(E) does not make health insurance cov-
erage offered through the association available
to any individual who is not a member (or de-
pendent of a member) of the association at the
time the coverage is initially issued,
(F) does not impose preexisting condition
exclusions except in a manner consistent with
the requirements of sections 101 and 102 as
they relate to group health plans, and
(G) provides for renewal and continuation
of health insurance coverage in a manner con-
sistent with the requirements of section 132 as
they relate to the renewal and continuation in
force of coverage in a group market.
(3) COBRA CONTINUATION
PROVISION.—The
term ‘‘COBRA continuation provision’’ means any of
the following:
(A) Section 4980B of the Internal Revenue
Code of 1986, other than subsection (f)(1) of
such section insofar as it relates to pediatric
vaccines.
(B) Part 6 of subtitle B of title I of the
Employee Retirement Income Security Act of
1974 (29 U.S.C. 1161 et seq.), other than sec-
tion 609.
(C) Title XXII of the Public Health Serv-
ice Act.
(4) HEALTH INSURANCE COVERAGE.—
(A) IN GENERAL.—Except as provided in
subparagraph (B), the term ‘‘health insurance
coverage’’ means benefits consisting of medical
care (provided directly, through insurance or re-
imbursement, or otherwise) under any hospital
or medical service policy or certificate, hospital
or medical service plan contract, or health
maintenance organization group contract of-
fered by an insurer or a health maintenance or-
ganization.
(B) EXCEPTION.—Such term does not in-
clude coverage under any separate policy, cer-
tificate, or contract only for one or more of any
of the following:
(i) Coverage for accident, credit-only,
vision, disability income, long-term care,
nursing home care, community-based care
dental, on-site medical clinics, or employee
assistance programs, or any combination
thereof.
(ii) Medicare supplemental health in-
surance (within the meaning of section
1882(g)(1) of the Social Security Act (42
U.S.C. 1395ss(g)(1))) and similar supple-
mental coverage provided under a group
health plan.
(iii) Coverage issued as a supplement
to liability insurance.
(iv) Liability insurance, including gen-
eral liability insurance and automobile li-
ability insurance.
(v) Workers’ compensation or similar
insurance.
(vi) Automobile medical-payment in-
surance.
(vii) Coverage consisting of benefit
payments made on a periodic basis for a
specified disease or illness or period of hos-
pitalization, without regard to the costs in-
curred or services rendered during the pe-
riod to which the payments relate.
(viii) Short-term limited duration in-
surance.
(ix) Such other coverage, comparable
to that described in previous clauses, as
may be specified in regulations prescribed
under this title.
(5) HEALTH
MAINTENANCE
ORGANIZATION;
HMO.—The terms ‘‘health maintenance organiza-
tion’’ and ‘‘HMO’’ mean—
(A) a Federally qualified health mainte-
nance organization (as defined in section
1301(a) of the Public Health Service Act (42
U.S.C. 300e(a))),
(B) an organization recognized under State
law as a health maintenance organization, or
(C) a similar organization regulated under
State law for solvency in the same manner and
to the same extent as such a health mainte-
nance organization,
if (other than for purposes of part 2 of subtitle B)
it is subject to State law which regulates insurance
(within the meaning of section 514(b)(2) of the Em-
ployee Retirement Income Security Act of 1974).
(6) HEALTH STATUS.—The term ‘‘health sta-
tus’’ includes, with respect to an individual, medical
condition, claims experience, receipt of health care,
medical history, evidence of insurability, or disabil-
ity.
(7) INDIVIDUAL
HEALTH
INSURANCE
COV-
ERAGE.—The term ‘‘individual health insurance cov-
erage’’ means health insurance coverage offered to
individuals if the coverage is not offered in connec-
tion with a group health plan (other than such a
plan that has fewer than two participants as current
employees on the first day of the plan year).
(8) INSURER.—The term ‘‘insurer’’ means an
insurance company, insurance service, or insurance
organization which is licensed to engage in the busi-
ness of insurance in a State and (except for pur-
poses of part 2 of subtitle B) which is regulated by
a State (within the meaning of section 514(b)(2)(A)
of the Employee Retirement Income Security Act of
1974).
(9) MEDICAL CARE.—The term ‘‘medical care’’
means—
(A) amounts paid for, or items or services
in the form of, the diagnosis, cure, mitigation,
treatment, or prevention of disease, or amounts
paid for, or items or services provided for, the
purpose of affecting any structure or function
of the body,
(B) amounts paid for, or services in the
form of, transportation primarily for and essen-
tial to medical care referred to in subparagraph
(A), and
(C) amounts paid for insurance covering
medical care referred to in subparagraphs (A)
and (B).
(10) NETWORK
PLAN.—The term ‘‘network
plan’’ means, with respect to health insurance cov-
erage, an arrangement of an insurer or a health
maintenance organization under which the financing
and delivery of medical care are provided, in whole
or in part, through a defined set of providers under
contract with the insurer or health maintenance or-
ganization.
(11) WAITING PERIOD.—The term ‘‘waiting pe-
riod’’ means, with respect to a group health plan
and an individual who is a potential participant or
beneficiary in the plan, the minimum period that
must pass with respect to the individual before the
individual is eligible to be covered for benefits under
the plan.
(d) TREATMENT OF PARTNERSHIPS.—
(1) TREATMENT AS A GROUP HEALTH PLAN.—
Any plan, fund, or program which would not be (but
for this paragraph) an employee welfare benefit plan
and which is established or maintained by a partner-
ship, to the extent that such plan, fund, or program
provides medical care to present or former partners
in the partnership or to their dependents (as defined
under the terms of the plan, fund, or program), di-
rectly or through insurance, reimbursement, or oth-
erwise, shall be treated (subject to paragraph (1)) as
an employee welfare benefit plan which is a group
health plan.
(2) TREATMENT OF PARTNERSHIP AND PART-
NERS AND EMPLOYER AND PARTICIPANTS.—In the
case of a group health plan—
(A) the term ‘‘employer’’ includes the part-
nership in relation to any partner; and
(B) the term ‘‘participant’’ includes—
(i) in connection with a group health
plan maintained by a partnership, an indi-
vidual who is a partner in relation to the
partnership, or
(ii) in connection with a group health
plan maintained by a self-employed individ-
ual (under which one or more employees
are participants), the self-employed individ-
ual,
if such individual is or may become eligible to
receive a benefit under the plan or such individ-
ual’s beneficiaries may be eligible to receive any
such benefit.
(e) DEFINITIONS
RELATING
TO
MARKETS
AND
SMALL EMPLOYERS.—As used in this title:
(1) INDIVIDUAL MARKET.—The term ‘‘individ-
ual market’’ means the market for health insurance
coverage offered to individuals and not to employers
or in connection with a group health plan and does
not include the market for such coverage issued only
by an insurer or HMO that makes such coverage
available only on the basis of affiliation with an as-
sociation or other group.
(2) LARGE GROUP MARKET.—The term ‘‘large
group market’’ means the market for health insur-
ance coverage offered to employers (other than small
employers) on behalf of their employees (and their
dependents) and does not include health insurance
coverage available solely in connection with a bona
fide association (as defined in subsection (c)(2)).
(3) SMALL EMPLOYER.—The term ‘‘small em-
ployer’’ means, in connection with a group health
plan with respect to a calendar year, an employer
who employs at least 2 but fewer than 51 employees
on a typical business day in the year. For purposes
of this paragraph, two or more trades or businesses,
whether or not incorporated, shall be deemed a sin-
gle employer if such trades or businesses are within
the same control group (within the meaning of sec-
tion 3(40)(B)(ii)).
(4) SMALL GROUP MARKET.—The term ‘‘small
group market’’ means the health insurance market
under which individuals obtain health insurance cov-
erage (directly or through any arrangement) on be-
half of themselves (and their dependents) on the
basis of employment or other relationship with re-
spect to a small employer and does not include
health insurance coverage available solely in connec-
tion with a bona fide association (as defined in sub-
section (c)(2)).
SEC. 192. STATE FLEXIBILITY TO PROVIDE GREATER PRO-
TECTION.
(a) STATE FLEXIBILITY TO PROVIDE GREATER PRO-
TECTION.—Subject to subsection (b), nothing in this title
shall be construed to preempt State laws that—
(1) require insurers or HMOs to impose a limi-
tation or exclusion of benefits relating to the treat-
ment of a preexisting condition for a period that is
shorter than the applicable period provided for under
this title; or
(2) allow individuals, participants, and bene-
ficiaries to be considered to be in a period of pre-
vious qualifying coverage if such individual, partici-
pant, or beneficiary experiences a lapse in coverage
that is greater than the 60-day periods provided for
under sections 101(b)(3)(A), 101(b)(3)(B)(ii), and
102(b)(2).
(b) NO OVERRIDE OF ERISA PREEMPTION.—Noth-
ing in this Act shall be construed to affect or modify the
provisions of section 514 of the Employee Retirement In-
come Security Act of 1974 (29 U.S.C. 1144).
SEC. 193. EFFECTIVE DATE.
(a) IN GENERAL.—Except as otherwise provided for
in this title, the provisions of this title shall apply with
respect to—
(1) group health plans, and health insurance
coverage offered in connection with group health
plans, for plan years beginning on or after January
1, 1998, and
(2) individual health insurance coverage issued,
renewed, in effect, or operated on or after July 1,
1998.
(b) CONSIDERATION OF PREVIOUS COVERAGE.—The
Secretaries of Health and Human Services, Treasury, and
Labor shall jointly establish rules regarding the treatment
(in determining qualified coverage periods under sections
102(b) and 141(b)) of coverage before the applicable effec-
tive date specified in subsection (a).
(c) TIMELY ISSUANCE OF REGULATIONS.—The Sec-
retaries of Health and Human Services, the Treasury, and
Labor shall issue such regulations on a timely basis as
may be required to carry out this title.
SEC. 194. RULE OF CONSTRUCTION.
Nothing in this title or any amendment made thereby
may be construed to require the coverage of any specific
procedure, treatment, or service as part of a group health
plan or health insurance coverage under this title or
through regulation.
TITLE II—PREVENTING HEALTH
CARE FRAUD AND ABUSE; AD-
MINISTRATIVE 
SIMPLIFICA-
TION
SEC. 200. REFERENCES IN TITLE.
Except as otherwise specifically provided, whenever in
this title an amendment is expressed in terms of an
amendment to or repeal of a section or other provision,
the reference shall be considered to be made to that sec-
tion or other provision of the Social Security Act.
Subtitle A—Fraud and Abuse
Control Program
SEC. 201. FRAUD AND ABUSE CONTROL PROGRAM.
(a) ESTABLISHMENT OF PROGRAM.—Title XI (42
U.S.C. 1301 et seq.) is amended by inserting after section
1128B the following new section:
‘‘FRAUD AND ABUSE CONTROL PROGRAM
‘‘SEC. 1128C. (a) ESTABLISHMENT OF PROGRAM.—
‘‘(1) IN GENERAL.—Not later than January 1,
1997, the Secretary, acting through the Office of the
Inspector General of the Department of Health and
Human Services, and the Attorney General shall es-
tablish a program—
‘‘(A) to coordinate Federal, State, and
local law enforcement programs to control fraud
and abuse with respect to health plans,
‘‘(B) to conduct investigations, audits,
evaluations, and inspections relating to the de-
livery of and payment for health care in the
United States,
‘‘(C) to facilitate the enforcement of the
provisions of sections 1128, 1128A, and 1128B
and other statutes applicable to health care
fraud and abuse,
‘‘(D) to provide for the modification and
establishment of safe harbors and to issue advi-
sory opinions and special fraud alerts pursuant
to section 1128D, and
‘‘(E) to provide for the reporting and dis-
closure of certain final adverse actions against
health care providers, suppliers, or practitioners
pursuant to the data collection system estab-
lished under section 1128E.
‘‘(2) COORDINATION WITH HEALTH PLANS.—In
carrying out the program established under para-
graph (1), the Secretary and the Attorney General
shall consult with, and arrange for the sharing of
data with representatives of health plans.
‘‘(3) GUIDELINES.—
‘‘(A) IN GENERAL.—The Secretary and the
Attorney General shall issue guidelines to carry
out the program under paragraph (1). The pro-
visions of sections 553, 556, and 557 of title 5,
United States Code, shall not apply in the issu-
ance of such guidelines.
‘‘(B) INFORMATION GUIDELINES.—
‘‘(i) IN
GENERAL.—Such guidelines
shall include guidelines relating to the fur-
nishing of information by health plans,
providers, and others to enable the Sec-
retary and the Attorney General to carry
out the program (including coordination
with health plans under paragraph (2)).
‘‘(ii) CONFIDENTIALITY.—Such guide-
lines shall include procedures to assure
that such information is provided and uti-
lized in a manner that appropriately pro-
tects the confidentiality of the information
and the privacy of individuals receiving
health care services and items.
‘‘(iii) QUALIFIED IMMUNITY FOR PRO-
VIDING INFORMATION.—The provisions of
section 1157(a) (relating to limitation on
liability) shall apply to a person providing
information to the Secretary or the Attor-
ney General in conjunction with their per-
formance of duties under this section.
‘‘(4) ENSURING ACCESS TO DOCUMENTATION.—
The Inspector General of the Department of Health
and Human Services is authorized to exercise such
authority described in paragraphs (3) through (9) of
section 6 of the Inspector General Act of 1978 (5
U.S.C. App.) as necessary with respect to the activi-
ties under the fraud and abuse control program es-
tablished under this subsection.
‘‘(5) AUTHORITY
OF
INSPECTOR
GENERAL.—
Nothing in this Act shall be construed to diminish
the authority of any Inspector General, including
such authority as provided in the Inspector General
Act of 1978 (5 U.S.C. App.).
‘‘(b) ADDITIONAL USE OF FUNDS BY INSPECTOR
GENERAL.—
‘‘(1) 
REIMBURSEMENTS
FOR
INVESTIGA-
TIONS.—The Inspector General of the Department
of Health and Human Services is authorized to re-
ceive and retain for current use reimbursement for
the costs of conducting investigations and audits and
for monitoring compliance plans when such costs are
ordered by a court, voluntarily agreed to by the
payor, or otherwise.
‘‘(2) CREDITING.—Funds received by the In-
spector General under paragraph (1) as reimburse-
ment for costs of conducting investigations shall be
deposited to the credit of the appropriation from
which initially paid, or to appropriations for similar
purposes currently available at the time of deposit,
and shall remain available for obligation for 1 year
from the date of the deposit of such funds.
‘‘(c) HEALTH PLAN DEFINED.—For purposes of this
section, the term ‘health plan’ means a plan or program
that provides health benefits, whether directly, through in-
surance, or otherwise, and includes—
‘‘(1) a policy of health insurance;
‘‘(2) a contract of a service benefit organiza-
tion; and
‘‘(3) a membership agreement with a health
maintenance organization or other prepaid health
plan.’’.
(b) ESTABLISHMENT OF HEALTH CARE FRAUD AND
ABUSE CONTROL ACCOUNT IN FEDERAL HOSPITAL IN-
SURANCE TRUST FUND.—Section 1817 (42 U.S.C. 1395i)
is amended by adding at the end the following new sub-
section:
‘‘(k) HEALTH CARE FRAUD AND ABUSE CONTROL
ACCOUNT.—
‘‘(1) ESTABLISHMENT.—There is hereby estab-
lished in the Trust Fund an expenditure account to
be known as the ‘Health Care Fraud and Abuse
Control Account’ (in this subsection referred to as
the ‘Account’).
‘‘(2) APPROPRIATED
AMOUNTS
TO
TRUST
FUND.—
‘‘(A) IN GENERAL.—There are hereby ap-
propriated to the Trust Fund—
‘‘(i) such gifts and bequests as may be
made as provided in subparagraph (B);
‘‘(ii) such amounts as may be depos-
ited in the Trust Fund as provided in sec-
tions 242(b) and 249(c) of the Health Cov-
erage Availability and Affordability Act of
1996, and title XI; and
‘‘(iii) such amounts as are transferred
to the Trust Fund under subparagraph
(C).
‘‘(B) AUTHORIZATION TO ACCEPT GIFTS.—
The Trust Fund is authorized to accept on be-
half of the United States money gifts and be-
quests made unconditionally to the Trust Fund,
for the benefit of the Account or any activity fi-
nanced through the Account.
‘‘(C) TRANSFER OF AMOUNTS.—The Man-
aging Trustee shall transfer to the Trust Fund,
under rules similar to the rules in section 9601
of the Internal Revenue Code of 1986, an
amount equal to the sum of the following:
‘‘(i) Criminal fines recovered in cases
involving a Federal health care offense (as
defined in section 982(a)(6)(B) of title 18,
United States Code).
‘‘(ii) Civil monetary penalties and as-
sessments imposed in health care cases, in-
cluding amounts recovered under titles XI,
XVIII, and XXI, and chapter 38 of title
31, United States Code (except as other-
wise provided by law).
‘‘(iii) Amounts resulting from the for-
feiture of property by reason of a Federal
health care offense.
‘‘(iv) Penalties and damages obtained
and otherwise creditable to miscellaneous
receipts of the general fund of the Treas-
ury obtained under sections 3729 through
3733 of title 31, United States Code
(known as the False Claims Act), in cases
involving claims related to the provision of
health care items and services (other than
funds awarded to a relator, for restitution
or otherwise authorized by law).
‘‘(3) APPROPRIATED
AMOUNTS
TO
ACCOUNT
FOR FRAUD AND ABUSE CONTROL PROGRAM, ETC.—
‘‘(A) DEPARTMENTS
OF
HEALTH
AND
HUMAN SERVICES AND JUSTICE.—
137
adopted or established under sections 1172 and
1173, shall supersede any contrary provision of
State law, including a provision of State law that re-
quires medical or health plan records (including bill-
ing information) to be maintained or transmitted in
written rather than electronic form.
‘‘(2) EXCEPTIONS.—A provision or requirement
under this part, or a standard or implementation
specification adopted or established under sections
1172 and 1173, shall not supersede a contrary pro-
vision of State law, if the provision of State law—
‘‘(A) imposes requirements, standards, or
implementation specifications that are more
stringent than the requirements, standards, or
implementation specifications under this part
with respect to the privacy of individually iden-
tifiable health information; or
‘‘(B) is a provision the Secretary deter-
mines—
‘‘(i) is necessary to prevent fraud and
abuse, or for other purposes; or
‘‘(ii) addresses controlled substances.
‘‘(b) PUBLIC HEALTH REPORTING.—Nothing in this
part shall be construed to invalidate or limit the authority,
power, or procedures established under any law providing