Table of Contents
Sec. 4121. Establishment of the health care fraud and abuse data col-
lection program .............................................................
334
Sec. 4122. Quarterly publication of adverse actions taken .....................
340
PART IV—AMENDMENTS TO CRIMINAL LAW
Sec. 4131. Penalties for health care fraud ..............................................
341
Sec. 4132. Broadening application of mail fraud statute .......................
342
Sec. 4133. Authorization of appropriations ............................................
342
Sec. 4134. Rewards for information leading to prosecution and convic-
tion ................................................................................
343
Sec. 4135. Forfeitures for Federal health care offenses .........................
345
Sec. 4136. Injunctive relief relating to Federal health care offenses .....
346
Subtitle C—Treatment of Certain Activities Under the
Antitrust Laws
Sec. 4201. Exemption from antitrust laws for certain competitive and
collaborative activities ...................................................
347
Sec. 4202. Safe harbors ..........................................................................
349
Sec. 4203. Designation of additional safe harbors .................................
352
Sec. 4204. Certificates of review .............................................................
355
Sec. 4205. Notifications providing reduction in certain penalties under
antitrust law for health care cooperative ventures .......
367
Sec. 4206. Review and reports on safe harbors and certificates of re-
view ...............................................................................
376
Sec. 4207. Rules, regulations, and guidelines .........................................
377
Sec. 4208. Establishment of HHS Office of Health Care Competition
Policy .............................................................................
379
Sec. 4209. Definitions .............................................................................
379
TITLE V—SPECIAL ASSISTANCE FOR FRONTIER, RURAL,
AND URBAN UNDERSERVED AREAS
Subtitle A—Frontier, Rural, and Urban Underserved Areas
Sec. 5001. Establishment of grant program ...........................................
382
Sec. 5002. Establishment of new program to provide funds to allow
federally qualified health centers and other entities or
organizations to provide expanded services to medi-
cally underserved individuals ........................................
394
Sec. 5003. Tax incentives for practice in frontier, rural, and urban un-
derserved areas ..............................................................
405
Sec. 5004. Rural emergency access care hospitals ..................................
419
Sec. 5005. Grants to States regarding aircraft for transporting rural
victims of medical emergencies .....................................
423
Sec. 5006. Demonstration projects to encourage the development and
operation of rural health networks ...............................
429
Sec. 5007. Study on expanding benefits under qualified health plans
for individuals residing in rural areas ..........................
440
Subtitle B—Primary Care Provider Education
Sec. 5101. Graduate medical education demonstration projects ............
441
Sec. 5102. Funding under medicare for training in nonhospital-owned
facilities .........................................................................
453
Sec. 5103. Increase in National Health Service Corps funding .............
455
Table of Contents
Sec. 5104. Increase in health professions funding for primary care
physicians ......................................................................
456
Sec. 5105. Health professions funding for nurse practitioners and phy-
sician assistants programs ............................................
457
Sec. 5106. State grants to increase the number of primary care provid-
ers ..................................................................................
459
Subtitle C—Programs Relating to Primary and Preventive
Care Services
Sec. 5201. Maternal and infant care coordination ..................................
Sec. 5202. Comprehensive school health education program ..................
461
Sec. 5203. Frontier States ......................................................................
467
TITLE VI—TREATMENT OF EXISTING FEDERAL
PROGRAMS
Sec. 6000. References in title ..................................................................
468
Subtitle A—Medicaid Program
PART I—OPTIONAL COVERAGE UNDER QUALIFIED HEALTH PLANS
Sec. 6001. Optional coverage under qualified health plans ....................
468
PART II—LIMITATION ON CERTAIN FEDERAL MEDICAID PAYMENTS
Sec. 6011. Cap on Federal payments made for acute medical services
furnished under the medicaid program .........................
474
PART III—STATE FLEXIBILITY TO CONTRACT FOR COORDINATED CARE
SERVICES
Sec. 6021. Modification of Federal requirements to allow States more
flexibility in contracting for coordinated care services
under medicaid ..............................................................
481
PART IV—OTHER PROVISIONS
Sec. 6031. Phased-in elimination of medicaid hospital disproportionate
share adjustment payments ..........................................
535
Subtitle B—Medicare
PART I—ENROLLMENT OF MEDICARE BENEFICIARIES IN QUALIFIED
HEALTH PLANS
Sec. 6101. Legislative proposal on enrolling medicare beneficiaries in
qualified health plans ....................................................
536
Sec. 6102. Interim enrollment of medicare beneficiaries in qualified
health plans ...................................................................
537
PART II—ENHANCEMENT OF MEDICARE RISK CONTRACTS
Sec. 6111. Revisions in the payment methodology for risk contractors
539
Sec. 6112. Adjustment in medicare capitation payments to take into
account secondary payer status ....................................
541
Sec. 6113. Establishment of outlier pool ................................................
541
Title I, Subtitle A
PART III—MEDICARE SELECT
Sec. 6121. Medicare select ......................................................................
542
PART IV—OTHER PROVISIONS
Sec. 6131. Medicare part B premium .....................................................
551
Sec. 6132. Increase in medicare part B premium for individuals with
high income ...................................................................
552
Sec. 6133. Permanent 10-percent reduction in payments for capital-re-
lated costs of outpatient hospital services .....................
558
Sec. 6134. Permanent reduction in payments for other costs of out-
patient hospital services ................................................
558
Sec. 6135. Imposition of coinsurance on laboratory services ..................
559
Sec. 6136. Imposition of copayment for certain home health visits .......
559
Sec. 6137. Phased-in elimination of medicare hospital disproportionate
share adjustment payments ..........................................
562
Sec. 6138. Elimination of bad debt recognition for hospital services .....
563
Sec. 6139. Medicare as secondary payer .................................................
564
TITLE VII—PATIENT’S RIGHT TO SELF-DETERMINATION
REGARDING HEALTH CARE
Sec. 7001. Treatment of advance directives ...........................................
565
Sec. 7002. Effect on other laws ..............................................................
566
Sec. 7003. Information provided to certain individuals ..........................
566
Sec. 7004. Recommendations to the Congress on issues relating to a
patient’s right of self-determination .............................
566
Sec. 7005. Effective date ........................................................................
567
TITLE I—BASIC REFORMS TO EX-
PAND ACCESS TO HEALTH IN-
SURANCE COVERAGE AND TO
ENSURE 
UNIVERSAL 
COV-
ERAGE
Subtitle A—Universal Access
SEC. 1001. ACCESS FOR EACH INDIVIDUAL.
Each individual who is a citizen or lawful permanent
resident of the United States is provided access to health
insurance coverage under a qualified health plan under
this title.
Title I, Subtitle A
SEC. 1002. PROMOTION OF COVERAGE THROUGH EX-
PANDED TAX DEDUCTIBILITY.
For provisions expanding health insurance tax de-
ductibility, see section 2002.
SEC. 1003. LOW-INCOME ASSISTANCE WITH QUALIFIED
HEALTH PLAN PREMIUMS.
(a) PREMIUM ASSISTANCE TO QUALIFIED INDIVID-
UALS
AND FAMILIES.—With respect to each calendar
year, in the case of a qualified family (as defined in sub-
section (b)), the Secretary shall provide for payment
through a voucher of the voucher amount (specified in
subsection (c)), which may be applied against the cost of
the premium for a qualified health plan under this title.
(b) QUALIFIED FAMILY.—For purposes of this sec-
tion—
(1) IN GENERAL.—Subject to paragraph (3),
the term ‘‘qualified family’’ means a family (as de-
fined in section 1601(8)) the family income of which
does not exceed the phase-in eligibility percentage
(specified in paragraph (2)) of the poverty line for
a family of the size involved.
(2) PHASE-IN ELIGIBILITY PERCENTAGE.—For
purposes of paragraph (1) and subject to subsection
(d), the phase-in eligibility percentage shall be deter-
mined under the following table:
Title I, Subtitle A
Applicable
Calendar year:
phase-in percentage:
1997 .........................................................................................
1998 .........................................................................................
110
1999 .........................................................................................
130
2000 .........................................................................................
150
2001 .........................................................................................
170
2002 .........................................................................................
190
2003 .........................................................................................
210
2004 .........................................................................................
230
2005 .........................................................................................
240.
(3) NOT QUALIFIED DURING PERIOD OF COV-
ERAGE UNDER MEDICAID.—No family is eligible for
a voucher if such family is a member of a class or
category described in 1902(a)(64) of the Social Se-
curity Act (as added by section 6011(b)).
(c) AMOUNT OF VOUCHER.—
(1) IN GENERAL.—The amount of a voucher
specified in this subsection for a qualified family is
the lesser of—
(A) the annual premium paid the individ-
ual or family for such year for coverage under
a qualified health plan in which the family is
enrolled, or
(B) the voucher percentage (specified in
paragraph (2)) of the applicable dollar limit for
such year for such family (determined under
section 91(b)(2) of the Internal Revenue Code
of 1986, as added by section 2001 of this Act,
and determined on an annual basis).
Title I, Subtitle A
(2) VOUCHER PERCENTAGE.—For purposes of
paragraph (1), the term ‘‘voucher percentage’’
means, for a family, 100 percent reduced (but not
below zero percent) by the ratio of 100 to 140 for
each 1 percentage point (or portion thereof) such
family’s income equals or exceeds 100 percent of the
income official poverty line (as defined by the Office
of Management and Budget, and revised annually in
accordance with section 673(2) of the Omnibus
Budget Reconciliation Act of 1981) applicable to a
family of the size involved.
(d) MODIFICATION OF PHASE-IN OF ELIGIBILITY.—
(1) ESTIMATION OF TOTAL EXPENDITURES.—
Between July 15 and August 1 of each calendar
year (beginning with 1997), the Director of the Of-
fice of Management and Budget (in this subsection
referred to as the ‘‘Director’’) shall estimate the sum
of—
(A) the expenditures under titles XVIII
and XIX of the Social Security Act for the fis-
cal year beginning in such year, and
(B) the total amount of the vouchers to be
provided under this section in that fiscal year.
(2) COMPARISON WITH BASELINE.—
Title I, Subtitle A
(A) MORE SAVINGS THAN ANTICIPATED.—
If the sum estimated under paragraph (1) for
a fiscal year is less than the baseline amount
under paragraph (3) for the fiscal year, then
paragraph (4) shall apply for the fiscal year.
(B) LESS SAVINGS THAN ANTICIPATED.—
If the sum estimated under paragraph (1) for
a fiscal year is more than the baseline amount
under paragraph (3), then paragraph (5)(B)
shall apply for the fiscal year (except as pro-
vided in paragraph (5)(A)).
(C) REPORT TO CONGRESS.—The Director
shall promptly report to Congress on determina-
tions under subparagraph (A).
(3) BASELINE.—For purposes of this sub-
section, the baseline amount under this paragraph
for fiscal year—
(A) 1997, is $318,000,000,000;
(B) 1998, is $352,000,000,000;
(C) 1999, is $391,000,000,000;
(D) 2000, is $435,000,000,000;
(E) 2001, is $483,000,000,000;
(F) 2002, is $535,000,000,000;
(G) 2003, is $593,000,000,000; or
Title I, Subtitle A
(H) 2004 and any succeeding fiscal year,
is the baseline under this paragraph for the
previous fiscal year increased by the percentage
increase in the per capita Gross Domestic Prod-
uct for the previous fiscal year.
(4) APPLICATION
OF
SAVINGS
TO
INCREASE
ELIGIBILITY FOR VOUCHERS.—
(A) IN GENERAL.—If this paragraph ap-
plies for a year (before 2005), subject to sub-
paragraph (B), the applicable percentage under
subsection (b)(2) for the year shall be increased
by such whole number of percentage points as
the Director estimates will result in aggregate
additional expenditures in the year that do not
exceed the amount by which the baseline
amount under paragraph (3) for the fiscal year
will exceed the sum estimated under paragraph
(1) for the fiscal year. Such increase shall only
apply to that calendar year involved.
(B) LIMITATION.—In no case shall the in-
crease under subparagraph (A) for a year result
in an applicable percentage exceeding the appli-
cable percentage specified in the table in sub-
section (b)(2) for the following year.
Title I, Subtitle A
(5) RECOVERY OF DEFICIT THROUGH ADJUST-
MENT MECHANISM.—
(A) IN GENERAL.—In the case described in
paragraph (2)(B), the Director shall submit to
the Benefits Commission a report on the deficit
for the year. With respect to a fiscal year in
which subparagraph (B)(i) applies, the Com-
mission may submit recommended modifications
to the Congress in response to such a deficit.
With respect to a fiscal year in which subpara-
graph (B)(ii) applies, the Commission shall sub-
mit recommended modifications to the Congress
in response to such a deficit. If Congress adopts
the modifications recommended by the Commis-
sion under such section, then subparagraph (B)
shall not apply for such year.
(B) ADJUSTMENT MECHANISM.—
(i) BEFORE FULL PHASE-IN.—If this
subparagraph applies for a year (up to the
full phase-in year (as defined in clause
(iii), then for the following year the phase-
in eligibility percentage under subsection
(b)(2) shall be decreased by such whole
number of percentage points as the Direc-
tor estimates will result in aggregate de-
Title I, Subtitle A
crease in expenditures that are equal to
the amount by which the sum estimated
under paragraph (1) for the fiscal year will
exceed the baseline amount under para-
graph (3) for the fiscal year. Such decrease
shall only apply to the year involved.
(ii) AFTER FULL PHASE-IN.—If this
subparagraph applies for a year (after the
full phase-in year), then for the following
year the phase-in eligibility percentage
under subsection (b)(2) shall be decreased
by such whole number of percentage points
as the Director estimates will result in ag-
gregate decrease in expenditures that are
equal to the amount by which the sum esti-
mated under paragraph (1) for the fiscal
year will exceed the baseline amount under
paragraph (3) for the fiscal year. Such de-
crease shall only apply to the year involved.
(iii) 
FULL
PHASE-IN
YEAR
DE-
FINED.—In this subparagraph, the term
‘‘full phase-in year’’ means the first year in
which the phase-in eligibility percentage
under subsection (b)(2) has equaled 240
percent.
Title I, Subtitle A
(C) REPORT TO CONGRESS.—The Director
shall submit to Congress a report on any deter-
minations and any adjustments under this
paragraph.
(6) ACCUMULATION
OF
SMALL
DEFICITS.—If
the sum estimated under paragraph (1) for a fiscal
year is determined by the Director to be such a
small amount as to not be administratively cost effi-
cient, no adjustments need be made.
(7) NO
ADMINISTRATIVE
OR
JUDICIAL
RE-
VIEW.—There shall be no administrative or judicial
review of any determination under this subsection.
(e) APPLICATION FOR ASSISTANCE.—
(1) IN GENERAL.—Any family may file an ap-
plication for a voucher under this section at any
time in accordance with this subsection.
(2) USE
OF
SIMPLE
FORM.—The Secretary
shall use an application which shall be as simple in
form as possible and understandable to the average
individual. The application may require attachment
of such documentation as deemed necessary by the
Secretary in order to ensure eligibility for assistance.
The Secretary shall use, as deemed practicable by
the Secretary, any existing forms employed for Fed-
Title I, Subtitle A
eral income tax filings as an application for assist-
ance.
(3) AVAILABILITY OF FORMS.—The Secretary
shall make application forms available through
health care providers and plans, public assistance of-
fices, public libraries, and at other locations (includ-
ing post offices) accessible to a broad cross-section
of families.
(4) SUBMISSION OF APPLICATION FORM.—An
application form under this subsection may be sub-
mitted in such manner as the Secretary shall pro-
vide.
(5) PERMITTING SUBMISSION OF REVISED AP-
PLICATION.—During a year, a family may submit a
revised application to reflect changes in the esti-
mated income of the family, including changes in
employment status of family members, during the
year. The voucher amount shall be revised to reflect
such a revised application.
(6) ENROLLMENT
AT
POINT
OF
APPLICA-
TION.—To the extent practicable, the Secretary shall
provide for the option of enrollment in a qualified
health plan as part of the application and approval
process for assistance under this section. In provid-
ing for such an option, the Secretary may require
Title I, Subtitle A
the State of residence to provide such information
and assistance regarding qualified health plans and
purchasing groups as may be necessary.
(f) DETERMINATION OF ELIGIBILITY.—
(1) IN GENERAL.—The Secretary shall provide
in a prompt manner for—
(A) a determination of eligibility on each
application for a voucher submitted under sub-
section (e), and
(B) notice of such determination to the
family involved.
(2) ELECTION WITH RESPECT TO INCOME DE-
TERMINATION.—As elected by a family at the time
of submission of an application for a voucher under
this section, income shall be determined either—
(A) by multiplying by a factor of 4 the in-
come for the 3-month period immediately pre-
ceding the month in which the application is
made, or
(B) based upon estimated income for the
entire year in which the application is submit-
ted.
(g) USE OF VOUCHER.—A voucher provided to a
family under this section shall be remitted by any individ-
ual in such family to the qualified health plan, the pur-
Title I, Subtitle A
chasing group, or, in the case of an employment-related
qualified health plan, to the employee’s employer, as the
case may be, for payment by the Secretary. The qualified
health plan, purchasing group, or employer shall make
proper adjustments in billing statements to reflect such
family’s remaining premium obligations (if any).
(h) RECONCILIATION.—
(1) NOTICE
OF
VOUCHER
AMOUNT
BY
SEC-
RETARY.—In the case of a qualified family that has
received a voucher under this section for any month
in a year, the Secretary shall, not later than Janu-
ary 31 of the following year, notify such family of
the total amount of the vouchers that such family
received during the year.
(2) FILING OF NOTICE.—A family that receives
a notice under paragraph (1) shall attach such no-
tice to the tax return filed by such family for the
year involved. The Secretary of the Treasury shall
establish a procedure to enable a family that is not
required to file a tax return for the year involved to
file the notice received under paragraph (1).
(3) RECONCILIATION OF ASSISTANCE BASED ON
ACTUAL INCOME.—
(A) IN GENERAL.—Based on and using the
information contained in the notice filed under
Title I, Subtitle A
paragraph (2) with respect to a family, the Sec-
retary of the Treasury shall compute the
amount of the voucher that should have been
provided under this section with respect to the
family in the year involved.
(B) OVERPAYMENT OF VOUCHER.—If the
amount of the voucher provided was greater
than the amount computed under subparagraph
(A), the excess amount shall be treated as an
underpayment of a tax imposed by chapter 1 of
the Internal Revenue Code of 1986 and paid by
the Secretary of the Treasury to the family in-
volved.
(C) UNDERPAYMENT OF VOUCHER.—If the
amount computed under subparagraph (A) is
greater than the amount of the voucher pro-
vided, the amount of the difference shall be
treated as an overpayment of tax imposed by
such chapter, or in the event such family is en-
titled to a refund of such a tax, subject to the
provisions of section 6402(d) of such Code.
(4) FAILURE TO FILE.—In the case of any fam-
ily that is required to file a notice under paragraph
(2) for a year and that fails to file such a notice by
the deadline specified by the Secretary, the entire
Title I, Subtitle A
amount of the voucher provided in such year shall
be considered the excess amount under paragraph
(3)(B). The Secretary shall waive the application of
this paragraph if the family establishes, to the satis-
faction of the Secretary, good cause for the failure
to file the notice on a timely basis.
(5) PENALTIES
FOR
FALSE
INFORMATION.—
Any individual who knowingly makes a material mis-
representation of information in an application for
assistance under this section, shall be liable to the
Federal Government for excess payments made
based on such misrepresentation and interest on
such excess payments at a rate specified by the Sec-
retary, and, in addition, shall be liable to the Fed-
eral Government for $1,000 or, if greater, 3 times
the excess payments made based on such misrepre-
sentation.
(6) INSTRUCTIONS FOR FILING NOTICE.—The
Secretary shall provide instructions for filing the no-
tice described in paragraph (2) (in such form as the
Secretary prescribes) no later than January 31 of
the year following the year involved.
(i) ADMINISTRATION BY A STATE.—Upon application
of a State, the Secretary may provide for the administra-
Title I, Subtitle A
tion of this section in a State through an appropriate
State agency.
(j) DEFINITIONS
AND
DETERMINATION
OF
IN-
COME.—For purposes of this section:
(1) POVERTY LINE.—The term ‘‘poverty line’’
means the income official poverty line (as defined by
the Office of Management and Budget, and revised
annually in accordance with section 673(2) of the
Omnibus Budget Reconciliation Act of 1981) appli-
cable to a family of the size involved.
(2) DETERMINATIONS OF INCOME.—
(A) IN
GENERAL.—The term ‘‘income’’
means adjusted gross income (as defined in sec-
tion 62(a) of the Internal Revenue Code of
1986)—
(i) determined without regard to sec-
tions 135, 162(l), 911, 931, and 933 of
such Code; and
(ii) increased by—
(I) the amount of interest re-
ceived or accrued which is exempt
from tax, plus
(II) the amount of social security
benefits (described in section 86(d) of
such Code) which is not includible in
Title I, Subtitle A
gross income under section 86 of such
Code.
(B) FAMILY INCOME.—The term ‘‘family
income’’ means, with respect to a family, the
sum of the income for all members of the family
(as defined in section 1601(8)), not including
the income of a dependent child with respect to
which no return is required under the Internal
Revenue Code of 1986.
(C) FAMILY SIZE.—The family size to be
applied under this section, with respect to fam-
ily income, is the number of individuals in-
cluded in the family for purposes of coverage
under a qualified health plan.
SEC. 1004. EXPANDED ACCESS TO EMPLOYER PLANS.
(a) QUALIFIED
HEALTH
PLANS
MADE
AVAIL-
ABLE.—Each employer shall make available, either di-
rectly, through a purchasing group, or otherwise, enroll-
ment in a qualified health plan to each eligible employee
of such employer. A small employer may meet the require-
ment of the previous sentence only through a qualified in-
sured health plan.
(b) FORWARDING INFORMATION.—
(1) INFORMATION REGARDING PLANS.—An em-
ployer must provide each employee of such employer
Title I, Subtitle A
(including any part-time or seasonal employee) with
information provided by the State under section
1405 regarding all qualified health plans offered in
the health care coverage area (in this title referred
to as a ‘‘HCCA’’) in which the employer is located
and, if the employee resides in another HCCA, infor-
mation regarding how to obtain information on
qualified health plans offered to residents of such
other HCCA.
(2) INFORMATION
REGARDING
EMPLOYEES.—
An employer must forward the name and address
(and any other necessary identifying information
specified by the Secretary) of each eligible em-
ployee—
(A) to the qualified health plan in which
such employee is enrolled, or
(B) to the purchasing group (if any)
through which such enrollment is made.
(c) PAYROLL DEDUCTION.—
(1) IN GENERAL.—If an employer is advised by
a qualified health plan (or by a purchasing group on
behalf of a qualified insured health plan) that an eli-
gible employee is enrolled in such a plan, the em-
ployer, upon authorization by the employee, shall
provide for the deduction, from the employee’s wages
Title I, Subtitle A
or other compensation, of the premium amount due
(less any employer contribution) to the plan or pur-
chasing group.
(2) APPLICATION OF VOUCHER.—The employer
shall reduce the amount so deducted by the amount
of any voucher (described in section 1003) presented
by the employee to the employer.
(d) LIMITED EMPLOYER OBLIGATION.—Nothing in
this section shall be construed as requiring an employer
to make, or preventing such employer from making, an
employer contribution toward coverage of employees (and
their dependents) under a qualified health plan.
(e) NO REQUIREMENT TO ENROLL IN EMPLOYER-
PROVIDED PLAN.—An eligible employee of a small em-
ployer may elect not to enroll in a qualified health plan
offered by an employer under this section. Such an em-
ployee may enroll—
(1) in any qualified health plan offered in the
HCCA in which the employee works or in which the
employee resides (including qualified health plans of-
fered through purchasing groups serving such
HCCA), or
(2) in a plan offered by an association which is
organized for purposes other than to offer health
plan coverage to the association’s members and
Title I, Subtitle B
which is offering such coverage as of the date of the
enactment of this Act.
Subtitle B—Qualified General Ac-
cess Plans in the Small Em-
ployer and Individual Market-
place
PART I—STANDARDS FOR GENERAL ACCESS
PLANS
Subpart A—Establishment and Application of
Standards
SEC. 1101. QUALIFIED GENERAL ACCESS PLANS.
(a) IN GENERAL.—In order to be a qualified general
access plan, a health plan must be certified under subtitle
E as meeting the applicable standards established under
section 1102 for a qualified general access plan.
(b) 
SPECIAL
RULES
FOR
LARGE
EMPLOYER
PLANS.—For special rules regarding the application of
similar standards to large employer plans, see part I of
subtitle C.
(c) CONSTRUCTION.—Whenever in this title a re-
quirement or standard is imposed on a health plan, the
requirement or standard is deemed to have been imposed
on the insurer or health plan sponsor of the plan in rela-
tion to that plan.
Title I, Subtitle B
SEC. 1102. ESTABLISHMENT OF STANDARDS.
(a) ROLE OF THE NAIC.—The Secretary shall re-
quest that the National Association of Insurance Commis-
sioners—
(1) develop specific standards, in the form of a
model Act and model regulations, to implement the
requirements of sections 1111 through 1117 and
1122 of subpart B; and
(2) report to the Secretary on such standards,
within 6 months after the date of the enactment of this
Act. If such Association develops such standards within
such period and the Secretary finds that such standards
implement the requirements of such section, such stand-
ards shall be applicable under this part.
(b) ROLE OF THE SECRETARY.—If the National As-
sociation of Insurance Commissioners Association fails to
develop and report on the standards described in sub-
section (a) by the date specified in such subsection or the
Secretary finds that such standards do not implement the
requirements of sections 1111 through 1117 and 1122,
the Secretary shall develop and publish such standards,
by not later than the date that is 1 year after the date
of enactment of this Act, and such standards shall be ap-
plicable under this part.
(c) REFERENCE
TO INSURANCE REFORM STAND-
ARDS.—For purposes of this subtitle, the term ‘‘insurance
Title I, Subtitle B
reform standards’’ means the standards developed under
this section and applicable under this part and includes
the requirements under sections 1118 through 1122 of
subpart B.
SEC. 1103. APPLICATION OF INTERIM REQUIREMENTS.
(a) IN GENERAL.—Prior to the date on which a State
establishes a certification program under subsection (a),
an insurer may only offer an insured health plan in such
State if such plan meets the requirements specified in sub-
section (c) applicable to qualified general access plans.
(b) NONCOMPLIANCE.—An insurer that offers an in-
sured health plan in a State referred to in subsection (a)
that fails to meet the requirements of subsection (c) shall
be subject to a sanction under the amendment made by
section 2403(a).
(c) REQUIREMENTS APPLICABLE.—For purposes of
this section, the requirements of this subsection are the
requirements specified in the following provisions:
(1) Subsections (a), (e), and (f) of section 1111
(relating to guaranteed eligibility, availability, and
renewability).
(2) Section 1112 (relating to nondiscrimination
based on health status), except (for purposes of this
section) that—
Title I, Subtitle B
(A) any reference to 3 months in section
1112(b)(1)(A) is deemed a reference to 6
months,
(B) any reference to 6 months in section
1112(b)(1)(B) is deemed a reference to 9
months, and
(C) any reference to 3-month period in sec-
tion 1112(b)(3)(B) is deemed a reference to 6-
month period.
(3) Section 1114 (relating to financial solvency
requirements).
(4) Section 1116(d) (relating to rating limita-
tions).
(5) Section 1120 (relating to mediation proce-
dures).
Subpart B—Standards
SEC. 1111. GUARANTEED ELIGIBILITY, AVAILABILITY, AND
RENEWABILITY.
(a) IN GENERAL.—Except as otherwise provided in
this section, no insurer may exclude from coverage under
a qualified general access plan any eligible employee or
eligible individual applying for coverage.
(b) STANDARDS.—The insurance reform standards
shall prohibit marketing or other practices by an insurer
intended to discourage or limit the issuance of a qualified
Title I, Subtitle B
general access plan to an eligible employee or eligible indi-
vidual on the basis of health status, employer size or in-
dustry, geographic area, or other risk factors.
(c) AVAILABILITY.—A qualified general access plan
must be made available throughout the entire HCCA in
which such plan is offered.
(d) GEOGRAPHIC LIMITATIONS.—A qualified general
access plan may deny coverage under the plan to an eligi-
ble employee or eligible individual who resides outside the
HCCA in which such plan is offered, but only if such de-
nial is applied uniformly, without regard to health status
or insurability of individuals.
(e) APPLICATION OF CAPACITY LIMITS.—
(1) IN GENERAL.—Subject to paragraph (2), a
qualified general access plan may apply to the ap-
propriate certifying authority (as defined in section
1601(1)) to cease enrolling eligible employees and el-
igible individuals under the plan if—
(A) the plan ceases to enroll any new eligi-
ble employees and eligible individuals; and
(B) the plan can demonstrate to the appli-
cable certifying authority that its financial or
provider capacity to serve previously covered
groups or individuals (and additional individ-
uals who will be expected to enroll because of
Title I, Subtitle B
affiliation with such previously covered groups
or individuals) will be impaired if it is required
to enroll other eligible employees and eligible in-
dividuals.
(2) FIRST-COME-FIRST-SERVED.—A qualified
general access plan is only eligible to exercise the
limitations provided for in paragraph (1) if such
plan provides for enrollment of eligible employees
and eligible individuals on a first-come-first-served
basis (except in the case of additional individuals de-
scribed in paragraph (1)(B)).
(f) RENEWABILITY.—
(1) IN GENERAL.—A qualified general access
plan that is issued to a small employer, eligible em-
ployee, or eligible individual shall be renewed, at the
option of the employer, employee, or individual, un-
less the plan is terminated for a reason specified in
paragraph (2) or (3).
(2) GROUNDS FOR REFUSAL TO RENEW.—An
insurer may refuse to renew, or may terminate, a
qualified general access plan under this subtitle only
for—
(A) nonpayment of premiums;
(B) fraud or misrepresentation; or
Title I, Subtitle B
(C) change in residence to a HCCA not
served under the plan.
(3) TERMINATION.—
(A) IN GENERAL.—An insurer is not re-
quired to renew or make available a qualified
general access plan through a particular type of
delivery system (as defined in section 1601)
with respect to a small employer, eligible em-
ployee, or eligible individual, if the insurer—
(i) elects not to renew all of its quali-
fied general access plans using such deliv-
ery system issued to small employers, eligi-
ble employees, and eligible individuals in a
HCCA; and
(ii) provides notice to the appropriate
certifying authority and to each small em-
ployer and eligible individual covered under
the plan of such termination at least 180
days before the date of expiration of the
plan.
(B) PROHIBITION ON MARKET REENTRY.—
In the case of such a termination, the insurer
may not provide for issuance of any qualified
general access plan using such a delivery sys-
tem to an eligible employer, eligible employee,
Title I, Subtitle B
or eligible individual in the State during the 5-
year period beginning on the date of the termi-
nation of the last plan not so renewed.
(g) EXCEPTION DURING TRANSITION.—
(1) IN GENERAL.—Until the date specified in
section 1501, an insurer may exclude from coverage
any individual who does not apply for enrollment on
a timely basis, consistent with this subsection.
(2) 
CLARIFICATION
OF
TIMELY
ENROLL-
MENT.—
(A) GENERAL INITIAL ENROLLMENT RE-
QUIREMENT.—Except as provided in this para-
graph, an insurer may consider enrollment of
an eligible employee or eligible individual in a
plan not to be timely if such employee or indi-
vidual fails to enroll in the plan during an ini-
tial enrollment period, if such period is at least
30 days long.
(B) ENROLLMENT DUE TO LOSS OF PRE-
VIOUS EMPLOYER COVERAGE.—Enrollment in a
qualified general access plan is considered to be
timely in the case of an eligible employee or eli-
gible individual who—
Title I, Subtitle B
(i) was covered under another health
plan at the time of the individual’s initial
enrollment period,
(ii) stated at the time of the initial en-
rollment period that coverage under a
health plan was the reason for declining
enrollment,
(iii) lost coverage under another
health plan (as a result of the termination
of the other plan’s coverage, termination or
reduction of employment, or other reason),
and
(iv) requests enrollment within 30
days after termination of such coverage.
(C) REQUIREMENT APPLIES DURING OPEN
ENROLLMENT
PERIODS.—Each qualified gen-
eral access plan shall provide for at least one
period (of not less than 30 days) each year dur-
ing which enrollment under the plan shall be
considered to be timely.
(D) EXCEPTION
FOR
COURT
ORDERS.—
Enrollment of a spouse or minor child of an eli-
gible employee or eligible individual shall be
considered to be timely if—
Title I, Subtitle B
(i) a court has ordered that coverage
be provided for the spouse or child under
a covered employee’s or individual’s health
plan, and
(ii) a request for enrollment is made
within 30 days after the date the court is-
sues the order.
(E) ENROLLMENT OF SPOUSES AND DE-
PENDENTS.—
(i) IN GENERAL.—Enrollment of the
spouse (including a child of the spouse)
and any dependent child of an eligible em-
ployee or eligible individual shall be consid-
ered to be timely if a request for enroll-
ment is made either—
(I) within 30 days of the date of
the marriage or of the date of the
birth or adoption of a child, if family
coverage is available as of such date,
or
(II) within 30 days of the date
family coverage is first made avail-
able.
(ii) COVERAGE.—If a plan makes
family coverage available and enrollment is
Title I, Subtitle B
made under the plan on a timely basis
under clause (i)(I), the coverage shall be-
come effective not later than the first day
of the first month beginning after the date
of the marriage or the date of birth or
adoption of the child (as the case may be).
SEC. 1112. NONDISCRIMINATION BASED ON HEALTH STA-
TUS.
(a) IN GENERAL.—Except as provided under sub-
section (b), a qualified health plan may not deny, limit,
or condition the coverage under (or benefits of) the plan
based on the health status, claims experience, receipt of
health care, execution of an advance directive, medical his-
tory, or lack of evidence of insurability, of an individual.
(b) TREATMENT OF PREEXISTING CONDITION EX-
CLUSIONS FOR ALL SERVICES.—
(1) IN GENERAL.—A qualified health plan may
not impose (and an insurer may not require a small
employer under a qualified health plan to impose
through a waiting period for coverage under a plan
or similar requirement) a limitation or exclusion of
benefits relating to treatment of a condition based
on the fact that the condition preexisted the effective
date of the plan with respect to an individual if—
Title I, Subtitle B
(A) the condition relates to a condition
that was not diagnosed or treated during the 3-
month period ending on the day before the first
date of coverage under the plan;
(B) the limitation or exclusion extends over
more than 6 months after the date of coverage
under the plan;
(C) the limitation or exclusion applies to
an individual who, as of the date of birth, was
covered under the plan; or
(D) the limitation or exclusion relates to
pregnancy.
In the case of an individual who is eligible for cov-
erage under a qualified health plan but for a waiting
period imposed by an employer, in applying subpara-
graphs (A) and (B), the individual shall be treated
as having been covered under the plan as of the ear-
liest date of the beginning of the waiting period.
(2) CREDITING
OF
PREVIOUS
COVERAGE.—A
qualified health plan shall provide that if an individ-
ual under such plan is in a period of continuous cov-
erage with respect to particular services as of the
date of initial coverage under such plan, any period
of exclusion of coverage with respect to a preexisting
condition for such services or type of services shall
Title I, Subtitle B
be reduced by 1 month for each month in the period
of continuous coverage.
(3) DEFINITIONS.—As used in this subsection:
(A) PERIOD OF CONTINUOUS COVERAGE.—
The term ‘‘period of continuous coverage’’
means, with respect to particular services, the
period beginning on the date an individual is
enrolled under a qualified health plan or an
equivalent health care program which provides
benefits with respect to such services and ends
on the date the individual is not so enrolled for
a continuous period of more than 3 months.
(B) PREEXISTING CONDITION.—The term
‘‘preexisting condition’’ means, with respect to
coverage under a qualified health plan, a condi-
tion the diagnosis of which was known or which
was treated, within the 3-month period ending
on the day before the first date of such cov-
erage (without regard to any waiting period).
SEC. 1113. BENEFITS OFFERED.
(a) IN GENERAL.—A qualified general access plan
shall—
(1) offer to all enrollees in the plan coverage for
the covered items and services specified under sub-
title D;
Title I, Subtitle B
(2) imposes on such enrollees the cost sharing
requirements for such items and services specified
under such subtitle;
(3) demonstrate the ability to provide such
items and services throughout the HCCA in which
the plan enrolls individuals; and
(4) covers the routine medical costs of certain
investigational treatments referred to in section
1301(d)(3).
However, no specific procedure or treatment is required
to be covered in such a plan.
(b) AVAILABILITY OF SERVICES IN ENTIRE COV-
ERAGE AREA.—Each qualified general access plan offered
in a HCCA shall provide assurances to the appropriate
certifying authority that it has the capacity to deliver the
full range of covered items and services to potential enroll-
ees who reside within the HCCA served by the plan.
(c) LIMITATION ON OFFERING ADDITIONAL BENE-
FITS.—An insurer offering a qualified general access plan
may only offer coverage of items and services that are not
covered items or services, or a reduction in cost sharing
below the cost sharing specified under subtitle D for the
benefit package applicable, if—
Title I, Subtitle B
(1) such additional coverage is offered and
priced separately from the standard or catastrophic
package offered;
(2) the purchase of the plan is not conditioned
upon the purchase of such additional coverage; and
(3) coverage of such additional items and serv-
ices is offered to individuals who are not enrolled in
such plan.
(d) APPLICATION
OF ARBITRATION.—A qualified
general access plan shall provide for a mandatory binding
arbitration in accordance with the process described in
section 1407.
SEC. 1114. FINANCIAL SOLVENCY REQUIREMENTS.
(a) SOLVENCY PROTECTION.—Each insurer offering
a qualified general access plan shall meet financial sol-
vency requirements to assure protection of enrollees with
respect to potential insolvency.
(b) PROTECTION AGAINST PROVIDER CLAIMS.—In
the case of a failure of a qualified general access plan to
make payments with respect to covered items and services,
an individual who is enrolled under the plan is not liable
to any health care provider or practitioner with respect
to the provision of such items and services for payments
in excess of the amount for which the enrollee would have
Title I, Subtitle B
been liable if the plan were to have made payments in a
timely manner.
SEC. 1115. ENROLLMENT.
(a) ENROLLMENT PROCESS.—
(1) IN GENERAL.—A qualified general access
plan shall establish an enrollment process consistent
with this subsection.
(2) INITIAL ENROLLMENT PERIOD.—Each eligi-
ble employee or eligible individual, at the time the
individual first becomes an eligible employee or eligi-
ble individual in the HCCA in which a qualified gen-
eral access plan is offered, shall have an initial en-
rollment period (of not less than 30 days) in which
to enroll in the plan.
(3) GENERAL
ENROLLMENT
PERIOD.—Each
qualified general access plan shall permit eligible
employees and eligible individuals to enroll (or
change enrollment) in the plan during each general
annual enrollment period specified by the appro-
priate certifying authority under section 1408.
(4) SPECIAL
ENROLLMENT
PERIODS.—In the
case of an eligible employee or eligible individual
who—
Title I, Subtitle B
(A) through marriage, divorce, birth, or
adoption of a child, or similar circumstances,
experiences a change in family composition;
(B) experiences a change in employment
status (including a significant change in the
terms and conditions of employment); or
(C) changes residence to another HCCA;
each qualified general access plan shall provide for
a special enrollment period in which the employee or
individual is permitted to change the individual or
family basis of coverage or the plan in which the em-
ployee or individual is enrolled. The circumstances
under which such special enrollment periods are re-
quired and the duration of such periods shall be
specified in the insurance reform standards.
(5) TRANSITIONAL
ENROLLMENT
PERIOD.—
Each qualified general access plan that will be of-
fered at the beginning of the first certification year
(as defined in section 1601(9)) shall provide for a
special transitional enrollment period (during a pe-
riod beginning in the months of October through
December of the previous year) during which eligible
employees and eligible individuals may first enroll.
(b) PERIOD OF COVERAGE.—
Title I, Subtitle B
(1) INITIAL ENROLLMENT PERIOD.—In the case
of an eligible employee or eligible individual who en-
rolls with a qualified general access plan during an
initial enrollment period, coverage under the plan
shall begin on such date (not later than the first day
of the first month that begins at least 15 days after
the date of enrollment) as the insurance reform
standards specify.
(2) GENERAL ENROLLMENT PERIODS.—In the
case of an eligible employee or eligible individual who
enrolls with a qualified general access plan during a
general enrollment period, coverage under the plan
shall begin on the first day of the first month begin-
ning at least 15 days after the end of such period.
(3) SPECIAL ENROLLMENT PERIODS.—
(A) IN GENERAL.—In the case of an eligi-
ble employee or eligible individual who enrolls
with a qualified general access plan during a
special enrollment period described in sub-
section (a)(4), coverage under the plan shall
begin on such date (not later than the first day
of the first month that begins at least 15 days
after the date of enrollment) as the insurance
reform standards specify, except that coverage
of family members shall begin as soon as pos-
Title I, Subtitle B
sible on or after the date of the event that gives
rise to the special enrollment period.
(B) TRANSITIONAL SPECIAL ENROLLMENT
PERIOD.—In the case of an eligible employee or
eligible individual who enrolls with a qualified
general access plan during the transitional spe-
cial enrollment period described in subsection
(a)(5), coverage under the plan shall begin on
January 1 of the first certification year.
(4) MINIMUM PERIOD OF ENROLLMENT.—
(A) IN GENERAL.—In order to avoid ad-
verse selection, each qualified general access
plan may require, consistent with the insurance
reform standards, that enrollments with the
plan be for not less than a specified minimum
enrollment period (with exceptions permitted
for such exceptional circumstances as the stand-
ards may recognize).
(B) SUNSET.—Subparagraph (A) shall not
apply on and after the date that the universal
coverage requirement of section 1501 first ap-
plies.
SEC. 1116. RATING LIMITATIONS.
(a) LIMIT ON VARIATION OF PREMIUMS FOR EN-
ROLLEES UNDER AGE 65.—
Title I, Subtitle B
(1) IN GENERAL.—Subject to paragraph (2),
the premium charged by an insurer for coverage
under a qualified general access plan offered to all
eligible employees and eligible individuals within an
age band specified under subsection (b) for a class
of family enrollment in a HCCA may not exceed
such premium within another age band for such
class and HCCA so specified by more than—
(A) 20 percent, for the first certification
year,
(B) 18, 16, 14, and 12 percent, for each
of the next 4 respective years, and
(C) 10 percent for each succeeding year
thereafter.
(2) ADJUSTMENT BASED ON DIFFERENCES IN
ADMINISTRATIVE COSTS.—In accordance with the in-
surance reform standards, an insurer may vary the
premiums based on identifiable differences in mar-
keting and other legitimate administrative costs (as
defined in such standards), except that such pre-
miums may not vary under this paragraph with re-
spect to enrollees within a particular purchasing
group.
(b) ESTABLISHMENT OF CLASSES OF FAMILY EN-
ROLLMENT AND AGE BANDS.—
Title I, Subtitle B
(1) CLASSES
OF
FAMILY
ENROLLMENT.—For
purposes of this title, there are 2 classes of family
enrollment:
(A) Enrollment of an individual without
dependents (in this section referred to as ‘‘indi-
vidual enrollment’’).
(B) Enrollment of an individual with de-
pendents.
(2) AGE BANDS.—For purposes of this title, the
insurance reform standards shall specify age bands
for individuals under 65 years of age, which shall be
applied to the premium for each class of family en-
rollment based on the age of the principal or other
enrollee (as specified under such standards).
(c) STANDARD PREMIUMS WITH RESPECT TO ELIGI-
BLE EMPLOYEES AND ELIGIBLE INDIVIDUALS.—
(1) IN GENERAL.—Each qualified general ac-
cess plan to be offered to an eligible employee or eli-
gible individual which provides for—
(A) the standard package, shall establish a
standard premium for such package, or
(B) the catastrophic package, shall estab-
lish a standard premium for such package,
for individual enrollment within each HCCA in
which the plan is offered. Subject to paragraph (2),
Title I, Subtitle B
within a HCCA for eligible employees and eligible in-
dividuals, the standard premium for each such pack-
age for all such employees and individuals shall be
the same.
(2) APPLICATION TO INDIVIDUALS.—The pre-
mium charged for coverage in a qualified general ac-
cess plan shall be the product of—
(A) the standard premium (established
under paragraph (1));
(B) in the case of enrollment other than
individual enrollment, the family adjustment
factor specified under paragraph (3); and
(C) the age factor (specified under para-
graph (4)) for the age band in which the enroll-
ment is classified.
(3) FAMILY ADJUSTMENT FACTOR.—The insur-
ance reform standards shall specify a family adjust-
ment factor that reflects the relative actuarial costs
of benefit packages based on a family enrollment (as
compared with such costs for individual enrollment).
Such factor may be different for the standard pack-
age and the catastrophic package, but may not differ
based on the geographic area in which the plan is
offered.
(4) AGE ADJUSTMENT FACTOR.—
Title I, Subtitle B
(A) IN GENERAL.—The insurance reform
standards shall specify, for each age band es-
tablished under subsection (b)(2), an age ad-
justment factor that reflects the relative actuar-
ial costs of benefit packages among enrollees
classified in the different age bands. Such fac-
tors may be different for the standard package
and the catastrophic package.
(B) LIMIT ON VARIATION IN AGE ADJUST-
MENT FACTORS.—The highest age adjustment
factor may not exceed twice the lowest age ad-
justment factor.
(d) FULL DISCLOSURE OF RATING PRACTICES.—
(1) IN GENERAL.—At the time an insurer offers
a qualified general access plan, the insurer shall
fully disclose rating practices for such plan.
(2) NOTICE ON EXPIRATION.—An insurer pro-
viding a qualified general access plan shall provide
for notice, at least 60 days before the date of expira-
tion of the plan, of the terms for renewal of the
plan. Such notice shall include an explanation of the
extent to which any increase in premiums is due to
actual or expected claims experience of the individ-
uals covered under the plan contract.
Title I, Subtitle B
(e) NOTIFICATION OF FAILURE TO RECEIVE PRE-
MIUM.—If a qualified general access plan fails to receive
payment on a premium due with respect to an individual
covered under the plan, the plan shall provide notice of
such failure to the individual within the 20-day period
after the date on which such premium payment was due.
(f) ACTUARIAL CERTIFICATION.—Each insurer shall
file annually with the appropriate certifying authority a
written statement by a member of the American Academy
of Actuaries (or other individual acceptable to such au-
thority) certifying that, based upon an examination by the
individual which includes a review of the appropriate
records and of the actuarial assumptions of the insurer
and methods used by the insurer in establishing premium
rates for qualified general access plans—
(1) the insurer is in compliance with the appli-
cable provisions of this section; and
(2) the rating methods are actuarially sound.
Each insurer shall retain a copy of such statement for ex-
amination by any individual at its principal place of busi-
ness.
(g) PAYMENT OF PREMIUMS.—
(1) IN GENERAL.—With respect to a new en-
rollee in a qualified general access plan, the plan
may require advanced payment of an amount equal
Title I, Subtitle B
to monthly applicable premium for the plan at the
time such individual is enrolled.
(2) REQUIREMENT
FOR
PAYROLL
DEDUC-
TIONS.—
(A) IN
GENERAL.—Subject to subpara-
graph (C)(ii), a qualified general access plan
may require, in the case of an individual en-
rolled under the plan as an eligible employee,
that payment of premiums with respect to the
individual be made through payroll deduction.
(B) FREQUENCY.—In the case of an eligi-
ble employee who is paid wages or other com-
pensation—
(i) on a monthly or more frequent
basis, a qualified general access plan may
not require the employer to provide for
payment of such an amount other than at
the same time at which such an amount is
deducted from such wages or other com-
pensation, or
(ii) less frequently than monthly, a
qualified general access plan may require
the employer to provide for payment of
such an amount on a monthly basis.
(C) EMPLOYEE PROTECTIONS.—
Title I, Subtitle B
(i) WITHHOLDING CONSTITUTES SAT-
ISFACTION
OF
OBLIGATION.—Withholding
of an amount by an employer under this
paragraph shall constitute satisfaction of
the employee’s obligation to pay the quali-
fied general access plan with respect to
such amount.
(ii) DIRECT
PAYMENT
ALLOWED
IN
CASE
OF
NONPAYMENT.—In the case of
the nonpayment to a qualified general ac-
cess plan of any amount withheld by an
employer, the plan shall notify such em-
ployee of such nonpayment and shall allow
the employee to make direct payments to
the plan effective with the next succeeding
payment period.
SEC. 1117. RISK ADJUSTMENT.
(a) IN GENERAL.—Each qualified general access plan
shall participate in a risk adjustment program of the State
(or the Secretary if the Secretary is the appropriate cer-
tifying authority) described in section 1406.
(b) RISK ADJUSTMENT PROCESS AND FACTORS.—
(1) IN GENERAL.—The insurance reform stand-
ards shall specify the risk adjustment process and
Title I, Subtitle B
factors to be used under such risk adjustment pro-
grams.
(2) FACTORS.—
(A) IN
GENERAL.—Such risk-adjustment
factors shall be established for each class of
family enrollment in a qualified general access
plan based on all individuals in such class en-
rolled in the plan. Each factor shall be cor-
related with increased or diminished risk for
consumption of the type of health services in-
cluded in the covered items and services under
section 1301. To the maximum extent prac-
ticable, such factors shall be determined with-
out regard to the delivery system used by indi-
vidual qualified general access plans in the pro-
vision of such items and services.
(B) RULES.—In determining such a factor
for a class, in the case of a qualified general ac-
cess plan that—
(i) on average has a lower-than-aver-
age risk for consumption of the covered
items and services, the factor shall be a
number, less than zero, reflecting the de-
gree of such lower risk;
Title I, Subtitle B
(ii) has an average risk for consump-
tion of such items and services, the factor
shall be zero; or
(iii) on average has a higher-than-av-
erage risk for consumption of such items
and services, the factor shall be a number,
greater than zero, reflecting the degree of
such higher risk.
SEC. 1118. COLLECTION AND PROVISION OF STANDARD-
IZED INFORMATION.
(a) IN GENERAL.—A qualified health plan shall pro-
vide the State (at a time, not less frequently than annu-
ally) such information as the Secretary shall prescribe by
regulation as necessary, consistent with this section and
sections 1405 and 3301, to evaluate the performance of
the qualified health plan and to prepare the comparative
materials described in section 1405. A qualified general
access plan shall provide each State with such additional
information as such State may determine to be necessary
with respect to qualified general access plans. The data
collection standards shall specify the standardized format
for such information (including model forms) for use by
qualified health plans in providing information under this
subsection. Such standards shall be consistent with sub-
title B of title III.
Title I, Subtitle B
(b) USE OF UNIFORM CLAIMS FORMS.—Each quali-
fied health plan shall use standardized forms, including
uniform claims forms, identified by the insurance reform
standards.
(c) 
CONDITIONING
CERTAIN
PROVIDER
PAY-
MENTS.—
(1) IN GENERAL.—In order to assure the collec-
tion of all information required from the direct pro-
viders of services for which benefits are available
through a qualified general access plan, a qualified
general access plan may not provide payment for
services (other than emergency services) furnished
under a benefits package unless the provider has
given the plan standard information (specified in or
pursuant to the insurance reform standards) re-
specting the services.
(2) FORWARDING
INFORMATION.—If informa-
tion under paragraph (1) is given to the qualified
general access plan, the plan is responsible for for-
warding the information to the State (or the Sec-
retary) under subsection (a).
(d) INFORMATION REGARDING A PATIENT’S RIGHT
TO SELF DETERMINATION REGARDING HEALTH CARE.—
Each qualified health plan shall provide written informa-
tion to each individual enrolling in such plan of such indi-
Title I, Subtitle B
vidual’s right under State law (whether statutory or as
recognized by the courts of the State) to make decisions
concerning medical care, including the right to accept or
refuse medical treatment and the right to formulate ad-
vance directives (as defined in section 1866(f)(3) of the
Social Security Act (42 U.S.C. 1395cc(f)(3))), and the
written policies of the qualified health plan with respect
to such right.
SEC. 1119. QUALITY ASSURANCE.
Each qualified general access plan shall establish and
maintain a quality assurance program that complies with
the standards developed under section 3001.
SEC. 1120. MEDIATION PROCEDURES RELATING TO MAL-
PRACTICE CLAIMS.
Each qualified general access plan shall establish and
maintain a mediation procedures program that complies
with the standards developed under section 4011.
SEC. 
1121. 
SERVICE 
TO 
DESIGNATED 
UNDERSERVED
AREAS.
Each qualified general access plan shall contain as-
surances of compliance with any requirements relating to
the provision of covered items and services in designated
underserved areas as determined by the appropriate cer-
tifying authority.
Title I, Subtitle B
SEC. 1122. ADDITIONAL REQUIREMENTS.
Each qualified general access plan shall comply with
the requirements of part III and meet such other require-
ments as may be imposed under the insurance reform
standards or by the appropriate certifying authority. If
such authority is a State, the authority may require such
a plan to enter into an agreement under section
1933(b)(3) of the Social Security Act, as added by section
6021(a) of this Act, for the provision of items and services
on a capitated basis under the medicaid program.
PART II—INDIVIDUAL AND SMALL EMPLOYER
PURCHASING GROUPS
SEC. 1141. ESTABLISHMENT AND ORGANIZATION.
(a) IN GENERAL.—Individual and small employer
purchasing groups (in this Act referred to as ‘‘purchasing
groups’’) may be established in accordance with this part.
Each purchasing group shall be chartered under State law
and operated as a not-for-profit corporation. An insurer
may not form, underwrite, or possess a majority vote of
a purchasing group, but may administer such a group.
(b) BOARD OF DIRECTORS.—
(1) IN GENERAL.—Each purchasing group shall
be governed by a Board of Directors. Such Board
shall initially be appointed under procedures under
section 1404(a). Subsequently, the Board shall be
elected by the members of the group in accordance
Title I, Subtitle B
with paragraph (3). Such Board shall be composed
of individuals who are small employers (or represent-
atives of small employers), eligible employees of
small employers (or representatives of such employ-
ees), and eligible individuals in the HCCA in which
the group operates.
(2) MEMBERSHIP.—A purchasing group shall
accept all small employers, eligible employees, and
eligible individuals residing within the HCCA served
by the group as members if such employers, employ-
ees or individuals request such membership.
(3) VOTING.—Members of a purchasing group
shall have voting rights consistent with the rules es-
tablished under section 1404(b).
(c) DUTIES OF PURCHASING GROUPS.—
(1) IN GENERAL.—Subject to paragraph (2),
each purchasing group shall—
(A) market qualified general access plans
to members throughout the entire HCCA served
by the group;
(B) enter into agreements with qualified
general access plans under section 1142;
(C) enter into agreements with small em-
ployers under section 1143;
Title I, Subtitle B
(D) enroll individuals in qualified general
access plans, only in accordance with section
1144; and
(E) carry out other functions provided for
under this title.
(2) LIMITATION ON ACTIVITIES.—A purchasing
group shall not—
(A) perform any activity (including review,
approval, or enforcement) relating to payment
rates for providers;
(B) perform any activity (including certifi-
cation or enforcement) relating to compliance of
general access plans with the requirements of
part 1 of this subtitle;
(C) assume financial risk in relation to any
such plan; or
(D) perform other activities identified by
the State as being inconsistent with the per-
formance of its duties under paragraph (1).
(d) RULES OF CONSTRUCTION.—
(1) ESTABLISHMENT NOT REQUIRED.—Nothing
in this section shall be construed as requiring—
(A) that a purchasing group be established
in each HCCA; and
Title I, Subtitle B
(B) that there be only one purchasing
group established with respect to a HCCA.
(2) SINGLE ORGANIZATION SERVING MULTIPLE
HCCAS.—Nothing in this section shall be construed
as preventing a single not-for-profit corporation
from being the purchasing group for more than one
HCCA.
SEC. 1142. AGREEMENTS WITH QUALIFIED GENERAL AC-
CESS PLANS.
(a) AGREEMENTS.—
(1) IN GENERAL.—Except as provided in para-
graph (3), each purchasing group for a HCCA shall
enter into an agreement under this section with each
qualified general access plan that desires to be made
available through the purchasing group in accord-
ance with procedures under section 1404.
(2) TERMINATION OF AGREEMENT.—An agree-
ment under paragraph (1) shall remain in effect for
a 12-month period, except that the purchasing group
may terminate an agreement under paragraph (1) if
the qualified general access plan’s certification under
section 1402 is terminated or for other good cause
shown.
Title I, Subtitle B
(3) LIMITATION
ON
RENEWAL
OF
AGREE-
MENTS.—Subsequent to the 12-month period de-
scribed in paragraph (2), a purchasing group may—
(A) refuse to enter into a subsequent
agreement with a qualified general access plan
if the group determines that the plan enroll-
ment or plan premium is too low, and
(B) if a previous agreement with a quali-
fied general access plan was terminated for
good cause and the group determines appro-
priate actions have not been taken to correct
the problems, refuse to enter into a subsequent
agreement with the plan.
(4) 
NO
PROHIBITION
ON
OFFERING
OF
PLANS.—Nothing in this subsection shall be con-
strued as prohibiting a qualified general access plan
that does not enter into an agreement under para-
graph (1) from being offered to small employers and
eligible individuals within a HCCA.
(b) RECEIPT
OF
PREMIUMS
ON
BEHALF
OF
PLANS.—
(1) IN GENERAL.—Under an agreement under
this section between a purchasing group and a quali-
fied general access plan, payment of premiums may
be made by individuals (or employers on their be-
Title I, Subtitle B
half) directly to the purchasing group for the benefit
of the plan.
(2) TIMING OF PAYMENT OF PREMIUMS.—Pre-
miums may be payable on a monthly basis (or, at
the option of an eligible employee or individual, on
a quarterly basis). The purchasing group may pro-
vide for reasonable penalties and grace periods for
late payment.
(3) QUALIFIED
GENERAL
ACCESS
PLANS
RE-
TAIN RISK OF NONPAYMENT.—Nothing in this sub-
section shall be construed as placing upon a pur-
chasing group any risk associated with the failure of
individuals and employers to make prompt payment
of premiums (other than the portion of the premium
representing the purchasing group administrative fee
under section 1145). Each small employer and eligi-
ble individual who enrolls with a qualified general
access plan through the purchasing group is liable to
the plan for premiums.
(c) FORWARDING OF PREMIUMS.—
(1) IN
GENERAL.—If, under an agreement
under subsection (a), premium payments under a
qualified general access plan are made to the pur-
chasing group, the purchasing group shall forward
to the plan the amount of the premiums.
Title I, Subtitle B
(2) PAYMENTS.—Payments shall be made by
the purchasing group under this subsection within a
period of days (specified by the Secretary and not to
exceed 7 days) after receipt of the premium from the
small employer of the eligible employee or the eligi-
ble individual, as the case may be.
SEC. 1143. PROVISION OF INFORMATION.
(a) IN GENERAL.—Each purchasing group for a
HCCA shall provide to each small employer that employs
individuals in the HCCA and to each eligible individual
who resides in the HCCA—
(1) information provided to the purchasing
group under section 1405 by the State in which such
group is located, and
(2) the opportunity to enter into an agreement
with the group for the purchase of a qualified gen-
eral access plan.
(b) FORWARDING INFORMATION AND PAYROLL DE-
DUCTIONS.—As part of an agreement entered into under
this section, a small employer shall forward the informa-
tion and make the payroll deductions required under sec-
tion 1004.
Title I, Subtitle B
SEC. 1144. ENROLLING ELIGIBLE EMPLOYEES AND ELIGI-
BLE INDIVIDUALS IN QUALIFIED GENERAL
ACCESS PLANS THROUGH A PURCHASING
GROUP.
A purchasing group shall offer, on behalf of each
qualified general access plan with which an agreement was
entered into under section 1142 and in accordance with
the enrollment procedures of such plans, enrollment in the
plan only to—
(1) all eligible employees employed by small em-
ployers in the HCCA served by the purchasing
group; and
(2) all eligible individuals residing in such
HCCA.
SEC. 1145. RESTRICTION ON CHARGES.
(a) IN GENERAL.—A purchasing group may impose
an administrative fee with respect to a eligible employee
or eligible individual enrolled under a qualified general ac-
cess plan offered through the purchasing group.
(b) FEE.—A purchasing group that elects to impose
a fee under subsection (a) shall ensure that such fee is
set as a percentage of the premium for each such plan
and is imposed uniformly with respect to all qualified gen-
eral access plans offered through the group.
Title I, Subtitle B
PART III—CONSUMER PROTECTION AND MARKET
REFORMS
SEC. 1161. REQUIREMENT FOR PROVISION OF INFORMA-
TION BY BROKERS.
Brokers or insurers who offer coverage under a quali-
fied general access plan to small employers (or eligible em-
ployees of small employers) or eligible individuals must
disclose to such prospective enrollees the information de-
veloped by the State under section 1405.
SEC. 1162. PROHIBITION OF IMPROPER INCENTIVES.
(a) LIMITATION ON FINANCIAL INCENTIVES.—No in-
surer that offers a qualified general access plan may vary
the commission or financial or other remuneration to a
person based on the claims experience or health status of
individuals enrolled by or through the person.
(b) PROHIBITION OF TIE-IN ARRANGEMENTS.—No
insurer that offers a qualified general access plan may re-
quire the purchase of any other insurance or product as
a condition for the purchase of a qualified general access
plan.
SEC. 1163. PROHIBITION OF SALE OF DUPLICATE COV-
ERAGE OR SALE TO CERTAIN POPULATIONS.
(a) DUPLICATE COVERAGE PROHIBITION.—It is un-
lawful for a person to sell or issue a qualified insured gen-
eral access plan to an individual—
Title I, Subtitle B
(1) with knowledge that the individual is cov-
ered under a qualified health plan or under an
equivalent health care program, or
(2) without obtaining such information as the
Secretary may specify (taking into account the type
of information described in section 1882(d)(1)(B) of
the Social Security Act).
(b) EXCEPTION.—Subsection (a) shall not apply to
a plan the sale or issuance of which is intended to replace
another qualified health plan. Subsection (a) also does not
apply in the case of coverage for insurance described in
section 1601(14)(B).
(c) ENFORCEMENT.—Any person who violates sub-
section (a) is subject to a civil money penalty not to exceed
$10,000 for each such violation. The provisions of section
1128A of the Social Security Act (other than subsections
(a) and (b)) shall apply to civil money penalties under this
subsection in the same manner as they apply to a penalty
or proceeding under section 1128A(a) of such Act.
Title I, Subtitle C
Subtitle C—Qualified Health Plans
in the Large Employer Market-
place
PART I—REQUIREMENTS ON LARGE EMPLOYER
PLANS
SEC. 1201. STANDARDS APPLIED TO LARGE EMPLOYER
PLANS.
Each large employer plan (as defined in section
1601(16)) shall meet the applicable standards developed
under section 1202.
SEC. 1202. ESTABLISHMENT OF STANDARDS APPLICABLE
TO LARGE EMPLOYER PLANS.
(a) ESTABLISHMENT OF STANDARDS BY SECRETARY
OF HEALTH AND HUMAN SERVICES.—
(1) IN GENERAL.—The Secretary of Health and
Human Services, in consultation with the Secretary
of Labor, shall develop and publish standards appli-
cable to large employer plans relating to the require-
ments described in paragraph (2). The Secretary
shall develop and publish such standards by not
later than the date that is 6 months after the date
of enactment of this Act. Such standards shall be
the insurance standards applicable under this part.
(2) REQUIREMENTS
SPECIFIED.—Subject to
paragraph (3), the requirements referred to in para-
Title I, Subtitle C
graph (1) are requirements specified in the following
provisions:
(A) Subsection (a) of section 1111 (relat-
ing to guaranteed eligibility), subject to sub-
sections (d) and (e) of such section, except that
such subsection shall be applied (for purposes
of this subsection) only with respect to eligible
employees of the large employer.
(B) 
Section 
1112 
(relating 
to 
non-
discrimination based on health status).
(C) Section 1113 (relating to benefits).
(D) Section 1115 (relating to enrollment)
or establish such comparable enrollment proce-
dures as the Secretary of Labor specifies, other
than the requirement for a general enrollment
period under subsection (a)(3) of such section.
(E) Section 1118 (relating to collection
and provision of standardized information).
(F) Section 1119 (relating to quality as-
surance).
(3) COLLECTIVE
BARGAINING
EXCEPTION.—
Paragraph (2)(A) shall not apply to a large em-
ployer plan that is providing benefits pursuant to a
collective bargaining agreement.
Title I, Subtitle C
(4) REFERENCE TO ENFORCEMENT.—For pro-
vision enforcing requirements of this subsection, see
the amendments made by sections 2402, 2411, and
2412.
(b) ESTABLISHMENT OF STANDARDS BY SECRETARY
OF LABOR.—
(1) IN GENERAL.—The Secretary of Labor, in
consultation with the Secretary of Health and
Human Services, shall develop and publish stand-
ards applicable to large employer plans relating to
the requirements specified in paragraph (2). The
Secretary shall develop and publish such standards
by not later than the date that is 6 months after the
date of enactment of this Act. Such standards shall
be the insurance standards applicable under this
part.
(2) REQUIREMENTS
SPECIFIED.—Subject to
paragraph (3), the requirements referred to in para-
graph (1) are requirements specified in the following
provisions:
(A) Section 1114 (relating to financial sol-
vency) or such standards similar to the stand-
ards established under such section as the Sec-
retary of Labor specifies, except that such
standards shall be consistent with the applicable
Title I, Subtitle C
rules under section 414 of the Employee Retire-
ment Income Security Act of 1974.
(B) Section 1116(g) (relating to payment
of premiums).
(C) Section 1120 (relating to mediation
procedures relating to malpractice claims).
(D) Section 1203 (relating to required
offer of different benefit packages).
(c) CONSIDERATION OF NAIC STANDARDS.—In es-
tablishing standards under this section, the Secretary of
Health and Human Services and the Secretary of Labor
shall take into account standards established under sub-
title B relating to comparable requirements.
(d) APPLICATION OF STANDARDS TO HEALTH PLANS
OFFERED UNDER FEHBP.—Notwithstanding any other
provision of law, each health plan offered under chapter
89 of title 5, United States Code, shall meet the standards
applicable to large employer plans under this subtitle, in
the same manner and as of the same date such standards
first apply to such plans.
SEC. 1203. OFFER OF DIFFERENT BENEFIT PACKAGES RE-
QUIRED.
(a) IN GENERAL.—Each large employer shall make
available to each eligible employee at least—
Title I, Subtitle C
(1) a qualified large employer plan that includes
the standard package, and
(2) a qualified large employer plan that includes
the catastrophic package.
(b) SELECTION OF PLANS BY MAJORITY OF EMPLOY-
EES.—
(1) IN
GENERAL.—The large employer shall
make the selections of qualified large employer plans
under paragraphs (1) and (2) of subsection (a) on
an annual basis. In making each such selection, the
large employer shall comply with any selection of a
qualified large employer plan made by at least 50
percent of the eligible employees of the large em-
ployer. The Secretary of Labor shall prescribe rules
which shall govern the manner in which employees
may make such a selection. Nothing in this sub-
section shall be construed to require an employer to
make any financial contribution towards the cost of
such a qualified large employer plan or for such an
employer to refuse to offer such a plan for good
cause.
(2) LIMITATION.—Paragraph (1) shall not
apply in the case of a large employer that contrib-
utes to the cost of the qualified large employer plan.
Title I, Subtitle C
(c) ENFORCEMENT.—For enforcement of the require-
ment of this section, see amendment made by section
2402(b) of this Act.
SEC. 1204. ENROLLMENT IN LARGE EMPLOYER PLANS IN
SATISFACTION OF ENROLLMENT REQUIRE-
MENT.
In the case of an individual who qualifies for coverage
under large employer plan (and is not eligible for coverage
under an equivalent health care program or under a quali-
fied health plan that is not a large employer plan), the
individual shall satisfy the requirement of section 1501
through enrollment in the large employer plan.
SEC. 1205. DEVELOPMENT OF LARGE OR MULTIPLE EM-
PLOYER PURCHASING GROUPS.
(a) IN GENERAL.—Nothing in this title shall be con-
strued as prohibiting 2 or more large employers from
forming a purchasing group with respect to the employees
of such employer or employers.
(b) NO USE OF INDIVIDUAL AND SMALL EMPLOYER
PURCHASING GROUPS.—A large employer shall be ineli-
gible to purchase health insurance through an individual
and small employer purchasing group.
SEC. 1207. CORRECTIVE ACTIONS.
(a) IN GENERAL.—The plan sponsor of each large
employer plan shall determine semiannually whether the
Title I, Subtitle C
requirements of this part are met. In any case in which
the plan sponsor determines that there is reason to believe
that there is or will be a failure to meet such requirements,
or the Secretary or the Secretary of Labor makes such
a determination and so notifies the plan sponsor, the plan
sponsor shall, within 90 days after making such deter-
mination or receiving such notification, notify such Sec-
retary (in such form and manner as the such Secretary
may prescribe by regulation) of a description of the correc-
tive actions (if any) that the plan sponsor has taken or
plans to take in response to such recommendations. The
plan sponsor shall thereafter report to such Secretary, in
such form and frequency as such Secretary may specify
to the plan sponsor, regarding corrective action taken by
the plan sponsor until the such requirements are met. Ei-
ther such Secretary may make a determination that a
large employer plan has ceased to be a qualified large em-
ployer plan only if such Secretary is satisfied that the nec-
essary corrective action cannot reasonably be expected to
occur on a timely basis necessary to avoid failure to pro-
vide benefits for which the plan is obligated.
(b) 
DISQUALIFICATION
OR
TERMINATION
OF
PLAN.—
(1) IN GENERAL.—In any case in which the
plan sponsor of a large employer plan determines
Title I, Subtitle C
that there is reason to believe that the plan will
cease to be a qualified large employer plan or will
terminate, the plan sponsor shall so inform the Sec-
retary and the Secretary of Labor, shall develop a
plan for winding up the affairs of the plan in con-
nection with such disqualification or termination in
a manner which will result in timely payment of all
benefits for which the plan is obligated, and shall
submit such plan in writing to such Secretaries. Ac-
tions required under this subparagraph shall be
taken in such form and manner as may be pre-
scribed in regulations jointly prescribed by such Sec-
retaries.
(2) ACTIONS REQUIRED IN CONNECTION WITH
DISQUALIFICATION OR TERMINATION.—
(A) IN GENERAL.—In any case in which—
(i) the Secretary or the Secretary of
Labor has been notified under paragraph
(1) of a failure of a large employer plan to
meet the requirements of this part and has
not been notified by the plan sponsor that
corrective action has restored compliance
with such requirements, and
(ii) such Secretary determines, in con-
sultation with the other Secretary referred
Title I, Subtitle C
to in clause (i), that the continuing failure
to meet such requirements can be reason-
ably expected to result in a continuing fail-
ure to pay benefits for which the plan is
obligated,
the plan sponsor and the large employer shall
comply with the requirements of subparagraph
(B) or (C), as applicable.
(B) ACTIONS BY PLAN SPONSOR.—Upon a
determination by the Secretary or the Secretary
of Labor under subparagraph (A)(ii), the plan
sponsor shall, at the direction of such Sec-
retary, terminate the plan and, in the course of
the termination, take such actions as such Sec-
retary, in consultation with the other Secretary
referred to in subparagraph (A)(i), may require
as necessary to ensure that the affairs of the
plan will be, to the maximum extent possible,
wound up in a manner which will result in time-
ly payment of all benefits for which the plan is
obligated.
(C) ACTIONS
BY
LARGE
EMPLOYER.—
Upon a determination by the Secretary or the
Secretary of Labor under subparagraph (A)(ii),
the large employer shall provide for such con-
Title I, Subtitle C
tingency coverage for all eligible employees of
the employer in accordance with regulations
which shall be prescribed in joint regulations of
such Secretaries. Such regulations may provide
for temporary coverage of such employees under
a plan provided by a purchasing group in the
appropriate HCCA, a plan provided under
chapter 89 of title 5, United States Code, or
other appropriate means established in such
regulations.
PART II—AMENDMENTS TO ERISA
SEC. 1221. LIMITATION ON COVERAGE OF GROUP HEALTH
PLANS UNDER TITLE I OF ERISA.
(a) IN GENERAL.—Section 4 of the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C. 1003) is
amended—
(1) in subsection (a), by striking ‘‘subsection
(b)’’ and inserting ‘‘subsections (b) and (c)’’;
(2) in subsection (b), by striking ‘‘The provi-
sions’’ and inserting ‘‘Except as provided in sub-
section (c), the provisions’’; and
(3) by adding at the end the following new sub-
section:
‘‘(c) COVERAGE OF GROUP HEALTH PLANS.—
Title I, Subtitle C
‘‘(1) LIMITED
INCLUSION.—This title shall
apply to a group health plan to the extent provided
in this subsection. For purposes of this title, a plan,
fund, or program shall not be treated as a group
health plan solely because an employer makes the
plan available (and takes related actions) in compli-
ance with the applicable requirements of section
1004 or section 1203 of the Health Equity and Ac-
cess Reform Today Act of 1993.
‘‘(2) COVERAGE UNDER CERTAIN PROVISIONS
WITH RESPECT TO LARGE EMPLOYER PLANS.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), parts 1 and 4 of subtitle B
shall apply to a large employer plan.
‘‘(B) INAPPLICABILITY WITH RESPECT TO
INSURED
QUALIFIED
HEALTH
PLANS.—Sub-
paragraph (A) shall not apply with respect to
any employee welfare benefit plan to the extent
such plan provides for health benefits under or
through a qualified insured health plan (as de-
fined in section 1601 of the Health Equity and
Access Reform Today Act of 1993).
‘‘(3) CLAIMS PROCEDURE.—Section 503 shall
apply in the case of any large employer plan.
Title I, Subtitle C
‘‘(4) CIVIL ACTIONS BY PARTICIPANTS, BENE-
FICIARIES, AND
FIDUCIARIES
AND
BY
THE
SEC-
RETARY.—Section 502 shall apply in the case of any
large employer plan and any other group health plan
for which the plan sponsor makes a contribution.
‘‘(5) DEFINITIONS AND ENFORCEMENT PROVI-
SIONS.—Sections 3, 501, 504, 505, 506, 510, and
511 and the preceding provisions of this section
shall apply to a group health plan to the extent nec-
essary to effectively carry out, and enforce the re-
quirements under, the provisions of this title as they
apply pursuant to this subsection.
‘‘(6) APPLICABILITY OF PREEMPTION RULES.—
Section 514 shall apply in the case of any group
health plan to the extent that parts 1 and 4 of sub-
title B apply to such plan under paragraph (2).’’.
(b) REPORTING AND DISCLOSURE REQUIREMENTS
APPLICABLE TO GROUP HEALTH PLANS.—
(1) IN GENERAL.—Part 1 of subtitle B of title
I of such Act is amended—
(A) in the heading for section 110, by add-
ing ‘‘BY PENSION PLANS’’ at the end;
(B) by redesignating section 111 as section
112; and
Title I, Subtitle C
(C) by inserting after section 110 the fol-
lowing new section:
‘‘SPECIAL RULES FOR GROUP HEALTH PLANS
‘‘SEC. 111. (a) IN GENERAL.—The Secretary may by
regulation provide special rules for the application of this
part to group health plans which are consistent with the
purposes of this title and the Health Equity and Access
Reform Today Act of 1993 and which take into account
the special needs of participants, beneficiaries, and health
care providers under such plans.
‘‘(b) EXPEDITIOUS REPORTING AND DISCLOSURE.—
Such special rules may include rules providing for—
‘‘(1) reductions in the periods of time referred
to in this part,
‘‘(2) increases in the frequency of reports and
disclosures required under this part, and
‘‘(3) such other changes in the provisions of
this part as may result in more expeditious reporting
and disclosure of plan terms and changes in such
terms to the Secretary and to plan participants and
beneficiaries,
to the extent that the Secretary determines that the rules
described in this subsection are necessary to ensure timely
reporting and disclosure of information consistent with the
purposes of this part and the Health Equity and Access
Title I, Subtitle C
Reform Today Act of 1993 as they relate to group health
plans.
‘‘(c) ADDITIONAL
REQUIREMENTS.—Such special
rules may include rules providing for reporting and disclo-
sure to the Secretary and to participants and beneficiaries
of additional information or at additional times with re-
spect to group health plans to which this part applies
under section 4(c)(2), if such reporting and disclosure
would be comparable to and consistent with similar re-
quirements applicable under the Health Equity and Access
Reform Today Act of 1993 with respect to small employer
plans and applicable regulations of the Secretary of
Health and Human Services prescribed thereunder.’’.
(2) CLERICAL AMENDMENT.—The table of con-
tents in section 1 of such Act is amended by striking
the items relating to sections 110 and 111 and in-
serting the following new items:
‘‘Sec. 110. Alternative methods of compliance by pension plans.
‘‘Sec. 111. Special rules for group health plans.
‘‘Sec. 112. Repeal and effective date.’’.
(c) TREATMENT OF MULTIPLE EMPLOYER WELFARE
ARRANGEMENTS.—
(1) 
INAPPLICABILITY
OF
PREEMPTION
RULES.—Section 514(b)(6)(A) of such Act (29
U.S.C. 1144(b)(6)(A)) is amended by adding at the
end (after and below clause (ii)) the following new
sentence:
Title I, Subtitle C
‘‘This paragraph shall not apply in the case of a group
health plan.’’.
(2) SPECIAL RULES FOR MULTIPLE EMPLOYER
WELFARE ARRANGEMENT PROVIDING HEALTH BEN-
EFITS.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), any multiple employer welfare ar-
rangement with respect to which there is in ef-
fect a certification by the Secretary of Labor
under this paragraph shall be treated for pur-
poses of this title as a large employer plan.
(B) REQUIREMENTS.—Subparagraph (A)
shall apply to a multiple employer welfare ar-
rangement only if—
(i) the benefits provided under the ar-
rangement consist solely of medical care
(as defined in section 213(d) of the Inter-
nal Revenue Code of 1986),
(ii) such arrangement meets the re-
quirements 
of 
clause 
(i) 
of 
section
514(b)(6)(A) of the Employee Retirement
Income Security Act of 1974 (as in effect
immediately before the amendment made
by paragraph (1)), and
Title I, Subtitle C
(iii) the sponsoring entity is organized
and maintained in good faith, with a con-
stitution and bylaws specifically stating its
purpose, as a trade association, an indus-
try association, a professional association,
or a chamber of commerce or other busi-
ness group, for substantial purposes other
than that of obtaining or providing medical
care described in section 213(d) of the In-
ternal Revenue Code of 1986, and the ap-
plicant demonstrates to the satisfaction of
the Secretary that the sponsoring entity is
established as a permanent entity which
receives the active support of its members.
(C) RESTRICTION ON COMMENCEMENT OF
NEW
ARRANGEMENTS.—A multiple employer
welfare arrangement providing benefits which
consist of medical care (as defined in section
213(d) of the Internal Revenue Code of 1986)
which has not commenced operations as of Jan-
uary 1, 1994, may commence operations only if
a certification of the arrangement under this
paragraph is in effect.
(D) 
CERTIFICATION
PROCEDURE.—The
Secretary of Labor shall certify a multiple em-
Title I, Subtitle C
ployer welfare arrangement under this para-
graph if—
(i) an application for such certifi-
cation with respect to such arrangement,
identified individually or by class, has been
duly filed in complete form with the Sec-
retary of Labor in accordance with this
paragraph,
(ii) such application demonstrates
compliance with the requirements of sec-
tion 1202, and
(iii) the Secretary of Labor finds that
such certification is—
(I) administratively feasible,
(II) not adverse to the interests
of the individuals covered under the
arrangement, and
(III) protective of the rights and
benefits of the individuals covered
under the arrangement.
In the case of an arrangement which has com-
menced operations as of January 1, 1994, an
application under this paragraph must be filed
not later than January 1, 1996.
Title I, Subtitle C
(E) DESIGNATION
OF
PLAN
SPONSOR.—
The Secretary of Labor shall provide by regula-
tion for designation of the entities to be treated
as the plan sponsor.
(F) REVOCATION
OF
CERTIFICATION.—
The Secretary of Labor may revoke a certifi-
cation under this paragraph for any cause that
may serve as the basis for the denial of an ini-
tial application for such a certification under
this paragraph.
(G) REVIEW OF ACTIONS BY SECRETARY
OF LABOR.—Any decision by the Secretary of
Labor which involves the denial of an applica-
tion by a multiple employee welfare arrange-
ment for certification under this paragraph or
the revocation of such a certification shall con-
tain a statement of the specific reason or rea-
sons supporting the Secretary’s action, includ-
ing reference to the specific terms of the certifi-
cation and the statutory provision or provisions
relevant to the determination. Any such denial
or revocation shall be subject to review as pro-
vided in section 502 of the Employee Retire-
ment Income Security Act of 1974.
Title I, Subtitle C
PART III—REVISION OF COBRA CONTINUATION
COVERAGE REQUIREMENTS
SEC. 1231. AMENDMENTS TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974.
(a) PERIOD OF COVERAGE.—Subparagraph (D) of
section 602(2) of the Employee Retirement Income Secu-
rity Act of 1974 (29 U.S.C. 1161(2)) is amended—
(1) by striking ‘‘or’’ at the end of clause (i), by
striking the period at the end of clause (ii) and in-
serting ‘‘, or’’, and by adding at the end the follow-
ing new clause:
‘‘(iii) eligible for coverage under a
qualified health plan in accordance with
title I of the Health Equity and Access Re-
form Today Act of 1993.’’, and
(2) by striking ‘‘OR MEDICARE ENTITLEMENT’’
in the heading and inserting ‘‘, MEDICARE ENTITLE-
MENT, OR QUALIFIED HEALTH PLAN ELIGIBILITY’’.
(b) QUALIFIED BENEFICIARY.—Section 607(3) of
such Act (29 U.S.C. 1167(2)) is amended by adding at
the end the following new subparagraph:
‘‘(D) SPECIAL
RULE
FOR
INDIVIDUALS
COVERED BY HEALTH EQUITY AND ACCESS RE-
FORM TODAY ACT OF 1993.—The term ‘qualified
beneficiary’ shall not include any individual
who, upon termination of coverage under a
Title I, Subtitle C
group health plan, is eligible for coverage under
a qualified health plan in accordance with title
I of the Health Equity and Access Reform
Today Act of 1993.’’
(c) REPEAL UPON IMPLEMENTATION OF HEALTH
EQUITY AND ACCESS REFORM TODAY ACT OF 1993.—
(1) IN GENERAL.—Part 6 of subtitle B of title
I of such Act (29 U.S.C. 601 et seq.) is amended
by striking sections 601 through 608 and by redesig-
nating section 609 as section 601.
(2) CONFORMING AMENDMENTS.—
(A) Section 502(a)(7) of such Act (29
U.S.C. 1132(a)(7)) is amended by striking
‘‘609(a)(2)(A)’’ and inserting ‘‘601(a)(2)(A)’’.
(B) Section 502(c)(1) is amended by strik-
ing ‘‘paragraph (1) or (4) of section 606’’.
(C) Section 514 of such Act (29 U.S.C.
1144) is amended by striking ‘‘609’’ each place
it appears in subsections (b)(7) and (b)(8) and
inserting ‘‘601’’.
(D) The table of contents in section 1 of
such Act is amended by striking the items relat-
ing to sections 601 through 609 and inserting
the following new item:
‘‘Sec. 601. Additional standards for group health plans.’’
(d) EFFECTIVE DATE.—
Title I, Subtitle C
(1) SUBSECTIONS
(a)
AND
(b).—The amend-
ments made by subsections (a) and (b) shall take ef-
fect on the date of the enactment of this Act.
(2) SUBSECTION (c).—The amendments made
by subsection (c) shall take effect on the first Janu-
ary 1 following the deadline specified in section
1401(c)(2) of this Act.
SEC. 1232. AMENDMENT TO PUBLIC HEALTH SERVICE ACT.
(a) PERIOD OF COVERAGE.—Subparagraph (D) of
section 2202(2) of the Public Health Service Act (42
U.S.C. 300bb–2(2)) is amended—
(1) by striking ‘‘or’’ at the end of clause (i), by
striking the period at the end of clause (ii) and in-
serting ‘‘, or’’, and by adding at the end the follow-
ing new clause:
‘‘(iii) eligible for coverage under a
qualified health plan in accordance with
title I of the Health Equity and Access Re-
form Today Act of 1993.’’, and
(2) by striking ‘‘OR MEDICARE ENTITLEMENT’’
in the heading and inserting ‘‘, MEDICARE ENTITLE-
MENT, OR QUALIFIED HEALTH PLAN ELIGIBILITY’’.
(b) QUALIFIED BENEFICIARY.—Section 2208(3) of
such Act (42 U.S.C. 300bb–8(3)) is amended by adding
at the end the following new subparagraph:
Title I, Subtitle C
‘‘(C) SPECIAL
RULE
FOR
INDIVIDUALS
COVERED BY THE HEALTH EQUITY AND ACCESS
REFORM TODAY ACT OF 1993.—The term ‘quali-
fied beneficiary’ shall not include any individual
who, upon termination of coverage under a
group health plan, is eligible for coverage under
a qualified health plan in accordance with title
I of the Health Equity and Access Reform
Today Act of 1993.’’.
(c) REPEAL UPON IMPLEMENTATION OF HEALTH
EQUITY AND ACCESS REFORM TODAY ACT OF 1993.—
(1) IN GENERAL.—Title XXII of such Act (42
U.S.C. 300bb–1 et seq.) is hereby repealed.
(2) CONFORMING AMENDMENT.—The table of
contents of such Act is amended by striking the item
relating to title XXII.
(d) EFFECTIVE DATE.—
(1) SUBSECTIONS (a) AND (b).—The amend-
ments made by subsections (a) and (b) shall take ef-
fect on the date of the enactment of this Act.
(2) SUBSECTION (c).—The amendments made
by subsection (c) shall take effect on the first Janu-
ary 1 following the deadline specified in section
1401(c)(2) of this Act.
Title I, Subtitle D
SEC. 1233. ADDITIONAL REVISIONS.
For additional revisions, see the amendments made
by section 2005 of this Act.
Subtitle D—Benefits; Benefits
Commission
PART I—BENEFITS
SEC. 1301. OFFERING OF BENEFIT PACKAGES.
(a) BENEFIT PACKAGES.—Each qualified health plan
shall provide one (or both) of the following benefit pack-
ages:
(1) STANDARD PACKAGE.—The standard pack-
age consists of the covered items and services speci-
fied under subsection (b), subject to the applicable
cost sharing requirement specified under subsection
(c)(1) for such a package.
(2) 
CATASTROPHIC
PACKAGE.—The 
cata-
strophic package consists of the covered items and
services (specified under subsection (b)), subject to
the applicable cost sharing requirement specified
under subsection (c)(2) for such a package.
(b) COVERED ITEMS AND SERVICES.—Subject to the
procedures for clarification and modification described in
part II, covered items and services consist of the following
items and services, but only when the provision of the item
or service is medically necessary or appropriate:
Title I, Subtitle D
(1) Medical and surgical services (and supplies
incident to such services).
(2) Medical equipment.
(3) Prescription drugs and biologicals.
(4) Preventive services.
(5) Rehabilitation and home health services re-
lated to an acute care episode.
(6) Services for severe mental illness.
(7) Substance abuse services.
(8) Hospice services.
(9) Emergency transportation and transpor-
tation for non-elective medically necessary services in
frontier and similar areas.
(c) COST SHARING.—
(1) STANDARD PACKAGE.—The standard pack-
age shall include deductibles, copayments, coinsur-
ance, and out-of-pocket limits on cost sharing estab-
lished for such package pursuant to part II.
(2) 
CATASTROPHIC
PACKAGE.—The 
cata-
strophic package shall include a general deductible
amount and an out-of-pocket limit on cost sharing
established for such package pursuant to part II
(and 
may 
include 
such 
other 
deductibles,
copayments, and coinsurance as a qualified health
plan may provide consistent with such part).
Title I, Subtitle D
(3) LIMITATION.—In establishing cost sharing
requirements under part II, the Commission shall
establish a limit on the total amount of cost-sharing
that may be incurred by a family within a class of
family enrollment in a year.
(d) CRITERIA
FOR DETERMINATION
OF MEDICAL
NECESSITY AND APPROPRIATENESS.—
(1) IN GENERAL.—A qualified health plan shall
provide for coverage of the items and services de-
scribed in subsection (b) only for treatments and di-
agnostic procedures that are medically necessary or
appropriate. In the case of dispute concerning a de-
termination of medical necessity or appropriateness
and subject to the succeeding provisions of this sub-
section, for purposes of this title, a treatment (as de-
fined in subparagraph (6)(A)) or diagnostic proce-
dure shall be considered to be ‘‘medically necessary
or appropriate’’ if the following criteria are met:
(A) TREATMENT OR DIAGNOSIS OF MEDI-
CAL CONDITION.—
(i) IN GENERAL.—The treatment or
diagnostic procedure is for a medical con-
dition.
(ii) MEDICAL CONDITION DEFINED.—
The term ‘‘medical condition’’ means a dis-
Title I, Subtitle D
ease, illness, injury, or biological or psycho-
logical condition or status for which treat-
ment is indicated to improve, maintain, or
stabilize a health outcome (as defined in
paragraph (6)(B)) or which, in the absence
of treatment, could lead to an adverse
change in a health outcome.
(iii) ADVERSE
CHANGE
IN
HEALTH
OUTCOME DEFINED.—In clause (ii), an ad-
verse change in a health outcome occurs if
there is a biological or psychological
decremental change in a health status.
(B) NOT INVESTIGATIONAL.—There must
be sufficient evidence on which to base conclu-
sions about the existence and magnitude of the
change in health outcome resulting from the
treatment or diagnostic procedure compared
with the best available alternative (or with no
treatment or diagnostic procedure if no alter-
native treatment or procedure is available).
(C) EFFECTIVE AND SAFE.—The evidence
must demonstrate that the treatment or diag-
nostic procedure can reasonably be expected to
produce the intended health result or provide
intended information and is safe and the treat-
Title I, Subtitle D
ment or diagnostic procedure provides a clini-
cally meaningful benefit with respect to safety
and effectiveness in comparison to other avail-
able alternatives or the patients current health
status.
(2) RELATIONSHIP TO FDA REVIEW.—
(A) APPROVED DRUGS, BIOLOGICALS, AND
MEDICAL DEVICES.—
(i) DRUGS.—A drug that has been
found to be safe and effective under sec-
tion 505 of the Federal Food, Drug, and
Cosmetic Act is deemed to meet the re-
quirements of paragraphs (1)(B) and
(1)(C) (relating to not investigational and
safety and effectiveness).
(ii) BIOLOGICALS.—A biological that
has been found to be safe and effective
under section 351 of the Public Health
Service Act is deemed to meet the require-
ments of paragraphs (1)(B) and (1)(C)
(relating to not investigational and safety
and effectiveness).
(iii) MEDICAL
DEVICES.—A medical
device that is marketed after the provision
of a notice under section 510(k) of the
Title I, Subtitle D
Federal Food, Drug, and Cosmetic Act or
that has an application for premarket ap-
proval approved under section 515 of such
Act is deemed to meet the requirements of
paragraphs (1)(B) and (1)(C) (relating to
not investigational and safety and effec-
tiveness).
(B) OTHER DRUGS, BIOLOGICALS, AND DE-
VICES.—A drug, biological, or medical device
not described in subparagraph (A) shall be con-
sidered to be investigational. Nothing shall pro-
hibit a qualified health plan from covering (nor
as compelling such a plan to cover) such drugs,
biologicals, and medical devices, including treat-
ment investigational new drugs.
(3) COVERAGE
OF
INVESTIGATIONAL
TREAT-
MENTS IN APPROVED RESEARCH TRIALS.—
(A) IN GENERAL.—Coverage of the routine
medical costs (as defined in subparagraph (C))
associated with the delivery of investigational
treatments (as defined in subparagraph (B))
shall be considered to be medically necessary or
appropriate only if the treatment is part of an
approved research trial (as defined in subpara-
graph (D)).
Title I, Subtitle D
(B) INVESTIGATIONAL
TREATMENT
DE-
FINED.—In subparagraph (A), the term ‘‘inves-
tigational treatment’’ means a treatment for
which there is not sufficient evidence to deter-
mine the health outcome of the treatment com-
pared with the best available alternative treat-
ment (or with no treatment if there is no alter-
native treatment).
(C) ROUTINE MEDICAL COSTS DEFINED.—
In subparagraph (A), the term ‘‘routine medical
costs’’ means the cost of health services re-
quired to provide treatment according to the de-
sign of the trial, except those costs normally
paid for by other funding sources (as defined by
the Secretary). Such costs do not include the
cost of the investigational agent, devices or pro-
cedures themselves, the costs of any nonhealth
services that might be required for a person to
receive the treatment, or the costs of managing
the research.
(D) APPROVED
RESEARCH
TRIAL
DE-
FINED.—In subparagraph (A), the term ‘‘ap-
proved research trial’’ means a trial—
(i) conducted for the primary purpose
of determining the safety, effectiveness, ef-
Title I, Subtitle D
ficacy, or health outcomes of a treatment,
compared with the best available alter-
native treatment, and
(ii) approved by the Secretary.
A trial is deemed to be approved under clause
(ii) if it is approved by the National Institutes
of Health, the Food and Drug Administration
(through an investigational new drug exemp-
tion), the Department of Veterans Affairs, the
Department of Defense, or by a qualified non-
governmental research entity (as identified in
guidelines issued by one or more of the Na-
tional Institutes of Health).
(4) DOCUMENTATION.—
(A) IN GENERAL.—Each qualified health
plan is responsible for maintaining documentary
evidence supporting the plan’s decisions to
cover or to deny coverage based on the criteria
specified in this subsection.
(B) DISCLOSURE.—Each qualified health
plan shall disclose to its enrollees, in a manner
specified by the State, its coverage decisions
and must submit information on such decisions
to the State.
Title I, Subtitle D
(5) BINDING
ARBITRATION
EVIDENCE.—The
evidence that may be used in making coverage deci-
sions under a binding arbitration process under this
section and section 1407 includes—
(A) published peer-reviewed literature,
(B) opinions of medical specialty groups
and other medical experts; and
(C) evidence of general acceptance by the
medical community.
(6) TREATMENT AND HEALTH OUTCOME DE-
FINED.—As used in this subsection:
(A) IN GENERAL.—The term ‘‘treatment’’
means any health care intervention undertaken,
with respect to a specific indication, to improve,
maintain, or stabilize a health outcome or to
prevent or mitigate an adverse change in a
health outcome.
(B) 
HEALTH
OUTCOME.—The 
term
‘‘health outcome’’ means an outcome that af-
fects the length and quality of an enrollee’s life.
(e) APPLICATION IN BINDING ARBITRATION PROC-
ESS.—The criteria specified in subsection (d) shall be ap-
plied by arbitrators under the binding arbitration process
for disputes described in paragraphs (1)(C) and (2) of sec-
tion 1407.
Title I, Subtitle D
(f) FREEDOM TO OFFER BENEFITS.—Nothing in this
section shall be construed to prohibit a health plan that
is not a qualified health plan from offering any health care
benefits.
PART II—BENEFITS COMMISSION
SEC. 1311. ESTABLISHMENT.
There is established a commission to be known as the
Benefits Commission (in this part referred to as the
‘‘Commission’’).
SEC. 1312. DUTIES.
(a) INITIAL PROPOSAL.—Not later than the termi-
nation of the 6-month period beginning on the date of the
enactment of this Act, the Commission shall develop and
submit to the Congress a proposal for legislation that in-
cludes the following:
(1) CLARIFICATION
OF
COVERED
ITEMS
AND
SERVICES.—A clarification of the items and services
to be included in the covered items and services
under section 1301(b). Such clarification—
(A) may eliminate a category of items or
services described in paragraphs (1) through
(7) of such section;
(B) may not specify the categories of
health care providers who are authorized to de-
liver items or services;
119
Title I, Subtitle E
SEC. 1406. RISK ADJUSTMENT PROGRAM.
(a) IN GENERAL.—Each State program under this
part shall provide for a risk adjustment program using
the risk adjustment process and factors described in sec-
tion 1117(b) to adjust the premiums of qualified general
access plans to reflect the relative actuarial risk of eligible
employees and eligible individuals enrolled in the qualified
general access plans participating in the program. The
program shall apply such risk-adjustment factors, in ac-
cordance with a methodology established under the stand-
ards under such section, so that the sum of such factors
is zero for all participating qualified general access plans,
within a class of family enrollment in each HCCA.
(b) 
ADJUSTMENT
FOR
DIFFERENCES
IN
NONPAYMENT RATES.—In accordance with rules estab-
lished by the Secretary, each State program under this
part shall provide that if the rates of nonpayment of pre-
miums for qualified general access plans during grace pe-
riods (established under section 1142(b)(2) or otherwise)
vary appreciably among qualified general access plans, the
State program shall provide for such adjustments in the
payments made among such plans as will place each quali-
fied general access plan in the same position as if the rates
of nonpayment were the same.
353
Title IV, Subtitle C
Human Services and the Chair of the Federal Trade
Commission) shall—
(A) review the proposed safe harbors sub-
mitted under paragraph (1); and
(B) submit a report to Congress describing
the proposals to be included in the publication
of additional safe harbors described in para-
graph (3) and the proposals that are not to be
so included, together with explanations there-
fore.
(3) PUBLICATION OF ADDITIONAL SAFE HAR-
BORS.—Not later than 180 days after the date of
the enactment of this Act, the Attorney General (in
consultation with the Secretary of Health and
Human Services and the Chair of the Federal Trade
Commission) shall publish in the Federal Register
proposed additional safe harbors for purposes of sec-
tion 4201(a)(2) for providers of health care services.
Not later than 180 days after publishing such pro-
posed safe harbors in the Federal Register, the At-
torney General shall issue final rules establishing
such safe harbors.
(b) CRITERIA FOR SAFE HARBORS.—In establishing
safe harbors under subsection (a), the Attorney General
shall take into account the following: