H. R. 3103—41
preceding calendar year and who employs at least 2 employees
on the first day of the plan year.
‘‘(3) LARGE GROUP MARKET.—The term ‘large group market’
means the health insurance market under which individuals
obtain health insurance coverage (directly or through any
arrangement) on behalf of themselves (and their dependents)
through a group health plan maintained by a large employer.
‘‘(4) SMALL EMPLOYER.—The term ‘small employer’ means,
in connection with a group health plan with respect to a cal-
endar year and a plan year, an employer who employed an
average of at least 2 but not more than 50 employees on
business days during the preceding calendar year and who
employs at least 2 employees on the first day of the plan
year.
‘‘(5) SMALL GROUP MARKET.—The term ‘small group market’
means the health insurance market under which individuals
obtain health insurance coverage (directly or through any
arrangement) on behalf of themselves (and their dependents)
through a group health plan maintained by a small employer.
‘‘(6) APPLICATION OF CERTAIN RULES IN DETERMINATION OF
EMPLOYER SIZE.—For purposes of this subsection—
‘‘(A) APPLICATION OF AGGREGATION RULE FOR EMPLOY-
ERS.—all persons treated as a single employer under sub-
section (b), (c), (m), or (o) of section 414 of the Internal
Revenue Code of 1986 shall be treated as 1 employer.
‘‘(B) EMPLOYERS
NOT
IN
EXISTENCE
IN
PRECEDING
YEAR.—In the case of an employer which was not in exist-
ence throughout the preceding calendar year, the deter-
mination of whether such employer is a small or large
employer shall be based on the average number of employ-
ees that it is reasonably expected such employer will
employ on business days in the current calendar year.
‘‘(C) PREDECESSORS.—Any reference in this subsection
to an employer shall include a reference to any predecessor
of such employer.
‘‘SEC. 2792. REGULATIONS.
‘‘The Secretary, consistent with section 104 of the Health Care
Portability and Accountability Act of 1996, may promulgate such
regulations as may be necessary or appropriate to carry out the
provisions of this title. The Secretary may promulgate any interim
final rules as the Secretary determines are appropriate to carry
out this title.’’.
(b) APPLICATION OF RULES BY CERTAIN HEALTH MAINTENANCE
ORGANIZATIONS.—Section 1301 of such Act (42 U.S.C. 300e) is
amended by adding at the end the following new subsection:
‘‘(d) An organization that offers health benefits coverage shall
not be considered as failing to meet the requirements of this section
notwithstanding that it provides, with respect to coverage offered
in connection with a group health plan in the small or large group
market (as defined in section 2791(e)), an affiliation period consist-
ent with the provisions of section 2701(g).’’.
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in this subsection,
part A of title XXVII of the Public Health Service Act (as
added by subsection (a)) shall apply with respect to group
health plans, and health insurance coverage offered in connec-
H. R. 3103—42
tion with group health plans, for plan years beginning after
June 30, 1997.
(2) DETERMINATION OF CREDITABLE COVERAGE.—
(A) PERIOD OF COVERAGE.—
(i) IN GENERAL.—Subject to clause (ii), no period
before July 1, 1996, shall be taken into account under
part A of title XXVII of the Public Health Service
Act (as added by this section) in determining creditable
coverage.
(ii) SPECIAL RULE FOR CERTAIN PERIODS.—The Sec-
retary of Health and Human Services, consistent with
section 104, shall provide for a process whereby individ-
uals who need to establish creditable coverage for peri-
ods before July 1, 1996, and who would have such
coverage credited but for clause (i) may be given credit
for creditable coverage for such periods through the
presentation of documents or other means.
(B) CERTIFICATIONS, ETC.—
(i) IN GENERAL.—Subject to clauses (ii) and (iii),
subsection (e) of section 2701 of the Public Health
Service Act (as added by this section) shall apply to
events occurring after June 30, 1996.
(ii) NO CERTIFICATION REQUIRED TO BE PROVIDED
BEFORE
JUNE
1, 1997.—In no case is a certification
required to be provided under such subsection before
June 1, 1997.
(iii) CERTIFICATION ONLY ON WRITTEN REQUEST FOR
EVENTS OCCURRING BEFORE OCTOBER 1, 1996.—In the
case of an event occurring after June 30, 1996, and
before October 1, 1996, a certification is not required
to be provided under such subsection unless an individ-
ual (with respect to whom the certification is otherwise
required to be made) requests such certification in
writing.
(C) TRANSITIONAL RULE.—In the case of an individual
who seeks to establish creditable coverage for any period
for which certification is not required because it relates
to an event occurring before June 30, 1996—
(i) the individual may present other credible evi-
dence of such coverage in order to establish the period
of creditable coverage; and
(ii) a group health plan and a health insurance
issuer shall not be subject to any penalty or enforce-
ment action with respect to the plan’s or issuer’s credit-
ing (or not crediting) such coverage if the plan or
issuer has sought to comply in good faith with the
applicable requirements under the amendments made
by this section.
(3) SPECIAL
RULE
FOR
COLLECTIVE
BARGAINING
AGREE-
MENTS.—Except as provided in paragraph (2)(B), in the case
of a group health plan maintained pursuant to 1 or more
collective bargaining agreements between employee representa-
tives and one or more employers ratified before the date of
the enactment of this Act, part A of title XXVII of the Public
Health Service Act (other than section 2701(e) thereof) shall
not apply to plan years beginning before the later of—
H. R. 3103—43
(A) the date on which the last of the collective bargain-
ing agreements relating to the plan terminates (determined
without regard to any extension thereof agreed to after
the date of the enactment of this Act), or
(B) July 1, 1997.
For purposes of subparagraph (A), any plan amendment made
pursuant to a collective bargaining agreement relating to the
plan which amends the plan solely to conform to any require-
ment of such part shall not be treated as a termination of
such collective bargaining agreement.
(4) TIMELY REGULATIONS.—The Secretary of Health and
Human Services, consistent with section 104, shall first issue
by not later than April 1, 1997, such regulations as may be
necessary to carry out the amendments made by this section
and section 111.
(5) LIMITATION ON ACTIONS.—No enforcement action shall
be taken, pursuant to the amendments made by this section,
against a group health plan or health insurance issuer with
respect to a violation of a requirement imposed by such amend-
ments before January 1, 1998, or, if later, the date of issuance
of regulations referred to in paragraph (4), if the plan or issuer
has sought to comply in good faith with such requirements.
(d) MISCELLANEOUS CORRECTION.—Section 2208(1) of the Public
Health Service Act (42 U.S.C. 300bb–8(1)) is amended by striking
‘‘section 162(i)(2)’’ and inserting ‘‘5000(b)’’.
SEC. 103. REFERENCE 
TO 
IMPLEMENTATION 
THROUGH 
THE
INTERNAL REVENUE CODE OF 1986.
For provisions amending the Internal Revenue Code of 1986
to provide for application and enforcement of rules for group health
plans similar to those provided under the amendments made by
section 101(a), see section 401.
SEC. 104. ASSURING COORDINATION.
The Secretary of the Treasury, the Secretary of Health and
Human Services, and the Secretary of Labor shall ensure, through
the execution of an interagency memorandum of understanding
among such Secretaries, that—
(1) regulations, rulings, and interpretations issued by such
Secretaries relating to the same matter over which two or
more such Secretaries have responsibility under this subtitle
(and the amendments made by this subtitle and section 401)
are administered so as to have the same effect at all times;
and
(2) coordination of policies relating to enforcing the same
requirements through such Secretaries in order to have a
coordinated enforcement strategy that avoids duplication of
enforcement efforts and assigns priorities in enforcement.
Subtitle B—Individual Market Rules
SEC. 111. AMENDMENT TO PUBLIC HEALTH SERVICE ACT.
(a) IN GENERAL.—Title XXVII of the Public Health Service
Act, as added by section 102(a) of this Act, is amended by inserting
after part A the following new part:
H. R. 3103—44
‘‘PART B—INDIVIDUAL MARKET RULES
‘‘SEC. 2741. GUARANTEED AVAILABILITY OF INDIVIDUAL HEALTH
INSURANCE COVERAGE TO CERTAIN INDIVIDUALS WITH
PRIOR GROUP COVERAGE.
‘‘(a) GUARANTEED AVAILABILITY.—
‘‘(1) IN GENERAL.—Subject to the succeeding subsections
of this section and section 2744, each health insurance issuer
that offers health insurance coverage (as defined in section
2791(b)(1)) in the individual market in a State may not, with
respect to an eligible individual (as defined in subsection (b))
desiring to enroll in individual health insurance coverage—
‘‘(A) decline to offer such coverage to, or deny enroll-
ment of, such individual; or
‘‘(B) impose any preexisting condition exclusion (as
defined in section 2701(b)(1)(A)) with respect to such cov-
erage.
‘‘(2) SUBSTITUTION BY STATE OF ACCEPTABLE ALTERNATIVE
MECHANISM.—The requirement of paragraph (1) shall not apply
to health insurance coverage offered in the individual market
in a State in which the State is implementing an acceptable
alternative mechanism under section 2744.
‘‘(b) ELIGIBLE INDIVIDUAL DEFINED.—In this part, the term
‘eligible individual’ means an individual—
‘‘(1)(A) for whom, as of the date on which the individual
seeks coverage under this section, the aggregate of the periods
of creditable coverage (as defined in section 2701(c)) is 18
or more months and (B) whose most recent prior creditable
coverage was under a group health plan, governmental plan,
or church plan (or health insurance coverage offered in connec-
tion with any such plan);
‘‘(2) who is not eligible for coverage under (A) a group
health plan, (B) part A or part B of title XVIII of the Social
Security Act, or (C) a State plan under title XIX of such Act
(or any successor program), and does not have other health
insurance coverage;
‘‘(3) with respect to whom the most recent coverage within
the coverage period described in paragraph (1)(A) was not
terminated based on a factor described in paragraph (1) or
(2) of section 2712(b) (relating to nonpayment of premiums
or fraud);
‘‘(4) if the individual had been offered the option of continu-
ation coverage under a COBRA continuation provision or under
a similar State program, who elected such coverage; and
‘‘(5) who, if the individual elected such continuation cov-
erage, has exhausted such continuation coverage under such
provision or program.
‘‘(c) ALTERNATIVE COVERAGE PERMITTED WHERE NO STATE
MECHANISM.—
‘‘(1) IN GENERAL.—In the case of health insurance coverage
offered in the individual market in a State in which the State
is not implementing an acceptable alternative mechanism under
section 2744, the health insurance issuer may elect to limit
the coverage offered under subsection (a) so long as it offers
at least two different policy forms of health insurance coverage
both of which—
H. R. 3103—45
‘‘(A) are designed for, made generally available to, and
actively marketed to, and enroll both eligible and other
individuals by the issuer; and
‘‘(B) meet the requirement of paragraph (2) or (3),
as elected by the issuer.
For purposes of this subsection, policy forms which have dif-
ferent cost-sharing arrangements or different riders shall be
considered to be different policy forms.
‘‘(2) CHOICE OF MOST POPULAR POLICY FORMS.—The require-
ment of this paragraph is met, for health insurance coverage
policy forms offered by an issuer in the individual market,
if the issuer offers the policy forms for individual health insur-
ance coverage with the largest, and next to largest, premium
volume of all such policy forms offered by the issuer in the
State or applicable marketing or service area (as may be pre-
scribed in regulation) by the issuer in the individual market
in the period involved.
‘‘(3) CHOICE
OF
POLICY
FORMS
WITH
REPRESENTATIVE
COVERAGE.—
‘‘(A) IN GENERAL.—The requirement of this paragraph
is met, for health insurance coverage policy forms offered
by an issuer in the individual market, if the issuer offers
a lower-level coverage policy form (as defined in subpara-
graph (B)) and a higher-level coverage policy form (as
defined in subparagraph (C)) each of which includes bene-
fits substantially similar to other individual health insur-
ance coverage offered by the issuer in that State and each
of which is covered under a method described in section
2744(c)(3)(A) (relating to risk adjustment, risk spreading,
or financial subsidization).
‘‘(B) LOWER-LEVEL OF COVERAGE DESCRIBED.—A policy
form is described in this subparagraph if the actuarial
value of the benefits under the coverage is at least 85
percent but not greater than 100 percent of a weighted
average (described in subparagraph (D)).
‘‘(C) HIGHER-LEVEL OF COVERAGE DESCRIBED.—A policy
form is described in this subparagraph if—
‘‘(i) the actuarial value of the benefits under the
coverage is at least 15 percent greater than the actuar-
ial value of the coverage described in subparagraph
(B) offered by the issuer in the area involved; and
‘‘(ii) the actuarial value of the benefits under the
coverage is at least 100 percent but not greater than
120 percent of a weighted average (described in
subparagraph (D)).
‘‘(D) WEIGHTED
AVERAGE.—For purposes of this
paragraph, the weighted average described in this subpara-
graph is the average actuarial value of the benefits pro-
vided by all the health insurance coverage issued (as elected
by the issuer) either by that issuer or by all issuers in
the State in the individual market during the previous
year (not including coverage issued under this section),
weighted by enrollment for the different coverage.
‘‘(4) ELECTION.—The issuer elections under this subsection
shall apply uniformly to all eligible individuals in the State
for that issuer. Such an election shall be effective for policies
offered during a period of not shorter than 2 years.
H. R. 3103—46
‘‘(5) ASSUMPTIONS.—For purposes of paragraph (3), the
actuarial value of benefits provided under individual health
insurance coverage shall be calculated based on a standardized
population and a set of standardized utilization and cost factors.
‘‘(d) SPECIAL RULES FOR NETWORK PLANS.—
‘‘(1) IN GENERAL.—In the case of a health insurance issuer
that offers health insurance coverage in the individual market
through a network plan, the issuer may—
‘‘(A) limit the individuals who may be enrolled under
such coverage to those who live, reside, or work within
the service area for such network plan; and
‘‘(B) within the service area of such plan, deny such
coverage to such individuals if the issuer has demonstrated,
if required, to the applicable State authority that—
‘‘(i) it will not have the capacity to deliver services
adequately to additional individual enrollees because
of its obligations to existing group contract holders
and enrollees and individual enrollees, and
‘‘(ii) it is applying this paragraph uniformly to
individuals without regard to any health status-related
factor of such individuals and without regard to
whether the individuals are eligible individuals.
‘‘(2) 180-DAY SUSPENSION UPON DENIAL OF COVERAGE.—An
issuer, upon denying health insurance coverage in any service
area in accordance with paragraph (1)(B), may not offer cov-
erage in the individual market within such service area for
a period of 180 days after such coverage is denied.
‘‘(e) APPLICATION OF FINANCIAL CAPACITY LIMITS.—
‘‘(1) IN
GENERAL.—A health insurance issuer may deny
health insurance coverage in the individual market to an
eligible individual if the issuer has demonstrated, if required,
to the applicable State authority that—
‘‘(A) it does not have the financial reserves necessary
to underwrite additional coverage; and
‘‘(B) it is applying this paragraph uniformly to all
individuals in the individual market in the State consistent
with applicable State law and without regard to any health
status-related factor of such individuals and without regard
to whether the individuals are eligible individuals.
‘‘(2) 180-DAY SUSPENSION UPON DENIAL OF COVERAGE.—An
issuer upon denying individual health insurance coverage in
any service area in accordance with paragraph (1) may not
offer such coverage in the individual market within such service
area for a period of 180 days after the date such coverage
is denied or until the issuer has demonstrated, if required
under applicable State law, to the applicable State authority
that the issuer has sufficient financial reserves to underwrite
additional coverage, whichever is later. A State may provide
for the application of this paragraph on a service-area-specific
basis.
‘‘(e) MARKET REQUIREMENTS.—
‘‘(1) IN GENERAL.—The provisions of subsection (a) shall
not be construed to require that a health insurance issuer
offering health insurance coverage only in connection with
group health plans or through one or more bona fide associa-
tions, or both, offer such health insurance coverage in the
individual market.
H. R. 3103—47
‘‘(2) CONVERSION
POLICIES.—A health insurance issuer
offering health insurance coverage in connection with group
health plans under this title shall not be deemed to be a
health insurance issuer offering individual health insurance
coverage solely because such issuer offers a conversion policy.
‘‘(f) 
CONSTRUCTION.—Nothing 
in 
this 
section 
shall 
be
construed—
‘‘(1) to restrict the amount of the premium rates that an
issuer may charge an individual for health insurance coverage
provided in the individual market under applicable State law;
or
‘‘(2) to prevent a health insurance issuer offering health
insurance coverage in the individual market from establishing
premium discounts or rebates or modifying otherwise applicable
copayments or deductibles in return for adherence to programs
of health promotion and disease prevention.
‘‘SEC. 2742. GUARANTEED RENEWABILITY OF INDIVIDUAL HEALTH
INSURANCE COVERAGE.
‘‘(a) IN GENERAL.—Except as provided in this section, a health
insurance issuer that provides individual health insurance coverage
to an individual shall renew or continue in force such coverage
at the option of the individual.
‘‘(b) GENERAL EXCEPTIONS.—A health insurance issuer may
nonrenew or discontinue health insurance coverage of an individual
in the individual market based only on one or more of the following:
‘‘(1) NONPAYMENT OF PREMIUMS.—The individual has failed
to pay premiums or contributions in accordance with the terms
of the health insurance coverage or the issuer has not received
timely premium payments.
‘‘(2) FRAUD.—The individual has performed an act or prac-
tice that constitutes fraud or made an intentional misrepresen-
tation of material fact under the terms of the coverage.
‘‘(3) TERMINATION OF PLAN.—The issuer is ceasing to offer
coverage in the individual market in accordance with subsection
(c) and applicable State law.
‘‘(4) MOVEMENT
OUTSIDE
SERVICE
AREA.—In the case of
a health insurance issuer that offers health insurance coverage
in the market through a network plan, the individual no longer
resides, lives, or works in the service area (or in an area
for which the issuer is authorized to do business) but only
if such coverage is terminated under this paragraph uniformly
without regard to any health status-related factor of covered
individuals.
‘‘(5) ASSOCIATION
MEMBERSHIP
CEASES.—In the case of
health insurance coverage that is made available in the individ-
ual market only through one or more bona fide associations,
the membership of the individual in the association (on the
basis of which the coverage is provided) ceases but only if
such coverage is terminated under this paragraph uniformly
without regard to any health status-related factor of covered
individuals.
‘‘(c) REQUIREMENTS
FOR
UNIFORM
TERMINATION
OF
COV-
ERAGE.—
‘‘(1) PARTICULAR TYPE OF COVERAGE NOT OFFERED.—In any
case in which an issuer decides to discontinue offering a particu-
lar type of health insurance coverage offered in the individual
H. R. 3103—48
market, coverage of such type may be discontinued by the
issuer only if—
‘‘(A) the issuer provides notice to each covered individ-
ual provided coverage of this type in such market of such
discontinuation at least 90 days prior to the date of the
discontinuation of such coverage;
‘‘(B) the issuer offers to each individual in the individ-
ual market provided coverage of this type, the option to
purchase any other individual health insurance coverage
currently being offered by the issuer for individuals in
such market; and
‘‘(C) in exercising the option to discontinue coverage
of this type and in offering the option of coverage under
subparagraph (B), the issuer acts uniformly without regard
to any health status-related factor of enrolled individuals
or individuals who may become eligible for such coverage.
‘‘(2) DISCONTINUANCE OF ALL COVERAGE.—
‘‘(A) IN GENERAL.—Subject to subparagraph (C), in any
case in which a health insurance issuer elects to dis-
continue offering all health insurance coverage in the
individual market in a State, health insurance coverage
may be discontinued by the issuer only if—
‘‘(i) the issuer provides notice to the applicable
State authority and to each individual of such dis-
continuation at least 180 days prior to the date of
the expiration of such coverage, and
‘‘(ii) all health insurance issued or delivered for
issuance in the State in such market are discontinued
and coverage under such health insurance coverage
in such market is not renewed.
‘‘(B) PROHIBITION ON MARKET REENTRY.—In the case
of a discontinuation under subparagraph (A) in the individ-
ual market, the issuer may not provide for the issuance
of any health insurance coverage in the market and State
involved during the 5-year period beginning on the date
of the discontinuation of the last health insurance coverage
not so renewed.
‘‘(d) EXCEPTION FOR UNIFORM MODIFICATION OF COVERAGE.—
At the time of coverage renewal, a health insurance issuer may
modify the health insurance coverage for a policy form offered
to individuals in the individual market so long as such modification
is consistent with State law and effective on a uniform basis among
all individuals with that policy form.
‘‘(e) APPLICATION
TO
COVERAGE
OFFERED
ONLY
THROUGH
ASSOCIATIONS.—In applying this section in the case of health insur-
ance coverage that is made available by a health insurance issuer
in the individual market to individuals only through one or more
associations, a reference to an ‘individual’ is deemed to include
a reference to such an association (of which the individual is a
member).
‘‘SEC. 2743. CERTIFICATION OF COVERAGE.
‘‘The provisions of section 2701(e) shall apply to health insur-
ance coverage offered by a health insurance issuer in the individual
market in the same manner as it applies to health insurance
coverage offered by a health insurance issuer in connection with
a group health plan in the small or large group market.
H. R. 3103—49
‘‘SEC. 2744. STATE FLEXIBILITY IN INDIVIDUAL MARKET REFORMS.
‘‘(a) WAIVER
OF REQUIREMENTS WHERE IMPLEMENTATION
OF
ACCEPTABLE ALTERNATIVE MECHANISM.—
‘‘(1) IN GENERAL.—The requirements of section 2741 shall
not apply with respect to health insurance coverage offered
in the individual market in the State so long as a State is
found to be implementing, in accordance with this section and
consistent with section 2746(b), an alternative mechanism (in
this section referred to as an ‘acceptable alternative mecha-
nism’)—
‘‘(A) under which all eligible individuals are provided
a choice of health insurance coverage;
‘‘(B) under which such coverage does not impose any
preexisting condition exclusion with respect to such cov-
erage;
‘‘(C) under which such choice of coverage includes at
least one policy form of coverage that is comparable to
comprehensive health insurance coverage offered in the
individual market in such State or that is comparable
to a standard option of coverage available under the group
or individual health insurance laws of such State; and
‘‘(D) in a State which is implementing—
‘‘(i) a model act described in subsection (c)(1),
‘‘(ii) a qualified high risk pool described in sub-
section (c)(2), or
‘‘(iii) a mechanism described in subsection (c)(3).
‘‘(2) PERMISSIBLE FORMS
OF
MECHANISMS.—A private or
public individual health insurance mechanism (such as a health
insurance coverage pool or programs, mandatory group conver-
sion policies, guaranteed issue of one or more plans of individual
health insurance coverage, or open enrollment by one or more
health insurance issuers), or combination of such mechanisms,
that is designed to provide access to health benefits for individ-
uals in the individual market in the State in accordance with
this section may constitute an acceptable alternative mecha-
nism.
‘‘(b) APPLICATION OF ACCEPTABLE ALTERNATIVE MECHANISMS.—
‘‘(1) PRESUMPTION.—
‘‘(A) IN GENERAL.—Subject to the succeeding provisions
of this subsection, a State is presumed to be implementing
an acceptable alternative mechanism in accordance with
this section as of July 1, 1997, if, by not later than April
1, 1997, the chief executive officer of a State—
‘‘(i) notifies the Secretary that the State has
enacted or intends to enact (by not later than January
1, 1998, or July 1, 1998, in the case of a State described
in subparagraph (B)(ii)) any necessary legislation to
provide for the implementation of a mechanism reason-
ably designed to be an acceptable alternative mecha-
nism as of January 1, 1998, (or, in the case of a
State described in subparagraph (B)(ii), July 1, 1998);
and
‘‘(ii) provides the Secretary with such information
as the Secretary may require to review the mechanism
and its implementation (or proposed implementation)
under this subsection.
‘‘(B) DELAY PERMITTED FOR CERTAIN STATES.—
H. R. 3103—50
‘‘(i) EFFECT
OF
DELAY.—In the case of a State
described in clause (ii) that provides notice under
subparagraph (A)(i), for the presumption to continue
on and after July 1, 1998, the chief executive officer
of the State by April 1, 1998—
‘‘(I) must notify the Secretary that the State
has enacted any necessary legislation to provide
for the implementation of a mechanism reasonably
designed to be an acceptable alternative mecha-
nism as of July 1, 1998; and
‘‘(II) must provide the Secretary with such
information as the Secretary may require to review
the mechanism and its implementation (or pro-
posed implementation) under this subsection.
‘‘(ii) STATES DESCRIBED.—A State described in this
clause is a State that has a legislature that does not
meet within the 12-month period beginning on the
date of enactment of this Act.
‘‘(C) CONTINUED APPLICATION.—In order for a mecha-
nism to continue to be presumed to be an acceptable alter-
native mechanism, the State shall provide the Secretary
every 3 years with information described in subparagraph
(A)(ii) or (B)(i)(II) (as the case may be).
‘‘(2) NOTICE.—If the Secretary finds, after review of
information provided under paragraph (1) and in consultation
with the chief executive officer of the State and the insurance
commissioner or chief insurance regulatory official of the State,
that such a mechanism is not an acceptable alternative mecha-
nism or is not (or no longer) being implemented, the Secretary—
‘‘(A) shall notify the State of—
‘‘(i) such preliminary determination, and
‘‘(ii) the consequences under paragraph (3) of a
failure to implement such a mechanism; and
‘‘(B) shall permit the State a reasonable opportunity
in which to modify the mechanism (or to adopt another
mechanism) in a manner so that may be an acceptable
alternative mechanism or to provide for implementation
of such a mechanism.
‘‘(3) FINAL DETERMINATION.—If, after providing notice and
opportunity under paragraph (2), the Secretary finds that the
mechanism is not an acceptable alternative mechanism or the
State is not implementing such a mechanism, the Secretary
shall notify the State that the State is no longer considered
to be implementing an acceptable alternative mechanism and
that the requirements of section 2741 shall apply to health
insurance coverage offered in the individual market in the
State, effective as of a date specified in the notice.
‘‘(4) LIMITATION
ON
SECRETARIAL
AUTHORITY.—The Sec-
retary shall not make a determination under paragraph (2)
or (3) on any basis other than the basis that a mechanism
is not an acceptable alternative mechanism or is not being
implemented.
‘‘(5) FUTURE ADOPTION OF MECHANISMS.—If a State, after
January 1, 1997, submits the notice and information described
in paragraph (1), unless the Secretary makes a finding
described in paragraph (3) within the 90-day period beginning
on the date of submission of the notice and information, the
H. R. 3103—51
mechanism shall be considered to be an acceptable alternative
mechanism for purposes of this section, effective 90 days after
the end of such period, subject to the second sentence of para-
graph (1).
‘‘(c) PROVISION RELATED TO RISK.—
‘‘(1) ADOPTION OF NAIC MODELS.—The model act referred
to in subsection (a)(1)(D)(i) is the Small Employer and Individ-
ual Health Insurance Availability Model Act (adopted by the
National Association of Insurance Commissioners on June 3,
1996) insofar as it applies to individual health insurance cov-
erage or the Individual Health Insurance Portability Model
Act (also adopted by such Association on such date).
‘‘(2) QUALIFIED HIGH RISK POOL.—For purposes of subsection
(a)(1)(D)(ii), a ‘qualified high risk pool’ described in this para-
graph is a high risk pool that—
‘‘(A) provides to all eligible individuals health insurance
coverage (or comparable coverage) that does not impose
any preexisting condition exclusion with respect to such
coverage for all eligible individuals, and
‘‘(B) provides for premium rates and covered benefits
for such coverage consistent with standards included in
the NAIC Model Health Plan for Uninsurable Individuals
Act (as in effect as of the date of the enactment of this
title).
‘‘(3) OTHER
MECHANISMS.—For purposes of subsection
(a)(1)(D)(iii), a mechanism described in this paragraph—
‘‘(A) provides for risk adjustment, risk spreading, or
a risk spreading mechanism (among issuers or policies
of an issuer) or otherwise provides for some financial sub-
sidization for eligible individuals, including through assist-
ance to participating issuers; or
‘‘(B) is a mechanism under which each eligible individ-
ual is provided a choice of all individual health insurance
coverage otherwise available.
‘‘SEC. 2745. ENFORCEMENT.
‘‘(a) STATE ENFORCEMENT.—
‘‘(1) STATE AUTHORITY.—Subject to section 2746, each State
may require that health insurance issuers that issue, sell,
renew, or offer health insurance coverage in the State in the
individual market meet the requirements established under
this part with respect to such issuers.
‘‘(2) FAILURE TO IMPLEMENT REQUIREMENTS.—In the case
of a State that fails to substantially enforce the requirements
set forth in this part with respect to health insurance issuers
in the State, the Secretary shall enforce the requirements of
this part under subsection (b) insofar as they relate to the
issuance, sale, renewal, and offering of health insurance cov-
erage in the individual market in such State.
‘‘(b) SECRETARIAL ENFORCEMENT AUTHORITY.—The Secretary
shall have the same authority in relation to enforcement of the
provisions of this part with respect to issuers of health insurance
coverage in the individual market in a State as the Secretary
has under section 2722(b)(2) in relation to the enforcement of the
provisions of part A with respect to issuers of health insurance
coverage in the small group market in the State.
H. R. 3103—52
‘‘SEC. 2746. PREEMPTION.
‘‘(a) IN GENERAL.—Subject to subsection (b), nothing in this
part (or part C insofar as it applies to this part) shall be construed
to prevent a State from establishing, implementing, or continuing
in effect standards and requirements unless such standards and
requirements prevent the application of a requirement of this part.
‘‘(b) RULES OF CONSTRUCTION.—Nothing in this part (or part
C insofar as it applies to this part) shall be construed to affect
or modify the provisions of section 514 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1144).
‘‘SEC. 2747. GENERAL EXCEPTIONS.
‘‘(a) EXCEPTION FOR CERTAIN BENEFITS.—The requirements of
this part shall not apply to any health insurance coverage in relation
to its provision of excepted benefits described in section 2791(c)(1).
‘‘(b) EXCEPTION FOR CERTAIN BENEFITS IF CERTAIN CONDITIONS
MET.—The requirements of this part shall not apply to any health
insurance coverage in relation to its provision of excepted benefits
described in paragraph (2), (3), or (4) of section 2791(c) if the
benefits are provided under a separate policy, certificate, or contract
of insurance.’’.
(b) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in this subsection,
part B of title XXVII of the Public Health Service Act (as
inserted by subsection (a)) shall apply with respect to health
insurance coverage offered, sold, issued, renewed, in effect,
or operated in the individual market after June 30, 1997,
regardless of when a period of creditable coverage occurs.
(2) APPLICATION OF CERTIFICATION RULES.—The provisions
of section 102(d)(2) of this Act shall apply to section 2743
of the Public Health Service Act in the same manner as it
applies to section 2701(e) of such Act.
Subtitle C—General and Miscellaneous
Provisions
SEC. 191. HEALTH COVERAGE AVAILABILITY STUDIES.
(a) STUDIES.—
(1) STUDY ON EFFECTIVENESS OF REFORMS.—The Secretary
of Health and Human Services shall provide for a study on
the effectiveness of the provisions of this title and the various
State laws, in ensuring the availability of reasonably priced
health coverage to employers purchasing group coverage and
individuals purchasing coverage on a non-group basis.
(2) STUDY
ON
ACCESS
AND
CHOICE.—The Secretary also
shall provide for a study on—
(A) the extent to which patients have direct access
to, and choice of, health care providers, including specialty
providers, within a network plan, as well as the opportunity
to utilize providers outside of the network plan, under
the various types of coverage offered under the provisions
of this title; and
(B) the cost and cost-effectiveness to health insurance
issuers of providing access to out-of-network providers, and
the potential impact of providing such access on the cost
H. R. 3103—53
and quality of health insurance coverage offered under
provisions of this title.
(3) CONSULTATION.—The studies under this subsection shall
be conducted in consultation with the Secretary of Labor, rep-
resentatives of State officials, consumers, and other representa-
tives of individuals and entities that have expertise in health
insurance and employee benefits.
(b) REPORTS.—Not later than January 1, 2000, the Secretary
shall submit to the appropriate committees of Congress a report
on each of the studies under subsection (a).
SEC. 192. REPORT ON MEDICARE REIMBURSEMENT OF TELEMEDICINE.
The Health Care Financing Administration shall complete its
ongoing study of Medicare reimbursement of all telemedicine serv-
ices and submit a report to Congress on Medicare reimbursement
of telemedicine services by not later than March 1, 1997. The
report shall—
(1) utilize data compiled from the current demonstration
projects already under review and gather data from other
ongoing telemedicine networks;
(2) include an analysis of the cost of services provided
via telemedicine; and
(3) include a proposal for Medicare reimbursement of such
services.
SEC. 193. ALLOWING FEDERALLY-QUALIFIED HMOS TO OFFER HIGH
DEDUCTIBLE PLANS.
Section 1301(b) of the Public Health Service Act (42 U.S.C.
300e(b)) is amended by adding at the end the following new para-
graph:
‘‘(6) A health maintenance organization that otherwise
meets the requirements of this title may offer a high-deductible
health plan (as defined in section 220(c)(2) of the Internal
Revenue Code of 1986).’’.
SEC. 194. VOLUNTEER SERVICES PROVIDED BY HEALTH PROFES-
SIONALS AT FREE CLINICS.
Section 224 of the Public Health Service Act (42 U.S.C. 233)
is amended by adding at the end the following subsection:
‘‘(o)(1) For purposes of this section, a free clinic health profes-
sional shall in providing a qualifying health service to an individual
be deemed to be an employee of the Public Health Service for
a calendar year that begins during a fiscal year for which a transfer
was made under paragraph (6)(D). The preceding sentence is subject
to the provisions of this subsection.
‘‘(2) In providing a health service to an individual, a health
care practitioner shall for purposes of this subsection be considered
to be a free clinic health professional if the following conditions
are met:
‘‘(A) The service is provided to the individual at a free
clinic, or through offsite programs or events carried out by
the free clinic.
‘‘(B) The free clinic is sponsoring the health care practi-
tioner pursuant to paragraph (5)(C).
‘‘(C) The service is a qualifying health service (as defined
in paragraph (4)).
‘‘(D) Neither the health care practitioner nor the free clinic
receives any compensation for the service from the individual
H. R. 3103—54
or from any third-party payor (including reimbursement under
any insurance policy or health plan, or under any Federal
or State health benefits program). With respect to compliance
with such condition:
‘‘(i) The health care practitioner may receive repayment
from the free clinic for reasonable expenses incurred by
the health care practitioner in the provision of the service
to the individual.
‘‘(ii) The free clinic may accept voluntary donations
for the provision of the service by the health care practi-
tioner to the individual.
‘‘(E) Before the service is provided, the health care practi-
tioner or the free clinic provides written notice to the individual
of the extent to which the legal liability of the health care
practitioner is limited pursuant to this subsection (or in the
case of an emergency, the written notice is provided to the
individual as soon after the emergency as is practicable). If
the individual is a minor or is otherwise legally incompetent,
the condition under this subparagraph is that the written notice
be provided to a legal guardian or other person with legal
responsibility for the care of the individual.
‘‘(F) At the time the service is provided, the health care
practitioner is licensed or certified in accordance with applicable
law regarding the provision of the service.
‘‘(3)(A) For purposes of this subsection, the term ‘free clinic’
means a health care facility operated by a nonprofit private entity
meeting the following requirements:
‘‘(i) The entity does not, in providing health services
through the facility, accept reimbursement from any third-
party payor (including reimbursement under any insurance
policy or health plan, or under any Federal or State health
benefits program).
‘‘(ii) The entity, in providing health services through the
facility, either does not impose charges on the individuals to
whom the services are provided, or imposes a charge according
to the ability of the individual involved to pay the charge.
‘‘(iii) The entity is licensed or certified in accordance with
applicable law regarding the provision of health services.
‘‘(B) With respect to compliance with the conditions under
subparagraph (A), the entity involved may accept voluntary dona-
tions for the provision of services.
‘‘(4) For purposes of this subsection, the term ‘qualifying health
service’ means any medical assistance required or authorized to
be provided in the program under title XIX of the Social Security
Act, without regard to whether the medical assistance is included
in the plan submitted under such program by the State in which
the health care practitioner involved provides the medical assist-
ance. References in the preceding sentence to such program shall
as applicable be considered to be references to any successor to
such program.
‘‘(5) Subsection (g) (other than paragraphs (3) through (5))
and subsections (h), (i), and (l) apply to a health care practitioner
for purposes of this subsection to the same extent and in the
same manner as such subsections apply to an officer, governing
board member, employee, or contractor of an entity described in
subsection (g)(4), subject to paragraph (6) and subject to the
following: