I
103D CONGRESS
1ST SESSION
H. R. 191
To reform the United States health care delivery and financing system,
to increase access to health care and affordable health insurance, to
contain costs of health care in a manner that improves health care,
and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 5, 1993
Mr. GEKAS introduced the following bill; which was referred jointly to the
Committees on Energy and Commerce, Ways and Means, the Judiciary,
Education and Labor, and Rules
A BILL
To reform the United States health care delivery and financ-
ing system, to increase access to health care and afford-
able health insurance, to contain costs of health care
in a manner that improves health care, and for other
purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘American Consumers Health Care Reform Act of 1993’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—IMMEDIATE HEALTH CARE REFORMS
Subtitle A—Expansion of Medicaid Program
Sec. 101. Transition of State medicaid programs to State long-term care pro-
grams.
Sec. 102. Establishment of Federal medical assistance program for acute care.
Subtitle B—Medicare Reform
Sec. 111. Improved efficiency through consolidation of administration of parts
A and B.
Sec. 112. Provider payment reforms to address inconsistent incentives.
Subtitle C—Health Benefit Plan Reform
PART 1—PREEMPTION OF STATE MANDATORY BENEFIT LAWS AND ANTI-
MANAGED CARE LAWS
Sec. 121. Preemption from insurance mandates for qualified small employer
purchasing groups.
Sec. 122. Removing restrictions on managed care.
PART 2—RESTRICTION ON PRE-EXISTING CONDITION PROVISIONS FOR
EMPLOYER HEALTH INSURANCE
Sec. 123. Limitation on pre-existing condition clauses; assurance of continuity
of coverage.
PART 3—SMALL EMPLOYER INSURANCE MARKET REFORMS
Sec. 124. Acceptance of all small employers seeking coverage; offering of mini-
mum benefit package.
Sec. 125. Use of community-rated premiums.
PART 4—ESTABLISHMENT OF STANDARDS; ENFORCEMENT; GENERAL
DEFINITIONS
Sec. 126. Establishment of standards.
Sec. 127. Enforcement.
Subtitle D—Medical Malpractice Reform
PART 1—GENERAL PROVISIONS
Sec. 131. Federal reform of medical malpractice liability actions.
Sec. 132. Definitions.
Sec. 133. Effective date.
PART 2—UNIFORM STANDARDS FOR MEDICAL MALPRACTICE LIABILITY
ACTIONS
Sec. 141. Statute of limitations.
Sec. 142. Requirement for initial resolution of action through alternative dis-
pute resolution.
Sec. 143. Relation to alternative dispute resolution of Federal agencies.
Sec. 144. Mandatory pre-trial settlement conference.
Sec. 145. Calculation and payment of damages.
Sec. 146. Treatment of attorney’s fees and other costs.
Sec. 147. Joint and several liability.
Sec. 148. Uniform standard for determining negligence.
Sec. 149. Application of medical practice guidelines in malpractice liability ac-
tions.
Sec. 150. Special provision for certain obstetric services.
Sec. 151. Preemption.
PART 3—REQUIREMENTS FOR STATE ALTERNATIVE DISPUTE RESOLUTION
SYSTEMS (ADR)
Sec. 161. Basic requirements for ADR.
Sec. 162. Certification of State systems.
Sec. 163. Reports on implementation and effectiveness of alternative dispute
resolution systems.
PART 4—OTHER REQUIREMENTS AND PROGRAMS
Sec. 171. Facilitating development and use of medical practice guidelines.
Sec. 172. Permitting State professional societies to participate in disciplinary
activities.
Sec. 173. Requirements for risk management programs.
Sec. 174. Grants for medical safety promotion.
Sec. 175. Study of barriers to voluntary service by physicians.
Subtitle E—Medical Education Reform
Sec. 181. Limitation on medicare hospital payment for direct and indirect grad-
uate medical education support and Federal assistance for in-
sured medical student loans for non-primary care physicians.
Sec. 182. State comprehensive health professions education plans.
Subtitle F—Public Delivery System
Sec. 183. Identification of medically underserved populations.
Sec. 184. State comprehensive plans for medically underserved populations.
Sec. 185. Publicly-funded health centers serving medically underserved areas.
Sec. 186. Office of disease prevention and health promotion.
Sec. 187. Consolidation of Federal activities relating to nutrition.
Sec. 188. Demonstration projects on health care decisionmaking.
Sec. 189. Action plan on health promotion and disease prevention.
Subtitle G—Public Disclosure
Sec. 191. Development of national standards for disclosure of health care infor-
mation; implementation by States.
Sec. 192. Data submission and collection.
Sec. 193. Data dissemination and publication.
Sec. 194. Access to data.
Sec. 195. Definitions.
Subtitle H—Tax Incentives to Provide Only Minimum Benefits
Sec. 198. Denial of employer tax deduction for providing health care coverage
in excess of minimum benefits and denial of employee exclusion
for such excess coverage.
Sec. 199. Deduction for health insurance costs of self-employed individuals
made permanent and increased to extent of costs for minimum
benefits.
TITLE II—NATIONAL HEALTH CARE REFORM PROPOSALS
Subtitle A—National Health Care Reform Commission
Sec. 201. Establishment.
Sec. 202. Establishment of national goals; consultations; improved coordination;
evaluation and recommendations on demonstration projects.
Sec. 203. Establishment of minimum benefit package.
Subtitle B—Demonstration Projects on Alternative Financing and Delivery
Systems
Sec. 211. Establishment of demonstration projects.
Sec. 212. Process.
Sec. 213. Priorities.
Sec. 214. Scope and duration of projects.
Sec. 215. Waivers of certain laws.
Sec. 216. Reports and evaluations.
TITLE I—IMMEDIATE HEALTH
CARE REFORMS
Subtitle A—Expansion of Medicaid
Program
SEC. 101. TRANSITION OF STATE MEDICAID PROGRAMS TO
STATE LONG-TERM CARE PROGRAMS.
(a) IN GENERAL.—Title XIX of the Social Security
Act is amended by adding at the end the following new
section:
‘‘ACUTE CARE TRANSITION TO FEDERAL MEDICAL
ASSISTANCE PROGRAM
‘‘SEC. 1931. (a) PHASE-IN OF EXPANDED ELIGI-
BILITY.—
‘‘(1) 2-YEAR PHASE IN.—
‘‘(A) IN GENERAL.—Notwithstanding any
other provision of this title, subject to sub-
section (e), for calendar quarters beginning on
or after the first day of the first effective fiscal
year (as defined in subparagraph (C)), each
State medical assistance plan under section
1902 shall provide for medical assistance under
the plan to all eligible individuals (as defined in
paragraph (2)) who are residents of the State.
‘‘(B) TRANSFER OF COVERAGE.—Notwith-
standing any other provision of this title, effec-
tive on the first day of the third effective fiscal
year—
‘‘(i) no payment shall be made to a
State under section 1903(a) for medical
assistance, other than—
‘‘(I) medical assistance with re-
spect to outpatient prescription drugs
and biologicals, and
‘‘(II) medical assistance with re-
spect to home health care services,
nursing facility services, home and
community care (under section 1929),
community supported living arrange-
ments services (described in section
1930), home and community-based
services (described in section 1915),
and other items and services that re-
late to long-term care and are not
covered under part B of this title; and
‘‘(ii) no State is obligated to make
available medical assistance under this
part for items and services for which pay-
ment may not be made under clause (i).
‘‘(C) FIRST, SECOND, AND THIRD EFFEC-
TIVE FISCAL YEARS DEFINED.—In this section,
the terms ‘first effective fiscal year’, ‘second ef-
fective fiscal year’, and ‘third effective fiscal
year’ means the first, second, and third fiscal
years, respectively, that begin more than 180
days after the date of the enactment of this sec-
tion.
‘‘(2) ELIGIBLE INDIVIDUAL DEFINED.—
‘‘(A) IN
GENERAL.—In this section, the
term ‘eligible individual’ means an individual—
‘‘(i) is a citizen or national of the
United States, an alien lawfully admitted
for permanent residence, or an alien other-
wise permanently residing in the United
States under color of law;
‘‘(ii) whose income (as determined
under section 1612 for purposes of the
supplemental security income program,
subject to subparagraph (C)) does not ex-
ceed the applicable income level (specified
in subparagraph (B)); and
‘‘(iii) whose resources (as determined
under section 1613 for purposes of the
supplemental security income program) do
not exceed the maximum amount of re-
sources that an individual may have and
obtain benefits under that program.
‘‘(B) APPLICABLE INCOME LEVEL.—
‘‘(i) IN GENERAL.—Subject to clause
(ii), the applicable income level is, for serv-
ices furnished in—
‘‘(I) the first effective fiscal year,
60 percent of the Federal poverty
level (as defined in subparagraph
(D)), and
‘‘(II) the second effective fiscal
year, 70 percent of the Federal pov-
erty level.
‘‘(ii) SPECIAL RULES FOR PREGNANT
WOMEN AND CHILDREN.—With respect to
services related to pregnancy and children
under 19 years of age, the applicable in-
come level is, for services furnished in—
‘‘(I) the first effective fiscal year,
150 percent of the Federal poverty
level (as defined in subparagraph
(C)), and
‘‘(II) the second effective fiscal
year, 170 percent of the Federal pov-
erty level.
‘‘(C) INCOME DETERMINATION.—In deter-
mining income, costs incurred for medical care
or for any other type of remedial care shall be
taken into account and deducted from income
otherwise determined.
‘‘(D) FEDERAL
POVERTY
LEVEL
DE-
FINED.—In this section, the term ‘Federal pov-
erty level’ means the official poverty line (as de-
fined by the Office of Management and Budget,
and revised annually in accordance with section
673(2) of the Omnibus Budget Reconciliation
Act of 1981) applicable to a family of the size
involved.
‘‘(3) 
RELATION
TO
ALTERNATIVE
ELIGI-
BILITY.—Nothing in this section shall be construed
as restricting the eligibility under other provisions of
this title of individuals for medical assistance under
this part.
‘‘(b) SERVICES FOR WHICH MEDICAL ASSISTANCE
PROVIDED.—Notwithstanding any other provision of this
title, the medical assistance made available under this sec-
tion—
‘‘(1) subject to paragraph (2), shall include
medical assistance for the same amount, duration,
and scope of services as are provided under the
State plan to individuals described in section
1902(a)(10)(A)(i), but
‘‘(2) shall not include medical assistance for
nursing facility services or home health care services.
‘‘(c) COST-SHARING.—
‘‘(1) NO
COST-SHARING
FOR
PREGNANCY-RE-
LATED SERVICES, PREVENTIVE SERVICES, AND CHIL-
DREN.—There shall be no cost-sharing imposed with
respect to—
‘‘(A) services related to pregnancy,
‘‘(B) preventive services, or
‘‘(C) services furnished to children under
19 years of age.
‘‘(2) NOMINAL COST-SHARING FOR THE POOR-
EST INDIVIDUALS.—There shall be no cost-sharing
(other than nominal cost-sharing, within the mean-
ing of section 1916(a)(3)) imposed with respect to
services furnished to individuals whose income is de-
termined to be less than 50 percent of the Federal
poverty level.
‘‘(3) COST-SHARING FOR OTHER SERVICES AND
POPULATIONS.—
‘‘(A) IN GENERAL.—With respect to eligi-
ble individuals not described in paragraph (2)
with respect to services not described in para-
graph (1), there shall be imposed the following
cost-sharing:
‘‘(i) For outpatient services, there
shall be a copayment of $5 for each visit,
or $10 in the case of a nonemergency visit
to a hospital emergency room.
‘‘(ii) For inpatient hospital services,
there shall be a copayment of $50 for each
inpatient hospital admission.
‘‘(B) LIMIT
ON
COST-SHARING.—In no
case shall the cost-sharing imposed under sub-
paragraph (A)—
‘‘(i) for an individual (whether or not
the individual is a member of a family) ex-
ceed $500 in any calendar year, or
‘‘(ii) collectively for all members of a
family exceed $1,000 in any calendar year.
‘‘(d) CHANGES IN FEDERAL MEDICAL ASSISTANCE
PERCENTAGE.—
‘‘(1) INCREASE FOR ACUTE CARE SERVICES.—
Subject to subsection (e), the Federal medical assist-
ance percentage for each of the 50 States and the
District of Columbia for medical assistance for acute
care services (described in paragraph (3)) shall be
increased, for calendar quarters occurring in—
‘‘(A) the first effective fiscal year, by a
percentage equal to 20 percent of the difference
between 100 percentage points and the Federal
medical assistance percentage otherwise applica-
ble (without regard to this subsection), or
‘‘(B) the second effective fiscal year, by a
percentage equal to 40 percent of the difference
between 100 percentage points and the Federal
medical assistance percentage otherwise applica-
ble (without regard to this subsection).
‘‘(2) DECREASE
IN
FMAP
FOR
OUTPATIENT
PRESCRIPTION DRUGS AND LONG-TERM CARE SERV-
ICES.—The Federal medical assistance percentage
for each of the 50 States and the District of Colum-
bia for medical assistance for items and services
(other than assistance for acute care services), for
calendar quarters occurring in—
‘‘(A) the first effective fiscal year, by a
percentage equal to 5 percent of the Federal
medical assistance percentage otherwise applica-
ble (without regard to this subsection), or
‘‘(B) the second effective fiscal year, by a
percentage equal to 10 percent of the Federal
medical assistance percentage otherwise applica-
ble (without regard to this subsection).
‘‘(3) ASSISTANCE FOR ACUTE CARE SERVICES
DEFINED.—In this subsection, the term ‘assistance
for acute care services’ means—
‘‘(A) medical assistance for services de-
scribed in section 1905(a), other than for serv-
ices described in subclause (I) or (II) of sub-
section (a)(1)(B)(i) of this section, and
‘‘(B) medical assistance relating to medi-
care cost-sharing.
‘‘(4) CONSTRUCTION.—The changes in the Fed-
eral medical assistance percentage provided under
this subsection shall only apply for purposes of this
title.
‘‘(e) REQUIREMENT FOR CONTINUATION OF LONG-
TERM CARE ASSISTANCE.—No individual residing in a
State shall be eligible for medical assistance under this
section, and the State shall not be eligible for an increase
in the Federal medical assistance percentage under sub-
section (d)(1) for a calendar quarter, unless—
‘‘(1) the State continues to provide for medical
assistance under this part with respect to home
health care services and nursing facility services, and
‘‘(2) such assistance is provided consistent with
standards adopted under section 205 of the Amer-
ican Consumers Health Care Reform Act of 1992.’’.
(b) FEDERAL STANDARDS FOR STATE LONG-TERM
CARE PROGRAMS.—The Secretary of Health and Human
Services, in consultation with representatives of States, in-
dustry, and the beneficiary community, shall develop
standards that shall apply, pursuant to section 1931(e)(2)
of the Social Security Act, to State long-term care plans
under part A of title XIX of such Act at the end of the
10-year transition period provided under the amendment
made by subsection (a).
(c) REPORT ON IMPACT OF DECREASE IN FMAP FOR
OUTPATIENT PRESCRIPTION DRUGS.—The Secretary of
Health and Human Services shall submit to Congress, not
later than 2 years after the date of the enactment of this
Act, a report that—
(1) evaluates the impact on the States of the
decrease, provided under the amendment made by
subsection (a), in the Federal medical assistance
percentage for medical assistance for outpatient pre-
scription drugs, and
(2) makes such recommendations for changes in
this Act (including the amendments made by this
Act) in order to avoid any significant adverse impact
on States that continue to provide medical assistance
for outpatient prescription drugs to individuals in
need of such assistance.
(d) CONFORMING AMENDMENTS.—
(1) Section 1905(a) of such Act (42 U.S.C.
1396d(a)) is amended, in the matter before para-
graph (1), by striking ‘‘or’’ at the end of clause (ix),
by inserting ‘‘or’’ at the end of clause (x), and by
inserting after clause (x) the following new clause:
‘‘(xi) individuals described in section 1931(a),’’.
(2) Section 1905(b) of such Act is amended by
striking ‘‘The term’’ and inserting ‘‘Subject to sec-
tion 1931(d), the term’’.
SEC. 102. ESTABLISHMENT OF FEDERAL MEDICAL ASSIST-
ANCE PROGRAM FOR ACUTE CARE.
(a) IN GENERAL.—Title XIX of the Social Security
Act is amended—
(1) by inserting after the heading the following:
‘‘PART A—STATE MEDICAL ASSISTANCE PROGRAMS’’;
AND
(2) by adding at the end the following new part:
‘‘PART B—FEDERAL MEDICAL ASSISTANCE PROGRAM
‘‘ESTABLISHMENT OF PROGRAM
‘‘SEC. 1951. (a) IN GENERAL.—This part establishes
a Federal medical assistance program to provide medical
assistance for acute care services to all poor individuals
in the United States and to provide medical assistance for
medicare cost-sharing for certain medicare beneficiaries.
‘‘(b) APPROPRIATIONS.—There are authorized to be
appropriated, without fiscal year limitation, such sums as
may be necessary to carry out this part.
‘‘(c) EFFECTIVE DATE.—The provisions of this part
shall first apply to medical assistance for services or medi-
care cost-sharing furnished during calendar quarters be-
ginning on or after the first day of the third effective fiscal
year (as defined in subsection (d)).
‘‘(d) THIRD AND FOURTH EFFECTIVE FISCAL YEARS
DEFINED.—In this part, the terms ‘third effective fiscal
year’ and ‘fourth effective fiscal year’ mean the third and
fourth fiscal years, respectively, that begin more than 180
days after the date of the enactment of this part.
‘‘ELIGIBILITY
‘‘SEC. 1952. (a) IN GENERAL.—
‘‘(1) GENERAL MEDICAL ASSISTANCE.—Subject
to section 1957, the Secretary shall provide for pay-
ment under this part for costs of the items and serv-
ices described in section 1953 furnished to eligible
individuals (as defined in subsection (b)).
‘‘(2) MEDICAL
ASSISTANCE
WITH
MEDICARE
COST-SHARING
FOR
CERTAIN
MEDICARE
BENE-
FICIARIES.—
‘‘(A) IN
GENERAL.—The Secretary shall
provide for payment under this part for—
‘‘(i) medicare cost-sharing (as defined
in section 1905(p)(3)) for qualified medi-
care beneficiaries who reside in one of the
50 States or the District of Columbia;
‘‘(ii) medicare cost-sharing described
in section 1905(p)(3)(A)(i) for qualified
disabled and working individuals described
in section 1905(s) residing in one of the 50
States or the District of Columbia; and
‘‘(iii) for medicare cost-sharing de-
scribed in section 1905(p)(3)(A)(ii) for in-
dividuals residing in one of the 50 States
or the District of Columbia who would be
qualified medicare beneficiaries described
in section 1905(p)(1) but for the fact that
their income exceeds 100 percent, but is
less than 120 percent, of the official pov-
erty line (referred to in such section) for a
family of the size involved.
‘‘(B) SPECIAL
RULES.—In applying sub-
paragraph (A)—
‘‘(i) the income level that is deemed to
be applied under section 1905(p)(1)(B) is
100 percent of the official poverty line (as
defined by the Office of Management and
Budget, and revised annually in accord-
ance with section 673(2) of the Omnibus
Budget Reconciliation Act of 1981) appli-
cable to a family of the size involved, and
‘‘(ii) the term ‘medicare cost-sharing’
described in section 1905(p)(3)(A) may in-
clude, as determined by the Secretary and
for purposes of clauses (i) and (iii) of sub-
paragraph (A) only, premiums for enroll-
ment of a qualified medicare beneficiary
with an eligible organization under section
1876.
‘‘(b) ELIGIBLE INDIVIDUAL DEFINED.—
‘‘(1) IN GENERAL.—In this section, the term
‘eligible individual’ means an individual—
‘‘(A) is a citizen or national of the United
States, an alien lawfully admitted for perma-
nent residence, or an alien otherwise perma-
nently residing in the United States under color
of law;
‘‘(B) whose income (as determined under
section 1612 for purposes of the supplemental
security income program, subject to paragraph
(3)) does not exceed the applicable income level
(specified in paragraph (2)); and
‘‘(C) whose resources (as determined under
section 1613 for purposes of the supplemental
security income program) do not exceed the
maximum amount of resources that an individ-
ual may have and obtain benefits under that
program.
‘‘(2) APPLICABLE INCOME LEVEL.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the applicable income level is, for
services furnished in—
‘‘(i) the third effective fiscal year, 80
percent of the Federal poverty level (as de-
fined in paragraph (4)),
‘‘(ii) the fourth effective fiscal year,
90 percent of the Federal poverty level, or
‘‘(iii) any subsequent fiscal year, is
100 percent of the Federal poverty level.
‘‘(B) SPECIAL
RULES
FOR
PREGNANT
WOMEN AND CHILDREN.—With respect to serv-
ices related to pregnancy and children under 19
years of age, the applicable income level is 185
percent of the Federal poverty level (as defined
in paragraph (4)).
‘‘(3) INCOME DETERMINATION.—In determining
income, costs incurred for medical care or for any
other type of remedial care (recognized by the Sec-
retary) shall be taken into account and deducted
from income otherwise determined.
‘‘(4) FEDERAL POVERTY LEVEL DEFINED.—In
this section, the term ‘Federal poverty level’ means
the official poverty line (as defined by the Office of
Management and Budget, and revised annually in
accordance with section 673(2) of the Omnibus
Budget Reconciliation Act of 1981) applicable to a
family of the size involved.
‘‘SERVICES COVERED
‘‘SEC. 1953. (a) IN GENERAL.—Subject to subsection
(b), items and services described in this section are the
care and services listed in paragraphs (1) through (5),
(17), and (21) of section 1905(a).
‘‘(b) EXCLUSION OF LONG-TERM CARE SERVICES.—
Items and services described in this section do not in-
clude—
‘‘(1) nursing facility services described in sec-
tion 1905(a)(4)(A), and
‘‘(2) home health care services described in sec-
tion 1905(a)(7).
‘‘(c) AMOUNT, DURATION, AND SCOPE.—There shall
be no fixed limitation on the amount, duration, and scope
of medically necessary services described in subsection (a).
‘‘PAYMENTS; COST-SHARING
‘‘SEC. 1954. (a) PAYMENT LEVEL.—
‘‘(1) IN
GENERAL.—Subject to cost-sharing
under subsection (c) and the succeeding provisions
of this subsection, the payment amount for services
under this part for medical assistance under section
1952(a)(1) shall be the same as the payment
amount that would be made under title XVIII for
such 
services 
(determined 
without 
regard 
to
deductibles and coinsurance and copayments under
such title).
‘‘(2) PHASE-IN OF PAYMENT RATES.—During
the first 2 fiscal years in which this part applies, the
Secretary shall provide for such adjustment in pay-
ment rates so that—
‘‘(A) during the first fiscal year, the rates
are based—
‘‘(i) 2⁄3 on the rates applied under
part A during the previous fiscal year (in-
creased by the same percentage as the per-
centage increase in payment rates under
title XVIII from the previous fiscal year to
such first fiscal year), and
‘‘(ii) 1⁄3 on the rates applied under
title XVIII (as adjusted under paragraph
(3)) during such first fiscal year; and
‘‘(B) during the second fiscal year, the
rates are based—
‘‘(i) 1⁄3 on the rates applied under
part A during the second previous fiscal
year (increased by the same percentage as
the percentage increase in payment rates
under title XVIII from the second previous
fiscal year to such second), and
‘‘(ii) 2⁄3 on the rates applied under
title XVIII (as adjusted under paragraph
(3)) during such second fiscal year.
‘‘(3) ADJUSTMENT
OF
MEDICARE
PAYMENT
RATES.—The Secretary shall adjust the payment
rates established under title XVIII and applied
under this part in order to take into account dif-
ferences in the demographic and geographic charac-
teristics between the individuals covered under such
title and the individuals covered under this part.
‘‘(b) PARTICIPATION
AND
MANDATORY
ASSIGN-
MENT.—In the case of medical assistance made available
under section 1952(a)(1), payment may only be made
under this part for services furnished by a provider that—
‘‘(1) meets such conditions as the Secretary es-
tablishes, based on conditions of participation of pro-
viders, physicians, and suppliers established for pur-
poses of title XVIII, and
‘‘(2) has entered into a participation agreement
under which the provider agrees to accept the pay-
ment amounts established under this section (includ-
ing cost-sharing under subsection (c)) as payment in
full for covered services.
‘‘(c) COST-SHARING.—In the case of medical assist-
ance made available under section 1952(a)(1)—
‘‘(1) NO
COST-SHARING
FOR
PREGNANCY-RE-
LATED SERVICES, PREVENTIVE SERVICES, AND CHIL-
DREN.—There shall be no cost-sharing imposed with
respect to—
‘‘(A) services related to pregnancy,
‘‘(B) preventive services, or
‘‘(C) services furnished to children under
19 years of age.
‘‘(2) NOMINAL COST-SHARING FOR THE POOR-
EST INDIVIDUALS.—There shall be no cost-sharing
(other than nominal cost-sharing, within the mean-
ing of section 1916(a)(3)) imposed with respect to
services furnished to individuals whose income is de-
termined to be less than 50 percent of the Federal
poverty level.
‘‘(3) COST-SHARING FOR OTHER SERVICES AND
POPULATIONS.—
‘‘(A) IN GENERAL.—With respect to eligi-
ble individuals not described in paragraph (2)
with respect to services not described in para-
graph (1), there shall be imposed the following
cost-sharing:
‘‘(i) For outpatient services, there
shall be a copayment of $5 for each visit,
or $10 in the case of a nonemergency visit
to a hospital emergency room.
‘‘(ii) For inpatient hospital services,
there shall be a copayment of $50 for each
inpatient hospital admission.
‘‘(B) LIMIT
ON
COST-SHARING.—In no
case shall the cost-sharing imposed under sub-
paragraph (A)—
‘‘(i) for an individual (whether or not
the individual is a member of a family) ex-
ceed $500 in any calendar year, or
‘‘(ii) collectively for all members of a
family exceed $1,000 in any calendar year.
‘‘ADMINISTRATION
‘‘SEC. 1955. (a) ELIGIBILITY DETERMINATIONS.—
The Secretary shall provide for determinations of eligi-
bility for benefits under this part for individuals residing
in a State to be made through the same administrative
entity that provides for determinations of eligibility for
supplemental security income benefits under title XVI for
residents of that State.
‘‘(b) PAYMENTS.—The Secretary shall provide for
payments to providers under this part through the single
entity (or entities) responsible under section 111 of the
American Consumers Health Care Reform Act of 1992 for
administrative functions under title XVIII, in the same
manner as such entities provide for payments to providers
under such title.
‘‘USE OF ALTERNATIVE DELIVERY SYSTEMS
‘‘SEC. 1956. (a) IN GENERAL.—The Secretary shall
take such steps as may be appropriate to encourage the
development and application of managed care arrange-
ments to the provision of covered services under this part
to individuals eligible under section 1952(a)(1).
‘‘(b) TYPES OF MANAGED CARE ARRANGEMENTS.—
‘‘(1) IN
GENERAL.—Managed care arrange-
ments under this section shall include—
‘‘(A) primary care case-management ar-
rangements (which meet standards established
by the Secretary), and
‘‘(B) health maintenance organizations and
competitive medical plans (which meet stand-
ards established by the Secretary).
In establishing standards for primary care case-man-
agement arrangements and for maintenance organi-
zations and competitive medical plans, the Secretary
shall take into account the standards established for
such arrangements and for such organizations and
plans under this title and title XVIII, respectively.
‘‘(2) CAPITATION
PAYMENTS.—Comprehensive
managed care arrangements (including health main-
tenance organizations and competitive medical
plans) shall include capitation payments at a level
equivalent to the level of payments which would be
made for individuals covered under this part and not
enrolled under such an arrangement.
‘‘(3) CONSTRUCTION.—Nothing in this sub-
section shall be construed as limiting the number or
proportion of individuals covered under this part
who may be enrolled under a managed care arrange-
ment under this subsection.
‘‘STATE MAINTENANCE OF EFFORT REQUIRED;
REDUCTION IN FMAP FOR LONG-TERM CARE SERVICES
‘‘SEC. 1957. (a) IN GENERAL.—No individual resid-
ing in a State shall be eligible for medical assistance under
this part (other than under section 1952(a)(2)), unless—
‘‘(1) the State continues to provide for medical
assistance under part A with respect to home health
care services and nursing facility services; and
‘‘(2) the State provides for payment to the Sec-
retary of the amount specified under subsection (b).
Payments shall be made under paragraph (2) by States
on a quarterly basis based on estimates made by the Sec-
retary and subsequent payments shall be adjusted to re-
flect amounts by which previous payments were greater,
or less than, the amount of payment which should have
been made.
‘‘(b) MAINTENANCE OF EFFORT AMOUNT.—
‘‘(1) IN
GENERAL.—The amount specified
under this subsection for a State for a calendar
quarter is the greater of—
‘‘(A) the State share (as specified under
paragraph (2)) of the total amount of expendi-
tures made by the Secretary for residents of the
State during the quarter under this part, or
‘‘(B) the State amount specified under
paragraph (3), reduced by the amount of pay-
ments made by the State (less any Federal pay-
ments to the State) under part A for the quar-
ter.
‘‘(2) STATE SHARE.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (C), the ‘State share’ for a State for a
calendar quarter is 100 percent less the Federal
percentage specified in subparagraph (B) for
the State for the quarter.
‘‘(B) FEDERAL PERCENTAGE DEFINED.—
The Federal percentage specified in this sub-
paragraph for a State or the District of Colum-
bia for a quarter is—
‘‘(i) the Federal medical assistance
percentage specified in section 1905(b)
(determined without regard to section
1931(d)) for the State for the quarter, in-
creased by
‘‘(ii) a percentage equal to the per-
centage specified in subparagraph (C) of
the difference between 100 percentage
points and the Federal medical assistance
percentage described in clause (i).
‘‘(C) PHASE IN.—The percentage specified
in this subparagraph for calendar quarters oc-
curring in—
‘‘(i) the third effective fiscal year is
50 percent;
‘‘(ii) each of the next 3 succeeding fis-
cal years, is the percentage specified in
this subparagraph for the calendar quar-
ters occurring in the previous fiscal year
increased by 10 percent;
‘‘(iii) each of the next 3 succeeding
fiscal years, is the percentage specified in
this subparagraph for the calendar quar-
ters occurring in the previous fiscal year
increased by 5 percent; and
‘‘(iv) each succeeding fiscal year, is
100 percent.
‘‘(3) PAYMENT AMOUNT.—
‘‘(A) IN GENERAL.—The payment amount
specified under this paragraph for a State for
a quarter in a fiscal year is equal to the prod-
uct of—
‘‘(i) the average, per capita payment
level made under this title for the last full
fiscal year before the first effective fiscal
year, increased by the percentage specified
in subparagraph (B), and
‘‘(ii) the population of the State.
‘‘(B) PERCENTAGE
INCREASE.—The per-
centage specified in this subparagraph for a fis-
cal year is the percentage increase in the
consumer price index for all urban consumers
(all items; U.S. city average) between the mid-
point of the fiscal year described in subpara-
graph (A)(i) to the midpoint of the fiscal year
involved.
‘‘(c) DECREASE IN FMAP FOR SERVICES NOT COV-
ERED UNDER PART.—
‘‘(1) IN GENERAL.—Notwithstanding any other
provision of law, the Federal medical assistance per-
centage for each of the 50 States and the District
of Columbia for medical assistance for services for
which benefits are not available under this part shall
be, for calendar quarters occurring in a fiscal year
(beginning with the third effective fiscal year), the
percentage specified in paragraph (2) of the Federal
medical assistance percentage otherwise applicable
(without regard to this part).
‘‘(2) PHASE OUT PERCENTAGE.—The percent-
age specified in this paragraph for calendar quarters
occurring in—
‘‘(A) the third and fourth effective fiscal
years is 85 and 80 percent, respectively;
‘‘(B) each of the next 4 succeeding fiscal
years, is the percentage specified in this para-
graph for the calendar quarters occurring in the
previous fiscal year decreased by 10 percentage
points;
‘‘(C) the next succeeding fiscal year, is 20
percent; and
‘‘(D) each succeeding fiscal year, is 0 per-
cent.’’.
(b) STUDY AND REPORT MAINTENANCE OF EFFORT
FORMULA.—
(1) STUDY.—The Secretary of Health and
Human Services shall provide for a study on the ef-
fect of the State maintenance-of-effort requirements
(under subsections (a) and (b) of section 1957(b) of
the Social Security Act, as added by subsection (a))
on different States and on the relation of the total
amount of maintenance of effort to the long-term
care needs in each State.
(2) REPORT.—Not later than 2 years after the
date of the enactment of this Act, the Secretary
shall submit to Congress a report on such study.
The Secretary shall include in such report such rec-
ommendations for adjustments in the requirements
of such subsections as may be appropriate to limit
the effort required of States to some indicator based
on the needs for long-term care services in each
State.
Subtitle B—Medicare Reform
SEC. 111. IMPROVED EFFICIENCY THROUGH CONSOLIDA-
TION OF ADMINISTRATION OF PARTS A AND
B.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall take such steps as may be necessary
to consolidate the administration of parts A and B of the
medicare program over a 5-year period.
(b) COMBINATION OF INTERMEDIARY AND CARRIER
FUNCTIONS.—In taking such steps, the Secretary shall
contract with a single entity that combines the
intermediary and carrier functions in each area except
where the Secretary finds that special regional or national
contracts are appropriate.
(c) REPORT ON LEGISLATION REQUIRED.—Not later
than 1 year after the date of the enactment of this Act,
the Secretary shall submit to Congress a report specifying
such legislative changes as may be required in order to
carry out this section.
SEC. 112. PROVIDER PAYMENT REFORMS TO ADDRESS IN-
CONSISTENT INCENTIVES.
(a) DEVELOPMENT OF PAYMENT PROPOSALS.—The
Secretary of Health and Human Services shall develop
payment proposals that eliminate inconsistent incentives
that now exist under the medicare program. Such payment
proposals shall include the following:
(1) Proposals that ensure appropriate, consist-
ent, and complimentary payment incentives for pay-
ments for hospital services and payments for physi-
cian services.
(2) Proposals that eliminate inconsistent pay-
ment policies for the same service at different sites.
(3) Proposals that instill appropriate incentives
as regards the growth in service capacity and appro-
priate use of services.
(4) Proposals that are consistent with the goals
of ensuring both access to appropriate high quality
of care throughout an episode of illness and cost ef-
ficiency in the care delivered.
(b) REPORT.—Not later than 1 year after the date
of the enactment of this Act, the Secretary shall submit
to Congress a description of such proposals. The Secretary
shall include in the report such recommendations with re-
spect to such proposals as the Secretary determines to be
appropriate and shall specify such legislative changes as
may be required in order to implement such recommenda-
tions.
Subtitle C—Health Benefit Plan
Reform
PART 1—PREEMPTION OF STATE MANDATORY BENEFIT
LAWS AND ANTI-MANAGED CARE LAWS
SEC. 121. PREEMPTION FROM INSURANCE MANDATES FOR
QUALIFIED SMALL EMPLOYER PURCHASING
GROUPS.
(a) QUALIFIED
SMALL
EMPLOYER
PURCHASING
GROUP DEFINED.—For purposes of this section, an asso-
ciation is a qualified small employer purchasing group if—
(1) the association submits an application to
the Secretary of Health and Human Services at such
time and in such form as the Secretary may require;
and
(2) on the basis of information contained in the
application and any other information the Secretary
may require, the Secretary determines that—
(A) the association is administered solely
under the authority and control of its member
employers,
(B) the association’s membership consists
solely of employers with not more than 100 em-
ployees (except that an employer member of the
group may retain its membership in the group
if, after the Secretary determines that the asso-
ciation meets the requirements of this para-
graph, the number of employees of the employer
member increases to more than 100),
(C) with respect to each State in which its
members are located, the association consists of
not fewer than 100 employers, and
(D) at the time the association submits its
application, the health benefit plans with re-
spect to the employer members of the associa-
tion are in compliance with applicable State
laws relating to health benefit plans.
(b) PREEMPTION FROM INSURANCE MANDATES.—
(1) FINDING.—Congress finds that employer
purchasing groups organized for the purpose of ob-
taining health insurance for employer members af-
fect interstate commerce.
(2) PREEMPTION OF STATE MANDATES.—In the
case of a qualified small employer purchasing group
described in subsection (a), no provision of State law
shall apply that requires the offering, as part of the
health benefit plan with respect to an employer
member of such a group, of any services, category
of care, or services of any class or type of provider.
(3) PREEMPTION OF PROVISIONS PROHIBITING
EMPLOYER GROUPS FROM PURCHASING HEALTH IN-
SURANCE.—In the case of a qualified small employer
purchasing group described in subsection (a), no
provision of State or local law shall apply that pro-
hibits a group of employers from purchasing health
insurance with respect to member employers of the
group or their employees.
(c) EFFECTIVE DATE.—This section shall take effect
60 days after the date of the enactment of this Act.
SEC. 122. REMOVING RESTRICTIONS ON MANAGED CARE.
(a) PREEMPTION OF STATE LAW PROVISIONS.—Sub-
ject to subsection (c), the following provisions of State law
are preempted and may not be enforced:
(1) RESTRICTIONS ON REIMBURSEMENT RATES
OR
SELECTIVE
CONTRACTING.—Any law that re-
stricts the ability of a carrier to negotiate reimburse-
ment rates with providers or to contract selectively
with one provider or a limited number of providers.
(2) RESTRICTIONS
ON
DIFFERENTIAL
FINAN-
CIAL INCENTIVES.—Any law that limits the financial
incentives that a health benefit plan may require a
beneficiary to pay when a non-plan provider is used
on a non-emergency basis.
(3) RESTRICTIONS
ON
UTILIZATION
REVIEW
METHODS.—Any law that—
(A) prohibits utilization review of any or
all treatments and conditions,
(B) requires that such review be made (i)
by a resident of the State in which the treat-
ment is to be offered or by an individual li-
censed in such State, or (ii) by a physician in
any particular specialty or with any board cer-
tified specialty of the same medical specialty as
the provider whose services are being reviewed,
(C) requires the use of specified standards
of health care practice in such reviews or re-
quires the disclosure of the specific criteria used
in such reviews,
(D) requires payments to providers for the
expenses of responding to utilization review re-
quests, or
(E) imposes liability for delays in perform-
ing such review.
Nothing in subparagraph (B) shall be construed as
prohibiting a State from (i) requiring that utilization
review be conducted by a licensed health care profes-
sional or (ii) requiring that any appeal from such a
review be made by a licensed physician or by a li-
censed physician in any particular specialty or with
any board certified specialty of the same medical
specialty as the provider whose services are being re-
viewed.
(b) GAO STUDY.—
(1) IN
GENERAL.—The Comptroller General
shall conduct a study of the benefits and cost effec-
tiveness of the use of managed care in the delivery
of health services.
(2) REPORT.—By not later than 4 years after
the date of the enactment of this Act, the Comptrol-
ler General shall submit a report to Congress on the
study conducted under paragraph (1) and shall in-
clude in the report such recommendations (including
whether the provisions of subsection (a) should be
extended) as may be appropriate.
(c) SUNSET.—Unless otherwise provided, subsection
(a) shall not apply 5 years after the date of the enactment
of this Act.
PART 2—RESTRICTION ON PRE-EXISTING CONDITION
PROVISIONS FOR EMPLOYER HEALTH INSURANCE
SEC. 
123. 
LIMITATION 
ON 
PRE-EXISTING 
CONDITION
CLAUSES; ASSURANCE OF CONTINUITY OF
COVERAGE.
(a) LIMITATIONS ON TREATMENT OF PRE-EXISTING
CONDITIONS.—A carrier may not impose (or require an
employer to impose through a waiting period for coverage
under a health benefit policy or similar requirement) a
limitation or exclusion of benefits under an employer
health benefit plan relating to treatment of a condition
based on the fact that the condition pre-existed the effec-
tiveness of the policy if—
(1) the condition relates to a condition that was
not diagnosed or treated within 6 months before the
date of coverage under the plan;
(2) the limitation or exclusion extends over
more than 6 months after the date of coverage
under the plan;
(3) the limitation or exclusion applies to an in-
dividual who, as of the date of birth, was covered
under the plan or is under 19 years of age; or
(4) the limitation or exclusion relates to preg-
nancy.
In the case of an individual who is eligible for coverage
under an employer health benefit plan but for a waiting
period imposed by the employer, in applying paragraphs
(1) and (2), the individual shall be treated as have been
covered under the plan as of the earliest date of the begin-
ning of the waiting period.
(b) ASSURANCE
OF
CONTINUITY
OF
COVERAGE
THROUGH PREVIOUS SATISFACTION OF PRE-EXISTING
CONDITION REQUIREMENT.—
(1) IN GENERAL.—Each carrier shall waive any
period applicable to a pre-existing condition for simi-
lar benefits with respect to an individual to the ex-
tent that the individual was covered for the condi-
tion under any health benefit plan (as defined in
paragraph (3)) that was in effect before the date of
the enrollment under the carrier’s plan.
(2) CONTINUOUS COVERAGE REQUIRED.—
(A) IN GENERAL.—Paragraph (1) shall no
longer apply if there is a continuous period of
more than 60 days (or, in the case of an indi-
vidual described in subparagraph (C), 6
months) on which the individual was not cov-
ered under a health benefit plan.
(B) TREATMENT OF WAITING PERIODS.—
In applying subparagraph (A), any waiting pe-
riod imposed by an employer before an em-
ployee is eligible to be covered under a policy
shall be treated as a period in which the em-
ployee was covered under a health benefit plan.
(C) JOB TERMINATION.—An individual is
described in this subparagraph if the individual
loses coverage under an employer health plan
due to termination of employment.
(3) EXCLUSION
OF
CASH-ONLY
AND
DREAD
DISEASE
POLICIES.—In this subsection, the term
‘‘health benefit plan’’ does not include any insurance
which is offered primarily to provide—
(A) coverage for a specified disease or ill-
ness, or
(B) hospital or fixed indemnity policy, un-
less the Secretary (or in the case of a plan in
a State, the State) determines that such a pol-
icy provides sufficiently comprehensive coverage
of a benefit so that it should be treated as a
health benefit plan under this subsection.
PART 3—SMALL EMPLOYER INSURANCE MARKET
REFORMS
SEC. 124. ACCEPTANCE OF ALL SMALL EMPLOYER SEEKING
COVERAGE; OFFERING OF MINIMUM BENEFIT
PACKAGE.
(a) ACCEPTANCE OF ALL SMALL EMPLOYER GROUPS
SEEKING COVERAGE.—Subject to the succeeding provi-
sions of this section, a carrier that offers a small employer
health plan to small employers located in a State—
(1) must offer the same plan to any other small
employer located in the State, and
(2) may refuse to issue or renew or terminate
such a plan for a small employer only for—
(A) nonpayment of premiums, or
(B) fraud or misrepresentation.
The requirement of paragraph (1) shall apply on a contin-
uous, year-round basis.
(b) OFFERING OF MINIMUM BENEFIT PACKAGE.—
At such time as a minimum benefit package is established
under section 203, each carrier that makes available in
a State any small employer health benefit plan shall make
available to each small employer in the State such a plan
that only provides benefits for the minimum benefit pack-
age established under such section.
(c) RESTRICTIONS OF ENROLLMENT PERMITTED IN
THE CASE OF CERTAIN ASSOCIATION COVERAGE.—In the
case of an health benefit plan offered through an associa-
tion which is composed exclusively of employers (which
may include self-employed individuals) and which has been
formed for purposes other than obtaining health insur-
ance, the carrier is not required to offer the plan with re-
spect to individuals who are not employees of such employ-
ers or self-employed members of the association, or their
dependents.
(d) TREATMENT OF HEALTH MAINTENANCE ORGA-
NIZATIONS.—
(1) 
GEOGRAPHIC
LIMITATIONS.—A 
health
maintenance organization may deny enrollment with
respect to an individual if the individual is residing
outside the service area of the organization, but only
if such denial is applied uniformly without regard to
health status or insurability.
(2) SIZE LIMITS.—A health maintenance orga-
nization may apply to the Secretary to cease enroll-
ing new employer groups or individuals in its in-
sured health benefit plan (or in a geographic area
served by the plan) if—
(A) it ceases to enroll any new employer
groups or individuals, and
(B) it can demonstrate that its financial or
administrative capacity to serve previously en-
rolled groups and individuals (and additional in-
dividuals who will be expected to enroll because
of affiliation with such previously enrolled
groups) will be impaired if it is required to en-
roll new employer groups or individuals.
SEC. 125. USE OF COMMUNITY-RATED PREMIUMS.
(a) COHESIVE RATING SYSTEM
AND ACTUARIAL
CERTIFICATION.—
(1) IN
GENERAL.—The premiums (including
reference premium rate, as defined in subsection
(b)(2)) and age-sex adjustments under subsection (c)
for all small employer health plans of the same car-
rier shall—
(A) be established based on a single cohe-
sive rating system which is applied consistently
for all small employers and is designed not to
treat small employers differently based on
health status or risk status; and
(B) be actuarially certified annually.
(2) ACTUARIAL
CERTIFIED
DEFINED.—For
purposes of paragraph (1)(B), a plan is considered
to be ‘‘actuarially certified’’ if there is a written
statement, by a member of the American Academy
of Actuaries or other individual acceptable to the
Secretary that a small employer carrier is in compli-
ance with this section, based upon the individual’s
examination, including a review of the appropriate
records and of the actuarial assumptions and meth-
ods utilized by the carrier in establishing premium
rates for applicable health plans.
(b) USE OF COMMUNITY-RATED REFERENCE PRE-
MIUM RATES.—
(1) IN GENERAL.—The reference premium rate
charged for a small employer health plan with simi-
lar benefits in a community for a type of family en-
rollment (described in subsection (d)) shall be the
same for all small employers.
(2) REFERENCE PREMIUM RATE.—In this sec-
tion, the term ‘‘reference premium rate’’ means, for
a rating period in a community, the lowest premium
rate charged or which could have been charged by
the small employer carrier to small employers under
a rating system in the community for health plans
with the same or similar coverage. The reference
premium rate is determined without regard to any
adjustment for age or sex described in subsection
(c).
(c) AGE AND SEX ADJUSTMENT TO COMMUNITY-
RATING.—
(1) IN GENERAL.—Subject to paragraph (2), a
small employer health plan may provide for an ad-
justment to the reference premium rate based on
age and gender of covered individuals. Any such ad-
justment shall be applied consistently to all small
employers.
(2) LIMITATION ON ADJUSTMENT.—The adjust-
ment under paragraph (1) may not result, with re-
spect to small employer health plans with similar
benefits in a community, in a premium rate for the
most expensive age-sex group exceeding 133 percent
of the premium rate for the least expensive age-sex
group.
(d) TYPES OF FAMILY ENROLLMENT.—Each small
employer health plan shall permit enrollment of (and shall
compute premiums separately for) individuals based on
each of the following beneficiary classes:
(1) 1 adult.
(2) A married couple without children.
(3) A married couple with 1 or more children,
or 1 adult with 1 or more children.
(e) COMMUNITY.—For purposes of this section, the
term ‘‘community’’ means a geographic area designated
by the Secretary as—
(1) encompassing one or more adjacent metro-
politan statistical areas, or
(2) the remaining area within each State (that
is not designated within any community under para-
graph (1));
except that the Secretary may designate an entire State
as a community if such a designation would better carry
out the purposes of this title. The Secretary from time
to time may change the boundaries of communities des-
ignated under paragraph (1) or (2) for such purposes.
There shall be no administrative or judicial review of the
designation of communities under this subsection.
PART 4—ESTABLISHMENT OF STANDARDS;
ENFORCEMENT; GENERAL DEFINITIONS
SEC. 126. ESTABLISHMENT OF STANDARDS.
(a) ROLE OF NAIC.—The Secretary shall request the
National Association of Insurance Commissioners to de-
velop, within 9 months after the date of the enactment
of this Act, model regulations that specify standards to
carry out parts 2 and 3 of this subtitle. If the Association
develops such regulations specifying such standards within
such period, the Secretary shall review such standards to
determine if they meet such requirements. Such review
shall be completed within 30 days after the date the regu-
lations are developed. Unless the Secretary determines
within such period that the standards do not meet the re-
quirements, such standards shall serve as the standards
under section 127.
(b) CONTINGENCY.—If the Association does not de-
velop such model regulations within such period or the
Secretary determines that such regulations do not meet
the requirements described in subsection (a), the Sec-
retary shall specify, within 15 months after the date of
the enactment of this Act, standards to carry out parts
2 and 3 of this subtitle.
(c) EFFECTIVE
DATE.—The standards provided
under this section shall apply to small employer health
benefit plans offered in a State on or after the date the
standards are implemented in the State under section 127
and to such plans renewed on or after 4 years after the
date such standards are implemented in the State under
such section.
SEC. 127. ENFORCEMENT.
(a) PRIMARY APPLICATION OF STANDARDS TO IN-
SURED PLANS THROUGH STATES.—
(1) IN GENERAL.—Each State shall submit to
the Secretary, by the deadline specified in paragraph
(B), a report on the implementation and enforce-
ment of the standards established under section 126
with respect to insured employer health benefit plans
offered not later than such deadline.
(2) DEADLINE FOR REPORT.—
(A) 1 YEAR
AFTER
STANDARDS
ESTAB-
LISHED.—Subject to subparagraph (B), the
deadline under this paragraph is 1 year after
the date standards are established under section
126.
(B) EXCEPTION
FOR
LEGISLATION.—In
the case of a State which the Secretary identi-
fies, in consultation with the National Associa-
tion of Insurance Commissioners, as—
(i) requiring State legislation (other
than legislation appropriating funds) in
order for carriers and health benefit plans
offered to small employers to meet the
standards established under section 126,
but
(ii) having a legislature which is not
scheduled to meet in 1993 in a legislative
session in which such legislation may be
considered,
the date specified in this paragraph is the first
day of the first calendar quarter beginning after
the close of the first legislative session of the
State legislature that begins on or after Janu-
ary 1, 1993. For purposes of the previous sen-
tence, in the case of a State that has a 2-year
legislative session, each year of such session
shall be deemed to be a separate regular ses-
sion of the State legislature.
(b) MORE STRINGENT STATE STANDARDS PER-
MITTED.—A State may, under this section, implement
standards that are more stringent than the standards es-
tablished under section 126.
(c) FEDERAL ROLE.—
(1) INSURED PLANS.—If the Secretary deter-
mines that a State has failed to submit a report by
the deadline specified under subsection (a) or finds
that the State no longer is carrying out its respon-
sibility under the respective subsection, the Sec-
retary shall notify the State and provide the State
a period of 30 days in which to submit such report
or to carry out its responsibilities under the respec-
tive subsection. If, after such 30-day period, the Sec-
retary finds that such a failure has not been cor-
rected, the Secretary shall provide for such mecha-
nism for the implementation and enforcement of the
standards established under section 126 in the State
with respect to insured employer health benefit plans
as the Secretary determines to be appropriate. Such
standards shall apply to health benefit plans offered
or renewed on or after 3 months after the applicable
deadlines established under section 126(c).
(2) 
SELF-INSURED
PLANS.—The 
Secretary
shall provide for such mechanism for the implemen-
tation and enforcement of the standards established
under section 126 in the State with respect to em-
ployer health benefit plans that are not subject to
regulation by a State (or by the Secretary under
paragraph (1)) as the Secretary determines to be ap-
propriate. Such standards shall apply to such health
benefit plans offered or renewed on or after 1 year
after the date standards are established under sec-
tion 126.
(d) FEDERAL ENFORCEMENT THROUGH EXCISE
TAX.—
(1) IN GENERAL.—Chapter 43 of the Internal
Revenue Code of 1986 (relating to qualified pension,
etc., plans) is amended by adding at the end thereof
the following new section:
‘‘SEC. 4980C. FAILURE BY CARRIER TO COMPLY WITH EM-
PLOYER HEALTH INSURANCE STANDARDS.
‘‘(a) IMPOSITION OF TAX.—There is hereby imposed
a tax on the failure of—
‘‘(1) any carrier to comply with the standards
established under section 126 of the American Con-
sumers Health Care Reform Act of 1993 to carry
out part 2 of subtitle B of such Act, or
‘‘(2) any small employer carrier in any Federal
standard State to comply with the standards estab-
lished under such section to carry out part 3 of such
subtitle.
‘‘(b) AMOUNT OF TAX.—The tax imposed by—
‘‘(1) subsection (a)(1) shall be equal to 25 per-
cent of the amounts received by the health benefit
plan (during the period such failure persists), or
‘‘(2) subsection (a)(2) shall be equal to 25 per-
cent of the amounts received by the carrier (during
the period such failure persists) for providing any
health benefit plan with respect to any employer in
the Federal standard State.
‘‘(c) LIABILITY FOR TAX.—The tax imposed by—
‘‘(1) subsection (a)(1) shall be paid by the per-
son issuing the health benefit plan, or
‘‘(2) subsection (a)(2) shall be paid by the car-
rier.
‘‘(d) EXCEPTIONS.—
‘‘(1) CORRECTIONS WITHIN 30 DAYS.—No tax
shall be imposed by subsection (a) by reason of any
failure if—
‘‘(A) such failure was due to reasonable
cause and not to willful neglect, and
‘‘(B) such failure is corrected within the
30-day period beginning on earliest date the
carrier knew, or exercising reasonable diligence
would have known, that such failure existed.
‘‘(2) WAIVER BY SECRETARY.—In the case of a
failure which is due to reasonable cause and not to
willful neglect, the Secretary may waive part or all
of the tax imposed by subsection (a) to the extent
that payment of such tax would be excessive relative
to the failure involved.
‘‘(e) DEFINITIONS.—For purposes of this section—
‘‘(1) CARRIER; 
ETC.—The terms ‘carrier’,
‘small employer carrier’, ‘health benefit plan’, and
‘small employer’ have the meanings given such terms
in section 128 of the American Consumers Health
Care Reform Act of 1993.
‘‘(2) FEDERAL
STANDARD
STATE.—The term
‘Federal standard State’ means any State with re-
spect to which a determination is in effect under sec-
tion 127(c)(1)) of the American Consumers Health
Care Reform Act of 1993.’’.
(2) CLERICAL AMENDMENT.—The table of sec-
tions for chapter 43 of such Code is amended by
adding at the end thereof the following new items:
‘‘Sec. 4980C. Failure by carrier to comply with employer health
insurance standards in States.’’.
SEC. 128. DEFINITIONS.
In this subtitle (except as otherwise provided):
(1) The term ‘‘carrier’’ means any entity which
provides health insurance or health benefits in a
State, and includes a licensed insurance company, a
prepaid hospital or medical service plan, a health
maintenance organization, the plan sponsor of a
multiple employer welfare arrangement or an em-
ployee benefit plan (as defined under the Employee
Retirement Income Security Act of 1974), or any
other entity providing a plan of health insurance
subject to State insurance regulation.
(2)(A) Subject to subparagraph (B), the term
‘‘employer health benefit plan’’ means a health bene-
fit plan (including an employee welfare benefit plan,
as defined in section 3(1) of the Employee Retire-
ment Income Security Act of 1974) which is offered
to employees through an employer and for which the
employer provides for any contribution to such plan
or any premium for such plan are deducted by the
employer from compensation to the employee.
(B) A State may provide (for a plan in a State)
that the term ‘‘employer health benefit plan’’ does
not include an association plan (as defined in sub-
paragraph (C)).
(C) For purposes of subparagraph (B), the
term ‘‘association plan’’ means a health benefit plan
offered by an organization to its members if the or-
ganization was formed other than for purposes of
purchasing insurance.
(3) The term ‘‘full-time employee’’ means, with
respect to an employer, an individual who normally
is employed for at least 30 hours per week by the
employer.
(4) The term ‘‘health benefit plan’’ means any
hospital or medical expense incurred policy or certifi-
cate, hospital or medical service plan contract, or
health maintenance subscriber contract, or a mul-
tiple employer welfare arrangement or employee ben-
efit plan (as defined under the Employee Retirement
Income Security Act of 1974) which provides bene-
fits with respect to health care services, but does not
include—
(A) coverage only for accident, dental, vi-
sion, disability income, or long-term care insur-
ance, or any combination thereof,
(B) medicare supplemental health insur-
ance,
(C) coverage issued as a supplement to li-
ability insurance,
(D) worker’s compensation or similar in-
surance, or
(E) automobile medical-payment insurance,
or any combination thereof.
(5) The term ‘‘health maintenance organiza-
tion’’ includes a carrier that meets specified stand-
ards and that offers to provide health services on a
prepaid, at-risk basis primarily through a defined set
of providers.
(6) The term ‘‘insured health benefit plan’’
means any health benefit plan provided through in-
surance, and includes a prepaid hospital or medical
service plan, the health benefit plan of a health
maintenance organization, and a multiple employer
welfare arrangement.
(7) The term ‘‘Secretary’’ means the Secretary
of Health and Human Services.
Subtitle D—Medical Malpractice
Reform
PART 1—GENERAL PROVISIONS
SEC. 131. FEDERAL REFORM OF MEDICAL MALPRACTICE
LIABILITY ACTIONS.
(a) CONGRESSIONAL FINDINGS.—
(1) EFFECT
ON
INTERSTATE
COMMERCE.—
Congress finds that the health care and insurance
industries are industries affecting interstate com-
merce and the medical malpractice litigation systems
existing throughout the United States affect inter-
state commerce by contributing to the high cost of
health care and premiums for malpractice insurance
purchased by health care providers.
(2) EFFECT
ON
FEDERAL
SPENDING.—Con-
gress finds that the medical malpractice litigation
systems existing throughout the United States have
a significant effect on the amount, distribution, and
use of Federal funds because of—
(A) the large number of individuals who
receive health care benefits under programs op-
erated or financed by the Federal Government;
(B) the large number of individuals who
benefit because of the exclusion from Federal
taxes of the amounts spent by their employers
to provide them with health insurance benefits;
(C) the large number of health care provid-
ers and health care professionals who provide
items or services for which the Federal Govern-
ment makes payments; and
(D) the large number of such providers
and professionals who have received direct or
indirect financial assistance from the Federal
Government because of their status as such
professionals or providers.
(b) APPLICABILITY.—This subtitle shall apply with
respect to any medical malpractice liability claim and to
any medical malpractice liability action brought in any
State or Federal court, except that this subtitle shall not
apply to—
(1) 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 applies to
the action; or
(2) a claim or action in which the plaintiff’s
sole allegation is an allegation of an injury arising
from the use of a medical product.
(c) PREEMPTION OF STATE LAW.—Subject to section
151, this subtitle supersedes State law only to the extent
that State law differs from any provision of law estab-
lished by or under this subtitle. Any issue that is not gov-
erned by any provision of law established by or under this
subtitle shall be governed by otherwise applicable State or
Federal law.
(d) FEDERAL COURT JURISDICTION NOT ESTAB-
LISHED ON FEDERAL QUESTION GROUNDS.—Nothing in
this subtitle shall be construed to establish any jurisdiction
in the district courts of the United States over medical
malpractice liability actions on the basis of sections 1331
or 1337 of title 28, United States Code.
SEC. 132. DEFINITIONS.
As used in this subtitle:
(1) ALTERNATIVE DISPUTE RESOLUTION SYS-
TEM; ADR.—The term ‘‘alternative dispute resolution
system’’ or ‘‘ADR’’ means a system established by
a State that provides for the resolution of medical
malpractice liability claims in a manner other than
through medical malpractice liability actions.
(2) CLAIMANT.—The term ‘‘claimant’’ means
any person who alleges a medical malpractice liabil-
ity claim, or, in the case of an individual who is de-
ceased, incompetent, or a minor, the person on
whose behalf such a claim is alleged.
(3) ECONOMIC DAMAGES.—The term ‘‘economic
damages’’ means damages paid to compensate an in-
dividual for losses for hospital and other medical ex-
penses, lost wages, lost employment, and other pecu-
niary losses.
(4) HEALTH CARE PROFESSIONAL.—The term
‘‘health care professional’’ means any individual who
provides health care services in a State and who is
required by State law or regulation to be licensed or
certified by the State to provide such services in the
State.
(5) 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 State
law or regulation to be licensed or certified by the
State to engage in the delivery of such services in
the State.
(6) INJURY.—The term ‘‘injury’’ means any ill-
ness, disease, or other harm that is the subject of
a medical malpractice liability action or claim.
(7) MEDICAL
MALPRACTICE
LIABILITY
AC-
TION.—The term ‘‘medical malpractice liability ac-
tion’’ means a civil action (other than an action in
which the plaintiff’s sole allegation is an allegation
of an intentional tort) brought in a State or Federal
court against a health care provider or health care
professional (regardless of the theory of liability on
which the action is based) in which the plaintiff al-
leges a medical malpractice liability claim.
(8) 
MEDICAL
MALPRACTICE
LIABILITY
CLAIM.—The term ‘‘medical malpractice liability
claim’’ means a claim in which the claimant alleges
that injury was caused by the provision of (or the
failure to provide) health care services.
(9) MEDICAL
PRODUCT.—The term ‘‘medical
product’’ means a device (as defined in section
201(h) of the Federal Food, Drug, and Cosmetic
Act) or a drug (as defined in section 201(g)(1) of
the Federal Food, Drug, and Cosmetic Act).
(10) 
NONECONOMIC
DAMAGES.—The 
term
‘‘noneconomic damages’’ means damages paid to
compensate an individual for losses for physical and
emotional pain, suffering, inconvenience, physical
impairment, mental anguish, disfigurement, loss of
enjoyment of life, loss of consortium, and other
nonpecuniary losses, but does not include punitive
damages.
(11) 
SECRETARY.—The 
term 
‘‘Secretary’’
means the Secretary of Health and Human Services.
(12) STATE.—The term ‘‘State’’ means each of
the several States, the District of Columbia, the
Commonwealth of Puerto Rico, the Virgin Islands,
Guam, and American Samoa.
SEC. 133. EFFECTIVE DATE.
(a) IN GENERAL.—Except as provided in subsection
(b) and sections 149, 172, and 173, this subtitle shall
apply with respect to claims accruing or actions brought
on or after the expiration of the 3-year period that begins
on the date of the enactment of this Act.
(b) EXCEPTION FOR STATES REQUESTING EARLIER
IMPLEMENTATION OF REFORMS.—
(1) APPLICATION.—A State may submit an ap-
plication to the Secretary requesting the early imple-
mentation of this subtitle with respect to claims or
actions brought in the State.
(2) DECISION BY SECRETARY.—The Secretary
shall issue a response to a State’s application under
paragraph (1) not later than 90 days after receiving
the application. If the Secretary determines that the
State meets the requirements of this subtitle at the
time of submitting its application, the Secretary
shall approve the State’s application, and this sub-
title shall apply with respect to actions brought in
the State on or after the expiration of the 90-day