereinafter in this subtitle re-
ferred to as the ‘‘Review Board’’). The Review Board shall
be composed of 5 members appointed by the Secretary of
Labor from among persons who by reason of training,
education, or experience are qualified to carry out the
functions of the Review Board under this subtitle. The
Secretary of Labor shall prescribe such rules as are nec-
essary for the orderly transaction of proceedings by the
Review Board. Every official act of the Review Board shall
be entered of record, and its hearings and records shall
be open to the public.
(b) REVIEW PROCESS.—The Review Board shall en-
sure, in accordance with rules prescribed by the Secretary
of Labor, that reasonable notice is provided for each ap-
peal before the Review Board of a hearing officer’s deci-
sion under section 5304, and shall provide for the orderly
908
Title V, Subtitle C
consideration of arguments by any party to the hearing
upon which the hearing officer’s decision is based. In the
discretion of the Review Board, any other person may be
allowed to intervene in the proceeding and to present writ-
ten argument. The National Health Board may intervene
in the proceeding as a matter of right.
(c) SCOPE OF REVIEW.—The Review Board shall re-
view the decision of the hearing officer from which the
appeal is made, except that the review shall be only for
the purposes of determining—
(1) whether the determination is supported by
substantial evidence on the record considered as a
whole,
(2) in the case of any interpretation by the
hearing officer of contractual terms (irrespective of
the extent to which extrinsic evidence was consid-
ered), whether the determination is supported by a
preponderance of the evidence,
(3) whether the determination is in excess of
statutory jurisdiction, authority, or limitations, or in
violation of a statutory right, or
(4) whether the determination is without ob-
servance of procedure required by law.
(d) DECISION OF REVIEW BOARD.—The decision of
the hearing officer as affirmed or modified by the Review
909
Title V, Subtitle C
Board (or any reversal by the Review Board of the hearing
officer’s final disposition of the proceedings) shall become
the final order of the Review Board and binding on all
parties, subject to review under subsection (e). The Review
Board shall cause a copy of its decision to be served on
the parties to the proceedings not later than 5 days after
the date of the decision.
(e) REVIEW OF FINAL ORDERS.—
(1) IN GENERAL.—Not later than 60 days after
the entry of the final order, any person aggrieved by
any such final order under which the amount or
value in controversy exceeds $10,000 may seek a re-
view of the order in the United States court of ap-
peals for the circuit in which the violation is alleged
to have occurred or in which the complainant re-
sides.
(2) FURTHER REVIEW.—Upon the filing of the
record with the court, the jurisdiction of the court
shall be exclusive and its judgment shall be final, ex-
cept that the judgment shall be subject to review by
the Supreme Court of the United States upon writ
of certiorari or certification as provided in section
1254 of title 28 of the United States Code.
(3) ENFORCEMENT DECREE IN ORIGINAL RE-
VIEW.—If, upon appeal of an order under paragraph
910
Title V, Subtitle C
(1), the United States court of appeals does not re-
verse the order, the court shall have the jurisdiction
to make and enter a decree enforcing the order of
the Review Board.
(f) AWARDING OF ATTORNEYS’ FEES AND OTHER
COSTS AND EXPENSES.—In any proceeding before the Re-
view Board under this section or any judicial proceeding
under subsection (e), the Review Board or the court (as
the case may be) shall award to a prevailing complainant
reasonable costs and expenses (including a reasonable at-
torney’s fee) on the causes on which the complainant pre-
vails.
SEC. 5206. RULES GOVERNING BENEFIT CLAIMS DETER-
MINATIONS.
(a) IN GENERAL.—Determinations made under this
part or by any State court in connection with a complaint
based on an act or practice described in section 5202(b)
shall be in accordance with the provisions of this Act, the
comprehensive benefit package as provided by this Act, the
rules and regulations of the National Health Board pre-
scribed under this Act, and decisions of the National
Health Board under this Act.
(b) RIGHTS AND REMEDIES UNDER STATE LAW.—
Subject to subsection (a), the rights and remedies avail-
able in State court against a health plan providing services
911
Title V, Subtitle C
through a regional alliance in connection with a complaint
based on an act or practice described in section 5202(b)
shall be governed by State law.
SEC. 5207. CIVIL MONEY PENALTIES.
(a) DENIAL OR DELAY IN PAYMENT OR PROVISION
OF BENEFITS.—
(1) IN GENERAL.—The Secretary of Labor may
assess a civil penalty against any health plan, or
against any other plan in connection with benefits
provided thereunder under a supplemental benefit
policy described in section 1421(b)(1) or a cost shar-
ing policy described in section 1421(b)(2), for unrea-
sonable denial or delay in the payment or provision
of benefits thereunder, in an amount not to exceed—
(A) $25,000 per violation, or $75,000 per
violation in the case of a finding of bad faith
on the part of the plan, and
(B) in the case of a finding of a pattern
or practice of such violations engaged in by the
plan, $1,000,000 in addition to the total
amount of penalties assessed under subpara-
graph (A) with respect to such violations.
For purposes of subparagraph (A), each violation
with respect to any single individual shall be treated
as a separate violation.
912
Title V, Subtitle C
(2) CIVIL
ACTION
TO
ENFORCE
CIVIL
PEN-
ALTY.—The Secretary of Labor may commence a
civil action in any court of competent jurisdiction to
enforce a civil penalty assessed under paragraph (1).
(b) CIVIL PENALTIES
FOR CERTAIN OTHER AC-
TIONS.—The Secretary of Labor may assess a civil penalty
described in section 5412(b)(1) against any corporate alli-
ance health plan, or against any other plan sponsored by
a corporate alliance in connection with benefits provided
thereunder under a cost sharing policy described in section
1421(b)(2), for any action described in section 5412(a).
The Secretary of Labor may initiate proceedings to impose
such penalty in the same manner as the Secretary of
Health and Human Services may initiate proceedings
under section 5412 with respect to actions described in
section 5412(a).
Subpart B—Early Resolution Programs
SEC. 5211. ESTABLISHMENT OF EARLY RESOLUTION PRO-
GRAMS IN COMPLAINT REVIEW OFFICES.
(a) ESTABLISHMENT
OF PROGRAMS.—Each State
shall establish and maintain an Early Resolution Program
in each complaint review office in such State. The Pro-
gram shall include—
913
Title V, Subtitle C
(1) the establishment and maintenance of fo-
rums for mediation of disputes in accordance with
this subpart, and
(2) the establishment and maintenance of such
forums for other forms of alternative dispute resolu-
tion (including binding arbitration) as may be pre-
scribed in regulations of the Secretary of Labor.
Each State shall ensure that the standards applied in
Early Resolution Programs administered in such State
which apply to any form of alternative dispute resolution
described in paragraph (2) and which relate to time re-
quirements, qualifications of facilitators, arbitrators, or
other mediators, and confidentiality are at least equivalent
to the standards which apply to mediation proceedings
under this subpart.
(b) DUTIES
OF COMPLAINT REVIEW OFFICES.—
Each complaint review office in a State—
(1) shall administer its Early Resolution Pro-
gram in accordance with regulations of the Secretary
of Labor,
(2) shall, pursuant to subsection (a)(1)—
(A) recruit and train individuals to serve
as facilitators for mediation proceedings under
the Early Resolution Program from attorneys
who have the requisite expertise for such serv-
914
Title V, Subtitle C
ice, which shall be specified in regulations of
the Secretary of Labor,
(B) 
provide 
meeting 
sites, 
maintain
records, and provide facilitators with adminis-
trative support staff, and
(C) establish and maintain attorney refer-
ral panels,
(3) shall ensure that, upon the filing of a com-
plaint with the office, the complainant is adequately
apprised of the complainant’s options for review
under this part, and
(4) shall monitor and evaluate the Program on
an ongoing basis.
SEC. 5212. INITIATION OF PARTICIPATION IN MEDIATION
PROCEEDINGS.
(a) ELIGIBILITY
OF CASES
FOR SUBMISSION
TO
EARLY RESOLUTION PROGRAM.—A dispute may be sub-
mitted to the Early Resolution Program only if the fol-
lowing requirements are met with respect to the dispute:
(1) NATURE OF DISPUTE.—The dispute con-
sists of an assertion by an individual enrolled under
a health plan of one or more claims against the
health plan for payment or provision of benefits, or
against any other plan maintained by the regional
alliance or corporate alliance sponsoring the health
915
Title V, Subtitle C
plan with respect to benefits provided under a sup-
plemental 
benefit 
policy 
described 
in 
section
1421(b)(1) or a cost sharing policy described in sec-
tion 1421(b)(2), based on alleged coverage under the
plan, and a denial of the claims, or a denial of ap-
propriate reimbursement based on the claims, by the
plan.
(2) NATURE OF DISPUTED CLAIM.—Each claim
consists of—
(A) a claim for payment or provision of
benefits under the plan; or
(B) a request for information or docu-
ments the disclosure of which is required under
this Act (including claims of entitlement to dis-
closure based on colorable claims to rights to
benefits under the plan).
(b) FILING OF ELECTION.—A complainant with a
dispute which is eligible for submission to the Early Reso-
lution Program may make the election under section
5203(a)(2) to submit the dispute to mediation proceedings
under the Program not later than 15 days after the date
the complaint is filed with the complaint review office
under section 5202(b).
(c) AGREEMENT TO PARTICIPATE.—
916
Title V, Subtitle C
(1) ELECTION BY CLAIMANT.—A complainant
may elect participation in the mediation proceedings
only by entering into a written participation agree-
ment (including an agreement to comply with the
rules of the Program and consent for the complaint
review office to contact the health plan regarding the
agreement), and by releasing plan records to the
Program for the exclusive use of the facilitator as-
signed to the dispute.
(2) PARTICIPATION BY PLANS OR HEALTH BEN-
EFITS CONTRACTORS.—Each party whose participa-
tion in the mediation proceedings has been elected
by a claimant pursuant to paragraph (1) shall par-
ticipate in, and cooperate fully with, the proceedings.
The claims review office shall provide such party
with a copy of the participation agreement described
in paragraph (1), together with a written description
of the Program. Such party shall submit the copy of
the agreement, together with its authorized signa-
ture signifying receipt of notice of the agreement, to
the claims review office, and shall include in the sub-
mission to the claims review office a copy of the
written record of the plan claims procedure com-
pleted pursuant to section 5201 with respect to the
dispute and all relevant plan documents. The rel-
917
Title V, Subtitle C
evant documents shall include all documents under
which the plan is or was administered or operated,
including copies of any insurance contracts under
which benefits are or were provided and any fee or
reimbursement schedules for health care providers.
SEC. 5213. MEDIATION PROCEEDINGS.
(a) ROLE OF FACILITATOR.—In the course of medi-
ation proceedings under the Early Resolution Program,
the facilitator assigned to the dispute shall prepare the
parties for a conference regarding the dispute and serve
as a neutral mediator at such conference, with the goal
of achieving settlement of the dispute.
(b) PREPARATIONS FOR CONFERENCE.—In advance
of convening the conference, after identifying the nec-
essary parties and confirming that the case is eligible for
the Program, the facilitator shall analyze the record of the
claims procedure conducted pursuant to section 5201 and
any position papers submitted by the parties to determine
if further case development is needed to clarify the legal
and factual issues in dispute, and whether there is any
need for additional information and documents.
(c) CONFERENCE.—Upon convening the conference,
the facilitator shall assist the parties in identifying undis-
puted issues and exploring settlement. If settlement is
reached, the facilitator shall assist in the preparation of
918
Title V, Subtitle C
a written settlement agreement. If no settlement is
reached, the facilitator shall present the facilitator’s eval-
uation, including an assessment of the parties’ positions,
the likely outcome of further administrative action or liti-
gation, and suggestions for narrowing the issues in dis-
pute.
(d) TIME LIMIT.—The facilitator shall ensure that
mediation proceedings with respect to any dispute under
the Early Resolution Program shall be completed within
120 days after the election to participate. The parties may
agree to one extension of the proceedings by not more than
30 days if the proceedings are suspended to obtain an
agency ruling or to reconvene the conference in a subse-
quent session.
(e) INAPPLICABILITY OF FORMAL RULES.—Formal
rules of evidence shall not apply to mediation proceedings
under the Early Resolution Program. All statements made
and evidence presented in the proceedings shall be admis-
sible in the proceedings. The facilitator shall be the sole
judge of the proper weight to be afforded to each submis-
sion. The parties to mediation proceedings under the Pro-
gram shall not be required to make statements or present
evidence under oath.
919
Title V, Subtitle C
(f) REPRESENTATION.—Parties may participate pro
se or be represented by attorneys throughout the pro-
ceedings of the Early Resolution Program.
(g) CONFIDENTIALITY.—
(1) IN
GENERAL.—Under regulations of the
Secretary of Labor, rules similar to the rules under
section 574 of title 5, United States Code (relating
to confidentiality in dispute resolution proceedings)
shall apply to the mediation proceedings under the
Early Resolution Program.
(2) CIVIL REMEDIES.—The Secretary of Labor
may assess a civil penalty against any person who
discloses information in violation of the regulations
prescribed pursuant to paragraph (1) in the amount
of three times the amount of the claim involved. The
Secretary of Labor may bring a civil action to en-
force such civil penalty in any court of competent ju-
risdiction.
SEC. 5214. LEGAL EFFECT OF PARTICIPATION IN MEDI-
ATION PROCEEDINGS.
(a) PROCESS NONBINDING.—Findings and conclu-
sions made in the mediation proceedings of the Early Res-
olution Program shall be treated as advisory in nature and
nonbinding. Except as provided in subsection (b), the
920
Title V, Subtitle C
rights of the parties under subpart A shall not be affected
by participation in the Program.
(b) RESOLUTION THROUGH SETTLEMENT AGREE-
MENT.—If a case is settled through participation in medi-
ation proceedings under the Program, the facilitator shall
assist the parties in drawing up an agreement which shall
constitute, upon signature of the parties, a binding con-
tract between the parties, which shall be enforceable under
section 5215.
(c) PRESERVATION OF RIGHTS OF NON-PARTIES.—
The settlement agreement shall not have the effect of
waiving or otherwise affecting any rights to review under
subpart A, or any other right under this Act or the plan,
with respect to any person who is not a party to the settle-
ment agreement.
SEC. 5215. ENFORCEMENT OF SETTLEMENT AGREEMENTS.
(a) ENFORCEMENT.—Any party to a settlement
agreement entered pursuant to mediation proceedings
under this subpart may petition any court of competent
jurisdiction for the enforcement of the agreement, by filing
in the court a written petition praying that the agreement
be enforced. In such a proceeding, the order of the hearing
officer shall not be subject to review.
(b) COURT REVIEW.—It shall be the duty of the court
to advance on the docket and to expedite to the greatest
921
Title V, Subtitle C
possible extent the disposition of any petition filed under
this section, with due deference to the role of settlement
agreements under this part in achieving prompt resolution
of disputes involving health plans.
(c) AWARDING OF ATTORNEY’S FEES AND OTHER
COSTS AND EXPENSES.—In any action by an individual
enrolled under a health plan for court enforcement under
this section, a prevailing plaintiff shall be entitled to rea-
sonable costs and expenses (including a reasonable attor-
ney’s fee and reasonable expert witness fees) on the
charges on which the plaintiff prevails.
PART 2—ADDITIONAL REMEDIES AND
ENFORCEMENT PROVISIONS
SEC. 5231. JUDICIAL REVIEW OF FEDERAL ACTION ON
STATE SYSTEMS.
(a) IN GENERAL.—Any State or alliance that is ag-
grieved by a determination by the National Health Board
under subpart B of part 1 of subtitle F of title I shall
be entitled to judicial review of such determination in ac-
cordance with this section.
(b) JUDICIAL REVIEW.—
(1) JURISDICTION.—The courts of appeals of
the United States (other than the United States
Court of Appeals for the Federal Circuit) shall have
jurisdiction to review a determination described in
922
Title V, Subtitle C
subsection (a), to affirm the determination, or to set
it aside, in whole or in part. A judgment of a court
of appeals in such an action shall be subject to re-
view by the Supreme Court of the United States
upon certiorari or certification as provided in section
1254 of title 28, United States Code.
(2) PETITION FOR REVIEW.—A State or an alli-
ance that desires judicial review of a determination
described in subsection (a) shall, within 30 days
after it has been notified of such determination, file
with the United States court of appeals for the cir-
cuit in which the State or alliance is located a peti-
tion for review of such determination. A copy of the
petition shall be transmitted by the clerk of the
court to the National Health Board, and the Board
shall file in the court the record of the proceedings
on which the determination or action was based, as
provided in section 2112 of title 28, United States
Code.
(3) SCOPE OF REVIEW.—The findings of fact of
the National Health Board, if supported by substan-
tial evidence, shall be conclusive; but the court, for
good cause shown, may remand the case to the
Board to take further evidence, and the Board may
make new or modified findings of fact and may mod-
923
Title V, Subtitle C
ify its previous action, and shall certify to the court
the record of the further proceedings. Such new or
modified findings of fact shall likewise be conclusive
if supported by substantial evidence.
SEC. 5232. ADMINISTRATIVE AND JUDICIAL REVIEW RELAT-
ING TO COST CONTAINMENT.
There shall be no administrative or judicial review of
any determination by the National Health Board respect-
ing any matter under subtitle A of title VI.
SEC. 5233. CIVIL ENFORCEMENT.
Unless otherwise provided in this Act, the district
courts of the United States shall have jurisdiction of civil
actions brought by—
(1) the Secretary of Labor to enforce any final
order of such Secretary or to collect any civil mone-
tary penalty assessed by such Secretary under this
Act; and
(2) the Secretary of Health and Human Serv-
ices to enforce any final order of such Secretary or
to collect any civil monetary penalty assessed by
such Secretary under this Act.
SEC. 5234. PRIORITY OF CERTAIN BANKRUPTCY CLAIMS.
Section 507(a)(8) of title 11, United States Code, is
amended to read as follows:
‘‘(8) Eighth, allowed unsecured claims—
924
Title V, Subtitle C
‘‘(A) based upon any commitment by the
debtor to the Federal Deposit Insurance Cor-
poration, the Resolution Trust Corporation, the
Director of the Office of Thrift Supervision, the
Comptroller of the Currency, or the Board of
Governors of the Federal Reserve System, or
their predecessors or successors, to maintain
the capital of an insured depository institution;
‘‘(B) for payments under subtitle B of title
IV of the Health Security Act owed to a re-
gional alliance (as defined in section 1301 of
such Act);
‘‘(C) for payments owed to a corporate alli-
ance health plan under trusteeship of the Sec-
retary of Labor under section 1395 of the
Health Security Act; or
‘‘(D) for assessments and related amounts
owed to the Secretary of Labor under section
1397 of the Health Security Act.’’.
SEC. 5235. PRIVATE RIGHT TO ENFORCE STATE RESPON-
SIBILITIES.
The failure of a participating State to carry out a
responsibility applicable to participating States under this
Act constitutes a deprivation of rights secured by this Act
for the purposes of section 1977 of the Revised Statutes
925
Title V, Subtitle C
of the United States (42 U.S.C. 1983). In an action
brought under such section, the court shall exercise juris-
diction without regard to whether the aggrieved person
has exhausted any administrative or other remedies that
may be provided by law.
SEC. 5236. PRIVATE RIGHT TO ENFORCE FEDERAL RESPON-
SIBILITIES IN OPERATING A SYSTEM IN A
STATE.
(a) IN GENERAL.—The failure of the Secretary of
Health and Human Services to carry out a responsibility
under section 1522 (relating to operation of an alliance
system in a State) confers an enforceable right of action
on any person who is aggrieved by such failure. Such a
person may commence a civil action against the Secretary
in an appropriate State court or district court of the
United States.
(b) EXHAUSTION OF REMEDIES.—In an action under
subsection (a), the court shall exercise jurisdiction without
regard to whether the aggrieved person has exhausted any
administrative or other remedies that may be provided by
law.
(c) RELIEF.—In an action under subsection (a), if
the court finds that a failure described in such subsection
has occurred, the aggrieved person may recover compen-
926
Title V, Subtitle C
satory and punitive damages and the court may order any
other appropriate relief.
(d) ATTORNEY’S FEES.—In an action under sub-
section (a), the court, in its discretion, may allow the pre-
vailing party, other than the United States, a reasonable
attorney’s fee (including expert fees) as part of the costs,
and the United States shall be liable for costs the same
as a private person.
SEC. 5237. PRIVATE RIGHT TO ENFORCE RESPONSIBILITIES
OF ALLIANCES.
(a) IN GENERAL.—The failure of a regional alliance
or a corporate alliance to carry out a responsibility appli-
cable to the alliance under this Act confers an enforceable
right of action on any person who is aggrieved by such
failure. Such a person may commence a civil action
against the alliance in an appropriate State court or dis-
trict court of the United States.
(b) EXHAUSTION OF REMEDIES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), in an action under subsection (a) the
court may not exercise jurisdiction until the ag-
grieved person has exhausted any administrative
remedies that may be provided by law.
(2) NO EXHAUSTION REQUIRED.—In an action
under subsection (a), the court shall exercise juris-
927
Title V, Subtitle C
diction without regard to whether the aggrieved per-
son has exhausted any administrative or other rem-
edies that may be provided by law if the action re-
lates to—
(A) whether the person is an eligible indi-
vidual within the meaning of section 1001(c);
(B) whether the person is eligible for a
premium discount under subpart A of part 1 of
subtitle B of title VI;
(C) whether the person is eligible for a re-
duction in cost sharing under subpart D of part
3 of subtitle D of title I; or
(D) enrollment or disenrollment in a health
plan.
(c) RELIEF.—In an action under subsection (a), if
the court finds that a failure described in such subsection
has occurred, the aggrieved person may recover compen-
satory and punitive damages and the court may order any
other appropriate relief.
(d) ATTORNEY’S FEES.—In any action under sub-
section (a), the court, in its discretion, may allow the pre-
vailing party, other than the United States, a reasonable
attorney’s fee (including expert fees) as part of the costs,
and the United States shall be liable for costs the same
as a private person.
928
Title V, Subtitle C
SEC. 5238. DISCRIMINATION CLAIMS.
(a) CIVIL ACTION BY AGGRIEVED PERSON.—
(1) IN GENERAL.—Any person who is aggrieved
by the failure of a health plan to comply with section
1402(c) may commence a civil action against the
plan in an appropriate State court or district court
of the United States.
(2) STANDARDS.—The standards used to deter-
mine whether a violation has occurred in a complaint
alleging discrimination on the basis of age or dis-
ability under section 1402(c) shall be the standards
applied under the Age Discrimination Act of 1975
(42 U.S.C. 6101 et seq.) and the Americans with
Disabilities Act of 1990 (42 U.S.C. 12101 et seq.).
(3) RELIEF.—In an action under paragraph
(1), if the court finds that the health plan has failed
to comply with section 1402(c), the aggrieved person
may recover compensatory and punitive damages
and the court may order any other appropriate re-
lief.
(4) ATTORNEY’S FEES.—In any action under
paragraph (1), the court, in its discretion, may allow
the prevailing party, other than the United States,
a reasonable attorney’s fee (including expert fees) as
part of the costs, and the United States shall be lia-
ble for costs the same as a private person.
929
Title V, Subtitle C
(b) ACTION
BY SECRETARY.—Whenever the Sec-
retary of Health and Human Services finds that a health
plan has failed to comply with section 1402(c), or with
an applicable regulation issued under such section, the
Secretary shall notify the plan. If within a reasonable pe-
riod of time the health plan fails or refuses to comply,
the Secretary may—
(1) refer the matter to the Attorney General
with a recommendation that an appropriate civil ac-
tion be instituted;
(2) terminate the participation of the health
plan in an alliance; or
(3) take such other action as may be provided
by law.
(c) ACTION BY ATTORNEY GENERAL.—When a mat-
ter is referred to the Attorney General under subsection
(b)(1), the Attorney General may bring a civil action in
a district court of the United States for such relief as may
be appropriate, including injunctive relief. In a civil action
under this section, the court—
(1) may grant any equitable relief that the
court considers to be appropriate;
(2) may award such other relief as the court
considers to be appropriate, including compensatory
and punitive damages; and
930
Title V, Subtitle C
(3) may, to vindicate the public interest when
requested by the Attorney General, assess a civil
money penalty against the health plan in an
amount—
(A) not exceeding $50,000 for a first viola-
tion; and
(B) not exceeding $100,000 for any subse-
quent violation.
SEC. 5239. NONDISCRIMINATION IN FEDERALLY ASSISTED
PROGRAMS.
Federal payments to regional alliances under part 2
of subtitle C of title VI shall be treated as Federal finan-
cial assistance for purposes of section 504 of the Rehabili-
tation Act of 1973 (29 U.S.C. 794), section 303 of the
Age Discrimination Act of 1975 (42 U.S.C. 6102), and
section 601 of the Civil Rights Act of 1964 (42 U.S.C.
2000d).
SEC. 5240. CIVIL ACTION BY ESSENTIAL COMMUNITY PRO-
VIDER.
(a) IN GENERAL.—An electing essential community
provider (as defined in section 1431(d)) who is aggrieved
by the failure of a health plan to fulfill a duty imposed
on the plan by section 1431 may commence a civil action
against the plan in an appropriate State court or district
court of the United States.
931
Title V, Subtitle C
(b) RELIEF.—In an action under subsection (a), if
the court finds that the health plan has failed to fulfill
a duty imposed on the plan by section 1431, the electing
essential community provider may recover compensatory
damages and the court may order any other appropriate
relief.
(c) ATTORNEY’S FEES.—In any action under sub-
section (a), the court, in its discretion, may allow the pre-
vailing party, other than the United States, a reasonable
attorney’s fee (including expert fees) as part of the costs,
and the United States shall be liable for costs the same
as a private person.
SEC. 5241. FACIAL CONSTITUTIONAL CHALLENGES.
(a) JURISDICTION.—The United States District
Court for the District of Columbia shall have original and
exclusive jurisdiction of any civil action brought to invali-
date this Act or a provision of this Act on the ground of
its being repugnant to the Constitution of the United
States on its face and for every purpose. In any action
described in this subsection, the district court may not
grant any temporary order or preliminary injunction re-
straining the enforcement, operation, or execution of this
Act or any provision of this Act.
932
Title V, Subtitle C
(b) STATUTE OF LIMITATIONS.—An action described
in subsection (a) shall be commenced not later than 1 year
after the date of the enactment of this Act.
(c) CONVENING OF THREE-JUDGE COURT.—An ac-
tion described in subsection (a) shall be heard and deter-
mined by a district court of three judges in accordance
with section 2284 of title 28, United States Code.
(d) CONSOLIDATION.—When actions described in
subsection (a) involving a common question of law or fact
are pending before a district court, the court shall order
all the actions consolidated.
(e) DIRECT APPEAL TO SUPREME COURT.—In any
action described in subsection (a), an appeal may be taken
directly to the Supreme Court of the United States from
any final judgment, decree, or order in which the district
court—
(1) holds this Act or any provision of this Act
invalid; and
(2) makes a determination that its holding will
materially undermine the application of the Act as
whole.
(f) CONSTRUCTION.—This section does not limit—
(1) the right of any person—
(A) to a litigation concerning the Act or
any portion of the Act; or
933
Title V, Subtitle C
(B) to petition the Supreme Court for re-
view of any holding of a district court by writ
of certiorari at any time before the rendition of
judgment in a court of appeals; or
(2) the authority of the Supreme Court to grant
a writ of certiorari for the review described in para-
graph (1)(B).
SEC. 5242. TREATMENT OF PLANS AS PARTIES IN CIVIL AC-
TIONS.
(a) IN GENERAL.—A health plan may sue or be sued
under this Act as an entity. Service of summons, sub-
poena, or other legal process of a court or hearing officer
upon a trustee or an administrator of any such plan in
his capacity as such shall constitute service upon the plan.
In a case where a plan has not designated in applicable
plan documents an individual as agent for the service of
legal process, service upon the Secretary of Health and
Human Services (in the case of a regional alliance health
plan) or the Secretary of Labor (in the case of a corporate
alliance health plan) shall constitute such service. The
Secretary, not later than 15 days after receipt of service
under the preceding sentence, shall notify the adminis-
trator or any trustee of the plan of receipt of such service.
(b) OTHER PARTIES.—Any money judgment under
this Act against a plan referred to in subsection (a) shall
934
Title V, Subtitle D
be enforceable only against the plan as an entity and shall
not be enforceable against any other person unless liability
against such person is established in his individual capac-
ity under this Act.
SEC. 
5243. 
GENERAL 
NONPREEMPTION 
OF 
EXISTING
RIGHTS AND REMEDIES.
Nothing in this title shall be construed to deny, im-
pair, or otherwise adversely affect a right or remedy avail-
able under law to any person on the date of the enactment
of this Act or thereafter, except to the extent the right
or remedy is inconsistent with this title.
Subtitle D—Medical Malpractice
PART 1—LIABILITY REFORM
SEC. 5301. FEDERAL TORT REFORM.
(a) APPLICABILITY.—
(1) IN GENERAL.—Except as provided in sec-
tion 5302, this part shall apply with respect to any
medical malpractice liability action brought in any
State or Federal court, except that this part shall
not apply to a claim or action for damages arising
from a vaccine-related injury or death to the extent
that title XXI of the Public Health Service Act ap-
plies to the claim or action.
(2) PREEMPTION.—The provisions of this part
shall preempt any State law to the extent such law
935
Title V, Subtitle D
is inconsistent with the limitations contained in such
provisions. The provisions of this part shall not pre-
empt any State law that provides for defenses or
places limitations on a person’s liability in addition
to those contained in this subtitle, places greater
limitations on the amount of attorneys’ fees that can
be collected, or otherwise imposes greater restric-
tions than those provided in this part.
(3) EFFECT
ON
SOVEREIGN
IMMUNITY
AND
CHOICE OF LAW OR VENUE.—Nothing in this part
shall be construed to—
(A) waive or affect any defense of sov-
ereign immunity asserted by any State under
any provision of law;
(B) waive or affect any defense of sov-
ereign immunity asserted by the United States;
(C) affect the applicability of any provision
of the Foreign Sovereign Immunities Act of
1976;
(D) preempt State choice-of-law rules with
respect to claims brought by a foreign nation or
a citizen of a foreign nation; or
(E) affect the right of any court to trans-
fer venue or to apply the law of a foreign nation
or to dismiss a claim of a foreign nation or of
936
Title V, Subtitle D
a citizen of a foreign nation on the ground of
inconvenient forum.
(4) FEDERAL
COURT
JURISDICTION
NOT
ES-
TABLISHED
ON
FEDERAL
QUESTION
GROUNDS.—
Nothing in this part shall be construed to establish
any jurisdiction in the district courts of the United
States over medical malpractice liability actions on
the basis of section 1331 or 1337 of title 28, United
States Code.
(b) DEFINITIONS.—In this subtitle, the following
definitions apply:
(1) ALTERNATIVE DISPUTE RESOLUTION SYS-
TEM; ADR.—The term ‘‘alternative dispute resolu-
tion system’’ or ‘‘ADR’’ means a system that pro-
vides for the resolution of medical malpractice claims
in a manner other than through medical malpractice
liability actions.
(2) CLAIMANT.—The term ‘‘claimant’’ means
any person who alleges a medical malpractice claim,
and any person on whose behalf such a claim is al-
leged, including the decedent in the case of an action
brought through or on behalf of an estate.
(3) HEALTH CARE PROFESSIONAL.—The term
‘‘health care professional’’ means any individual who
provides health care services in a State and who is
937
Title V, Subtitle D
required by the laws or regulations of the State to
be licensed or certified by the State to provide such
services in the State.
(4) HEALTH
CARE
PROVIDER.—The term
‘‘health care provider’’ means any organization or
institution that is engaged in the delivery of health
care services in a State and that is required by the
laws or regulations of the State to be licensed or cer-
tified by the State to engage in the delivery of such
services in the State.
(5) INJURY.—The term ‘‘injury’’ means any ill-
ness, disease, or other harm that is the subject of
a medical malpractice liability action or a medical
malpractice claim.
(6) MEDICAL
MALPRACTICE
LIABILITY
AC-
TION.—The term ‘‘medical malpractice liability ac-
tion’’ means a civil action brought in a State or Fed-
eral court against a health care provider or health
care professional (regardless of the theory of liability
on which the claim is based) in which the plaintiff
alleges a medical malpractice claim.
(7) MEDICAL MALPRACTICE CLAIM.—The term
‘‘medical malpractice claim’’ means a claim brought
against a health care provider or health care profes-
sional in which a claimant alleges that injury was
938
Title V, Subtitle D
caused by the provision of (or the failure to provide)
health care services, except that such term does not
include—
(A) any claim based on an allegation of an
intentional tort; or
(B) any claim based on an allegation that
a product is defective that is brought against
any individual or entity that is not a health
care professional or health care provider.
SEC. 5302. PLAN-BASED ALTERNATIVE DISPUTE RESOLU-
TION MECHANISMS.
(a) APPLICATION TO MALPRACTICE CLAIMS UNDER
PLANS.—In the case of any medical malpractice claim
arising from the provision of (or failure to provide) health
care services to an individual enrolled in a regional alliance
health plan or a corporate alliance health plan, no medical
malpractice liability action may be brought with respect
to such claim until the final resolution of the claim under
the alternative dispute resolution system adopted by the
plan under subsection (b).
(b) ADOPTION OF MECHANISM BY PLANS.—Each re-
gional alliance health plan and corporate alliance health
plan shall—
(1) adopt at least one of the alternative dispute
resolution methods specified under subsection (c) for
939
Title V, Subtitle D
the resolution of medical malpractice claims arising
from the provision of (or failure to provide) health
care services to individuals enrolled in the plan; and
(2) disclose to enrollees (and potential enroll-
ees), in a manner specified by the regional alliance
or the corporate alliance, the availability and proce-
dures for consumer grievances under the plan, in-
cluding the alternative dispute resolution method or
methods adopted under this subsection.
(c) SPECIFICATION OF PERMISSIBLE ALTERNATIVE
DISPUTE RESOLUTION METHODS.—
(1) IN GENERAL.—The Board shall, by regula-
tion, develop alternative dispute resolution methods
for the use by regional alliance and corporate alli-
ance health plans in resolving medical malpractice
claims under subsection (a). Such methods shall in-
clude at least the following:
(A) ARBITRATION.—The use of arbitra-
tion.
(B) MEDIATION.—The use of required me-
diation.
(C) EARLY
OFFERS
OF
SETTLEMENT.—
The use of a process under which parties are
required to make early offers of settlement.
940
Title V, Subtitle D
(2) STANDARDS
FOR
ESTABLISHING
METH-
ODS.—In developing alternative dispute resolution
methods under paragraph (1), the Board shall as-
sure that the methods promote the resolution of
medical malpractice claims in a manner that—
(A) is affordable for the parties involved;
(B) provides for timely resolution of
claims;
(C) provides for the consistent and fair
resolution of claims; and
(D) provides for reasonably convenient ac-
cess to dispute resolution for individuals en-
rolled in plans.
(d) FURTHER REDRESS.—A plan enrollee dissatisfied
with the determination reached as a result of an alter-
native dispute resolution method applied under this sec-
tion may, after the final resolution of the enrollee’s claim
under the method, bring a cause of action to seek damages
or other redress with respect to the claim to the extent
otherwise permitted under State law.
SEC. 5303. REQUIREMENT FOR CERTIFICATE OF MERIT.
(a) REQUIRING SUBMISSION WITH COMPLAINT.—No
medical malpractice liability action may be brought by any
individual unless, at the time the individual brings the ac-
941
Title V, Subtitle D
tion (except as provided in subsection (b)(1)), the indi-
vidual submits an affidavit—
(1) declaring that the individual (or the individ-
ual’s attorney) has consulted and reviewed the facts
of the action with a qualified specialist (as defined
in subsection (c));
(2) including a written report by a qualified
specialist that clearly identifies the individual and
that includes the specialist’s determination that,
after a review of the medical record and other rel-
evant material, there is a reasonable and meritorious
cause for the filing of the action against the defend-
ant; and
(3) on the basis of the qualified specialist’s re-
view and consultation, that the individual (or the in-
dividual’s attorney) has concluded that there is a
reasonable and meritorious cause for the filing of the
action.
(b) EXTENSION IN CERTAIN INSTANCES.—
(1) IN GENERAL.—Subject to paragraph (2),
subsection (a) shall not apply with respect to an in-
dividual who brings a medical malpractice liability
action without submitting an affidavit described in
such subsection if—
942
Title V, Subtitle D
(A) the individual is unable to obtain the
affidavit before the expiration of the applicable
statute of limitations; or
(B) at the time the individual brings the
action, the individual has been unable to obtain
medical records or other information necessary
to prepare the affidavit requested pursuant to
any applicable law.
(2) DEADLINE
FOR
SUBMISSION
WHERE
EX-
TENSION APPLIES.—In the case of an individual who
brings an action for which paragraph (1) applies,
the action shall be dismissed unless the individual
submits the affidavit described in subsection (a) not
later than—
(A) in the case of an action for which sub-
paragraph (A) of paragraph (1) applies, 90
days after bringing the action; or
(B) in the case of an action for which sub-
paragraph (B) of paragraph (1) applies, 90
days after obtaining the information described
in such subparagraph.
(c) QUALIFIED
SPECIALIST
DEFINED.—In sub-
section (a), a ‘‘qualified specialist’’ means, with respect
to a medical malpractice liability action, a health care pro-
fessional who—
943
Title V, Subtitle D
(1) is knowledgeable of, and has expertise in,
the same specialty area of practice that is the sub-
ject of the action; and
(2) is reasonably believed by the individual
bringing the action (or the individual’s attorney)—
(A) to be knowledgeable in the relevant
issues involved in the particular action,
(B) to practice (or to have practiced within
the preceding 6 years) or to teach (or to have
taught within the preceding 6 years) in the
same area of health care or medicine that is at
issue in the action, and
(C) to be qualified by experience or dem-
onstrated competence in the subject matter of
the case.
(d) SANCTIONS FOR SUBMITTING FALSE ALLEGA-
TIONS.—Upon the motion of any party or its own initia-
tive, the court in a medical malpractice liability action may
impose a sanction on a party or the party’s attorney (or
both), including a requirement that the party reimburse
the other party to the action for costs and reasonable at-
torney’s fees, if any information contained in an affidavit
described in subsection (a) is submitted without reason-
able cause and is found to be untrue.
944
Title V, Subtitle D
SEC. 5304. LIMITATION ON AMOUNT OF ATTORNEY’S CON-
TINGENCY FEES.
(a) IN GENERAL.—An attorney who represents, on
a contingency fee basis, a plaintiff in a medical mal-
practice liability action may not charge, demand, receive,
or collect for services rendered in connection with such ac-
tion (including the resolution of the claim that is the sub-
ject of the action under any alternative dispute resolution
system) in excess of 331⁄3 percent of the total amount re-
covered by judgment or settlement in such action.
(b) CALCULATION OF PERIODIC PAYMENTS.—In the
event that a judgment or settlement includes periodic or
future payments of damages, the amount recovered for
purposes of computing the limitation on the contingency
fee under subsection (a) shall be based on the cost of the
annuity or trust established to make the payments. In any
case in which an annuity or trust is not established to
make such payments, such amount shall be based on the
present value of the payments.
(c) CONTINGENCY FEE DEFINED.—As used in this
section, the term ‘‘contingency fee’’ means any fee for pro-
fessional legal services which is, in whole or in part, con-
tingent upon the recovery of any amount of damages,
whether through judgment or settlement.
945
Title V, Subtitle D
SEC. 5305. REDUCTION OF AWARDS FOR RECOVERY FROM
COLLATERAL SOURCES.
The total amount of damages recovered by a plaintiff
in a medical malpractice liability action shall be reduced
by the amount of any past or future payment which the
plaintiff has received or for which the plaintiff is eligible
on account of the same injury for which the damages are
awarded, including payment under—
(1) Federal or State disability or sickness pro-
grams;
(2) Federal, State, or private health insurance
programs;
(3) private disability insurance programs;
(4) employer wage continuation programs; and
(5) any other program, if the payment is in-
tended to compensate the plaintiff for the same in-
jury for which damages are awarded.
SEC. 5306. PERIODIC PAYMENT OF AWARDS.
At the request of any party to a medical malpractice
liability action, the defendant shall not be required to pay
damages in a single, lump-sum payment, but shall be per-
mitted to make such payments periodically based on such
schedule as the court considers appropriate, taking into
account the periods for which the injured party will need
medical and other services.
946
Title V, Subtitle D
PART 2—OTHER PROVISIONS RELATING TO
MEDICAL MALPRACTICE LIABILITY
SEC. 
5311. 
ENTERPRISE 
LIABILITY 
DEMONSTRATION
PROJECT.
(a) ESTABLISHMENT.—Not later than January 1,
1996, the Secretary shall establish a demonstration
project under which the Secretary shall provide funds (in
such amount as the Secretary considers appropriate) to
one or more eligible States to demonstrate whether sub-
stituting liability for medical malpractice on the part of
the health plan in which a physician participates for the
personal liability of the physician will result in improve-
ments in the quality of care provided under the plan, re-
ductions in defensive medical practices, and better risk
management.
(b) ELIGIBILITY OF STATE.—A State is eligible to
participate in the demonstration project established under
subsection (a) if the State submits an application to the
Secretary (at such time and in such form as the Secretary
may require) containing such information and assurances
as the Secretary may require, including assurances that
the State—
(1) has entered into an agreement with a health
plan (other than a fee-for-service plan) operating in
the State under which the plan assumes legal liabil-
ity with respect to any medical malpractice claim
947
Title V, Subtitle D
arising from the provision of (or failure to provide)
services under the plan by any physician partici-
pating in the plan;
(2) has provided that, under the law of the
State, a physician participating in a plan that has
entered into an agreement with the State under
paragraph (1) may not be liable in damages or oth-
erwise for such a claim and the plan may not require
such physician to indemnify the plan for any such li-
ability; and
(3) will provide the Secretary with such reports
on the operation of the project as the Secretary may
require.
(c) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated such sums as may be
necessary to carry out demonstration projects under this
section.
SEC. 5312. PILOT PROGRAM APPLYING PRACTICE GUIDE-
LINES TO MEDICAL MALPRACTICE LIABILITY
ACTIONS.
(a) ESTABLISHMENT.—Not later than 1 year after
the Secretary determines that appropriate practice guide-
lines are available, the Secretary shall establish a pilot
program under which the Secretary shall provide funds (in
such amount as the Secretary considers appropriate) to
948
Title V, Subtitle D
one or more eligible States to determine the effect of ap-
plying practice guidelines in the resolution of medical mal-
practice liability actions.
(b) ELIGIBILITY OF STATE.—A State is eligible to
participate in the pilot program established under sub-
section (a) if the State submits an application to the Sec-
retary (at such time and in such form as the Secretary
may require) containing—
(1) assurances that, under the law of the State,
in the resolution of any medical malpractice liability
action, it shall be a complete defense to any allega-
tion that a party against whom the action is filed
was negligent that, in the provision of (or the failure
to provide) the services that are the subject of the
action, the party followed the appropriate practice
guideline established by the National Quality Man-
agement Program under subtitle A; and
(2) such other information and assurances as
the Secretary may require.
(c) REPORTS
TO CONGRESS.—Not later than 3
months after the last day of each year for which the pilot
program established under subsection (a) is in effect, the
Secretary shall submit a report to Congress describing the
operation of the program during the previous year and
containing such recommendations as the Secretary con-
949
Title V, Subtitle E
siders appropriate, including recommendations relating to
revisions to the laws governing medical malpractice liabil-
ity.
Subtitle E—Fraud and Abuse
PART 
1—ESTABLISHMENT 
OF 
ALL-PAYER
HEALTH CARE FRAUD AND ABUSE CONTROL
PROGRAM
SEC. 5401. ALL-PAYER HEALTH CARE FRAUD AND ABUSE
CONTROL PROGRAM.
(a) IN GENERAL.—Not later than January 1, 1996,
the Secretary (acting through the Inspector General of the
Department of Health and Human Services) and the At-
torney General shall establish a program—
(1) to coordinate the functions of the Attorney
General, the Secretary, and other organizations with
respect to the prevention, detection, and control of
health care fraud and abuse,
(2) to conduct investigations, audits, evalua-
tions, and inspections relating to the delivery of and
payment for health care in the United States, and
(3) to facilitate the enforcement of this subtitle
and other statutes applicable to health care fraud
and abuse.
(b) COORDINATION
WITH
LAW
ENFORCEMENT
AGENCIES.—In carrying out the program under sub-
950
Title V, Subtitle E
section (a), the Secretary and Attorney General shall con-
sult with, and arrange for the sharing of data and re-
sources with Federal, State and local law enforcement
agencies, State Medicaid Fraud Control Units, and State
agencies responsible for the licensing and certification of
health care providers.
(c) COORDINATION WITH HEALTH ALLIANCES AND
HEALTH PLANS.—In carrying out the program under
subsection (a), the Secretary and Attorney General shall
consult with, and arrange for the sharing of data with rep-
resentatives of health alliances and health plans.
(d) AUTHORITIES OF ATTORNEY GENERAL AND IN-
SPECTOR GENERAL.—In carrying out duties under sub-
section (a), the Attorney General and the Inspector Gen-
eral are authorized—
(1) to conduct, supervise, and coordinate audits,
civil and criminal investigations, inspections, and
evaluations relating to the program established
under such subsection; and
(2) to have access (including on-line access as
requested and available) to all records available to
health alliances and health plans relating to the ac-
tivities described in paragraph (1) (subject to re-
strictions based on the confidentiality of certain in-
formation under part 2 of subtitle B).
951
Title V, Subtitle E
(e) QUALIFIED IMMUNITY FOR PROVIDING INFORMA-
TION.—The provisions of section 1157(a) of the Social Se-
curity Act (relating to limitation on liability) shall apply
to a person providing information or communications to
the Secretary or Attorney General in conjunction with
their performance of duties under this section, in the same
manner as such section applies to information provided
to organizations with a contract under part B of title XI
of such Act.
(f) AUTHORIZATIONS OF APPROPRIATIONS FOR IN-
VESTIGATORS AND OTHER PERSONNEL.—In addition to
any other amounts authorized to be appropriated to the
Secretary and the Attorney General for health care anti-
fraud and abuse activities for a fiscal year, there are au-
thorized to be appropriated such additional amounts as
may be necessary to enable the Secretary and the Attorney
General to conduct investigations, audits, evaluations, and
inspections of allegations of health care fraud and abuse
and otherwise carry out the program established under
subsection (a) in a fiscal year.
(g) USE OF POWERS UNDER INSPECTOR GENERAL
ACT OF 1978.—In carrying out duties and responsibilities
under the program established under subsection (a), the
Inspector General is authorized to exercise all powers
952
Title V, Subtitle E
granted under the Inspector General Act of 1978 to the
same manner and extent as provided in that Act.
(h) DEFINITION.—In this part and part 2, the term
‘‘Inspector General’’ means the Inspector General of the
Department of Health and Human Services.
SEC. 5402. ESTABLISHMENT OF ALL-PAYER HEALTH CARE
FRAUD AND ABUSE CONTROL ACCOUNT.
(a) ESTABLISHMENT.—
(1) IN GENERAL.—There is hereby created on
the books of the Treasury of the United States an
account to be known as the ‘‘All-Payer Health Care
Fraud and Abuse Control Account’’ (in this section
referred to as the ‘‘Anti-Fraud Account’’). The Anti-
Fraud Account shall consist of such gifts and be-
quests as may be made as provided in paragraph (2)
and such amounts as may be deposited in such Anti-
Fraud Account as provided in section 5412(d)(2)
and title XI of the Social Security Act. It shall also
include the following:
(A) All criminal fines imposed in cases in-
volving a Federal health care offense (as de-
fined in subsection (d)).
(B) Penalties and damages imposed under
the False Claims Act (31 U.S.C. 3729 et seq.),
in cases involving claims related to the provision
953
Title V, Subtitle E
of health care items and services (other than
funds awarded to a relator or for restitution).
(C) Administrative penalties and assess-
ments imposed under titles XI, XVIII, and XIX
of the Social Security Act and section 5412 (ex-
cept as otherwise provided by law).
(D) Amounts resulting from the forfeiture
of property by reason of a Federal health care
offense.
Any such funds received on or after the date of the
enactment of this Act shall be deposited in the Anti-
Fraud Account.
(2) AUTHORIZATION TO ACCEPT GIFTS.—The
Anti-Fraud Account is authorized to accept on be-
half of the United States money gifts and bequests
made unconditionally to the Anti-Fraud Account, for
the benefit of the Anti-Fraud Account or any activ-
ity financed through the Anti-Fraud Account.
(b) USE OF FUNDS.—
(1) IN GENERAL.—Amounts in the Anti-Fraud
Account shall be available without appropriation and
until expended as determined jointly by the Sec-
retary and Attorney General in carrying out the All-
Payer Health Care Fraud and Abuse Control Pro-
gram established under section 5401 (including the
954
Title V, Subtitle E
administration of the Program), and may be used to
cover costs incurred in operating the Program,
including—
(A) costs of prosecuting health care mat-
ters (through criminal, civil and administrative
proceedings);
(B) costs of investigations (including
equipment, salaries, administratively uncontrol-
lable work, travel, and training of law enforce-
ment personnel);
(C) costs of financial and performance au-
dits of health care programs and operations;
and
(D) costs of inspections and other evalua-
tions.
(2) FUNDS USED TO SUPPLEMENT AGENCY AP-
PROPRIATIONS.—It is intended that disbursements
made from the Anti-Fraud Account to any Federal
agency be used to increase and not supplant the re-
cipient agency’s appropriated operating budget.
(c) ANNUAL REPORT.—The Secretary and the Attor-
ney General shall submit an annual report to Congress
on the amount of revenue which is generated and dis-
bursed by the Anti-Fraud Account in each fiscal year.
955
Title V, Subtitle E
(d) FEDERAL HEALTH CARE OFFENSE DEFINED.—
The term ‘‘Federal health care offense’’ means a violation
of, or a criminal conspiracy to violate—
(1) sections 226, 668, 1033, or 1347 of title
18, United States Code;
(2) section 1128B of the Social Security Act;
(3) sections 287, 371, 664, 666, 1001, 1027,
1341, 1343, or 1954 of title 18, United States Code,
if the violation or conspiracy relates to health care
fraud;
(4) sections 501 or 511 of the Employee Retire-
ment Income Security Act of 1974, if the violation
or conspiracy relates to health care fraud; or
(5) sections 301, 303(a)(2), or 303 (b) or (e)
of the Federal Food Drug and Cosmetic Act, if the
violation or conspiracy relates to health care fraud.
SEC. 5403. USE OF FUNDS BY INSPECTOR GENERAL.
(a) REIMBURSEMENTS FOR INVESTIGATIONS.—
(1) IN GENERAL.—The Inspector General is au-
thorized to receive and retain for current use reim-
bursement for the costs of conducting investigations,
when such restitution is ordered by a court, volun-
tarily agreed to by the payor, or otherwise.
(2) CREDITING.—Funds received by the Inspec-
tor General as reimbursement for costs of con-
956
Title V, Subtitle E
ducting investigations shall be deposited to the cred-
it of the appropriation from which initially paid, or
to appropriations for similar purposes currently
available at the time of deposit, and shall remain
available for obligation for 1 year from the date of
their deposit.
(3) EXCEPTION FOR FORFEITURES.—This sub-
section does not apply to investigative costs paid to
the Inspector General from the Department of Jus-
tice Asset Forfeiture Fund, which monies shall be
deposited and expended in accordance with sub-
section (b).
(b) HHS OFFICE OF INSPECTOR GENERAL ASSET
FORFEITURE PROCEEDS FUND.—
(1) IN GENERAL.—There is established in the
Treasury of the United States the ‘‘HHS Office of
Inspector General Asset Forfeiture Proceeds Fund,’’
to be administered by the Inspector General, which
shall be available to the Inspector General without
fiscal year limitation for expenses relating to the in-
vestigation of matters within the jurisdiction of the
Inspector General.
(2) DEPOSITS.—There shall be deposited in the
Fund all proceeds from forfeitures that have been
transferred to the Inspector General from the De-
957
Title V, Subtitle E
partment of Justice Asset Forfeiture Fund under
section 524 of title 28, United States Code.
PART 2—APPLICATION OF FRAUD AND ABUSE
AUTHORITIES UNDER THE SOCIAL SECURITY
ACT TO ALL PAYERS
SEC. 5411. EXCLUSION FROM PARTICIPATION.
(a) MANDATORY EXCLUSION.—The Secretary shall
exclude an individual or entity from participation in any
applicable health plan if the individual or entity is ex-
cluded from participation in a public program under, or
is otherwise described in, section 1128(a) of the Social Se-
curity Act (relating to individuals and entities convicted
of health care-related crimes or patient abuse).
(b) PERMISSIVE EXCLUSION.—The Secretary may
exclude an individual or entity from participation in any
applicable health plan if the individual or entity is ex-
cluded from participation in a public program under, or
is otherwise described in, section 1128(b) of the Social Se-
curity Act (other than paragraphs (6)(A), (6)(C), (6)(D),
(10), or (13) of such section).
(c) NOTICE, EFFECTIVE DATE, AND PERIOD OF EX-
CLUSION.—(1) An exclusion under this section or section
5412(b)(3) shall be effective at such time and upon such
reasonable notice to the public and to the individual or
958
Title V, Subtitle E
entity excluded as may be specified in regulations con-
sistent with paragraph (2).
(2) Such an exclusion shall be effective with respect
to services furnished to an individual on or after the effec-
tive date of the exclusion.
(3)(A) The Secretary shall specify, in the notice of
exclusion under paragraph (1) and the notice under sec-
tion 5412(e), the minimum period (or, in the case of an
exclusion of an individual excluded from participation in
a public program under, or is otherwise described in, sec-
tion 1128(b)(12) of the Social Security Act, the period)
of the exclusion.
(B) In the case of a mandatory exclusion under sub-
section (a), the minimum period of exclusion shall be not
less than 5 years.
(C) In the case of an exclusion of an individual ex-
cluded from participation in a public program under, or
is otherwise described in, paragraph (1), (2), or (3) of sec-
tion 1128(b) of the Social Security Act, the period of ex-
clusion shall be a minimum of 3 years, unless the Sec-
retary determines that a longer period is necessary be-
cause of aggravating circumstances.
(D) In the case of an exclusion of an individual or
entity excluded from participation in a public program
under, or is otherwise described in, paragraph (4), (5)(A),
959
Title V, Subtitle E
or (5)(B) of section 1128(b) of the Social Security Act,
the period of the exclusion shall not be less than the period
during which the individual’s or entity’s license to provide
health care is revoked, suspended or surrendered, or the
individual or the entity is excluded or suspended from a
Federal or State health care program.
(E) In the case of an exclusion of an individual or
entity described in paragraph (6)(B) of section 1128(b)
of the Social Security Act, the period of the exclusion shall
be not less than 1 year.
(F) In the case of an exclusion of an individual de-
scribed in paragraph (12) of section 1128(b) of the Social
Security Act, the period of the exclusion shall be equal
to the sum of—
(i) the length of the period in which the indi-
vidual failed to grant the immediate access described
in that paragraph, and
(ii) an additional period, not to exceed 90 days,
set by the Secretary.
(d) NOTICE TO ENTITIES ADMINISTERING PUBLIC
PROGRAMS FOR THE DELIVERY OF OR PAYMENT FOR
HEALTH CARE ITEMS OR SERVICES.—(1) The Secretary
shall exercise the authority under this section in a manner
that results in an individual’s or entity’s exclusion from
960
Title V, Subtitle E
all applicable health plans for the delivery of or payment
for health care items or services.
(2) The Secretary shall promptly notify each sponsor
of an applicable health plan and each entity that admin-
isters a State health care program described in section
1128(h) of the Social Security Act of the fact and cir-
cumstances of each exclusion (together with the period
thereof) effected against an individual or entity under this
section or under section 5412(b)(3).
(e) NOTICE TO STATE LICENSING AGENCIES.—The
provisions of section 1128(e) of the Social Security Act
shall apply to this section in the same manner as such
provisions apply to sections 1128 and 1128A of such Act.
(f) NOTICE, HEARING, AND JUDICIAL REVIEW.—(1)
Subject to paragraph (2), any individual or entity that is
excluded (or directed to be excluded) from participation
under this section is entitled to reasonable notice and op-
portunity for a hearing thereon by the Secretary to the
same extent as is provided in section 205(b) of the Social
Security Act, and to judicial review of the Secretary’s final
decision after such hearing as is provided in section 205(g)
of such Act, except that such action shall be brought in
the Court of Appeals of the United States for the judicial
circuit in which the individual or entity resides, or has a
principal place of business, or, if the individual or entity
961
Title V, Subtitle E
does not reside or have a principal place of business within
any such judicial circuit, in the United States Court of
Appeals for the District of Columbia Circuit.
(2) Unless the Secretary determines that the health
or safety of individuals receiving services warrants the ex-
clusion taking effect earlier, any individual or entity that
is the subject of an adverse determination based on para-
graphs (6)(B), (7), (8), (9), (11), (12), (14), or (15) of
section 1128(b) of the Social Security Act, shall be enti-
tled to a hearing by an administrative law judge (as pro-
vided under section 205(b) of the Social Security Act) on
the determination before any exclusion based upon the de-
termination takes effect. If a hearing is requested, the ex-
clusion shall be effective upon the issuance of an order
by the administrative law judge upholding the determina-
tion of the Secretary to exclude.
(3) The provisions of section 205(h) of the Social Se-
curity Act shall apply with respect to this section or sec-
tion 5412(b)(3) to the same extent as such provisions
apply with respect to title II of such Act.
(g) APPLICATION
FOR TERMINATION
OF EXCLU-
SION.—(1) An individual or entity excluded (or directed
to be excluded) from participation under this section or
section 5412(b)(3) may apply to the Secretary, in a man-
ner specified by the Secretary in regulations and at the
962
Title V, Subtitle E
end of the minimum period of exclusion (or, in the case
of an individual or entity described in section 1128(b)(12),
the period of exclusion) provided under this section or sec-
tion 5412(b)(3) and at such other times as the Secretary
may provide, for termination of the exclusion.
(2) The Secretary may terminate the exclusion if the
Secretary determines, on the basis of the conduct of the
applicant which occurred after the date of the notice of
exclusion or which was unknown to the Secretary at the
time of the exclusion, that—
(A) there is no basis under this section or sec-
tion 5412(b)(3) for a continuation of the exclusion,
and
(B) there are reasonable assurances that the
types of actions which formed the basis for the origi-
nal exclusion have not recurred and will not recur.
(3) The Secretary shall promptly notify each sponsor
of an applicable health plan and each entity that admin-
isters a State health care program described in section
1128(h) of the Social Security Act of each termination of
exclusion made under this subsection.
(h) CONVICTED DEFINED.—In this section, the term
‘‘convicted’’ has the meaning given such term in section
1128(i) of the Social Security Act.
963
Title V, Subtitle E
(i) REQUEST FOR EXCLUSION.—The sponsor of any
applicable health plan (including a State in the case of
a regional alliance health plan and the Secretary of Labor
in the case of a corporate alliance health plan) may re-
quest that the Secretary of Health and Human Services
exclude an individual or entity with respect to actions
under such a plan in accordance with this section.
(j) EFFECT OF EXCLUSION.—Notwithstanding any
other provision of this Act, no payment may be made
under a health plan for the delivery of or payment for any
item or service (other than an emergency item or service,
not including items or services furnished in an emergency
room of a hospital) furnished—
(1) by an individual or entity during the period
when such individual or entity is excluded pursuant
to this section or section 5412(b)(3) from participa-
tion in a health plan; or
(2) at the medical direction or on the prescrip-
tion of a physician during the period when the physi-
cian is excluded pursuant to this section or section
5412(b)(3) from participation in a health plan and
the person furnishing the item or service knew or
had reason to know of the exclusion (after a reason-
able time period after reasonable notice has been
furnished to the person).
964
Title V, Subtitle E
(k) DELEGATION.—The Secretary may delegate au-
thority granted under this section to the Inspector Gen-
eral.
SEC. 5412. CIVIL MONETARY PENALTIES.
(a) ACTIONS SUBJECT TO PENALTY.—Any person
who is determined by the Secretary to have committed any
of the following actions with respect to an applicable
health plan shall be subject to a penalty in accordance
with subsection (b):
(1) ACTIONS
SUBJECT
TO
PENALTY
UNDER
MEDICARE, MEDICAID, AND OTHER SOCIAL SECURITY
HEALTH PROGRAMS.—Any action that would subject
the person to a penalty under paragraphs (1)
through (12) of section 1128A(a) of the Social Secu-
rity Act if the action was taken with respect to title
V, XVIII, XIX, or XX of such Act.
(2) TERMINATION OF ENROLLMENT.—The ter-
mination of an individual’s enrollment (including the
refusal to re-enroll an individual) in violation of sub-
title E of title I or State law.
(3) DISCRIMINATING
ON
BASIS
OF
MEDICAL
CONDITION.—The engagement in any practice that
would reasonably be expected to have the effect of
denying or discouraging the initial or continued en-
rollment in a health plan by individuals whose med-
965
Title V, Subtitle E
ical condition or history indicates a need for sub-
stantial future medical services.
(4) INDUCING
ENROLLMENT
ON
FALSE
PRE-
TENSES.—The engagement in any practice to induce
enrollment in an applicable health plan through rep-
resentations to individuals which the person knows
or should know are false or fraudulent.
(5) PROVIDING INCENTIVES TO ENROLL.—The
offer or payment of remuneration to any individual
that such person knows or should know is likely to
influence such individual to enroll in a particular
plan, or to cause such individual to induce others to
enroll in a particular plan.
(b) PENALTIES DESCRIBED.—
(1) GENERAL RULE.—Any person who the Sec-
retary determines has committed an action described
in paragraphs (2) through (5) of subsection (a) shall
be subject to a civil monetary penalty in an amount
not to exceed $50,000 for each such determination.
(2) ACTIONS SUBJECT TO PENALTIES UNDER
SOCIAL SECURITY ACT.—In the case of a person who
the Secretary determines has committed an action
described in paragraph (1) of subsection (a), the
person shall be subject to the civil monetary penalty
(together with any additional assessment) to which
966
Title V, Subtitle E
the person would be subject under section 1128A of
the Social Security Act if the action on which the
determination is based had been committed with re-
spect to title V, XVIII, XIX, or XX of such Act.
(3) 
DETERMINATIONS
TO
EXCLUDE
PER-
MITTED.—In addition to any civil monetary penalty
or assessment imposed under this subsection, the
Secretary may make a determination in the same
proceeding to exclude the person from participation
in all applicable health plans for the delivery of or
payment for health care items or services (in accord-
ance with section 5411(c)).
(c) PROCEDURES FOR IMPOSITION OF PENALTIES.—
(1) APPLICABILITY OF PROCEDURES UNDER SO-
CIAL SECURITY ACT.—Except as otherwise provided
in paragraph (2), the provisions of section 1128A of
the Social Security Act (other than subsections (a)
and (b) and the second sentence of subsection (f))
shall apply to the imposition of a civil monetary pen-
alty, assessment, or exclusion under this section in
the same manner as such provisions apply with re-
spect to the imposition of a penalty, assessment, or
exclusion under section 1128A of such Act.
967
Title V, Subtitle E
(2) AUTHORITY OF SECRETARY OF LABOR AND
STATES TO IMPOSE PENALTIES, ASSESSMENTS, AND
EXCLUSIONS.—
(A) IN GENERAL.—The Secretary of Labor
or a State may initiate an action to impose a
civil monetary penalty, assessment, or exclusion
under this section with respect to actions relat-
ing to a corporate alliance health plan or a re-
gional alliance health plan, respectively, if au-
thorized by the Attorney General and the Sec-
retary pursuant to regulations promulgated by
the Secretary in consultation with the Attorney
General.
(B) REQUIREMENTS
DESCRIBED.—Under
the regulations promulgated under subpara-
graph (A), the Attorney General and the Sec-
retary shall review an action proposed by the
Secretary of Labor or a State, and not later
than 120 days after receiving notice of the pro-
posed action from the Secretary of Labor or the
State, shall—
(i) approve the proposed action to be
taken by the Secretary of Labor or the
State;
(ii) disapprove the proposed action; or
968
Title V, Subtitle E
(iii) assume responsibility for initi-
ating a criminal, civil, or administrative ac-
tion based on the information provided in
the notice.
(C) ACTION DEEMED APPROVED IF DEAD-
LINE MISSED.—If the Attorney General and the
Secretary fail to respond to a proposed action
by the Secretary of Labor or a State within the
period described in subparagraph (B), the At-
torney General and the Secretary shall be
deemed to have approved the proposed action to
be taken by the Secretary of Labor or the
State.
(d) TREATMENT OF AMOUNTS RECOVERED.—Any
amounts recovered under this section shall be paid to the
Secretary and disposed of as follows:
(1) Such portions of the amounts recovered as
is determined to have been improperly paid from an
applicable health plan for the delivery of or payment
for health care items or services shall be repaid to
such plan.
(2) The remainder of the amounts recovered
shall be deposited in the All-Payer Health Care
Fraud and Abuse Control Account established under
section 5402.
969
Title V, Subtitle E
(e) NOTIFICATION OF LICENSING AUTHORITIES.—
Whenever the Secretary’s determination to impose a pen-
alty, assessment, or exclusion under this section becomes
final, the Secretary shall notify the appropriate State or
local licensing agency or organization (including the agen-
cy specified in section 1864(a) and 1902(a)(33) of the So-
cial Security Act) that such a penalty, assessment, or ex-
clusion has become final and the reasons therefor.
SEC. 5413. LIMITATIONS ON PHYSICIAN SELF-REFERRAL.
The provisions of section 1877 of the Social Security
Act shall apply—
(1) to items and services (and payments and
claims for payment for such items and services) fur-
nished under any applicable health plan in the same
manner as such provisions apply to designated
health services (and payments and claims for pay-
ment for such services) under title XVIII of the So-
cial Security Act; and
(2) to a State (with respect to an item or serv-
ice furnished or payment made under a regional alli-
ance health plan) and to the Secretary of Labor
(with respect to an item or service furnished or pay-
ment made under a corporate alliance health plan)
in the same manner as such provisions apply to the
Secretary.
970
Title V, Subtitle E
SEC. 5414. CONSTRUCTION OF SOCIAL SECURITY ACT REF-
ERENCES.
(a) INCORPORATION OF OTHER AMENDMENTS.—Any
reference in this part to a provision of the Social Security
Act shall be considered a reference to the provision as
amended under title IV.
(b) EFFECT OF SUBSEQUENT AMENDMENTS.—Ex-
cept as provided in subsection (a), any reference to a pro-
vision of the Social Security Act in this part shall be
deemed to be a reference to such provision as in effect
on the date of the enactment of this Act, and (except as
Congress may otherwise provide) any amendments made
to such provisions after such date shall not be taken into
account in determining the applicability of such provisions
to individuals and entities under this Act.
PART 3—AMENDMENTS TO ANTI-FRAUD AND
ABUSE PROVISIONS UNDER THE SOCIAL SE-
CURITY ACT
SEC. 5421. REFERENCE TO AMENDMENTS.
For provisions amending the anti-fraud and abuse
provisions existing under the Social Security Act, see part
5 of subtitle A of title IV.
971
Title V, Subtitle E
PART 4—AMENDMENTS TO CRIMINAL LAW
SEC. 5431. HEALTH CARE FRAUD.
(a) IN GENERAL.—Chapter 63 of title 18, United
States Code, is amended by adding at the end the fol-
lowing:
‘‘§ 1347. Health care fraud
‘‘(a) Whoever knowingly executes, or attempts to exe-
cute, a scheme or artifice—
‘‘(1) to defraud any health alliance, health plan,
or other person, in connection with the delivery of or
payment for health care benefits, items, or services;
‘‘(2) to obtain, by means of false or fraudulent
pretenses, representations, or promises, any of the
money or property owned by, or under the custody
or control of, any health alliance, health plan, or
person in connection with the delivery of or payment
for health care benefits, items, or services;
shall be fined under this title or imprisoned not more than
10 years, or both. If the violation results in serious bodily
injury (as defined in section 1365 of this title) such person
shall be imprisoned for life or any term of years.
‘‘(b) As used in this section, the terms ‘health alli-
ance’ and ‘health plan’ have the meanings given those
terms in title I of the Health Security Act.’’.
972
Title V, Subtitle E
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of chapter 63 of title 18, United States
Code, is amended by adding at the end the following:
‘‘1347. Health care fraud.’’.
SEC. 5432. FORFEITURES FOR VIOLATIONS OF FRAUD STAT-
UTES.
(a) IN GENERAL.—Section 982(a) of title 18, United
States Code, is amended by inserting after paragraph (5)
the following:
‘‘(6) If the court determines that a Federal health
care offense (as defined in section 5402(d) of the Health
Security Act) is of a type that poses a serious threat to
the health of any person or has a significant detrimental
impact on the health care system, the court, in imposing
sentence on a person convicted of that offense, shall order
that person to forfeit property, real or personal, that—
‘‘(A)(i) is used in the commission of the offense;
or
‘‘(ii) constitutes or is derived from proceeds
traceable to the commission of the offense; and
‘‘(B) is of a value proportionate to the serious-
ness of the offense.’’.
(b) PROCEEDS OF HEALTH CARE FRAUD FORFEIT-
URES.—Section 524(c)(4)(A) of title 28, United States
Code, is amended by inserting ‘‘all proceeds of forfeitures
relating to Federal health care offenses (as defined in sec-
973
Title V, Subtitle E
tion 5402(d) of the Health Security Act), and’’ after ‘‘ex-
cept’’.
SEC. 5433. FALSE STATEMENTS.
(a) IN GENERAL.—Chapter 47 of title 18, United
States Code, is amended by adding at the end the fol-
lowing:
‘‘§ 1033. False statements relating to health care mat-
ters
‘‘(a) Whoever, in any matter involving a health alli-
ance or health plan, knowingly and willfully falsifies, con-
ceals, or covers up by any trick, scheme, or device a mate-
rial fact, or makes any false, fictitious, or fraudulent state-
ments or representations, or makes or uses any false writ-
ing or document knowing the same to contain any false,
fictitious, or fraudulent statement or entry, shall be fined
under this title or imprisoned not more than 5 years, or
both.
‘‘(b) As used in this section the terms ‘health alliance’
and ‘health plan’ have the meanings given those terms in
title I of the Health Security Act.’’.
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of chapter 47 of title 18, United States
Code, is amended by adding at the end the following:
‘‘1033. False statements relating to health care matters.’’.
974
Title V, Subtitle E
SEC. 5434. BRIBERY AND GRAFT.
(a) IN GENERAL.—Chapter 11 of title 18, United
States Code, is amended by adding at the end the fol-
lowing:
‘‘§ 226. Bribery and graft in connection with health
care
‘‘(a) Whoever—
‘‘(1) directly or indirectly, corruptly gives, of-
fers, or promises anything of value to a health care
official, or offers or promises a health care official
to give anything of value to any other person, with
intent—
‘‘(A) to influence any of the health care of-
ficial’s actions, decisions, or duties relating to a
health alliance or health plan;
‘‘(B) to influence such an official to com-
mit or aid in the committing, or collude in or
allow, any fraud, or make opportunity for the
commission of any fraud, on a health alliance or
health plan; or
‘‘(C) to induce such an official to engage
in any conduct in violation of the lawful duty of
such official; or
‘‘(2) being a health care official, directly or in-
directly, corruptly demands, seeks, receives, accepts,
or agrees to accept anything of value personally or
975
Title V, Subtitle E
for any other person or entity, the giving of which
violates paragraph (1) of this subsection;
shall be fined under this title or imprisoned not more than
15 years, or both.
‘‘(b) Whoever, otherwise than as provided by law for
the proper discharge of any duty, directly or indirectly
gives, offers, or promises anything of value to a health
care official, for or because of any of the health care offi-
cial’s actions, decisions, or duties relating to a health care
alliance or health plan, shall be fined under this title or
imprisoned not more than two years, or both.
‘‘(c) As used in this section—
‘‘(1) the term ‘health care official’ means—
‘‘(A) an administrator, officer, trustee, fi-
duciary, custodian, counsel, agent, or employee
of any health care alliance or health plan;
‘‘(B) an officer, counsel, agent, or em-
ployee, of an organization that provides services
under contract to any health alliance or health
plan;
‘‘(C) an official or employee of a State
agency having regulatory authority over any
health alliance or health plan;
‘‘(D) an officer, counsel, agent, or em-
ployee of a health care sponsor; and
976
Title V, Subtitle E
‘‘(2) the term ‘health care sponsor’ means any
individual or entity serving as the sponsor of a
health alliance or health plan for purposes of the
Health Security Act, and includes the joint board of
trustees or other similar body used by two or more
employers to administer a health alliance or health
plan for purposes of such Act.’’.
(b) CLERICAL AMENDMENT.—The table of chapters
at the beginning of chapter 11 of title 18, United States
Code, is amended by adding at the end the following:
‘‘226. Bribery and graft in connection with health care.’’.
SEC. 5435. INJUNCTIVE RELIEF RELATING TO HEALTH
CARE OFFENSES.
Section 1345(a)(1) of title 18, United States Code,
is amended—
(1) by striking ‘‘or’’ at the end of subparagraph
(A);
(2) by inserting ‘‘or’’ at the end of subpara-
graph (B); and
(3) by adding at the end the following:
‘‘(C) committing or about to commit a Federal
health care offense (as defined in section 5402(d) of
the Health Security Act);’’.
SEC. 5436. GRAND JURY DISCLOSURE.
Section 3322 of title 18, United States Code, is
amended—
977
Title V, Subtitle E
(1) by redesignating subsections (c) and (d) as
subsections (d) and (e), respectively; and
(2) by inserting after subsection (b) the fol-
lowing:
‘‘(c) A person who is privy to grand jury information
concerning a health law violation—
‘‘(1) received in the course of duty as an attor-
ney for the Government; or
‘‘(2) disclosed under rule 6(e)(3)(A)(ii) of the
Federal Rules of Criminal Procedure;
may disclose that information to an attorney for the Gov-
ernment to use in any civil proceeding related to a Federal
health care offense (as defined in section 5402(d) of the
Health Security Act).’’.
SEC. 5437. THEFT OR EMBEZZLEMENT.
(a) IN GENERAL.—Chapter 31 of title 18, United
States Code, is amended by adding at the end the fol-
lowing:
‘‘§ 668. Theft or embezzlement in connection with
health care
‘‘(a) Whoever embezzles, steals, willfully and unlaw-
fully converts to the use of any person other than the
rightful owner, or intentionally misapplies any of the mon-
eys, securities, premiums, credits, property, or other assets
of a health alliance, health plan, or of any fund connected
978
Title V, Subtitle E
with such an alliance or plan, shall be fined under this
title or imprisoned not more than 10 years, or both.
‘‘(b) As used in this section, the terms ‘health alli-
ance’ and ‘health plan’ have the meanings given those
terms under title I of the Health Security Act.’’.
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of chapter 31 of title 18, United States
Code, is amended by adding at the end the following:
‘‘668. Theft or embezzlement in connection with health care.’’.
SEC. 5438. MISUSE OF HEALTH SECURITY CARD OR UNIQUE
IDENTIFIER.
(a) IN GENERAL.—Chapter 33 of title 18, United
States Code, is amended by adding at the end the fol-
lowing:
‘‘§ 716. Misuse of health security card or unique iden-
tifier
‘‘Whoever—
‘‘(1) requires the display of, requires the use of,
or uses a health security card that is issued under
section 1001(b) of the Health Security Act for any
purpose other than a purpose described in section
5105(a) of such Act; or
‘‘(2) requires the disclosure of, requires the use
of, or uses a unique identifier number provided pur-
suant to section 5104 of such Act for any purpose
979
Title V, Subtitle E
that is not authorized by the National Health Board
pursuant to such section;
shall be fined under this title or imprisoned not more than
2 years, or both.’’.
(b) AMENDMENT
TO
CHAPTER
HEADING.—The
heading for chapter 33 of title 18, United States Code,
is amended to read as follows:
‘‘CHAPTER 33—EMBLEMS, INSIGNIA,
IDENTIFIERS, AND NAMES’’.
(c) CLERICAL AMENDMENT
TO TABLE
OF SEC-
TIONS.—The table of sections at the beginning of chapter
33, United States Code, is amended by adding at the end
the following new item:
‘‘716. Misuse of health security card or unique identifier.’’.
(d) CLERICAL AMENDMENT TO TABLE OF CHAP-
TERS.—The item relating to chapter 33 in the table of
chapters at the beginning of part 1 of title 18, United
States Code, is amended to read as follows:
‘‘33. Emblems, insignia, identifiers, and names .....................
701’’.
PART 5—AMENDMENTS TO CIVIL FALSE CLAIMS
ACT
SEC. 5441. AMENDMENTS TO CIVIL FALSE CLAIMS ACT.
Section 3729 of title 31, United States Code, is
amended—
(1) in subsection (a)(7), by inserting ‘‘or to a
health plan’’ after ‘‘property to the Government’’;
980
Title V, Subtitle F
(2) in the matter following subsection (a)(7), by
inserting ‘‘or health plan’’ before ‘‘sustains because
of the act of that person,’’;
(3) at the end of the first sentence of sub-
section (a), by inserting ‘‘or health plan’’ before
‘‘sustains because of the act of the person.’’;
(4) in subsection (c)—
(A) by inserting ‘‘the term’’ after ‘‘sec-
tion,’’; and
(B) by adding at the end the following:
‘‘The term also includes any request or demand,
whether under contract of otherwise, for money
or property which is made or presented to a
health plan.’’; and
(5) by adding at the end the following:
‘‘(f) HEALTH PLAN DEFINED.—For purposes of this
section, the term ‘health plan’ has the meaning given such
term under section 1400 of the Health Security Act.’’.
Subtitle F—McCarran-Ferguson
Reform
SEC. 5501. REPEAL OF EXEMPTION FOR HEALTH INSUR-
ANCE.
(a) IN GENERAL.—Section 3 of the Act of March 9,
1945 (15 U.S.C. 1013), known as the McCarran-Ferguson
Act, is amended by adding at the end the following:
981
Title VI
‘‘(c) Notwithstanding that the business of insurance
is regulated by State law, nothing in this Act shall limit
the applicability of the following Acts to the business of
insurance to the extent that such business relates to the
provision of health benefits:
‘‘(1) The Sherman Act (15 U.S.C. 1 et seq.).
‘‘(2) The Clayton Act (15 U.S.C. 12 et seq.).
‘‘(3) Federal Trade Commission Act (15 U.S.C.
41 et seq.).
‘‘(4) The Act of June 19, 1936 (49 Stat. 1526;
15 U.S.C. 21a et seq.), known as the Robinson-Pat-
man Antidiscrimination Act.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on the first day of the sixth
month beginning after the date of the enactment of this
Act.
TITLE VI—PREMIUM CAPS; PRE-
MIUM-BASED 
FINANCING;
AND PLAN PAYMENTS
TABLE OF CONTENTS OF TITLE
Page
Sec. 6000. General definitions ................................................................
982
Subtitle A—Premium Caps
PART 1—REGIONAL ALLIANCE HEALTH EXPENDITURES
SUBPART A—COMPUTATION OF TARGETS AND ACCEPTED BIDS
Sec. 6001. Computation of regional alliance inflation factors ................
984
982
Title VI
Sec. 6002. Board determination of national per capita baseline pre-
mium target ..................................................................
990
Sec. 6003. Determination of alliance per capita premium targets .........
995
Sec. 6004. Alliance initial bidding and negotiation process ....................
1000
Sec. 6005. State financial incentives .......................................................
1004
Sec. 6006. Recommendations to eliminate regional variations in alli-
ance targets due to variation in practice patterns; con-
gressional consideration ................................................
1005
Sec. 6007. Reference to limitation on administrative and judicial re-
view of certain determinations ......................................
1012
SUBPART B—PLAN AND PROVIDER PAYMENT REDUCTIONS TO MAINTAIN
EXPENDITURES WITHIN TARGETS
Sec. 6011. Plan payment reduction ........................................................
1012
Sec. 6012. Provider payment reduction ..................................................
1017
PART 2—CORPORATE ALLIANCES HEALTH EXPENDITURES
Sec. 6021. Calculation of premium equivalents ......................................
1020
Sec. 6022. Termination of corporate alliance for excess increase in ex-
penditures ......................................................................
1021
PART 3—TREATMENT OF SINGLE-PAYER STATES
Sec. 6031. Special rules for single-payer States .....................................
1024
PART 4—TRANSITION PROVISIONS
Sec. 6041. Monitoring prices and expenditures ......................................
1024
Subtitle B—Premium-Related Financings
PART 1—FAMILY PREMIUM PAYMENTS
SUBPART A—FAMILY SHARE
Sec. 6101. Family share of premium ......................................................
1025
Sec. 6102. Amount of premium ..............................................................
1028
Sec. 6103. Alliance credit ........................................................................
1030
Sec. 6104. Premium discount based on income ......................................
1030
Sec. 6105. Excess premium credit ..........................................................
1042
Sec. 6106. Corporate alliance opt-in credit .............................................
1044
Sec. 6107. Family collection shortfall add-on .........................................
1045
SUBPART B—REPAYMENT OF ALLIANCE CREDIT BY CERTAIN FAMILIES
Sec. 6111. Repayment of alliance credit by certain families ..................
1047
Sec. 6112. No liability for families employed full-time; reduction in li-
ability for part-time employment ..................................
1048
Sec. 6113. Limitation of liability based on income .................................
1051
Sec. 6114. Special treatment of certain retirees and qualified spouses
and children ..................................................................
1055
Sec. 6115. Special treatment of certain medicare beneficiaries ..............
1058
PART 2—EMPLOYER PREMIUM PAYMENTS
SUBPART A—REGIONAL ALLIANCE EMPLOYERS
Sec. 6121. Employer premium payment required ...................................
1058
983
Title VI
Sec. 6122. Computation of base employment monthly premium ............
1063
Sec. 6123. Premium discount for certain employers ..............................
1070
Sec. 6124. Payment adjustment for large employers electing coverage
in a regional alliance .....................................................
1075
Sec. 6125. Employer collection shortfall add-on .....................................
1081
Sec. 6126. Application to self-employed individuals ...............................
1081
SUBPART B—CORPORATE ALLIANCE EMPLOYERS
Sec. 6131. Employer premium payment required ...................................
1084
Subtitle C—Payments to Regional Alliance Health Plans
Sec. 6201. Computation of blended plan per capita payment amount ...
1086
Sec. 6202. Computation of plan bid, AFDC, and SSI proportions ........
1088
SEC. 6000. GENERAL DEFINITIONS.
(a) DEFINITIONS RELATING TO BIDS.—In this title:
(1) ACCEPTED BID.—The term ‘‘accepted bid’’
means the bid which is agreed to between a regional
alliance health plan and a regional alliance for cov-
erage of the comprehensive benefit package in the
alliance area under subpart A of part 1.
(2) FINAL ACCEPTED BID.—The term ‘‘final ac-
cepted bid’’ means the accepted bid, taking into ac-
count any voluntary reduction in such bid made
under section 6004(e).
(3) WEIGHTED AVERAGE ACCEPTED BID.—The
term ‘‘weighted average accepted bid’’ means, for a
regional alliance for a year, the average of the ac-
cepted bids for all regional alliance health plans of-
fered by such alliance, weighted to reflect the rel-
ative enrollment of regional alliance eligible individ-
uals among such plans.
984
Title VI
(4) REDUCED WEIGHTED AVERAGE ACCEPTED
BID.—The term ‘‘reduced weighted average accepted
bid’’, for a health plan offered by a regional alliance
for a year, is the lesser of—
(A) the weighted average accepted bid for
the regional alliance for the year (determined
using the final accepted bids as the accepted
bids), or
(B) the regional alliance per capita target
for the year.
(b) WEIGHTED AVERAGE PREMIUM.—In this title,
the term ‘‘weighted average premium’’ means, for a class
of family enrollment and with respect to a regional alliance
for a year, the product of—
(1) reduced weighted average accepted bid (as
defined in subsection (a)(4));
(2) the uniform per capita conversion factor
(established under section 1341(b)) for the alliance;
and
(3) the premium class factor established by the
Board for that class under section 1531.
(c) INCORPORATION OF OTHER DEFINITIONS.—Ex-
cept as otherwise provided in this title, the definitions of
terms in subtitle J of title I of this Act shall apply to
this title.
985
Title VI, Subtitle A
Subtitle A—Premium Caps
PART 1—REGIONAL ALLIANCE HEALTH
EXPENDITURES
Subpart A—Computation of Targets and Accepted
Bids
SEC. 6001. COMPUTATION OF REGIONAL ALLIANCE INFLA-
TION FACTORS.
(a) COMPUTATION.—
(1) IN GENERAL.—This section provides for the
computation of factors that limit the growth of pre-
miums for the comprehensive benefit package in re-
gional alliance health plans. The Board shall com-
pute and publish, not later than March 1 of each
year (beginning with 1995) the regional alliance in-
flation factor (as defined in paragraph (2)) for each
regional alliance for the following year.
(2) REGIONAL ALLIANCE INFLATION FACTOR.—
In this part, the term ‘‘regional alliance inflation
factor’’ means, for a year for a regional alliance—
(A) the general health care inflation factor
for the year (as defined in paragraph (3));
(B) adjusted under subsection (c) (to take
into account material changes in the demo-
graphic and socio-economic characteristics of
the population of alliance eligible individuals);
986
Title VI, Subtitle A
(C) decreased by the percentage adjust-
ment (if any) provided with respect to the re-
gional alliance under subsection (d) (relating to
adjustment for previous excess expenditures);
and
(D) in the case of the year 2001, increased
by a factor that the Board determines to reflect
the ratio of (i) the actuarial value of the in-
crease in benefits provided in that year under
the comprehensive benefit package to (ii) the
actuarial value of the benefits that would have
been in such package in the year without regard
to the increase.
For purposes of subparagraph (D)(i), the actuarial
value of the increase with respect to mental illness
and substance abuse services (included within the
comprehensive benefit package) shall not exceed an
actuarial value based on the amount of the total ex-
penditures that would have been made in 2001 by
States and subdivisions of States for mental illness
and substance abuse services (included in such pack-
age as of 2001) if this Act had not been enacted.
(3) GENERAL HEALTH CARE INFLATION FAC-
TOR.—
987
Title VI, Subtitle A
(A) 1996 THROUGH
2000.—In this part,
the term ‘‘general health care inflation factor’’,
for a year, means the percentage increase in the
CPI (as specified under subsection (b)) for the
year plus the following:
(i) For 1996, 1.5 percentage points.
(ii) For 1997, 1.0 percentage points.
(iii) For 1998, 0.5 percentage points.
(iv) For 1999 and for 2000, 0 per-
centage points.
(B) YEARS AFTER 2000.—
(i) 
RECOMMENDATION
TO
CON-
GRESS.—In 1999, the Board shall submit
to Congress recommendations on what the
general health care inflation factor should
be for years beginning with 2001.
(ii) FAILURE OF CONGRESS TO ACT.—
If the Congress fails to enact a law speci-
fying the general health care inflation fac-
tor for a year after 2000, the Board, in
January of the year before the year in-
volved, shall compute such factor for the
year involved. Such factor shall be the
product of the factors described in sub-
988
Title VI, Subtitle A
paragraph (C) for that fiscal year, minus
1.
(C) FACTORS.—The factors described in
this subparagraph for a year are the following:
(i) CPI.—1 plus the percentage
change in the CPI for the year, determined
based upon the percentage change in the
average of the CPI for the 12-month pe-
riod ending with August 31 of the previous
fiscal year over such average for the pre-
ceding 12-month period.
(ii) REAL GDP PER CAPITA.—1 plus
the average annual percentage change in
the real, per capita gross domestic product
of the United States during the 3-year pe-
riod ending in the preceding calendar year,
determined by the Board based on data
supplied by the Department of Commerce.
(b) PROJECTION OF INCREASE IN CPI.—
(1) IN GENERAL.—For purposes of this section,
the Board shall specify, as of the time of publica-
tion, the annual percentage increase in the CPI (as
defined in section 1902(9)) for the following year.
(2) DATA TO BE USED.—Such increase shall be
the projection of the CPI contained in the budget of
989
Title VI, Subtitle A
the United States transmitted by the President to
the Congress in the year.
(c) SPECIAL ADJUSTMENT FOR MATERIAL CHANGES
IN DEMOGRAPHIC CHARACTERISTICS OF POPULATION.—
(1) ADJUSTMENT
FOR
CORPORATE
ALLIANCE
OPT-IN.—
(A) IN
GENERAL.—The Board shall de-
velop a method for adjusting the regional alli-
ance inflation factor for each regional alliance
in order to reflect material changes in the de-
mographic characteristics of regional alliance el-
igible individuals residing in the alliance area
(in comparison with such characteristics for the
previous year) as a result of one or more cor-
porate alliances terminating an election under
section 1313.
(B) BASIS
FOR
ADJUSTMENTS.—Adjust-
ments under this paragraph (whether an in-
crease or decrease) shall be based on the char-
acteristics and factors used for making adjust-
ments in payments under section 6124.
(2) ADJUSTMENT FOR REGIONAL TREND COM-
PARED TO NATIONAL TREND.—
(A) IN
GENERAL.—The Board shall de-
velop a method for adjusting the regional alli-
990
Title VI, Subtitle A
ance inflator factor for each regional alliance in
order to reflect material changes in the demo-
graphic characteristics (including at least age,
gender, and socio-economic status) and health
status of regional alliance eligible individuals re-
siding in the alliance area in comparison with
the average change in such characteristics for
such individuals residing in the United States.
The adjustment under this paragraph shall be
for changes not taken into account in the ad-
justment under paragraph (1).
(B) NEUTRAL ADJUSTMENT.—Such meth-
od (and any annual adjustment under this
paragraph) shall be designed to result in the
adjustment effected under this paragraph for a
year not changing the weighted average of the
regional alliance inflation factors.
(3) APPLICATION.—The Board shall provide, on
an annual basis, for an adjustment of regional alli-
ance inflation factors under this subsection using
such methods.
(d) CONSULTATION PROCESS.—The Board shall have
a process for consulting with representatives of States and
regional alliances before establishing the regional alliance
inflation factors for each year under this section.
991
Title VI, Subtitle A
SEC. 6002. BOARD DETERMINATION OF NATIONAL PER CAP-
ITA BASELINE PREMIUM TARGET.
(a) IN GENERAL.—Not later than January 1, 1995,
the Board shall determine a national per capita baseline
premium target. Such target is equal to—
(1) the national average per capita current cov-
erage health expenditures (determined under sub-
section (b)),
(2) updated under subsection (c).
(b) DETERMINATION OF NATIONAL AVERAGE PER
CAPITA CURRENT COVERAGE HEALTH EXPENDITURES.—
(1) IN GENERAL.—The Board shall determine
the national average per capita current coverage
health expenditures equal to—
(A) total covered current health care ex-
penditures (described in paragraph (2)), divided
by
(B) the estimated population in the United
States of regional alliance eligible individuals
(as determined by the Board as of 1993 under
paragraph (4)) for whom such expenditures
were determined.
The population under subparagraph (B) shall not in-
clude SSI recipients or AFDC recipients.
(2) CURRENT HEALTH CARE EXPENDITURES.—
For purposes of paragraph (1)(A), the Board shall
992
Title VI, Subtitle A
determine current health care expenditures as fol-
lows:
(A) DETERMINATION OF TOTAL EXPENDI-
TURES.—The Board shall first determine the
amount of total payments made for items and
services included in the comprehensive benefit
package (determined without regard to cost
sharing) in the United States in 1993.
(B) REMOVAL OF CERTAIN EXPENDITURES
NOT TO BE COVERED THROUGH REGIONAL AL-
LIANCES.—The amount so determined shall be
decreased by the proportion of such amount
that is attributable to any of the following:
(i) Medicare beneficiaries (other than
such beneficiaries who are regional alliance
eligible individuals).
(ii) AFDC recipients or SSI recipi-
ents.
(iii) Expenditures which are paid for
through workers’ compensation or auto-
mobile or other liability insurance.
(iv) Expenditures by parties (includ-
ing the Federal Government) that the
Board determines will not be payable by
regional alliance health plans for coverage
993
Title VI, Subtitle A
of the comprehensive benefit package
under this Act.
(C) ADDITION
OF
PROJECTED
EXPENDI-
TURES
FOR
UNINSURED
AND
UNDERINSURED
INDIVIDUALS.—The amount so determined and
adjusted shall be increased to take into account
increased utilization of, and expenditures for,
items and services covered under the com-
prehensive benefit package likely to occur, as a
result of coverage under a regional alliance
health plan of individuals who, as of 1993 were
uninsured or underinsured with respect to the
comprehensive benefit package. In making such
determination, such expenditures shall be based
on the estimated average cost for such services
in 1993 (and not on private payment rates es-
tablished for such services). In making such de-
termination, the estimated amount of uncom-
pensated care in 1993 shall be removed and will
not include adjustments to offset payments
below costs by public programs.
(D) ADDITION OF HEALTH PLAN AND AL-
LIANCE
COSTS
OF
ADMINISTRATION.—The
amount so determined and adjusted shall be in-
creased by an estimated percentage (determined
994
Title VI, Subtitle A
by the Board, but no more than 15 percent)
that reflects the proportion of premiums that
are required for health plan and regional alli-
ance administration (including regional alliance
costs for administration of income-related pre-
mium discounts and cost sharing reductions)
and for State premium taxes (which taxes shall
be limited to such amounts in 1993 as are at-
tributable to the health benefits to be included
in the comprehensive benefit package).
(E) DECREASE FOR COST SHARING.—The
amount so determined and adjusted shall be de-
creased by a percentage that reflects (i) the es-
timated average percentage of total amounts
payable for items and services covered under
the comprehensive benefit package that will be
payments in the form of cost sharing under a
higher cost sharing plan, and (ii) the percent-
age reduction in utilization estimated to result
from the application of high cost sharing.
(3) SPECIAL RULES.—
(A) BENEFITS USED.—The determinations
under this section shall be based on the com-
prehensive benefit package as in effect in 1996.
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Title VI, Subtitle A
(B) ASSUMING NO CHANGE IN EXPENDI-
TURE
PATTERN.—The determination under
paragraph (2) shall be made without regard to
any change in the pattern of expenditures that
may result from the enrollment of AFDC recipi-
ents and SSI recipients in regional alliance
health plans.
(4) ELIGIBLE
INDIVIDUALS.—In this sub-
section, the determination of who are regional alli-
ance eligible individuals under this subsection shall
be made as though this Act was fully in effect in
each State as of 1993.
(c) UPDATING.—
(1) IN GENERAL.—Subject to paragraph (3),
the Board shall update the amount determined
under subsection (b)(1) for each of 1994 and 1995
by the appropriate update factor described in para-
graph (2) for the year.
(2) APPROPRIATE UPDATE FACTOR.—In para-
graph (1), the appropriate update factor for a year
is 1 plus the annual percentage increase for the year
(as determined by the Secretary, based on actual or
projected information) in private sector health care
spending for items and services included in the com-
prehensive benefit package (as of 1996).
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Title VI, Subtitle A
(3) LIMIT.—The total, cumulative update under
this subsection shall not exceed 15 percent.
SEC. 6003. DETERMINATION OF ALLIANCE PER CAPITA
PREMIUM TARGETS.
(a) INITIAL DETERMINATION.—Not later than Janu-
ary 1, 1995, the Board shall determine, for each regional
alliance for 1996, a regional alliance per capita premium
target. Such target shall equal—
(1) the national per capita baseline premium
target (determined by the Board under section
6002),
(2) updated by the regional alliance inflation
factor (as determined under section 6001(a)(2)) for
1996, and
(3) adjusted by the adjustment factor for the
regional alliance (determined under subsection (c)).
(b) SUBSEQUENT DETERMINATIONS.—
(1) DETERMINATION.—Not later than March 1
of each year (beginning with 1996) the Board shall
determine, for each regional alliance for the suc-
ceeding year a regional alliance per capita premium
target.
(2) GENERAL RULE.—Subject to subsection (e),
such target shall equal—
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Title VI, Subtitle A
(A) the regional alliance per capita target
determined under this section (without regard
to subsection (e)) for the regional alliance for
the previous year,
(B) updated by the regional alliance infla-
tion factor (as determined in section 6001(a))
for the year.
(3) ADJUSTMENT FOR PREVIOUS EXCESS RATE
OF INCREASE IN EXPENDITURES.—Such target for a
year is subject to a decrease under section 6001(d).
(c) ADJUSTMENT FACTORS
FOR REGIONAL ALLI-
ANCES FOR INITIAL DETERMINATION.—
(1) IN GENERAL.—The Board shall establish an
adjustment factor for each regional alliance in a
manner consistent with this subsection.
(2) CONSIDERATIONS.—In establishing the fac-
tor for each regional alliance, the Board shall con-
sider, using information of the type described in
paragraph (3), the difference between the national
average of the factors taken into account in deter-
mining the national per capita baseline premium tar-
get and such factors for the regional alliance, includ-
ing variations in health care expenditures and in
rates of uninsurance and underinsurance in the dif-
ferent alliance areas and including variations in the
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Title VI, Subtitle A
proportion of expenditures for services provided by
academic health centers in the different alliance
areas.
(3) TYPE OF INFORMATION.—The type of infor-
mation described in this paragraph is—
(A) information on variations in premiums
across States and across alliance areas within a
State (based on surveys and other data);
(B) information on variations in per capita
health spending by State, as measured by the
Secretary;
(C) information on variations across States
in per capita spending under the medicare pro-
gram and in such spending among alliance
areas within a State under such program; and
(D) area rating factors commonly used by
actuaries.
(4) APPLICATION
OF
FACTORS
IN
NEUTRAL
MANNER.—The application of the adjustment factors
under this subsection for 1996 shall be done in a
manner so that the weighted average of the regional
alliance per capita premium targets for 1996 is
equal to the national per capita baseline premium
target determined under section 6002. Such weight-
ed average shall be based on the Board’s estimate of
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Title VI, Subtitle A
the expected distribution of alliance eligible individ-
uals (taken into account under section 6002) among
the regional alliances.
(5) CONSULTATION PROCESS.—The Board shall
have a process for consulting with representatives of
States and regional alliances before establishing the
adjustment for regional alliances under this sub-
section.
(d) TREATMENT OF CERTAIN STATES.—
(1) NON-ALLIANCE STATES.—In the case of a
State that is not a participating State or otherwise
has not established regional alliances, the entire
State shall be treated under the provisions of this
part as composing a single regional alliance.
(2) CHANGES IN ALLIANCE BOUNDARIES.—In
the case of a State that changes the boundaries of
its regional alliances (including the establishment of
such alliances after 1996), the Board shall provide
a method for computing a regional alliance per cap-
ita premium target for each regional alliance af-
fected by such change in a manner that—
(A) reflects the factors taken into account
in establishing the adjustment factors for re-
gional alliances under subsection (c), and
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Title VI, Subtitle A
(B) results in the weighted average of the
newly computed regional targets for the re-
gional alliances affected by the change equal to
the weighted average of the regional targets for
the regional alliances as previously established.
(e) ADJUSTMENT FOR PREVIOUS EXCESS RATE OF
INCREASE IN EXPENDITURES.—
(1) IN GENERAL.—If the actual weighted aver-
age accepted bid for a regional alliance for a year
(as determined by the Board based on actual enroll-
ment in the first month of the year) exceeds the re-
gional alliance per capita premium target (deter-
mined under this section) for the year, then the re-
gional alliance per capita premium target shall be
reduced, by 1⁄2 of the excess percentage (described in
paragraph (2)) for the year, for each of the 2 suc-
ceeding years.
(2) EXCESS PERCENTAGE.—The excess percent-
age described in this paragraph for a year is the per-
centage by which—
(A) the actual weighted average accepted
bid (referred to in paragraph (1)) for a regional
alliance for the year, exceeds
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Title VI, Subtitle A
(B) the regional alliance per capita pre-
mium target (determined under this section) for
the year.
SEC. 6004. ALLIANCE INITIAL BIDDING AND NEGOTIATION
PROCESS.
(a) BIDDING PROCESS.—
(1) OBTAINING BIDS.—
(A) IN GENERAL.—Not later than July 1
before the first year, and not later than August
1 of each succeeding year, the regional alliance
shall have obtained premium bids from each
plan seeking to participate as a regional alli-
ance health plan with respect to the alliance in
the following year.
(B) DISCLOSURE.—In obtaining such bids,
a regional alliance may determine to disclose
(or not to disclose) the regional alliance per
capita premium target for the regional alliance
(determined under section 6003) for the year
involved.
(C) CONDITION.—Each bid submitted by a
plan under this subsection shall be conditioned
upon the plan’s agreement to accept any pay-
ment reduction that may be imposed under sec-
tion 6011.
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Title VI, Subtitle A
(2) NEGOTIATION
PROCESS.—Following the
bidding process under paragraph (1), a State may
provide for negotiations with health plans relating to
the premiums to be charged by such plans. Such ne-
gotiations may result in the resubmission of bids,
but in no case shall a health plan resubmit a bid
that exceeds its prior bid.
(3) LEGALLY
BINDING
BIDS.—All bids sub-
mitted under this subsection must be legally binding
with respect to the plans involved.
(4) ACCEPTANCE.—The final bid submitted by
a plan under this subsection shall be considered to
be the final accepted bid, except as provided in sub-
section (e).
(5) ASSISTANCE.—The Board shall provide re-
gional alliances with such information and technical
assistance as may assist such alliances in the bid-
ding process under this subsection.
(b) SUBMISSION OF INFORMATION TO BOARD.—By
not later than September 1 of each year for which bids
are obtained under subsection (a), each regional alliance
shall submit to the Board a report that discloses—
(1) information regarding the final bids ob-
tained under subsection (a) by the different plans;
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Title VI, Subtitle A
(2)(A) for the first year, any information the
Board may request concerning an estimation of the
enrollment likely in each such plan of alliance eligi-
ble individuals who will be offered enrollment in a
health plan by alliance in the first year, or
(B) for a succeeding year, the actual distribu-
tion of enrollment of alliance eligible individuals in
regional alliance health plans in the year in which
the report is transmitted; and
(3) limitations on capacity of regional alliance
health plans.
(c) COMPUTATION OF WEIGHTED AVERAGE ACCEPT-
ED BID.—
(1) IN GENERAL.—For each regional alliance
the Board shall determine a weighted average ac-
cepted bid for each year for which bids are obtained
under subsection (a). Such determination shall be
based on information on accepted bids for the year,
submitted under subsection (b)(1), and shall take
into account, subject to paragraph (2), the informa-
tion on enrollment distribution submitted under sub-
section (b)(2).
(2) ENROLLMENT
DISTRIBUTION
RULES.—In
making the determination under paragraph (1) for a
regional alliance, the Board shall establish rules re-
1004
Title VI, Subtitle A
specting the treatment of enrollment in plans that
are discontinued or are newly offered.
(d) NOTICE TO CERTAIN ALLIANCES.—
(1) IN GENERAL.—By not later than October 1
of each year for which bids are obtained, the Board
shall notify a regional alliance—
(A) if the weighted average accepted bid
(determined under subsection (c)) for the alli-
ance is greater than the regional alliance per
capita premium target for the alliance (deter-
mined under section 6003) for the year, and
(B) of the reduced weighted average ac-
cepted bid for the alliance.
(2) NOTICE OF PREMIUM REDUCTIONS.—If no-
tice is provided to a regional alliance under para-
graph (1), the Board shall notify the regional alli-
ance and each noncomplying plan of any plan pay-
ment reduction computed under section 6011 for
such a plan and the opportunity to voluntarily re-
duce the accepted bid under subsection (e) in order
to avoid such a reduction.
(e) VOLUNTARY REDUCTION
OF ACCEPTED BID
(FINAL ACCEPTED BID).—After the Board has deter-
mined under subsection (c) the weighted average accepted
bid for a regional alliance and the Board has determined
1005
Title VI, Subtitle A
plan payment reductions, before such date as the Board
may specify (in order to provide for an open enrollment
period), a noncomplying plan has the opportunity to volun-
tarily reduce its accepted bid by the amount of the plan
payment reduction that would otherwise apply to the plan.
Such reduction shall not affect the amount of the plan
payment reduction for any other plan for that year.
SEC. 6005. STATE FINANCIAL INCENTIVES.
(a) ELECTION.—Any participating State may elect to
assume responsibility for containment of health care ex-
penditures in the State consistent with this part. Such re-
sponsibility shall include submitting annual reports to the
Board on any activities undertaken by the State to contain
such expenditures. A participating State may regulate the
rates charged by providers furnishing health care items
and services to all private payers. Such regulation of rates
may not cause a corporate alliance health plan to be
charged, directly or indirectly, rates different from those
charged other health plans for the same items and services
or otherwise discriminate against corporate alliance health
plans.
(b) FINANCIAL INCENTIVE.—In the case of a State
that has made an election under subsection (a), if the
Board determines for a particular year (beginning with
the first year) that the statewide weighted average of the
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Title VI, Subtitle A
reduced weighted average accepted bids (based on actual
average enrollment for the year), for regional alliances in
the State, is less than the statewide weighted average of
the regional alliance per capita premium targets (based
upon such enrollment) for such alliances for the year, then
the amount of the State maintenance-of-effort payment
under section 9001(b), for the following year, shall be re-
duced by 1⁄2 of the product of—
(1)(A) the amount by which the amount of such
statewide average target exceeds the amount of such
statewide average accepted bid, divided by (B) the
amount of such target; and
(2) the total of the amount of the Federal pay-
ments made in that particular year to regional alli-
ances in the State under subtitle B of title IX.
SEC. 6006. RECOMMENDATIONS TO ELIMINATE REGIONAL
VARIATIONS IN ALLIANCE TARGETS DUE TO
VARIATION IN PRACTICE PATTERNS; CON-
GRESSIONAL CONSIDERATION.
(a) ESTABLISHMENT OF ADVISORY COMMISSION ON
REGIONAL VARIATIONS IN HEALTH EXPENDITURES.—
The chair of the Board shall establish, by not later than
60 days after the date of appointment of the first chair,
an advisory commission on regional variations in health
expenditures.
1007
Title VI, Subtitle A
(b) COMPOSITION.—The advisory commission shall
be composed of consumers, employers, providers, rep-
resentatives of health plans, States, regional alliances, in-
dividuals with expertise in the financing of health care,
individuals with expertise in the economics of health care,
and representatives of diverse geographic areas.
(c) ELIMINATION OF REGIONAL VARIATION IN PRE-
MIUMS DUE TO PRACTICE PATTERN.—
(1) COMMISSION
STUDY.—The advisory com-
mission shall examine methods of eliminating vari-
ation in regional alliance per capita premium targets
due to variation in practice patterns, not due to
other factors (such as health care input prices and
demographic factors), by 2002.
(2) COMMISSION REPORT.—The advisory com-
mission shall submit to the Board a report that
specifies one or more methods for eliminating the
variation described in paragraph (1).
(3) BOARD
RECOMMENDATIONS.—The Board
shall submit to Congress, by not later July 1, 1995,
detailed recommendations respecting the specific
method to be used to eliminate the variation de-
scribed in paragraph (1) by 2002. Such rec-
ommendations may take into account regional vari-
ations in demographic or health status and in health
1008
Title VI, Subtitle A
care input prices, based on the availability of accu-
rate proxies for measuring price variation. In taking
into account health care input prices, the Board
shall explain what percentage of variation found
should be adjusted and what percentage of the pre-
mium should be adjusted.
(d) CONGRESSIONAL CONSIDERATION.—
(1) IN
GENERAL.—Detailed recommendations
submitted under subsection (c)(3) shall apply under
this subtitle unless a joint resolution (described in
paragraph (2)) disapproving such recommendations
is enacted, in accordance with the provisions of
paragraph (3), before the end of the 60-day period
beginning on the date on which such recommenda-
tions were submitted. For purposes of applying the
preceding sentence and paragraphs (2) and (3), the
days on which either House of Congress is not in
session because of an adjournment of more than
three days to a day certain shall be excluded in the
computation of a period.
(2) JOINT RESOLUTION OF DISAPPROVAL.—A
joint resolution described in this paragraph means
only a joint resolution which is introduced within the
10-day period beginning on the date on which the
1009
Title VI, Subtitle A
Board submits recommendations under subsection
(e)(3) and—
(A) which does not have a preamble;
(B) the matter after the resolving clause of
which is as follows: ‘‘That Congress disapproves
the recommendations of the National Health
Board concerning elimination of regional vari-
ation in regional alliance premiums, as sub-
mitted by the Board on lllllll.’’, the
blank space being filled in with the appropriate
date; and
(C) the title of which is as follows: ‘‘Joint
resolution disapproving recommendations of the
National Health Board concerning elimination
of regional variation in regional alliance pre-
miums, as submitted by the Board on
lllllll.’’, the blank space being filled
in with the appropriate date.
(3) PROCEDURES FOR CONSIDERATION OF RES-
OLUTION OF DISAPPROVAL.—Subject to paragraph
(4), the provisions of section 2908 (other than sub-
section (a)) of the Defense Base Closure and Re-
alignment Act of 1990 shall apply to the consider-
ation of a joint resolution described in paragraph (2)
in the same manner as such provisions apply to a
1010
Title VI, Subtitle A
joint resolution described in section 2908(a) of such
Act.
(4) SPECIAL RULES.—For purposes of applying
paragraph (3) with respect to such provisions—
(A) any reference to the Committee on
Armed Services of the House of Representatives
shall be deemed a reference to an appropriate
Committee of the House of Representatives
(specified by the Speaker of the House of Rep-
resentatives at the time of submission of rec-
ommendations under subsection (c)(3)) and any
reference to the Committee on Armed Services
of the Senate shall be deemed a reference to an
appropriate Committee of the Senate (specified
by the Majority Leader of the Senate at the
time of submission of recommendations under
subsection (c)(3)); and
(B) any reference to the date on which the
President transmits a report shall be deemed a
reference to the date on which the Board sub-
mits a recommendation under subsection (c)(3).
(e) ELIMINATION OF REGIONAL VARIATION STATE
PAYMENT AMOUNTS.—
(1) COMMISSION
STUDY.—The advisory com-
mission shall examine methods of reducing variation
1011
Title VI, Subtitle A
among States in the level of payments required
under subtitle A of title IX by 2002. The commis-
sion shall examine methods of reducing variation due
to practice patterns, historical differences in the
rates of reimbursement to providers, and in the
amount, duration, and scope of benefits covered
under State medicaid plans.
(2) COMMISSION REPORT.—The advisory com-
mission shall submit to the Board a report that
specifies one or more methods for reducing the vari-
ation described in paragraph (1).
(3) BOARD
RECOMMENDATIONS.—The Board
shall submit to Congress, by not later than July 1,
1995, detailed recommendations respecting the spe-
cific method to be used to reduce the variation de-
scribed in paragraph (1) by 2002 in a budget neu-
tral manner with respect to total government pay-
ments and payments by the Federal Government. In
submitting recommendations under this paragraph,
the Board shall consider the fiscal capacity of the
States.
(4) CONGRESSIONAL CONSIDERATION.—
(A) IN
GENERAL.—Subject to the suc-
ceeding provisions of this paragraph, the provi-
sions of subsection (d) shall apply to rec-
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Title VI, Subtitle A
ommendations under paragraph (3) in the same
manner as they apply to recommendations
under subsection (c)(3).
(B) SPECIAL
RULES.—In applying sub-
paragraph (A)—
(i) the following shall be substituted
for the matter after the resolving clause
described in subsection (d)(2)(B): ‘‘That
Congress disapproves the recommendations
of the National Health Board concerning
reduction of regional variation in State
payments, as submitted by the Board on
lllllll.’’; and
(ii) the following shall be substituted
for the title described in subsection
(d)(2)(C): ‘‘Joint resolution disapproving
recommendations of the National Health
Board concerning reducing regional vari-
ation in State payments, as submitted by
the Board on lllllll.’’.
(f) INFORMATION.—The advisory commission shall
provide the Board, States, and regional alliances with in-
formation about regional differences in health care costs
and practice patterns.
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Title VI, Subtitle A
SEC. 6007. REFERENCE TO LIMITATION ON ADMINISTRA-
TIVE AND JUDICIAL REVIEW OF CERTAIN DE-
TERMINATIONS.
For limitation on administrative and judicial review
of certain determinations under this part, see section
5232.
Subpart B—Plan and Provider Payment Reductions
to Maintain Expenditures within Targets
SEC. 6011. PLAN PAYMENT REDUCTION.
(a) PLAN PAYMENT REDUCTION.—In order to assure
that payments to regional alliance health plans by a re-
gional alliance are consistent with the applicable regional
alliance per capita target for the alliance (computed under
this subtitle), each noncomplying plan (as defined in sub-
section (b)(2)) for a year is subject to a reduction in plan
payment (under section 1351) by the amount equal to
plan payment reduction specified in subsection (c) for the
year.
(b) NONCOMPLYING ALLIANCE AND NONCOMPLYING
PLAN DEFINED.—In this part:
(1) 
NONCOMPLYING
ALLIANCE.—The 
term
‘‘noncomplying alliance’’ means, for a year, a re-
gional alliance for which the weighted average ac-
cepted bid (computed under section 6004(c)) exceeds
the regional alliance per capita premium target for
the year.
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Title VI, Subtitle A
(2) NONCOMPLYING
PLAN.—The term ‘‘non-
complying plan’’ means, for a year, a regional alli-
ance health plan offered through a noncomplying al-
liance if the final accepted bid for the year exceeds
the maximum complying bid (as defined in sub-
section (d)) for the year. No plan shall be a noncom-
plying plan for a year before the first year in which
the plan is offered by a regional alliance.
(c) AMOUNT OF PLAN PAYMENT REDUCTION.—
(1) IN GENERAL.—The amount of the plan pay-
ment reduction, for a noncomplying plan offered by
an alliance, is the alliance-wide reduction percentage
(as defined in paragraph (2)) of the excess bid
amount (as defined in paragraph (3)) for the plan.
(2) ALLIANCE-WIDE
REDUCTION
PERCENT-
AGE.—
(A) IN GENERAL.—In paragraph (1), the
term 
‘‘alliance-wide 
reduction 
percentage’’
means, for a noncomplying plan offered by an
alliance for a year—
(i) the amount by which (I) the
weighted average accepted bid (computed
under section 6004(c)(1)) for the alliance
for the year, exceeds (II) the regional alli-