representation of the nature set forth in sections 
303 and 304, respectively. 
(4) The plan must provide for such methods of 
administration, including methods relating to the es-
tablishment and maintenance of personnel standards 
on a merit basis (except that the Board shall exer-
cise no authority with respect to the selection, tenure 
of office, or compensation of any individual employed 
in accordance with such methods), as are found by 
the Board to be necessary for the proper and effi-
cient administration of such benefits in the State. 
(5) The plan must provide for the making of 
surveys of the resources and needs of the State, in 
accordance with section 102(a), and sets forth a pro-
gram for the administration of such benefits in the 
State which gives reasonable assurance (A) that 
maximum use will be made of all available health 
personnel and facilities desiring to participate in the 
provision of benefits to eligible individuals, (B) that 
funds allotted to the State for the several classes of 
benefits will be allocated in such manner as to give 
reasonable assurance of the availability of services in 
all health-service areas in the State, and (C) that 
any maldistribution or other inadequacies in the 
health personnel or facilities available for such pur-
pose, or in the quality of the services rendered, will 
be progressively improved as rapidly as may be prac-
ticable. 
(6) The plan must provide that the State agen-
cy will make such reports in such form and con-
taining such information as the Board may from 
time to time reasonably require, and give the Board, 
upon demand, access to the records upon which such 
information is based. 
(7) The plan must provide that all Federal 
funds paid to the State agency for purposes of car-
rying out this Act in the State shall be properly 
safeguarded and expended solely for the purposes for 
which paid, and must provide for the repayment by 
the State to the United States of any such funds 
lost by the State agency or diverted from the pur-
poses for which paid. 
(8) The plan must provide for cooperation, in-
cluding where necessary entering into working agree-
ments (with any appropriate transfer of funds), with 
other public agencies of the State or of its political 
subdivisions concerned with programs related to the 
purposes of this Act, and with appropriate agencies 
of other States or of the United States admin-
istering this Act, or benefits under this Act, in other 
States. 
(b) APPROVAL.—The Board shall approve any State 
plan and any modification thereof submitted by the State 
which it finds complies with the provisions of subsection 
(a). No change in a State plan shall be required within 
one year after initial approval thereof, or within one year 
after any change thereafter required therein, by reason of 
any change in the regulations or standards prescribed pur-
suant to this Act, except with the consent of the State 
or in accordance with further action by Congress. 
(c) NOTICE OF DISAPPROVAL.—In the event of its 
disapproval of any plan or any modification therein sub-
mitted by a State pursuant to this title, the Board shall 
notify the State of such disapproval and shall, upon re-
quest of the State, afford it reasonable notice and oppor-
tunity for a hearing on such disapproval. 
(d) FALLBACK ADMINISTRATION.—
(1) NOTICE TO GOVERNOR.—If a State has not 
prior to October 1, 2004, submitted and had ap-
proved a plan of operations, the Board shall notify 
the Governor of the State that the Board will be re-
quired to administer this Act in the State, com-
mencing October 1, 2004.
(2) PUBLICATION OF NOTICE.—The Board shall 
provide for the publication of such notice in at least 
two newspapers of general circulation in the State. 
(3) CONTINUED
ADMINISTRATION.—If within 
60 days after such notification to the Governor the 
State has not submitted an approvable plan, the 
Board shall continue such administration until one 
year after the submission and approval of a plan of 
operations in accordance with this section. 
(4) WAIVER.—The Board may waive the re-
quirement that a State plan must be submitted and 
approved one year prior to commencement of State 
administration if it is satisfied in a particular case 
that the substitution of a shorter preparatory period 
will not prejudice the interests of eligible individuals 
in the State. 
(e) NONCOMPLIANCE.—
(1) NOTICE.—Whenever the Board, after rea-
sonable notice and opportunity for hearing to the 
State, finds that the State, having submitted and 
had approved a plan of operations under this title—
(A) is not complying substantially with the 
provisions of such plan, or with the provisions 
of this Act or any regulations or standards pre-
scribed thereunder, or
(B) has withdrawn its plan or failed to 
change it when and as required by a change in 
this Act or in regulations prescribed thereunder, 
the Board shall notify the Governor of the State of 
such findings, together with its reasons therefor and 
a statement concerning the effect of such findings 
under this Act, and shall provide for the publication 
of such notice in at least two newspapers of general 
circulation in the State. 
(2) BOARD ASSUMPTION OF RESPONSIBILITY.—
If within 60 days following such a notice the State 
has not taken appropriate action to bring its plan or 
its administration thereof into conformity with this 
Act and regulations and standards thereunder, the 
Board shall immediately assume responsibility for 
the administration of this Act in the State and shall 
administer the same in such State for so long there-
after as the State fails to give reasonable assurances 
of substantial compliance or fails to submit an ap-
provable plan, as the case may be. 
(f) BOARD AUTHORITY.—In any State in which the 
Board has assumed responsibility for the administration 
of benefits under this Act as provided in subsections (d) 
and (e), the Board shall have and discharge all authority 
and duties, in accordance with the provisions of this Act,
which it finds necessary for that purpose, and the term 
‘‘State agency’’ wherever used in title II or title III shall 
be deemed to refer to the Board. 
(g) ADDITIONAL STATE-FUNDED SERVICES.—Noth-
ing in this Act shall preclude any State or any political 
subdivision thereof, whether or not the State has assumed 
responsibility for the administration of benefits under this 
Act, from furnishing, with funds available from sources 
other than the National Health Care Trust Fund, any ad-
ditional health services to individuals who are eligible for 
benefits under this Act or any or all health services to 
individuals who are not so eligible. 
TITLE V—NATIONAL HEALTH IN-
SURANCE BOARD; NATIONAL 
ADVISORY MEDICAL POLICY 
COUNCIL; GENERAL ADMINIS-
TRATIVE PROVISIONS 
SEC. 501. NATIONAL HEALTH INSURANCE BOARD. 
(a) ESTABLISHMENT.—
(1) IN GENERAL.—There is hereby established 
in the Department of Health and Human Services a 
National Health Insurance Board. 
(2) COMPOSITION.—The Board shall be com-
posed of 5 members, three of whom shall be ap-
pointed by the President by and with the advice and
consent of the Senate, and the other two of whom 
shall be the Surgeon General of the Public Health 
Service and the Administrator of Social Security. At 
least one of the appointed members shall be a doctor 
of medicine licensed to practice medicine or surgery 
in one of the States. 
(3) NO OTHER EMPLOYMENT.—During an ap-
pointment member’s term of membership on the 
Board, the member shall not shall engage in any 
other business, vocation, or employment. 
(4) COMPENSATION.—Each appointed member 
shall receive a salary at an annual rate of basic pay, 
established by the President, which is not less than 
the annual rate of basic pay for positions at level V 
of the Executive Schedule and which is not greater 
than the annual rate of basic pay for positions at 
level IV of the Executive Schedule. 
(5) TERM.—Each appointed member shall hold 
office for a term of six years, except that—
(A) any member appointed to fill a vacancy 
occurring prior to the expiration of the term for 
which the member’s predecessor was appointed 
shall be appointed for the remainder of such 
term; and
making regulations, as it may consider necessary 
and proper to carry out the provisions of this Act. 
(3) CONTRACT AUTHORITY.—The Board may 
also enter into agreements for the furnishing or pro-
vision of personal health services under this Act 
without regard to the provisions of title 5, United 
States Code, pertaining to the appointment, status, 
or compensation of Federal employees, or pertaining 
to contracts for personal services, and without re-
gard to section 3709 of the Revised Statutes (41 
U.S.C. 5), and any person rendering services pursu-
ant to an agreement so made shall not by reason 
thereof be deemed to be an employee of the United 
States. 
(c) USE
OF EXECUTIVE AGENCIES.—In admin-
istering the provisions of this Act, the Board is authorized 
to utilize the services and facilities of any executive depart-
ment or other agency of the United States in accordance 
with an agreement with the head thereof. Payment for 
such services and facilities shall be made in advance or 
by way of reimbursement, as may be agreed upon with 
the head of the executive department or other agency fur-
nishing them. 
(d) PERSONNEL.—
(1) IN GENERAL.—Personnel of the Board shall 
be appointed by the Secretary upon recommendation 
of the Board. 
(2) DETAILING OF EMPLOYEES TO BOARD.— 
The Secretary is authorized to detail to the Board, 
upon its request, any officer or employee of the De-
partment of Health and Human Services, and in the 
Secretary’s discretion to reimburse, from funds 
available for the administration of this Act, the ap-
propriation from which the salary or, in the case of 
commissioned officers of the Public Health Service, 
the pay and allowances of such officer or employee 
are paid. 
(e) DETAILING OF BOARD EMPLOYEES.—Upon the 
request of any State agency administering a State plan 
of operations pursuant to title IV, or upon the request 
of any State desiring to prepare and submit a plan of op-
erations, any officer or employee of the Board (including 
any officer or employee detailed to the Board pursuant 
to subsection (d)) may be detailed by the Board to assist 
in the administration, or in the preparation, of such State 
plan of operations. The funds available for the Federal 
administration of this Act may, in the discretion of the 
Secretary, be reimbursed from funds allotted to the State 
pursuant to section 802 and available for State adminis-
tration, for the salary (or for the pay and allowances) of 
any officer or employee so detailed. 
SEC. 502. ADVISORY COUNCIL. 
(a) ESTABLISHMENT.—
(1) IN GENERAL.—There is hereby established 
a National Advisory Medical Policy Council. 
(2) COMPOSITION.—The Council shall consist of 
the Chairman of the Board, who shall serve as 
Chairman of the Advisory Council ex officio, and 16 
members appointed by the Secretary of Health and 
Human Services. At least 8 of the 16 appointed 
members shall be individuals who are familiar with 
the need for personal health services in urban or 
rural areas and who are representative of the inter-
ests of individuals eligible for benefits under this 
Act, and at least 6 of the members shall be individ-
uals who are outstanding in the medical or other 
professions concerned with the provision of services 
provided as benefits under this Act and who are rep-
resentative of the individuals, organizations, and 
other persons by whom personal health services will 
be provided. 
(3) TERM.—Each appointed member shall hold 
office for a term of 4 years, except that any member 
appointed to fill a vacancy occurring prior to the ex-
piration of the term for which the member’s prede-
cessor was appointed shall be appointed for the re-
mainder of that term, and the terms of the members 
first taking office shall expire, as designated by the 
Secretary at the time of appointment, four at the 
end of the first year, four at the end of the second 
year, four at the end of the third year, and four at 
the end of the fourth year after the date of appoint-
ment. 
(4) TECHNICAL AND PROFESSIONAL ADVISORY 
COMMITTEES.—The Advisory Council is authorized 
to appoint such special advisory technical or profes-
sional committees as may be useful in carrying out 
its functions, and the members of such committees 
may be members of the Advisory Council, or other 
persons, or both. 
(5) 
COMPENSATION.—Appointed 
Advisory 
Council members and members of technical or pro-
fessional committees, while serving on business of 
the Council (inclusive of traveltime), shall receive 
compensation at rates fixed by the Secretary, but 
not exceeding $200 per day, and shall be entitled to 
receive actual and necessary traveling expenses and 
per diem in lieu of subsistence while so serving away 
from their places of residence.
(6) SUPPORT SERVICES.—The Advisory Coun-
cil, its appointed members, and its committees, shall 
be provided with such secretarial, clerical, or other 
assistance as may be provided by the Congress for 
carrying out their respective functions. 
(7) MEETINGS.—The Advisory Council shall 
meet as frequently as the Board deems necessary, 
but not less than twice each year. Upon request by 
six or more members, it shall be the duty of the 
Chairman to call a meeting of the Council. 
(b) FUNCTIONS.—The Advisory Council shall advise 
the Board with reference to matters of general policy and 
administration arising in connection with the making of 
regulations, the establishment of professional standards, 
and the performance of its other duties under this Act. 
(c) INDEFINITE DURATION.—Section 14 of the Fed-
eral Advisory Committee Act shall not apply to the Advi-
sory Council. 
SEC. 503. STUDIES, RECOMMENDATIONS, AND REPORTS. 
(a) IN GENERAL.—The Board shall have the duty of 
studying and making recommendations as to the most ef-
fective methods of providing health services, and as to leg-
islation and matters of administrative policy concerning 
health and related subjects.
(b) ANNUAL REPORTS.—At the beginning of each 
regular session of Congress, it shall make a full report 
to Congress of the administration of this Act, including 
a report with regard to the adequacy of its financial provi-
sions contained in this Act and of appropriations made 
pursuant thereto, the methods of allotment of funds
among the States, and related matters. Such report shall 
include a record of consultations with the Advisory Coun-
cil, recommendations of the Advisory Council, and com-
ments thereon. 
SEC. 504. NONDISCLOSURE OF INFORMATION. 
(a) CONFIDENTIALITY.—Information concerning an 
individual, obtained from the individual or from any physi-
cian, dentist, nurse, or hospital, or from any other person 
pursuant to or as a result of the administration of this 
Act, shall be held confidential (except for statistical pur-
poses) and shall not be disclosed or be open to public in-
spection in any manner revealing the identity of the indi-
vidual or other person from whom the information was ob-
tained or to whom the information pertains, except as may 
be necessary for the proper administration of this Act or 
of other laws, State or Federal. 
(b) PENALTY.—Any person who shall violate any pro-
vision of subsection (a) shall be deemed guilty of a mis-
demeanor and, upon conviction thereof, shall be punished