202
Title II, Subtitle C
‘‘SEC. 4980D. FAILURE TO MEET REQUIREMENTS FOR
LONG-TERM CARE INSURANCE POLICIES.
‘‘(a) GENERAL RULE.—There is hereby imposed on
any person failing to meet the requirements of subsection
(c) or (d) a tax in the amount determined under sub-
section (b).
‘‘(b) AMOUNT OF TAX.—
‘‘(1) IN GENERAL.—The amount of the tax im-
posed by subsection (a) shall be $100 per policy for
each day any requirements of subsection (c), (d), or
(e) are not met with respect to each long-term care
insurance policy.
‘‘(2) WAIVER.—In the case of a failure which is
due to reasonable cause and not to willful neglect,
the Secretary may waive part or all of the tax im-
posed by subsection (a) to the extent that payment
of the tax would be excessive relative to the failure
involved.
‘‘(c) ADDITIONAL RESPONSIBILITIES.—The require-
ments of this subsection are as follows:
‘‘(1) REQUIREMENTS OF MODEL PROVISIONS.—
‘‘(A) MODEL REGULATION.—The following
requirements of the model regulation must be
met:
‘‘(i) Section 13 (relating to application
forms and replacement coverage).
203
Title II, Subtitle C
‘‘(ii) Section 14 (relating to reporting
requirements), except that the issuer shall
also report at least annually the number of
claims denied during the reporting period
for each class of business (expended as a
percentage of claims denied), other than
claims denied for failure to meet the wait-
ing period or because of any applicable
pre-existing condition.
‘‘(iii) Section 20 (relating to filing re-
quirements for marketing).
‘‘(iv) Section 21 (relating to standards
for marketing), including inaccurate com-
pletion of medical histories, other than sec-
tion 21C(1) and 21C(6) thereof, except
that—
‘‘(I) in addition to such require-
ments, no person shall, in selling or
offering to sell a long-term care insur-
ance policy, misrepresent a material
fact; and
‘‘(II) no such requirements shall
include a requirement to inquire or
identify whether a prospective appli-
cant or enrollee for long-term care in-
204
Title II, Subtitle C
surance has accident and sickness in-
surance.
‘‘(v) Section 22 (relating to appro-
priateness of recommended purchase).
‘‘(vi) Section 24 (relating to standard
format outline of coverage).
‘‘(vii) Section 25 (relating to require-
ment to deliver shopper’s guide).
‘‘(B) MODEL ACT.—The following require-
ments of the model Act must be met:
‘‘(i) Section 6F (relating to right to
return), except that such section shall also
apply to denials of applications and any re-
fund shall be made within 30 days of the
return or denial.
‘‘(ii) Section 6G (relating to outline of
coverage).
‘‘(iii) Section 6H (relating to require-
ments for certificates under group plans).
‘‘(iv) Section 6I (relating to policy
summary).
‘‘(v) Section 6J (relating to monthly
reports on accelerated death benefits).
‘‘(vi) Section 7 (relating to incontest-
ability period).
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Title II, Subtitle C
‘‘(C) DEFINITIONS.—For purposes of this
paragraph, the terms ‘model regulation’ and
‘model Act’ have the meanings given such terms
by section 7702B(h)(2)(B).
‘‘(2) DELIVERY OF POLICY.—If an application
for a long-term care insurance policy (or for a cer-
tificate under a group long-term care insurance pol-
icy) is approved, the issuer shall deliver to the appli-
cant (or policyholder or certificate-holder) the policy
(or certificate) of insurance not later than 30 days
after the date of the approval.
‘‘(3) INFORMATION ON DENIALS OF CLAIMS.—
If a claim under a long-term care insurance policy
is denied, the issuer shall, within 60 days of the date
of a written request by the policyholder or certifi-
cate-holder (or representative)—
‘‘(A) provide a written explanation of the
reasons for the denial, and
‘‘(B) make available all information di-
rectly relating to such denial.
‘‘(d) DISCLOSURE.—The requirements of this sub-
section are met if either of the following statements,
whichever is applicable, is prominently displayed on the
front page of any long-term care insurance policy and in
206
Title II, Subtitle C
the outline of coverage required under subsection
(c)(1)(B)(ii):
‘‘(1) A statement that: ‘This policy is intended
to be a qualified long-term care insurance contract
under section 7702B(b) of the Internal Revenue
Code of 1986.’.
‘‘(2) A statement that: ‘This policy is not in-
tended to be a qualified long-term care insurance
contract under section 7702B(b) of the Internal
Revenue Code of 1986.’.
‘‘(e) LONG-TERM CARE INSURANCE POLICY DE-
FINED.—For purposes of this section, the term ‘long-term
care insurance policy’ means any product which is adver-
tised, marketed, or offered as long-term care insurance.’’
(b) CONFORMING AMENDMENT.—The table of sec-
tions for chapter 43, as amended by section 2403, is
amended by adding at the end the following new item:
‘‘Sec. 4980D. Failure to meet requirements for long-term care in-
surance policies.’’
SEC. 2303. COORDINATION WITH STATE REQUIREMENTS.
Nothing in this subtitle shall be construed as prevent-
ing a State from applying standards that provide greater
protection of policyholders of long-term care insurance
policies (as defined in section 4980D(e) of the Internal
Revenue Code of 1986).
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Title II, Subtitle D
SEC. 2304. UNIFORM LANGUAGE AND DEFINITIONS.
(a) IN GENERAL.—The National Association of In-
surance Commissioners shall not later than January 1,
1995, promulgate standards for the use of uniform lan-
guage and definitions in long-term care insurance policies
(as defined in section 4980D(e) of the Internal Revenue
Code 1986).
(b) VARIATIONS.—Standards under subsection (a)
may permit the use of nonuniform language to the extent
required to take into account differences among States in
the licensing of nursing facilities and other providers of
long-term care.
SEC. 2305. EFFECTIVE DATES.
(a) SECTION 2301.—The amendments made by sec-
tion 2301 shall apply to contracts issued after December
31, 1994. The provisions of section 2203(c) of this Act
shall apply to such contracts.
(b) SECTION 2302.—The amendments made by sec-
tion 2302 shall apply to actions taken after December 31,
1994.
Subtitle D—Enforcement
Provisions
PART I—GENERAL PROVISIONS
SEC. 2401. UNIVERSAL COVERAGE.
(a) REQUIRED REPORTING.—
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Title II, Subtitle D
(1) IN GENERAL.—Section 1144 of the Social
Security Act (42 U.S.C. 1320b–14) is amended to
read as follows:
‘‘HEALTH INSURANCE COVERAGE DATA BANK
‘‘SEC. 1144. (a) ESTABLISHMENT OF DATA BANK.—
The Secretary shall establish a Health Insurance Coverage
Data Bank (hereafter in this section referred to as the
‘Data Bank’) to—
‘‘(1) further the purposes of subtitle F of title
I of the Health Equity and Access Reform Today
Act of 1993,
‘‘(2) further the purposes of section 1862(b) in
the identification of, and collection from, third par-
ties responsible for payment for health care items
and services furnished to medicare beneficiaries, and
‘‘(3) assist in the identification of, and the col-
lection from, third parties responsible for the reim-
bursement of costs incurred by any State plan under
title XIX with respect to medicaid beneficiaries,
upon request by the State agency described in sec-
tion 1902(a)(5) administering such plan.
‘‘(b) INFORMATION IN DATA BANK.—
‘‘(1) IN GENERAL.—The Data Bank shall con-
tain information obtained pursuant to section
6103(l)(12) of the Internal Revenue Code of 1986
and subsection (c).
209
Title II, Subtitle D
‘‘(2) DISCLOSURE OF INFORMATION IN DATA
BANK.—The Secretary is authorized until September
30, 1998—
‘‘(A) (subject to the restriction in subpara-
graph (D)(i) of section 6103(l)(12) of the Inter-
nal Revenue Code of 1986) to disclose any in-
formation in the Data Bank obtained pursuant
to such section solely for the purposes of such
section,
‘‘(B) (subject to the restriction in sub-
section (c)(5)) to disclose any other information
in the Data Bank to any State agency described
in section 1902(a)(5), employer, or qualified
health plan solely for the purposes described in
subsection (a), and
‘‘(C) to disclose any other information in
the Data Bank to the Secretary of the Treasury
for the purpose of carrying out the purposes of
section 5000A of the Internal Revenue Code of
1986.
‘‘(c) REQUIREMENT TO REPORT INFORMATION.—
‘‘(1) REPORTING REQUIREMENT.—
‘‘(A) IN
GENERAL.—Any employer de-
scribed in paragraph (2), any qualified health
plan in the case of individuals enrolling in non-
210
Title II, Subtitle D
employer-provided plans, and any governmental
or nongovernmental official responsible for any
equivalent health care program (as defined in
section 1601(7) of the Health Equity and Ac-
cess Reform Today Act of 1993 shall report to
the Secretary (in such form and manner as the
Secretary determines will minimize the burden
of such reporting) with respect to each individ-
ual the information required under paragraph
(3) for each applicable calendar year.
‘‘(B) SPECIAL
RULE.—To the extent a
qualified health plan provides information re-
quired under paragraph (3) in a form and man-
ner specified by the Secretary (in consultation
with the Secretary of Labor) on behalf of an
employer in accordance with section 101(f) of
the Employee Retirement Income Security Act
of 1974, the employer has complied with the re-
porting requirement under subparagraph (A)
with respect to the reporting of such informa-
tion.
‘‘(C) APPLICABLE YEAR.—For purposes of
this paragraph, the term ‘applicable calendar
year’ means any calendar year beginning after
1994, and before the calendar year with respect
211
Title II, Subtitle D
to which the Secretary makes a determination
that the health care data interchange system
established under subtitle B of title III of the
Health Equity and Access Reform Today Act of
1993 is providing the information necessary to
meet the purposes described in subsection (a).
‘‘(2) EMPLOYER DESCRIBED.—
‘‘(A) IN
GENERAL.—An employer is de-
scribed in this paragraph if such employer has,
or contributes to, a qualified health plan, with
respect to which at least 1 employee of such
employer is an electing individual.
‘‘(B) ELECTING
INDIVIDUAL.—For pur-
poses of this paragraph, the term ‘electing indi-
vidual’ means an individual associated or for-
merly associated with the employer in a busi-
ness relationship who elects coverage under the
employer’s qualified health plan.
‘‘(C) CERTAIN INDIVIDUALS EXCLUDED.—
For purposes of this paragraph, an individual
providing 
service 
referred 
to 
in 
section
3121(a)(7)(B) of the Internal Revenue Code of
1986 shall not be considered an employee or
electing individual with respect to an employer.
212
Title II, Subtitle D
‘‘(3) INFORMATION REQUIRED.—For purposes
of paragraph (1), each employer, qualified health
plan, or Secretary shall provide the following infor-
mation:
‘‘(A) The name and TIN of the individual.
‘‘(B) The type of qualified health plan cov-
erage (single or family) elected by the individ-
ual.
‘‘(C) The name, address, and identifying
number of the qualified health plan elected by
such individual.
‘‘(D) The name and TIN of each other in-
dividual covered under the qualified health plan
pursuant to such election.
‘‘(E) The period during which such cov-
erage is elected.
‘‘(F) The name, address, and TIN of the
employer or qualified health plan.
‘‘(4) TIME OF FILING.—For purposes of deter-
mining the date for filing the report under para-
graph (1), such report shall be treated as a state-
ment described in section 6051(d) of the Internal
Revenue Code of 1986.
‘‘(5) LIMITS ON DISCLOSURE OF INFORMATION
REPORTED.—
213
Title II, Subtitle D
‘‘(A) IN GENERAL.—The disclosure of the
information reported under paragraph (1) shall
be restricted by the Secretary under rules simi-
lar to the rules of subsections (a) and (p) of
section 6103 of the Internal Revenue Code of
1986.
‘‘(B) PENALTY FOR UNAUTHORIZED WILL-
FUL DISCLOSURE OF INFORMATION.—The un-
authorized disclosure of any information re-
ported under paragraph (1) shall be subject to
the penalty described in paragraph (1), (2), (3),
or (4) of section 7213(a) of such Code.
‘‘(6) PENALTY FOR FAILURE TO REPORT.—In
the case of the failure of an employer (other than a
Federal or other governmental entity) or a qualified
health plan to report under paragraph (1)(A) with
respect to each individual, the Secretary shall impose
a penalty as described in part II of subchapter B of
chapter 68 of the Internal Revenue Code of 1986.
‘‘(d) FEES FOR DATA BANK SERVICES.—The Sec-
retary shall establish fees for services provided under this
section which shall remain available, without fiscal year
limitation, to the Secretary to cover the administrative
costs to the Data Bank of providing such services.
‘‘(e) DEFINITIONS.—In this section:
214
Title II, Subtitle D
‘‘(1) 
MEDICARE
BENEFICIARY.—The 
term
‘medicare beneficiary’ means an individual entitled
to benefits under part A, or enrolled under part B,
of title XVIII, but does not include such an individ-
ual enrolled in part A under section 1818.
‘‘(2) MEDICAID BENEFICIARY.—The term ‘med-
icaid beneficiary’ means an individual entitled to
benefits under a State plan for medical assistance
under title XIX (including a State plan operating
under a statewide waiver under section 1115).
‘‘(3) QUALIFIED
HEALTH
PLAN.—The term
‘qualified health plan’ shall have the meaning given
to such term by section 1601(20) of the Health Eq-
uity and Access Reform Today Act of 1993.
‘‘(4) TIN.—The term ‘TIN’ shall have the
meaning given to such term by section 7701(a)(41)
of such Code.’’.
(2) MEDICAID
CONFORMING
AMENDMENTS.—
Section 1902(a)(25)(A)(i) of the Social Security Act
(42 U.S.C. 1396a(a)(25)(A)(i)) is amended by strik-
ing ‘‘Medicare and Medicaid Coverage Data Bank’’
and inserting ‘‘Health Insurance Coverage Data
Bank’’.
(3) CONFORMING
AMENDMENTS
TO
ERISA.—
Section 101(f) of the Employee Retirement Income
215
Title II, Subtitle D
Security Act of 1974 (29 U.S.C. 1021(f)) is amend-
ed—
(A) by striking ‘‘(as added by section
13581 of the Omnibus Budget Reconciliation
Act of 1993)’’ in paragraph (1)(A), and
(B) by striking ‘‘Medicare and Medicaid
Coverage Data Bank’’ in paragraph (1)(A)(i)
and inserting ‘‘Health Insurance Coverage Data
Bank’’,
(4) EFFECTIVE DATE.—The amendments made
by this subsection shall take effect on and after the
first January 1 following the deadline specified in
section 1401(c)(2) of this Act.
(b) ENFORCEMENT.—
(1) IN GENERAL.—Chapter 47 (relating to ex-
cise taxes on qualified pension, etc. plans) is amend-
ed by inserting after section 5000 the following new
section:
‘‘SEC. 5000A. FAILURE OF INDIVIDUALS WITH RESPECT TO
HEALTH INSURANCE.
‘‘(a) GENERAL RULE.—There is hereby imposed a
tax on the failure of any individual to comply with the
requirements of section 1501 of the Health Equity and
Access Reform Today Act of 1993.
216
Title II, Subtitle D
‘‘(b) AMOUNT OF TAX.—The amount of tax imposed
by subsection (a) with respect to any calendar year shall
be equal to 120 percent of the applicable dollar limit for
such year for such individual (within the meaning of sec-
tion 91(b)(2) and determined on an annual basis).
‘‘(c) LIMITATION ON TAX.—
‘‘(1) TAX
NOT
TO
APPLY
WHERE
FAILURES
CORRECTED WITHIN 30 DAYS.—No tax shall be im-
posed by subsection (a) with respect to any failure
if—
‘‘(A) such failure was due to reasonable
cause and not to willful neglect, and
‘‘(B) such failure is corrected during the
30-day period (or such period as the Secretary
may determine appropriate) beginning on the
1st date any of the individuals on whom the tax
is imposed knew, or exercising reasonable dili-
gence would have known, that such failure ex-
isted.
‘‘(2) WAIVER BY SECRETARY.—In the case of a
failure which is due to reasonable cause and not to
willful neglect, the Secretary may waive part or all
of the tax imposed by subsection (a) to the extent
that the payment of such tax would be excessive rel-
ative to the failure involved.
217
Title II, Subtitle D
‘‘(3) LOW-ASSISTANCE
EXEMPTION.—No tax
shall be imposed by subsection (a) on any individual
who would have received a voucher for the calendar
year under section 1003, but for a decrease in the
phase-in eligibility percentage provided under sub-
section (d)(5)(B) thereof.’’.
(2) CLERICAL AMENDMENT.—The table of sec-
tions for such chapter 47 is amended by adding at
the end the following new item:
‘‘Sec. 5000A. Failure of individuals with respect to health insur-
ance.’’.
(3) EFFECTIVE DATE.—The amendments made
by this section shall take effect on January 1, 2005.
SEC. 2402. ROLE OF EMPLOYERS AND LARGE EMPLOYER
PLANS.
(a) IN GENERAL.—Chapter 47 (relating to excise
taxes on qualified pension, etc. plans), as amended by sec-
tion 2401(b)(1), is amended by inserting after section
5000A the following new section:
‘‘SEC. 5000B. FAILURE OF EMPLOYERS OR LARGE EM-
PLOYER PLANS WITH RESPECT TO HEALTH
INSURANCE.
‘‘(a) GENERAL RULE.—There is hereby imposed a
tax on the failure of any person or plan to comply with
the requirements of section 1004 or section 1201 of the
Health Equity and Access Reform Today Act of 1993 with
218
Title II, Subtitle D
respect to any employee of the person or enrollee of the
plan.
‘‘(b) AMOUNT OF TAX.—
‘‘(1) IN GENERAL.—The amount of the tax im-
posed by subsection (a) on any failure with respect
to an employee or enrollee shall be $100 for each
day in the noncompliance period with respect to such
failure.
‘‘(2) NONCOMPLIANCE PERIOD.—For purposes
of this section, the term ‘noncompliance period’
means, with respect to any failure, the period—
‘‘(A) beginning on the date such failure
first occurs, and
‘‘(B) ending on the date such failure is
corrected.
‘‘(3) CORRECTION.—A failure of a person or
plan to comply with the requirements of section
1004 or section 1201 of the Health Equity and Ac-
cess Reform Today Act of 1993 with respect to any
employee of the person or enrollee of the plan shall
be treated as corrected if—
‘‘(A) such failure is retroactively undone to
the extent possible, and
‘‘(B) the employee or enrollee is placed in
a financial position which is as good as such
219
Title II, Subtitle D
employee or enrollee would have been in had
such failure not occurred.
‘‘(c) LIMITATIONS ON AMOUNT OF TAX.—
‘‘(1) TAX NOT TO APPLY TO FAILURES COR-
RECTED WITHIN 30 DAYS.—No tax shall be imposed
by subsection (a) on any failure if—
‘‘(A) such failure was due to reasonable
cause and not to willful neglect, and
‘‘(B) such failure is corrected during the
30-day period (or such period as the Secretary
may determine appropriate) beginning on the
first date any of the persons referred to in sub-
section (d) knew, or exercising reasonable dili-
gence would have known, that such failure ex-
isted.
‘‘(2) WAIVER BY SECRETARY.—In the case of a
failure which is due to reasonable cause and not to
willful neglect, the Secretary may waive part or all
of the tax imposed by subsection (a) to the extent
that the payment of such tax would be excessive rel-
ative to the failure involved.
‘‘(d) LIABILITY FOR TAX.—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, the following shall be liable
for the tax imposed by subsection (a) on a failure:
220
Title II, Subtitle D
‘‘(A) In the case of a health plan other
than a multiemployer plan, the employer.
‘‘(B) In the case of a multiemployer plan,
the plan.
‘‘(C) Each person who is responsible (other
than in a capacity as an employee) for admin-
istering or providing benefits under the health
plan and whose act or failure to act caused (in
whole or in part) the failure.
‘‘(2) SPECIAL RULES FOR PERSONS DESCRIBED
IN PARAGRAPH (1)(C).—A person described in sub-
paragraph (C) (and not in subparagraphs (A) and
(B)) of paragraph (1) shall be liable for the tax im-
posed by subsection (a) on any failure only if such
person assumed (under a legally enforceable written
agreement) responsibility for the performance of the
act to which the failure relates.’’
(b) CLERICAL AMENDMENT.—The table of sections
for chapter 47, as amended by section 2401(b)(2), is
amended by adding at the end the following new item:
‘‘Sec. 5000B. Failure of employers and large employer plans with
respect to health insurance.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on or after the first January
1 following the deadline specified in section 1401(c)(2).
221
Title II, Subtitle D
SEC. 2403. ENFORCEMENT BEFORE STATE CERTIFICATION
PROGRAMS OR STANDARDS IN PLACE.
(a) ENFORCEMENT
BY EXCISE TAX
FOR INSUR-
ERS.—Chapter 43 (relating to qualified pension, etc.,
plans) is amended by adding at the end the following new
section:
‘‘SEC. 4980C. FAILURE OF INSURER OR LARGE EMPLOYER
PLAN TO COMPLY WITH CERTAIN PLAN
STANDARDS.
‘‘(a) IMPOSITION OF TAX.—
‘‘(1) IN GENERAL.—There is hereby imposed a
tax on the failure of an insurer or of a sponsor of
a large employer plan to comply with the require-
ments applicable to such insurer or plan under sec-
tion 1103(c) or subparagraph (A) or (B) of section
1202(a)(2) of the Health Equity and Access Reform
Today Act of 1993.
‘‘(2) EXCEPTION.—Paragraph (1) shall not
apply to a failure by an insurer in a State if the Sec-
retary of Health and Human Services determines
that the State has in effect a regulatory enforcement
mechanism that provides adequate sanctions with re-
spect to such a failure by such an insurer.
‘‘(b) AMOUNT OF TAX.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
the amount of the tax imposed by subsection (a)
222
Title II, Subtitle D
shall be $100 for each day during which such failure
persists for each individual to which such failure re-
lates. A rule similar to the rule of section
4980B(b)(3) shall apply for purposes of this section.
‘‘(2) LIMITATION.—The amount of the tax im-
posed by subsection (a) for an insurer or plan spon-
sor with respect to a health plan shall not exceed 25
percent of the amounts received under the plan for
coverage during the period such failure persists.
‘‘(c) LIABILITY FOR TAX.—The tax imposed by this
section shall be paid by the insurer or plan sponsor.
‘‘(d) LIMITATIONS ON AMOUNT OF TAX.—
‘‘(1) TAX NOT TO APPLY TO FAILURES COR-
RECTED WITHIN 30 DAYS.—No tax shall be imposed
by subsection (a) on any failure if—
‘‘(A) such failure was due to reasonable
cause and not to willful neglect, and
‘‘(B) such failure is corrected during the
30-day period (or such period as the Secretary
may determine appropriate) beginning on the
first date the insurer or plan sponsor knows, or
exercising reasonable diligence could have
known, that such failure existed.
‘‘(2) WAIVER BY SECRETARY.—In the case of a
failure which is due to reasonable cause and not to
223
Title II, Subtitle D
willful neglect, the Secretary may waive part or all
of the tax imposed by subsection (a) to the extent
that the payment of such tax would be excessive rel-
ative to the failure involved.
‘‘(e) DEFINITIONS.—For purposes of this section, the
terms ‘health plan’, ‘insurer’, and ‘self-insured health
plan’ have the meanings given such terms in section 1601
of the Health Equity and Access Reform Today Act of
1993.’’
(b) CLERICAL AMENDMENT.—The table of sections
for chapter 43 is amended by adding at the end the follow-
ing new item:
‘‘Sec. 4980C. Failure of insurer or large employer plan to comply
with certain plan standards.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
SEC. 2404. DISCLOSURE OF INFORMATION REGARDING
RECONCILIATION OF ASSISTANCE.
Paragraph (7) of section 6103(l) (relating to disclo-
sure of return information to Federal, State, and local
agencies administering certain programs under the Social
Security Act, the Food Stamp Act of 1977, or title 38,
United States Code, or certain housing assistance pro-
grams) is amended—
224
Title II, Subtitle D
(1) by striking the semicolon at the end of
clauses (i), (ii), (iii), (iv), (v), and (vi) and inserting
a period,
(2) by striking ‘‘; and’’ at the end of the matter
following clause (viii) and inserting a period, and
(3) by adding at the end (following the matter
following clause (ix)) the following new clause:
‘‘(x) 
voucher 
assistance 
provided
under section 1003 of the Health Equity
and Access Reform Today Act of 1993.’’
PART II—OTHER ENFORCEMENT PROVISIONS
SEC. 2411. CONFORMING ERISA CHANGES REGARDING EN-
FORCEMENT OF EMPLOYER FAILURES.
(a) IN GENERAL.—Section 502(a) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1132(a)) is amended by striking ‘‘or’’ at the end of para-
graph (5), by striking the period at the end of paragraph
(6) and inserting ‘‘; or’’, and by inserting at the end the
following new paragraph:
‘‘(7) by an employee of any person, or by the
Secretary—
‘‘(A) for the relief provided in subsection
(c)(4), or
‘‘(B) to enjoin any act or practice which
violates section 1004 of the Health Equity and
225
Title II, Subtitle D
Access Reform Today Act of 1993, or to obtain
other appropriate equitable relief to redress
such violation or to enforce the provisions of
such section.’’
(b) CIVIL PENALTY.—Section 502(c) of such Act (29
U.S.C. 1132(c)) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(4)(A) The Secretary may assess a civil pen-
alty against any employer who fails to meet the re-
quirements of section 1004 of the Health Equity
and Access Reform Today Act of 1993 in an amount
not to exceed $100 per day from the date of the fail-
ure. Such penalty shall not be assessed if a tax has
been imposed under section 5000B with respect to
the failure.
‘‘(B) No penalty shall be imposed under sub-
paragraph (A) on any failure during any period for
which it is established to the satisfaction of the Sec-
retary that the employer did not know, or exercising
reasonable diligence would not have known, that
such failure existed.
‘‘(C) No penalty shall be imposed by subpara-
graph (A) on any failure if—
‘‘(i) such failure was due to reasonable
cause and not to willful neglect, and
226
Title II, Subtitle D
‘‘(ii) such failure is corrected during the
30-day period beginning on the first date the
employer knew, or exercising reasonable dili-
gence would have known, that such failure ex-
isted.
‘‘(D) In the case of a failure which is due to
reasonable cause and not to willful neglect, the Sec-
retary may waive part or all of the penalty imposed
by subparagraph (A) to the extent that the payment
of such penalty would be excessive relative to the
failure involved.’’
SEC. 2412. EQUITABLE RELIEF REGARDING INSURERS FAIL-
ING TO COMPLY WITH QUALIFIED HEALTH
PLAN STANDARDS.
(a) IN GENERAL.—The Secretary of Labor may—
(1) assess a civil penalty against any insurer
who fails to comply with the requirements applicable
to the insurer under subtitle B of title I of the
Health Equity and Access Reform Today Act of
1993 in an amount not to exceed $100 for each day
during which the failure persists, except that the ag-
gregate amount of the penalty with respect to any
failure shall not exceed 25 percent of the amounts
received under the plan during the period during
which the failure persists, or
227
Title II, Subtitle D
(2) bring a civil action—
(A) to enjoin an insurer from any such
failure, or
(B) to obtain other appropriate equitable
relief to address any such failure or to enforce
the provisions of such subtitle.
(b) EXCEPTIONS TO PENALTY.—
(1) IN GENERAL.—The provisions of subpara-
graphs (B), (C), and (D) of section 502(c)(4) of the
Employee Retirement Income Security Act of 1974
shall apply to any failure to which subsection (a)(1)
applies.
(2) EXCEPTION.—Subsection (a)(1) shall not
apply to a failure by an insurer in a State if the Sec-
retary of Health and Human Services determines
that the State has in effect a regulatory enforcement
mechanism that provides adequate sanctions with re-
spect to such a failure by such an insurer.
(3) COORDINATION
WITH
TAX.—No penalty
shall be assessed under subsection (a)(1) if a tax has
been imposed under section 5000C with respect to
the failure.
(c) APPLICABLE RULES.—The provisions of part 5
of title I of the Employee Retirement Income Security Act
of 1974 shall apply to the extent necessary to effectively
228
Title III, Subtitle A
carry out, and enforce the requirements under, subsection
(a).
TITLE III—QUALITY ASSURANCE
AND SIMPLIFICATION
Subtitle A—Quality Assurance
PART I—STANDARDS AND MEASUREMENTS OF
QUALITY
SEC. 3001. STANDARDS FOR QUALITY ASSURANCE AND
PERFORMANCE MEASURES PROGRAMS.
(a) DEVELOPMENT.—The Secretary, in consultation
with relevant agencies (such as the Agency for Health
Care Policy and Research and other agencies determined
appropriate by the Secretary) and recognized private enti-
ties engaged in quality assurance activities related to
health insurance (such as the Joint Commission on Ac-
creditation of Health Care Organizations and the National
Committee for Quality Assurance), shall develop and pub-
lish in the Federal Register standards that quality assur-
ance programs must comply with. Such standards shall
apply to all facilities, including network providers. Such
standards may be annually modified if determined appro-
priate by the Secretary.
(b) QUALITY DATA.—
(1) REQUIREMENT.—The Secretary shall en-
sure that the standards developed under subsection
229
Title III, Subtitle A
(a) contain a requirement that a qualified health
plan annually provide quality data, including infor-
mation concerning treatment outcomes and effective-
ness under the plan, to the Secretary, the relevant
HCCA and to individuals enrolled in a qualified
health plan.
(2) FORMAT.—The Secretary shall develop and
publish in the Federal Register a quality data for-
mat that a qualified health plan must adhere to in
providing quality data as required under paragraph
(1).
(c) PERFORMANCE MEASURES.—In developing the
standards under subsection (a), the Secretary shall ensure
that appropriate performance measures are established.
Such measures shall be utilized by the Health Care Data
Panel established under section 3214 as the basis upon
which the specifications and requirements for information
under subtitle B of this title will be developed.
(d) PROVIDER RISK PROGRAMS.—The Secretary
shall ensure that the standards developed under sub-
section (a) contain a requirement that a qualified health
plan provide for a provider risk program to prevent or pro-
vide early warning of practices that may result in injury.
SEC. 3002. NATIONAL HEALTH DATA SYSTEM.
(a) STANDARDIZATION OF INFORMATION.—
230
Title III, Subtitle A
(1) IN GENERAL.—The Secretary, in consulta-
tion with the States, shall establish standards for
the periodic provision by qualified health plans of in-
formation under section 1118 to the States and the
auditing of the information so provided by the Sec-
retary.
(2) PATIENT
CONFIDENTIALITY.—The stand-
ards developed under paragraph (1) shall be estab-
lished in a manner that protects the confidentiality
of individual enrollees, but may provide for the dis-
closure of information which discloses particular pro-
viders within a qualified health plan.
(b) ANALYSIS OF INFORMATION.—
(1) IN GENERAL.—The Secretary shall analyze
the information provided to the States under section
1118 with respect to qualified health plans.
(2) CENTRAL
ACCESS.—The Secretary shall
make available, in a central location and consistent
with subsection (a)(2), all of such analyses.
(3) DISTRIBUTION
OF
ANALYSES.—The Sec-
retary shall distribute the analyses in a form, con-
sistent with subsection (a)(2), that reports, on a Na-
tional, State and community basis, the levels and
trends of health care expenditures, the rates and
trends in the provision of individual procedures, and
231
Title III, Subtitle A
(to the extent such procedures are priced separately)
the price levels and rates of price change for such
procedures. The reports shall include both aggregate
and per capita measures for areas and shall include
comparative data for different areas.
(c) DISTRIBUTION OF INFORMATION.—
(1) ANNUAL REPORT ON EXPENDITURES.—The
Secretary shall publish annually (beginning with
1997) a report on expenditures for procedures, vol-
umes of procedures, and, to the extent such proce-
dures are priced separately, the prices of procedures.
Such report shall be distributed to each qualified
health plan, each purchasing group, each Governor,
and each State legislature.
(2) ANNUAL
REPORTS.—The Secretary shall
publish an annual report, based on analyses under
this section, that identifies—
(A) procedures for which, as reflected in
variations in use or rates of increase, there ap-
pear to be the greatest need to develop valid
clinical protocols for clinical decision-making
and review,
(B) procedures for which, as reflected in
price variations and price inflation, there ap-
233
Title III, Subtitle A
SEC. 3003. MEASURES OF QUALITY OF CARE OF SPECIAL-
IZED CENTERS OF CARE.
(a) COLLECTION OF INFORMATION.—The Secretary
shall provide a process whereby a specialized center of care
(as defined in subsection (d)) may submit to the Sec-
retary, or such independent entity as the Secretary may
designate, such clinical and other information bearing on
the quality of care provided with respect to the covered
items and services under section 1301 at the center as
the Secretary may specify. Such information shall include
sufficient information to take into account outcomes and
the risk factors associated with individuals receiving care
through the center. Such information shall be provided at
such frequency (not less often than annually) as the Sec-
retary specifies.
(b) MEASURES
OF QUALITY.—Using information
submitted under subsection (a) and information reported
under section 3002, the Secretary shall—
(1) analyze the performance of such centers
with respect to the quality of care provided,
(2) rate the performance of such a center with
respect to a class of services relative to the perform-
ance of other specialized centers of care and relative
to the performance of qualified health plans gen-
erally, and
(3) publish such ratings.
234
Title III, Subtitle A
(c) USE OF SERVICE MARK FOR SPECIALIZED CEN-
TERS OF CARE.—The Secretary may establish a service
mark for specialized centers of care the performance of
which has been rated under subsection (b). Such service
mark shall be treated as if registered under the Trade-
mark Act of 1946. For purposes of such Act, such service
mark shall be deemed to be used in commerce. For pur-
poses of this subsection, the ‘‘Trademark Act of 1946’’
refers to the Act entitled ‘‘An Act to provide for the reg-
istration and protection of trademarks used in commerce,
to carry out the provisions of international conventions,
and for other purposes’’, approved July 5, 1946 (15
U.S.C. 1051 et seq.).
(d) SPECIALIZED CENTER OF CARE DEFINED.—As
used in this section, the term ‘‘specialized center of care’’
means an institution or other organized system for the
provision of specific services, which need not be multi-dis-
ciplinary, and does not include (except as the Secretary
may provide) individual practitioners.
SEC. 3004. CLINICAL EVALUATIONS.
(a) ESTABLISHMENT.—The Secretary shall examine
the feasibility of creating an Agency for Clinical Evalua-
tions (to be headed by an Administrator) under which the
following responsibilities will be consolidated:
235
Title III, Subtitle A
(1) Responsibilities of the Administrator for
Health Care Policy and Research, under title IX of
the Public Health Service Act and under section
1142 of the Social Security Act.
(2) Responsibilities of the Director of the Na-
tional Center for Health Statistics (under section
306 of the Public Health Service Act).
(3) Responsibilities of the Director of the Office
of Medical Applications of Research at the National
Institutes of Health.
(4) Responsibilities of the Director of the Office
of Research and Demonstrations of the Health Care
Financing Administration, insofar as such respon-
sibilities relate to clinical evaluations.
(b) SPECIFIC DUTIES.—In addition to carrying out
subsection (a), the Secretary shall—
(1) set priorities for the research community to
strengthen the research base;
(2) support research and evaluation (both on a
contract and investigator-initiated basis) on medical
effectiveness through technology assessment, consen-
sus development, outcomes research practice guide-
lines, and other appropriate activities;
236
Title III, Subtitle A
(3) conduct effectiveness trials in collaboration
with medical specialty societies, medical educators,
and qualified health plans;
(4) maintain a clearinghouse and other reg-
istries on clinical trials and outcomes research data;
(5) assure the systematic evaluation of existing
as well as new treatments and diagnostic tech-
nologies in a constant, continuous effort to upgrade
the knowledge base for clinical decisionmaking and
policy choice; and
(6) design a computerized dissemination system
for providers to provide an interactive system of in-
formation on outcomes research, practice guidelines,
and other information.
(c) ASSISTANCE.—The Secretary shall provide the
Benefits Commission established under subtitle D of title
I with such information, on evaluations related to the cov-
ered items and services under section 1301 and any other
information developed in the scope of carrying out the re-
sponsibilities of the Secretary, as may be appropriate.
(d) COOPERATION WITH OTHER AGENCIES.—In car-
rying out responsibilities under this section, the Secretary
shall cooperate and consult with the Director of the Na-
tional Institutes of Health, the Commissioner of Food and
237
Title III, Subtitle A
Drugs, the Secretary of Veterans Affairs, and the heads
of any other interested Federal department or agency.
(e) ADDITIONAL AUTHORIZATION
OF APPROPRIA-
TIONS.—For purposes of carrying out this section, there
are authorized to be appropriated $250,000,000 for each
fiscal year (beginning with fiscal year 1995).
SEC. 3005. REPORT AND RECOMMENDATIONS ON ACHIEV-
ING UNIVERSAL COVERAGE.
(a) FACTORS AFFECTING COVERAGE.—
(1) COLLECTION OF INFORMATION.—The Sec-
retary, on a continuing basis, shall collect informa-
tion concerning, and analyze the number and char-
acteristics of, eligible individuals (as defined in sub-
section (c)) who are not enrolled with qualified
health plans compared to such number and charac-
teristics of individuals so enrolled. Such characteris-
tics shall include age, sex, race, ethnicity, family sta-
tus, employment status, whether the individual is an
eligible employee, income, health status, health risk
factors, geography, whether the individual resides in
a rural or medically underserved area, and such
other factors as may affect the election of an eligible
individual to obtain health insurance coverage.
(2) REPORT.—Not later than April 1 of each
year (beginning with 1997), the Secretary shall pre-
238
Title III, Subtitle A
pare and submit to the appropriate committees of
Congress a report analyzing the information col-
lected under paragraph (1). Such report shall in-
clude a description of the primary factors contribut-
ing to lack of coverage of identifiable groups of eligi-
ble individuals.
(b) RECOMMENDATIONS
FOR
INCREASING
COV-
ERAGE.—
(1) IN GENERAL.—Not later than January 1,
1998, the Secretary shall prepare and submit to
Congress recommendations on the feasibility, cost-ef-
fectiveness, and the economic impact of using dif-
ferent voluntary and other methods for increasing
the coverage of eligible individuals.
(2) INDIVIDUAL
MANDATE.—The Secretary
shall specifically make recommendations under para-
graph (1) regarding establishing a requirement that
all eligible individuals obtain health coverage
through enrollment with a qualified health plan.
(c) ELIGIBLE INDIVIDUAL DEFINED.—In this sec-
tion, the term ‘‘eligible individual’’ has the same meaning
given such term by section 1601(6).
SEC. 3006. MONITORING REINSURANCE MARKET.
(a) IN GENERAL.—The Secretary shall monitor the
reinsurance market for qualified health plans.
239
Title III, Subtitle A
(b) PERIODIC REPORTS.—The Secretary shall peri-
odically report to Congress respecting the availability of
reinsurance for qualified health plans at reasonable rates
and the impact of such availability on the establishment
of new plans and on the financial solvency of current
plans.
SEC. 3007. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to the Bene-
fits Commission established under subtitle D of title I for
each of fiscal years 1995 through 2001 such sums as may
be necessary to carry out activities under this Act.
PART II—AGENCY FOR HEALTH CARE POLICY
AND RESEARCH
SEC. 3101. AGENCY FOR HEALTH CARE POLICY AND RE-
SEARCH.
Title IX of the Public Health Service Act (42 U.S.C.
299 et seq.) is amended—
(1) in section 902(a) (42 U.S.C. 299a(a))—
(A) in the matter preceding paragraph (1),
by inserting after ‘‘guideline development,’’ the
following: ‘‘effectiveness trials (in collaboration
with medical speciality societies and qualified
health plans under the Health Equity and Ac-
cess Reform Today Act of 1993),’’;
240
Title III, Subtitle A
(B) in paragraph (7), by striking ‘‘and’’ at
the end thereof;
(C) in paragraph (8), by striking the pe-
riod and inserting ‘‘; and’’; and
(D) by adding at the end thereof the fol-
lowing new paragraph:
‘‘(9) priorities that would enable the research
community to strengthen and expand the health care
research base.’’;
(2) in section 902, by adding at the end thereof
the following new subsections:
‘‘(f) CLEARINGHOUSE.—The Administrator shall es-
tablish within the Agency a clearinghouse, and such other
registries as the Administrator determines are appro-
priate, to compile and make available information and re-
search data concerning clinical trials undertaken under
this title.
‘‘(g) FUND INVESTIGATOR.—The Administrator shall
appoint an individual to serve as the fund investigator of
the Agency. The fund investigator shall be responsible for
initiating research, through grants or contracts under this
title, with respect to the relationship between health care
treatments and outcomes. The fund investigator shall be
compensated in accordance with section 925(a)(2).’’; and
241
Title III, Subtitle A
(3) in section 911(b)(2) (42 U.S.C. 299b–
(b)(2)), by striking ‘‘and medical review organiza-
tions’’ and inserting ‘‘, medical review organizations,
and qualified health plans under the Health Equity
and Access Reform Today Act of 1993’’.
PART III—NATIONAL FUND FOR MEDICAL
RESEARCH
SEC. 3201. NATIONAL FUND FOR MEDICAL RESEARCH.
(a) DESIGNATION
OF OVERPAYMENTS
AND CON-
TRIBUTIONS FOR THE NATIONAL FUND FOR MEDICAL
RESEARCH.—
(1) IN GENERAL.—Subchapter A of chapter 61
of the Internal Revenue Code of 1986 (relating to
returns and records) is amended by adding at the
end the following new part:
‘‘PART 
IX—DESIGNATION 
OF 
OVERPAYMENTS
AND CONTRIBUTIONS FOR THE NATIONAL
FUND FOR MEDICAL RESEARCH
‘‘Sec. 6097. Amounts for the National Fund for Medical Research.
‘‘SEC. 6097. AMOUNTS FOR THE NATIONAL FUND FOR MEDI-
CAL RESEARCH.
‘‘(a) IN GENERAL.—Every individual (other than a
nonresident alien) may designate that—
242
Title III, Subtitle A
‘‘(1) a portion (not less than $1) of any over-
payment of the tax imposed by chapter 1 for the
taxable year, and
‘‘(2) a cash contribution (not less than $1),
be paid over to the National Fund for Medical Research.
In the case of a joint return of a husband and wife, each
spouse may designate one-half of any such overpayment
of tax (not less than $2).
‘‘(b) MANNER AND TIME OF DESIGNATION.—Any
designation under subsection (a) may be made with re-
spect to any taxable year only at the time of filing the
original return of the tax imposed by chapter 1 for such
taxable year. Such designation shall be made either on the
1st page of the return or on the page bearing the tax-
payer’s signature.
‘‘(c) OVERPAYMENTS TREATED AS REFUNDED.—For
purposes of this section, any overpayment of tax des-
ignated under subsection (a) shall be treated as being re-
funded to the taxpayer as of the last day prescribed for
filing the return of tax imposed by chapter 1 (determined
with regard to extensions) or, if later, the date the return
is filed.
‘‘(d) DESIGNATED AMOUNTS NOT DEDUCTIBLE.—
No amount designated pursuant to subsection (a) shall be
243
Title III, Subtitle A
allowed as a deduction under section 170 or any other sec-
tion for any taxable year.
‘‘(e) TERMINATION.—This section shall not apply to
taxable years beginning in a calendar year after a deter-
mination by the Secretary that the sum of all designations
under subsection (a) for taxable years beginning in the
second and third calendar years preceding the calendar
year is less than $5,000,000.’’.
(2) CLERICAL
AMENDMENT.—The table of
parts for subchapter A of chapter 61 of such Code
is amended by adding at the end the following new
item:
‘‘Part IX. Designation of overpayments and contributions for the
National Fund for Medical Research.’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to taxable years begin-
ning after December 31, 1993.
(b) ESTABLISHMENT OF THE NATIONAL FUND FOR
MEDICAL RESEARCH.—
(1) IN GENERAL.—Subchapter A of chapter 98
of the Internal Revenue Code of 1986 (relating to
the trust fund code) is amended by adding at the
end the following new section:
‘‘SEC. 9512. NATIONAL FUND FOR MEDICAL RESEARCH.
‘‘(a) CREATION OF FUND.—There is established in
the Treasury of the United States a fund to be known
244
Title III, Subtitle A
as the ‘‘National Fund for Medical Research’’, consisting
of such amounts as may be credited or paid to such Fund
as provided in this section or section 9602(b).
‘‘(b) TRANSFERS TO FUND.—There is hereby trans-
ferred to the National Fund for Medical Research
amounts equivalent to—
‘‘(1) the amounts designated under section
6097 (relating to designation of overpayments and
contributions to the Fund), and
‘‘(2) amounts equivalent to the civil penalties
imposed under section 502(c)(4) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1132(c)) and section 2412 of the Health Equity and
Access Reform Today Act of 1993.
‘‘(c) EXPENDITURES FROM FUND.—
‘‘(1) IN GENERAL.—The Secretary shall pay an-
nually, within 30 days after the President signs an
appropriations Act for the Departments of Labor,
Health and Human Services, and Education, and re-
lated agencies, or by the end of the first quarter of
the fiscal year, to the Secretary of Health and
Human Services on behalf of the National Institutes
of Health, an amount equal to the amount in the
National Fund for Medical Research at the time of
such payment, to carry out the purposes of section
245
Title III, Subtitle A
404F of the Public Health Service Act, less any ad-
ministrative expenses which may be paid under para-
graph (2).
‘‘(2) ADMINISTRATIVE EXPENSES.—Amounts in
the National Fund for Medical Research shall be
available to pay the administrative expenses of the
Department of the Treasury directly allocable to—
‘‘(A) modifying the individual income tax
return forms to carry out section 6097,
‘‘(B) carrying out this chapter with respect
to such Fund, and
‘‘(C) processing amounts received under
section 6097 and transferring such amounts to
such Fund.
‘‘(d) BUDGET TREATMENT OF AMOUNTS IN FUND.—
The amounts in the National Fund for Medical Research
shall be excluded from, and shall not be taken into ac-
count, for purposes of any budget enforcement procedure
under the Congressional Budget Act of 1974 or the Bal-
anced Budget and Emergency Deficit Control Act of
1985.’’.
(2) CLERICAL AMENDMENT.—The table of sec-
tions for subchapter A of chapter 98 of the Internal
Revenue Code of 1986 is amended by adding at the
end the following new item:
‘‘Sec. 9512. National Fund for Medical Research.’’.
246
Title III, Subtitle A
(c) PURPOSES FOR EXPENDITURES FROM FUND.—
Part A of title IV of the Public Health Service Act is
amended by adding at the end the following new section:
‘‘SEC. 404F. EXPENDITURES FROM THE NATIONAL FUND
FOR MEDICAL RESEARCH.
‘‘(a) DISTRIBUTION OF AMOUNTS.—From amounts
received for any fiscal year from the National Fund for
Medical Research, the Secretary shall distribute—
‘‘(1) 3 percent of such amounts to the Director
of NIH to be allocated at the Director’s discretion
for—
‘‘(A) carrying out the responsibilities of the
Director of NIH, including the Office of Re-
search on Women’s Health, the Office of Re-
search on Minority Health, the Office on Alter-
native Medicine, and the Office of Rare Disease
Research;
‘‘(B) construction of, and acquisition of
equipment for, facilities of or used by the Na-
tional Institutes of Health; and
‘‘(C) transfer to the National Center for
Research Resources to carry out section 481A
concerning biomedical and behavioral research
facilities;
248
Title III, Subtitle B
‘‘(d) MAINTENANCE
OF
EFFORT.—No amounts
transferred under subsection (a) shall replace or reduce
the amount of appropriations for the National Institutes
of Health under appropriations Acts.’’.
Subtitle B—Administrative
Simplification
SEC. 3301. ESTABLISHMENT OF HEALTH CARE DATA INTER-
CHANGE SYSTEM.
(a) IN GENERAL.—In accordance with the procedures
provided in this subtitle, there shall be established a health
care data interchange system the purpose of which is to
make health care data available on a uniform basis to all
participants in the health care system.
(b) GENERAL REQUIREMENTS FOR SYSTEM.—The
system described in subsection (a) shall ensure—
(1) the integration of all participants in the
health care system;
(2) the use of uniform processes which will per-
mit participants in the health care system to com-
municate electronically for the submission and re-
ceipt of health care data;
(3) the privacy of individuals who are patients
receiving health care services and the confidentiality
of information in the data interchange system;
249
Title III, Subtitle B
(4) that the data in the system is verifiable,
timely, accurate, reliable, useful, complete, relevant,
time and date stamped, and comparable; and
(5) an overall reduction in the administrative
burdens and costs of the health care system, an
overall increase in the productivity, effectiveness,
and efficiency of the system, and an overall increase
in the quality of care furnished by the system.
(c) GENERAL IMPLEMENTATION.—The system de-
scribed in subsection (a) shall be implemented through—
(1) the development of proposed regulations as
provided under section 3302 by the Health Care
Data Panel established under section 3313 (referred
to in this subtitle as the ‘‘Panel’’); and
(2) the development of final regulations through
the Office of Management and Budget (referred to
in this subtitle as ‘‘OMB’’) as provided under sec-
tion 3303.
SEC. 3302. DEVELOPMENT OF PROPOSED REGULATIONS BY
PANEL.
(a) IN GENERAL.—The Panel shall, in consultation
with the National Health Informatics Commission estab-
lished under section 3314, develop proposed regulations
for the implementation and ongoing operation of an inte-
grated electronic health care data interchange system that
250
Title III, Subtitle B
are based on the operating standards, conventions, re-
quirements, and procedures for the system established, se-
lected, or developed by the Panel under sections 3304
through 3310.
(b) REQUIREMENTS RELATING TO PROPOSED REGU-
LATIONS.—The proposed regulations developed under sub-
section (a) shall—
(1) be submitted to OMB not later than 30
days after the date on which the Panel is required
to establish, select, or develop any of such operating
standards, conventions, requirements, and proce-
dures for the system; and
(2) provide that the general requirements for
the system referred to in section 3301(b) are met.
(c) MODIFICATIONS.—The Panel shall continuously
monitor the implementation of the regulations promul-
gated by OMB under section 3303 and shall submit to
OMB any proposed modifications to such regulations de-
termined appropriate by the Panel. The requirements of
section 3303 shall apply to any such proposed modifica-
tions in the same manner as such requirements apply to
the proposed regulations initially submitted by the Panel.
251
Title III, Subtitle B
SEC. 3303. PROMULGATION AND IMPLEMENTATION OF
PROPOSED REGULATIONS BY OMB.
(a) PROMULGATION OF REGULATIONS.—OMB shall
promulgate regulations based on the proposed regulations
submitted under section 3302 within 90 days after the
date such proposed regulations are submitted.
(b) APPLICABILITY.—
(1) IN GENERAL.—The regulations promulgated
by OMB shall apply to all participants in the health
care system.
(2) SPECIAL RULE REGARDING THE MEDICARE
PROGRAM.—The Secretary may incorporate the ca-
pabilities of the common working file used in the
medicare program under title XVIII of the Social
Security Act into a uniform working file system de-
veloped and operated according to the regulations
referred to in subsection (a).
(c) COMPLIANCE WITH REGULATIONS.—
(1) IN GENERAL.—Not later than 1 year after
the date on which any regulations (other than the
regulations described in paragraph (2)) are promul-
gated by OMB, all participants in the health care
system shall be required to comply with such regula-
tions.
(2) COMPREHENSIVE QUALITY MEASUREMENT
DATA.—Not later than 2 years after the date on
252
Title III, Subtitle B
which any regulations relating to standards, conven-
tions, and requirements for comprehensive quality
measurement data (as described in subsection
3304(e)(3)) are promulgated by OMB, all partici-
pants in the health care system shall be required to
comply with such regulations.
SEC. 3304. SELECTION AND ESTABLISHMENT OF DATA AND
TRANSACTION STANDARDS, CONVENTIONS,
AND REQUIREMENTS FOR THE DATA INTER-
CHANGE SYSTEM.
(a) IN GENERAL.—The Panel, in consultation with
the American National Standards Institute (referred to in
this subtitle as ‘‘ANSI’’), shall select and establish data
and transaction standards, conventions, and requirements
that permit the electronic interchange of any health care
data the Panel determines necessary for the efficient and
effective administration of the health care system.
(b) MINIMUM REQUIREMENTS.—The data and trans-
action standards, conventions, and requirements selected
and established by the Panel under this section shall, at
a minimum—
(1) ensure that the data interchange system
shall have the capability to comply with such stand-
ards, conventions, and requirements; and
253
Title III, Subtitle B
(2) be based on any standards that are in use
and generally accepted on the date of the enactment
of this subtitle or that are recommended by nation-
ally recognized standard setting groups, including
ANSI, the National Uniform Billing Committee, the
Uniform Claim Form Task Force, the National
Committee for Prescription Drug Programs, and the
Healthcare Informatics Standards Planning Panel.
(c) APPLICABILITY.—The proposed regulations devel-
oped by the Panel shall provide that—
(1) any participant in the health care system
who has the capability to interchange data through
a uniform working file developed by the Panel under
section 3305 shall be required to transmit and re-
ceive such data using the standards, conventions,
and requirements developed by the Panel under this
section; and
(2) any participant in the health care system
who does not have such capability shall be required
to transmit and receive data through a health care
information clearinghouse or a health care value-
added network that is certified under the procedure
established pursuant to 3311.
(d) ADDITIONAL REQUIREMENTS.—
254
Title III, Subtitle B
(1) IN
GENERAL.—The proposed regulations
developed by the Panel shall provide that no partici-
pant in the health care system shall be permitted to
establish data requirements in addition to such
standards, conventions, and requirements established
by the Panel and included in regulations promul-
gated by OMB—
(A) unless 2 or more participants volun-
tarily establish such additional requirements
and the requirements meet all of the privacy
and confidentiality standards developed by the
Panel under this subtitle and included in any
regulations promulgated by OMB; or
(B) unless a waiver is granted under para-
graph (2) to establish such additional require-
ments.
(2) CONDITIONS FOR WAIVERS.—
(A) IN GENERAL.—The proposed regula-
tions developed by the Panel shall provide that
any participant in the health care system may
request a waiver to establish additional data re-
quirements.
(B) CONSIDERATION
OF
WAIVER
RE-
QUESTS.—The proposed regulations developed
by the Panel shall provide that no waiver shall
255
Title III, Subtitle B
be granted under this paragraph unless the en-
tity granting such waiver considers the value of
the additional data to be exchanged for re-
search or other purposes determined appro-
priate by the Panel, the administrative cost of
the additional data requirements, the burden of
the additional data requirements, and the bur-
den of the timing of the imposition of the addi-
tional data requirements.
(C) CERTAIN REQUESTS FOR WAIVERS.—
The proposed regulations developed by the
Panel shall provide that if a participant in the
health care system attempts to impose addi-
tional data requirements on any other such par-
ticipant, the participant on which such require-
ments are being imposed may contact the Sec-
retary. The Panel shall develop a procedure
under which any participant in the health care
system contacting the Secretary under the pre-
ceding sentence shall remain anonymous. The
Secretary shall notify the participant imposing
the additional data requirements that such re-
quirements may not be imposed on any other
participant unless such other participant volun-
256
Title III, Subtitle B
tarily agrees to such requirements or a waiver
is obtained under this paragraph.
(e) TIMETABLE
FOR STANDARDS, CONVENTIONS,
AND REQUIREMENTS.—
(1) STANDARDS, CONVENTIONS, AND REQUIRE-
MENTS RELATING TO FINANCIAL AND ADMINISTRA-
TIVE
TRANSACTIONS.—Not later than 9 months
after the date of the enactment of this subtitle, the
Panel shall develop data and transaction standards,
conventions, and requirements for the following
items relating to the financing and administration of
health care:
(A) Enrollment.
(B) Eligibility.
(C) Payment and remittance advice.
(D) Claims.
(E) Claims status.
(F) Coordination of benefits.
(G) Crossover billing.
(H) First report of injury.
(I) Standardized claim attachments.
(J) Any other items relating to the financ-
ing and administration of health care delivery.
(2) STANDARDS, CONVENTIONS, AND REQUIRE-
MENTS RELATING TO INITIAL QUALITY MEASURE-
257
Title III, Subtitle B
MENT INDICATORS.—Not later than 12 months after
the date of the enactment of this subtitle, the Panel
shall develop data and transaction standards, con-
ventions, and requirements for participants in the
health care system to transmit data derived from the
financial and administrative transactions data de-
scribed in paragraph (1) on quality measurement,
utilization monitoring, risk assessment, patient satis-
faction, outcomes, and access.
(3) STANDARDS, CONVENTIONS, AND REQUIRE-
MENTS
RELATING
TO
COMPREHENSIVE
QUALITY
MEASUREMENT DATA.—Not later than 24 months
after the date of the enactment of this subtitle, the
Panel shall develop standards, conventions, and re-
quirements for participants in the health care sys-
tem to transmit comprehensive data collected at the
site of care on quality measurement, utilization mon-
itoring, risk assessment, patient satisfaction, out-
comes, and access.
(4) STANDARDS, CONVENTIONS, AND REQUIRE-
MENTS
RELATING
TO
DATA
ON
PATIENT
CARE
RECORDS.—Not later than 36 months after the date
of the enactment of this subtitle, the Panel shall de-
velop standards, conventions, and requirements re-
lated to the inclusion of data from patient care
258
Title III, Subtitle B
records into the health care data interchange sys-
tem, including standards, conventions, and require-
ments on the identification of the origin of any data
from such records that is included in such system.
(5) STANDARDS, CONVENTIONS, AND REQUIRE-
MENTS FOR THE CENTERS FOR DISEASE CONTROL
AND PREVENTION.—Not later than 36 months after
the date of the enactment of this subtitle, the Panel,
in collaboration with the Centers for Disease Control
and Prevention (referred to in this subtitle as the
‘‘CDCP’’) and in consultation with State depart-
ments of health, shall develop standards, conven-
tions, and requirements for the electronic inter-
change of data on vital health statistics collected by
CDCP or the States or any other such data as
CDCP determines appropriate.
(f) WAIVERS OF COMPLIANCE.—
(1) FINANCIAL
AND
ADMINISTRATIVE
TRANS-
ACTIONS.—The proposed regulations developed by
the Panel shall provide that any of the data and
transaction standards, conventions, and require-
ments relating to financial and administrative trans-
actions developed by the Panel under subsection
(e)(1) may be waived until January 1, 1995, for a
health care provider that—
259
Title III, Subtitle B
(A) does not have access to a health care
information clearinghouse or a health care
value-added network, is in the process of devel-
oping a system that complies with such stand-
ards, conventions, and requirements, and exe-
cutes an agreement with the appropriate regu-
latory entity that such provider will meet such
standards, conventions, and requirements by a
specified date (not later than January 1, 1995);
or
(B) is a small rural hospital (as defined by
the Panel and included in regulations promul-
gated by OMB).
(2) COMPREHENSIVE QUALITY MEASUREMENT
DATA.—The proposed regulations developed by the
Panel shall provide that any of the data and trans-
action standards, conventions, and requirements re-
lating to comprehensive quality measurement data
developed by the Panel under subsection (e)(3) may
be waived until January 1, 1998, for a health care
provider that—
(A) does not have access to a health care
information clearinghouse or a health care
value-added network, is in the process of devel-
oping a system that complies with such stand-
260
Title III, Subtitle B
ards, conventions, and requirements, and exe-
cutes an agreement with the appropriate regu-
latory entity that such provider will meet such
standards and requirements by a specified date
(not later than January 1, 1998); or
(B) agrees to obtain from such provider’s
records the data elements that are needed to
meet the standards and requirements developed
under subsection (e)(3) and agrees to subject
the provider’s data transfer process to a quality
assurance program that is satisfactory to the
appropriate regulatory entity.
SEC. 3305. STANDARDS FOR OPERATION OF A UNIFORM
WORKING FILE.
Not later than 24 months after the date of the enact-
ment of this subtitle the Panel shall establish standards
for the development and operation of a uniform working
file system that is national in scope. Such standards shall
ensure—
(1) that all participants in the health care sys-
tem may be linked electronically (directly or indi-
rectly) to the uniform working file system;
(2) that any privacy and confidentiality stand-
ards established by the Panel under section 3308 are
satisfied;
261
Title III, Subtitle B
(3) that the uniform working file system im-
proves the efficiency and effectiveness of the admin-
istration of the health care system, including health
care quality measurement;
(4) the interoperability of the uniform working
file system by—
(A) supporting the data and transaction
standards, conventions, and requirements se-
lected and established by the Panel; and
(B) making use of such standards, conven-
tions, and requirements; and
(5) the support of any other requirements se-
lected or established by the Panel.
SEC. 3306. CODE SETS FOR SYSTEM.
Not later than 9 months after the date of the enact-
ment of this subtitle, the Panel shall select and establish
code sets that are maintained by private and public enti-
ties as the Panel’s official code sets for use in a national
uniform working file system. The proposed regulations de-
veloped by the Panel shall provide that any changes or
updates to such code sets that are established or requested
by the private or public entity which maintains the code
set—
(1) shall preserve the informational value of
data retained either within the uniform working file
262
Title III, Subtitle B
system or within the information systems of parties
making use of the data and transactions standards,
conventions, and requirements;
(2) shall include instructions on how existing
data containing such codes is to be converted or
translated so as to preserve its value;
(3) shall be incorporated into the official code
set in such a manner as to minimize the disruption
to the national uniform working file system and min-
imize the cost to all entities within the system for
reprogramming to accommodate such changes or up-
dates; and
(4) shall be implemented—
(A) only after at least 90 days advance no-
tice has been provided to participants in the
health care system; and
(B) no more frequently than on an annual
basis.
SEC. 3307. ESTABLISHMENT OF UNIQUE IDENTIFIERS.
(a) IN GENERAL.—Not later than 9 months after the
date of the enactment of this subtitle, the Panel shall de-
velop unique identifiers for each participant in the health
care system.
(b) SPECIAL RULES.—
263
Title III, Subtitle B
(1) INDIVIDUALS.—Each individual shall have a
unique identifier developed by the Panel.
(2) HEALTH PLANS OR PROVIDERS.—In devel-
oping unique identifiers for each health plan or pro-
vider, the Panel shall take into account multiple uses
for such identifiers and shall consider multiple phys-
ical locations and specialty classifications for provid-
ers. The unique identifiers for health plans or pro-
viders may be based on the system used under title
XVIII of the Social Security Act on the date of the
enactment of this subtitle.
SEC. 3308. PRIVACY AND CONFIDENTIALITY STANDARDS.
(a) IN GENERAL.—Not later than 9 months after the
date of the enactment of this subtitle, the Panel, after tak-
ing into consideration the Insurance Information and Pri-
vacy Protection Model Act of the National Association of
Insurance Commissioners, other model legislation, and
international guidelines, shall develop requirements that
protect the privacy of participants in the health care sys-
tem and ensure the confidentiality of information in the
data interchange system.
(b) PRINCIPLES CONSIDERED.—In developing the re-
quirements referred to in subsection (a), the Panel shall
take into consideration the following principles:
264
Title III, Subtitle B
(1) Information relating to an identifiable or
identified individual should be collected only to the
extent necessary to carry out the purpose for which
the information is collected.
(2) Information relating to an identifiable or
identified individual collected for a particular pur-
pose should generally not be used for another pur-
pose without the individual’s informed consent un-
less the pooling of information renders an individ-
ual’s data unidentifiable.
(3) Information relating to an identifiable or
identified individual should be disposed of when no
longer necessary to carry out the purpose for which
it was collected, unless the pooling of information
renders an individual’s data unidentifiable.
(4) Methods to ensure the verifiability, timeli-
ness, accuracy, reliability, utility, completeness, rel-
evance, and comparability of information relating to
an identifiable or identified individual should be in-
stituted.
(5) An individual should be notified in advance
of the collection of information relating to such indi-
vidual with regard to—
(A) whether the furnishing of information
is mandatory or voluntary;
265
Title III, Subtitle B
(B) the recordkeeping practices with re-
spect to any information provided; and
(C) the uses to be made of any information
provided.
(6) If informed consent is necessary for the in-
tended primary or secondary use of information re-
lating to an identifiable or identified individual, the
individual should be provided the opportunity to re-
ject such uses at the time the information is col-
lected, except where such uses are necessary to com-
ply with law.
(7) An individual should be permitted to inspect
and correct any information which concerns such in-
dividual and should be able to obtain information on
how such information is being used.
SEC. 3309. TRANSFER OF INFORMATION BETWEEN HEALTH
PLANS.
Not later than 9 months after the date of the enact-
ment of this subtitle, the Panel shall develop rules and
procedures—
(1) for determining the financial liability of
health plans when health care benefits are payable
under two or more health plans; and
(2) concerning the transfer among health plans
of appropriate official data sets needed to carry out
266
Title III, Subtitle B
the coordination of benefits, the sequential process-
ing of claims, and other health data as determined
necessary by the Panel for individuals who have
more than one health plan, according to the prior-
ities established under the rules and procedures es-
tablished under paragraph (1).
SEC. 3310. FINES AND PENALTIES FOR FAILURE TO COM-
PLY.
(a) DEVELOPMENT BY THE PANEL.—
(1) COMPLIANCE WITH STANDARDS FOR PRI-
VACY
AND
CONFIDENTIALITY.—Not later than 9
months after the date of the enactment of this sub-
title, the Panel shall develop civil fines and penalties,
as determined appropriate by the Panel, to enforce
any of the requirements developed by the Panel
under section 3308 relating to privacy and confiden-
tiality. The civil fines and penalties developed by the
Panel under this paragraph shall not be less than
$1,000 for each violation.
(2) 
COMPLIANCE
WITH
OTHER
REQUIRE-
MENTS.—
(A) IN
GENERAL.—Not later than 9
months after the date of the enactment of this
subtitle, the Panel shall develop civil fines and
penalties, as determined appropriate by the
267
Title III, Subtitle B
Panel, to enforce any of the requirements devel-
oped by the Panel under this subtitle other than
the requirements related to privacy and con-
fidentiality. The civil fines and penalties devel-
oped by the Panel under this paragraph shall
not exceed $100 for each violation.
(B) LIMITATIONS.—
(i) PENALTIES NOT TO APPLY WHERE
NONCOMPLIANCE NOT DISCOVERED EXER-
CISING REASONABLE DILIGENCE.—No civil
fine or penalty developed by the Panel
under this paragraph shall be imposed if it
is established that the person liable for the
fine or penalty did not know, and by exer-
cising reasonable diligence would not have
known, that such person failed to comply
with any of the requirements described in
subparagraph (A).
(ii) PENALTIES
NOT
TO
APPLY
TO
COMPLIANCE FAILURES CORRECTED WITH-
IN 30 DAYS.—No civil fine or penalty devel-
oped by the Panel under this paragraph
shall be imposed if—
268
Title III, Subtitle B
(I) the failure to comply was due
to reasonable cause and not to willful
neglect, and
(II) the failure to comply is cor-
rected during the 30-day period begin-
ning on the 1st date the person liable
for the fine or penalty knew, or by ex-
ercising reasonable diligence would
have known, that the failure to com-
ply occurred.
(iii) WAIVER.—In the case of a failure
to comply which is due to reasonable cause
and not to willful neglect, any civil fine or
penalty developed by the Panel under this
paragraph may be waived to the extent
that the payment of such fine or penalty
would be excessive relative to the compli-
ance failure involved.
(b) LEGISLATIVE PROPOSAL ON CERTAIN CRIMINAL
FINES AND PENALTIES.—Not later than 12 months after
the date of the enactment of this subtitle, the Panel shall
submit to Congress a legislative proposal relating to any
criminal fines and penalties determined appropriate by the
Panel to enforce any of the requirements developed by the
269
Title III, Subtitle B
Panel under section 3308 relating to privacy and confiden-
tiality.
SEC. 3311. OVERSIGHT OF UNIFORM WORKING FILE,
HEALTH 
CARE 
INFORMATION 
CLEARING-
HOUSES, AND VALUE-ADDED NETWORKS.
(a) PERIODIC REVIEWS.—Not later than 9 months
after the date of the enactment of this subtitle, the Sec-
retary shall establish a procedure for the periodic review
of business practices, performance, and fees with respect
to the uniform working file and each health care informa-
tion clearinghouse and value-added network to ensure that
such entities are not taking unfair advantage of partici-
pants in the health care system through the application
of any regulations promulgated by OMB.
(b) CERTIFICATION PROCEDURE.—Not later than 12
months after the date of the enactment of this subtitle,
the Panel shall establish a certification procedure for the
uniform working file, health care information clearing-
houses, and value-added networks. The requirements for
certification shall include—
(1) adherence to the data and transaction
standards and requirements and the privacy and
confidentiality standards included in any regulations
promulgated by OMB;
270
Title III, Subtitle B
(2) making public standardized indicators of
performance such as accessibility, transaction re-
sponsiveness, administrative efficiency, reliability,
dependability, and any other indicators determined
appropriate by the Secretary; and
(3) any other requirements determined appro-
priate by the Secretary.
SEC. 3312. ANNUAL REPORTS TO CONGRESS.
(a) IN GENERAL.—The Panel shall annually prepare
and submit to Congress a report on—
(1) the status of the data interchange system,
including the system’s ability to provide data on
cost, quality, and patient satisfaction;
(2) the savings and costs of implementing the
data interchange system; and
(3) any legislative recommendations related to
the data interchange system.
(b) AVAILABILITY TO THE PUBLIC.—Any informa-
tion in the report submitted to Congress under subsection
(a) shall be made available to the public unless such infor-
mation may not be disclosed by law.
SEC. 3313. HEALTH CARE DATA PANEL.
(a) ESTABLISHMENT.—There is established a panel
to be known as the Health Care Data Panel.
(b) MEMBERSHIP.—
271
Title III, Subtitle B
(1) IN GENERAL.—The Panel shall be composed
of the following members:
(A) The Secretary.
(B) The Secretary of Defense.
(C) The Secretary of Veterans Affairs.
(D) A representative of the Agency for
Health Care Policy and Research.
(E) A representative of the National Insti-
tute of Standards and Technology.
(F) A representative of the National Tele-
communication and Information Administra-
tion.
(G) Six additional Federal officers deter-
mined appropriate by the Secretary.
(2) CHAIR.—The Secretary shall be the Chair
of the Panel.
(c) MEETINGS.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the Panel shall meet at the call of the
Chair.
(2) INITIAL
AND
SUBSEQUENT
MEETINGS.—
The Panel shall hold a meeting not later than 30
days after the date of the enactment of this section
and at least annually thereafter.
272
Title III, Subtitle B
(3) QUORUM.—A majority of the members of
the Panel shall constitute a quorum, but a lesser
number of members may hold hearings.
(d) POWERS OF THE PANEL.—
(1) HEARINGS.—The Panel may hold such
hearings, sit and act at such times and places, take
such testimony, and receive such evidence as the
Panel considers advisable to carry out the purposes
of this section.
(2) INFORMATION FROM FEDERAL AGENCIES.—
The Panel may secure directly from any Federal de-
partment or agency such information as the Panel
considers necessary to carry out the provisions of
this section. Upon request of the Chair of the Panel,
the head of such department or agency shall furnish
such information to the Panel.
(3) POSTAL SERVICES.—The Panel may use the
United States mails in the same manner and under
the same conditions as other departments and agen-
cies of the Federal Government.
(4) GIFTS.—The Panel may accept, use, and
dispose of gifts or donations of services or property.
(e) PANEL PERSONNEL MATTERS.—
(1) COMPENSATION OF MEMBERS.—Members of
the Panel shall serve without compensation in addi-
273
Title III, Subtitle B
tion to that received for their services as officers or
employees of the Federal Government.
(2) STAFF.—
(A) DETAIL
OF
GOVERNMENT
EMPLOY-
EES.—Upon the request of the Chair, any Fed-
eral Government employee may be detailed to
the Panel without reimbursement, and such de-
tail shall be without interruption or loss of civil
service status or privilege.
(B) CONTRACTS.—The Chair may enter
into contracts or other arrangements that may
be necessary for the Panel to perform its du-
ties.
(C) INTERNAL ORGANIZATION.—The Chair
may prescribe such rules as the Chair deter-
mines necessary with respect to the internal or-
ganization of the Panel.
SEC. 3314. NATIONAL HEALTH INFORMATICS COMMISSION.
(a) APPOINTMENT.—The Panel shall provide for ap-
pointment of a National Health Informatics Commission
(referred to in this section as the ‘‘Commission’’) to advise
the Panel on its activities.
(b) MEMBERSHIP.—
274
Title III, Subtitle B
(1) IN GENERAL.—The Commission shall con-
sist of 15 members. The Panel shall designate 1
member of the Commission as the Chair.
(2) EXPERTISE.—Members of the Commission
shall be individuals who—
(A) represent different professions and dif-
ferent geographic areas, including urban and
rural areas;
(B) represent Federal or State government
health programs;
(C) represent applicable standard-setting
groups, including the National Uniform Billing
Committee, the Uniform Claim Form Task
Force, American National Standards Institute,
and the Healthcare Informatics Standards
Planning Panel;
(D) represent consumers of health care
services; and
(E) have expertise in—
(i) electronic data interchange of
health care information and computerized
information systems associated with the
operation and administration of matters
relating to health care;
275
Title III, Subtitle B
(ii) the provision and financing of
health care;
(iii) 
conducting 
and 
interpreting
health economics research;
(iv) research and development of tech-
nological and scientific advances in health
care;
(v) health care eligibility, enrollment,
and claims administration;
(vi) health care financial management;
(vii) health care reimbursement; or
(viii) health care outcomes research.
(3) TERMS.—The Chair shall serve on the Com-
mission at the pleasure of the Panel. Each other
member of the Commission shall be appointed for a
term of 5 years, except with respect to the members
first appointed—
(A) 3 members shall be appointed for a
term of 1 year;
(B) 3 members shall be appointed for
terms of 2 years;
(C) 3 members shall be appointed for
terms of 3 years;
(D) 3 members shall be appointed for
terms of 4 years; and
276
Title III, Subtitle B
(E) 2 members shall be appointed for
terms of 5 years.
(4) VACANCIES.—
(A) IN GENERAL.—A vacancy on the Com-
mission shall be filled in the manner in which
the original appointment was made and shall be
subject to any conditions which applied with re-
spect to the original appointment.
(B) FILLING UNEXPIRED TERM.—An indi-
vidual chosen to fill a vacancy shall be ap-
pointed for the unexpired term of the member
replaced.
(C) EXPIRATION OF TERMS.—The term of
any member shall not expire before the date on
which the member’s successor takes office.
(c) MEETINGS.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the Commission shall meet at the call of
the Chair.
(2) INITIAL MEETING.—No later than 30 days
after the date on which all members of the Commis-
sion have been appointed, the Commission shall hold
its first meeting.
277
Title III, Subtitle B
(3) QUORUM.—A majority of the members of
the Commission shall constitute a quorum, but a
lesser number of members may hold hearings.
(d) DUTIES.—
(1) IN GENERAL.—Not later than 60 days prior
to any date on which the Panel is required to select,
establish, or develop any requirements relating to
the data interchange system, the Commission shall
make recommendations to the Panel with respect to
the issues relating to such requirements.
(2) ADDITIONAL STUDIES AND PROJECTS.—As
directed by the Panel, the Commission shall under-
take such studies and projects as the Panel may
deem necessary.
(e) POWERS OF THE COMMISSION.—
(1) HEARINGS.—The Commission may hold
such hearings, sit and act at such times and places,
take such testimony, and receive such evidence as
the Commission considers advisable to carry out the
purposes of this section.
(2) INFORMATION FROM FEDERAL AGENCIES.—
The Commission may secure directly from any Fed-
eral department or agency such information as the
Commission considers necessary to carry out the
provisions of this section. Upon request of the Chair,
279
Title III, Subtitle B
ing per diem in lieu of subsistence, at rates author-
ized for employees of agencies under subchapter I of
chapter 57 of title 5, United States Code, while
away from their homes or regular places of business
in the performance of services for the Commission.
(3) STAFF.—
(A) IN GENERAL.—The Chair may, with-
out regard to civil service laws and regulations,
appoint and terminate such personnel as may
be necessary to enable the Commission to per-
form its duties.
(B) COMPENSATION.—The Chair may fix
the compensation of personnel without regard
to the provisions of chapter 51 and subchapter
III of chapter 53 of title 5, United States Code,
relating to classification of positions and Gen-
eral Schedule pay rates, except that the rate of
pay for the personnel may not exceed the rate
payable for level V of the Executive Schedule
under section 5316 of such title.
(C) DETAIL
OF
GOVERNMENT
EMPLOY-
EES.—Any Federal Government employee may
be detailed to the Commission without reim-
bursement, and such detail shall be without
280
Title III, Subtitle B
interruption or loss of civil service status or
privilege.
(D) PROCUREMENT OF TEMPORARY AND
INTERMITTENT
SERVICES.—The Chair may
procure temporary and intermittent services
under section 3109(b) of title 5, United States
Code, at rates for individuals which do not ex-
ceed the daily equivalent of the annual rate of
basic pay prescribed for level V of the Executive
Schedule under section 5316 of such title.
(E) CONTRACTS.—The Chair may enter
into contracts or other arrangements that may
be necessary for the Commission to perform its
duties.
(F) INTERNAL ORGANIZATION.—The Chair
may prescribe such rules as the Chair deter-
mines necessary with respect to the internal or-
ganization of the Commission. The Commission
shall create such committees (composed of
Commission members and others as appointed
by the Chair) as necessary to enable the Com-
mission to meet its responsibilities and func-
tions.
(g) REPORTS.—The Commission shall submit to the
Panel such reports as may be requested by the Panel on
281
Title III, Subtitle B
each study or project conducted by the Commission. Such
reports shall contain such information as requested by the
Panel.
(h) TERMINATION OF COMMISSION.—The Commis-
sion shall terminate 20 years after the date of the enact-
ment of this title.
(i) AUTHORIZATION OF APPROPRIATIONS.—
(1) IN GENERAL.—There are authorized to be
appropriated such sums as may be necessary to
carry out the purposes of this section.
(2) AVAILABILITY.—Any sums appropriated
under the authorization contained in this subsection
shall remain available, without fiscal year limitation,
until expended.
SEC. 3315. DEFINITIONS.
For purposes of this subtitle:
(1) ADMINISTRATOR.—The term ‘‘adminis-
trator’’ has the meaning given that term in section
3(16)(A) of the Employee Retirement Income Secu-
rity Act of 1974.
(2) CODE SETS.—The term ‘‘code sets’’ means
any codes used for supplying specific data in a uni-
form data set, including tables of terms, medical di-
agnostic codes, medical procedure codes, identifica-
tion numbers, and any code sets of the National
282
Title III, Subtitle B
Uniform Billing Committee, the Health Care Fi-
nancing Administration, or ANSI.
(3) EMPLOYEE WELFARE BENEFIT PLAN.—The
term ‘‘employee welfare benefit plan’’ has the mean-
ing given that term in section 3(1) of the Employee
Retirement Income Security Act of 1974.
(4) HEALTH
CARE
INFORMATION
CLEARING-
HOUSE.—The term ‘‘health care information clear-
inghouse’’ means a public or private entity that—
(A) processes data that cannot be sent di-
rectly due to lack of proper formatting or edit-
ing; and
(B) facilitates the translation of data to
the standardized data set and code sets between
persons who normally would send or receive the
transaction;
but does not store information processed beyond the
time required to complete its task and communicate
the information.
(5) HEALTH CARE VALUE-ADDED NETWORK.—
The term ‘‘health care value-added network’’ means
any entity that provides additional services beyond
the transmission of data or value, such as the stor-
age of electronic data or value and the transfer of
such data or value between health care entities.
283
Title IV, Subtitle A
(6) INSURER.—The term ‘‘insurer’’ means any
entity that offers a health plan under which such en-
tity is at risk for all or part of the cost of benefits
under the plan, and includes any agent of such en-
tity.
(7) PARTICIPANT IN THE HEALTH CARE SYS-
TEM.—The term ‘‘participant in the health care sys-
tem’’ means any Federal health care program, State,
employee welfare benefit plan, health plan, adminis-
trator, insurer, or provider.
(8) PROVIDER.—The term ‘‘provider’’ means a
physician, hospital, pharmacy, laboratory, or other
person licensed or otherwise authorized under appli-
cable State laws to furnish health care items or serv-
ices.
TITLE IV—JUDICIAL REFORMS
Subtitle A—Medical Liability
Reform
SEC. 4001. DEFINITIONS.
For purposes of this subtitle:
(1) ALTERNATIVE DISPUTE RESOLUTION SYS-
TEM; ADR.—The term ‘‘alternative dispute resolution
system’’ or ‘‘ADR’’ means a system that provides
for the resolution of health care malpractice claims
284
Title IV, Subtitle A
in a manner other than through health care mal-
practice actions.
(2) CLAIMANT.—The term ‘‘claimant’’ means
any person who alleges a health care malpractice
claim, and any person on whose behalf such a claim
is alleged, including the decedent in the case of an
action brought through or on behalf of an estate.
(3) ECONOMIC LOSSES.—The term ‘‘economic
losses’’ means losses for hospital and medical ex-
penses, lost wages, lost employment, and other pecu-
niary losses incurred by an individual with respect to
which a health care malpractice claim or action is
pursued.
(4) HEALTH CARE PROFESSIONAL.—The term
‘‘health care professional’’ means any individual who
provides health care services in a State and who is
required by State law or regulation to be licensed or
certified by the State to provide such services in the
State.
(5) HEALTH
CARE
PROVIDER.—The term
‘‘health care provider’’ means any organization or
institution that is engaged in the delivery of health
care services in a State and that is required by State
or Federal law or regulation to be licensed or cer-
285
Title IV, Subtitle A
tified by the State or Federal Government to engage
in the delivery of such services in a State.
(6) HEALTH
CARE
NEGLIGENCE.—The term
‘‘health care negligence’’ means an act or omission
by a health care provider or a health care profes-
sional which deviates from the applicable State
standard of care and causes an injury.
(7) HEALTH CARE MALPRACTICE ACTION.—The
term ‘‘health care malpractice action’’ means a civil
action brought in a State or Federal court against
a health care provider, health care professional, or
other defendant joined in the action (regardless of
the theory of liability on which the claim is based)
in which the claimant alleges a health care mal-
practice claim.
(8) HEALTH CARE MALPRACTICE CLAIM.—The
term ‘‘health care malpractice claim’’ means a claim
brought against a health care provider, health care
professional, or other defendant joined in a claim al-
leging that an injury was suffered by the claimant
as the result of health care negligence or gross neg-
ligence, breach of express or implied warranty or
contract, or failure to discharge a duty to warn or
instruction to obtain consent arising from the provi-
sion of (or failure to provide) health care services.
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Title IV, Subtitle A
(9) INJURY.—The term ‘‘injury’’ means an in-
jury, illness, disease, or other harm suffered by an
individual as a result of the provision of health care
services by a health care provider or health care pro-
fessional.
(10) NONECONOMIC LOSSES.—The term ‘‘non-
economic losses’’ means losses for physical and emo-
tional pain, suffering, inconvenience, physical im-
pairment, mental anguish, disfigurement, loss of en-
joyment of life, and other nonpecuniary losses in-
curred by an individual with respect to which a
health care malpractice claim or action is pursued.
PART I—MEDIATION AND ALTERNATIVE DISPUTE
RESOLUTION
SEC. 4011. MEDIATION.
(a) 
REQUIREMENTS
FOR
QUALIFIED
HEALTH
PLANS.—In accordance with section 1120, a qualified
health plan shall provide effective mediation procedures
for hearing and resolving health care malpractice claims.
(b) CERTIFICATION AND STANDARDS.—
(1) CERTIFICATION.—A qualified health plan
meets the requirement of subsection (a) if the medi-
ation procedures provided under the plan are cer-
tified by the State as being in compliance with the
standards developed under paragraph (2).
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Title IV, Subtitle A
(2) STANDARDS.—
(A) IN
GENERAL.—The standards devel-
oped under subpart B of part I of subtitle B of
title I shall contain minimum mediation stand-
ards that qualified health plans must meet in
order to be certified by the State under para-
graph (1).
(B) MEDIATION
SERVICES.—The stand-
ards developed under subparagraph (A) shall
require a qualified health plan to provide medi-
ation services through—
(i) the Federal Mediation and Concil-
iation Service; or
(ii) a private mediation service that
has been certified by the State as being eli-
gible to mediate health care malpractice
claims.
(c) NOTIFICATION.—A qualified health plan shall
provide notice to enrollees and potential enrollees concern-
ing the mediation procedures available under the plan and
the procedures under which an enrollee commences the
mediation process.
(d) PARTICIPATION.—
(1) REQUIREMENT.—A party to a dispute
brought to mediation under this section shall be re-
288
Title IV, Subtitle A
quired to participate in the mediation if requested by
another party.
(2) PRIVILEGE.—All information disclosed in a
mediation procedure under this section shall be priv-
ileged and may not be used in any other proceeding
unless such information is discovered independently
of such mediation procedure.
SEC. 4012. FAILURE OF MEDIATION.
With respect to a claim submitted to mediation as
provided for in section 4011, if the mediation process fails
to resolve the dispute from which such claim arose, the
parties to such claim shall participate in an applicable al-
ternative dispute resolution method under section 4013.
SEC. 4013. ALTERNATIVE DISPUTE RESOLUTION.
(a) APPLICATION TO HEALTH CARE MALPRACTICE
CLAIMS UNDER PLANS.—In the case of any health care
malpractice claim, no health care malpractice action may
be brought with respect to such claim until the final reso-
lution of the claim under the alternative dispute resolution
method adopted by the State under subsection (b).
(b) ADOPTION OF MECHANISM BY STATES.—Each
State shall—
(1) adopt at least one of the alternative dispute
resolution methods specified under this part for the
289
Title IV, Subtitle A
resolution of health care malpractice claims arising
from the provision of health care services; and
(2) require that health plans disclose to enroll-
ees (and potential enrollees), in accordance with
standards established by the Secretary, the availabil-
ity and procedures for consumer grievances under
the plan, including mediation and the alternative
dispute resolution method or methods adopted under
this section.
(c) SPECIFICATION OF PERMISSIBLE ALTERNATIVE
DISPUTE RESOLUTION METHODS.—
(1) IN GENERAL.—The Secretary shall, by reg-
ulation, develop alternative dispute resolution meth-
ods for the use by States in resolving health care
malpractice claims under subsection (a). Such meth-
ods shall include at least the following:
(A) BINDING ARBITRATION.—The use of
binding arbitration.
(B) FAULT-BASED SYSTEMS.—The use of
fault-based administrative systems, expedited
review and dismissal of claims when not ade-
quately supported.
(C) EARLY
OFFERS
OF
SETTLEMENT.—
The use of a process under which parties have
the option to make early offers of settlement.
290
Title IV, Subtitle A
(D) CATASTROPHIC SYSTEMS.—The use of
catastrophic injury compensation systems.
(2) STANDARDS
FOR
ESTABLISHING
METH-
ODS.—In developing alternative dispute resolution
methods under paragraph (1), the Secretary shall
assure that the methods promote the resolution of
health care malpractice claims in a manner that—
(A) is affordable for the parties involved;
(B) provides for timely resolution of
claims;
(C) provides for the consistent and fair
resolution of claims; and
(D) provides for reasonably convenient ac-
cess to dispute resolution for individuals en-
rolled in qualified health plans.
(d) STATE INITIATED ALTERNATIVE.—A State will
be permitted to operate an alternative dispute resolution
method (other than a method described in subsection (c))
that otherwise complies with this part if such system—
(1) is determined by the Secretary to accom-
plish the purposes and otherwise meet the require-
ments of this part; and
(2) is certified by the Secretary as an appro-
priate alternative dispute resolution method.
291
Title IV, Subtitle A
(e) FAILURE TO ESTABLISH SYSTEM.—If a State
fails to establish an alternative resolution system that
meets the requirements of this part, the Secretary shall
provide for the operation of an approved alternative dis-
pute resolution method in such State until such time as
a system under this part is adopted.
SEC. 4014. COURT ACTIONS.
(a) IN GENERAL.—The extent to which any party
seeks further redress (subsequent to a decision of an alter-
native dispute resolution method) concerning a health care
malpractice claim or action in a Federal or State court
shall be dependent upon the methods of alternative dispute
resolution adopted by the State. With respect to such fur-
ther redress, if the party initiating such court action re-
ceives a worse result, with respect to liability or level of
damages, under the decision of the court than under the
State alternative dispute resolution method, such party
shall bear the costs, including legal fees, incurred in the
court action by the other party or parties to such action.
(b) REQUIREMENT FOR PERFORMANCE BOND.—The
court in a health care malpractice action may require the
party that contested the ruling of the alternative dispute
resolution method with respect to the health care mal-
practice claim that is the subject of the action to post a
performance bond (in such amount and consisting of such
292
Title IV, Subtitle A
funds and assets as the court determines to be appro-
priate), except that the court may waive the application
of such requirement to a party if the court determines that
the posting of such a bond is not necessary to ensure that
the party shall meet the requirements of this section to
pay the opposing party the costs incurred by the opposing
party under the action.
PART II—LIABILITY REFORM
SEC. 4021. APPLICABILITY
(a) IN GENERAL.—This part shall apply with respect
to any health care malpractice action brought in any State
or Federal court, except that this part shall not apply to
a claim or action for damages arising from a vaccine-relat-
ed injury or death to the extent that title XXI of the Pub-
lic Health Service Act applies to the claim or action.
(b) PREEMPTION.—The provisions of this part shall
preempt any State law to the extent such law is inconsist-
ent with the limitations contained in such provisions. The
provisions of this part shall not preempt any State law
that provides for liability defenses or places limitations on
a person’s liability for damages in addition to those con-
tained in this subtitle, places greater limitations on the
amount of attorneys’ fees that can be collected, or other-
wise imposes greater restrictions than those provided in
this part.
293
Title IV, Subtitle A
(c) EFFECT ON SOVEREIGN IMMUNITY AND CHOICE
OF LAW OR VENUE.—Nothing in subsection (b) shall be
construed to—
(1) waive or affect any defense of sovereign im-
munity asserted by any State under any provision of
law;
(2) waive or affect any defense of sovereign im-
munity asserted by the United States;
(3) affect the applicability of any provision of
the Foreign Sovereign Immunities Act of 1976;
(4) preempt State choice-of-law rules with re-
spect to claims brought by a foreign nation or a citi-
zen of a foreign nation; or
(5) affect the right of any court to transfer
venue or to apply the law of a foreign nation or to
dismiss a claim of a foreign nation or of a citizen
of a foreign nation on the ground of inconvenient
forum.
(d) FEDERAL COURT JURISDICTION NOT ESTAB-
LISHED ON FEDERAL QUESTION GROUNDS.—Nothing in
this part shall be construed to establish any jurisdiction
in the district courts of the United States over health care
malpractice actions on the basis of section 1331 or 1337
of title 28, United States Code.
294
Title IV, Subtitle A
SEC. 4022. LIMITATION ON AMOUNT OF ATTORNEY’S CON-
TINGENCY FEES.
(a) IN GENERAL.—An attorney who represents, on
a contingency fee basis, a plaintiff in a health care mal-
practice claim or action may not charge, demand, receive,
or collect for services rendered in connection with such ac-
tion (including the resolution of the claim that is the sub-
ject of the action under any alternative dispute resolution)
in excess of 25 percent of the total amount recovered by
judgment or settlement in such action.
(b) CALCULATION OF FEES IN THE EVENT OF PERI-
ODIC PAYMENTS.—In the event that a judgment or settle-
ment includes periodic or future payments of damages, the
amount recovered for purposes of computing the limitation
on the contingency fee under subsection (a) shall be based
on the cost of the annuity or trust established to make
the payments. In any case in which an annuity or trust
is not established to make such payments, such amount
shall be based on the present value of the payments.
(c) CONTINGENCY FEE DEFINED.—As used in this
section, the term ‘‘contingency fee’’ means any fee for pro-
fessional legal services which is, in whole or in part, con-
tingent upon the recovery of any amount of damages,
whether through judgment or settlement.
295
Title IV, Subtitle A
SEC. 4023. REFORM OF DAMAGES.
(a) LIMITATION ON NONECONOMIC DAMAGES.—With
respect to a health care malpractice claim or action
brought in any forum, the total amount of damages that
may be awarded to an individual and the family members
of such individual for noneconomic losses resulting from
an injury alleged under such claim or action may not ex-
ceed $250,000, regardless of the number of health care
professionals, health care providers and other defendants
against whom the action is brought or the number of ac-
tions brought with respect to the injury. With respect to
actions heard by a jury, the jury may not be informed
of limitation contained in this subsection, and if necessary,
a reduction in the jury’s damage award shall be made by
the court.
(b) MANDATORY OFFSETS FOR DAMAGES PAID BY
A COLLATERAL SOURCE.—
(1) IN
GENERAL.—With respect to a health
care malpractice claim or action, the total amount of
damages received by an individual under such action
shall be reduced, in accordance with paragraph (2),
by any other payment that has been, or will be,
made to an individual to compensate such individual
for the injury that was the subject of such action.
(2) AMOUNT OF REDUCTION.—The amount by
which an award of damages to an individual for an
296
Title IV, Subtitle A
injury shall be reduced under paragraph (1) shall
be—
(A) the total amount of any payments
(other than such award) that have been made
or that will be made to such individual to pay
costs of or compensate such individual for the
injury that was the subject of the action; minus
(B) the amount paid by such individual (or
by the spouse, parent, or legal guardian of such
individual) to secure the payments described in
subparagraph (A).
(c) PERIODIC PAYMENTS.—With respect to a health
care malpractice action referred to in subsection (a), no
person may be required to pay more than $100,000 for
future damages in a single payment of a damages award,
but a person shall be permitted to make such payments
of the award on a periodic basis. The periods for such
payments shall be determined by the adjudicating body,
based upon projections of future losses and shall be re-
duced to present value.
(d) PUNITIVE DAMAGES.—
(1) FUND.—Each State shall establish a health
care education and disciplinary program, to be ap-
proved by the Secretary, and a fund consisting of
297
Title IV, Subtitle A
such amounts as are transferred to the fund under
paragraph (2).
(2) TRANSFER OF AMOUNTS.—Each State shall
require that 75 percent of all awards of punitive
damages resulting from all health care malpractice
claims or actions in that State be transferred to the
fund established under paragraph (1) in the State.
(3) OBLIGATIONS FROM FUND.—The chief exec-
utive officer of a State shall obligate such sums as
are available in the fund established in that State
under paragraph (1) to provide additional resources
to State health care practitioner disciplinary boards
for the monitoring, education, and disciplining of
health care practitioners.
(e) ATTORNEY DISCLOSURE.—Attorneys hired to
represent any parties involved in a health care malpractice
action referred to in subsection (a) shall, at the time of
entering into the agreement with respect to such hiring,
disclose—
(1) the estimated probability of success on the
action;
(2) the number of hours the attorney estimates
will be needed to handle the action;
298
Title IV, Subtitle A
(3) an estimate of the attorney fee required
(and whether any costs will be assessed outside the
contingency fee arrangement); and
(4) an alternative fee type or rate (hourly or
contingency) if available.
At the close of the action, an attorney shall provide to
the client, and the court if the action was litigated, a full,
documented disclosure of the hours spent, a description
of the work conducted during those hours, the total com-
pensation received and the calculated hourly fee concern-
ing such action. Failure to provide the information re-
quired in this subsection will result in a fee limit of 10
percent of the award.
SEC. 4024. REFORM OF PROCEDURES.
(a) STATUTE OF LIMITATIONS.—
(1) IN GENERAL.—Except as provided in para-
graph (2), no health care malpractice claim or action
may be initiated after the expiration of the 2-year
period that begins on the date on which the alleged
injury and its cause should reasonably have been
discovered, but in no event later than 6 years after
the date of the alleged occurrence of the injury.
(2) EXCEPTION FOR MINORS.—In the case of
an alleged injury suffered by a minor who has not
attained 6 years of age, no health care malpractice
299
Title IV, Subtitle A
claim or action may be initiated after the expiration
of the 2-year period that begins on the date on
which the alleged injury and its cause should reason-
ably have been discovered, but in no event later than
6 years after the date of the alleged occurrence of
the injury and its cause or the date on which the
minor attains 12 years of age, whichever is later.
(b) JOINT AND SEVERAL LIABILITY.—
(1) IN
GENERAL.—With respect to a health
care malpractice claim or action, the liability of each
defendant for noneconomic and punitive damages
shall be several only, and shall not be joint. Each de-
fendant shall be liable only for the amount of non-
economic and punitive damages allocated to such de-
fendant in direct proportion to such defendant’s per-
centage of responsibility as determined under para-
graph (2).
(2) PROPORTION
OF
RESPONSIBILITY.—For
purposes of this subsection, the trier of fact shall de-
termine the proportion of responsibility of each
party for the claimant’s harm.
(c) FRIVOLOUS ACTIONS.—
(1) BY ATTORNEY.—With respect to a health
care malpractice claim or action, if the court or the
adjudicating body determines that the claim or ac-
300
Title IV, Subtitle A
tion, or any part thereof, was pursued by an attor-
ney where the attorney does not have reasonable
grounds to believe that the action was well grounded
in fact and was warranted by existing law, the court
shall impose an appropriate sanction, including the
reasonable costs and attorneys fees attributable to
the frivolous claims.
(2) BY CLAIMANT.—Sanctions under paragraph
(1) may apply against a claimant if the court deter-
mines that the frivolous nature of the action was a
result of the misrepresentation of facts by the claim-
ant to the attorney.
SEC. 4025. PRACTICE GUIDELINES.
(a) REBUTTABLE PRESUMPTION.—
(1) DEVELOPMENT.—Each State shall develop,
for certification by the Secretary, a set of specialty
clinical practice guidelines, based on recommended
guidelines developed by the Agency for Health Care
Policy and Research.
(2) PROVISION
OF
HEALTH
CARE
UNDER
GUIDELINES.—Notwithstanding any other provision
of law, in any claim or action brought in a Federal
or State court or other forum arising from the provi-
sion of a health care service to an individual, if the
service was provided to the individual in accordance
301
Title IV, Subtitle A
with the guidelines developed by the State (that cer-
tified or regulates the health plan involved in the ac-
tion) and certified by the Secretary under paragraph
(1), the guidelines—
(A) may be introduced by a provider who
is a party to the claim or action;
(B) if introduced, shall establish a rebutta-
ble presumption that the service prescribed by
the guidelines is the appropriate standard of
medical care; and
(C) if used to establish a rebuttable pre-
sumption, may only be overcome by the presen-
tation of clear and convincing evidence on be-
half of the party against whom the presumption
operates.
(b) ABSOLUTE DEFENSE.—With respect to new or
experimental treatments that are part of approved re-
search trials (as defined in subsection (c)), no health care
provider may be required to provide or held liable for fail-
ing to provide such treatment until that treatment is
found to be safe and efficacious by the Agency for Health
Care Policy and Research.
(c) DEFINITIONS.—As used in this section:
(1) NEW OR EXPERIMENTAL TREATMENTS.—
The term ‘‘new or experimental treatments’’ means
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Title IV, Subtitle A
a treatment for which there is not sufficient evidence
to determine the health outcome of the treatment
compared with the best available alternative treat-
ment (or with no treatment if there is no alternative
treatment).
(2) APPROVED RESEARCH TRIALS.—The term
‘‘approved research trial’’ means a trial—
(A) conducted for the primary purpose of
determining the safety, effectiveness, efficacy,
or health outcomes of a treatment, compared
with the best available alternative treatment,
and
(B) approved by the Secretary.
A trial is deemed to be approved under subpara-
graph (B) if it is approved by the National Insti-
tutes of Health, the Food and Drug Administration
(through an investigational new drug exemption),
the Department of Defense, the Department of Vet-
erans Affairs, or by a qualified nongovernmental re-
search entity (as identified in guidelines issued by
one or more of the National Institutes of Health).
SEC. 4026. DRUGS AND DEVICES.
(a) DEFINITIONS.—For purposes of this section:
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Title IV, Subtitle A
(1) DEVICE.—The term ‘‘device’’ has the mean-
ing given the term in section 201(h) of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 321(h)).
(2) DRUG.—The term ‘‘drug’’ has the meaning
given the term in section 201(g)(1) of the Federal
Food, 
Drug, 
and 
Cosmetic 
Act 
(21 
U.S.C.
321(g)(1)).
(3) HEALTH
CARE
PRODUCER.—The term
‘‘health care producer’’ means any firm or business
enterprise that designs, manufactures, produces, or
sells a drug or device that is the subject of a health
care malpractice claim or action.
(b) LIMITATION.—
(1) IN GENERAL.—Punitive damages otherwise
permitted by applicable law shall not be awarded in
a health care malpractice claim or action under this
Act against a health care producer of a drug or de-
vice (or other defendant joined in such claim or ac-
tion) that caused the harm complained of by the
claimant if—
(A) the drug or device—
(i) was subject to approval under sec-
tion 505 (21 U.S.C. 355) or premarket ap-
proval under section 515 (21 U.S.C. 360e),
respectively, of the Federal Food, Drug,
456
Title V, Subtitle B
(b) GRANTS FOR STATE LOAN REPAYMENT PRO-
GRAMS.—Section 338I(i)(1) of such Act (42 U.S.C. 254q–
1(i)(1)) is amended to read as follows:
‘‘(1) IN GENERAL.—The Secretary shall ensure
that not less than one-third of the amounts appro-
priated under section 338H(b)(1) for each fiscal
year shall be made available for grants under this
section.’’.
SEC. 5104. INCREASE IN HEALTH PROFESSIONS FUNDING
FOR PRIMARY CARE PHYSICIANS.
(a) FAMILY MEDICINE.—Section 747(d)(1) of the
Public Health Service Act (42 U.S.C. 293k(d)(1)) is
amended by striking ‘‘for each of’’ and all that follows
through ‘‘1995’’ and inserting ‘‘for each of the fiscal years
1993 and 1994, $67,500,000 for fiscal year 1995, and
such sums as may be necessary for each of the fiscal years
1996 and 1997’’.
(b) GENERAL INTERNAL MEDICINE AND PEDIAT-
RICS.—Section 748(c) of the Public Health Service Act
(42 U.S.C. 293l(c)) is amended by striking ‘‘for each of’’
and all that follows through ‘‘1995’’ and inserting ‘‘for
each of the fiscal years 1993 and 1994, $31,250,000 for
fiscal year 1995, and such sums as may be necessary for
each of the fiscal years 1996 and 1997’’.
457
Title V, Subtitle B
SEC. 5105. HEALTH PROFESSIONS FUNDING FOR NURSE
PRACTITIONERS AND PHYSICIAN ASSISTANTS
PROGRAMS.
(a) PHYSICIAN ASSISTANTS.—Section 750(d)(1) of
the Public Health Service Act (42 U.S.C. 293n(d)(1)) is
amended by striking ‘‘for each of the fiscal years 1993
through 1995’’ and inserting ‘‘for each of the fiscal years
1993 and 1994, $11,250,000 for fiscal year 1995, and
such sums as may be necessary for each of the fiscal years
1996 and 1997’’.
(b) NURSE PRACTITIONERS.—Section 822(d) of such
Act (42 U.S.C. 296m(d)) is amended by striking ‘‘1994.’’
and inserting ‘‘1994, $25,000,000 for fiscal year 1995,
and such sums as may be necessary for each of the fiscal
years 1996 and 1997’’.
(c) ADVANCED
EDUCATION
OF
PROFESSIONAL
NURSES.—Section 830(f)(1) of the Public Health Service
Act (42 U.S.C. 297(f)(1)) is amended by striking ‘‘for
each of’’ and all that follows through ‘‘1995’’ and insert-
ing ‘‘for each of the fiscal years 1993 and 1994,
$25,000,000 for fiscal year 1995, and such sums as may
be necessary for each of the fiscal years 1996 and 1997’’.
(d) SCHOLARSHIP PROGRAM FOR PHYSICIAN ASSIST-
ANTS.—Part C of title VII of the Public Health Service
Act (42 U.S.C. 293j et seq.), as amended by section 511,
475
Title VI, Subtitle A
cal assistance under the State plan in any month in
the quarter.
‘‘(b) PER-CAPITA LIMIT.—
‘‘(1) IN GENERAL.—For purposes of subsection
(a), the per-capita limit for a class of medicaid cat-
egorical individuals for a State for—
‘‘(A) fiscal year 1996, is an amount equal
to the base per-capita funding amount (as de-
termined under paragraph (2)) for such class
for such State, increased by 18.8 percent; and
‘‘(B) fiscal year 1997 and each succeeding
fiscal year, is an amount equal to the amount
determined under this paragraph for the pre-
vious fiscal year for the class updated by the
applicable percentage for such fiscal year (de-
scribed in paragraph (3)).
‘‘(2) BASE PER-CAPITA FUNDING AMOUNT.—
‘‘(A) IN
GENERAL.—The base per-capita
funding amount for a State for a class is an
amount equal to the quotient of—
‘‘(i) the total expenditures made
under the State plan with respect to medi-
cal assistance furnished for acute medical
services for individuals within such class
for calendar quarters in fiscal year 1994,
478
Title VI, Subtitle A
‘‘(E) Home or community-based services
furnished under a waiver granted under sub-
section (c), (d), or (e) of section 1915.
‘‘(F) Home and community care furnished
to functionally disabled elderly individuals
under section 1929.
‘‘(G) Community supported living arrange-
ments services under section 1930.
‘‘(H) Case-management services (as de-
scribed in section 1915(g)(2)).
‘‘(I) Home health care services (as referred
to in section 1905(a)(7)), clinic services, and re-
habilitation services that are furnished to an in-
dividual who has a condition or disability that
qualifies the individual to receive any of the
services described in a previous subparagraph.
‘‘(J) Hospice care.
‘‘(2) MEDICAID
CATEGORICAL
INDIVIDUAL.—
The term ‘medicaid categorical individual’ means an
individual described in section 1902(a)(10)(A).
‘‘(3) CLASS OF MEDICAID CATEGORICAL INDI-
VIDUALS.—The term ‘class’ means individuals within
each of the following classes:
‘‘(A) SSI-RELATED INDIVIDUALS.—Medic-
aid categorical individuals—
500
Title VI, Subtitle A
‘‘(1) provide that each primary care case man-
agement entity participating in such program has a
written contract with the State agency,
‘‘(2) include methods for selection and monitor-
ing of participating primary care case management
entities to ensure—
‘‘(A) that the geographic locations, hours
of operation, patient to staff ratio, and other
relevant characteristics of such entities are suf-
ficient to afford individuals eligible for medical
assistance under the State plan access to such
entities that is at least equivalent to the access
to health care providers that would be available
to such individuals if such individuals were not
enrolled with such entity,
‘‘(B) that such entities and their profes-
sional personnel are licensed as required by
State law and qualified to provide case manage-
ment services, through methods such as ongo-
ing monitoring of compliance with applicable re-
quirements and providing information and tech-
nical assistance, and
‘‘(C) that such entities—
‘‘(i) provide timely and appropriate
primary care to such enrollees consistent