Union Calendar No. 249
104TH CONGRESS
2D SESSION
H. R. 3070
[Report No. 104–497, Part I]
A BILL
To improve portability and continuity of health in-
surance coverage in the group and individual
markets, to combat waste, fraud, and abuse in
health insurance and health care delivery, and to
simplify the administration of health insurance.
MARCH 29, 1996
Committees on Ways and Means, the Judiciary, and Eco-
nomic and Educational Opportunities discharged; com-
mitted to the Committee of the Whole House on the
State of the Union and ordered to be printed
IB
Union Calendar No. 249
104TH CONGRESS
2D SESSION
H. R. 3070
[Report No. 104–497, Part I]
To improve portability and continuity of health insurance coverage in the
group and individual markets, to combat waste, fraud, and abuse in
health insurance and health care delivery, and to simplify the administra-
tion of health insurance.
IN THE HOUSE OF REPRESENTATIVES
MARCH 12, 1996
Mr. BILIRAKIS (for himself and Mr. BLILEY) introduced the following bill;
which was referred to the Committee on Commerce, and in addition to
the Committees on Ways and Means, the Judiciary, and Economic and
Educational Opportunities, for a period to be subsequently determined by
the Speaker, in each case for consideration of such provisions as fall with-
in the jurisdiction of the committee concerned
MARCH 25, 1996
Reported from the Committee on Commerce with an amendment
[Strike out all after the enacting clause and insert the part printed in italic]
MARCH 25, 1996
Referral to the Committees on Ways and Means, the Judiciary, and Economic
and Educational Opportunities extended for a period ending not later
than March 29, 1996
MARCH 29, 1996
Additional sponsors: Mr. HASTERT, Mr. GILLMOR, Mr. STEARNS, Mr. KLUG,
Mr. NORWOOD, and Mr. WELLER
MARCH 29, 1996
Committees on Ways and Means, the Judiciary, and Economic and Edu-
cational Opportunities discharged; committed to the Committee of the
Whole House on the State of the Union and ordered to be printed
[For text of introduced bill, see copy of bill as introduced on March 12, 1996]
A BILL
To improve portability and continuity of health insurance
coverage in the group and individual markets, to combat
waste, fraud, and abuse in health insurance and health
care delivery, and to simplify the administration of health
insurance.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Health Coverage Availability and Affordability Act of
1996’’.
(b) TABLE OF CONTENTS.—The table of contents of this
Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—IMPROVED AVAILABILITY AND PORTABILITY OF HEALTH
INSURANCE COVERAGE
SUBTITLE A—COVERAGE UNDER GROUP HEALTH PLANS
Sec. 101. Portability of coverage for previously covered individuals.
Sec. 102. Limitation on preexisting condition exclusions; no application to cer-
tain newborns, adopted children, and pregnancy.
Sec. 103. Prohibiting exclusions based on health status and providing for enroll-
ment periods.
Sec. 104. Enforcement.
SUBTITLE B—CERTAIN REQUIREMENTS FOR INSURERS AND HMOS IN THE
GROUP AND INDIVIDUAL MARKETS
PART 1—AVAILABILITY OF GROUP HEALTH INSURANCE COVERAGE
Sec. 131. Guaranteed availability of general coverage in the small group market.
Sec. 132. Guaranteed renewability of group coverage.
PART 2—AVAILABILITY OF INDIVIDUAL HEALTH INSURANCE COVERAGE
Sec. 141. Guaranteed availability of individual health insurance coverage to cer-
tain individuals with prior group coverage.
Sec. 142. Guaranteed renewability of individual health insurance coverage.
PART 3—ENFORCEMENT
Sec. 151. Incorporation of provisions for State enforcement with Federal fallback
authority.
Subtitle C—Sense of Committee on Additional Requirements
Sec. 161. Sense of Committee on Commerce on additional requirements.
Subtitle D—Definitions; General Provisions
Sec. 191. Definitions; scope of coverage.
Sec. 192. State flexibility to provide greater protection.
Sec. 193. Effective date.
Sec. 194. Rule of construction.
TITLE II—PREVENTING HEALTH CARE FRAUD AND ABUSE;
ADMINISTRATIVE SIMPLIFICATION
Sec. 200. References in title.
Subtitle A—Fraud and Abuse Control Program
Sec. 201. Fraud and abuse control program.
Sec. 202. Medicare integrity program.
Sec. 203. Beneficiary incentive programs.
Sec. 204. Application of certain health anti-fraud and abuse sanctions to fraud
and abuse against Federal health care programs.
Sec. 205. Guidance regarding application of health care fraud and abuse sanc-
tions.
Subtitle B—Revisions to Current Sanctions for Fraud and Abuse
Sec. 211. Mandatory exclusion from participation in medicare and State health
care programs.
Sec. 212. Establishment of minimum period of exclusion for certain individuals
and entities subject to permissive exclusion from medicare and
State health care programs.
Sec. 213. Permissive exclusion of individuals with ownership or control interest
in sanctioned entities.
Sec. 214. Sanctions against practitioners and persons for failure to comply with
statutory obligations.
Sec. 215. Intermediate sanctions for medicare health maintenance organizations.
Sec. 216. Additional exception to anti-kickback penalties for discounting and
managed care arrangements.
Sec. 217. Criminal penalty for fraudulent disposition of assets in order to obtain
medicaid benefits.
Sec. 218. Effective date.
Subtitle C—Data Collection
Sec. 221. Establishment of the health care fraud and abuse data collection pro-
gram.
Subtitle D—Civil Monetary Penalties
Sec. 231. Social security act civil monetary penalties.
Sec. 232. Clarification of level of intent required for imposition of sanctions.
Sec. 233. Penalty for false certification for home health services.
Subtitle E—Revisions to Criminal Law
Sec. 241. Definition of Federal health care offense.
Sec. 242. Health care fraud.
Sec. 243. Theft or embezzlement.
Sec. 244. False statements.
Sec. 245. Obstruction of criminal investigations of health care offenses.
Sec. 246. Laundering of monetary instruments.
Sec. 247. Injunctive relief relating to health care offenses.
Sec. 248. Authorized investigative demand procedures.
Sec. 249. Forfeitures for Federal health care offenses.
Subtitle F—Administrative Simplification
Sec. 251. Purpose.
Sec. 252. Administrative simplification.
‘‘PART C—ADMINISTRATIVE SIMPLIFICATION
‘‘Sec. 1171. Definitions.
‘‘Sec. 1172. General requirements for adoption of standards.
‘‘Sec. 1173. Standards for information transactions and data elements.
‘‘Sec. 1174. Timetables for adoption of standards.
‘‘Sec. 1175. Requirements.
‘‘Sec. 1176. General penalty for failure to comply with requirements and
standards.
‘‘Sec. 1177. Wrongful disclosure of individually identifiable health informa-
tion.
‘‘Sec. 1178. Effect on State law.
‘‘Sec. 1179. Health Information Advisory Committee.
TITLE I—IMPROVED AVAILABIL-
ITY 
AND 
PORTABILITY 
OF
HEALTH 
INSURANCE 
COV-
ERAGE
Subtitle A—Coverage Under Group
Health Plans
SEC. 101. PORTABILITY OF COVERAGE FOR PREVIOUSLY
COVERED INDIVIDUALS.
(a) CREDITING PERIODS OF PREVIOUS COVERAGE TO-
WARD PREEXISTING CONDITION RESTRICTIONS.—Subject
to the succeeding provisions of this section, a group health
plan, and an insurer or health maintenance organization
offering health insurance coverage in connection with a
group health plan, shall provide that any preexisting condi-
tion limitation period (as defined in subsection (b)(2)) is
reduced by the length of the aggregate period of qualified
prior coverage (if any, as defined in subsection (b)(3)) ap-
plicable to the participant or beneficiary as of the date of
commencement of coverage under the plan.
(b) DEFINITIONS AND OTHER PROVISIONS RELATING
TO PREEXISTING CONDITIONS.—
(1) PREEXISTING CONDITION.—
(A) IN GENERAL.—For purposes of this sub-
title, subject to subparagraph (B), the term ‘‘pre-
existing condition’’ means a condition, regardless
of the cause of the condition, for which medical
advice, diagnosis, care, or treatment was rec-
ommended or received within the 6-month period
ending on the day before—
(i) the effective date of the coverage of
such participant or beneficiary, or
(ii) the earliest date upon which such
coverage could have been effective if there
were no waiting period applicable,
whichever is earlier.
(B) TREATMENT
OF
GENETIC
INFORMA-
TION.—For purposes of this section, genetic in-
formation shall not be considered to be a pre-
existing condition, so long as treatment of the
condition to which the information is applicable
has not been sought during the 6-month period
described in subparagraph (A).
(2) PREEXISTING
CONDITION
LIMITATION
PE-
RIOD.—For purposes of this subtitle, the term ‘‘pre-
existing condition limitation period’’ means, with re-
spect to coverage of an individual under a group
health plan or under health insurance coverage, the
period during which benefits with respect to treat-
ment of a condition of such individual are not pro-
vided based on the fact that the condition is a pre-
existing condition.
(3) AGGREGATE PERIOD OF QUALIFIED PRIOR
COVERAGE.—
(A) IN GENERAL.—For purposes of this sec-
tion, the term ‘‘aggregate period of qualified
prior coverage’’ means, with respect to com-
mencement of coverage of an individual under a
group health plan or health insurance coverage
offered in connection with a group health plan,
the aggregate of the qualified coverage periods
(as defined in subparagraph (B)) of such indi-
vidual occurring before the date of such com-
mencement. Such period shall be treated as zero
if there is more than a 60-day break in coverage
under a group health plan (or health insurance
coverage offered in connection with such a plan)
between the date the most recent qualified cov-
erage period ends and the date of such com-
mencement.
(B) QUALIFIED COVERAGE PERIOD.—
(i) IN GENERAL.—For purposes of this
paragraph, subject to subsection (c), the
term ‘‘qualified coverage period’’ means,
with respect to an individual, any period of
coverage of the individual under a group
health plan, health insurance coverage,
under title XVIII or XIX of the Social Secu-
rity Act, coverage under the TRICARE pro-
gram under chapter 55 of title 10, United
States Code, a program of the Indian
Health Service, and State health insurance
coverage or risk pool, and includes coverage
under a health plan offered under chapter
89 of title 5, United States Code.
(ii) DISREGARDING PERIODS BEFORE
BREAKS IN COVERAGE.—Such term does not
include any period occurring before any 60-
day break in coverage described in subpara-
graph (A).
(C) WAITING PERIOD NOT TREATED AS A
BREAK IN COVERAGE.—For purposes of subpara-
graphs (A) and (B), any period that is in a
waiting period for any coverage under a group
health plan (or for health insurance coverage of-
fered in connection with a group health plan)
shall not be considered to be a break in coverage
described in subparagraph (B)(ii).
(D) ESTABLISHMENT OF PERIOD.—A quali-
fied coverage period with respect to an individ-
ual shall be established through presentation of
certifications described in subsection (c) or in
such other manner as may be specified in regula-
tions to carry out this section.
(c) CERTIFICATIONS OF COVERAGE; CONFORMING COV-
ERAGE.—
(1) IN GENERAL.—The plan administrator of a
group health plan, or the insurer or HMO offering
health insurance coverage in connection with a group
health plan, shall, on request made on behalf of an in-
dividual covered (or previously covered within the
previous 18 months) under the plan or coverage, pro-
vide for a certification of the period of coverage of the
individual under such plan or coverage and of the
waiting period (if any) imposed with respect to the
individual for any coverage under the plan.
(2) STANDARD METHOD.—Subject to paragraph
(3), a group health plan, or insurer or HMO offering
health insurance coverage in connection with a group
health plan, shall determine qualified coverage periods
under subsection (b)(3)(B) by including all periods
described in such subsection, without regard to the
specific benefits offered during such a period.
(3) ALTERNATIVE METHOD.—Such a plan, in-
surer, or HMO may elect to make such determination
on a benefit-specific basis for all participants and
beneficiaries and not to include as a qualified cov-
erage period with respect to a specific benefit coverage
during a previous period unless such previous cov-
erage for that benefit was included at the end of the
most recent period of coverage. In the case of such an
election—
(A) the plan, insurer, or HMO shall promi-
nently state in any disclosure statements con-
cerning the plan or coverage and to each enrollee
at the time of enrollment under the plan (or at
the time the health insurance coverage is offered
for sale in the group health market) that the
plan or coverage has made such election and
shall include a description of the effect of this
election; and
(B) upon the request of the plan, insurer, or
HMO, the entity providing a certification under
paragraph (1)—
(i) shall promptly disclose to the re-
questing plan, insurer, or HMO the plan
statement (insofar as it relates to health
benefits under the plan) or other detailed
benefit information on the benefits available
under the previous plan or coverage, and
(ii) may charge for the reasonable cost
of providing such information.
SEC. 102. LIMITATION ON PREEXISTING CONDITION EXCLU-
SIONS; 
NO 
APPLICATION 
TO 
CERTAIN
NEWBORNS, ADOPTED CHILDREN, AND PREG-
NANCY.
(a) LIMITATION OF PERIOD.—
(1) IN GENERAL.—Subject to the succeeding pro-
visions of this section, a group health plan, and an
insurer or HMO offering health insurance coverage in
connection with a group health plan, shall provide
that any preexisting condition limitation period (as
defined in section 101(b)(2)) does not exceed 12
months, counting from the effective date of coverage.
(2) EXTENSION
OF
PERIOD
IN
THE
CASE
OF
LATE ENROLLMENT.—In the case of a participant or
beneficiary whose initial coverage commences after the
date the participant or beneficiary first becomes eligi-
ble for coverage under the group health plan, the ref-
erence in paragraph (1) to ‘‘12 months’’ is deemed a
reference to ‘‘18 months’’.
(b) EXCLUSION
NOT
APPLICABLE
TO
CERTAIN
NEWBORNS AND CERTAIN ADOPTIONS.—
(1) IN GENERAL.—Subject to paragraph (2), a
group health plan, and an insurer or HMO offering
health insurance coverage in connection with a group
health plan, may not provide any limitation on bene-
fits based on the existence of a preexisting condition
in the case of—
(A) an individual who within the 30-day
period beginning with the date of birth, or
(B) an adopted child or a child placed for
adoption beginning at the time of adoption or
placement if the individual, within the 30-day
period beginning on the date of adoption or
placement,
becomes covered under a group health plan or other-
wise becomes covered under health insurance coverage
(or covered for medical assistance under title XIX of
the Social Security Act).
(2) LOSS IF BREAK IN COVERAGE.—Paragraph
(1) shall no longer apply to an individual if the indi-
vidual does not have any coverage described in section
101(b)(3)(B)(i) for a continuous period of 60 days,
not counting in such period any days that are in a
waiting period for any coverage under a group health
plan.
(3) PLACED FOR ADOPTION DEFINED.—In this
subsection and section 103(d), the term ‘‘placement’’,
or being ‘‘placed’’, for adoption, in connection with
any placement for adoption of a child with any per-
son, means the assumption and retention by such per-
son of a legal obligation for total or partial support
of such child in anticipation of adoption of such
child. The child’s placement with such person termi-
nates upon the termination of such legal obligation.
(c) EXCLUSION NOT APPLICABLE TO PREGNANCY.—
For purposes of this section, pregnancy shall not be treated
as a preexisting condition.
(d) ELIGIBILITY PERIOD IMPOSED BY HEALTH MAIN-
TENANCE ORGANIZATIONS AS ALTERNATIVE TO PREEXIST-
ING CONDITION LIMITATION.—A health maintenance orga-
nization which offers health insurance coverage in connec-
tion with a group health plan and which does not use the
preexisting condition limitations allowed under this section
and section 101 with respect to any particular coverage op-
tion may impose an eligibility period for such coverage op-
tion, but only if such period does not exceed—
(1) 60 days, in the case of a participant or bene-
ficiary whose initial coverage commences at the time
such participant or beneficiary first becomes eligible
for coverage under the plan, or
(2) 90 days, in the case of a participant or bene-
ficiary whose initial coverage commences after the
date on which such participant or beneficiary first be-
comes eligible for coverage.
Such an HMO may use alternative methods, from those de-
scribed in the previous sentence, to address adverse selection
as approved by the applicable State authority. For purposes
of this subsection, the term ‘‘eligibility period’’ means a pe-
riod which, under the terms of the health insurance coverage
offered by the health maintenance organization, must expire
before the health insurance coverage becomes effective. Any
such eligibility period shall be treated for purposes of this
subtitle as a waiting period under the plan and shall run
concurrently with any other applicable waiting period
under the plan.
SEC. 103. PROHIBITING EXCLUSIONS BASED ON HEALTH
STATUS AND PROVIDING FOR ENROLLMENT
PERIODS.
(a) PROHIBITION OF EXCLUSION OF PARTICIPANTS OR
BENEFICIARIES BASED ON HEALTH STATUS.—
(1) IN GENERAL.—A group health plan, and an
insurer or HMO offering health insurance coverage in
connection with a group health plan, may not exclude
an employee or his or her beneficiary from being (or
continuing to be) a participant or beneficiary under
the terms of such plan or coverage based on health
status (as defined in section 191(c)(6)).
(2) CONSTRUCTION.—Nothing in this subsection
shall be construed as preventing the establishment of
preexisting condition limitations and restrictions to
the extent consistent with the provisions of this sub-
title.
(b) ENROLLMENT
OF ELIGIBLE INDIVIDUALS WHO
LOSE OTHER COVERAGE.—A group health plan shall per-
mit an uncovered employee who is otherwise eligible for cov-
erage under the terms of the plan (or an uncovered depend-
ent, as defined under the terms of the plan, of such an em-
ployee, if family coverage is available) to enroll for coverage
under the plan under at least one benefit option if each
of the following conditions is met:
(1) The employee or dependent was covered
under a group health plan or had health insurance
coverage at the time coverage was previously offered
to the employee or individual.
(2) The employee stated in writing at such time
that coverage under a group health plan or health in-
surance coverage was the reason for declining enroll-
ment.
(3) The employee or dependent lost coverage
under a group health plan or health insurance cov-
erage (as a result of loss of eligibility for the coverage,
termination of employment, or reduction in the num-
ber of hours of employment).
(4) The employee requests such enrollment within
30 days after the date of termination of such coverage.
(c) DEPENDENT BENEFICIARIES.—
(1) IN GENERAL.—If a group health plan makes
family coverage available, the plan may not require,
as a condition of coverage of an individual as a de-
pendent (as defined under the terms of the plan) of
a participant in the plan, a waiting period applica-
ble to the coverage of a dependent who—
(A) is a newborn,
(B) is an adopted child or child placed for
adoption 
(within 
the 
meaning 
of 
section
102(b)(3)), at the time of adoption or placement,
or
(C) is a spouse, at the time of marriage,
if the participant has met any waiting period appli-
cable to that participant.
(2) TIMELY ENROLLMENT.—
(A) IN GENERAL.—Enrollment of a partici-
pant’s beneficiary described in paragraph (1)
shall be considered to be timely if a request for
enrollment is made within 30 days of the date
family coverage is first made available or, in the
case described in—
(i) paragraph (1)(A), within 30 days
of the date of the birth,
(ii) paragraph (1)(B), within 30 days
of the date of the adoption or placement for
adoption, or
(iii) paragraph (1)(C), within 30 days
of the date of the marriage with such a ben-
eficiary who is the spouse of the partici-
pant,
if family coverage is available as of such date.
(B) COVERAGE.—If available coverage in-
cludes family coverage and enrollment is made
under such coverage on a timely basis under sub-
paragraph (A), the coverage shall become effec-
tive not later than the first day of the first
month beginning 15 days after the date the com-
pleted request for enrollment is received.
SEC. 104. ENFORCEMENT.
(a) ENFORCEMENT THROUGH COBRA PROVISIONS IN
INTERNAL REVENUE CODE.—
(1) APPLICATION OF COBRA SANCTIONS.—Sub-
section (a) of section 4980B of the Internal Revenue
Code of 1986 is amended by striking ‘‘the require-
ments of’’ and all that follows and inserting ‘‘the re-
quirements of—
‘‘(1) subsection (f) with respect to any qualified
beneficiary, or
‘‘(2) subject to subsection (h)—
‘‘(A) section 101 or 102 of the Health Cov-
erage Availability and Affordability Act of 1996
with respect to any individual covered under the
group health plan, or
‘‘(B) section 103 of such Act with respect to
any individual.’’.
(2) 
NOTICE
REQUIREMENT.—Section
4980B(f)(6)(A) of such Code is amended by inserting
before the period the following: ‘‘and subtitle A of title
I of the Health Coverage Availability and Afford-
ability Act of 1996’’.
(3) SPECIAL
RULES.—Section 4980B of such
Code is amended by adding at the end the following:
‘‘(h) SPECIAL RULES.—For purposes of applying this
section in the case of requirements described in subsection
(a)(2) relating to section 101, section 102, or section 103
of the Health Coverage Availability and Affordability Act
of 1996—
‘‘(1) DEFERRAL TO STATE REGULATION.—No tax
shall be imposed by this section on any failure to
meet the requirements of such section by any entity
which offers health insurance coverage and which is
an insurer or health maintenance organization (as
defined in section 191(c) of the Health Coverage
Availability and Affordability Act of 1996) regulated
by a State if the Secretary of Health and Human
Services has made the determination described in sec-
tion 104(c)(2) of such Act with respect to such State,
section, and entity.
‘‘(2) LIMITATION FOR INSURED PLANS.—In the
case of a group health plan of a small employer (as
defined in section 191 of the Health Coverage Avail-
ability and Affordability Act of 1996) that provides
health care benefits solely through a contract with an
insurer or health maintenance organization (as de-
fined in such section), no tax shall be imposed by this
section upon the employer on a failure to meet such
requirements if the failure is solely because of the
product offered by the insurer or organization under
such contract.
‘‘(3) LIMITATION ON IMPOSITION OF TAX.—In no
case shall a tax be imposed by this section for a fail-
ure to meet such a requirement if a sanction has been
imposed—
‘‘(A) by the Secretary of Labor under part
5 of subtitle A of title I of the Employee Retire-
ment Income Security Act of 1974 with respect
to such failure, or
‘‘(B) by the Secretary of Health and
Human Services under section 109 of the Health
Coverage Availability and Affordability Act of
1996 with respect to such failure.’’.
(b) ENFORCEMENT THROUGH ERISA SANCTIONS FOR
CERTAIN GROUP HEALTH PLANS.—
(1) IN GENERAL.—Subject to the succeeding pro-
visions of this subsection, sections 101 through 103 of
this subtitle shall be deemed to be provisions of title
I of the Employee Retirement Income Security Act of
1974 for purposes of applying such title.
(2) FEDERAL
ENFORCEMENT
ONLY
IF
NO
EN-
FORCEMENT
THROUGH
STATE.—The Secretary of
Labor shall enforce each section referred to in para-
graph (1) with respect to any entity which is an in-
surer or health maintenance organization regulated
by a State only if the Secretary of Labor determines
that—
(A) such State has not provided for enforce-
ment of State laws which govern the same mat-
ters as are governed by such section and which
require compliance by such entity with at least
the same requirements as those provided under
such section, and
(B) such entity has failed to comply with
such requirements of such section as are applica-
ble to such entity.
(3) LIMITATIONS ON LIABILITY.—
(A) NO APPLICATION WHERE FAILURE NOT
DISCOVERED
EXERCISING
REASONABLE
DILI-
GENCE.—No liability shall be imposed under this
subsection on the basis of any failure during any
period for which it is established to the satisfac-
tion of the Secretary of Labor that none of the
persons against whom the liability would be im-
posed knew, or exercising reasonable diligence
would have known, that such failure existed.
(B) NO APPLICATION WHERE FAILURE COR-
RECTED WITHIN 30 DAYS.—No liability shall be
imposed under this subsection on the basis of
any failure if such failure was due to reasonable
cause and not to willful neglect, and such failure
is corrected during the 30-day period beginning
on the first day any of the persons against whom
the liability would be imposed knew, or exercis-
ing reasonable diligence would have known, that
such failure existed.
(4) AVOIDING
DUPLICATION
OF
CERTAIN
PEN-
ALTIES.—In no case shall a civil money penalty be
imposed under the authority provided under para-
graph (1) for a violation of this subtitle for which an
excise tax has been imposed under section 4980B of
the Internal Revenue Code of 1986 or a civil money
penalty imposed under subsection (c).
(c) ENFORCEMENT THROUGH CIVIL MONEY PEN-
ALTIES.—
(1) IMPOSITION.—
(A) IN GENERAL.—Subject to the succeeding
provisions of this subsection, any group health
plan, insurer, or organization that fails to meet
a requirement of this subtitle is subject to a civil
money penalty under this section.
(B) LIABILITY FOR PENALTY.—Rules simi-
lar to the rules described in section 4980B(e) of
the Internal Revenue Code of 1986 for liability
for a tax imposed under section 4980B(a) of such
Code shall apply to liability for a penalty im-
posed under subparagraph (A).
(C) AMOUNT OF PENALTY.—
(i) 
IN
GENERAL.—The 
maximum
amount of penalty imposed under this
paragraph is $100 for each day for each in-
dividual with respect to which such a fail-
ure occurs.
(ii) 
CONSIDERATIONS
IN
IMPOSI-
TION.—In determining the amount of any
penalty to be assessed under this paragraph,
the Secretary of Health and Human Serv-
ices shall take into account the previous
record of compliance of the person being as-
sessed with the applicable requirements of
this subtitle, the gravity of the violation,
and the overall limitations for uninten-
tional failures provided under section
4980B(c)(4) of the Internal Revenue Code of
1986.
(iii) LIMITATIONS.—
(I) 
PENALTY
NOT
TO
APPLY
WHERE FAILURE NOT DISCOVERED EX-
ERCISING
REASONABLE
DILIGENCE.—
No civil money penalty shall be im-
posed under this paragraph on any
failure during any period for which it
is established to the satisfaction of the
Secretary that none of the persons
against whom the penalty would be
imposed knew, or exercising reasonable
diligence would have known, that such
failure existed.
(II) PENALTY NOT TO APPLY TO
FAILURES
CORRECTED
WITHIN
DAYS.—No civil money penalty shall
be imposed under this paragraph on
any failure if such failure was due to
reasonable cause and not to willful ne-
glect, and such failure is corrected dur-
ing the 30-day period beginning on the
first day any of the persons against
whom the penalty would be imposed
knew, or exercising reasonable diligence
would have known, that such failure
existed.
(D) ADMINISTRATIVE REVIEW.—
(i) OPPORTUNITY FOR HEARING.—The
person assessed shall be afforded an oppor-
tunity for hearing by the Secretary upon re-
quest made within 30 days after the date of
the issuance of a notice of assessment. In
such hearing the decision shall be made on
the record pursuant to section 554 of title 5,
United States Code. If no hearing is re-
quested, the assessment shall constitute a
final and unappealable order.
(ii) HEARING PROCEDURE.—If a hear-
ing is requested, the initial agency decision
shall be made by an administrative law
judge, and such decision shall become the
final order unless the Secretary modifies or
vacates the decision. Notice of intent to
modify or vacate the decision of the admin-
istrative law judge shall be issued to the
parties within 30 days after the date of the
decision of the judge. A final order which
takes effect under this paragraph shall be
subject to review only as provided under
subparagraph (D).
(E) JUDICIAL REVIEW.—
(i) FILING OF ACTION FOR REVIEW.—
Any person against whom an order impos-
ing a civil money penalty has been entered
after an agency hearing under this para-
graph may obtain review by the United
States district court for any district in
which such person is located or the United
States District Court for the District of Co-
lumbia by filing a notice of appeal in such
court within 30 days from the date of such
order, and simultaneously sending a copy of
such notice be registered mail to the Sec-
retary.
(ii) CERTIFICATION
OF
ADMINISTRA-
TIVE
RECORD.—The 
Secretary 
shall
promptly certify and file in such court the
record upon which the penalty was imposed.
(iii) STANDARD
FOR
REVIEW.—The
findings of the Secretary shall be set aside
only if found to be unsupported by substan-
tial 
evidence 
as 
provided 
by 
section
706(2)(E) of title 5, United States Code.
(iv) APPEAL.—Any final decision,
order, or judgment of such district court
concerning such review shall be subject to
appeal as provided in chapter 83 of title 28
of such Code.
(F) FAILURE TO PAY ASSESSMENT; MAINTE-
NANCE OF ACTION.—
(i) FAILURE TO PAY ASSESSMENT.—If
any person fails to pay an assessment after
it has become a final and unappealable
order, or after the court has entered final
judgment in favor of the Secretary, the Sec-
retary shall refer the matter to the Attorney
General who shall recover the amount as-
sessed by action in the appropriate United
States district court.
(ii) NONREVIEWABILITY.—In such ac-
tion the validity and appropriateness of the
final order imposing the penalty shall not
be subject to review.
(G) PAYMENT
OF
PENALTIES.—Except as
otherwise provided, penalties collected under this
paragraph shall be paid to the Secretary (or
other officer) imposing the penalty and shall be
available without appropriation and until ex-
pended for the purpose of enforcing the provi-
sions with respect to which the penalty was im-
posed.
(2) FEDERAL
ENFORCEMENT
ONLY
IF
NO
EN-
FORCEMENT THROUGH STATE.—Paragraph (1) shall
apply to enforcement of the requirements of section
101, 102, or 103 with respect to any entity which of-
fers health insurance coverage and which is an in-
surer or HMO regulated by a State if the Secretary
of Health and Human Services has determined that
such State has not provided for enforcement of State
laws which govern the same matters as are governed
by such section and which require compliance by such
entity with at least the same requirements as those
provided under such section.
(3) NONDUPLICATION OF SANCTIONS.—In no case
shall a civil money penalty be imposed under this
subsection for a violation of this subtitle for which an
excise tax has been imposed under section 4980B of
the Internal Revenue Code of 1986 or for which a
civil money penalty has been imposed under the au-
thority provided under subsection (b).
(d) COORDINATION
IN ADMINISTRATION.—The Sec-
retaries of the Treasury, Labor, and Health and Human
Services shall issue regulations that are nonduplicative to
carry out this subtitle. Such regulations shall be issued in
a manner that assures coordination and nonduplication in
their activities under this subtitle.
Subtitle B—Certain Requirements
for Insurers and HMOs in the
Group and Individual Markets
PART 1—AVAILABILITY OF GROUP HEALTH
INSURANCE COVERAGE
SEC. 131. GUARANTEED AVAILABILITY OF GENERAL COV-
ERAGE IN THE SMALL GROUP MARKET.
(a) ISSUANCE OF COVERAGE.—
(1) IN GENERAL.—Subject to the succeeding sub-
sections of this section, each insurer or HMO that of-
fers health insurance coverage in the small group
market in a State—
(A) must accept every small employer in the
State that applies for such coverage; and
(B) must accept for enrollment under such
coverage every eligible individual (as defined in
paragraph (2)) who applies for enrollment dur-
ing the initial period in which the individual
first becomes eligible for coverage under the
group health plan and may not place any re-
striction which is inconsistent with section
103(a) on an individual being a participant or
beneficiary so long as such individual is an eli-
gible individual.
(2) ELIGIBLE
INDIVIDUAL
DEFINED.—In this
section, the term ‘‘eligible individual’’ means, with re-
spect to an insurer or HMO that offers health insur-
ance coverage to any small employer in the small
group market, such an individual in relation to the
employer as shall be determined—
(A) in accordance with the terms of such
plan,
(B) as provided by the insurer or HMO
under rules of the insurer or HMO which are
uniformly applicable, and
(C) in accordance with all applicable State
laws governing such insurer or HMO.
(b) SPECIAL
RULES
FOR
NETWORK
PLANS
AND
HMOS.—
(1) IN GENERAL.—In the case of an insurer that
offers health insurance coverage in the small group
market through a network plan and in the case of an
HMO that offers health insurance coverage in connec-
tion with such a plan, the insurer or HMO may—
(A) limit the employers that may apply for
such coverage to those with eligible individuals
whose place of employment or residence is in the
service area for such plan or HMO;
(B) limit the individuals who may be en-
rolled under such coverage to those whose place
of residence or employment is within the service
area for such plan or HMO; and
(C) within the service area of such plan or
HMO, deny such coverage to such employers if
the insurer or HMO demonstrates that—
(i) it will not have the capacity to de-
liver services adequately to enrollees of any
additional groups because of its obligations
to existing group contract holders and en-
rollees, and
(ii) it is applying this paragraph uni-
formly to all employers without regard to
the claims experience of those employers and
their employees (and their beneficiaries) or
the health status of such employees and
beneficiaries.
(2) 180-DAY SUSPENSION UPON DENIAL OF COV-
ERAGE.—An insurer or HMO, upon denying health
insurance coverage in any service area in accordance
with paragraph (1)(C), may not offer coverage in the
small group market within such service area for a pe-
riod of 180 days after such coverage is denied.
(c) SPECIAL RULE FOR FINANCIAL CAPACITY LIM-
ITS.—
(1) IN
GENERAL.—An insurer or HMO may
deny health insurance coverage in the small group
market if the insurer or HMO demonstrates to the ap-
plicable State authority that—
(A) it does not have the financial reserves
necessary to underwrite additional coverage, and
(B) it is applying this paragraph uni-
formly to all employers without regard to the
claims experience or duration of coverage of those
employers and their employees (and their bene-
ficiaries) or the health status of such employees
and beneficiaries.
(2) 180-DAY SUSPENSION UPON DENIAL OF COV-
ERAGE.—An insurer or HMO upon denying health
insurance coverage in connection with group health
plans in any service area in accordance with para-
graph (1) may not offer coverage in connection with
group health plans in the small group market within
such service area for a period of 180 days after such
coverage is denied.
(d) EXCEPTION TO REQUIREMENT FOR ISSUANCE OF
COVERAGE BY REASON OF FAILURE BY PLAN TO MEET
CERTAIN
MINIMUM
PARTICIPATION
OR
CONTRIBUTION
RULES.—
(1) IN GENERAL.—Subsection (a) shall not apply
in the case of any group health plan with respect to
which—
(A) participation rules of an insurer or
HMO which are described in paragraph (2) are
not met, or
(B) contribution rules of an insurer or
HMO which are described in paragraph (3) are
not met.
(2) PARTICIPATION
RULES.—For purposes of
paragraph (1)(A), participation rules (if any) of an
insurer or HMO shall be treated as met with respect
to a group health plan only if such rules are uni-
formly applicable and in accordance with applicable
State law and the number or percentage of eligible in-
dividuals who, under the plan, are participants or
beneficiaries equals or exceeds a level which is deter-
mined in accordance with such rules.
(3) CONTRIBUTION
RULES.—For purposes of
paragraph (1)(B), contribution rules (if any) of an
insurer or HMO shall be treated as met with respect
to a group health plan only if such rules are in ac-
cordance with applicable State law.
SEC. 132. GUARANTEED RENEWABILITY OF GROUP COV-
ERAGE.
(a) IN GENERAL.—Except as provided in this section,
if an insurer or health maintenance organization offers
health insurance coverage in the small or large group mar-
ket, the insurer or organization must renew or continue in
force such coverage at the option of the employer.
(b) GENERAL EXCEPTIONS.—An insurer or organiza-
tion may nonrenew or discontinue health insurance cov-
erage offered an employer based only on one or more of the
following:
(1) NONPAYMENT OF PREMIUMS.—The employer
has failed to pay premiums or contributions in ac-
cordance with the terms of the health insurance cov-
erage or the insurer or organization has not received
timely premium payments.
(2) FRAUD.—The employer has performed an act
or practice that constitutes fraud or made an inten-
tional misrepresentation of material fact under the
terms of the coverage.
(3) VIOLATION
WITH
PARTICIPATION
OR
CON-
TRIBUTION RULES.—The employer has failed to com-
ply with a material plan provision relating to par-
ticipation or contribution rules in accordance with
section 131(d).
(4) TERMINATION
OF
PLAN.—Subject to sub-
section (c), the insurer or organization is ceasing to
offer coverage in the small or large group market in
a State (or, in the case of a network plan or HMO,
in a geographic area).
(5) MOVEMENT
OUTSIDE
SERVICE
AREA.—The
employer has changed the place of employment in
such manner that employees and dependents reside
and are employed outside the service area of the in-
surer or organization or outside the area for which
the insurer or organization is authorized to do busi-
ness.
Paragraph (5) shall apply to an insurer or HMO only if
it is applied uniformly without regard to the claims experi-
ence of employers and their employees (and their bene-
ficiaries) or the health status of such employees and bene-
ficiaries.
(c) EXCEPTIONS FOR UNIFORM TERMINATION OF COV-
ERAGE.—
(1) PARTICULAR TYPE OF COVERAGE NOT OF-
FERED.—In any case in which a insurer or HMO de-
cides to discontinue offering a particular type of
health insurance coverage in the small or large group
market, coverage of such type may be discontinued by
the insurer or organization only if—
(A) the insurer or organization provides no-
tice to each employer provided coverage of this
type in such market (and participants and bene-
ficiaries covered under such coverage) of such
discontinuation at least 90 days prior to the
date of the discontinuation of such coverage;
(B) the insurer or organization offers to
each employer in the small employer or large
employer market provided coverage of this type,
the option to purchase any other health insur-
ance coverage currently being offered by the in-
surer or organization for employers in such mar-
ket; and
(C) in exercising the option to discontinue
coverage of this type and in offering one or more
replacement coverage, the insurer or organization
acts uniformly without regard to the health sta-
tus or insurability of participants or bene-
ficiaries covered or new participants or bene-
ficiaries who may become eligible for such cov-
erage.
(2) DISCONTINUANCE OF ALL COVERAGE.—
(A) IN GENERAL.—Subject to subparagraph
(C), in any case in which an insurer or HMO
elects to discontinue offering all health insurance
coverage in the small group market or the large
group market, or both markets, in a State, health
insurance coverage may be discontinued by the
insurer or organization only if—
(i) the insurer or organization provides
notice to the applicable State authority and
to each employer (and participants and
beneficiaries covered under such coverage) of
such discontinuation at least 180 days prior
to the date of the expiration of such cov-
erage, and
(ii) all health insurance issued or de-
livered for issuance in the State in such
market (or markets) are discontinued and
coverage under such health insurance cov-
erage in such market (or markets) is not re-
newed.
(B) PROHIBITION ON MARKET REENTRY.—
In the case of a discontinuation under subpara-
graph (A) in one or both markets, the insurer or
organization may not provide for the issuance of
any health insurance coverage in the market and
State involved during the 5-year period begin-
ning on the date of the discontinuation of the
last health insurance coverage not so renewed.
(d) EXCEPTION FOR UNIFORM MODIFICATION OF COV-
ERAGE.—At the time of coverage renewal, an insurer or
HMO may modify the coverage offered to a group health
plan in the group health market so long as such modifica-
tion is effective on a uniform basis among group health
plans with that type of coverage.
PART 2—AVAILABILITY OF INDIVIDUAL HEALTH
INSURANCE COVERAGE
SEC. 141. GUARANTEED AVAILABILITY OF INDIVIDUAL
HEALTH INSURANCE COVERAGE TO CERTAIN
INDIVIDUALS WITH PRIOR GROUP COVERAGE.
(a) GOALS.—The goals of this section are—
(1) to guarantee that any qualifying individual
(as defined in subsection (b)(1)) is able to obtain
qualifying coverage (as defined in subsection (b)(2));
and
(2) to assure that qualifying individuals obtain-
ing such coverage receive credit for their prior cov-
erage toward the new coverage’s preexisting condition
exclusion period (if any) in a manner consistent with
subsection (b)(3).
(b) QUALIFYING INDIVIDUAL AND HEALTH INSURANCE
COVERAGE DEFINED.—In this section—
(1) QUALIFYING INDIVIDUAL.—The term ‘‘quali-
fying individual’’ means an individual—
(A) who is in a qualified coverage period
(as defined in section 101(b)(3)(C)) that—
(i) includes coverage under one or more
group health plans, and
(ii) commenced 18 or more months be-
fore the date on which the individual seeks
coverage under this section;
(B) is not eligible for coverage under (i) a
group health plan, (ii) part A or part B of title
XVIII of the Social Security Act, or (iii) a State
plan under title XIX of such Act (or any succes-
sor program);
(C) with respect to whom the most recent
coverage within the coverage period described in
subparagraph (A)(i) was not terminated based
on a factor described in paragraph (1) or (2) of
section 132(b);
(D) if the individual had been offered the
option of continuation coverage under a COBRA
continuation provision or under a similar State
program, elected such coverage;
(E) who, if the individual elected such con-
tinuation coverage, has exhausted such continu-
ation coverage;
(F) who does not have individual health in-
surance coverage; and
(G) whose most recent prior coverage either
(i) was under a group health plan, governmental
plan, or church plan (or health insurance cov-
erage offered in connection with any such plan),
or (ii) was not under such a plan (or such cov-
erage) but was terminated involuntarily because
of the withdrawal of the plan or coverage, move-
ment out of a service area, or similar involun-
tary reasons.
(2) QUALIFYING COVERAGE.—
(A) IN
GENERAL.—The term ‘‘qualifying
coverage’’ means, with respect to an insurer or
HMO in relation to an qualifying individual,
individual health insurance coverage for which
the actuarial value of the benefits is not less
than—
(i) the weighted average actuarial
value of the benefits provided by all the in-
dividual health insurance coverage issued
by the insurer or HMO in the State during
the previous year (not including coverage
issued under this section), or
(ii) the weighted average of the actuar-
ial value of the benefits provided by all the
individual health insurance coverage issued
by all insurers and HMOs in the State dur-
ing the previous year (not including cov-
erage issued under this section),
as elected by the plan or by the State under sub-
section (c)(1).
(B) ASSUMPTIONS.—For purposes of sub-
paragraph (A), the actuarial value of benefits
provided under individual health insurance cov-
erage shall be calculated based on a standardized
population and a set of standardized utilization
and cost factors.
(3) CREDITING
FOR
PREVIOUS
COVERAGE.—
Crediting is consistent with this paragraph only if
any preexisting condition exclusion period is reduced
at least to the extent such a period would be reduced
if the coverage under this section were under a group
health plan to which section 101(a) applies. In carry-
ing out this subsection, provisions similar to the pro-
visions of section 101(c) shall apply.
(c) OPTIONAL STATE ESTABLISHMENT
OF MECHA-
NISMS TO ACHIEVE GOALS OF GUARANTEEING AVAILABIL-
ITY OF COVERAGE.—
(1) IN GENERAL.—Any State may establish pub-
lic or private mechanisms reasonably designed to
meet the goals specified in subsection (a). If a State
implements such a mechanism by the deadline speci-
fied in paragraph (4), the State may elect to have
such mechanisms apply instead of having subsection
(d) apply in the State. An election under this para-
graph shall be by notice to the Secretary of Health
and Human Services on a timely basis consistent
with the deadlines specified in paragraph (4). In es-
tablishing what is qualifying coverage under such a
mechanism under this subsection, a State may exer-
cise the election described in subsection (b)(2)(A) with
respect to each insurer or HMO in the State (or on
a collective basis after exercising such election for each
such insurer or HMO).
(2) TYPES OF MECHANISMS.—State mechanisms
under this subsection may include one or more (or a
combination) of the following:
(A) Health insurance coverage pools or pro-
grams authorized or established by the State.
(B) Mandatory group conversion policies.
(C) Guaranteed issue of one or more plans
of individual health insurance coverage to quali-
fying individuals.
(D) Open enrollment by one or more insur-
ers or HMOs.
The mechanisms described in the previous sentence
are not an exclusive list of the mechanisms (or com-
binations of mechanisms) that may be used under this
subsection.
(3) SAFE HARBOR FOR BENEFITS UNDER CUR-
RENT RISK POOLS.—In the case of a State that has
a health insurance coverage pool or risk pool in effect
on March 12, 1996, and that implements the mecha-
nism described in paragraph (2)(A), the benefits
under such mechanism (or benefits the actuarial value
of which is not less than the actuarial value of such
current benefits, using the assumptions described in
subsection (b)(2)(B)) are deemed, for purposes of this
section, to constitute qualified coverage.
(4) DEADLINE FOR STATE IMPLEMENTATION.—
(A) IN GENERAL.—Subject to subparagraph
(B), the deadline under this paragraph is July
1, 1997.
(B) EXTENSION TO PERMIT LEGISLATION.—
The deadline under this paragraph is July 1,
1998, in the case of a State the legislature of
which does not have a regular legislative session
at any time between January 1, 1997, and June
30, 1997.
(C) CONSTRUCTION.—Nothing in this sec-
tion shall be construed as preventing a State
from—
(i) implementing guaranteed availabil-
ity mechanisms before the deadline,
(ii) continuing in effect mechanisms
that are in effect before the date of the en-
actment of this Act,
(iii) offering guaranteed availability of
coverage that is not qualifying coverage, or
(iv) offering guaranteed availability of
coverage to individuals who are not qualify-
ing individuals.
(d) FALLBACK PROVISIONS.—
(1) NO STATE ELECTION.—If a State has not
provided notice to the Secretary of an election on a
timely basis under subsection (c), the Secretary shall
notify the State that paragraph (3) will be applied in
the State.
(2) PRELIMINARY DETERMINATION AFTER STATE
ELECTION.—If—
(A) a State has provided notice of an elec-
tion on a timely basis under subsection (c), and
(B) the Secretary finds, after consultation
with the chief executive officer of the State and
the insurance commissioner or chief insurance
regulatory official of the State, that such a mech-
anism (for which notice was provided) is not
reasonably designed to meet the goals specified in
subsection (a),
the Secretary shall notify the State of such prelimi-
nary determination, of the consequences under para-
graph (3) of a failure to implement such a mecha-
nism, and permit the State a reasonable opportunity
in which to modify the mechanism (or to adopt an-
other mechanism) that is reasonably designed to meet
the goals specified in subsection (a). If, after provid-
ing such notice and opportunity, the Secretary finds
that the State has not implemented such a mecha-
nism, the Secretary shall notify the State that para-
graph (3) will be applied in the State.
(3) DESCRIPTION OF FALLBACK MECHANISM.—
As provided under paragraphs (1) and (2) and sub-
ject to paragraph (5), each insurer or HMO in the
State involved that issues individual health insurance
coverage—
(A) shall offer qualifying health insurance
coverage, in which qualifying individuals obtain-
ing such coverage receive credit for their prior
coverage toward the new coverage’s preexisting
condition exclusion period (if any) in a manner
consistent with subsection (b)(3), to each qualify-
ing individual in the State, and
(B) may not decline to issue such coverage
to such an individual based on health status (ex-
cept as permitted under paragraph (4)).
(4) APPLICATION
OF
NETWORK
AND
CAPACITY
LIMITS.—Under regulations, the provisions of sub-
sections (b) and (c) of section 131 shall apply to an
individual in the individual health insurance market
under this subsection in the same manner as they
apply under section 131 to an employer in the small
group market.
(5) TERMINATION OF FALLBACK MECHANISM.—
The provisions of this subsection shall cease to apply
to a State if the Secretary finds that a State has im-
plemented a mechanism that is reasonably designed to
meet the goals specified in subsection (a), and until
the Secretary finds that such mechanism is no longer
being implemented.
(e) CONSTRUCTION.—
(1) PREMIUMS.—Nothing in this section shall be
construed to affect the determination of an insurer or
HMO as to the amount of the premium payable
under an individual health insurance coverage under
applicable state law.
(2) MARKET REQUIREMENTS.—
(A) IN GENERAL.—The provisions of sub-
section (a) shall not be construed to require that
an insurer or HMO offering health insurance
coverage only in connection with a group health
plan or an association offer individual health in-
surance coverage.
(B) CONVERSION POLICIES.—An insurer or
HMO offering health insurance coverage in con-
nection with a group health plan under subtitle
A shall not be deemed to be an insurer or HMO
offering an individual health insurance coverage
solely because such insurer or HMO offers a con-
version policy.
(3) DISREGARD OF ASSOCIATION COVERAGE.—
An insurer or HMO that offers health insurance cov-
erage only in connection with a group health plan or
in connection with individuals based on affiliation
with one or more associations is not considered, for
tentional misrepresentation of material fact under the
terms of the coverage.
(3) TERMINATION
OF
COVERAGE.—Subject to
subsection (c), the insurer or HMO is ceasing to offer
health insurance coverage in the individual market in
a State (or, in the case of a network plan or HMO,
in a geographic area).
(4) MOVEMENT
OUTSIDE
SERVICE
AREA.—The
individual has changed residence and resides outside
the service area of the insurer or organization or out-
side the area for which the insurer or organization is
authorized to do business.
Paragraph (4) shall apply to an insurer or HMO only if
it is applied uniformly without regard to the claims experi-
ence of employers and their employees (and their bene-
ficiaries) or the health status of such employees and bene-
ficiaries.
(c) TERMINATION
OF INDIVIDUAL COVERAGE.—The
provisions of section 132(c) shall apply to this section in
the same manner as they apply under section 132, except
that any reference to an employer or market is deemed a
reference to the a covered individual or the individual mar-
ket, respectively.
(d) EXCEPTION FOR UNIFORM MODIFICATION OF COV-
ERAGE.—The provisions of section 132(d) shall apply to in-
dividual health insurance coverage in the individual market
under this section in the same manner as it applies to
health insurance coverage offered in connection with a
group health plan in the group market under such section.
PART 3—ENFORCEMENT
SEC. 151. INCORPORATION OF PROVISIONS FOR STATE EN-
FORCEMENT WITH FEDERAL FALLBACK AU-
THORITY.
The provisions of paragraphs (1) and (2) of section
104(c) shall apply to enforcement of requirements in each
section in part 1 or part 2 with respect to insurers and
HMOs regulated by a State in the same manner as such
provisions apply to enforcement of requirements in section
101, 102, or 103 with respect to insurers and HMOs regu-
lated by a State.
Subtitle C—Sense of Committee on
Additional Requirements
SEC. 161. SENSE OF COMMITTEE ON COMMERCE ON ADDI-
TIONAL REQUIREMENTS.
(a) FINDINGS.—The Committee on Commerce of the
House of Representatives finds the following:
(1) The National Cancer Institute has stated
that sufficient data do not exist to support wide-
spread clinical applicability of autologous bone mar-
row transplants and high dosage chemotherapy for
treatment of breast cancer.
(2) In relation to mandatory hospital stays for
child birth, several studies have shown little associa-
tion between initial hospital stays and subsequent
hospital stays. For example, a review of 20,000 inpa-
tient deliveries found no connection between the length
of stay and a newborn’s likelihood of developing
health problems. Another study that tracked readmis-
sion rates to 275,000 discharges showed no statis-
tically significant differences for those who had hos-
pital stays of 24 hours or less.
(b) SENSE OF COMMITTEE.—It is the sense of the Com-
mittee on Commerce of the House of Representatives that—
(1) the impact, on health care costs and the pro-
vision of necessary quality health services, of mandat-
ing the inclusion in health insurance coverage and
group health plans of bone marrow transplants for
treatment of breast cancer and of minimum periods
of inpatient care for child birth has not been evalu-
ated;
(2) there is no legislative precedent for Congress
requiring the coverage of specific benefits under pri-
vate and State health insurance plans; and
(3) it is the intent of the Committee to conduct
one or more hearings to examine issues relating to re-
quiring the inclusion of benefits under group health
plans and health insurance coverage offered in the
group and individual markets.
Subtitle D—Definitions; General
Provisions
SEC. 191. DEFINITIONS; SCOPE OF COVERAGE.
(a) GROUP HEALTH PLAN.—
(1) DEFINITION.—Subject to the succeeding pro-
visions of this subsection and subsection (d)(1), the
term ‘‘group health plan’’ means an employee welfare
benefit plan to the extent that the plan provides medi-
cal care (as defined in subsection (c)(9)) to employees
or their dependents (as defined under the terms of the
plan) directly or through insurance, reimbursement,
or otherwise, and includes a group health plan (with-
in the meaning of section 5000(b)(1) of the Internal
Revenue Code of 1986).
(2) LIMITATION
OF
REQUIREMENTS
TO
PLANS
WITH 2 OR MORE EMPLOYEE PARTICIPANTS.—The re-
quirements of subtitle A and part 1 of subtitle B shall
apply in the case of a group health plan for any plan
year, or for health insurance coverage offered in con-
nection with a group health plan for a year, only if
the group health plan has two or more participants
as current employees on the first day of the plan year.
(3) EXCLUSION OF PLANS WITH LIMITED COV-
ERAGE.—An employee welfare benefit plan shall be
treated as a group health plan under this title only
with respect to medical care which is provided under
the plan and which does not consist of coverage ex-
cluded from the definition of health insurance cov-
erage under subsection (c)(4)(B).
(4) TREATMENT OF CHURCH PLANS.—
(A) EXCLUSION.—The requirements of this
title insofar as they apply to group health plans
shall not apply to church plans.
(B) OPTIONAL DISREGARD IN DETERMINING
PERIOD OF COVERAGE.—For purposes of apply-
ing section 101(b)(3)(B)(i), a group health plan
may elect to disregard periods of coverage of an
individual under a church plan that, pursuant
to subparagraph (A), is not subject to the re-
quirements of this title.
(5) TREATMENT OF GOVERNMENTAL PLANS.—
(A) ELECTION TO BE EXCLUDED.—If the
plan sponsor of a governmental plan which is a
group health plan to which the provisions of this
subtitle otherwise apply makes an election under
this paragraph for any specified period (in such
form and manner as the Secretary of Health and
Human Services may by regulations prescribe),
then the requirements of this title insofar as they
apply to group health plans shall not apply to
such governmental plans for such period.
(B) OPTIONAL DISREGARD IN DETERMINING
PERIOD OF COVERAGE IF ELECTION MADE.—For
purposes of applying section 101(b)(3)(B)(i), a
group health plan may elect to disregard periods
of coverage of an individual under a govern-
mental plan that, under an election under sub-
paragraph (A), is not subject to the requirements
of this title.
(6) TREATMENT OF MEDICAID PLAN AS GROUP
HEALTH PLAN.—A State plan under title XIX of the
Social Security Act shall be treated as a group health
plan for purposes of applying section 101(c)(1), un-
less the State elects not to be so treated.
(7) TREATMENT
OF
MEDICARE
AND
INDIAN
HEALTH
SERVICE
PROGRAMS
AS
GROUP
HEALTH
PLAN.—Title XVIII of the Social Security Act and a
program of the Indian Health Service shall be treated
as a group health plan for purposes of applying sec-
tion 101(c)(1).