I
103D CONGRESS
2D SESSION
H. R. 4519
To increase access to health insurance for employees of small businesses,
and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MAY 26, 1994
Mr. MANZULLO introduced the following bill; which was referred jointly to the
Committees on Energy and Commerce, Education and Labor, Ways and
Means, and the Judiciary
A BILL
To increase access to health insurance for employees of small
businesses, 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; FINDINGS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Small Business Health Insurance Choice Act’’.
(b) FINDINGS RELATING
TO INTERSTATE COM-
MERCE.—Congress finds that health insurance is a critical
part of the economy of the United States and interstate
commerce, consumes a significant percentage of public
and private spending, and affects all industries and indi-
viduals in the United States.
SEC. 2. TABLE OF CONTENTS.
The table of contents of this Act is as follows:
Sec. 1. Short title; findings.
Sec. 2. Table of contents.
TITLE I—IMPROVED ACCESS TO AFFORDABLE HEALTH CARE
Subtitle A—Increased Availability and Continuity of Health Coverage for
Employees and Their Families
PART 1—PREEXISTING CONDITIONS AND CONTINUITY OF
COVERAGE; RENEWABILITY
Sec. 101. Limitation on pre-existing condition clauses.
Sec. 102. Assurance of continuity of coverage through previous satisfaction of
pre-existing condition requirement.
Sec. 103. Requirements relating to renewability generally.
PART 2—ENFORCEMENT; EFFECTIVE DATES; DEFINITIONS
Sec. 111. Enforcement.
Sec. 112. Effective dates.
Sec. 113. Definitions.
Subtitle B—Preemption of Scope of State Regulation
Sec. 121. Prohibition of State benefit mandates for group health plans.
Sec. 122. Prohibition of provisions prohibiting employer groups from purchas-
ing health insurance.
Sec. 123. Restrictions on managed care.
Sec. 124. Definitions.
Subtitle C—Health Deduction Fairness
Sec. 131. Permanent extension and increase in health insurance tax deduction
for self-employed individuals.
Sec. 132. Deduction of health insurance premiums for certain previously unin-
sured individuals.
TITLE II—REMOVING ANTI-TRUST IMPEDIMENTS
Sec. 201. Establishment of limited exemption program for health care joint
ventures.
Sec. 202. Issuance of health care certificates of public advantage.
Sec. 203. Interagency Advisory Committee on Competition, Antitrust Policy,
and Health Care.
Sec. 204. Definitions.
TITLE I—IMPROVED ACCESS TO
AFFORDABLE HEALTH CARE
Subtitle A—Increased Availability
and Continuity of Health Cov-
erage for Employees and Their
Families
PART 1—PREEXISTING CONDITIONS AND
CONTINUITY OF COVERAGE; RENEW-
ABILITY
SEC. 
101. 
LIMITATION 
ON 
PRE-EXISTING 
CONDITION
CLAUSES.
A group health plan may not impose (and an insurer
may not require an employer under a group health plan
to impose through a waiting period for coverage under a
plan or similar requirement) a limitation or exclusion of
benefits relating to treatment of a condition based on the
fact that the condition pre-existed the effective date of the
plan with respect to an individual if—
(1) the condition relates to a condition that was
not diagnosed or treated within 3 months before the
date of coverage under the plan;
(2) the limitation or exclusion extends over
more than 6 months after the date of coverage
under the plan;
(3) the limitation or exclusion applies to an in-
dividual who, as of the date of birth, was covered
under the plan; or
(4) the limitation or exclusion relates to preg-
nancy.
In the case of an individual who is eligible for coverage
under a plan but for a waiting period imposed by the em-
ployer, in applying paragraphs (1) and (2), the individual
shall be treated as having been covered under the plan
as of the earliest date of the beginning of the waiting pe-
riod.
SEC. 102. ASSURANCE OF CONTINUITY OF COVERAGE
THROUGH PREVIOUS SATISFACTION OF PRE-
EXISTING CONDITION REQUIREMENT.
(a) IN GENERAL.—Each group health plan shall
waive any period applicable to a preexisting condition for
similar benefits with respect to an individual to the extent
that the individual, prior to the date of such individual’s
enrollment in such plan, was covered for the condition
under any other health plan that was in effect before such
date.
(b) CONTINUOUS COVERAGE REQUIRED.—
(1) IN
GENERAL.—Subsection (a) shall no
longer apply if there is a continuous period of more
than 60 days (or, in the case of an individual de-
scribed in paragraph (3), 6 months) on which the in-
dividual was not covered under a group health plan.
(2) TREATMENT OF WAITING PERIODS.—In ap-
plying paragraph (1), any waiting period imposed by
an employer before an employee is eligible to be cov-
ered under a plan shall be treated as a period in
which the employee was covered under a group
health plan.
(3) JOB TERMINATION.—An individual is de-
scribed in this paragraph if the individual loses cov-
erage under a group health plan due to termination
of employment.
(4) EXCLUSION
OF
CASH-ONLY
AND
DREAD
DISEASE
PLANS.—In this subsection, the term
‘‘group health plan’’ does not include any group
health plan which is offered primarily to provide—
(A) coverage for a specified disease or ill-
ness, or
(B) a hospital or fixed indemnity policy,
unless the Secretary determines that such a
plan provides sufficiently comprehensive cov-
erage of a benefit so that it should be treated
as a group health plan under this subsection.
SEC. 103. REQUIREMENTS RELATING TO RENEWABILITY
GENERALLY.
(a) MULTIEMPLOYER PLANS AND EXEMPTED MUL-
TIPLE EMPLOYER HEALTH PLANS.—A multiemployer
plan and an exempted multiple employer health plan may
not cancel coverage or deny renewal of coverage under
such a plan with respect to an employer other than—
(1) for nonpayment of contributions,
(2) for fraud or other misrepresentation by the
employer,
(3) for noncompliance with plan provisions,
(4) for misuse of a provider network provision,
or
(5) because the plan is ceasing to provide any
coverage in a geographic area.
(b) INSURERS.—
(1) IN GENERAL.—An insurer may not cancel a
health insurance plan or deny renewal of coverage
under such a plan other than—
(A) for nonpayment of premiums,
(B) for fraud or other misrepresentation
by the insured,
(C) for noncompliance with plan provi-
sions,
(D) for misuse of a provider network provi-
sion, or
(E) because the insurer is ceasing to pro-
vide any health insurance plan in a State, or,
in the case of a health maintenance organiza-
tion, in a geographic area.
(2) LIMITATION ON MARKET REENTRY.—If an
insurer terminates the offering of health insurance
plans in an area, the insurer may not offer such a
health insurance plan to any employer in the area
until 5 years after the date of the termination.
PART 2—ENFORCEMENT; EFFECTIVE
DATES; DEFINITIONS
SEC. 111. ENFORCEMENT.
(a) ENFORCEMENT BY DEPARTMENT OF LABOR FOR
EMPLOYERS AND GROUP HEALTH PLANS.—
(1) IN GENERAL.—For purposes of part 5 of
subtitle B of title I of the Employee Retirement In-
come Security Act of 1974, the provisions of part 1
of this subtitle shall be deemed to be provisions of
title I of such Act irrespective of exclusions under
section 4(b) of such Act.
(2) REGULATORY AUTHORITY.—With respect to
the regulatory authority of the Secretary of Labor
under this subtitle pursuant to subsection (a), sec-
tion 505 of the Employee Retirement Income Secu-
rity Act of 1974 (29 U.S.C. 1135) shall apply.
(b) ENFORCEMENT
BY EXCISE TAX
FOR INSUR-
ERS.—
(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 OF INSURER TO COMPLY WITH
HEALTH INSURANCE STANDARDS.
‘‘(a) IMPOSITION OF TAX.—
‘‘(1) IN GENERAL.—There is hereby imposed a
tax on the failure of an insurer to comply with the
requirements applicable to the insurer under part 1
of subtitle A of title I of the Small Business Health
Insurance Choice Act.
‘‘(2) EXCEPTION.—Paragraph (1) shall not
apply to a failure by an insurer in a State if the Sec-
retary of Health and Human Services determines
that the State has in effect a regulatory enforcement
mechanism that provides adequate sanctions with re-
spect to such a failure by such an insurer.
‘‘(b) AMOUNT OF TAX.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
the amount of the tax imposed by subsection (a)
shall be $100 for each day during which such failure
persists for each individual to which such failure re-
lates. A rule similar to the rule of section
4980B(b)(3) shall apply for purposes of this section.
‘‘(2) LIMITATION.—The amount of the tax im-
posed by subsection (a) for an insurer with respect
to a health insurance plan shall not exceed 25 per-
cent of the amounts received under the plan for cov-
erage during the period such failure persists.
‘‘(c) LIABILITY FOR TAX.—The tax imposed by this
section shall be paid by the insurer.
‘‘(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 in-
surer knew, or exercising reasonable diligence
would have known, that such failure existed.
‘‘(2) WAIVER BY SECRETARY.—In the case of a
failure which is due to reasonable cause and not to
willful neglect, the Secretary may waive part or all
of the tax imposed by subsection (a) to the extent
that payment of such tax would be excessive relative
to the failure involved.
‘‘(e) DEFINITIONS.—For purposes of this section, the
terms ‘health insurance plan’ and ‘insurer’ have the re-
spective meanings given such terms in section 113 of the
Small Business Health Insurance Choice Act.’’
(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 of insurer to comply with health insurance
standards.’’
SEC. 112. EFFECTIVE DATES.
(a) PART 1.—The requirements of part 1 with re-
spect to—
(1) group health plans and employers shall
apply to plans years beginning after December 31,
1994, and
(2) insurers shall take effect on January 1,
1995.
SEC. 113. DEFINITIONS.
(a) IN GENERAL.—For purposes of this subtitle:
(1) EMPLOYER.—The term ‘‘employer’’ shall
have the meaning applicable under section 3(5) of
the Employee Retirement Income Security Act of
1974.
(2) EXEMPTED MULTIPLE EMPLOYER HEALTH
PLAN.—The term ‘‘exempted multiple employer
health plan’’ means a multiple employer welfare ar-
rangement treated as an employee welfare benefit
plan by reason of an exemption under part 7 of sub-
title B of title I of the Employee Retirement Income
Security Act of 1974 (as added by part 2 of subtitle
C of this title).
(3) GROUP
HEALTH
PLAN; PLAN.—(A) The
term ‘‘group health plan’’ means an employee wel-
fare benefit plan providing medical care (as defined
in section 213(d) of the Internal Revenue Code of
1986) to participants or beneficiaries directly or
through insurance, reimbursement, or otherwise, but
does not include any type of coverage excluded from
the definition of a health insurance plan under sec-
tion 1107(4)(B).
(B) The term ‘‘plan’’ means, unless used with
a modifying term or the context specifically indicates
otherwise, a group health plan (including any such
plan which is a multiemployer plan), an exempted
multiple employer health plan, or an insured mul-
tiple employer health plan.
(4) HEALTH INSURANCE PLAN.—
(A) IN GENERAL.—Except as provided in
subparagraph (B), the term ‘‘health insurance
plan’’ means any hospital or medical service
policy or certificate, hospital or medical service
plan contract, or health maintenance organiza-
tion group contract offered by an insurer.
(B) EXCEPTION.—Such term does not in-
clude any of the following—
(i) coverage only for accident, dental,
vision, disability income, or long-term care
insurance, or any combination thereof,
(ii) medicare supplemental health in-
surance,
(iii) coverage issued as a supplement
to liability insurance,
(iv) worker’s compensation or similar
insurance, or
(v) automobile medical-payment insur-
ance,
or any combination thereof.
(5) INSURED
MULTIPLE
EMPLOYER
HEALTH
PLAN.—The term ‘‘insured multiple employer health
plan’’ means a fully insured multiple employer wel-
fare arrangement under which benefits consist solely
of medical care described in section 607(1) of the
Employee Retirement Income Security Act of 1974
(disregarding such incidental benefits as the Sec-
retary of Health and Human Services shall specify
by regulations).
(6) INSURER.—The term ‘‘insurer’’ means a li-
censed insurance company, a prepaid hospital or
medical service plan, and a health maintenance orga-
nization offering such a plan to an employer, and in-
cludes a similar organization regulated under State
law for solvency.
(7) STATE.—The term ‘‘State’’ means the 50
States, the District of Columbia, Puerto Rico, the
Virgin Islands, Guam, and American Samoa.
Subtitle B—Preemption of Scope of
State Regulation
SEC. 121. PROHIBITION OF STATE BENEFIT MANDATES FOR
GROUP HEALTH PLANS.
In the case of a group health plan, no provision of
State or local law shall apply that requires the coverage
of one or more specific benefits, services, or categories of
health care, or services of any class or type of provider
of health care.
SEC. 122. PROHIBITION OF PROVISIONS PROHIBITING EM-
PLOYER 
GROUPS 
FROM 
PURCHASING
HEALTH INSURANCE.
No provision of State or local law shall apply that
prohibits 2 or more employers from obtaining coverage
under an insured multiple employer health plan.
SEC. 123. 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 group health plan to negotiate
reimbursement 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 group health plan may require a
beneficiary to pay when a non-plan provider is used
on a non-emergency basis.
(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.
SEC. 124. DEFINITIONS.
For purposes of this subtitle, the terms ‘‘employee’’,
‘‘employer’’, ‘‘group health plan’’, ‘‘health insurance
plan’’, ‘‘insured multiple employer health plan’’, and
‘‘State’’ have the meanings given such terms in section
113.
Subtitle C—Health Deduction
Fairness
SEC. 131. PERMANENT EXTENSION AND INCREASE IN
HEALTH INSURANCE TAX DEDUCTION FOR
SELF-EMPLOYED INDIVIDUALS.
(a) PERMANENT EXTENSION OF DEDUCTION.—
(1) IN GENERAL.—Subsection (l) of section 162
of the Internal Revenue Code of 1986 (relating to
special rules for health insurance costs of self-em-
ployed individuals) is amended by striking paragraph
(6).
(2) EFFECTIVE DATE.—The amendment made
by this subsection shall apply to taxable years begin-
ning after December 31, 1994.
(b) INCREASE IN AMOUNT OF DEDUCTION.—
(1) IN
GENERAL.—Paragraph (1) of section
162(l) of such Code is amended by striking ‘‘25 per-
cent of’’ and inserting ‘‘100 percent (50 percent in
the case of taxable years beginning in 1996 or 1997)
of’’.
(2) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to taxable years begin-
ning after December 31, 1994.
SEC. 132. DEDUCTION OF HEALTH INSURANCE PREMIUMS
FOR CERTAIN PREVIOUSLY UNINSURED INDI-
VIDUALS.
(a) IN GENERAL.—Section 213 of the Internal Reve-
nue Code of 1986 (relating to medical, dental, etc., ex-
penses) is amended by adding at the end thereof the fol-
lowing new subsection:
‘‘(f) DEDUCTION FOR HEALTH INSURANCE COSTS
DETERMINED WITHOUT REGARD TO ADJUSTED GROSS
INCOME THRESHOLD.—
‘‘(1) IN GENERAL.—Subsection (a) shall be ap-
plied without regard to the limitation based on ad-
justed gross income in the case of the applicable per-
centage of the amounts paid for insurance which
constitutes medical care for the taxpayer, his spouse,
and dependents.
‘‘(2) APPLICABLE PERCENTAGE.—For purposes
of paragraph (1), the term ‘applicable percentage’
means—
‘‘(A) 25 percent for taxable years begin-
ning in 1995 or 1996,
‘‘(B) 50 percent for taxable years begin-
ning in 1997 or 1998, and
‘‘(C) 100 percent for taxable years begin-
ning after 1999.
‘‘(3) DEDUCTION NOT ALLOWED TO INDIVID-
UALS
ELIGIBLE
FOR
EMPLOYER-SUBSIDIZED
COV-
ERAGE.—
‘‘(A) IN
GENERAL.—Paragraph (1) shall
not apply to any individual—
‘‘(i) who is eligible to participate in
any subsidized health plan maintained by
an employer of such individual or the
spouse of such individual, or
‘‘(ii) who is (or whose spouse is) a
member of a subsidized class of employees
of an employer.
‘‘(B) SUBSIDIZED CLASS.—For purposes of
subparagraph (A), an individual is a member of
a subsidized class of employees of an employer
if, at any time during the 3 calendar years end-
ing with or within the taxable year, any mem-
ber of such class was eligible to participate in
any subsidized health plan maintained by such
employer.
‘‘(C) SPECIAL RULES.—
‘‘(i) CONTROLLED GROUPS.—All per-
sons treated as a single employer under
subsection (a) or (b) of section 52 or sub-
section (m) or (o) of section 414 shall be
treated as a single employer for purposes
of subparagraph (B).
‘‘(ii) CLASSES.—Classes of employees
shall be determined under regulations pre-
scribed by the Secretary based on such fac-
tors as the Secretary determines appro-
priate to carry out the purposes of this
subsection.
‘‘(4) COORDINATION
WITH
DEDUCTION
FOR
OTHER AMOUNTS.—Amounts allowable as a deduc-
tion under subsection (a) by reason of this sub-
section shall not be taken into account in determin-
ing the deduction under subsection (a) for other
amounts.
‘‘(5) SUBSECTION NOT TO APPLY TO INDIVID-
UALS
ELIGIBLE
FOR
MEDICARE.—This subsection
shall not apply to amount paid for insurance cover-
ing an individual who is eligible for benefits under
title XVIII of the Social Security Act.’’
(b) DEDUCTION ALLOWED WHETHER OR NOT INDI-
VIDUAL ITEMIZES OTHER DEDUCTIONS.—Subsection (a)
of section 62 of such Code is amended by inserting after
paragraph (15) the following new paragraph:
‘‘(16) COSTS
OF
CERTAIN
HEALTH
INSUR-
ANCE.—The deduction allowed by section 213 to the
extent allowable by reason of section 213(f).’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1994.
TITLE II—REMOVING ANTI-
TRUST IMPEDIMENTS
SEC. 201. ESTABLISHMENT OF LIMITED EXEMPTION PRO-
GRAM FOR HEALTH CARE JOINT VENTURES.
(a) ESTABLISHMENT.—
(1) IN
GENERAL.—Not later than 6 months
after the date of the enactment of this Act, the At-
torney General, after consultation with the Secretary
of Health and Human Services and the Interagency
Advisory Committee on Competition, Antitrust Pol-
icy, and Health Care, shall promulgate specific
guidelines under which a health care joint venture
may submit an application requesting that the At-
torney General provide the entities participating in
the joint venture with an exemption under which
(notwithstanding any other provision of law)—
(A) monetary recovery on a claim under
the antitrust laws shall be limited to actual
damages if the claim results from conduct with-
in the scope of the joint venture that occurs
while the exemption is in effect; and
(B) the conduct of the entity in making or
performing a contract to carry out the joint
venture shall not be deemed illegal per se under
the antitrust laws but shall be judged on the
basis of its reasonableness, taking into account
all relevant factors affecting competition, in-
cluding (but not limited to) effects on competi-
tion in properly defined, relevant research, de-
velopment, product, process, and service mar-
kets (taking into consideration worldwide capac-
ity to the extent that it may be appropriate in
the circumstances).
(2) DEADLINE FOR RESPONSE.—The Attorney
General, after consultation with the Secretary and
the Advisory Committee, shall approve or disapprove
the application of a health care joint venture for an
exemption under this subsection not later than 30
days after the Attorney General receives the joint
venture’s application.
(3) PROVIDING REASONS FOR DISAPPROVAL.—
If the Attorney General disapproves the application
of a health care joint venture for an exemption
under this subsection, the Attorney General shall
provide the joint venture with a statement explaining
the reasons for the Attorney General’s disapproval.
(b) REQUIREMENTS FOR APPROVAL.—For purposes
of subsection (a), the Attorney General shall approve the
application of a health care joint venture for an exemption
under subsection (a) if an entity participating in the joint
venture submits to the Attorney General an application
not later than 30 days after the entity has entered into
a written agreement to participate in the joint venture (or
not later than 30 days after the date of the enactment
of this Act in the case of a joint venture in effect as of
such date) that contains the following information and as-
surances:
(1) The identities of the parties to the joint
venture.
(2) The nature, objectives, and planned activi-
ties of the joint venture.
(3) Assurances that the entities participating in
the joint venture shall notify the Attorney General
of any changes in the information described in para-
graphs (1) and (2) during the period for which the
exemption is in effect.
(c) REVOCATION OF EXEMPTION.—
(1) IN GENERAL.—The Attorney General, after
consultation with the Secretary, may revoke an ex-
emption provided to a health care joint venture
under this section if, at any time during which the
exemption is in effect, the Attorney General finds
that the joint venture no longer meets the applicable
requirements for approval under subsection (b), ex-
cept that the Attorney General may not revoke such
an exemption if the failure of the health care joint
venture to meet such requirements is merely tech-
nical in nature.
(2) TIMING.—The revocation of an exemption
under paragraph (1) shall apply only to conduct of
the health care joint venture occurring after the ex-
emption is no longer in effect.
(d) WITHDRAWAL OF APPLICATION.—Any party that
submits an application under this section may withdraw
such application at any time before the Attorney General’s
response to the application.
(e) REQUIREMENTS RELATING TO NOTICE AND PUB-
LICATION
OF EXEMPTIONS
AND RELATED INFORMA-
TION.—
(1) PUBLICATION OF APPROVED APPLICATIONS
FOR EXEMPTIONS IN FEDERAL REGISTER.—
(A) IN GENERAL.—With respect to each
exemption for a health care joint venture pro-
vided under subsection (a), the Attorney Gen-
eral (acting jointly with the Secretary) shall—
(i) prepare a notice with respect to
the joint venture that identifies the parties
to the venture and that describes the
planned activities of the venture;
(ii) submit the notice to the entities
participating in the joint venture; and
(iii) after submitting the notice to
such entities (but not later than 30 days
after approving the application for the ex-
emption for the joint venture), publish the
notice in the Federal Register.
(B) EFFECT
OF
PUBLICATION.—An ex-
emption provided by the Attorney General
under subsection (a) shall take effect as of the
date of the publication in the Federal Register
of the notice with respect to the exemption pur-
suant to subparagraph (A).
(2) WAIVER
OF
DISCLOSURE
REQUIREMENTS
FOR INFORMATION RELATING TO APPLICATIONS FOR
EXEMPTIONS.—
(A) IN
GENERAL.—All information and
documentary material submitted as part of an
application of a health care joint venture for an
exemption under subsection (a), together with
any other information obtained by the Attorney
General, the Secretary, or the Advisory Com-
mittee in the course of any investigation, ad-
ministrative proceeding, or case with respect to
a potential violation of the antitrust laws by the
joint venture with respect to which the exemp-
tion applies, shall be exempt from disclosure
under section 552 of title 5, United States
Code, and shall not be made publicly available
by any agency of the United States to which
such section applies, except as relevant to a law
enforcement investigation or in a judicial or ad-
ministrative proceeding in which such informa-
tion and material is subject to any protective
order.
(B) EXCEPTION
FOR
INFORMATION
IN-
CLUDED IN FEDERAL REGISTER NOTICE.—Sub-
paragraph (A) shall not apply with respect to
information contained in a notice published in
the Federal Register pursuant to paragraph
(1).
(3) USE OF INFORMATION TO SUPPORT OR AN-
SWER CLAIMS UNDER ANTITRUST LAWS.—
(A) IN GENERAL.—Except as provided in
subparagraph (B), the fact of disclosure of con-
duct under an application for an exemption
under subsection (a) and the fact of publication
of a notice in the Federal Register under para-
graph (1) shall be admissible into evidence in
any judicial or administrative proceeding for the
sole purpose of establishing that a person is en-
titled to the protections provided by an exemp-
tion granted under subsection (a).
(B) EFFECT
OF
REJECTED
APPLICA-
TION.—If the Attorney General denies, in whole
or in part, an application for an exemption
under subsection (a), or revokes an exemption
under such section, neither the negative deter-
mination nor the statement of reasons therefore
shall be admissible into evidence in any admin-
istrative or judicial proceeding for the purpose
of supporting or answering any claim under the
antitrust laws.
SEC. 202. ISSUANCE OF HEALTH CARE CERTIFICATES OF
PUBLIC ADVANTAGE.
(a) ISSUANCE AND EFFECT OF CERTIFICATE.—The
Attorney General, after consultation with the Secretary
and the Advisory Committee, shall issue in accordance
with this section a certificate of public advantage to each
eligible health care joint venture that complies with the
requirements in effect under this section on or after the
expiration of the 1-year period that begins on the date
of the enactment of this Act (without regard to whether
or not the Attorney General has promulgated regulations
to carry out this section by such date). Such venture, and
the parties to such venture, shall not be liable under any
of the antitrust laws for conduct described in such certifi-
cate and engaged in by such venture if such conduct oc-
curs while such certificate is in effect.
(b) REQUIREMENTS APPLICABLE TO ISSUANCE OF
CERTIFICATES.—
(1) STANDARDS
TO
BE
MET.—The Attorney
General shall issue a certificate to an eligible health
care joint venture if the Attorney General finds
that—
(A) the benefits that are likely to result
from carrying out the venture outweigh the re-
duction in competition (if any) that is likely to
result from the venture, and
(B) such reduction in competition is rea-
sonably necessary to obtain such benefits.
(2) FACTORS TO BE CONSIDERED.—
(A) WEIGHING OF BENEFITS AGAINST RE-
DUCTION
IN
COMPETITION.—For purposes of
making the finding described in paragraph
(1)(A), the Attorney General shall consider
whether the venture is likely —
(i) to maintain or to increase the
quality of health care,
(ii) to increase access to health care,
(iii) to achieve cost efficiencies that
will be passed on to health care consumers,
such as economies of scale, reduced trans-
action costs, and reduced administrative
costs,
(iv) to preserve the operation of
health care facilities located in underserved
geographical areas,
(v) to improve utilization of health
care resources, and
(vi) to reduce inefficient health care
resource duplication.
(B) NECESSITY OF REDUCTION IN COM-
PETITION.—For purposes of making the finding
described in paragraph (1)(B), the Attorney
General shall consider—
(i) the ability of the providers of
health care services that are (or likely to
be) affected by the health care joint ven-
ture and the entities responsible for mak-
ing payments to such providers to nego-
tiate societally optimal payment and serv-
ice arrangements,
(ii) the effects of the health care joint
venture on premiums and other charges
imposed by the entities described in clause
(i), and
(iii) the availability of equally effi-
cient, less restrictive alternatives to achieve
the benefits that are intended to be
achieved by carrying out the venture.
(c) ESTABLISHMENT
OF CRITERIA
AND PROCE-
DURES.—Subject to subsections (d) and (e), not later than
1 year after the date of the enactment of this Act, the
Attorney General and the Secretary shall establish jointly
by rule the criteria and procedures applicable to the issu-
ance of certificates under subsection (a). The rules shall
specify the form and content of the application to be sub-
mitted to the Attorney General to request a certificate,
the information required to be submitted in support of
such application, the procedures applicable to denying and
to revoking a certificate, and the procedures applicable to
the administrative appeal (if such appeal is authorized by
rule) of the denial and the revocation of a certificate. Such
information may include the terms of the health care joint
venture (in the case of a venture in existence as of the
time of the application) and implementation plan for the
joint venture.
(d) ELIGIBLE HEALTH CARE JOINT VENTURE.—To
be an eligible health care joint venture for purposes of this
section, a health care joint venture shall submit to the At-
torney General an application that complies with the rules
in effect under subsection (c) and that includes—
(1) an agreement by the parties to the venture
that the venture will not foreclose competition by en-
tering into contracts that prevent health care provid-
ers from providing health care in competition with
the venture,
(2) an agreement that the venture will submit
to the Attorney General annually a report that de-
scribes the operations of the venture and informa-
tion regarding the impact of the venture on health
care and on competition in health care, and
(3) an agreement that the parties to the ven-
ture will notify the Attorney General and the Sec-
retary of the termination of the venture not later
than 30 days after such termination occurs.
(e) REVIEW OF APPLICATIONS FOR CERTIFICATES.—
Not later than 30 days after an eligible health care joint
venture submits to the Attorney General an application
that complies with the rules in effect under subsection (c)
and with subsection (d), the Attorney General shall issue
or deny the issuance of such certificate. If, before the expi-
ration of such 30-day period, the Attorney General fails
to issue or deny the issuance of such certificate, the Attor-
ney General shall be deemed to have issued such certifi-
cate.
(f) REVOCATION OF CERTIFICATE.—Whenever the
Attorney General finds that a health care joint venture
with respect to which a certificate is in effect does not
meet the standards specified in subsection (b), the Attor-
ney General shall revoke such certificate.
(g) WRITTEN REASONS; JUDICIAL REVIEW.—
(1) DENIAL
AND
REVOCATION
OF
CERTIFI-
CATES.—If the Attorney General denies an applica-
General denies an application submitted or re-
vokes a certificate issued under this section
without an opportunity for hearing on the
record, then any party to the health care joint
venture involved may commence a civil action,
not later than 60 days after receiving notice of
the denial or revocation, in an appropriate dis-
trict court of the United States for de novo re-
view of such denial or revocation.
(h) EXEMPTION.—A person shall not be liable under
any of the antitrust laws for conduct necessary—
(1) to prepare, agree to prepare, or attempt to
agree to prepare an application to request a certifi-
cate under this section, or
(2) to attempt to enter into any health care
joint venture with respect to which such a certificate
is in effect.
SEC. 203. INTERAGENCY ADVISORY COMMITTEE ON COM-
PETITION, ANTITRUST POLICY, AND HEALTH
CARE.
(a) ESTABLISHMENT.—There is hereby established
the Interagency Advisory Committee on Competition,
Antitrust Policy, and Health Care. The Advisory Commit-
tee shall be composed of—
(1) the Secretary of Health and Human Serv-
ices (or the designee of the Secretary);
(2) the Attorney General (or the designee of the
Attorney General);
(3) the Director of the Office of Management
and Budget (or the designee of the Director); and
(4) a representative of the Federal Trade Com-
mission.
(b) DUTIES.—The duties of the Advisory Committee
are—
(1) to discuss and evaluate competition and
antitrust policy, and their implications with respect
to the performance of health care markets;
(2) to analyze the effectiveness of health care
joint ventures receiving exemptions under the pro-
gram established under section 201(a) or certificates
under section 202 in reducing the costs of and ex-
panding access to the health care services that are
the subject of such ventures; and
(3) to make such recommendations to Congress
not later than 2 years after the date of the enact-
ment of this Act (and at such subsequent periods as
the Advisory Committee considers appropriate) re-
garding modifications to the program established
under section 201(a) or to section 202 as the Advi-
sory Committee considers appropriate, including
modifications relating to the costs to health care
providers of obtaining an exemption for a joint ven-
ture under such program.
SEC. 204. DEFINITIONS.
For purposes of this title:
(1) The term ‘‘Advisory Committee’’ means the
Interagency Advisory Committee on Competition,
Antitrust Policy, and Health Care established under
section 203.
(2) The term ‘‘antitrust laws’’—
(A) has the meaning given it in subsection
(a) of the first section of the Clayton Act (15
U.S.C. 12(a)), except that such term includes
section 5 of the Federal Trade Commission Act
(15 U.S.C. 45) to the extent such section ap-
plies to unfair methods of competition; and
(B) includes any State law similar to the
laws referred to in subparagraph (A).
(3) The term ‘‘certificate’’ means a certificate
of public advantage authorized to be issued under
section 202(a).
(4) The term ‘‘health care joint venture’’ means
an agreement (whether existing or proposed) be-
tween 2 or more providers of health care services
that is entered into solely for the purpose of sharing
in the provision of health care services and that in-
volves substantial integration or financial risk-shar-
ing between the parties, but does not include the ex-
changing of information, the entering into of any
agreement, or the engagement in any other conduct
that is not reasonably required to carry out such
agreement.
(5) The term ‘‘health care services’’ includes
services related to the delivery or administration of
health care services.
(6) The term ‘‘liable’’ means liable for any civil
or criminal violation of the antitrust laws.
(7) The term ‘‘provider of health care services’’
means any individual or entity 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.
(8) The term ‘‘Secretary’’ means the Secretary
of Health and Human Services.
Æ
HR 4519 IH——2
HR 4519 IH——3