I
104TH CONGRESS
1ST SESSION
H. R. 2071
To promote cost containment and reform in health care.
IN THE HOUSE OF REPRESENTATIVES
JULY 19, 1995
Mr. PETERSON of Florida (for himself, Mr. MORAN, Mr. DOOLEY, Mr. CLEM-
ENT, Mr. POSHARD, Mr. STENHOLM, Mr. MARTINEZ, Mr. GIBBONS, Mrs.
MEEK of Florida, and Mr. COLEMAN) introduced the following bill; which
was referred to the Committee on Commerce, and in addition to the Com-
mittees on Ways and Means, Economic and Educational Opportunities,
and the Judiciary, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall within
the jurisdiction of the committee concerned
A BILL
To promote cost containment and reform in health care.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Health Care Improvement Act of 1995’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—ASSURING AVAILABILITY AND CONTINUITY OF HEALTH
COVERAGE
Subtitle A—Insurance Reform
PART 1—GUARANTEED ACCESS TO HEALTH COVERAGE
Sec. 1001. Guaranteed offer by carriers.
Sec. 1002. Guaranteed issue by carriers.
Sec. 1003. Guaranteed renewal.
Sec. 1004. Restricting preexisting condition exclusions.
Sec. 1005. Enrollment periods.
PART 2—PROVISION OF BENEFITS
Sec. 1011. Standards for managed care arrangements.
Sec. 1012. Utilization review.
Sec. 1013. Medical savings accounts.
PART 3—FAIR RATING PRACTICES
Sec. 1021. Use of fair rating practices.
Sec. 1022. Coordination with premium assistance certificate program.
Sec. 1023. Establishment of risk adjustment mechanisms.
PART 4—CONSUMER PROTECTIONS
Sec. 1031. Requirement for provision of information.
Sec. 1032. Prohibition of improper incentives.
Sec. 1033. Written policies and procedures respecting advance directives.
Subtitle B—Benefits
Sec. 1101. Qualified health coverage.
Sec. 1102. Standard coverage.
Sec. 1103. High-deductible coverage.
Sec. 1104. Actuarial valuation of benefits.
Sec. 1105. Limitation on offering supplemental benefits.
Sec. 1106. Family coverage option; supplemental coverage.
Sec. 1107. Level playing field for providers.
Subtitle C—Standards and Certification; Enforcement; Preemption; General
Provisions
Sec. 1201. Establishment of standards.
Sec. 1202. Application of standards to carriers through States.
Sec. 1203. Application to group health plans.
Sec. 1204. Enforcement.
Sec. 1205. Limitation on self insurance for small employers.
Subtitle D—Definitions; General Provisions
Sec. 1901. General definitions.
Sec. 1902. Definitions relating to employment.
Sec. 1903. Definitions relating to health coverage, plans, and carriers.
Sec. 1904. Definitions relating to residence and immigration status.
Sec. 1905. Effective dates.
TITLE II—REMOVAL OF FINANCIAL BARRIERS TO ACCESS
Subtitle A—Tax Deductibility for Individuals and Self-Employed
Sec. 2001. Deduction for health insurance costs of self-employed individuals in-
creased and made permanent.
Sec. 2002. Deduction for health insurance costs of individuals who are not self-
employed.
Sec. 2003. Restrictions on health benefits provided through cafeteria plans and
flexible spending arrangements.
Subtitle B—Premium and Cost-Sharing Subsidy Program and Supplemental
Benefits Program for Low-Income Individuals
Sec. 2101. State premium and cost-sharing subsidy programs and supplemental
benefits programs.
‘‘TITLE XXI—STATE ACUTE CARE BENEFITS PROGRAMS FOR
LOW-INCOME INDIVIDUALS
‘‘PART A—STATE PREMIUM AND COST-SHARING SUBSIDY PROGRAMS
‘‘Sec. 2101. Establishment of State programs.
‘‘Sec. 2102. Eligibility.
‘‘Sec. 2103. Premium and cost-sharing assistance.
‘‘Sec. 2104. Eligibility determinations.
‘‘Sec. 2105. End-of-year reconciliation for premium assistance.
‘‘Sec. 2106. Payments to States.
‘‘Sec. 2107. Federal title XXI matching percentage.
‘‘PART B—STATE SUPPLEMENTAL ACUTE CARE BENEFITS PROGRAMS
‘‘Sec. 2121. Establishment of State supplemental acute care benefits pro-
grams.
‘‘Sec. 2122. Eligibility.
‘‘Sec. 2123. Scope and provision of benefits; benefits administration.
‘‘Sec. 2124. Payments to States.
‘‘PART C—GENERAL PROVISIONS
‘‘Sec. 2141. Nature of payment obligation.
‘‘Sec. 2142. Audits.
‘‘Sec. 2143. Demonstration project authority.
‘‘Sec. 2144. Definitions and determinations of income.
Sec. 2102. Division of medicaid benefits into core benefits and supplemental
benefits for AFDC, SSI, and non-cash beneficiaries; limitation
on Federal financial participation for core and supplemental
benefits.
Sec. 2103. Operation of program as State plan requirement under medicaid.
Sec. 2104. Application of miscellaneous provisions.
TITLE III—ACCESS IMPROVEMENTS
SUBTITLE A—IMPROVED ACCESS IN RURAL AREAS
PART 1—GRANTS TO ENCOURAGE COMMUNITY RURAL HEALTH NETWORKS
Sec. 3001. Assistance for development of access plans for chronically under-
served areas.
Sec. 3002. Technical assistance grants for networks.
Sec. 3003. Development grants for networks.
Sec. 3004. Definitions.
PART 2—INCENTIVES FOR HEALTH PROFESSIONALS TO PRACTICE IN RURAL
AREAS THROUGH THE NATIONAL HEALTH SERVICE CORPS PROGRAM
Sec. 3011. National Health Service Corps loan repayments excluded from gross
income.
Sec. 3012. Modification in criteria for designation as health professional short-
age area.
Sec. 3013. Other provisions regarding National Health Service Corps.
PART 3—ASSISTANCE FOR INSTITUTIONAL PROVIDERS
Subpart A—Emergency Medical Systems
Sec. 3021. Emergency medical services.
Sec. 3022. Grants to States regarding aircraft for transporting rural victims of
medical emergencies.
Subpart B—Demonstration Projects to Encourage Primary
Care and Rural-Based Graduate Medical Education
Sec. 3031. State and consortium demonstration projects.
Sec. 3032. Goals for projects.
Sec. 3033. Definitions.
Subpart C—Medicare Demonstration Regarding Consortia of
Hospitals
Sec. 3041. Medicare demonstration regarding consortia of hospitals.
Subtitle B—Public Health Grants
Sec. 3101. Grants to States for public health programs.
Sec. 3102. Scholarship and loan repayment programs regarding service in pub-
lic health positions.
Subtitle C—Academic Health Centers
Sec. 3201. Study of payments for medical education at sites other than hos-
pitals.
Sec. 3202. Study of funding needs of health professions schools.
TITLE IV—MALPRACTICE REFORM
Subtitle A—Findings; Purpose; Definitions
Sec. 4001. Findings; purpose.
Sec. 4002. Definitions.
Subtitle B—Uniform Standards for Malpractice Claims
Sec. 4101. Applicability.
Sec. 4102. Requirement for initial resolution of action through alternative dis-
pute resolution.
Sec. 4103. Procedural requirements for filing of actions.
Sec. 4104. Treatment of noneconomic and punitive damages.
Sec. 4105. Periodic payments for future losses.
Sec. 4106. Uniform statute of limitations.
Sec. 4107. Special provision for certain obstetric services.
Sec. 4108. Uniform standard for determining liability in actions based on neg-
ligence.
Sec. 4109. Jurisdiction of Federal courts.
Sec. 4110. Preemption.
Subtitle C—Requirements for State Alternative Dispute Resolution Systems
(ADR)
Sec. 4201. Basic requirements.
Sec. 4202. Certification of State systems; applicability of alternative Federal
system.
Sec. 4203. Grants to States.
Sec. 4204. Reports on implementation and effectiveness of alternative dispute
resolution systems.
Subtitle D—Grants to States for Development of Practice Guidelines
Sec. 4301. Grants to States.
TITLE V—MARKET INCENTIVES TO CONTAINING COSTS
Subtitle A—Administrative Simplification
Sec. 5000. Purpose.
Sec. 5001. Definitions.
PART 1—STANDARDS FOR DATA ELEMENTS AND TRANSACTIONS
Sec. 5011. General requirements on Secretary.
Sec. 5012. Standards for data elements of health information.
Sec. 5013. Information transaction standards.
Sec. 5014. Health information network privacy standards.
Sec. 5015. Timetables for adoption of standards.
PART 2—REQUIREMENTS WITH RESPECT TO CERTAIN TRANSACTIONS AND
INFORMATION
Sec. 5021. Standard transactions and information.
Sec. 5022. Accessing health information for authorized purposes.
Sec. 5023. Ensuring availability of information.
Sec. 5024. Timetables for compliance with requirements.
PART 3—MISCELLANEOUS PROVISIONS
Sec. 5031. Standards and certification for health information network services.
Sec. 5032. Imposition of additional requirements.
Sec. 5033. Effect on State law.
Subtitle B—Antitrust
Sec. 5101. Publication of antitrust guidelines on activities of health plans.
Sec. 5102. Issuance of health care certificates of public advantage.
Sec. 5103. Study of impact on competition.
TITLE VI—MEDICARE
Subtitle A—Increased Beneficiary Choice; Improved Program Efficiency
Title I, Subtitle A
PART 1—INCREASED BENEFICIARY CHOICE
Sec. 6001. Requirements for health maintenance organizations under medicare.
Sec. 6002. Expansion and revision of medicare select policies.
Sec. 6003. Including notice of available health maintenance organizations in an-
nual notice to beneficiaries.
Sec. 6004. Legislative proposal on enrolling medicare beneficiaries in qualified
health plans.
Sec. 6005. Optional interim enrollment of medicare beneficiaries in private
health plans.
PART 2—IMPROVED PROGRAM EFFICIENCY
Sec. 6011. Improved efficiency through consolidation of administration of parts
A and B.
PART 3—NOTICE OF ADVANCE DIRECTIVE RIGHTS
Sec. 6021. Providing notice of rights regarding medical care to individuals en-
tering medicare.
Subtitle B—Savings
Sec. 6101. Reduction in conversion factor for physician fee schedule for non-
primary care services.
Sec. 6102. Reduction in hospital outpatient services through establishment of
prospective payment system.
Sec. 6103. Increase in medicare part B premium for individuals with high in-
come.
Sec. 6104. Phased-in elimination of medicare hospital disproportionate share
adjustment payments.
Sec. 6105. Imposition of coinsurance on laboratory services.
TITLE I—ASSURING AVAILABIL-
ITY 
AND 
CONTINUITY 
OF
HEALTH COVERAGE
Subtitle A—Insurance Reform
PART 1—GUARANTEED ACCESS TO HEALTH
COVERAGE
SEC. 1001. GUARANTEED OFFER BY CARRIERS.
(a) IN GENERAL.—Each carrier that offers health in-
surance coverage in the individual/small group market in
a fair rating area (as defined in section 1903) shall make
available, to each qualifying individual (as defined in sec-
Title I, Subtitle A
tion 1904(3)) or small employer (covered in such market)
in such fair rating area—
(1) qualified standard coverage consistent with
section 1102, and
(2) subject to subsection (b), qualified high-de-
ductible coverage consistent with section 1103.
(b) HIGH-DEDUCTIBLE COVERAGE.—
(1) EXCEPTION
FOR
HEALTH
MAINTENANCE
ORGANIZATIONS.—The requirement of subsection
(a)(2) shall not apply with respect to health insur-
ance coverage that—
(A) is provided by a Federally qualified
health maintenance organization (as defined in
section 1301(a) of the Public Health Service
Act), or
(B) is not provided by such an organiza-
tion but is provided by an organization recog-
nized under State law as a health maintenance
organization or managed care organization or a
similar organization regulated under State law
for solvency.
(2) LIMITATION ON OFFER OF HIGH-DEDUCT-
IBLE COVERAGE.—Qualified high-deductible coverage
may not be made available by a carrier to a qualify-
ing individual (or to a small employer with respect
Title I, Subtitle A
to an employee) unless the carrier also makes avail-
able qualified standard coverage that has identical
benefits (other than the amount of the deductible)
and the individual or employee demonstrates to the
carrier that the individual or employee has available
assets (as defined by the Secretary) equal to at least
the deductible amount established under section
1104(b)(1) applicable to the high-deductible cov-
erage. A carrier may not make available to an indi-
vidual health coverage (other than coverage for sup-
plemental benefits) the actuarial value of which is
less than the actuarial value of qualified high-de-
ductible coverage, unless the individual has available
assets (as defined by the Secretary) equal to at least
the deductible amount of the coverage offered.
(3) OPTION TO OFFER MEDISAVE COVERAGE.—
The offer of high-deductible coverage under sub-
section (a)(2) may be accompanied by the contribu-
tion by an employer to a medical savings account (in
accordance with section 7705 of the Internal Reve-
nue Code of 1986).
(c) COVERAGE OF ENTIRE RATING AREA.—
(1) IN GENERAL.—With respect to each fair
rating area for which a carrier offers health insur-
ance coverage, the carrier shall provide for coverage
Title I, Subtitle A
of benefits for items and services furnished through-
out the fair rating area.
(2) SPECIAL
RULE
FOR
CARRIERS
OFFERING
COVERAGE IN MULTI-STATE METROPOLITAN STATIS-
TICAL AREAS.—In the case of a carrier that offers
qualified health insurance coverage in the individual/
small employer market in a portion of a State that
is located in an interstate metropolitan statistical
area, the carrier may not provide such coverage with
respect to an individual or employer in such metro-
politan statistical area unless the carrier also offers
such coverage in other portions of the area located
in other States.
(3) SPECIAL RULE FOR COVERAGE THROUGH
MANAGED CARE ARRANGEMENT.—In the case of cov-
erage offered by a carrier or under a group health
plan to the extent that it provides benefits through
a managed care arrangement in a fair rating area,
this subsection shall not be construed as requiring
the establishment of facilities throughout the area, if
the facilities are located consistent with section
1002(b)(1).
(d) FAMILY COVERAGE OPTION.—The offer of cov-
erage under this section with respect to an individual shall