(1) INITIAL REPORT.—Not later than January
1, 1996, the Board shall report to the Congress re-
garding the implementation of the program estab-
lished under this Act, including any recommenda-
tions for further implementing legislation.
(2) ANNUAL REPORTS.—Beginning January 1,
1997, the Board shall annually report to Congress
on the status of expenditures under this Act and the
long-range plans and goals of the Board for the or-
ganization and delivery of health care services and
long-term care services under this Act.
SEC. 302. FEDERAL HEALTH ADVISORY COUNCIL.
(a) APPOINTMENT.—Not later than January 1, 1995,
the Board shall provide for appointment of a Federal
Health Advisory Council to advise the Board on its activi-
ties.
(b) MEMBERSHIP.—Such Advisory Council shall con-
sist of 15 members who are representatives of consumers,
providers, unions, health care experts, senior citizen
groups, public health officials, experts in long-term care,
rural health care and mental illness, and other individuals
with an interest in the health care system. Such members
shall serve for terms of 3 years, except that, in the initial
appointment, 5 members shall be each appointed for terms
of 1-year, 2-years, and 3-years.
(c) VACANCIES.—
(1) IN GENERAL.—The Board shall fill any va-
cancy in the membership of the Advisory Council in
the same manner as the original appointment. The
vacancy shall not affect the power of the remaining
members to execute the duties of the Advisory Coun-
cil.
(2) VACANCY
APPOINTMENTS.—Any member
appointed to fill a vacancy shall serve for the re-
mainder of the term for which the predecessor of the
member was appointed.
(3) REAPPOINTMENT.—The Board may re-
appoint an appointed member of the Advisory Coun-
cil for a second term in the same manner as the
original appointment.
(d) CHAIRPERSON AND VICE CHAIRPERSON.—The
Advisory Council shall select a Chairperson and a Vice
Chairperson from among the members of the Advisory
Council.
(e) COMPENSATION.—All members of the Advisory
Council shall be reimbursed by the Board for travel and
per diem in lieu of subsistence expenses during the per-
formance of duties of the Advisory Council in accordance
with subchapter I of chapter 57 of title 5, United States
Code.
(f) FACA NOT APPLICABLE.—The provisions of the
Federal Advisory Committee Act shall not apply to the
Advisory Council.
(g) DUTIES.—The Advisory Council shall conduct
studies and make recommendations to the Board on the
overall functioning of the program established under this
Act and consumer and provider satisfaction with such pro-
gram.
SEC. 303. FEDERAL HEALTH PRIORITIES COUNCIL.
(a) IN GENERAL.—There is hereby established a
Federal Health Priorities Council.
(b) APPOINTMENT AND TERMS OF MEMBERS.—
(1) APPOINTMENT.—The Priorities Council
shall be composed of 15 individuals appointed by the
President, with the advice and consent of the Sen-
ate, not later than October 1, 1994. Such individuals
shall be representatives from the fields of medicine,
dentistry, mental health care, nursing, social serv-
ices, ethics, economics, business, and consumer
groups.
(2) TERMS OF MEMBERS.—The individuals ap-
pointed shall serve for a term of 5 years, except that
the terms of individuals initially appointed shall be
(as specified by the President) for such fewer num-
ber of years as will provide for the expiration of
terms on a staggered basis.
(c) VACANCIES.—
(1) IN GENERAL.—The President shall fill any
vacancy in the membership of the Priorities Council
in the same manner as the original appointment.
The vacancy shall not affect the power of the re-
maining members to execute the duties of the Prior-
ities Council.
(2) VACANCY
APPOINTMENTS.—Any member
appointed to fill a vacancy shall serve for the re-
mainder of the term for which the predecessor of the
member was appointed.
(3) REAPPOINTMENT.—The President may re-
appoint an appointed member of the Priorities
Council for a second term in the same manner as
the original appointment.
(d) PRESIDENT AND VICE PRESIDENT.—The Prior-
ities Council shall select a President and a Vice President
from among the members of the Priorities Council.
(e) COMPENSATION.—Members of the Priorities
Council shall be compensated at a level comparable to level
II of the Executive Schedule, in accordance with section
5313 of title 5, United States Code.
(f) STAFF.—The Priorities Council shall employ such
staff as the Priorities Council may determine necessary.
(g) APPLICABILITY
OF
CIVIL
SERVICE
PROVI-
SIONS.—The staff of the Priorities Council may be ap-
pointed without regard to the provisions of title 5, United
States Code, governing appointments in the competitive
service and be compensated without regard to the provi-
sions of chapter 51, and subchapter III of chapter 53 of
title 5 relating to classification and General Schedule pay
rates, except that no individual may receive pay less than
120 percent of the minimum rate of basic pay payable for
GS–15 of the General Schedule or more than the rate of
basic pay payable for level IV of the Executive Schedule.
(h) COMMITTEES.—The Priorities Council may estab-
lish such committees of its members and other medical,
economic, or health services advisers as it determines to
be necessary to assist the Priorities Council in the per-
formance of its duties.
(i) FUNCTIONS.—In order to build a consensus on the
values to be used to guide health resource decisions, the
Priorities Council shall have the following functions:
(1) Conduct public hearings and solicit testi-
mony and information from advocates for children,
senior citizens, the disabled, consumers of mental
health services, low-income people, providers of
health care, business leaders, and others.
(2) Building on outcomes research and the de-
velopment of practice guidelines, conduct studies and
make recommendations for how health care dollars
should be allocated in the context of a publicly fund-
ed national health insurance plan.
(j) REPORTS.—The Priorities Council shall report to
the Board a list of health services ranked by priority, from
the most important to the least important, representing
the comparative benefits of each service to the Nation’s
population. The recommendation shall be accompanied by
a report of an independent actuary retained for the Board
to determine rates necessary to cover the costs of the in-
cluded services in order to establish an appropriate annual
global budget. The recommendation is to be used in evalu-
ating and modifying the health care services and the long-
term care services covered under this Act. The reports
from the Priorities Council to the Board are to be submit-
ted by January 31 of 1996 (and of each subsequent year),
to be acted on by the Board by the following January 31.
SEC. 304. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated such sums
as are necessary for the establishment and operation of
the Board, Advisory Council, and Priorities Council to
carry out the purposes of this Act.
Subtitle B—State Administration
SEC. 311. STATE PROGRAMS.
(a) SUBMISSION OF PROGRAMS.—
(1) IN GENERAL.—Not later than October 1,
1996, each State shall submit to the Board the
State program in the State.
(2) REGIONAL PROGRAMS.—Any State may join
with neighboring States to submit to the Board a re-
gional program in lieu of a State program, as de-
scribed in section 314.
(b) REVIEW AND APPROVAL OF PROGRAMS.—The
Board shall review programs submitted under subsection
(a) and determine whether such programs meet the re-
quirements for approval, not later than October 1, 1997.
The Board shall not approve such a program unless it
finds that the program provides, consistent with the provi-
sions of this Act, for—
(1) adequate financing of health care services
and long-term care services covered under this Act
through a designated fund, including the annual
submission of the State program budget to the
Board,
(2) adequate administration, including the des-
ignation of a single nonprofit State agency respon-
sible for administration of the program, and suffi-
cient provisions to ensure against fraud and abuse,
(3) the establishment of—
(A) an institution reimbursement negotia-
tion board to negotiate global operating, capital,
and health training budgets with hospitals and
other health care and long-term care institu-
tions,
(B) a practitioner reimbursement negotia-
tion board (with membership including State
government representatives, consumers, general
practice 
physicians, 
specialists, 
and
nonphysician practitioners) to negotiate reim-
bursement rates for participating providers, and
(C) at the State’s option, a State advisory
board (with broad representation of health pol-
icy experts, institutional providers, practition-
ers, and consumers) to generally oversee and re-
view the performance of the State program,
(4) assurances that individuals have the free-
dom to choose practitioners and other health care
providers for services covered under this Act, and
(5) an organized grievance procedure available
to consumers through which complaints about the
organization and administration of the State pro-
gram may be filed, heard, and resolved.
(c) OPERATIONAL STATUS.—A State program in a
State shall not be considered operational unless it is ap-
proved and remains approved under subsection (b).
(d) FAILURE TO COMPLY WITH THIS ACT.—When-
ever the Board, after reasonable notice and opportunity
for hearing to the designated State agency finds that in
the administration of the State program there is a failure
to comply with any provision of this Act, the Board may—
(1) withhold further payments to the State
under section 402 and may limit such withholding to
specific portions of such program affected by the
failure, or
(2) place the State program, or specific portions
of such program, in receivership under the jurisdic-
tion of the Board,
until such failure has been corrected.
(e) JUDICIAL REVIEW.—
(1) IN GENERAL.—If any State is dissatisfied
with the Board’s action in denying approval of such
State’s program or finding a failure under sub-
section (d) with respect to such program, such State
may, within 60 days after notice of such action, file
with the United States court of appeals for the cir-
cuit in which such State is located a petition for re-
view of that action. A copy of the petition shall be
forthwith transmitted by the clerk of the court to
the Board. The Board thereupon shall file in the
court the record of the proceedings upon which the
Board’s action was based, as provided in section
2112 of title 28, United States Code.
(2) FINDINGS OF FACT.—The findings of fact
by the Board, if supported by substantial evidence,
shall be conclusive; but the court, for good cause
shown, may remand the case to the Board to take
further evidence, and the Board may thereupon
make new or modified findings of fact and may mod-
ify the Board’s previous action, and shall file in the
court the record of the further proceedings. Such
new or modified findings of fact shall likewise be
conclusive if supported by substantial evidence.
(3) JURISDICTION OF COURT.—Upon the filing
of such petition, the court shall have jurisdiction to
affirm the action of the Board or to set it aside, in
whole or in part. The judgment of the court shall be
subject to review by the Supreme Court of the Unit-
ed States upon certiorari or certification as provided
in section 1254 of title 28, United States Code.
SEC. 312. USE OF FISCAL INTERMEDIARIES.
(a) IN GENERAL.—Each State program may contract
with fiscal intermediaries in a process of competitive bid-
ding.
(b) ROLE OF FISCAL INTERMEDIARY.—
(1) IN
GENERAL.—Subject to paragraph (2)
and under continuous State oversight, the fiscal
intermediary shall process claims and reimburse-
ments, distribute the allocation of funds as specified
in agreements on global operating budgets, and as-
sume general responsibility for the administration of
the State program.
(2) LIMITATION.—The fiscal intermediary may
not participate in, nor administer, the negotiating
processes used to establish global operating budgets
or practitioner reimbursement rates.
(c) 
TYPE
OF
ORGANIZATION.—The 
fiscal
intermediary may be any type of entity designated by the
State, including nonprofit associations and private compa-
nies, as long as the State or regional program provides
for public accountability. Such accountability may include
review of the operations of the fiscal intermediary by the
State advisory board.
SEC. 313. STATE WAIVERS; MANAGED CARE.
(a) STATE WAIVERS.—A State program shall be al-
lowed to obtain waivers from the Board—
(1) to implement alternative and innovative—
(A) methods of reimbursing health care
providers,
(B) patient cost-sharing arrangements,
and
(C) administrative structures, and
(2) to provide the services covered under this
Act through the use of health plans paid through a
capitation method in order to allow the freedom of
choice of all eligible individuals in the selection of a
health plan.
In approving any waiver the Board shall assure itself that
the State program otherwise complies with the require-
ments of this Act that are not inconsistent with the grant-
ing of such waiver.
(b) MANAGED CARE OPTION.—No provision of this
Act shall be construed to prohibit or discourage any State
from developing, or contracting with, managed care net-
works for the purpose of delivering services covered under
this Act of a higher quality and in a more cost-effective
manner, as long as such networks otherwise meet the re-
quirements of this Act.
(c) ORGANIZED
APPROACHES
TO
DELIVERY
OF
SERVICES.—The Board shall sponsor efforts to encourage
States and providers of services to develop and expand or-
ganized approaches to the delivery of health care services
covered under this Act, including health maintenance or-
ganizations, hospital-based and community-oriented team
health services, and neighborhood-hospital-home health
care plans.
SEC. 314. STATE REGIONAL CONSORTIA.
(a) IN GENERAL.—Any group of States may enter
into an agreement to establish a regional consortium for
the purposes of implementing a program to be approved
by the Board under section 311. Such regional consortium
shall have jurisdiction over all States that are parties to
such agreement and that shall be subject to the provisions
of section 311 as if such consortium were established by
a single State.
(b) CONSORTIUM AGREEMENT.—Any agreement to
establish a State regional consortium shall, in addition to
providing for the requirements specified in section 311(b),
provide for—
(1) a mechanism to resolve any disputes be-
tween or among the States that are parties to the
agreement, and
(2) the collection of data and information con-
cerning the operations of the consortium and the
submission of such data and information to the
Board on an annual basis.
(c) 
CONGRESSIONAL
REVIEW.—Any 
consortium
agreement described in this section which has been ap-
proved by the Board, shall be submitted to the Congress
and shall be considered in effect, unless within 60 days
of the submission of the agreement, the Congress enacts
a disapproval resolution under the procedures described
in section 501.
SEC. 315. GRANTS TO STATES.
(a) IN GENERAL.—The Board shall make grants (in-
cluding cooperative agreements) available to States for
funding programs and for research designed to prevent or
minimize the high costs of health care, to treat illness,
disease, or medical conditions created by conditions in the
environment or workplace, and to promote health and
wellness.
(b) SPECIFIC PROGRAM AREAS.—Grants under this
section shall be awarded for initiatives in the areas of—
(1) environmental health, and
(2) health promotion and disease prevention.
(c) REQUESTS FOR PROPOSALS.—The Board shall
issue periodic requests each year for proposals for grants
under this section.
SEC. 316. TECHNICAL ASSISTANCE TO STATES.
(a) GRANTS.—
(1) IN GENERAL.—Not later than October 1,
1995, the Board shall award a grant to each State
or group of States to assist in paying the costs asso-
ciated with the establishment and initial operation of
the State plan or the State regional consortium
agreement.
(2) AMOUNTS.—Not less than $500,000 shall
be provided to each State or group of States under
a grant awarded under paragraph (1), and any
State or group of States shall remit to the Trust
Fund any unspent amount of such grant at the end
of the 2-year period beginning with the date of the
awarding of such grant.
(3) PLANNING FUNCTIONS.—Amounts provided
under grants awarded under paragraph (1) shall be
utilized for planning functions only.
(4) STUDY.—Not later than October 1, 1998,
the Board shall prepare and submit to the appro-
priate committees of Congress, a report that shall
contain the results of a study conducted by the
Board concerning the use of the grants awarded
under paragraph (1), and whether such use was ef-
fective preparing State plans and State regional con-
sortia agreements and simplifying administrative
procedures.
(b) TECHNICAL ASSISTANCE.—The Board shall pro-
vide technical assistance to States in developing State
plans and State regional consortia agreements.
(c) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated such sums as may be
necessary to carry out this section.
TITLE IV—FINANCING
Subtitle A—Health Budgets
SEC. 401. NATIONAL HEALTH BUDGET.
(a) IN GENERAL.—
(1) ANNUAL BUDGETS.—Except as provided in
paragraph (2), the Board shall establish an annual
fiscal year budget of expenditures that estimates the
total expenditures to be made in such fiscal year by
the Federal Government and States for health care
services and long-term care services covered under
this Act, including the administrative costs associ-
ated with such services.
(2) BIENNIAL BUDGETS.—The Board may es-
tablish biennial fiscal year budgets in lieu of annual
budgets.
(b) NATIONAL AVERAGE PER CAPITA COSTS.—
(1) IN GENERAL.—At least 6 months before the
beginning of the first fiscal year of the program
under this Act, the Board shall compute the national
average per capita cost for each of the services de-
scribed in subsection (a) using data the Board
deems to be appropriate.
(2) ADJUSTMENTS FOR RISK GROUPS.—
(A) IN
GENERAL.—The Board shall de-
velop an adjustment factor to the national aver-
age per capita costs computed under paragraph
(1) for each risk group (as designated under
subparagraph (B)) to reflect the national aver-
age per capita costs for that risk group.
(B) RISK GROUPS.—The Board shall des-
ignate a series of risk groups, determined by
age, sex, and other factors that represent dis-
tinct patterns of health care services and long-
term care services utilization and costs.
(3) STATE ADJUSTMENTS TO NATIONAL AVER-
AGE PER CAPITA COSTS.—The Board shall develop