230
same coverage to all such employees or in-
dividuals in the same geographic area. Sec-
tion 2711(a)(1)(B) of this Act limits denial
of enrollment of certain eligible individuals
under health benefits coverage in the small
group market.
‘‘(ii) 
CONSTRUCTION.—Nothing 
in
this title shall be construed as requiring or
permitting a health insurance issuer to
provide coverage outside the service area of
the issuer, as approved under State law.
‘‘(C) NO FINANCIAL UNDERWRITING.—The
HealthMart provides health benefits coverage
only through contracts with health insurance
issuers and does not assume insurance risk with
respect to such coverage.
‘‘(3) GEOGRAPHIC AREAS.—
‘‘(A) 
SPECIFICATION
OF
GEOGRAPHIC
AREAS.—The HealthMart shall specify the geo-
graphic area (or areas) in which it makes avail-
able health benefits coverage offered by health
insurance issuers to employers, or individuals,
as the case may be. Any such area shall encom-
pass at least one entire county or equivalent
area.
231
‘‘(B) MULTISTATE AREAS.—In the case of
a HealthMart that serves more than one State,
such geographic areas may be areas that in-
clude portions of two or more contiguous
States.
‘‘(C) 
MULTIPLE
HEALTHMARTS
PER-
MITTED IN SINGLE GEOGRAPHIC AREA.—Noth-
ing in this title shall be construed as preventing
the establishment and operation of more than
one HealthMart in a geographic area or as lim-
iting the number of HealthMarts that may op-
erate in any area.
‘‘(4) PROVISION OF ADMINISTRATIVE SERVICES
TO PURCHASERS.—
‘‘(A) IN GENERAL.—The HealthMart pro-
vides administrative services for purchasers.
Such services may include accounting, billing,
enrollment information, and employee coverage
status reports.
‘‘(B) CONSTRUCTION.—Nothing in this
subsection shall be construed as preventing a
HealthMart from serving as an administrative
service organization to any entity.
‘‘(5) DISSEMINATION
OF
INFORMATION.—The
HealthMart collects and disseminates (or arranges
232
for the collection and dissemination of) consumer-
oriented information on the scope, cost, and enrollee
satisfaction of all coverage options offered through
the HealthMart to its members and eligible individ-
uals. Such information shall be defined by the
HealthMart and shall be in a manner appropriate to
the type of coverage offered. To the extent prac-
ticable, such information shall include information
on provider performance, locations and hours of op-
eration of providers, outcomes, and similar matters.
Nothing in this section shall be construed as pre-
venting the dissemination of such information or
other information by the HealthMart or by health
insurance issuers through electronic or other means.
‘‘(6) 
FILING
INFORMATION.—The
HealthMart—
‘‘(A) files with the applicable Federal au-
thority information that demonstrates the
HealthMart’s compliance with the applicable re-
quirements of this title; or
‘‘(B) in accordance with rules established
under section 2803(a), files with a State such
information as the State may require to dem-
onstrate such compliance.
233
‘‘(b) HEALTH
BENEFITS
COVERAGE
REQUIRE-
MENTS.—
‘‘(1) COMPLIANCE
WITH
CONSUMER
PROTEC-
TION REQUIREMENTS.—Any health benefits coverage
offered through a HealthMart shall—
‘‘(A) be underwritten by a health insurance
issuer that—
‘‘(i) is licensed (or otherwise regu-
lated) under State law,
‘‘(ii) meets all applicable State stand-
ards relating to consumer protection, sub-
ject to section 2802(b), and
‘‘(iii) offers the coverage under a con-
tract with the HealthMart;
‘‘(B) subject to paragraph (2), be approved
or otherwise permitted to be offered under
State law; and
‘‘(C) provide full portability of creditable
coverage for individuals who remain members of
the same HealthMart notwithstanding that they
change the employer through which they are
members in accordance with the provisions of
the parts 6 and 7 of subtitle B of title I of the
Employee Retirement Income Security Act of
1974 and titles XXII and XXVII of this Act,
234
so long as both employers are purchasers in the
HealthMart, and notwithstanding that they ter-
minate such employment, if the HealthMart
permits enrollment directly by eligible individ-
uals.
‘‘(2) ALTERNATIVE PROCESS FOR APPROVAL OF
HEALTH BENEFITS COVERAGE IN CASE OF DISCRIMI-
NATION OR DELAY.—
‘‘(A) IN
GENERAL.—The requirement of
paragraph (1)(B) shall not apply to a policy or
product of health benefits coverage offered in a
State if the health insurance issuer seeking to
offer such policy or product files an application
to waive such requirement with the applicable
Federal authority, and the authority deter-
mines, based on the application and other evi-
dence presented to the authority, that—
‘‘(i) either (or both) of the grounds
described in subparagraph (B) for approval
of the application has been met; and
‘‘(ii) the coverage meets the applicable
State standards (other than those that
have been preempted under section 2802).
‘‘(B) GROUNDS.—The grounds described
in this subparagraph with respect to a policy or
235
product of health benefits coverage are as fol-
lows:
‘‘(i) FAILURE
TO
ACT
ON
POLICY,
PRODUCT, OR
RATE
APPLICATION
ON
A
TIMELY BASIS.—The State has failed to
complete action on the policy or product
(or rates for the policy or product) within
90 days of the date of the State’s receipt
of a substantially complete application. No
period before the date of the enactment of
this section shall be included in deter-
mining such 90-day period.
‘‘(ii) DENIAL OF APPLICATION BASED
ON
DISCRIMINATORY
TREATMENT.—The
State has denied such an application
and—
‘‘(I) the standards or review
process imposed by the State as a
condition of approval of the policy or
product imposes either any material
requirements, procedures, or stand-
ards to such policy or product that
are not generally applicable to other
policies and products offered or any
236
requirements 
that 
are 
preempted
under section 2802; or
‘‘(II) the State requires the
issuer, as a condition of approval of
the policy or product, to offer any pol-
icy or product other than such policy
or product.
‘‘(C) ENFORCEMENT.—In the case of a
waiver granted under subparagraph (A) to an
issuer with respect to a State, the Secretary
may enter into an agreement with the State
under which the State agrees to provide for
monitoring and enforcement activities with re-
spect to compliance of such an issuer and its
health insurance coverage with the applicable
State standards described in subparagraph
(A)(ii). Such monitoring and enforcement shall
be conducted by the State in the same manner
as the State enforces such standards with re-
spect to other health insurance issuers and
plans, without discrimination based on the type
of issuer to which the standards apply. Such an
agreement shall specify or establish mechanisms
by which compliance activities are undertaken,
while not lengthening the time required to re-
237
view and process applications for waivers under
subparagraph (A).
‘‘(3) EXAMPLES OF TYPES OF COVERAGE.—The
benefits 
coverage 
made 
available 
through 
a
HealthMart may include, but is not limited to, any
of the following if it meets the other applicable re-
quirements of this title:
‘‘(A) Coverage through a health mainte-
nance organization.
‘‘(B) Coverage in connection with a pre-
ferred provider organization.
‘‘(C) Coverage in connection with a li-
censed provider-sponsored organization.
‘‘(D) Indemnity coverage through an insur-
ance company.
‘‘(E) Coverage offered in connection with a
contribution into a medical savings account or
flexible spending account.
‘‘(F) Coverage that includes a point-of-
service option.
‘‘(G) Any combination of such types of
coverage.
‘‘(4) WELLNESS BONUSES FOR HEALTH PRO-
MOTION.—Nothing in this title shall be construed as
precluding a health insurance issuer offering health
238
benefits coverage through a HealthMart from estab-
lishing premium discounts or rebates for members or
from modifying otherwise applicable copayments or
deductibles in return for adherence to programs of
health promotion and disease prevention so long as
such programs are agreed to in advance by the
HealthMart and comply with all other provisions of
this title and do not discriminate among similarly
situated members.
‘‘(c) PURCHASERS; MEMBERS; HEALTH INSURANCE
ISSUERS.—
‘‘(1) PURCHASERS.—
‘‘(A) IN GENERAL.—Subject to the provi-
sions of this title, a HealthMart shall permit
any employer or any individual described in
subsection (a)(1)(C), if coverage is offered
through the HealthMart for such employer or
individual, to contract with the HealthMart for
the purchase of health benefits coverage for its
employees and dependents of those employees
or for the individual (and the individual’s de-
pendents), respectively, and may not vary condi-
tions of eligibility (including premium rates and
membership fees) of an employer or individual
to be a purchaser.
239
‘‘(B) ROLE
OF
ASSOCIATIONS, BROKERS,
AND LICENSED HEALTH INSURANCE AGENTS.—
Nothing in this section shall be construed as
preventing an association, broker, licensed
health insurance agent, or other entity from as-
sisting or representing a HealthMart or employ-
ers or individuals from entering into appro-
priate arrangements to carry out this title.
‘‘(C) EXCLUSIVE NATURE OF CONTRACT.—
‘‘(i) IN GENERAL.—Subject to clause
(ii), such a contract shall provide that the
purchaser agrees not to obtain or sponsor
health benefits coverage, on behalf of any
eligible employees (and their dependents),
other than through the HealthMart.
‘‘(ii) EXCEPTION IF NO COVERAGE OF-
FERED IN AREA OF RESIDENCES.—Clause
(i) shall not apply to an eligible individual
who resides in an area for which no cov-
erage is offered by any health insurance
issuer through the HealthMart.
‘‘(iii) NOTHING
PRECLUDING
INDI-
VIDUAL EMPLOYEE OPT-OUT.—Nothing in
this subparagraph shall be construed as re-
quiring an eligible employee of an employer
240
that is a purchaser to obtain health bene-
fits coverage through the HealthMart.
‘‘(2) MEMBERS.—
‘‘(A) IN GENERAL.—
‘‘(i) EMPLOYMENT
BASED
MEMBER-
SHIP.—Under rules established to carry
out this title, with respect to an employer
that has a purchaser contract with a
HealthMart, individuals who are employees
of the employer may enroll for group
health benefits coverage (including cov-
erage for dependents of such enrolling em-
ployees) offered by a health insurance
issuer through the HealthMart.
‘‘(ii) INDIVIDUALS.—Under rules es-
tablished to carry out this title, with re-
spect to an individual who has a purchaser
contract with a HealthMart for himself or
herself, the individual may enroll for indi-
vidual health benefits coverage (including
coverage for dependents of such individual)
offered by a health insurance issuer
through the HealthMart. Nothing in this
clause shall be construed as requiring a
241
HealthMart to offer coverage to individuals
in any geographic area.
‘‘(B) NONDISCRIMINATION
IN
ENROLL-
MENT.—A HealthMart may not deny enroll-
ment as a member to an individual who is an
employee or individual (or dependent of such an
employee or individual) eligible to be so enrolled
based on health status-related factors, except as
may be permitted consistent with section
2742(b).
‘‘(C) ANNUAL
OPEN
ENROLLMENT
PE-
RIOD.—In the case of members enrolled in
health benefits coverage offered by a health in-
surance issuer through a HealthMart, subject
to subparagraph (D), the HealthMart shall pro-
vide for an annual open enrollment period of 30
days during which such members may change
the coverage option in which the members are
enrolled.
‘‘(D) RULES OF ELIGIBILITY.—Nothing in
this paragraph shall preclude a HealthMart
from establishing rules of employee or indi-
vidual eligibility for enrollment and reenroll-
ment of members during the annual open en-
rollment period under subparagraph (C). Such
242
rules shall be applied consistently to all pur-
chasers and members within the HealthMart
and shall not be based in any manner on health
status-related factors and may not conflict with
sections 2701 and 2702 of this Act.
‘‘(3) HEALTH INSURANCE ISSUERS.—
‘‘(A) PREMIUM
COLLECTION.—The con-
tract between a HealthMart and a health insur-
ance issuer shall provide, with respect to a
member enrolled with health benefits coverage
offered by the issuer through the HealthMart,
for the payment of the premiums collected by
the HealthMart (or the issuer) for such cov-
erage (less a pre-determined administrative
charge negotiated by the HealthMart and the
issuer) to the issuer.
‘‘(B) SCOPE OF SERVICE AREA.—Nothing
in this title shall be construed as requiring the
service area of a health insurance issuer with
respect to health insurance coverage to cover
the entire geographic area served by a
HealthMart.
‘‘(C) AVAILABILITY
OF
COVERAGE
OP-
TIONS.—A HealthMart shall enter into con-
tracts with one or more health insurance issuers
243
in a manner that assures that at least 2 health
insurance coverage options are made available
in the geographic area specified under sub-
section (a)(3)(A).
‘‘(d) PREVENTION OF CONFLICTS OF INTEREST.—
‘‘(1) FOR BOARDS OF DIRECTORS.—A member
of a board of directors of a HealthMart may not
serve as an employee or paid consultant to the
HealthMart, but may receive reasonable reimburse-
ment for travel expenses for purposes of attending
meetings of the board or committees thereof.
‘‘(2) FOR BOARDS OF DIRECTORS OR EMPLOY-
EES.—An individual is not eligible to serve in a paid
or unpaid capacity on the board of directors of a
HealthMart or as an employee of the HealthMart, if
the individual is employed by, represents in any ca-
pacity, owns, or controls any ownership interest in
an organization from whom the HealthMart receives
contributions, grants, or other funds not connected
with 
a 
contract 
for 
coverage 
through 
the
HealthMart.
‘‘(3) 
EMPLOYMENT
AND
EMPLOYEE
REP-
RESENTATIVES.—
‘‘(A) IN GENERAL.—An individual who is
serving on a board of directors of a HealthMart
244
as a representative described in subparagraph
(A) or (B) of section 2801(a)(1) shall not be
employed by or affiliated with a health insur-
ance issuer or be licensed as or employed by or
affiliated with a health care provider.
‘‘(B) CONSTRUCTION.—For purposes of
subparagraph (A), the term ‘‘affiliated’’ does
not include membership in a health benefits
plan or the obtaining of health benefits cov-
erage offered by a health insurance issuer.
‘‘(e) CONSTRUCTION.—
‘‘(1) 
NETWORK
OF
AFFILIATED
HEALTHMARTS.—Nothing in this section shall be
construed as preventing one or more HealthMarts
serving different areas (whether or not contiguous)
from providing for some or all of the following
(through a single administrative organization or oth-
erwise):
‘‘(A) Coordinating the offering of the same
or similar health benefits coverage in different
areas served by the different HealthMarts.
‘‘(B) Providing for crediting of deductibles
and other cost-sharing for individuals who are
provided health benefits coverage through the
245
HealthMarts 
(or 
affiliated 
HealthMarts)
after—
‘‘(i) a change of employers through
which the coverage is provided, or
‘‘(ii) a change in place of employment
to an area not served by the previous
HealthMart.
‘‘(2) PERMITTING
HEALTHMARTS
TO
ADJUST
DISTRIBUTIONS AMONG ISSUERS TO REFLECT REL-
ATIVE RISK OF ENROLLEES.—Nothing in this sec-
tion shall be construed as precluding a HealthMart
from providing for adjustments in amounts distrib-
uted among the health insurance issuers offering
health benefits coverage through the HealthMart
based on factors such as the relative health care risk
of members enrolled under the coverage offered by
the different issuers.
‘‘SEC. 2802. APPLICATION OF CERTAIN LAWS AND REQUIRE-
MENTS.
‘‘(a) AUTHORITY OF STATES.—Nothing in this sec-
tion shall be construed as preempting State laws relating
to the following:
‘‘(1) The regulation of underwriters of health
coverage, including licensure and solvency require-
ments.
246
‘‘(2) The application of premium taxes and re-
quired payments for guaranty funds or for contribu-
tions to high-risk pools.
‘‘(3) The application of fair marketing require-
ments and other consumer protections (other than
those specifically relating to an item described in
subsection (b)).
‘‘(4) The application of requirements relating to
the adjustment of rates for health insurance cov-
erage.
‘‘(b) TREATMENT OF BENEFIT AND GROUPING RE-
QUIREMENTS.—State laws insofar as they relate to any
of the following are superseded and, except as provided
under section 2801(c)(3)(C), shall not apply to health ben-
efits coverage made available through a HealthMart:
‘‘(1) Benefit requirements for health benefits
coverage offered through a HealthMart, including
(but not limited to) requirements relating to cov-
erage of specific providers, specific services or condi-
tions, or the amount, duration, or scope of benefits,
but not including requirements to the extent re-
quired to implement title XXVII or other Federal
law and to the extent the requirement prohibits an
exclusion of a specific disease from such coverage.
247
‘‘(2) Requirements (commonly referred to as
fictitious group laws) relating to grouping and simi-
lar requirements for such coverage to the extent
such requirements impede the establishment and op-
eration of HealthMarts pursuant to this title.
‘‘(3) Any other requirements (including limita-
tions on compensation arrangements) that, directly
or indirectly, preclude (or have the effect of pre-
cluding) the offering of such coverage through a
HealthMart, if the HealthMart meets the require-
ments of this title.
Any State law or regulation relating to the composition
or organization of a HealthMart is preempted to the ex-
tent the law or regulation is inconsistent with the provi-
sions of this title.
‘‘(c) APPLICATION OF ERISA FIDUCIARY AND DIS-
CLOSURE REQUIREMENTS.—The board of directors of a
HealthMart is deemed to be a plan administrator of an
employee welfare benefit plan which is a group health plan
for purposes of applying parts 1 and 4 of subtitle B of
title I of the Employee Retirement Income Security Act
of 1974 and those provisions of part 5 of such subtitle
which are applicable to enforcement of such parts 1 and
4, and the HealthMart shall be treated as such a plan
and the enrollees enrolled on the basis of employment shall
248
be treated as participants and beneficiaries for purposes
of applying such provisions pursuant to this subsection.
‘‘(d) APPLICATION OF ERISA RENEWABILITY PRO-
TECTION.—A HealthMart is deemed to be group health
plan that is a multiple employer welfare arrangement for
purposes of applying section 703 of the Employee Retire-
ment Income Security Act of 1974.
‘‘(e) APPLICATION OF RULES FOR NETWORK PLANS
AND
FINANCIAL
CAPACITY.—The provisions of sub-
sections (c) and (d) of section 2711 apply to health bene-
fits coverage offered by a health insurance issuer through
a HealthMart.
‘‘(f) CONSTRUCTION RELATING TO OFFERING RE-
QUIREMENT.—Nothing in section 2711(a) of this Act or
703 of the Employee Retirement Income Security Act of
1974 shall be construed as permitting the offering outside
the HealthMart of health benefits coverage that is only
made available through a HealthMart under this section
because of the application of subsection (b).
‘‘(g) APPLICATION TO GUARANTEED RENEWABILITY
REQUIREMENTS IN CASE OF DISCONTINUATION OF AN
ISSUER.—For purposes of applying section 2712 in the
case of health insurance coverage offered by a health in-
surance issuer through a HealthMart, if the contract be-
tween the HealthMart and the issuer is terminated and
249
the HealthMart continues to make available any health in-
surance coverage after the date of such termination, the
following rules apply:
‘‘(1) RENEWABILITY.—The HealthMart shall
fulfill the obligation under such section of the issuer
renewing and continuing in force coverage by offer-
ing purchasers (and members and their dependents)
all available health benefits coverage that would oth-
erwise be available to similarly-situated purchasers
and members from the remaining participating
health insurance issuers in the same manner as
would be required of issuers under section 2712(c).
‘‘(2) APPLICATION OF ASSOCIATION RULES.—
The HealthMart shall be considered an association
for purposes of applying section 2712(e).
‘‘(h) CONSTRUCTION
IN RELATION
TO CERTAIN
OTHER LAWS.—Nothing in this title shall be construed
as modifying or affecting the applicability to HealthMarts
or health benefits coverage offered by a health insurance
issuer through a HealthMart of parts 6 and 7 of subtitle
B of title I of the Employee Retirement Income Security
Act of 1974 or titles XXII and XXVII of this Act.
‘‘SEC. 2803. ADMINISTRATION.
‘‘(a) IN GENERAL.—The applicable Federal authority
shall administer this title and is authorized to issue such
250
regulations as may be required to carry out this title. Such
regulations shall promote the active development of
Healthmarts and first be issued in final form not later
than 6 months after the date of the enactment of this title
and shall be subject to Congressional review under the
provisions of chapter 8 of title 5, United States Code. The
applicable Federal authority shall incorporate the process
of ‘deemed file and use’ with respect to the information
filed under section 2801(a)(6)(A) and shall determine
whether information filed by a HealthMart demonstrates
compliance with the applicable requirements of this title.
Such authority shall exercise its authority under this title
in a manner that fosters and promotes the development
of HealthMarts in order to improve access to health care
coverage and services.
‘‘(b) PERIODIC REPORTS.—The applicable Federal
authority shall submit to Congress a report every 30
months, during the 10-year period beginning on the effec-
tive date of the rules promulgated by the applicable Fed-
eral authority to carry out this title, on the effectiveness
of this title in promoting coverage of uninsured individ-
uals. Such authority may provide for the production of
such reports through one or more contracts with appro-
priate private entities.
251
‘‘SEC. 2804. DEFINITIONS.
‘‘For purposes of this title:
‘‘(1) APPLICABLE FEDERAL AUTHORITY.—The
term ‘applicable Federal authority’ means the Sec-
retary of Health and Human Services .
‘‘(2) ELIGIBLE
EMPLOYEE
OR
INDIVIDUAL.—
The term ‘eligible’ means, with respect to an em-
ployee or other individual and a HealthMart, an em-
ployee or individual who is eligible under section
2801(c)(2) to enroll or be enrolled in health benefits
coverage offered through the HealthMart.
‘‘(3) EMPLOYER; EMPLOYEE; DEPENDENT.—
Except as the applicable Federal authority may oth-
erwise provide, the terms ‘employer’, ‘employee’, and
‘dependent’, as applied to health insurance coverage
offered by a health insurance issuer licensed (or oth-
erwise regulated) in a State, shall have the meanings
applied to such terms with respect to such coverage
under the laws of the State relating to such coverage
and such an issuer. The term ‘dependent’ may in-
clude the spouse and children of the individual in-
volved.
‘‘(4) HEALTH BENEFITS COVERAGE.—The term
‘health benefits coverage’ has the meaning given the
term group health insurance coverage in section
2791(b)(4).
252
‘‘(5) HEALTH INSURANCE ISSUER.—The term
‘health insurance issuer’ has the meaning given such
term in section 2791(b)(2).
‘‘(6) HEALTH STATUS-RELATED FACTOR.—The
term ‘health status-related factor’ has the meaning
given such term in section 2791(d)(9).
‘‘(7) HEALTHMART.—The term ‘HealthMart’ is
defined in section 2801(a).
‘‘(8) MEMBER.—The term ‘member‘‘ means,
with respect to a HealthMart, an individual enrolled
for health benefits coverage through the HealthMart
under section 2801(c)(2).
‘‘(9) 
PURCHASER.—The 
term 
‘purchaser’
means, with respect to a HealthMart, an employer
or individual that has contracted under section
2801(c)(1)(A) with the HealthMart for the purchase
of health benefits coverage.
‘‘(10) SMALL EMPLOYER.—The term ‘small em-
ployer’ has the meaning given such term in section
2791(e)(4), but also includes any employer if—
‘‘(A) such employer met the requirements
under such section for any preceding calendar
year after 1998, and
‘‘(B) such employer employed an average
of 250 or fewer employees on business days
253
during each preceding calendar year after
1998.’’.
Subtitle D—Community Health
Organizations
SEC. 231. PROMOTION OF PROVISION OF INSURANCE BY
COMMUNITY HEALTH ORGANIZATIONS.
(a) WAIVER OF STATE LICENSURE REQUIREMENT
FOR COMMUNITY HEALTH ORGANIZATIONS IN CERTAIN
CASES.—Subpart I of part D of title III of the Public
Health Service Act is amended by adding at the end the
following new section:
‘‘WAIVER OF STATE LICENSURE REQUIREMENT FOR
COMMUNITY HEALTH ORGANIZATIONS IN CERTAIN CASES
‘‘SEC. 330B. (a) WAIVER AUTHORIZED.—
‘‘(1) IN GENERAL.—A community health orga-
nization may offer health insurance coverage in a
State notwithstanding that it is not licensed in such
a State to offer such coverage if—
‘‘(A) the organization files an application
for waiver of the licensure requirement with the
Secretary of Health and Human Services (in
this section referred to as the ‘Secretary’) by
not later than November 1, 2003; and
‘‘(B) the Secretary determines, based on
the application and other evidence presented to
the Secretary, that any of the grounds for ap-
254
proval of the application described in subpara-
graph (A), (B), or (C) of paragraph (2) has
been met.
‘‘(2) GROUNDS FOR APPROVAL OF WAIVER.—
‘‘(A) FAILURE TO ACT ON LICENSURE AP-
PLICATION ON A TIMELY BASIS.—The ground
for approval of such a waiver application de-
scribed in this subparagraph is that the State
has failed to complete action on a licensing ap-
plication of the organization within 90 days of
the date of the State’s receipt of a substantially
complete application. No period before the date
of the enactment of this section shall be in-
cluded in determining such 90-day period.
‘‘(B) DENIAL OF APPLICATION BASED ON
DISCRIMINATORY TREATMENT.—The ground for
approval of such a waiver application described
in this subparagraph is that the State has de-
nied such a licensing application and the stand-
ards or review process imposed by the State as
a condition of approval of the license or as the
basis for such denial by the State imposes any
material requirements, procedures, or standards
(other than solvency requirements) to such or-
ganizations that are not generally applicable to
255
other entities engaged in a substantially similar
business.
‘‘(C) DENIAL OF APPLICATION BASED ON
APPLICATION OF SOLVENCY REQUIREMENTS.—
With respect to waiver applications filed on or
after the date of publication of solvency stand-
ards established by the Secretary under sub-
section (d), the ground for approval of such a
waiver application described in this subpara-
graph is that the State has denied such a li-
censing application based (in whole or in part)
on the organization’s failure to meet applicable
State solvency requirements and such require-
ments are not the same as the solvency stand-
ards established by the Secretary. For purposes
of this subparagraph, the term solvency require-
ments means requirements relating to solvency
and other matters covered under the standards
established by the Secretary under subsection
(d).
‘‘(3) TREATMENT OF WAIVER.—In the case of
a waiver granted under this subsection for a commu-
nity health organization with respect to a State—
256
‘‘(A) LIMITATION TO STATE.—The waiver
shall be effective only with respect to that State
and does not apply to any other State.
‘‘(B) LIMITATION TO 36-MONTH PERIOD.—
The waiver shall be effective only for a 36-
month period but may be renewed for up to 36
additional months if the Secretary determines
that such an extension is appropriate.
‘‘(C) CONDITIONED ON COMPLIANCE WITH
CONSUMER PROTECTION AND QUALITY STAND-
ARDS.—The continuation of the waiver is condi-
tioned upon the organization’s compliance with
the requirements described in paragraph (5).
‘‘(D) PREEMPTION OF STATE LAW.—Any
provisions of law of that State which relate to
the licensing of the organization and which pro-
hibit the organization from providing health in-
surance coverage shall be superseded.
‘‘(4) PROMPT ACTION ON APPLICATION.—The
Secretary shall grant or deny such a waiver applica-
tion within 60 days after the date the Secretary de-
termines that a substantially complete waiver appli-
cation has been filed. Nothing in this section shall
be construed as preventing an organization which
257
has had such a waiver application denied from sub-
mitting a subsequent waiver application.
‘‘(5) APPLICATION
AND
ENFORCEMENT
OF
STATE
CONSUMER
PROTECTION
AND
QUALITY
STANDARDS.—A waiver granted under this sub-
section to an organization with respect to licensing
under State law is conditioned upon the organiza-
tion’s compliance with all consumer protection and
quality standards insofar as such standards—
‘‘(A) would apply in the State to the com-
munity health organization if it were licensed as
an entity offering health insurance coverage
under State law; and
‘‘(B) are generally applicable to other risk-
bearing managed care organizations and plans
in the State.
‘‘(6) REPORT.—By not later than December 31,
2002, the Secretary shall submit to the Committee
on Commerce of the House of Representatives and
the Committee on Labor and Human Resources of
the Senate a report regarding whether the waiver
process under this subsection should be continued
after December 31, 2003.
‘‘(b) ASSUMPTION OF FULL FINANCIAL RISK.—To
qualify for a waiver under subsection (a), the community
258
health organization shall assume full financial risk on a
prospective basis for the provision of covered health care
services, except that the organization—
‘‘(1) may obtain insurance or make other ar-
rangements for the cost of providing to any enrolled
member such services the aggregate value of which
exceeds such aggregate level as the Secretary speci-
fies from time to time;
‘‘(2) may obtain insurance or make other ar-
rangements for the cost of such services provided to
its enrolled members other than through the organi-
zation because medical necessity required their pro-
vision before they could be secured through the orga-
nization;
‘‘(3) may obtain insurance or make other ar-
rangements for not more than 90 percent of the
amount by which its costs for any of its fiscal years
exceed 105 percent of its income for such fiscal year;
and
‘‘(4) may make arrangements with physicians
or other health care professionals, health care insti-
tutions, or any combination of such individuals or
institutions to assume all or part of the financial
risk on a prospective basis for the provision of
259
health services by the physicians or other health pro-
fessionals or through the institutions.
‘‘(c) CERTIFICATION OF PROVISION AGAINST RISK
OF INSOLVENCY FOR UNLICENSED CHO’S.—
‘‘(1) IN GENERAL.—Each community health or-
ganization that is not licensed by a State and for
which a waiver application has been approved under
subsection (a)(1), shall meet standards established
by the Secretary under subsection (d) relating to the
financial solvency and capital adequacy of the orga-
nization.
‘‘(2) CERTIFICATION PROCESS FOR SOLVENCY
STANDARDS FOR CHO’S.—The Secretary shall estab-
lish a process for the receipt and approval of appli-
cations of a community health organization de-
scribed in paragraph (1) for certification (and peri-
odic recertification) of the organization as meeting
such solvency standards. Under such process, the
Secretary shall act upon such a certification applica-
tion not later than 60 days after the date the appli-
cation has been received.
‘‘(d) ESTABLISHMENT
OF SOLVENCY STANDARDS
FOR COMMUNITY HEALTH ORGANIZATIONS.—
‘‘(1) IN GENERAL.—The Secretary shall estab-
lish, on an expedited basis and by rule pursuant to
260
section 553 of title 5, United States Code and
through the Health Resources and Services Adminis-
tration, standards described in subsection (c)(1) (re-
lating to financial solvency and capital adequacy)
that entities must meet to obtain a waiver under
subsection (a)(2)(C). In establishing such standards,
the Secretary shall consult with interested organiza-
tions, including the National Association of Insur-
ance Commissioners, the Academy of Actuaries, and
organizations representing Federally qualified health
centers.
‘‘(2) FACTORS
TO
CONSIDER
FOR
SOLVENCY
STANDARDS.—In establishing solvency standards for
community health organizations under paragraph
(1), the Secretary shall take into account—
‘‘(A) the delivery system assets of such an
organization and ability of such an organization
to provide services to enrollees;
‘‘(B) alternative means of protecting
against insolvency, including reinsurance, unre-
stricted surplus, letters of credit, guarantees,
organizational insurance coverage, partnerships
with other licensed entities, and valuation at-
tributable to the ability of such an organization
261
to meet its service obligations through direct
delivery of care; and
‘‘(C) any standards developed by the Na-
tional Association of Insurance Commissioners
specifically for risk-based health care delivery
organizations.
‘‘(3) ENROLLEE PROTECTION AGAINST INSOL-
VENCY.—Such standards shall include provisions to
prevent enrollees from being held liable to any per-
son or entity for the organization’s debts in the
event of the organization’s insolvency.
‘‘(4) DEADLINE.—Such standards shall be pro-
mulgated in a manner so they are first effective by
not later than April 1, 1999.
‘‘(e) DEFINITIONS.—In this section:
‘‘(1) COMMUNITY
HEALTH
ORGANIZATION.—
The term ‘community health organization’ means an
organization that is a Federally-qualified health cen-
ter or is controlled by one or more Federally-quali-
fied health centers.
‘‘(2) FEDERALLY-QUALIFIED
HEALTH
CEN-
TER.—The term ‘Federally-qualified health center’
has the meaning given such term in section
1905(l)(2)(B) of the Social Security Act.
262
‘‘(3) HEALTH
INSURANCE
COVERAGE.—The
term ‘health insurance coverage’ has the meaning
given such term in section 2791(b)(1).
‘‘(4) CONTROL.—The term ‘control’ means the
possession, whether direct or indirect, of the power
to direct or cause the direction of the management
and policies of the organization through member-
ship, board representation, or an ownership interest
equal to or greater than 50.1 percent.’’.
TITLE 
III—AMENDMENTS 
TO
THE 
INTERNAL 
REVENUE
CODE OF 1986
Subtitle A—Patient Protections
SEC. 301. PATIENT ACCESS TO UNRESTRICTED MEDICAL
ADVICE, EMERGENCY MEDICAL CARE, OB-
STETRIC AND GYNECOLOGICAL CARE, PEDI-
ATRIC CARE, AND CONTINUITY OF CARE.
Subchapter B of chapter 100 of the Internal Revenue
Code of 1986 is amended—
(1) in the table of sections, by inserting after
the item relating to section 9812 the following new
item:
‘‘Sec. 9813. Patient access to unrestricted medical advice, emergency medical
care, obstetric and gynecological care, pediatric care, and con-
tinuity of care.’’; and
(2) by inserting after section 9812 the fol-
lowing:
263
‘‘SEC. 9813. PATIENT ACCESS TO UNRESTRICTED MEDICAL
ADVICE, EMERGENCY MEDICAL CARE, OB-
STETRIC AND GYNECOLOGICAL CARE, PEDI-
ATRIC CARE, AND CONTINUITY OF CARE.
‘‘(a) PATIENT ACCESS TO UNRESTRICTED MEDICAL
ADVICE.—
‘‘(1) IN GENERAL.—In the case of any health
care professional acting within the lawful scope of
practice in the course of carrying out a contractual
employment arrangement or other direct contractual
arrangement between such professional and a group
health plan, the plan with which such contractual
employment arrangement or other direct contractual
arrangement is maintained by the professional may
not impose on such professional under such arrange-
ment any prohibition or restriction with respect to
advice, provided to a participant or beneficiary
under the plan who is a patient, about the health
status of the participant or beneficiary or the med-
ical care or treatment for the condition or disease of
the participant or beneficiary, regardless of whether
benefits for such care or treatment are provided
under the plan.
‘‘(2) HEALTH CARE PROFESSIONAL DEFINED.—
For purposes of this paragraph, the term ‘health
care professional’ means a physician (as defined in
264
section 1861(r) of the Social Security Act) or other
health care professional if coverage for the profes-
sional’s services is provided under the group health
plan for the services of the professional. Such term
includes a podiatrist, optometrist, chiropractor, psy-
chologist, dentist, physician assistant, physical or oc-
cupational therapist and therapy assistant, speech-
language pathologist, audiologist, registered or li-
censed practical nurse (including nurse practitioner,
clinical nurse specialist, certified registered nurse
anesthetist, and certified nurse-midwife), licensed
certified social worker, registered respiratory thera-
pist, and certified respiratory therapy technician.
‘‘(3) RULE
OF
CONSTRUCTION.—Nothing in
this subsection shall be construed to require the
sponsor of a group health plan to engage in any
practice that would violate its religious beliefs or
moral convictions.
‘‘(b) PATIENT ACCESS
TO EMERGENCY MEDICAL
CARE.—
‘‘(1) COVERAGE OF EMERGENCY SERVICES.—
‘‘(A) IN GENERAL.—If a group health plan
provides any benefits with respect to emergency
services (as defined in subparagraph (B)(ii)), or
ambulance services, the plan shall cover emer-
265
gency services (including emergency ambulance
services as defined in subparagraph (B)(iii))
furnished under the plan—
‘‘(i) without the need for any prior
authorization determination;
‘‘(ii) whether or not the health care
provider furnishing such services is a par-
ticipating provider with respect to such
services;
‘‘(iii) in a manner so that, if such
services are provided to a participant or
beneficiary by a nonparticipating health
care provider, the participant or bene-
ficiary is not liable for amounts that ex-
ceed the amounts of liability that would be
incurred if the services were provided by a
participating provider; and
‘‘(iv) without regard to any other term
or condition of such plan (other than ex-
clusion or coordination of benefits, or an
affiliation or waiting period, permitted
under section 701 and other than applica-
ble cost sharing).
‘‘(B) DEFINITIONS.—In this subsection:
266
‘‘(i) EMERGENCY
MEDICAL
CONDI-
TION.—The term ‘emergency medical con-
dition’ means—
‘‘(I) a medical condition mani-
festing itself by acute symptoms of
sufficient severity (including severe
pain) such that a prudent layperson,
who possesses an average knowledge
of health and medicine, could reason-
ably expect the absence of immediate
medical attention to result in a condi-
tion described in clause (i), (ii), or
(iii) of section 1867(e)(1)(A) of the
Social 
Security 
Act 
(42 
U.S.C.
1395dd(e)(1)(A)); and
‘‘(II) a medical condition mani-
festing itself in a neonate by acute
symptoms of sufficient severity (in-
cluding severe pain) such that a pru-
dent health care professional could
reasonably expect the absence of im-
mediate medical attention to result in
a condition described in clause (i),
(ii), or (iii) of section 1867(e)(1)(A)
of the Social Security Act.
267
‘‘(ii) 
EMERGENCY
SERVICES.—The
term ‘emergency services’ means—
‘‘(I) with respect to an emer-
gency medical condition described in
clause (i)(I), a medical screening ex-
amination (as required under section
1867 of the Social Security Act, 42
U.S.C. 1395dd)) that is within the ca-
pability of the emergency department
of a hospital, including ancillary serv-
ices routinely available to the emer-
gency department to evaluate an
emergency medical condition (as de-
fined in clause (i)) and also, within
the capabilities of the staff and facili-
ties at the hospital, such further med-
ical examination and treatment as are
required under section 1867 of such
Act to stabilize the patient; or
‘‘(II) with respect to an emer-
gency medical condition described in
clause (i)(II), medical treatment for
such condition rendered by a health
care provider in a hospital to a
neonate, including available hospital
268
ancillary services in response to an ur-
gent request of a health care profes-
sional and to the extent necessary to
stabilize the neonate.
‘‘(iii) EMERGENCY AMBULANCE SERV-
ICES.—The term ‘emergency ambulance
services’ means ambulance services (as de-
fined for purposes of section 1861(s)(7) of
the Social Security Act) furnished to trans-
port an individual who has an emergency
medical condition (as defined in clause (i))
to a hospital for the receipt of emergency
services (as defined in clause (ii)) in a case
in which appropriate emergency medical
screening examinations are covered under
the plan pursuant to paragraph (1)(A) and
a prudent layperson, with an average
knowledge of health and medicine, could
reasonably expect that the absence of such
transport would result in placing the
health of the individual in serious jeopardy,
serious impairment of bodily function, or
serious dysfunction of any bodily organ or
part.
269
‘‘(iv) STABILIZE.—The term ‘to sta-
bilize’ means, with respect to an emergency
medical condition, to provide such medical
treatment of the condition as may be nec-
essary to assure, within reasonable medical
probability, that no material deterioration
of the condition is likely to result from or
occur during the transfer of the individual
from a facility.
‘‘(v) NONPARTICIPATING.—The term
‘nonparticipating’ means, with respect to a
health care provider that provides health
care items and services to a participant or
beneficiary under group health plan, a
health care provider that is not a partici-
pating health care provider with respect to
such items and services.
‘‘(vi) 
PARTICIPATING.—The 
term
‘participating’ means, with respect to a
health care provider that provides health
care items and services to a participant or
beneficiary under group health plan, a
health care provider that furnishes such
items and services under a contract or
other arrangement with the plan.
270
‘‘(c) PATIENT RIGHT TO OBSTETRIC AND GYNECO-
LOGICAL CARE.—
‘‘(1) IN
GENERAL.—In any case in which a
group health plan—
‘‘(A) provides benefits under the terms of
the plan consisting of—
‘‘(i) gynecological care (such as pre-
ventive women’s health examinations); or
‘‘(ii) obstetric care (such as preg-
nancy-related services),
provided by a participating health care profes-
sional who specializes in such care (or provides
benefits consisting of payment for such care);
and
‘‘(B) requires or provides for designation
by a participant or beneficiary of a partici-
pating primary care provider,
if the primary care provider designated by such a
participant or beneficiary is not such a health care
professional, then the plan shall meet the require-
ments of paragraph (2).
‘‘(2) REQUIREMENTS.—A group health plan
meets the requirements of this paragraph, in connec-
tion with benefits described in paragraph (1) con-
sisting of care described in clause (i) or (ii) of para-
271
graph (1)(A) (or consisting of payment therefor), if
the plan—
‘‘(A) does not require authorization or a
referral by the primary care provider in order
to obtain such benefits; and
‘‘(B) treats the ordering of other care of
the same type, by the participating health care
professional providing the care described in
clause (i) or (ii) of paragraph (1)(A), as the au-
thorization of the primary care provider with
respect to such care.
‘‘(3) HEALTH CARE PROFESSIONAL DEFINED.—
For purposes of this subsection, the term ‘health
care professional’ means an individual (including,
but not limited to, a nurse midwife or nurse practi-
tioner) who is licensed, accredited, or certified under
State law to provide obstetric and gynecological
health care services and who is operating within the
scope of such licensure, accreditation, or certifi-
cation.
‘‘(4) CONSTRUCTION.—Nothing in paragraph
(1) shall be construed as preventing a plan from of-
fering (but not requiring a participant or beneficiary
to accept) a health care professional trained,
credentialed, and operating within the scope of their
272
licensure to perform obstetric and gynecological
health care services. Nothing in paragraph (2)(B)
shall waive any requirements of coverage relating to
medical necessity or appropriateness with respect to
coverage of gynecological or obstetric care so or-
dered.
‘‘(5) TREATMENT OF MULTIPLE COVERAGE OP-
TIONS.—In the case of a plan providing benefits
under two or more coverage options, the require-
ments of this subsection shall apply separately with
respect to each coverage option.
‘‘(d) PATIENT RIGHT TO PEDIATRIC CARE.—
‘‘(1) IN
GENERAL.—In any case in which a
group health plan provides benefits consisting of
routine pediatric care provided by a participating
health care professional who specializes in pediatrics
(or consisting of payment for such care) and the
plan requires or provides for designation by a partic-
ipant or beneficiary of a participating primary care
provider, the plan shall provide that such a partici-
pating health care professional may be designated, if
available, by a parent or guardian of any beneficiary
under the plan is who under 18 years of age, as the
primary care provider with respect to any such bene-
fits.
273
‘‘(2) HEALTH CARE PROFESSIONAL DEFINED.—
For purposes of this subsection, the term ‘health
care professional’ means an individual who is li-
censed, accredited, or certified under State law to
provide pediatric health care services and who is op-
erating within the scope of such licensure, accredita-
tion, or certification.
‘‘(3) CONSTRUCTION.—Nothing in paragraph
(1) shall be construed as preventing a plan from of-
fering (but not requiring a participant or beneficiary
to accept) a health care professional trained,
credentialed, and operating within the scope of their
licensure to perform pediatric health care services.
Nothing in paragraph (1) shall waive any require-
ments of coverage relating to medical necessity or
appropriateness with respect to coverage of pediatric
care so ordered.
‘‘(4) TREATMENT OF MULTIPLE COVERAGE OP-
TIONS.—In the case of a plan providing benefits
under two or more coverage options, the require-
ments of this subsection shall apply separately with
respect to each coverage option.
‘‘(e) CONTINUITY OF CARE.—
‘‘(1) IN GENERAL.—
274
‘‘(A) TERMINATION
OF
PROVIDER.—If a
contract between a group health plan and a
health care provider is terminated (as defined
in subparagraph (D)(ii)), or benefits provided
by a health care provider are terminated be-
cause of a change in the terms of provider par-
ticipation in a group health plan, and an indi-
vidual who, at the time of such termination, is
a participant or beneficiary in the plan and is
scheduled to undergo surgery (including an
organ transplantation), is undergoing treatment
for pregnancy, or is determined to be terminally
ill (as defined in section 1861(dd)(3)(A) of the
Social Security Act) and is undergoing treat-
ment for the terminal illness, the plan shall—
‘‘(i) notify the individual on a timely
basis of such termination and of the right
to elect continuation of coverage of treat-
ment by the provider under this sub-
section; and
‘‘(ii) subject to paragraph (3), permit
the individual to elect to continue to be
covered with respect to treatment by the
provider for such surgery, pregnancy, or
275
illness during a transitional period (pro-
vided under paragraph (2)).
‘‘(B) TREATMENT
OF
TERMINATION
OF
CONTRACT
WITH
HEALTH
INSURANCE
ISSUER.—If a contract for the provision of
health insurance coverage between a group
health plan and a health insurance issuer is ter-
minated and, as a result of such termination,
coverage of services of a health care provider is
terminated with respect to an individual, the
provisions of subparagraph (A) (and the suc-
ceeding provisions of this subsection) shall
apply under the plan in the same manner as if
there had been a contract between the plan and
the provider that had been terminated, but only
with respect to benefits that are covered under
the plan after the contract termination.
‘‘(C) TERMINATION
DEFINED.—For pur-
poses of this subsection, the term ‘terminated’
includes, with respect to a contract, the expira-
tion or nonrenewal of the contract, but does not
include a termination of the contract by the
plan for failure to meet applicable quality
standards or for fraud.
‘‘(2) TRANSITIONAL PERIOD.—
276
‘‘(A) IN GENERAL.—Except as provided in
subparagraphs (B) through (D), the transi-
tional period under this paragraph shall extend
up to 90 days (as determined by the treating
health care professional) after the date of the
notice described in paragraph (1)(A)(i) of the
provider’s termination.
‘‘(B) SCHEDULED
SURGERY.—If surgery
was scheduled for an individual before the date
of the announcement of the termination of the
provider status under paragraph (1)(A)(i), the
transitional period under this paragraph with
respect to the surgery or transplantation.
‘‘(C) PREGNANCY.—If—
‘‘(i) a participant or beneficiary was
determined to be pregnant at the time of
a provider’s termination of participation,
and
‘‘(ii) the provider was treating the
pregnancy before date of the termination,
the transitional period under this paragraph
with respect to provider’s treatment of the
pregnancy shall extend through the provision of
post-partum care directly related to the deliv-
ery.
277
‘‘(D) TERMINAL ILLNESS.—If—
‘‘(i) a participant or beneficiary was
determined to be terminally ill (as deter-
mined under section 1861(dd)(3)(A) of the
Social Security Act) at the time of a pro-
vider’s termination of participation, and
‘‘(ii) the provider was treating the ter-
minal illness before the date of termi-
nation,
the transitional period under this paragraph
shall extend for the remainder of the individ-
ual’s life for care directly related to the treat-
ment of the terminal illness or its medical
manifestations.
‘‘(3) PERMISSIBLE TERMS AND CONDITIONS.—
A group health plan may condition coverage of con-
tinued treatment by a provider under paragraph
(1)(A)(i) upon the individual notifying the plan of
the election of continued coverage and upon the pro-
vider agreeing to the following terms and conditions:
‘‘(A) The provider agrees to accept reim-
bursement from the plan and individual in-
volved (with respect to cost-sharing) at the
rates applicable prior to the start of the transi-
tional period as payment in full (or, in the case
278
described in paragraph (1)(B), at the rates ap-
plicable under the replacement plan after the
date of the termination of the contract with the
health insurance issuer) and not to impose cost-
sharing with respect to the individual in an
amount that would exceed the cost-sharing that
could have been imposed if the contract referred
to in paragraph (1)(A) had not been termi-
nated.
‘‘(B) The provider agrees to adhere to the
quality assurance standards of the plan respon-
sible for payment under subparagraph (A) and
to provide to such plan necessary medical infor-
mation related to the care provided.
‘‘(C) The provider agrees otherwise to ad-
here to such plan’s policies and procedures, in-
cluding procedures regarding referrals and ob-
taining prior authorization and providing serv-
ices pursuant to a treatment plan (if any) ap-
proved by the plan.
‘‘(D) The provider agrees to provide tran-
sitional care to all participants and beneficiaries
who are eligible for and elect to have coverage
of such care from such provider.
279
‘‘(E) If the provider initiates the termi-
nation, the provider has notified the plan within
30 days prior to the effective date of the termi-
nation of—
‘‘(i) whether the provider agrees to
permissible terms and conditions (as set
forth in this paragraph) required by the
plan, and
‘‘(ii) if the provider agrees to the
terms and conditions, the specific plan
beneficiaries and participants undergoing a
course of treatment from the provider who
the provider believes, at the time of the no-
tification, would be eligible for transitional
care under this subsection.
‘‘(4) CONSTRUCTION.—Nothing in this sub-
section shall be construed to—
‘‘(A) require the coverage of benefits which
would not have been covered if the provider in-
volved remained a participating provider, or
‘‘(B) prohibit a group health plan from
conditioning a provider’s participation on the
provider’s agreement to provide transitional
care to all participants and beneficiaries eligible
280
to obtain coverage of such care furnished by the
provider as set forth under this subsection.
‘‘(f) COVERAGE FOR INDIVIDUALS PARTICIPATING IN
APPROVED CANCER CLINICAL TRIALS.—
‘‘(1) COVERAGE.—
‘‘(A) IN GENERAL.—If a group health plan
provides coverage to a qualified individual (as
defined in paragraph (2)), the plan—
‘‘(i) may not deny the individual par-
ticipation in the clinical trial referred to in
paragraph (2)(B);
‘‘(ii) subject to paragraphs (2), (3),
and (4), may not deny (or limit or impose
additional conditions on) the coverage of
routine patient costs for items and services
furnished in connection with participation
in the trial; and
‘‘(iii) may not discriminate against the
individual on the basis of the participation
of the participant or beneficiary in such
trial.
‘‘(B) EXCLUSION
OF
CERTAIN
COSTS.—
For purposes of subparagraph (A)(ii), routine
patient costs do not include the cost of the tests
281
or measurements conducted primarily for the
purpose of the clinical trial involved.
‘‘(C) USE OF IN-NETWORK PROVIDERS.—If
one or more participating providers is partici-
pating in a clinical trial, nothing in subpara-
graph (A) shall be construed as preventing a
plan from requiring that a qualified individual
participate in the trial through such a partici-
pating provider if the provider will accept the
individual as a participant in the trial.
‘‘(2) QUALIFIED
INDIVIDUAL
DEFINED.—For
purposes of paragraph (1), the term ‘qualified indi-
vidual’ means an individual who is a participant or
beneficiary in a group health plan and who meets
the following conditions:
‘‘(A)(i) The individual has been diagnosed
with cancer.
‘‘(ii) The individual is eligible to partici-
pate in an approved clinical trial according to
the trial protocol with respect to treatment of
cancer.
‘‘(iii) The individual’s participation in the
trial offers meaningful potential for significant
clinical benefit for the individual.
‘‘(B) Either—
282
‘‘(i) the referring physician is a par-
ticipating health care professional and has
concluded that the individual’s participa-
tion in such trial would be appropriate
based upon satisfaction by the individual of
the conditions described in subparagraph
(A); or
‘‘(ii) the individual provides medical
and scientific information establishing that
the individual’s participation in such trial
would be appropriate based upon the satis-
faction by the individual of the conditions
described in subparagraph (A).
‘‘(3) PAYMENT.—
‘‘(A) IN GENERAL.—A group health plan
shall provide for payment for routine patient
costs described in paragraph (1)(B) but is not
required to pay for costs of items and services
that are reasonably expected to be paid for by
the sponsors of an approved clinical trial.
‘‘(B) ROUTINE PATIENT CARE COSTS.—
‘‘(i) IN
GENERAL.—For purposes of
this paragraph, the term ‘routine patient
care costs’ shall include the costs associ-
283
ated with the provision of items and serv-
ices that—
‘‘(I) would otherwise be covered
under the group health plan if such
items and services were not provided
in connection with an approved clin-
ical trial program; and
‘‘(II) are furnished according to
the protocol of an approved clinical
trial program.
‘‘(ii) EXCLUSION.—For purposes of
this paragraph, ‘routine patient care costs’
shall not include the costs associated with
the provision of—
(I) an investigational drug or de-
vice, unless the Secretary has author-
ized the manufacturer of such drug or
device to charge for such drug or de-
vice; or
(II) any item or service supplied
without charge by the sponsor of the
approved clinical trial program.
‘‘(C) PAYMENT
RATE.—For purposes of
this subsection—
284
‘‘(i) PARTICIPATING
PROVIDERS.—In
the case of covered items and services pro-
vided by a participating provider, the pay-
ment rate shall be at the agreed upon rate.
‘‘(ii) 
NONPARTICIPATING
PRO-
VIDERS.—In the case of covered items and
services provided by a nonparticipating
provider, the payment rate shall be at the
rate the plan would normally pay for com-
parable items or services under clause (i).
‘‘(4) APPROVED CLINICAL TRIAL DEFINED.—
‘‘(A) IN GENERAL.—For purposes of this
subsection, the term ‘approved clinical trial’
means a cancer clinical research study or can-
cer clinical investigation approved by an Institu-
tional Review Board.
‘‘(B) CONDITIONS
FOR
DEPARTMENTS.—
The conditions described in this paragraph, for
a study or investigation conducted by a Depart-
ment, are that the study or investigation has
been reviewed and approved through a system
of peer review that the Secretary determines—
‘‘(i) to be comparable to the system of
peer review of studies and investigations
285
used by the National Institutes of Health,
and
‘‘(ii) assures unbiased review of the
highest scientific standards by qualified in-
dividuals who have no interest in the out-
come of the review.
‘‘(5) CONSTRUCTION.—Nothing in this sub-
section shall be construed to limit a plan’s coverage
with respect to clinical trials.
‘‘(6) PLAN
SATISFACTION
OF
CERTAIN
RE-
QUIREMENTS; RESPONSIBILITIES OF FIDUCIARIES.—
‘‘(A) IN GENERAL.—For purposes of this
subsection, insofar as a group health plan pro-
vides benefits in the form of health insurance
coverage through a health insurance issuer, the
plan shall be treated as meeting the require-
ments of this subsection with respect to such
benefits and not be considered as failing to
meet such requirements because of a failure of
the issuer to meet such requirements so long as
the plan sponsor or its representatives did not
cause such failure by the issuer.
‘‘(B) CONSTRUCTION.—Nothing in this
subsection shall be construed to affect or mod-
ify the responsibilities of the fiduciaries of a
286
group health plan under part 4 of subtitle B of
title I of the Employee Retirement Income Se-
curity Act of 1974.
‘‘(7) STUDY AND REPORT.—
‘‘(A) STUDY.—The Secretary shall analyze
cancer clinical research and its cost implications
for managed care, including differentiation in—
‘‘(i) the cost of patient care in trials
versus standard care;
‘‘(ii) the cost effectiveness achieved in
different sites of service;
‘‘(iii) research outcomes;
‘‘(iv) volume of research subjects
available in different sites of service;
‘‘(v) access to research sites and clin-
ical trials by cancer patients;
‘‘(vi) patient cost sharing or copay-
ment costs realized in different sites of
service;
‘‘(vii) health outcomes experienced in
different sites of service;
‘‘(viii) long term health care services
and costs experienced in different sites of
service;
287
‘‘(ix) morbidity and mortality experi-
enced in different sites of service; and
‘‘(x) patient satisfaction and pref-
erence of sites of service.
‘‘(B) REPORT
TO
CONGRESS.—Not later
than January 1, 2005, the Secretary shall sub-
mit a report to Congress that contains—
‘‘(i) an assessment of any incremental
cost to group health plans resulting from
the provisions of this section;
‘‘(ii) a projection of expenditures to
such plans resulting from this section;
‘‘(iii) an assessment of any impact on
premiums resulting from this section; and
‘‘(iv) recommendations regarding ac-
tion on other diseases.’’.
SEC. 302. EFFECTIVE DATE AND RELATED RULES.
(a) IN GENERAL.—The amendments made by this
subtitle shall apply with respect to plan years beginning
on or after January 1 of the second calendar year fol-
lowing the date of the enactment of this Act, except that
the Secretary of the Treasury may issue regulations before
such date under such amendments. The Secretary shall
first issue regulations necessary to carry out the amend-
288
ments made by this subtitle before the effective date there-
of.
(b) LIMITATION ON ENFORCEMENT ACTIONS.—No
enforcement action shall be taken, pursuant to the amend-
ments made by this subtitle, against a group health plan
with respect to a violation of a requirement imposed by
such amendments before the date of issuance of regula-
tions issued in connection with such requirement, if the
plan has sought to comply in good faith with such require-
ment.
(c) SPECIAL RULE FOR COLLECTIVE BARGAINING
AGREEMENTS.—In the case of a group health plan main-
tained pursuant to one or more collective bargaining
agreements between employee representatives and one or
more employers ratified before the date of the enactment
of this Act, the amendments made by this subtitle shall
not apply with respect to plan years beginning before the
later of—
(1) the date on which the last of the collective
bargaining agreements relating to the plan termi-
nates (determined without regard to any extension
thereof agreed to after the date of the enactment of
this Act); or
(2) January 1, 2002.
289
For purposes of this subsection, any plan amendment
made pursuant to a collective bargaining agreement relat-
ing to the plan which amends the plan solely to conform
to any requirement added by this subtitle shall not be
treated as a termination of such collective bargaining
agreement.
Subtitle B—Medical Savings
Accounts
SEC. 311. EXPANSION OF AVAILABILITY OF MEDICAL SAV-
INGS ACCOUNTS.
(a) REPEAL OF LIMITATIONS ON NUMBER OF MED-
ICAL SAVINGS ACCOUNTS.—
(1) IN GENERAL.—Subsections (i) and (j) of
section 220 of the Internal Revenue Code of 1986
are hereby repealed.
(2) CONFORMING AMENDMENT.—Paragraph (1)
of section 220(c) of such Code is amended by strik-
ing subparagraph (D).
(b) ALL EMPLOYERS MAY OFFER MEDICAL SAVINGS
ACCOUNTS.—
(1) IN
GENERAL.—Subclause (I) of section
220(c)(1)(A)(iii) of such Code (defining eligible indi-
vidual) is amended by striking ‘‘and such employer
is a small employer’’.
(2) CONFORMING AMENDMENTS.—
290
(A) Paragraph (1) of section 220(c) of
such Code is amended by striking subparagraph
(C).
(B) Subsection (c) of section 220 of such
Code is amended by striking paragraph (4) and
by redesignating paragraph (5) as paragraph
(4).
(c) INCREASE IN AMOUNT OF DEDUCTION ALLOWED
FOR CONTRIBUTIONS TO MEDICAL SAVINGS ACCOUNTS.—
(1) IN
GENERAL.—Paragraph (2) of section
220(b) of such Code is amended to read as follows:
‘‘(2) MONTHLY LIMITATION.—The monthly lim-
itation for any month is the amount equal to 1⁄12 of
the annual deductible (as of the first day of such
month) of the individual’s coverage under the high
deductible health plan.’’.
(2) CONFORMING AMENDMENT.—Clause (ii) of
section 220(d)(1)(A) of such Code is amended by
striking ‘‘75 percent of’’.
(d) BOTH EMPLOYERS AND EMPLOYEES MAY CON-
TRIBUTE TO MEDICAL SAVINGS ACCOUNTS.—Paragraph
(5) of section 220(b) of such Code is amended to read
as follows:
‘‘(5) COORDINATION WITH EXCLUSION FOR EM-
PLOYER
CONTRIBUTIONS.—The limitation which
291
would (but for this paragraph) apply under this sub-
section to the taxpayer for any taxable year shall be
reduced (but not below zero) by the amount which
would (but for section 106(b)) be includible in the
taxpayer’s gross income for such taxable year.’’.
(e) REDUCTION
OF
PERMITTED
DEDUCTIBLES
UNDER HIGH DEDUCTIBLE HEALTH PLANS.—
(1) IN GENERAL.—Subparagraph (A) of section
220(c)(2) of such Code (defining high deductible
health plan) is amended—
(A) by striking ‘‘$1,500’’ in clause (i) and
inserting ‘‘$1,000’’, and
(B) by striking ‘‘$3,000’’ in clause (ii) and
inserting ‘‘$2,000’’.
(2) CONFORMING AMENDMENT.—Subsection (g)
of section 220 of such Code is amended to read as
follows:
‘‘(g) COST-OF-LIVING ADJUSTMENT.—
‘‘(1) IN GENERAL.—In the case of any taxable
year beginning in a calendar year after 1998, each
dollar amount in subsection (c)(2) shall be increased
by an amount equal to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar
292
year in which such taxable year begins by sub-
stituting ‘calendar year 1997’ for ‘calendar year
1992’ in subparagraph (B) thereof.
‘‘(2) SPECIAL
RULES.—In the case of the
$1,000 amount in subsection (c)(2)(A)(i) and the
$2,000 amount in subsection (c)(2)(A)(ii), para-
graph (1)(B) shall be applied by substituting ‘cal-
endar year 1999’ for ‘calendar year 1997’.
‘‘(3) ROUNDING.—If any increase under para-
graph (1) or (2) is not a multiple of $50, such in-
crease shall be rounded to the nearest multiple of
$50.’’.
(f) MEDICAL SAVINGS ACCOUNTS MAY BE OFFERED
UNDER CAFETERIA PLANS.—Subsection (f) of section
125 of such Code is amended by striking ‘‘106(b),’’.
SEC. 312. EFFECTIVE DATE.
The amendments made by this subtitle shall apply to
taxable years beginning after December 31, 2000.
293
Subtitle C—Tax Incentives for
Health Care
SEC. 321. DEDUCTION FOR HEALTH AND LONG-TERM CARE
INSURANCE COSTS OF INDIVIDUALS NOT
PARTICIPATING IN EMPLOYER-SUBSIDIZED
HEALTH PLANS.
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 is amended
by redesignating section 222 as section 223 and by insert-
ing after section 221 the following new section:
‘‘SEC. 222. HEALTH AND LONG-TERM CARE INSURANCE
COSTS.
‘‘(a) IN GENERAL.—In the case of an individual,
there shall be allowed as a deduction an amount equal to
the applicable percentage of the amount paid during the
taxable year for insurance which constitutes medical care
for the taxpayer and the taxpayer’s spouse and depend-
ents.
‘‘(b) APPLICABLE PERCENTAGE.—For purposes of
subsection (a), the applicable percentage shall be deter-
mined in accordance with the following table:
‘‘For taxable years beginning
The applicable
in calendar year—
percentage is—
2002, 2003, and 2004 .................................................................
2005 .............................................................................................
2006 .............................................................................................
2007 and thereafter .....................................................................
100.
‘‘(c) LIMITATION BASED ON OTHER COVERAGE.—
300
‘‘(III) the taxpayer files a joint
return for the taxable year, and
‘‘(iii) $500 if such individual is an in-
dividual for whom a deduction under sec-
tion 151(c) is allowable to the taxpayer for
such taxable year.
‘‘(B) LIMITATION
TO
DEPENDENTS.—
Not more than 2 individuals may be taken into
account by the taxpayer under subparagraph
(A)(iii).
‘‘(C) SPECIAL RULE FOR MARRIED INDI-
VIDUALS.—In the case of an individual—
‘‘(i) who is married (within the mean-
ing of section 7703) as of the close of the
taxable year but does not file a joint return
for such year, and
‘‘(ii) who does not live apart from
such individual’s spouse at all times during
the taxable year,
the limitation imposed by subparagraph (B)
shall be divided equally between the individual
and the individual’s spouse unless they agree on
a different division.
‘‘(3) COVERAGE MONTH.—For purposes of this
subsection—