I
103D CONGRESS
1ST SESSION
H. R. 2610
To amend the Social Security Act and the Internal Revenue Code of 1986
to provide for a Mediplan that assures the provision of health insurance
coverage to all residents, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JULY 1, 1993
Mr. STARK introduced the following bill; which was referred jointly to the
Committees on Ways and Means and Energy and Commerce
SEPTEMBER 29, 1993
Additional sponsors: Mr. COYNE, Mr. SABO, and Mr. YATES
A BILL
To amend the Social Security Act and the Internal Revenue
Code of 1986 to provide for a Mediplan that assures
the provision of health insurance coverage to all resi-
dents, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as
‘‘Mediplan Health Care Act of 1993’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
identify (as appropriate) if the individual is a child, a preg-
nant woman, or a low-income individual.
‘‘(b) ENROLLMENT
AT
BIRTH.—The mechanism
under subsection (a) shall include a process for the auto-
matic enrollment of individuals at the time of birth in the
United States.
‘‘PART B—BENEFITS
‘‘SEC. 2121. SCOPE OF BENEFITS.
‘‘(a) IN GENERAL.—Except as provided in the suc-
ceeding provisions of this part, the benefits provided to
an individual described in section 2101(a) by the program
established by this title shall consist of entitlement to the
same benefits as are provided under title XVIII to individ-
uals entitled to benefits under part A, and enrolled under
part B, of title XVIII.
‘‘(b) CHANGE IN THE DEDUCTIBLE AND LIMIT ON
COST-SHARING.—
‘‘(1) IN GENERAL.—Except as provided in the
succeeding provisions of this part, the amount of ex-
penses (other than expenses for benefits described in
subsection (c)) with respect to which an individual is
entitled to have payment made under this title for
any year shall first be reduced by a deductible of
$350, except that in no case shall the amount of the
deductible for all the members of a family exceed
$500. Such deductible shall be instead of the deduct-
ible for inpatient hospital services under the first
sentence of section 1813(a)(1) and the deductible
under section 1833(b).
‘‘(2) LIMIT ON OUT-OF-POCKET EXPENSES.—
Whenever in a calendar year an individual’s ex-
penses for deductibles, coinsurance, and copayments
with respect to services covered under this title (in-
cluding expenses for benefits described in subsection
(c)) and furnished during the year equals $2,500, or
$3,000 for all the members of a family, payment of
benefits under this title for the individual (or for the
members of such family, respectively) for services
furnished during the remainder of the year shall be
paid without the application of any coinsurance or
copayments.
‘‘(c) PRESCRIPTION DRUGS.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
benefits shall also be made available under this title
for outpatient prescription drugs and biologicals
(based on a formulary developed by the Secretary).
‘‘(2) SEPARATE DEDUCTIBLE.—With respect to
benefits under this subsection, instead of applying
the cost-sharing described in subsection (b), except
as provided in the succeeding provisions of this sec-
tion and subsection (b)(2), such benefits shall be
subject to an annual individual deductible of $800
and coinsurance of 20 percent of the recognized pay-
ment amount under section 2141(g).
‘‘(d) CHILDREN.—
‘‘(1) NO DEDUCTIBLES OR COINSURANCE.—In
the case of children (as defined in section
2161(a)(1)), 
there 
shall 
be 
no 
coinsurance,
deductibles, or copayments applicable to covered
benefits (including benefits described in paragraphs
(2) and (3)).
‘‘(2) ADDITIONAL PREVENTIVE BENEFITS.—
‘‘(A) IN GENERAL.—Subject to the perio-
dicity schedule established with respect to the
services under subparagraph (B), for children
benefits shall be available under this title for
the following items and services:
‘‘(i) Newborn and well-baby care, in-
cluding normal newborn care and pediatri-
cian services for high-risk deliveries.
‘‘(ii) Well-child care, including routine
office visits, routine immunizations (includ-
ing the vaccine itself), routine laboratory
tests, and preventive dental care.
‘‘(B) PERIODICITY SCHEDULE.—The Sec-
retary, in consultation with the American Acad-
emy of Pediatrics and the American Dental As-
sociation, shall establish a schedule of periodic-
ity which reflects the general, appropriate fre-
quency with which services listed in subpara-
graph (A) should be provided to healthy chil-
dren.
‘‘(3) OTHER ADDITIONAL SERVICES FOR CHIL-
DREN.—For children, benefits also shall be available
under this title for the following:
‘‘(A) Inpatient hospital services (without
regard to the restrictions described in sub-
sections (a)(1) and (b)(1) of section 1812 and
the 
coinsurance 
described 
in 
section
1813(a)(1)).
‘‘(B) Eyeglasses and hearing aids, and ex-
aminations therefor.
‘‘(e) PREGNANCY-RELATED SERVICES.—
‘‘(1) IN GENERAL.—In the case of a pregnant
woman (as defined in section 2161(a)(3)), benefits
under this title shall include entitlement to have pay-
ment made for the following, without the application
of deductibles, coinsurance, or copayments, subject
to the periodicity schedule established with respect
to the services under paragraph (2) and prior au-
thorization of certain services under paragraph (3):
‘‘(A) Prenatal care, including care for all
complications of pregnancy.
‘‘(B) Inpatient labor and delivery services.
‘‘(C) Postnatal care.
‘‘(D) Postnatal family planning services.
‘‘(2) PERIODICITY SCHEDULE.—The Secretary,
in consultation with the American College of Obstet-
rics and Gynecology, shall establish a schedule of pe-
riodicity which reflects the general, appropriate fre-
quency with which services listed in paragraph (1)
should be provided to pregnant women without com-
plications of pregnancy.
‘‘(3) PRIOR
AUTHORIZATION
REQUIRED
FOR
CERTAIN SERVICES.—
‘‘(A) IN GENERAL.—Except in the case of
items and services specified under subpara-
graph (B), benefits are not available with re-
spect to an item or service under paragraph (1)
unless the provision of the item or service has
been approved by a utilization and quality con-
trol peer review organization before the provi-
sion of the item or service.
‘‘(B) EXCEPTION FOR ROUTINE OR COM-
MON ITEMS AND SERVICES.—Subparagraph (A)
shall not apply to items and services which the
Secretary has specified on a list as being ei-
ther—
‘‘(i) related to normal pregnancy, or
‘‘(ii) related to a highly prevalent
complication of pregnancy,
or in the case of emergency services.
‘‘(4) MULTIPLE BASES FOR ELIGIBILITY.—In
the case of a pregnant woman who is also a child
or a low-income individual, the benefits under this
subsection shall be in addition or supplementation to
the benefits otherwise available to the individual.
‘‘(f) LOWER-INCOME INDIVIDUALS.—
‘‘(1) LIMITATIONS ON DEDUCTIBLES AND COIN-
SURANCE.—
‘‘(A) NONE
FOR
LOW-INCOME
INDIVID-
UALS.—In the case of a low-income individual,
there shall be no coinsurance, deductibles, or
copayments under this title.
‘‘(B) PHASE-IN
FOR
OTHER
LOWER-IN-
COME INDIVIDUALS.—In the case of an individ-
ual whose applicable modified gross income (as
defined in section 2161(b)(1)) exceeds the pov-
erty level (as defined in section 2161(b)(2)) but
does not exceed twice the poverty level, the co-
insurance, deductibles, and copayments applica-
ble under this title shall bear the same ratio to
the coinsurance, deductibles, and copayments
otherwise applicable as—
‘‘(i) the excess of the applicable modi-
fied gross income over the poverty level,
bears to
‘‘(ii) the poverty level.
If the ratio determined under the preceding
sentence is not a multiple of 25 percentage
points, such ratio shall be rounded to the near-
est 25 percentage points.
‘‘(2) ADDITIONAL BENEFITS FOR LOW-INCOME
INDIVIDUALS.—In the case of low-income individuals
(as defined in section 2161(a)(2)), benefits under
this title shall also include entitlement to have pay-
ment made for the following, without the application
of deductibles, coinsurance, or copayments:
‘‘(A) Inpatient hospital services (without
regard to the restrictions described in sub-
sections (a)(1) and (b)(1) of section 1812 and
the 
coinsurance 
described 
in 
section
1813(a)(1)).
UALS.—Payment shall not be denied under this title
under section 1862(a)(7) with respect to eyeglasses
and hearing aids and examinations therefor in the
case of children and low-income individuals.
‘‘(c) COORDINATION OF PAYMENTS.—
‘‘(1) PRIMARY
TO
GROUP
HEALTH
PLANS.—
Section 1862(b)(1) (relating to requirements of
group health plans) shall not apply under this title.
‘‘(2) SECONDARY
TO
MEDICARE.—Payment
shall not be made under this title with respect to
benefits to the extent that payment for such benefits
may be made under title XVIII.
‘‘PART C—PAYMENT FOR BENEFITS AND FINANCING
‘‘SEC. 2141. PAYMENTS FOR BENEFITS.
‘‘(a) IN GENERAL.—Except as otherwise provided in
this section and in section 2121—
‘‘(1) payment of benefits under this title with
respect to benefits shall be made in an amount con-
sistent with subsection (h) and on the same basis as
payment is made with respect to such benefits under
title XVIII, and
‘‘(2) the provisions of sections 1814, 1833,
1834, 1842, 1848, and 1886 shall apply to payment
of benefits under this title in the same manner as
they apply to benefits under title XVIII.
‘‘(b) NO COST-SHARING FOR CERTAIN SERVICES.—
No deductibles, coinsurance, copayments, or other cost-
sharing shall be imposed with respect to—
‘‘(1) well-child care services described in section
2121(d)(1),
‘‘(2) items and services for which an individual
is entitled under this title as a pregnant woman, and
‘‘(3) items and services for qualified low-income
individuals.
For provision limiting the deductibles, coinsurance, and
copayments under this title in any year, see section
2121(b)(2).
‘‘(c) NO EXTRA BILLING PERMITTED.—Payment
under this title may only be made on an assignment-relat-
ed basis (as defined in section 1842(i)(1)). If an entity
knowingly and willfully presents or causes to be presented
a claim or bills an individual enrolled under this title for
charges for services other than on an assignment-related
basis, the Secretary may apply sanctions against such en-
tity in accordance with section 1842(j)(2).
‘‘(d) ADJUSTMENT OF PAYMENTS.—
‘‘(1) ESTABLISHMENT
OF
NEW
DRGS
AND
WEIGHTS.—In making payment under this title with
respect to inpatient hospital services, the Secretary
shall establish such additional diagnosis-related
groups (and weighting factors with respect to dis-
charges within such groups) and make such adjust-
ments in the diagnosis-related groups and weighting
factors with respect to discharges within such groups
otherwise established under section 1886(d)(4) as
may be necessary—
‘‘(A) to reflect the types of discharges oc-
curring under this title which are not occurring
under title XVIII, and
‘‘(B) to provide for a weighting factor, for
cesarean section deliveries, which is 95 percent
of the weighting factor that otherwise would be
established.
‘‘(2) PAYMENT FOR OBSTETRICAL SERVICES.—
‘‘(A) GLOBAL FEE.—In making payment
under this title with respect to the group of ob-
stetrical services typical of treatment through-
out a course of pregnancy, the Secretary shall
establish, as a schedule under section 1848, a
global fee with respect to such group of serv-
ices.
‘‘(B) 
BONUS
FOR
EARLY
PRESEN-
TATION.—The fee schedule amount with respect
to obstetrical services under this title shall be
increased by 5 percent in the case of services
furnished to women who have presented for pre-
natal care during the first trimester.
‘‘(C) DISINCENTIVE FOR CESAREAN SEC-
TIONS.—The fee schedule amount otherwise es-
tablished with respect to a cesarean section
shall be 95 percent of the fee schedule amount
otherwise established.
‘‘(e) CONDITIONS
OF
AND LIMITATIONS
ON PAY-
MENTS.—The provisions of sections 1814 and 1835 shall
apply to payment for services under this title in the same
manner as they apply to payment for services under parts
A and B, respectively, of title XVIII.
‘‘(f) USE OF TRUST FUND.—In carrying out this sec-
tion, any reference in title XVIII to a trust fund shall be
treated as a reference to the Mediplan Trust Fund estab-
lished under section 2142.
‘‘(g) PAYMENT
FOR OUTPATIENT PRESCRIPTION
DRUGS AND BIOLOGICALS.—The Secretary, taking into
account the payment methodology that was described in
the amendments made by section 202 of the Medicare Cat-
astrophic Coverage Act of 1988 (as in effect before its re-
peal), shall establish a prospective payment methodology
for the payment for outpatient prescription drugs and
biologicals under this title. Such methodology shall be es-
tablished in a manner so as to meet the assurance de-
scribed in subsection (h) with respect to the class of serv-
ices that includes outpatient prescription drugs and
biologicals.
‘‘(h) COMPUTATION OF APPROPRIATE REFERENCE
RATES
OR CONVERSION FACTORS
TO STAY WITHIN
BUDGET.—In computing the amount of payment with re-
spect to services (within a class of services) for which a
standardized amount, conversion factor, or other rate
basis is established under title XVIII, such standardized
amount, conversion factor, or other rate basis shall be es-
tablished in such a manner as will assure that—
‘‘(1) the aggregate Mediplan expenditures (as
defined in section 201(d) of the Mediplan Health
Care Act of 1993) for all the services within such
class which are not attributable to services furnished
to individuals who are enrolled in a staff or group
model health maintenance organization (as defined
in section 207(b)(2)(B) of such Act) with respect to
health care services covered under the subscriber
agreement, is equal to
‘‘(2) the allocation to such class for the year
under section 202 of such Act with respect to the
national Mediplan expenditure budget, less the prod-
uct of such allocation and the proportion of such al-
location that the Secretary estimates is attributable
to services furnished to individuals who are enrolled
in such a staff or group model health maintenance
organization with respect to health care services cov-
ered under the subscriber agreement.
In computing the aggregate Mediplan expenditures under
paragraph (1), there shall be taken into account the ad-
justment in medicare payment rates under section 205 of
such Act.
‘‘SEC. 2142. MEDIPLAN TRUST FUND.
‘‘(a) ESTABLISHMENT.—(1) There is hereby created
on the books of the Treasury of the United States a trust
fund to be known as the ‘Mediplan Trust Fund’ (in this
section referred to as the ‘Trust Fund’). The Trust Fund
shall consist of such gifts and bequests as may be made
as provided in section 201(i)(1) and amounts appropriated
under paragraph (2).
‘‘(2) There are hereby appropriated to the Trust
Fund amounts equivalent to 100 percent of the taxes im-
posed by sections 59B and 59C of the Internal Revenue
Code of 1986. The amounts appropriated by the preceding
sentence shall be transferred from time to time from the
general fund in the Treasury to the Trust Fund, such
amounts to be determined on the basis of estimates by
the Secretary of the Treasury of the taxes, paid to or de-
posited into the Treasury; and proper adjustments shall
be made in amounts subsequently transferred to the extent
prior estimates were in excess of or were less than the
taxes specified in such sentence.
‘‘(b) INCORPORATION OF PROVISIONS.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
the provisions of subsections (b) through (e) and (g)
through (i) of section 1817 shall apply to the Trust
Fund in the same manner as they apply to the
Federal Hospital Insurance Trust Fund.
‘‘(2) EXCEPTIONS.—In applying paragraph
(1)—
‘‘(A) the Board of Trustees and Managing
Trustee of the Trust Fund shall be composed of
the members of the Board of Trustees and the
Managing Trustee, respectively, of the Federal
Hospital Insurance Trust Fund; and
‘‘(B) any reference in section 1817 to the
Federal Hospital Insurance Trust Fund or to
title XVIII (or part A thereof) is deemed a ref-
erence to the Trust Fund under this section
and this title, respectively.
‘‘PART D—ADMINISTRATIVE SIMPLIFICATION
‘‘SEC. 2151. REQUIREMENT FOR ENTITLEMENT VERIFICA-
TION SYSTEM.
‘‘(a) IN GENERAL.—
‘‘(1) REQUIREMENT.—Each Mediplan supple-
mental plan (as defined in section 2166(d)) and the
Secretary, with respect to the plan provided under
this title, shall provide for an electronic system, that
is certified by the Secretary as meeting the stand-
ards established under subsection (c), for the ver-
ification of an individual’s entitlement to benefits
under such plan.
‘‘(2) DEADLINE FOR APPLICATION OF REQUIRE-
MENT.—The deadline specified under this paragraph
for the requirement under paragraph (1) is 6
months after the date the standards are established
under subsection (c).
‘‘(b) ENFORCEMENT THROUGH CIVIL MONEY PEN-
ALTIES.—
‘‘(1) IN GENERAL.—In the case of a Mediplan
supplemental plan that fails to provide for an elec-
tronic verification system that is certified by the
Secretary as meeting the standards established
under subsection (c), the plan is subject to a civil
money penalty of not to exceed $100 for each day
in which such failure persists. The provisions of sec-
tion 1128A of the Social Security Act (other than
subsections (a) and (b)) shall apply to a civil money
penalty under this subsection in the same manner as
such provisions apply to a penalty or proceeding
under section 1128A(a) of such Act.
‘‘(2) EFFECTIVE
DATE.—No penalty may be
imposed under paragraph (1) for any failure occur-
ring before the deadline specified in subsection
(a)(2).
‘‘(c) STANDARDS FOR ENTITLEMENT VERIFICATION
SYSTEMS.—
‘‘(1) IN GENERAL.—The Secretary shall estab-
lish standards consistent with this subsection re-
specting the requirements for certification of entitle-
ment verification systems.
‘‘(2) INFORMATION
AVAILABLE.—Such stand-
ards shall require a system to provide information,
with respect to individuals, concerning the following:
‘‘(A) The specific benefits to which the in-
dividual is entitled under the plan.
‘‘(B) Current status of the individual with
respect 
to 
fulfillment 
of 
deductibles,
copayments, and out-of-pocket limits on cost-
sharing.
‘‘(C) Restrictions on providers who may
provide covered services, including utilization
controls (such as preadmission certification).
‘‘(3) FORM OF INQUIRY.—Each verification sys-
tem shall be capable of accepting inquiries under
this subsection from health care providers in a vari-
ety of electronic and other forms, including—
‘‘(A) through electronic transmission of in-
formation on the uniform health claims card (in
a manner similar to that for verification of
credit card purchases),
‘‘(B) through the use of a touch-tone tele-
phone line, and
‘‘(C) through the use of a computer
modem.
The system shall also provide, for an additional fee,
for the acceptance of inquiries in a nonelectronic
form.
‘‘(4) FORM OF RESPONSE.—Each such system
shall be capable of responding to such inquiries
under this subsection in a variety of electronic and
other forms, including—
‘‘(A) through modem transmission of infor-
mation,
‘‘(B) through computer synthesized voice
communication, and
‘‘(C) through transmission of information
to a facsimile (fax) machine.
The system shall also provide, for an additional fee,
for the response to inquiries in a nonelectronic form.
‘‘(5) LIMITATION ON FEES.—Neither the Sec-
retary nor a Mediplan supplemental may impose a
fee for the acceptance or response to an inquiry
under this subsection except where the acceptance or
response is in a nonelectronic form.
‘‘(6) PUBLIC DOMAIN SOFTWARE TO PROVID-
ERS.—The Secretary shall provide for the develop-
ment, and shall make available without charge to
health service providers and Mediplan supplemental
plans, such computer software as will enable—
‘‘(A) such providers to make inquiries, and
receive responses, electronically respecting the
eligibility and benefits of an individual under
plans, and
‘‘(B) such plans to make inquiries, and re-
ceive responses, electronically respecting liability
of other plans for the provision or payment of
benefits.
‘‘(7) DEADLINE.—The Secretary shall first es-
tablish the standards under this subsection (and
shall develop and make available the software under
paragraph (6)) by not later than 12 months after
the date of the enactment of this title.
‘‘(d) APPLICATION
TO MEDICARE
AND MEDICAID
PROGRAMS.—
‘‘(1) MEDICARE
PROGRAM.—The Secretary
shall provide, in regulations promulgated to carry
out the medicare program, that there is established
an entitlement verification system that meets the
standards established under subsection (c), by not
later than the deadline specified in subsection (a)(2).
‘‘(2) STATE MEDICAID PLANS.—As a condition
for the approval of a State plan under the medicaid
program, effective for calendar quarters beginning
on or after the deadline specified in subsection
(a)(2), each such plan shall provide, in accordance
with regulations of the Secretary, that there is es-
tablished an entitlement verification system that
meets the standards established under subsection
(c).
‘‘SEC. 2152. REQUIREMENTS FOR UNIFORM CLAIMS AND
ELECTRONIC CLAIMS DATA SET.
‘‘(a) REQUIREMENTS.—
‘‘(1) SUBMISSION
OF
CLAIMS.—Each health
service provider that furnishes services in the United
States for which payment may be made under this
title or under a Mediplan supplemental plan shall
submit any claim for payment for such services only
in a form and manner consistent with standards es-
tablished under subsection (c).
‘‘(2) ACCEPTANCE OF CLAIMS.—The Secretary
and a Mediplan supplemental plan may not reject a
claim for payment under this title or the plan on the
basis of the form or manner in which the claim is
submitted if the claim is submitted in accordance
with the standards established under subsection (c).
‘‘(3) EFFECTIVE DATE.—This subsection shall
apply to claims for services furnished on or after the
date that is 6 months after the date standards are
established under subsection (c).
‘‘(b) ENFORCEMENT THROUGH CIVIL MONEY PEN-
ALTIES.—
‘‘(1) IN GENERAL.—
‘‘(A) PROVIDERS.—In the case of a health
service provider that submits a claim in viola-
tion of subsection (a)(1), the provider is subject
to a civil money penalty of not to exceed $100
(or, if greater, the amount of the claim) for
each such violation.
‘‘(B) PLANS.—In the case of a Mediplan
supplemental plan that rejects a claim in viola-
tion of subsection (a)(2), the plan is subject to
a civil money penalty of not to exceed $100 (or,
if greater, the amount of the claim) for each
such violation.
‘‘(2) PROCESS.—The provisions of section
1128A of the Social Security Act (other than sub-
sections (a) and (b)) shall apply to a civil money
penalty under paragraph (1) in the same manner as
such provisions apply to a penalty or proceeding
under section 1128A(a) of such Act.
‘‘(3) SUNSET FOR PENALTY.—No civil money
penalty may be imposed under this subsection for
submission (or rejection) of any claim on or after
the date that is 36 months after the effective date
specified in subsection (a)(3).
‘‘(c) STANDARDS RELATING TO UNIFORM CLAIMS
AND ELECTRONIC CLAIMS DATA SET.—
‘‘(1) ESTABLISHMENT
OF
STANDARDS.—The
Secretary shall establish standards that—
‘‘(A) relate to the form and manner of sub-
mission of claims for benefits under this title
and under a Mediplan supplemental plan, and
‘‘(B) define the data elements to be con-
tained in a uniform electronic claims data set to
be used with respect to such claims.
‘‘(2) SCOPE OF INFORMATION.—
‘‘(A) IN GENERAL.—The standards under
this subsection are intended to cover substan-
tially most claims that are filed under this title
and under Mediplan supplemental plans. Such
information need not include all elements that
may potentially be required to be reported
under utilization review provisions of such
plans.
‘‘(B) ENSURING
ACCOUNTABILITY
FOR
CLAIMS SUBMITTED ELECTRONICALLY.—In es-
tablishing such standards, the Secretary, in
consultation with appropriate agencies, shall in-
clude such methods of ensuring provider re-
sponsibility and accountability for claims sub-
mitted electronically that are designed to con-
trol fraud and abuse in the submission of such
claims.
‘‘(C) COMPONENTS.—In establishing such
standards the Secretary shall—
‘‘(i) with respect to data elements, de-
fine data fields, formats, and medical no-
menclature, and plan benefit and insurance
information;
‘‘(ii) develop a single, uniform coding
system for diagnostic and procedure codes;
and
‘‘(iii) provide for standards for the
uniform electronic transmission of such
elements.
‘‘(3) COORDINATION
WITH
STANDARDS
FOR
ELECTRONIC
MEDICAL
RECORDS.—In establishing
standards under this subsection, the Secretary shall
assure that—
‘‘(A) the development of such standards is
coordinated with the development of the stand-
ards for electronic medical records under sec-
tion 2153, and
‘‘(B) the coding of data elements under the
uniform electronic claims data set and the cod-
ing of the same elements in the uniform hos-
pital clinical data set are consistent.
‘‘(4) USE
OF
TASK
FORCES.—In adopting
standards under this subsection—
‘‘(A) the Secretary shall take into account
the recommendations of current task forces, in-
cluding at least the Workgroup on Electronic
Data Interchange, National Uniform Billing
Committee, the Uniform Claim Task Force, and
the Computer-based Patient Record Institute,
and
‘‘(B) the Secretary shall provide that the
electronic transmission standards are consist-
ent, to the extent practicable, with the applica-
ble standards established by the Accredited
Standards Committee X–12 of the American
National Standards Institute.
‘‘(5) UNIFORM, UNIQUE PROVIDER IDENTIFICA-
TION CODES.—In establishing standards under this
subsection—
‘‘(A) the Secretary shall provide for a
unique identifier code for each health service
provider that furnishes services for which a
claim may be submitted under this title or
under a Mediplan supplemental plan, and
‘‘(B) in the case of a provider that has a
unique identifier issued for purposes of title
XVIII, the code provided under subparagraph
(A) shall be the same as such unique identifier.
‘‘(6) PUBLIC DOMAIN SOFTWARE TO PROVID-
ERS.—The Secretary shall provide for the develop-
ment, and shall make available without charge to
health service providers, such computer software as
will enable the providers to submit claims and to re-
ceive verification of claims status electronically.
‘‘(7) STANDARDS
FOR
PAPER
CLAIMS.—The
standards shall provide for a uniform paper claims
form which is consistent with data elements required
for the submission of claims electronically.
‘‘(8) STANDARDS
FOR
CLAIMS
FOR
CLINICAL
LABORATORY TESTS.—The standards shall provide
that claims for clinical laboratory tests for which
benefits are provided under this title or under a
Mediplan supplemental plan shall be submitted di-
rectly by the person or entity that performed (or su-
pervised the performance of) the tests to the plan in
a manner consistent with (and subject to such excep-
tions as are provided under) the requirement for di-
rect submission of such claims under title XVIII.
‘‘(9) DEADLINE.—The Secretary shall first pro-
vide for the standards for the uniform claims under
this subsection (and shall develop and make avail-
able the software under paragraph (6)) by not later
than 1 year after the date of the enactment of this
title.
‘‘(d) USE UNDER THIS TITLE AND MEDICARE AND
MEDICAID PROGRAMS.—
‘‘(1) REQUIREMENT FOR PROVIDERS.—In the
case of a health service provider that submits a
claim for services furnished under this title in viola-
tion of subsection (a)(1), no payment shall be made
under this title for such services.
‘‘(2) REQUIREMENTS OF INTERMEDIARIES AND
CARRIERS UNDER MEDICARE PROGRAM.—The Sec-
retary shall provide, in regulations promulgated to
carry out this title, that the claims process provided
under this title conforms to the standards estab-
lished under subsection (c).
‘‘(3) REQUIREMENTS
OF
STATE
MEDICAID
PLANS.—As a condition for the approval of State
plans under the medicaid program, effective as of
the effective date specified in subsection (a)(3), each
such plan shall provide, in accordance with regula-
tions of the Secretary, that the claims process pro-
vided under the plan is modified to the extent re-
quired to conform to the standards established under
subsection (c).
‘‘SEC. 2153. ELECTRONIC MEDICAL RECORDS AND REPORT-
ING.
‘‘(a) 
STANDARDS
FOR
ELECTRONIC
MEDICAL
RECORDS FOR HOSPITALS.—
‘‘(1) PROMULGATION OF STANDARDS.—
‘‘(A) IN
GENERAL.—Between July 1,
1994, and January 1, 1995, the Secretary shall
promulgate standards described in paragraph
(2) for hospitals concerning electronic medical
records.
‘‘(B) REVISION.—The Secretary may from
time to time revise the standards promulgated
under this paragraph.
‘‘(2) CONTENTS OF STANDARDS.—The stand-
ards promulgated under paragraph (1) shall include
at least the following:
‘‘(A) A definition of a uniform hospital
clinical data set, including a definition of the
set of comprehensive data elements, for use by
utilization and quality control peer review orga-
nizations.
‘‘(B) Standards for an electronic patient
care information system with data obtained at
the point of care.
‘‘(C) A specification of, and manner of
presentation of, the individual data elements of
the set and system under this paragraph.
‘‘(D) Standards concerning the trans-
mission of electronic medical data.
‘‘(E) Standards relating to confidentiality
of patient-specific information, which include
the physical security of electronic data and the
use of keys, passwords, encryption, and other
means to ensure the protection of the confiden-
tiality and privacy of electronic data.
‘‘(3) COORDINATION
WITH
STANDARDS
FOR
UNIFORM ELECTRONIC CLAIMS DATA SET.—In es-
tablishing standards under this subsection, the Sec-
retary shall assure that—
‘‘(A) the development of such standards is
coordinated with the development of the stand-
ards for the uniform electronic claims data set
under subsection (b), and
‘‘(B) the coding of data elements under the
uniform hospital clinical data set and the cod-
ing of the same elements under the uniform
electronic claims data set are consistent.
‘‘(4) CONSULTATION.—In establishing stand-
ards under this subsection, the Secretary shall—
‘‘(A) consult with the American National
Standards Institute, hospitals, health benefit
plans, and other interested parties, and
‘‘(B) take into consideration, in developing
standards under paragraph (2)(A), the data set
used by the utilization and quality control peer
review program under part B of title XI.
‘‘(b) REQUIREMENT
FOR APPLICATION
OF ELEC-
TRONIC RECORDS STANDARDS TO HOSPITALS.—
‘‘(1) AS CONDITION OF MEDICARE PARTICIPA-
TION.—As of January 1, 1996, each hospital, as a
requirement of each participation agreement under
this title, shall, in accordance with the standards
promulgated under subsection (a)(1)—
‘‘(A) maintain clinical data included in the
uniform hospital clinical data set under sub-
section (a)(2)(A) in electronic form on all inpa-
tients,
‘‘(B) upon request of the Secretary or of a
utilization and quality control peer review orga-
nization (with which the Secretary has entered
into a contract under part B of title XI), trans-
mit electronically data requested from such
data set, and
‘‘(C) upon request of the Secretary, or of
a fiscal intermediary or carrier, transmit elec-
tronically any data (with respect to a claim)
from such data set.
‘‘(2) APPLICATION
OF
PRESENTATION
AND
TRANSMISSION STANDARDS TO ELECTRONIC TRANS-
MISSION TO FEDERAL AGENCIES.—Effective Janu-
ary 1, 1996, if a hospital is required under a Fed-
eral program to transmit a data element that is sub-
ject to a standard, promulgated under subsection
(a)(1), described in subparagraph (C) or (D) of sub-
section (a)(2), the head of the Federal agency re-
sponsible for such program (if not otherwise author-
ized) is authorized to require the provider to present
and transmit the data element electronically in ac-
cordance with such a standard.
‘‘(c) LIMITATION ON DATA REQUIREMENTS WHERE
STANDARDS IN EFFECT.—
‘‘(1) IN
GENERAL.—On or after January 1,
1996, the Secretary under this title or under title
XVIII (including any carrier or fiscal intermediary
or nor any utilization and quality control peer review
organization) and a Mediplan supplemental plan
may not require, for the purpose of utilization review
or as a condition of providing benefits or making
payments under this title, title XVIII, or the plan,
that a hospital—
‘‘(A) provide any data element not in the
uniform hospital clinical data set specified
under the standards promulgated under sub-
section (a), or
‘‘(B) transmit or present any such data
element in a manner inconsistent with such
standards applicable to such transmission or
presentation.
‘‘(2) COMPLIANCE.—The Secretary may impose
a civil money penalty on any Mediplan supplemental
plan that fails to comply with paragraph (1) in an
amount not to exceed $100 for each such failure.
The provisions of section 1128A of the Social Secu-
rity Act (other than the first sentence of subsection
(a) and other than subsection (b)) shall apply to a
civil money penalty under this paragraph in the
same manner as such provisions apply to a penalty
or proceeding under section 1128A(a) of such Act.
‘‘(3) APPLICATION TO MEDICAID PROGRAM.—As
a condition for the approval of State plans under the
medicaid program and in accordance with regula-
tions of the Secretary, effective as of January 1,
1996, each such plan may not require that a hos-
pital, for the purpose of utilization review or as a
condition of providing benefits or making payments
under the plan—
‘‘(A) provide any data element not in the
uniform hospital clinical data set specified
under the standards promulgated under sub-
section (a), or
‘‘(B) transmit or present any such data
element in a manner inconsistent with such
standards applicable to such transmission or
presentation.
‘‘(d) PREEMPTION OF STATE QUILL PEN LAWS.—
‘‘(1) IN GENERAL.—Any provision of State law
that requires medical or health insurance records
(including billing information) to be maintained in
written, rather than electronic, form shall deemed to
be satisfied if the records are maintained in an elec-
tronic form that meets standards established by the
Secretary under paragraph (2).
‘‘(2) SECRETARIAL
AUTHORITY.—Not later
than 1 year after the date of the enactment of this
title, the Secretary shall issue regulations to carry
out paragraph (1). The regulations shall provide for
an electronic substitute that is in the form of a
unique identifier (assigned to each authorized indi-
vidual) that serves the functional equivalent of a sig-
nature. The regulations may provide for such excep-
tions to paragraph (1) as the Secretary determines
to be necessary to prevent fraud and abuse, to pre-
vent the illegal distribution of controlled substances,
and in such other cases as the Secretary deems ap-
propriate.
‘‘(3) EFFECTIVE
DATE.—Paragraph (1) shall
take effect on the first day of the first month that
begins more than 30 days after the date the Sec-
retary issues the regulations referred to in para-
graph (2).
‘‘SEC. 2154. UNIFORM HOSPITAL COST REPORTING.
‘‘Each hospital, as a requirement under a participa-
tion agreement under this title for each cost reporting pe-
riod beginning during or after fiscal year 1993, shall pro-
vide for the reporting of information to the Secretary with
respect to any hospital care provided in a uniform manner
consistent with standards established by the Secretary to
carry out section 4007(c) of the Omnibus Budget Rec-
onciliation Act of 1987 and in an electronic form consist-
ent with standards established by the Secretary.
‘‘SEC. 2155. HEALTH SERVICE PROVIDER DEFINED.
‘‘In this part, the term ‘health service provider’ in-
cludes a provider of services (as defined in section
1861(u)), physician, supplier, and other person furnishing
health care services.
‘‘PART E—GENERAL PROVISIONS
‘‘SEC. 2161. DEFINITIONS RELATING TO BENEFICIARIES
AND INCOME.
‘‘(a) TERMS RELATING TO BENEFICIARIES.—In this
title:
‘‘(1) CHILD.—The term ‘child’ means an indi-
vidual who throughout a month has not attained 23
years of age.
‘‘(2) LOW-INCOME
INDIVIDUAL.—The term
‘low-income individual’ means an individual whose
applicable modified gross income (as defined in sub-
section (b)(1)) is less than 100 percent of the pov-
erty level (as defined in subsection (b)(2)).
‘‘(3) PREGNANT WOMAN.—The term ‘pregnant
woman’ means a woman who has been certified by
a physician (in a manner specified by the Secretary)
as being pregnant, until the last day of the month
in which the 60-day period (beginning on the date
of termination of the pregnancy) ends.
‘‘(b) TERMS RELATING TO INCOME.—In this title:
‘‘(1) APPLICABLE MODIFIED GROSS INCOME.—
‘‘(A) IN GENERAL.—Except as provided in
this paragraph, the term ‘applicable modified
gross income’ means, for a calendar year for an
individual, the modified gross income (as de-
fined in section 59B(c) of the Internal Revenue
Code of 1986) of the taxpayer (or the taxpayer
for whom the individual may be claimed as a
dependent) for the taxable year ending in the
second previous calendar year.
‘‘(B) APPLICATION
OF
CURRENT
YEAR
MODIFIED GROSS INCOME.—
‘‘(i) IN GENERAL.—Subject to clause
(ii), the Secretary shall establish a proce-
dure under which an individual may file a
declaration of estimated modified gross in-
come for a taxable year ending in a cal-
endar year, which modified gross income
will apply under this subsection as the ap-
plicable modified gross income for the cal-
endar year. Subject to clause (ii), such pro-
cedure shall be applicable regardless of
whether or not the individual filed a tax
return for the taxable year ending in the
second previous calendar year.
‘‘(ii) LIMITATION ON APPLICATION.—
The Secretary may limit the application of
clause (i), in the case of individuals who
have filed tax returns for the taxable year
ending in the second previous calendar
year, to individuals with respect to whom
the applicable modified gross income will
be reduced by at least 20 percent as a re-
sult of the application of such clause.
‘‘(iii) REQUIREMENT FOR RETURN.—
Any individual who has filed a declaration
under clause (i) for a calendar year is re-
quired to file an income tax return for the
taxable year in the calendar year, regard-
less of whether any income tax is actually
owed for the year. The failure of the indi-
vidual to file such a return makes the indi-
vidual liable for overpayments under this
title under clause (iv) in the same manner
as if this paragraph had not applied.
‘‘(iv) COLLECTION
FOR
OVERPAY-
MENTS.—If a declaration of estimated
modified gross income is made applicable
to a calendar year under clause (i) and the
actual modified gross income for that tax-
able year exceeds such estimated modified
gross income, the individual shall be liable
to the United States for 110 percent of the
amount of additional payments made
under this title as a result of the use of
such estimated modified gross income in-
stead of the actual modified gross income
for that taxable year.
‘‘(C) TRANSMITTAL OF INFORMATION.—By
not later than October 1 of each year, the Sec-
retary of the Treasury shall transmit to the
Secretary such information relating to the ap-
plicable modified gross income of individuals for
the taxable year ending in the previous year as
may be necessary to apply this title in the suc-
ceeding calendar year.
‘‘(2) POVERTY
LEVEL.—The term ‘poverty
level’ means, for an individual in a family, the offi-
cial poverty line (as defined by the Office of Man-
agement and Budget, and revised annually in ac-
cordance with section 673(2) of the Omnibus Budget
Reconciliation Act of 1981) applicable to a family of
the size involved.
‘‘SEC. 2162. INCORPORATION OF CERTAIN MEDICARE PRO-
VISIONS AND OTHER PROVISIONS.
‘‘(a) USE OF CARRIERS AND INTERMEDIARIES.—The
Secretary shall provide for the administration of this title
through the use of fiscal intermediaries and carriers in
the same manner as title XVIII is carried out through
the use of such fiscal intermediaries and carriers, except
‘‘(5) Part B of title XI (relating to peer review
of the utilization and quality of health care services).
‘‘(f) OTHER PROVISIONS.—The provisions of section
201(i) shall apply to this title and the Mediplan Trust
Fund in the same manner as they apply to title XVIII
and the Federal Hospital Insurance Trust Fund.
‘‘SEC. 2163. STATE MAINTENANCE OF EFFORT PAYMENTS.
‘‘(a) CONDITION
OF COVERAGE.—Notwithstanding
any other provision of this title, no individual who is a
resident of a State is eligible for benefits under this title
for a month in a calendar year, unless the State provides
(in a manner and at a time specified by the Secretary)
for payment to the Mediplan Trust Fund of 1⁄12th of the
amount specified in subsection (b) for the year.
‘‘(b) MAINTENANCE
OF EFFORT AMOUNT.—The
amount of payment specified in this subsection for a State
for a year is equal to the amount of payment (net of Fed-
eral payments) made by a State under its State plan under
title XIX for 1993 for medical assistance with respect to
which benefits would have been payable under this title
for low-income individuals if this title were in effect in that
year, increased to the year involved by the compounded
sum of the increase in the consumer price index for all
urban consumers (U.S. City average, as published by the
Bureau of Labor Statistics of the Department of Labor)
for each year after 1993 and up to the year involved.
‘‘SEC. 2164. MODIFICATION OF MEDICAID AND OTHER PRO-
GRAMS TO AVOID DUPLICATION OF BENE-
FITS.
‘‘Notwithstanding any other provision of law—
‘‘(1) a State plan under title XIX shall not pro-
vide any medical assistance for benefits with respect
to which any payments may be made under this
title;
‘‘(2) a health benefits plan under chapter 89 of
title 5, United States Code, shall not provide bene-
fits for which any payment may be made under this
title; and
‘‘(3) health benefits shall not be available under
the Civilian Health and Medical Program of the
Uniformed Services (as defined in section 1072(4) of
title 10, United States Code) for services for which
payment may be made under this title.
‘‘SEC. 2165. MAINTENANCE OF ADDITIONAL BENEFITS FOR
CURRENT 
BENEFICIARIES 
UNDER 
GROUP
HEALTH PLANS.
‘‘(a) IN GENERAL.—In the case of a group health
plan (as defined in section 5000(b)(1) of the Internal Rev-
enue Code of 1986) that, as of the date of the enactment
of this title, provides any health benefit to an employee
or former employee or a family member of an employee
or former employee that is additional to the benefits pro-
vided under this title, the group health plan must continue
to make available such an additional benefit to such an
individual notwithstanding the enactment of this title.
‘‘(b) LIMITATION TO CURRENT BENEFICIARIES.—
Subsection (a) shall not apply to an individual who is not
entitled to benefits under the group health plan as of the
date of the enactment of this title.
‘‘(c) ENFORCEMENT.—There is established a private
cause of action for damages (which shall be in an amount
triple the amount otherwise provided) in the case of a
group health plan that fails to continue to provide benefits
in accordance with subsection (a).
‘‘PART F—REGULATION OF MEDIPLAN SUPPLEMENTAL
POLICIES
‘‘SEC. 
2171. 
STANDARDS 
AND 
REQUIREMENTS 
FOR
MEDIPLAN SUPPLEMENTAL POLICIES.
‘‘(a) CERTIFICATION REQUIRED.—
‘‘(1) IN GENERAL.—No Mediplan supplemental
policy (as defined in section 2179(4)) may be issued
on or after the effective date specified in subsection
(d) (and no new contract may be offered under such
policy with respect to any individual or group begin-
ning on or after such effective date) unless the pol-
icy has been certified—
‘‘(A) by the Secretary (in accordance with
such procedures as the Secretary establishes),
or
‘‘(B) by a State regulatory program (ap-
proved under subsection (b)),
as meeting the standards established under section
2172 by such effective date.
‘‘(2) POLICY DISAPPROVED.—If the Secretary
(or, in the case of a policy certified by a State regu-
latory program, the State) determines that a
Mediplan supplemental policy does not meet the ap-
plicable standards of this title on or after such effec-
tive date, no coverage may be provided under the
plan to individuals not enrolled as of the date of the
determination and the policy may not be continued
for policy years beginning after the date of such de-
termination until the Secretary (or program) deter-
mines that such policy is in compliance with such
standards.
‘‘(b) STATE APPROVED PROGRAMS.—
‘‘(1) IN GENERAL.—If the Secretary determines
that a State has in effect an effective regulatory pro-
gram for the application of the standards established
under section 2172 to Mediplan supplemental poli-
cies, the Secretary may approve such program for
purposes of certification of Mediplan supplemental
policies under this title.
‘‘(2) ANNUAL REPORTS.—As a condition for the
continued approval of such a regulatory program,
the State shall report to the Secretary annually such
information as the Secretary may require with re-
spect to the performance of the program. Such infor-
mation shall include a list of the Mediplan supple-
mental policies certified under the program, the
compliance of such policies with the standards estab-
lished under section 2172, and enforcement actions
taken to ensure such compliance.
‘‘(3) PERIODIC SECRETARIAL REVIEW OF STATE
REGULATORY
PROGRAMS.—The Secretary annually
shall review State regulatory programs approved
under paragraph (1) to determine if they continue to
apply and enforce the standards. If the Secretary
initially determines that a State regulatory program
no longer is applying and enforcing such standards,
the Secretary shall provide the State an opportunity
to adopt such a plan of correction that would bring
such program into compliance. If the Secretary
makes a final determination that the State regu-
latory program, fails to apply and enforce such
standards after such an opportunity, the Secretary
shall disapprove such program and reassume respon-
sibility for certification of all Mediplan supplemental
policies in that State.
‘‘(4) GAO AUDITS.—The Comptroller General
shall conduct periodic reviews on a sample of State
regulatory programs approved under paragraph (1)
to determine their compliance with the requirements
of such paragraph. The Comptroller General shall
report to the Secretary and Congress on the findings
of such reviews.
‘‘(c) 
EXCISE
TAX
SANCTIONS.—Nonqualified
Mediplan supplemental policies are subject to an excise tax
under section 5000A of the Internal Revenue Code of
1986.
‘‘(d) EFFECTIVE DATE SPECIFIED.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
the effective date specified in this subsection for a
State is the earlier of—
‘‘(A) the date the State changes its stat-
utes or regulations to establish a regulatory
program that meets the requirements of this
part, or
‘‘(B) 1 year after the date the Secretary
first publishes standards under section 2172.
‘‘(2) ADDITIONAL
LEGISLATIVE
ACTION
RE-
QUIRED.—In the case of a State which the Secretary
identifies as—
‘‘(A) requiring State legislation (other than
legislation appropriating funds) to establish a
regulatory program that meets the require-
ments of this part, but
‘‘(B) having a legislature which is not
scheduled to meet in 1994 in a legislative ses-
sion in which such legislation may be consid-
ered,
the effective date specified in this subsection is the
first day of the first calendar quarter beginning
after the close of the first legislative session of the
State legislature that begins on or after January 1,
1994. For purposes of the previous sentence, in the
case of a State that has a 2-year legislative session,
each year of such session shall be deemed to be a
separate regular session of the State legislature.
‘‘SEC. 2172. ESTABLISHMENT OF STANDARDS.
‘‘(a) ESTABLISHMENT
OF STANDARDS.—The Sec-
retary shall develop and publish, by not later than 9
months after the the date of the enactment of this title,
specific standards to implement the requirements of this
title and to be applied under section 5000A of the Internal
Revenue Code of 1986.
‘‘(b) MORE STRINGENT STATE STANDARDS PER-
MITTED.—In the case of insured Mediplan supplemental
policies (as defined in section 2174(c)(2)), a State may
implement standards that are more stringent than the
standards established under this section.
‘‘(c) APPLICATION TO ERISA.—The Secretary shall
consult with the Secretary of Labor concerning the appli-
cation of the requirements of this title to employee welfare
benefit plans under title I of the Employee Retirement In-
come Security Act of 1974.
‘‘SEC. 
2173. 
REQUIREMENTS 
APPLICABLE 
TO 
ALL
MEDIPLAN SUPPLEMENTAL POLICIES.
‘‘(a) NO DISCRIMINATION BASED ON HEALTH STA-
TUS.—
‘‘(1) PROVISION OF SERVICES.—Except as pro-
vided under subsection (b), a Mediplan supplemental
policy may not deny, limit, or condition the coverage
under (or benefits of) the plan based on the health
status, claims experience, receipt of health care,
medical history, or lack of evidence of insurability,
of an individual.
‘‘(2) PREMIUM CHARGES.—A Mediplan supple-
mental policy may not vary premiums charged based
on the health status, claims experience, receipt of
health care, medical history, or lack of evidence of
insurability, of an individual.
‘‘(b) TREATMENT OF PRE-EXISTING CONDITION EX-
CLUSIONS FOR ALL SERVICES.—
‘‘(1) IN GENERAL.—Subject to the succeeding
provisions of this subsection, a Mediplan supple-
mental policy may exclude coverage with respect to
services related to treatment of a pre-existing condi-
tion, but the period of such exclusion may not ex-
ceed 6 months.
‘‘(2) NONAPPLICATION
TO
NEWBORNS.—The
exclusion of coverage permitted under paragraph (1)
shall not apply to services furnished to newborns.
‘‘(3) CREDITING OF PREVIOUS COVERAGE.—
‘‘(A) IN GENERAL.—If an individual is in
a period of continuous coverage (as defined in
subparagraph (B)(i)) with respect to particular
services as of the date of initial coverage under
a plan, any period of exclusion of coverage with
respect to a pre-existing condition for such serv-
ices or type of services shall be reduced by 1
month for each month in the period of continu-
ous coverage.
‘‘(B) DEFINITIONS.—In this paragraph:
‘‘(i) PERIOD
OF
CONTINUOUS
COV-
ERAGE.—The term ‘period of continuous
coverage’ means, with respect to particular
services, the period beginning on the date
an individual is enrolled under a Mediplan
supplemental policy or health benefit plan
or program (including the medicare pro-
gram, a State plan under title XIX, con-
tinuation coverage under section 4980B of
the Internal Revenue Code of 1986, or a
State general medical assistance program)
which provides the same or substantially
similar benefits with respect to such serv-
ices and ends on the date the individual is
not so enrolled for a continuous period of
more than 3 months.
‘‘(ii) PRE-EXISTING CONDITION.—The
term ‘pre-existing condition’ means, with
respect to coverage under a policy, a condi-
tion which has been diagnosed or treated
during the 3-month period ending on the
day before the first date of such coverage,
except that such term does not include a
condition which was first diagnosed or
treated during a period of continuous cov-
erage.
‘‘(C) STANDARDS
FOR
SIMILAR
BENE-
FITS.—The Secretary shall establish such cri-
teria for determining if benefits are substan-
tially similar as may be necessary to carry out
this subsection.
‘‘(c) SIMPLIFICATION OF BENEFITS.—
‘‘(1) IN
GENERAL.—Each Mediplan supple-
mental policy shall only offer benefits consistent with
the standards promulgated under paragraph (2).
‘‘(2) STANDARDS.—The Secretary shall promul-
gate standards providing for—
‘‘(A) limitations on the groups or packages
of benefits that may be offered under a
Mediplan supplemental policy consistent with
paragraphs (3) and (4) of this subsection,
‘‘(B) uniform language and definitions to
be used with respect to such benefits, and
‘‘(C) uniform format to be used in the pol-
icy with respect to such benefits.
‘‘(3) BASIS.—The standards under paragraph
(2) shall provide—
‘‘(A) for such groups or packages of bene-
fits as may be appropriate taking into account
the considerations specified in paragraph (4)
and the requirements of the succeeding sub-
paragraphs,
‘‘(B) for identification of a core group of
basic benefits common to all policies, and
‘‘(C) that, subject to paragraph (5), the
total number of different benefit packages
(counting the core group of basic benefits de-
scribed in subparagraph (B) and each other
combination of benefits that may be offered as
a separate benefit package) that may be estab-
lished in all the States and by all issuers shall
not exceed 10.
‘‘(4) INNOVATION.—With the approval of the
Secretary, the issuer of a Mediplan supplemental
policy may offer new or innovative benefits in addi-
tion to the benefits provided in a policy that other-
wise complies with the standards. Any such new or
innovative benefits may include benefits that are not
otherwise available and are cost effective and shall
be offered in a manner which is consistent with the
goal of simplification of Mediplan supplemental poli-
cies.
‘‘(5) FURTHER LIMITATIONS.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), this subsection shall not be
construed as preventing a State from restricting
the groups of benefits that may be offered in
Mediplan supplemental policies in the State.
‘‘(B) LIMITATION.—A State with a regu-
latory 
program 
approved 
under 
section
2171(b)(1) may not restrict under subpara-
graph (A) the offering of a Mediplan supple-
mental policy consisting only of the core group
of benefits described in paragraph (3)(B).
‘‘(6) CONSTRUCTION.—This subsection shall
not be construed as preventing an issuer of a
Mediplan supplemental policy who otherwise meets
the requirements of this section from providing,
through an arrangement with a vendor, for dis-
counts from that vendor to the policyholder or
certificateholders for the purchase of items or serv-
ices not covered under its Mediplan supplemental
policies.
‘‘(7) MAKING BASIC POLICY AVAILABLE.—
‘‘(A) IN
GENERAL.—Anyone who sells a
Mediplan supplemental policy to an individual
shall make available for sale to the individual a
Mediplan supplemental policy with only the core
group of basic benefits (described in paragraph
(3)(B)).
‘‘(B) OUTLINE
OF
COVERAGE.—Anyone
who sells a Mediplan supplemental policy to an
individual shall provide the individual, before
the sale of the policy, an outline of coverage
which describes the benefits under the policy.
Such outline shall be on a standard form ap-
proved by the Secretary consistent with the
standards promulgated under this subsection.
‘‘(8) PENALTY.—Whoever sells or issues a
Mediplan supplemental policy in violation of the re-
quirements of this subsection is subject to a civil
money penalty of not to exceed $25,000 (or $15,000
in the case of a seller who is not the issuer of the
policy) for each such violation.
‘‘(d) MINIMUM LOSS RATIO REQUIRED.—
‘‘(1) IN GENERAL.—A Mediplan supplemental
policy, a specific disease policy (as defined by the
Secretary), or a hospital confinement indemnity pol-
icy (as defined by the Secretary) may not be issued
or renewed (or otherwise provide coverage after the
effective date specified in section 2171(d)) unless—
‘‘(A) the policy can be expected for periods
after the effective date of these provisions (as
estimated for the entire period for which rates
are computed to provide coverage, on the basis
of incurred claims experience and earned pre-
miums for such periods, and in accordance with
a uniform methodology, including uniform re-
porting standards, developed by the Secretary)
to return to policyholders in the form of aggre-
gate benefits provided under the policy, at least
80 percent of the aggregate amount of pre-
miums collected in the case of group policies or
at least 70 percent in the case of individual
policies; and
‘‘(B) the issuer of the policy provides for
the issuance of a proportional refund, or a cred-
it against future premiums of a proportional
amount, based on the premium paid and in ac-
cordance with paragraph (2), of the amount of
premiums received necessary to assure that the
ratio of aggregate benefits provided to the ag-
gregate premiums collected (net of such refunds
or credits) complies with the expectation re-
quired under subparagraph (A), treating poli-
cies of the same type as a single policy for each
standard package.
For purposes of subparagraph (A) only, policies is-
sued as a result of solicitations of individuals
through the mails or by mass media advertising (in-
cluding both print and broadcast advertising) shall
be deemed to be individual policies. For the purpose
of calculating the refund or credit required under
paragraph (1)(B) for a policy issued before the ef-
fective date specified in section 2171(d), the refund
or credit calculation shall be based on the aggregate
benefits provided and premiums collected under all
such policies issued by an insurer in a State (sepa-
rated as to individual and group policies) and shall
be based only on aggregate benefits provided and
premiums collected under such policies after such
date.
‘‘(2) APPLICATION.—Paragraph (1)(B) shall be
applied with respect to each type of policy by stand-
ard package. Paragraph (1)(B) shall not apply to a
policy until 12 months following issue. In the case
of a policy issued before the effective date specified
in section 2171(d), paragraph (1)(B) shall not apply
until 1 year after such date.
‘‘(3) TIMING OF REFUND OR CREDIT.—
‘‘(A) IN GENERAL.—A refund or credit re-
quired under paragraph (1)(B) shall be made to
each policyholder insured under the applicable
policy as of the last day of the year involved.
‘‘(B) INTEREST.— Such a refund shall in-
clude interest from the end of the calendar year
involved until the date of the refund or credit
at a rate as specified by the Secretary for this
purpose from time to time which is not less
than the average rate of interest for 13-week
Treasury notes.
‘‘(C) DEADLINE.— For purposes of this
paragraph and paragraph (1)(B), refunds or
credit against premiums due shall be made,
with respect to a calendar year, not later than
the third quarter of the succeeding calendar
year.
‘‘(4) NO PREEMPTION.—The provisions of this
subsection do not preempt a State from requiring a
higher percentage than that specified in paragraph
(1)(A).
‘‘(5) AUDITS.—The Comptroller General shall
periodically, not less often than every 3 years, per-
form audits with respect to the compliance of
Mediplan supplemental policies and dread disease
policies with the loss ratio requirements of this sub-
section and shall report the results of such audits to
any State involved and to the Secretary.
‘‘(6) SANCTIONS.—
‘‘(A) IN GENERAL.—A person who fails to
provide refunds or credits as required in para-
graph (1)(B) is subject to a civil money penalty
of not to exceed $25,000 for each policy issued
for which such failure occurred.
‘‘(B) LIABILITY.—Each issuer of a policy
subject to the requirements of paragraph (1)(B)
shall be liable to the policyholder or, in the case
of a group policy, to the certificateholder for
credits required under such paragraph.
‘‘(e) GUARANTEED RENEWABILITY.—
‘‘(1) IN
GENERAL.—Each Mediplan supple-
mental policy shall be guaranteed renewable and—
‘‘(A) the issuer may not cancel or
nonrenew the policy solely on the ground of
health status of the individual, and
‘‘(B) the issuer shall not cancel or
nonrenew the policy for any reason other than
nonpayment of premium or material misrepre-
sentation.
‘‘(2) RIGHT
OF
CONVERSION
UPON
TERMI-
NATION OF GROUP POLICY.—If the Mediplan supple-
mental policy is terminated by the group policy-
holder and is not replaced as provided under para-
graph (4), the issuer shall offer certificateholders an
individual Mediplan supplemental policy which (at
the option of the certificateholder)—
‘‘(A) provides for continuation of the bene-
fits contained in the group policy, or
‘‘(B) provides for such benefits as other-
wise meets the requirements of this part.
‘‘(3) RIGHT
OF
CONVERSION
UPON
TERMI-
NATION OF MEMBERSHIP IN A GROUP.—If an indi-
vidual is a certificateholder in a group Mediplan sup-
plemental policy and the individual terminates mem-
bership in the group, the issuer shall—
‘‘(A) offer the certificateholder the conver-
sion opportunity described in paragraph (2), or
‘‘(B) at the option of the group policy-
holder, offer the certificateholder continuation
of coverage under the group policy.
‘‘(4) REPLACEMENT.—If a group Mediplan sup-
plemental policy is replaced by another group
Mediplan supplemental policy purchased by the same
policyholder, the succeeding issuer shall offer cov-
erage to all persons covered under the old group pol-
icy on its date of termination. Coverage under the
new group policy shall not result in any exclusion for
preexisting conditions that would have been covered
under the group policy being replaced.
‘‘(5) SUSPENSION
OF
POLICY
FOR
CERTAIN
LOW-INCOME INDIVIDUALS.—
‘‘(A) IN GENERAL.—Each Mediplan sup-
plemental policy shall provide that benefits and
premiums under the policy shall be suspended
at the request of the policyholder for the period
(not to exceed 24 months) in which the policy-
holder is determined to be entitled for benefits
under this title as a low-income individual, but
only if the policyholder notifies the issuer of
such policy within 90 days after the date the in-
dividual becomes so entitled. If such suspension
occurs 
and 
if 
the 
policyholder 
or
certificateholder loses such entitlement, such
policy shall be automatically reinstituted (effec-
tive as of the date of termination of such enti-
tlement) under the following terms, if the pol-
icyholder provides notice of such loss of entitle-
ment within 90 days after the date of such loss:
‘‘(i) There is no waiting period with
respect to treatment of pre-existing condi-
tions.
‘‘(ii) Coverage is substantially equiva-
lent to coverage in effect before the date of
the termination.
‘‘(iii) The classification of premiums
are on terms which are at least as favor-
able to the policyholder or certificateholder
as the premium classification terms that
would have applied to the policyholder or
certificateholder had the coverage never
terminated.
‘‘(B) PENALTY.—Any person who issues a
Mediplan supplemental policy and fails to com-
ply with the requirements of subparagraph (A)
is subject to a civil money penalty of not to ex-
ceed $25,000 for each such violation.
‘‘SEC. 2174. STANDARDS APPLICABLE ONLY TO INSURED
MEDIPLAN SUPPLEMENTAL POLICIES.
‘‘(a) OPEN ENROLLMENT.—
‘‘(1) IN GENERAL.—Subject to the succeeding
provisions of this subsection, a carrier that offers an
insured Mediplan supplemental policy (as defined in
subsection (c)) to individuals residing (or to groups
located) in a State must offer the same policy to any
other resident of (or group located in) the State.
Such requirement shall apply on a continuous, year-
round basis.
‘‘(2) RESTRICTIONS OF ENROLLMENT IN THE
CASE OF CERTAIN ASSOCIATION COVERAGE.—In the
case of an insured Mediplan supplemental policy of-
fered through an association which is composed ex-
clusively of employers (which may include self-em-
ployed individuals) and which has been formed for
purposes other than obtaining health insurance, the
carrier is not required to offer the policy to individ-
uals or employers who are not employees of such
employers or self-employed members of the associa-
tion, or their dependents.
‘‘(3) TREATMENT
OF
HEALTH
MAINTENANCE
ORGANIZATIONS.—
‘‘(A) 
GEOGRAPHIC
LIMITATIONS.—A
health maintenance organization may deny en-
rollment with respect to an individual if the in-
dividual is residing outside the service area of
the organization, but only if such denial is ap-
plied uniformly without regard to health status
or insurability.
‘‘(B) SIZE LIMITS.—A health maintenance
organization may apply to the Secretary to
cease enrolling new employer groups or individ-
uals in its insured Mediplan supplemental policy
(or in a geographic area served by the policy)
if—
‘‘(i) it ceases to enroll any new em-
ployer groups or individuals, and
‘‘(ii) it can demonstrate that its finan-
cial or administrative capacity to serve pre-
viously enrolled groups and individuals
(and additional individuals who will be ex-
pected to enroll because of affiliation with
such previously enrolled groups) will be im-
paired if it is required to enroll new em-
ployer groups or individuals.
‘‘(b) NOTICES AND RENEWAL PERIODS.—
‘‘(1) NOTICE
AND
SPECIFICATION
OF
RATES
AND ADMINISTRATIVE CHANGES.—
‘‘(A) NOTICE.—The carrier of an insured
Mediplan supplemental policy shall provide for
notice, at least 30 days before the date of expi-
ration of the policy, of the terms for renewal of
the policy. Except with respect to rates and ad-
ministrative changes, the terms of renewal (in-
cluding benefits) shall be the same as the terms
of issuance.
‘‘(B) RENEWAL RATES SAME AS ISSUANCE
RATES.—The carrier may change the terms for
such renewal, but the premium rates charged
with respect to such renewal shall be the same
as that for a new issue.
‘‘(2) PERIOD OF RENEWAL.—The period of re-
newal of each insured Mediplan supplemental policy
shall be for a period of not less than 12 months.
‘‘(c) DEFINITIONS.—In this section (and section
2172):
‘‘(1) CARRIER.—The term ‘carrier’ means any
person that offers a Mediplan supplemental policy,
whether through insurance or otherwise, including a
licensed insurance company, a prepaid hospital or
medical service plan, a health maintenance organiza-
tion, and a multiple employer welfare arrangement
(as defined in section 3(40) of the Employee Retire-
ment Income Security Act of 1974).
‘‘(2) INSURED MEDIPLAN SUPPLEMENTAL POL-
ICY.—The term ‘insured Mediplan supplemental pol-
icy’ means any Mediplan supplemental policy pro-
vided through insurance, and includes a prepaid hos-
pital or medical service plan, a health maintenance
organization, and a multiple employer welfare ar-
rangement (as defined in section 3(40) of the Em-
ployee Retirement Income Security Act of 1974).
‘‘SEC. 2175. PROHIBITION OF DUPLICATION.
‘‘(a) IN GENERAL.—
(1) IN GENERAL.—It is unlawful for a person
to sell or issue to an individual entitled to benefits
under this title—
‘‘(A) a health insurance policy with knowl-
edge that the policy duplicates health benefits
to which the individual is otherwise entitled
under this title (including special benefits as a
low-income individual),
‘‘(B) a Mediplan supplemental policy with
knowledge that the individual is entitled to ben-
efits under another Mediplan supplemental pol-
icy, or
‘‘(C) a health insurance policy (other than
a Mediplan supplemental policy) with knowledge
that the policy duplicates health benefits to
which the individual is otherwise entitled, other
than benefits to which the individual is entitled
under a requirement of State or Federal law.
‘‘(2) EXCEPTION.—Paragraph (1) shall not
apply with respect to—
half of the individual without regard to other
health benefit coverage of the individual.
‘‘(b) ADDITIONAL PROHIBITION.—Whoever violates
subsection (a) shall be fined under title 18, United States
Code, or imprisoned not more than 5 years, or both, and,
in addition to or in lieu of such a criminal penalty, is sub-
ject to a civil money penalty of not to exceed $25,000 (or
$15,000 in the case of a seller who is not the issuer of
the policy) for each such prohibited act.
‘‘(c) RULE.—A seller (who is not the issuer of a
health insurance policy) shall not be considered to violate
subsection (a) with respect to the sale of a Mediplan sup-
plemental policy if the policy is sold in compliance with
subsection (d).
‘‘(d) DISCLOSURE.—
‘‘(1) IN GENERAL.—It is unlawful for a person
to issue or sell a Mediplan supplemental policy to an
individual entitled to benefits under this title, wheth-
er directly, through the mail, or otherwise, unless—
‘‘(A) the person obtains from the individ-
ual, as part of the application for the issuance
or purchase and on a form described in sub-
paragraph (B), a written statement (in a form
specified by the Secretary) signed by the indi-
vidual stating, to the best of the individual’s
knowledge, what health insurance policies the
individual has, from what source, and whether
the individual is a low-income individual, and
‘‘(B) the written statement is accompanied
by a written acknowledgment (in a form speci-
fied by the Secretary), signed by the seller of
the policy, of the request for and receipt of such
statement.
‘‘(2) STATEMENT.—The statement required by
paragraph (1) shall be made on a form that—
‘‘(A) states in substance that an individual
entitled to benefits under this title does not
need more than one Mediplan supplemental pol-
icy,
‘‘(B) states in substance that low-income
individuals usually do not need a Mediplan sup-
plemental policy and that benefits and pre-
miums under any such policy shall be sus-
pended upon request of the policyholder during
the period (of not longer than 24 months) of
entitlement to benefits under this title as a low-
income individual and may be reinstated upon
no longer being a low-income individual, and
‘‘(C) states that counseling services may be
available in the State to provide advice concern-
ing the purchase of Mediplan supplemental poli-
cies and may provide the telephone number for
such services.
‘‘(3) NEED FOR STATEMENT.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), if the statement required by
paragraph (2) is not obtained or indicates that
the individual has another Mediplan supple-
mental policy or indicates that the individual is
entitled to benefits under this title as a low-in-
come individual, the sale of a Mediplan supple-
mental policy shall be considered to be a viola-
tion of subsection (a).
‘‘(B) 
EXCEPTION.—Subparagraph 
(A)
shall not apply in the case of an individual who
has a Mediplan supplemental policy, if the indi-
vidual indicates in writing, as part of the appli-
cation for purchase, that the policy being pur-
chased replaces such other policy and indicates
an intent to terminate the policy being replaced
when the new policy becomes effective and the
issuer or seller certifies in writing that such
policy will not, to the best of the issuer’s or sell-
er’s knowledge, duplicate coverage (taking into
account any such replacement).
‘‘(C) PENALTY.—Whoever issues or sells a
Mediplan supplemental policy in violation of
this paragraph shall be fined under title 18,
United States Code, or imprisoned not more
than 5 years, or both, and, in addition to or in
lieu of such a criminal penalty, is subject to a
civil money penalty of not to exceed $25,000 (or
$15,000 in the case of a seller who is not the
issuer of the policy) for each such violation.
‘‘SEC. 2176. ADDITIONAL PROHIBITIONS.
‘‘(a) IN GENERAL.—Whoever knowingly and willfully
makes or causes to be made or induces or seeks to induce
the making of any false statement or representation of a
material fact with respect to compliance of any policy with
the standards and requirements set forth in section 2173
or in regulations promulgated pursuant to such section
shall be fined under title 18, United States Code, or im-
prisoned not more than 5 years, or both, and, in addition
to or in lieu of such a criminal penalty, is subject to a
civil money penalty of not to exceed $5,000 for each such
prohibited act.
‘‘(b) FALSE REPRESENTATION.—Whoever falsely as-
sumes or pretends to be acting, or misrepresents in any
way that he is acting, under the authority of or in associa-
tion with, the program of health insurance established
under this title, or any Federal agency, for the purpose
of selling or attempting to sell insurance, or in such pre-
tended character demands, or obtains money, paper, docu-
ments, or anything of value, shall be fined under title 18,
United States Code, or imprisoned not more than 5 years,
or both, and, in addition to or in lieu of such a criminal
penalty, is subject to a civil money penalty of not to exceed
$5,000 for each such prohibited act.
‘‘(c) APPLICATION OF CIVIL MONEY PENALTY PRO-
CEDURES.— The provisions of section 1128A (other than
the first sentence of subsection (a) and other than sub-
section (b)) shall apply to a civil money penalty under this
part in the same manner as such provisions apply to a
penalty or proceeding under section 1128A(a).
‘‘SEC. 2177. INFORMATION DISCLOSURE.
‘‘(a) IN GENERAL.—The Secretary shall provide, to
all individuals entitled to benefits under this title such in-
formation as will permit such individuals to evaluate the
value of Mediplan supplemental policies to them and the
relationship of any such policies to benefits provided under
this title.
‘‘(b) INFORMATION
ON PROHIBITIONS.—The Sec-
retary shall—
‘‘(1) inform all individuals entitled to benefits
under this title of—
‘‘(A) the actions and practices that are
subject to sanctions under this part and
‘‘(B) the manner in which they may report
any such action or practice to an appropriate
official of the Department of Health and
Human Services (or to an appropriate State of-
ficial), and
‘‘(2) publish the toll-free number for individuals
to report suspected violations of the provision of this
part.
‘‘(c) COUNSELING NUMBERS.—The Secretary shall
provide individuals entitled to benefits under this title with
a listing of the addresses and telephone numbers of State
and Federal agencies and offices that provide information
and assistance to individuals with respect to the selection
of Mediplan supplemental policies.
‘‘SEC. 2178. LIMITATIONS ON SALES COMMISSIONS.
‘‘(a) IN GENERAL.—It is unlawful for a person who
provides for a commission or other compensation to an
agent or other representatives with respect to the sale of
a Mediplan supplemental policy (or certificate)—
‘‘(1) to provide for a first year commission or
other first year compensation that exceeds 200 per-
cent of the commission or other compensation for
the selling or servicing of the policy or certificate in
a second or subsequent year, or
‘‘(2) to provide for compensation with respect
to replacement of such a policy or certificate that is
greater than the compensation that would apply to
the renewal of the policy or certificate.
‘‘(b) PENALTY.—Whoever violates subsection (a)
shall be fined under title 18, United States Code, or im-
prisoned not more than 5 years, or both, and, in addition
to or in lieu of such a criminal penalty, is subject to a
civil money penalty of not to exceed $25,000 for each such
prohibited act.
‘‘(c) DEFINITION.—In this section, the term ‘com-
pensation’ includes pecuniary and nonpecuniary com-
pensation of any kind relating to the sale or renewal of
a policy or certificate and specifically includes bonuses,
gifts, prizes, awards, and finders’ fees.
‘‘SEC. 2179. DEFINITIONS.
‘‘In this part:
‘‘(1) GROUP.—The term ‘group’ means 2 or
more employees of the same employer who normally
perform on a monthly basis at least 171⁄2 hours of
service per week for that employer.
‘‘(2) HEALTH MAINTENANCE ORGANIZATION.—
The term ‘health maintenance organization’ has the
meaning given the term ‘eligible organization’ in sec-
tion 1876(b).
‘‘(3) MEDIPLAN SUPPLEMENTAL POLICY.—The
term ‘Mediplan supplemental policy’ is a health in-
surance policy or other health benefit plan offered by
a private entity to individuals who are entitled to
have payment made under this title, which provides
reimbursement for expenses incurred for services
and items for which payment may be made under
this title but which are not reimbursable by reason
of the application of deductibles, coinsurance
amounts, or other limitations imposed pursuant to
this title; but does not include—
‘‘(A) any such policy or plan of the trust-
ees of a fund established by one or more em-
ployers or labor organizations (or combination
thereof) if the policy or plan offers benefits as
a direct service organization under section
1833, or
‘‘(B) a policy or plan of a health mainte-
nance organization which offers benefits under
this title under section 2162(d).
For purposes of this title, the term ‘policy’ includes
a certificate issued under such policy.
‘‘(4) STATE.—The term ‘State’ means the 50
States and the District of Columbia.
‘‘PART G—STATE OPT OUT
‘‘SEC. 2181. ELECTION.
‘‘(a) IN GENERAL.—A State may elect, in accordance
with this part, to have health care benefits made available
to residents of the State under a State alternative health
care program under this part instead of under the other
provisions of this title. Such an election shall not be effec-
tive unless—
‘‘(1) the State submits to the Secretary an ap-
plication for election, in a form and manner specified
by the Secretary, and
‘‘(2) the Secretary determines that the proposed
health care program meets the requirements speci-
fied in sections 2182 and 2183.
‘‘(b) NO APPLICATION OF ELECTION ON OUT-OF-
STATE RESIDENTS.—An election of a State under this
part shall not affect the entitlement of individuals who are
not residents of the State to receive benefits under this
title for services furnished in the State on the same terms
and conditions as though such an election had not been
made.
‘‘SEC. 2182. REQUIREMENTS FOR STATE ALTERNATIVE
HEALTH CARE PROGRAMS.
‘‘The requirements, with respect to a State alter-
native health care program are as follows:
‘‘(1) ELIGIBILITY.—Each individual who is a
resident of the State (as determined by the Sec-
retary) is entitled to benefits under the program.
‘‘(2) ENROLLMENT
AND
MEDIPLAN
CARDS.—
The program provides for enrollment of eligible indi-
viduals, and the issuance of Mediplan cards, in a
manner consistent with section 2102.
‘‘(3) SCOPE OF BENEFITS.—
‘‘(A) IN GENERAL.—The scope of benefits
under the program shall not be less than the
scope of benefits specified in section 2121 (in-
cluding additional services for children, preg-
nancy-related services and special provisions for
lower-income individuals).
‘‘(B) EXCLUSIONS.—The exclusions from
benefits shall be no more restrictive than the
exclusions specified in section 2122. Pursuant
to section 2122(b)(2), payments under the pro-
gram shall be secondary to payments under the
medicare program.
‘‘(C) OUT-OF-STATE BENEFITS.—The pro-
gram shall provide for coverage of medically
necessary services furnished outside the State,
except in such cases as the Secretary may
specify. In specifying such cases, the Secretary
shall take into account the requirements of
health maintenance organization for coverage of
services outside the organization’s service area.
Any such out-of-State coverage shall be pro-
vided in a manner consistent with the provision
of benefits under this title to individuals who
are not residents of the State.
‘‘(4) LIMITATION ON COST-SHARING.—The pro-
gram does not impose cost-sharing in excess of the
cost-sharing that would be permitted under section
2141.
‘‘(5) ENTITLEMENT
VERIFICATION
SYSTEM.—
The program provides for an entitlement verification
system that meets the requirements of section
2151(c).
‘‘(6) UNIFORM CLAIMS AND ELECTRONIC DATA
SET.—The program provides for use of uniform
claims and electronic data set in accordance with the
standards established under section 2152(c).
‘‘(7) ELECTRONIC MEDICAL RECORDS AND RE-
PORTING; UNIFORM HOSPITAL COST REPORTING.—
The program requires hospitals in the State to meet
the standards for electronic medical records and uni-
form hospital cost reporting in accordance with sec-
tions 2153 and 2154.
‘‘(8) REPORTING SYSTEM.—The program pro-
vides for such reporting of information on the pro-
gram as the Secretary may require in order to as-
sure that the program meets the requirements of
this section.
‘‘(9) MAINTENANCE OF EFFORT PAYMENTS.—
The State is providing for payment to the Mediplan
Trust Fund in accordance with section 2163.
‘‘(10) USE
OF
FUNDS
AND
SAVINGS.—The
State will comply with the requirements of section
2185(b).
‘‘SEC. 2183. CONTROL OF AGGREGATE EXPENDITURES.
‘‘(a) ASSURANCES REQUIRED.—
‘‘(1) IN GENERAL.—A State election under this
part may not be approved until the Secretary has
been provided satisfactory assurances that under the
program, during a 3-year period (the first such pe-
riod beginning with the first month in which this
section applies to that program in the State) the ag-
gregate expenditures for required health care serv-
ices under the program will not exceed the applicable
total limit specified in paragraph (2).
‘‘(2) APPLICABLE TOTAL LIMIT.—The applica-
ble total limit specified in this paragraph is the total
of the maximum amount of payments that would be
payable in the State for the required health care
services under this title if the State election were not
in effect.
‘‘(3) SPECIAL RULE FOR EXPENDITURES FOR
HMOS.—In determining aggregate expenditures for
purposes of paragraph (1), the Secretary shall ex-
clude expenditures for services of staff or group
model health maintenance organizations if the State
program provides that such organizations may nego-
tiate directly with providers of services covered
under the program with respect to the organization’s
rate of payment for such services and, in determin-
ing the applicable limits under paragraph (2), the
Secretary shall exclude payments for services of such
organizations.
‘‘(b) ANNUAL DETERMINATION
BY SECRETARY.—
The Secretary shall annually determine whether a State
program met the assurances required under subsection (a)
for the most recent 3-year period for which the State
election was in effect.
‘‘(c) TREATMENT OF STATES FAILING TO CONTROL
AGGREGATE EXPENDITURES.—
‘‘(1) IN GENERAL.—The Secretary shall termi-
nate approval of a State election under this part or
impose a sanction described in paragraph (2) on a
State if the Secretary determines that, with respect
to a State program under this part for a 3-year pe-
riod the aggregate expenditures for required health
care services under the program exceeded the appli-
cable total limit specified in subsection (a)(2).
‘‘(2) SANCTIONS.—The sanction described in
this paragraph is a reduction in the aggregate
amount otherwise payable to the State under section
2185 for the following year (or for the following 3-
year period, if the Secretary determines that a re-
duction for such period is appropriate in the case of
a State) in an amount equal to the amount by which
the aggregate expenditures for the preceding 3-year
period under the program exceeded the applicable
total limit.
‘‘(3) NOTICE.—The Secretary may not impose
any sanction against a state under paragraph (2)
unless the Secretary has provided the State with no-
tice of the Secretary’s determination under para-
graph (1) and intent to impose the sanction under
paragraph (2).
‘‘SEC. 2184. TERMINATION OF APPROVAL OF STATE ELEC-
TION.
‘‘(a) PROCESS REQUIREMENTS.—
‘‘(1) NOTICE.—The Secretary may terminate
the approval of a State’s election under this part
only after the expiration of a 90-day period begin-
ning on the date the Secretary informs the State of
the Secretary’s intention to terminate such approval,
unless, during such 90-day period, the State re-
quests a hearing with the Secretary.
‘‘(2) HEARING.—If the State requests a hearing
during the 90-day period described in paragraph (1),
the Secretary shall conduct a hearing during which
the State may present evidence showing that the
Secretary should not terminate the approval of the
election. If the Secretary decides to reject such evi-
dence, the Secretary shall terminate the approval of
the State’s election beginning with the first day of
the first month that begins after the Secretary’s
decision.
‘‘(3) JUDICIAL
REVIEW
PROHIBITED.—There
shall be no administrative or judicial review of a de-
cision by the Secretary to terminate the approval of
a State election under this subsection.
‘‘(b) EFFECT OF TERMINATION ON PAYMENT RATES
APPLICABLE TO SERVICES IN STATE.—
‘‘(1) IN GENERAL.—If the Secretary terminates
the approval of a State election under this section,
the maximum payment rates applicable to required
health services shall be the maximum payment rates
otherwise applicable to the services subject to the
adjustment described in paragraph (2).
‘‘(2) RECAPTURE OF EXCESS SPENDING.—The
Secretary shall reduce the maximum payment rates
applicable under this title to required health services
by such factor as the Secretary determines necessary
to decrease the amount of aggregate expenditures
that would otherwise be made for services provided
in the State by the amount by which the aggregate
expenditures for the preceding 3-year period under
the program exceeded the applicable total limit spec-
ified in section 2183(a)(2).
‘‘SEC. 2185. PAYMENTS TO STATES.
‘‘(a) IN GENERAL.—In the case of a State with a
State alternative health care program approved under this
part, the Secretary shall provide for payment to the State,
on a monthly basis, of such amounts as the Secretary de-
termines to be equivalent to the payments that would have
been made under this title with respect to residents in the
State if the program had not been so approved. Such pay-
ments shall not include any amount attributable to
amounts paid under the medicare program under title
XVIII for residents of the State.
‘‘(b) USE OF FUNDS AND SAVINGS.—
‘‘(1) USE
OF
FUNDS.—A State alternative
health care program may only use funds provided
under subsection (a) for payment of covered bene-
fits, for the administration of the program under
this part, and, if applicable, for the expansion of
benefits or reduction of cost-sharing under para-
graph (2).
‘‘(2) APPLICATION OF SAVINGS.—In the case of
a State for which the aggregate expenditures (de-
scribed in section 2183) for required health services
are less than the applicable total limit specified in
section 2183(a)(2), the State shall provide for such
increase in the scope of benefits (which may include
a reduction in cost-sharing) as will assure the ex-
penditure of funds consistent with paragraph (1).
‘‘SEC. 2186. NO IMPACT ON MEDICARE BENEFITS.
‘‘Nothing in this part shall be construed as affecting
the entitlement of individuals to medicare benefits under
title XVIII.’’.
(b) EFFECTIVE DATE FOR BENEFITS.—Title XXI of
the Social Security Act shall apply to items and services
furnished on or after January 1, 1995.
(c) EXCISE
TAX
ON
PREMIUMS
RECEIVED
ON
MEDIPLAN SUPPLEMENTAL POLICIES WHICH DO NOT
MEET CERTAIN REQUIREMENTS.—
(1) IN GENERAL.—Chapter 47 of the Internal
Revenue Code of 1986 (relating to taxes on group
health plans) is amended by adding at the end there-
of the following new section:
‘‘SEC. 5000A. FAILURE TO SATISFY CERTAIN STANDARDS
FOR MEDIPLAN SUPPLEMENTAL POLICIES.
‘‘(a) IMPOSITION OF TAX.—
‘‘(1) GENERAL RULE.—There is hereby imposed
a tax on any nonqualified Mediplan supplemental
policy.
‘‘(2) 
NONQUALIFIED
MEDIPLAN
SUPPLE-
MENTAL
POLICY
DEFINED.—For purposes of this
section, the term ‘nonqualified Mediplan supple-
mental policy’ means any Mediplan supplemental
policy that—
‘‘(A) is not certified under section 21711
of the Social Security Act, or
‘‘(B) the Secretary of Health and Human
Services determines is providing coverage in vio-
lation of section 2171(a) of such Act.
‘‘(b) AMOUNT OF TAX.—
‘‘(1) IN GENERAL.—The amount of tax imposed
by subsection (a) shall be equal to—
‘‘(A) in the case of an insured Mediplan
supplemental policy, 50 percent of the gross
premiums received by the issuer which are at-
tributable to the period during which the policy
is a nonqualified Mediplan supplemental policy,
and
‘‘(B) in the case of a self-insured Mediplan
supplemental policy, 50 percent of the expendi-
tures under such policy during the period that
the policy is a nonqualified Mediplan supple-
mental policy.
‘‘(2) GROSS PREMIUMS.—For purposes of para-
graph (1)(A), gross premiums shall include any con-
sideration received with respect to any insured
Mediplan supplemental policy.
‘‘(3) CONTROLLED GROUPS.—For purposes of
paragraph (1)—
‘‘(A) CONTROLLED
GROUP
OF
CORPORA-
TIONS.—All corporations which are members of
the same controlled group of corporations shall
be treated as 1 person. For purposes of the pre-
ceding sentence, the term ‘controlled group of
corporations’ has the meaning given to such
term by section 1563(a), except that—
‘‘(i) ‘more than 50 percent’ shall be
substituted for ‘at least 80 percent’ each
place it appears in section 1563(a)(1), and
‘‘(ii) the determination shall be made
without regard to subsections (a)(4) and
(e)(3)(C) of section 1563.
‘‘(B) PARTNERSHIPS, PROPRIETORSHIPS,
ETC., WHICH ARE UNDER COMMON CONTROL.—
Under regulations prescribed by the Secretary,
all trades or business (whether or not incor-
porated) which are under common control shall
be treated as 1 person. The regulations pre-
scribed under this subparagraph shall be based
on principles similar to the principles which
apply in the case of subparagraph (A).
‘‘(c) LIABILITY FOR TAX.—
‘‘(1) INSURED POLICY.—In the case of an in-
sured Mediplan supplemental policy, the issuer of
the insurance or subscriber contract under which
such policy is provided shall be liable for the tax im-
posed by this section.
‘‘(2) SELF-INSURED POLICY.—In the case of a
self-insured policy—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the employer maintaining
such policy shall be liable for the tax imposed
by this section.
‘‘(B) MULTIEMPLOYER POLICIES, ETC.—In
the case of a multiemployer policy or any other
policy not maintained by an employer, the is-
suer of the policy shall be liable for the tax im-
posed by this section.
‘‘(d) INCORPORATION OF DEFINITIONS.—For pur-
poses of this section, the terms ‘Mediplan supplemental
policy’, ‘insured Mediplan supplemental policy’, and ‘self-
insured Mediplan supplemental policy’ have the meanings
given such terms in section 2175 of the Social Security
Act.’’.
(2) NONDEDUCTIBILITY
OF
TAX.—Subsection
(a) of section 275 of such Code (relating to
nondeductibility of certain taxes) is amended by add-
ing at the end thereof the following new paragraph:
‘‘(7) Taxes imposed by section 5000A (failure
to satisfy certain standards for Mediplan supple-
mental policies).’’
(3) CLERICAL AMENDMENTS.—
(A) So much of chapter 47 of such Code
as precedes subsection (a) of section 5000 is
amended to read as follows:
‘‘CHAPTER 47—TAXES RELATING TO
HEALTH BENEFIT PLANS
‘‘Sec. 5000. Contributions to nonconforming large group health
plans.
‘‘Sec. 5000A. Failure to satisfy certain standards for Mediplan
supplemental policies.
‘‘SEC. 5000. CONTRIBUTIONS TO NONCONFORMING LARGE
GROUP HEALTH PLANS.’’
(B) The table of chapters for subtitle D of
such Code is amended by striking the item re-
lating to chapter 47 and inserting the following
new item:
‘‘Chapter 47. Taxes relating to health benefit plans.’’
TITLE II—COST CONTAINMENT
SEC. 201. NATIONAL MEDIPLAN EXPENDITURE BUDGET.
(a) ESTABLISHMENT.—
(1) IN GENERAL.—For each calendar year (be-
ginning with 1995), there is established a national
Mediplan expenditure budget (in the amount speci-
fied under paragraph (2)).
(2) AMOUNT.—
(A) 1995.—The total amount of the na-
tional Mediplan expenditure budgets for 1995 is
equal to the Mediplan budget baseline (deter-
mined under subsection (b) for 1994) multiplied
by the applicable adjustment factor (specified
under subsection (c)) for 1995.
(B) 
SUBSEQUENT
YEARS.—The 
total
amount of such budget for each year after 1995
is equal to the budget determined under this
paragraph for the previous year multiplied by
the applicable adjustment factor (specified
under subsection (c)) for the year involved.
(3) PUBLICATION.—The Secretary of Health
and Human Services shall publish in the Federal
Register and report to the Congress, by not later
than April 1 before each year, the amount of the na-
tional Mediplan expenditure budget for the year.
(b) MEDIPLAN BUDGET BASELINE.—The Secretary
shall compute a Mediplan budget baseline under this sub-
section for 1994 as follows:
(1) 1993 ACTUAL
EXPENDITURES.—The Sec-
retary shall determine (on the basis of the best data
available) the amount of the aggregate Mediplan ex-
penditures (as defined in subsection (d)(1)) during
1993.
(2) PROJECTION
FOR
1994.—The Secretary
shall increase such amount by the Secretary’s esti-
mate of the percentage increase in the aggregate
Mediplan expenditures between the midpoint of 1993
and the midpoint of 1994.
(c) APPLICABLE ADJUSTMENT FACTOR.—The appli-
cable adjustment factor under this subsection for each
year is 1 plus the sum (expressed as a fraction) of—
(1) the average annual percentage increase in
the gross domestic product (in current dollars, as
published by the Secretary of Commerce) during the
5-year period ending with the second previous year;
plus
(2)(A) for 1995, 3.5 percentage points,
(B) for 1996, 2.5 percentage points,
(C) for 1997, 1.5 percentage points,
(D) for 1998, 0.5 percentage point, and
(E) for each year thereafter, 0 percentage
points.
(d) AGGREGATE MEDIPLAN EXPENDITURES DE-
FINED.—In this Act, the term ‘‘aggregate Mediplan ex-
penditures’’ means, with respect to health care services or
a class of services, expenditures made under the medicare
program or under Mediplan with respect to the provision
of such services or class of services, and also includes re-
ceipts of providers with respect to amounts payable as
deductibles, coinsurance, or other amounts for which the
beneficiary is liable with respect to items and services cov-
ered under either such program provided to a beneficiary,
and including payments made under a contract under sec-
tion 1833(a)(1) or section 1876 of the Social Security Act,
or comparable provisions of title XXI of such Act (other
than the portion of such payments that is attributable to
administrative costs).
SEC. 202. CLASSES OF HEALTH CARE SERVICES.
(a) ESTABLISHMENT OF CLASSES.—
(1) IN GENERAL.—
(A) SPECIFIED SERVICES.—In the case of
items and services specified in a subparagraph
under paragraph (2), all of the items and serv-
ices described in that subparagraph shall be
considered to be a ‘‘separate’’ class of health
care services.
(B) OVERLAPPING SERVICES.—Except as
the Secretary may provide, items and services
specified in a subparagraph of paragraph (2)
shall be considered to be excluded from the sub-
sequent subparagraphs of that paragraph.
(2) SPECIFIED HEALTH CARE SERVICES.—The
items and services specified in this paragraph are as
follows:
(A) Inpatient hospital services, other than
mental health services.
(B) Outpatient hospital services and ambu-
latory facility services (including renal dialysis
facility services), other than mental health serv-
ices.
(C) Diagnostic testing services (including
clinical laboratory services and x-ray services).
(D) Physicians’ services and other profes-
sional medical services, other than mental
health services.
(E) Home health services and hospice care.
(F) Rehabilitation services, such as phys-
ical therapy, occupational and speech therapy.
(G) Durable medical equipment and sup-
plies.
(H) Prescription drugs and biologicals and
insulin.
(I) Nursing facility services, including
skilled nursing facility services and intermediate
care facility services, other than mental health
services.
(J) Mental health services.
(K) Other covered services.
(b) PUBLICATION.—
(1) IN
GENERAL.—The Secretary shall pub-
lish—
(A) by not later than April 1, 1994, pro-
posed regulations defining the health care serv-
ices and establishing the classes of services
under this section, and
(B) by not later than June 1, 1994, final
regulations defining the health care services and
establishing such classes.
(2) ITEMS
INCLUDED
IN
REGULATIONS.—In
such regulations, the Secretary shall define—
(A) the class or classes to be established
under subsection (a)(1),
(B) the services to be included within each
class, and
(C) the methods and sources of data for
computing, for purposes of this title, aggregate
Mediplan expenditures for services within the
class.
(3) CHANGES.—
(A) NO CHANGES AUTHORIZED.—After the
Secretary has established classes of services
under paragraph (1)(B), the Secretary may not
change such classes (or the services included in
such classes), except in the case of services not
previously classified. Any such services not pre-
viously classified shall be classified within one
of the classes previously established.
(B) RECOMMENDED
CHANGES.—If the
Secretary determines that a change in the clas-
sification established under this section may be
appropriate, the Secretary shall submit to the
Congress a report proposing such change. The
Secretary shall include in the report an expla-
nation of—
(i) the rationale for such change, and
(ii) the impact of such change on the
total aggregate Mediplan expenditures per-
mitted for classes of services that would be
affected by the change.
(4) COMMISSION REPORTS.—
(A) INITIAL
REPORTS.—With respect to
the establishment of classes of services under
this section, each applicable Commission (as de-
fined in section 208(1))—
(i) by not later than March 1, 1994,
shall report its recommendations to the
Secretary and Congress concerning such
classes, and
(ii) by not later than May 1, 1994,
shall report to the Secretary and the Con-
gress its comments concerning the classi-
fication proposed by the Secretary under
paragraph (1)(A).
(B) PERIODIC REPORTS.—Each applicable
Commission shall periodically report to Con-
gress on changes in the system of classification
under this section that should be made to pro-
mote the more efficient provision of medically
appropriate health care services.
SEC. 203. ALLOCATION OF HEALTH BUDGET BY CLASS OF
SERVICE.
(a) ALLOCATION.—
(1) IN GENERAL.—The Secretary shall allocate
the national Mediplan expenditure budget under sec-
tion 201 for a year among classes of services speci-
fied under section 202.
(2) PROPORTIONAL
ALLOCATION
BASED
ON
HISTORICAL PROJECTED EXPENDITURES.—The per-
cent of the budget allocated to each class for a year
shall be equal to the quotient (expressed as a per-
centage) of—
(A) the historical projected Mediplan ex-
penditures for the class for the year (as deter-
mined under subsection (b)(1)), divided by
100
(B) the sum of such historical projected
Mediplan expenditures for all the classes for the
year.
(3) PUBLICATION.—
(A) IN GENERAL.—The Secretary shall, in
conjunction with the publication of budget
under section 201(a)(3) for a year and by not
later than April 1 before the year, publish in
the Federal Register and report to the Congress
the allocation of the budget among the classes
of services under this subsection.
(B) EXCEPTION
FOR 1995.—For 1995,
the Secretary shall publish and report the allo-
cation of the budget among the classes of
services under this subsection not later than
August 1, 1994.
(b) HISTORICAL PROJECTED EXPENDITURES.—
(1) DETERMINATION.—For purposes of sub-
section (a)—
(A) FOR
1994.—The historical projected
Mediplan expenditures for a class of services for
1994 is equal to the portion of the amount of
aggregate Mediplan expenditures during 1993
(as determined under section 201(b)(1)) which
is attributable to the class of services, multi-
101
plied by the trend factor (described in para-
graph (2)) for the class for 1994.
(B) SUBSEQUENT YEARS.—The historical
projected Mediplan expenditures for a class of
services for a year after 1994 is equal to the
amount of the allocation for the class under
subsection (a)(2) for the preceding year multi-
plied by the trend factor (described in subpara-
graph (B)) for the class for the year involved.
(2) TREND
FACTOR.—In paragraph (1), the
‘‘trend factor’’, for a class of services, is 1 plus the
average annual rate of increase in aggregate
Mediplan expenditures for the class of services dur-
ing the 5-year period ending with 1993.
(3) PUBLICATION
OF
TREND
FACTORS.—The
Secretary shall publish, by not later than August 1,
1994, the trend factors for the different classes of
services.
(c) REVIEW AND CHANGES IN ALLOCATION.—
(1) IN GENERAL.—
(A) NO
ADMINISTRATIVE
AUTHORITY
TO
CHANGE.—Except as specifically provided by
law enacted after the enactment of this Act, the
Secretary has no authority to change the alloca-
103
(B) changes in the patterns and practices
relating to health care delivery found to be ap-
propriate,
(C) changes in the distribution of health
care services, and
(D) the special health care needs of under-
served rural and inner city populations.
SEC. 204. NATIONAL HEALTH EXPENDITURES REPORTING
SYSTEM.
(a) IN GENERAL.—The Secretary shall establish a
national health expenditures reporting system (in this sec-
tion referred to as the ‘‘system’’) for purposes of—
(1) establishing the national health expendi-
tures budget,
(2) allocating the health budgets among classes
of services,
(3) determining payment rates, and
(4) monitoring expenditures in States which
have elections in effect under part G.
(b) INFORMATION REPORTING.—
(1) BY PROVIDER.—Under the system, provid-
ers of health care services shall report (beginning
not later than January 1, 1995) such information
relating to the provision of health care services (in-
cluding the volume and receipts for such services) in
104
such form and manner (including the use of elec-
tronic transmission), by such classification, and at
such periodic intervals, as the Secretary shall specify
in regulation.
(2) USE OF REPORTING MECHANISMS.—To the
maximum extent practicable and appropriate, report-
ing under such system shall be done through report-
ing mechanisms (such as uniform hospital reports
provided under section 2255 of the Social Security
Act) and using data bases otherwise in use.
(3) USE
OF
SURVEYS.—The Secretary may,
where appropriate, provide for the collection of infor-
mation under the system through surveys of a sam-
ple of health care providers or with respect to a sam-
ple of information with respect to such providers.
(4) CONFIDENTIALITY.—Information gathered
pursuant to the authority provided under this sec-
tion shall not be disclosed in a manner that identi-
fies individual providers of services.
(5) TRANSITION.—Before January 1, 1995, for
purposes of this title, the Secretary may use such
other data collection and estimation techniques as
may be appropriate for purposes described in sub-
section (a).
105
(c) ENFORCEMENT.—If a provider of health services
is required, under the system under this section, to report
information and refuses, after being requested by the Sec-
retary, to provide the information required, or deliberately
provides information that is false, the Secretary may im-
pose a civil money penalty of not to exceed $10,000 for
each such refusal or provision of false information. The
provisions of section 1128A of the Social Security Act
(other than subsections (a) and (b)) shall apply to civil
money penalties under the previous sentence in the same
manner as such provisions apply to a penalty or proceed-
ing under section 1128A(a) of such Act.
(d) INCLUSION OF HEALTH MAINTENANCE ORGANI-
ZATIONS.—In this section, the term ‘‘provider of health
care services’’ includes health maintenance organizations.
SEC. 205. CONFORMING MEDICARE PAYMENT RATES TO
MEDIPLAN HEALTH EXPENDITURE ALLOCA-
TIONS; TRANSITION.
(a) IN GENERAL.—Notwithstanding any other provi-
sion of law, the Secretary shall substitute for the payment
rate or allowance (or, in the absence of such a rate, pay-
ment amount) otherwise applied under the medicare pro-
gram (and any maximum charge limits or payment limits
imposed under such program) for any health care service
106
in a class of services the amount specified by the Secretary
under subsection (b) for the class for the year involved.
(b) AMOUNT.—
(1) IN
GENERAL.—At the same time as the
Secretary establishes payment rates under section
2141 of the Social Security Act, the Secretary shall
compute and publish, for each class of services for
each year, an amount under this subsection deter-
mined as follows:
(A) FIRST YEAR.—During the first year in
which benefits are available under title XXI of
the Social Security Act, the amount shall be the
sum of—
(i) 20 percent of the payment amount
established under such title for the class of
services, and
(ii) 80 percent of the amount estab-
lished under title XVIII of such Act.
(B) SECOND
YEAR.—During the second
year in which benefits are available under title
XXI of the Social Security Act, the amount
shall be the sum of—
(i) 40 percent of the payment amount
established under such title for the class of
services, and
107
(ii) 60 percent of the amount estab-
lished under title XVIII of such Act.
(C) THIRD YEAR.—During the third year
in which benefits are available under title XXI
of the Social Security Act, the amount shall be
the sum of—
(i) 60 percent of the payment amount
established under such title for the class of
services, and
(ii) 40 percent of the amount estab-
lished under title XVIII of such Act.
(D) FOURTH
YEAR.—During the fourth
year in which benefits are available under title
XXI of the Social Security Act, the amount
shall be the sum of—
(i) 80 percent of the payment amount
established under such title for the class of
services, and
(ii) 20 percent of the amount estab-
lished under title XVIII of such Act.
(E) FIFTH
AND
SUBSEQUENT
YEARS.—
During the fifth year in which benefits are
available under title XXI of the Social Security
Act, and any subsequent year the amount shall
be the 100 percent of the payment amount es-