I
103D CONGRESS
2D SESSION
H. R. 3960
To provide for health care for every American and to control the cost and
enhance the quality of the health care system.
IN THE HOUSE OF REPRESENTATIVES
MARCH 3, 1994
Mr. MILLER of California (for himself, Mr. MCDERMOTT, Mr. BECERRA, Mr.
CLAY, Mr. DELUGO, Mr. ENGEL, Mr. FALEOMAVAEGA, Mrs. MINK, Mr.
MURPHY, Mr. OWENS, Mr. PAYNE of New Jersey, Mr. ROMERO-
BARCELO´, Mr. SCOTT, and Ms. WOOLSEY) introduced the following bill;
which was referred to the Committee on Energy and Commerce, Ways
and Means, Armed Services, Post Office and Civil Service, Natural Re-
sources, and Education and Labor
A BILL
To provide for health care for every American and to control
the cost and enhance the quality of the health care system.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘American Health Security Act of 1994’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE 
I—ESTABLISHMENT 
OF 
A 
STATE-BASED 
AMERICAN
HEALTH SECURITY PROGRAM; UNIVERSAL ENTITLEMENT; EN-
ROLLMENT
Sec. 101. Establishment of a State-based American Health Security Program.
Sec. 102. Universal entitlement.
Sec. 103. Enrollment.
Sec. 104. Portability of benefits.
Sec. 105. Effective date of benefits.
Sec. 106. Relationship to existing Federal health programs.
TITLE II—COMPREHENSIVE BENEFITS, INCLUDING PREVENTIVE
BENEFITS AND BENEFITS FOR LONG TERM CARE
Sec. 201. Comprehensive benefits.
Sec. 202. Definitions relating to services.
Sec. 203. Special rules for home and community-based long-term care services.
Sec. 204. Exclusions and limitations.
Sec. 205. Certification; quality review; plans of care.
TITLE III—PROVIDER PARTICIPATION
Sec. 301. Provider participation and standards.
Sec. 302. Qualifications for providers.
Sec. 303. Qualifications for comprehensive health service organizations.
Sec. 304. Limitation on certain physician referrals.
TITLE IV—ADMINISTRATION
Subtitle A—General Administrative Provisions
Sec. 401. American Health Security Standards Board.
Sec. 402. American Health Security Advisory Council.
Sec. 403. Professional, technical, and temporary advisory committees.
Sec. 404. American Health Security Quality Council.
Sec. 405. State health security programs.
Sec. 406. Complementary conduct of related health programs.
Subtitle B—Control Over Fraud and Abuse
Sec. 411. Application of Federal sanctions to all fraud and abuse under Amer-
ican Health Security Program.
Sec. 412. National health care fraud data base.
Sec. 413. Requirements for operation of State health care fraud and abuse con-
trol units.
Sec. 414. Assignment of unique provider and patient identifiers.
TITLE V—QUALITY ASSESSMENT
Sec. 501. Functions of Quality Council; development of practice guidelines and
application to outliers.
Sec. 502. State quality review programs.
Sec. 503. Elimination of existing utilization review programs; transition.
Sec. 504. Development of national electronic data base.
TITLE VI—NATIONAL HEALTH SECURITY BUDGET; PAYMENTS;
COST CONTAINMENT MEASURES
Subtitle A—Budgeting and Payments to States
Sec. 601. National health security budget.
Sec. 602. Computation of individual and State capitation amounts.
Sec. 603. State health security budgets.
Sec. 604. Federal payments to States.
Sec. 605. Account for health professional education expenditures.
Subtitle B—Payments by States to Providers
Sec. 611. Payments to hospitals and other facility-based services for operating
expenses on the basis of approved global budgets.
Sec. 612. Payments to health care practitioners based on prospective fee
schedule.
Sec. 613. Payments to comprehensive health service organizations.
Sec. 614. Payments for community-based primary health services.
Sec. 615. Payments for prescription drugs.
Sec. 616. Approved devices and equipment.
Sec. 617. Payments for other items and services.
Sec. 618. Payment incentives for medically underserved areas.
Sec. 619. Authority for alternative payment methodologies.
Subtitle C—Mandatory Assignment and Administrative Provisions
Sec. 621. Mandatory assignment.
Sec. 622. Procedures for reimbursement; appeals.
TITLE VII—PROMOTION OF PRIMARY HEALTH CARE; DEVELOP-
MENT OF HEALTH SERVICE CAPACITY; PROGRAMS TO ASSIST
THE MEDICALLY UNDERSERVED
Subtitle A—Promotion and Expansion of Primary Care Professional Training
Sec. 701. Role of Board; establishment of primary care professional output
goals.
Sec. 702. Establishment of Advisory Committee on Health Professional Edu-
cation.
Sec. 703. Grants for health professions education, nurse education, and the Na-
tional Health Service Corps.
Subtitle B—Direct Health Care Delivery
Sec. 711. Setaside for public health block grants.
Sec. 712. Setaside for primary health care delivery.
Sec. 713. Primary care service expansion grants.
Subtitle C—Primary Care and Outcomes Research
Sec. 721. Set-aside for outcomes research.
Sec. 722. Office of Primary Care and Prevention Research.
Subtitle D—School-Related Health Services
Sec. 731. Authorizations of appropriations.
Sec. 732. Eligibility for development and operation grants.
Sec. 733. Preferences.
Sec. 734. Grants for development of projects.
Sec. 735. Grants for operation of projects.
Sec. 736. Federal administrative costs.
Sec. 737. Definitions.
TITLE VIII—FINANCING PROVISIONS; AMERICAN HEALTH
SECURITY TRUST FUND
Sec. 800. Amendment of 1986 code; section 15 not to apply.
Subtitle A—American Health Security Trust Fund
Sec. 801. American health security trust fund.
Subtitle B—Taxes Based on Income and Wages
Sec. 811. Payroll tax on employers.
Sec. 812. Health care income tax.
Subtitle C—Increase in Excise Taxes on Tobacco Products
Sec. 821. Increase in excise taxes on tobacco products.
Subtitle D—Increase in Taxes on Firearms and Ammunition
Sec. 831. Increase in taxes on firearms and ammunition.
TITLE IX—CONFORMING AMENDMENTS TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974
Sec. 901. ERISA inapplicable to health coverage arrangements under State
health security programs.
Sec. 902. Exemption of State health security programs from ERISA preemp-
tion.
Sec. 903. Prohibition of employee benefits duplicative of benefits under State
health security programs.
Sec. 903. Repeal of continuation coverage requirements under ERISA and cer-
tain other requirements relating to group health plans.
Sec. 904. Effective date of title.
TITLE I—ESTABLISHMENT OF A
STATE-BASED 
AMERICAN
HEALTH 
SECURITY 
PRO-
GRAM; UNIVERSAL ENTITLE-
MENT; ENROLLMENT
SEC. 101. ESTABLISHMENT OF A STATE-BASED AMERICAN
HEALTH SECURITY PROGRAM.
(a) IN GENERAL.—There is hereby established in the
United States a State-Based American Health Security
Program to be administered by the individual States in
accordance with Federal standards specified in, or estab-
lished under, this Act.
(b) STATE HEALTH SECURITY PROGRAMS.—In order
for a State to be eligible to receive payment under section
604, a State must establish a State health security pro-
gram in accordance with this Act.
(c) STATE DEFINED.—
(1) IN GENERAL.—In this Act, subject to para-
graph (2), the term ‘‘State’’ means each of the fifty
States and the District of Columbia.
(2) ELECTION.—If the Governor of Puerto
Rico, the Virgin Islands, Guam, American Samoa, or
the Northern Mariana Islands certifies to the Presi-
dent that the legislature of the Commonwealth or
territory has enacted legislation desiring that the
Commonwealth or territory be included as a State
under the provisions of this Act, such Common-
wealth or territory shall be included as a ‘‘State’’
under this Act beginning January 1 of the first year
beginning ninety days after the President receives
the notification.
SEC. 102. UNIVERSAL ENTITLEMENT.
(a) IN GENERAL.—Every individual who is a resident
of the United States and is a citizen or national of the
United States or lawful resident alien (as defined in sub-
section (d) is entitled to benefits for health care services
under this Act under the appropriate State health security
program. In this section, the term ‘‘appropriate State
health security program’’ means, with respect to an indi-
vidual, the State health security program for the State in
which the individual maintains a primary residence.
(b) TREATMENT OF CERTAIN NONIMMIGRANTS.—
(1) IN GENERAL.—The American Health Secu-
rity Standards Board (in this Act referred to as the
‘‘Board’’) may make eligible for benefits for health
care services under the appropriate State health se-
curity program under this Act such classes of aliens
admitted to the United States as nonimmigrants as
the Board may provide.
(2) CONSIDERATION.—In providing for eligi-
bility under paragraph (1), the Board shall consider
reciprocity in health care services offered to United
States citizens who are nonimmigrants in other for-
eign states, and such other factors as the Board
determines to be appropriate.
(c) TREATMENT OF OTHER INDIVIDUALS.—
(1) BY BOARD.—The Board also may make eli-
gible for benefits for health care services under the
appropriate State health security program under this
Act other individuals not described in subsection (a)
or (b), and regulate the nature of the eligibility of
such individuals, in order—
(A) to preserve the public health of
communities,
(B) to compensate States for the addi-
tional health care financing burdens created by
such individuals, and
(C) to prevent adverse financial and medi-
cal consequences of uncompensated care,
while inhibiting travel and immigration to the
United States for the sole purpose of obtaining
health care services.
(2) BY STATES.—Any State health security pro-
gram may make individuals described in paragraph
(1) eligible for benefits at the expense of the State.
(d) LAWFUL RESIDENT ALIEN DEFINED.—For pur-
poses of this section, the term ‘‘lawful resident alien’’
means an alien lawfully admitted for permanent residence
and any other alien lawfully residing permanently in the
United States under color of law, including an alien with
lawful temporary resident status under section 210, 210A,
or 234A of the Immigration and Nationality Act (8 U.S.C.
1160, 1161, or 1255a).
SEC. 103. ENROLLMENT.
(a) IN GENERAL.—Each State health security pro-
gram shall provide a mechanism for the enrollment of indi-
viduals entitled or eligible for benefits under this Act. The
mechanism shall—
(1) include a process for the automatic enroll-
ment of individuals at the time of birth in the
United States and at the time of immigration into
the United States or other acquisition of lawful resi-
dent status in the United States,
(2) provide for the enrollment, as of January 1,
1996, of all individuals who are eligible to be en-
rolled as of such date, and
(3) include a process for the enrollment of indi-
viduals made eligible for health care services under
subsections (b) and (c) of section 102.
(b) AVAILABILITY OF APPLICATIONS.—Each State
health security program shall make applications for enroll-
ment under the program available—
(1) at employment and payroll offices of em-
ployers located in the State,
(2) at local offices of the Social Security
Administration,
(3) at social services locations,
(4) at out-reach sites (such as provider and
practitioner locations), and
(5) at other locations (including post offices
and schools) accessible to a broad cross-section of
individuals eligible to enroll.
(c) ISSUANCE OF HEALTH SECURITY CARDS.—In
conjunction with an individual’s enrollment for benefits
under this Act, the State health security program shall
provide for the issuance of a health security card which
shall be used for purposes of identification and processing
of claims for benefits under the program. The State health
security program may provide for issuance of such cards
by employers for purposes of carrying out enrollment pur-
suant to subsection (a)(2).
SEC. 104. PORTABILITY OF BENEFITS.
(a) IN GENERAL.—To ensure continuous access to
benefits for health care services covered under this Act,
each State health security program—
(1) shall not impose any minimum period of
residence in the State, or waiting period, in excess
of three months before residents of the State are
entitled to, or eligible for, such benefits under the
program;
(2) shall provide continuation of payment for
covered health care services to individuals who have
terminated their residence in the State and estab-
lished their residence in another State, for the dura-
tion of any waiting period imposed in the State of
new residency for establishing entitlement to, or
eligibility for, such services; and
(3) shall provide for the payment for health
care services covered under this Act provided to indi-
viduals while temporarily absent from the State
based on the following principles:
(A) Payment for such health care services
is at the rate that is approved by the State
health security program in the State in which
the services are provided, unless the States con-
cerned agree to apportion the cost between
them in a different manner.
(B) Payment for such health care services
provided outside the United States is made on
the basis of the amount that would have been
paid by the State health security program for
similar services rendered in the State, with due
regard, in the case of hospital services, to the
size of the hospital, standards of service, and
other relevant factors.
(b) 
CROSS-BORDER
ARRANGEMENTS.—A 
State
health security program for a State may negotiate with
such a program in an adjacent State a reciprocal arrange-
ment for the coverage under such other program of health
care services to enrollees residing in the border region.
SEC. 105. EFFECTIVE DATE OF BENEFITS.
Benefits shall first be available under this Act for
items and services furnished on or after January 1, 1996.
SEC. 106. RELATIONSHIP TO EXISTING FEDERAL HEALTH
PROGRAMS.
(a) MEDICARE AND MEDICAID.—
(1) IN GENERAL.—Notwithstanding any other
provision of law, subject to paragraph (2)—
(A) no benefits shall be available under
title XVIII of the Social Security Act for any
item or service furnished after December 31,
1995,
(B) no individual is entitled to medical as-
sistance under a State plan approved under
title XIX of such Act for any item or service
furnished after such date, and
(C) no payment shall be made to a State
under section 1903(a) of such Act with respect
to medical assistance for any item or service
furnished after such date.
(2) TRANSITION.—In the case of inpatient hos-
pital services and extended care services during a
continuous period of stay which began before Janu-
ary 1, 1996, and which had not ended as of such
date, for which benefits are provided under title
XVIII, or under a State plan under title XIX, of the
Social Security Act, the Secretary of Health and
Human Services and each State plan, respectively,
shall provide for continuation of benefits under such
title or plan until the end of the period of stay.
(b) FEDERAL EMPLOYEES HEALTH BENEFITS PRO-
GRAM.—No benefits shall be made available under chapter
89 of title 5, United States Code, for any part of a cov-
erage period occurring after December 31, 1995.
(c) CHAMPUS.—No benefits shall be made available
under sections 1079 and 1086 of title 10, United States
Code, for items or services furnished after December 31,
1995.
(d) TREATMENT OF BENEFITS FOR VETERANS AND
NATIVE AMERICANS.—Nothing in this Act shall affect the
eligibility of veterans for the medical benefits and services
provided under title 38, United States Code, or of Indians
for the medical benefits and services provided by or
through the Indian Health Service.
TITLE II—COMPREHENSIVE BEN-
EFITS, INCLUDING PREVEN-
TIVE BENEFITS AND BENE-
FITS FOR LONG TERM CARE
SEC. 201. COMPREHENSIVE BENEFITS.
(a) IN GENERAL.—Subject to the succeeding provi-
sions of this title, individuals enrolled for benefits under
this Act are entitled to have payment made under a State
health security program for the following items and serv-
ices if medically necessary or appropriate for the mainte-
nance of health or for the diagnosis, treatment, or rehabili-
tation of a health condition:
(1) HOSPITAL SERVICES.—Inpatient and out-
patient hospital care, including 24-hour a day emer-
gency services.
(2) 
PROFESSIONAL
SERVICES.—Professional
services of health care practitioners authorized to
provide health care services under State law.
(3) 
COMMUNITY-BASED
PRIMARY
HEALTH
SERVICES.—Community-based primary health serv-
ices (as defined in section 202(a)).
(4) PREVENTIVE
SERVICES.—Preventive serv-
ices (as defined in section 202(b)).
(5) LONG-TERM
AND
CHRONIC
CARE
SERV-
ICES.—
(A) Nursing facility services.
(B) Home health services.
(C) Home and community-based long term
care services (as defined in section 202(c)) for
individuals described in section 203(a).
(D) Hospice care.
(6) PRESCRIPTION DRUGS, BIOLOGICALS, INSU-
LIN, MEDICAL FOODS.—
(A) Outpatient prescription drugs and
biologicals, as specified by the Board consistent
with section 515.
(B) Insulin.
(C) Medical foods (as defined in section
202(d)).
(7) DENTAL SERVICES.—Dental services (as de-
fined in section 202(h)).
(8) 
MENTAL
HEALTH
SERVICES.—Mental
health services (as defined in section 202(e)).
(9) SUBSTANCE
ABUSE
TREATMENT
SERV-
ICES.—Substance abuse treatment services (as de-
fined in section 202(f)).
(10) DIAGNOSTIC TESTS.—Diagnostic tests.
(11) OTHER ITEMS AND SERVICES.—
(A) OUTPATIENT
THERAPY.—Outpatient
physical therapy services, outpatient speech pa-
thology services, and outpatient occupational
therapy services in all settings.
(B) DURABLE MEDICAL EQUIPMENT.—Du-
rable medical equipment.
(C) HOME DIALYSIS.—Home dialysis sup-
plies and equipment.
(D) AMBULANCE.—Emergency ambulance
service.
(E) PROSTHETIC DEVICES.—Prosthetic de-
vices, including replacements of such devices.
(F) ADDITIONAL ITEMS AND SERVICES.—
Such other medical or health care items or
services as the Board may specify.
(b) COST-SHARING.—There are no deductibles, coin-
surance, or copayments applicable to acute care and pre-
ventive benefits provided under this title.
(c) PROHIBITION OF BALANCE BILLING.—As pro-
vided in section 531, no person may impose a charge for
covered services for which benefits are provided under this
Act.
(d) NO DUPLICATE HEALTH INSURANCE.—Each
State health security program shall prohibit the sale of
health insurance in the State if payment under the insur-
ance duplicates payment for any items or services for
which payment may be made under such a program.
(e) STATE PROGRAM MAY PROVIDE ADDITIONAL
BENEFITS.—Nothing in this Act shall be construed as
limiting the benefits that may be made available under a
State health security program to residents of the State
at the expense of the State.
(f) EMPLOYERS MAY PROVIDE ADDITIONAL BENE-
FITS.—Nothing in this Act shall be construed as limiting
the additional benefits that an employer may provide to
employees or their dependents, or to former employees or
their dependents.
SEC. 202. DEFINITIONS RELATING TO SERVICES.
(a) COMMUNITY-BASED PRIMARY HEALTH SERV-
ICES.—In this title, the term ‘‘community-based primary
health services’’ means ambulatory health services fur-
nished—
(1) by a rural health clinic;
(2) by a Federally-qualified health center, and
which, for purposes of this Act, include services
furnished by State and local health agencies;
(3) in a school-based setting;
(4) by public educational agencies and other
providers of services to children entitled to assist-
ance under the Individuals with Disabilities Edu-
cation Act for services furnished pursuant to a
written Individualized Family Services Plan or
Individual Education Plan under such Act; and
(5) public and private non-profit entities receiv-
ing Federal assistance under the Public Health
Service Act.
(b) PREVENTIVE SERVICES.—
(1) IN GENERAL.—In this title, the term ‘‘pre-
ventive services’’ means items and services—
(A) which—
(i) are specified in paragraph (2), or
(ii) the Board determines to be effec-
tive in the maintenance and promotion of
health or minimizing the effect of illness,
disease, or medical condition; and
(B) which are provided consistent with the
periodicity schedule established under para-
graph (3).
(2) SPECIFIED
PREVENTIVE
SERVICES.—The
services specified in this paragraph are as follows:
(A) Basic immunizations.
(B) Prenatal and well-baby care (for in-
fants under one year of age).
(C) Well-child care (including periodic
physical examinations, hearing and vision
screening, and developmental screening and ex-
aminations) for individuals under 18 years of
age.
(D) Periodic screening mammography, Pap
smears, and colorectal examinations and exami-
nations for prostate cancer.
(E) Physical examinations.
(F) Family planning services.
(G) Routine eye examinations, eyeglasses,
and contact lenses.
(H) Hearing aids, but only upon a deter-
mination of a certified audiologist or physician
that a hearing problem exists and is caused by
a condition that can be corrected by use of a
hearing aid.
(3) SCHEDULE.—The Board shall establish, in
consultation with experts in preventive medicine and
public health and taking into consideration those
preventive services recommended by the Preventive
Services Task Force and published as the Guide to
Clinical Preventive Services, a periodicity schedule
for the coverage of preventive services under para-
graph (1). Such schedule shall take into consider-
ation the cost-effectiveness of appropriate preventive
care and shall be revised not less frequently than
once every 5 years, in consultation with experts in
preventive medicine and public health.
(c) HOME
AND
COMMUNITY-BASED
LONG-TERM
CARE SERVICES.—In this title, the term ‘‘home and com-
munity-based long term care services’’ means the following
services provided to an individual to enable the individual
to remain in such individual’s place of residence within
the community:
(1) Homemaker services, including meals.
(2) Home health aide services.
(3) Adult day health care, social day care or
psychiatric day care.
(4) Medical social work services.
(5) Care coordination services, as defined in
subsection (g)(1).
(6) Respite care, including training for informal
caregivers.
(d) MEDICAL FOODS.—In this title, the term ‘‘medi-
cal foods’’ means foods which are formulated to be
consumed or administered enterally under the supervision
of a physician and which are intended for the specific die-
tary management of a disease or condition for which
distinctive nutritional requirements, based on recognized
scientific principles, are established by medical evaluation.
(e) MENTAL HEALTH SERVICES.—In this title, the
term ‘‘mental health services’’ means services related to
the prevention, diagnosis, treatment, and rehabilitation of
mental illness and promotion of mental health, including
the following services:
(1) Crisis intervention.
(2) Outpatient mental health services.
(3) Partial hospitalization and day and evening
treatment programs.
(4) Psychosocial rehabilitation services.
(5) Pharmacotherapeutic interventions.
(6) Other rehabilitation services, including half-
way and three-quarter-way house care.
(7) Inpatient mental health services.
(8) Care coordination services (as defined in
subsection (g)(1)).
(f) SUBSTANCE ABUSE TREATMENT SERVICES.—In
this title, the term ‘‘substance abuse treatment services’’
means services for the treatment of dependency on alcohol
or controlled substances provided through a treatment
program meeting State qualification standards and in-
cludes the following services:
(1) Crisis intervention, including assessment,
diagnosis, and referral.
(2) Detoxification services, in ambulatory and
inpatient settings.
(3) Outpatient services, including intensive day
and evening programs, continuing care, and family
services.
(4) Short-term residential services in a hospital
or free-standing program.
(5) Long-term residential services, including
therapeutic communities and halfway houses.
(6) Pharmacotherapeutic interventions.
(7) Care coordination services (as defined in
subsection (g)(1)).
(g) CARE COORDINATION SERVICES.—
(1) IN GENERAL.—In this title, the term ‘‘care
coordination services’’ means services provided by
care coordinators (as defined in paragraph (2)) to
individuals described in paragraph (3) for the co-
ordination and monitoring of mental health services,
substance abuse treatment services, and home and
community-based long term care services to ensure
appropriate, cost-effective utilization of such services
in a comprehensive and continuous manner, and in-
cludes—
(A) transition management between inpa-
tient facilities and community-based services,
including assisting patients in identifying and
gaining access to appropriate ancillary services;
and
(B) evaluating and recommending appro-
priate treatment services, in cooperation with
patients and other providers and in conjunction
with any quality review program or plan of care
under section 205.
(2) CARE COORDINATOR.—
(A) IN GENERAL.—In this title, the term
‘‘care coordinator’’ means an individual or non-
profit or public agency or organization which
the State health security program determines—
(i) is capable of performing directly,
efficiently, and effectively the duties of a
care coordinator described in paragraph
(1), and
(ii) demonstrates capability in estab-
lishing and periodically reviewing and re-
vising plans of care, and in arranging for
and monitoring the provision and quality
of services under any plan.
(B) INDEPENDENCE.—State health secu-
rity programs shall establish safeguards to as-
sure that care coordinators have no financial in-
terest in treatment decisions or placements.
Care coordination may not be provided through
any structure or mechanism through which
quality review is performed.
(3) ELIGIBLE INDIVIDUALS.—An individual de-
scribed in this paragraph is an individual—
(A) described in section 203 (relating to
individuals qualifying for long term and chronic
care services); or
(B) determined (in a manner specified by
the Board)—
(i) to have a serious mental illness (as
defined by the Board), or
(ii) to have a history of substance
abuse displaying severe associated illness
or previous treatment failure (as defined
by the Board).
(h) DENTAL SERVICES.—In this title, the term ‘‘den-
tal services’’ means preventive and prophylactic dental
treatment consistent with a periodicity schedule estab-
lished by the Board and treatment for dental disease and
injury in children under 18 years of age, and does not
include orthodontic services.
(i) NURSING
FACILITY; NURSING
FACILITY
SERV-
ICES.—Except as may be provided by the Board, the
terms ‘‘nursing facility’’ and ‘‘nursing facility services’’
have the meanings given such terms in sections 1919(a)
and 1905(f), respectively, of the Social Security Act.
(j) OTHER TERMS.—Except as may be provided by
the Board, the definitions contained in section 1861 of the
Social Security Act shall apply.
SEC. 203. SPECIAL RULES FOR HOME AND COMMUNITY-
BASED LONG-TERM CARE SERVICES.
(a) QUALIFYING INDIVIDUALS.—For purposes of sec-
tion 201(a)(5)(C), individuals described in this subsection
are the following individuals:
(1) ADULTS.—Individuals 18 years of age or
older determined (in a manner specified by the
Board)—
(A) to be unable to perform, without the
assistance of an individual, at least 2 of the fol-
lowing 5 activities of daily living (or who has a
similar level of disability due to cognitive
impairment)—
(i) bathing;
(ii) eating;
(iii) dressing;
(iv) toileting; and
(v) transferring in and out of a bed or
in and out of a chair; or
(B) due to cognitive or mental impair-
ments, requires supervision because the individ-
ual behaves in a manner that poses health or
safety hazards to himself or herself or others.
(2) CHILDREN.—Individuals under 18 years of
age determined (in a manner specified by the Board)
to meet such alternative standard of disability for
children as the Board develops.
(b) LIMIT ON SERVICES.—
(1) IN GENERAL.—No individual is entitled to
receive benefits under a State health security pro-
gram with respect to home and community-based
long term care services in a period (specified by the
Board) to the extent the amount of payments for
such benefits exceeds 65 percent (or such alternative
ratio as the Board establishes under paragraph (2))
of the average of amount of payment that would
have been made under the program during the pe-
riod if the individual were a resident of a nursing fa-
cility in the same area in which the services were
provided.
(2) ALTERNATIVE RATIO.—The Board may es-
tablish for purposes of paragraph (1) an alternative
ratio (of payments for home and community-based
long term care services to payments for nursing fa-
cility services) as the Board determines to be more
consistent with the goal of providing cost-effective
long-term care in the most appropriate and least
restrictive setting.
SEC. 204. EXCLUSIONS AND LIMITATIONS.
(a) IN GENERAL.—Subject to section 201(e), benefits
for service are not available under this Act unless the
services meet the standards specified in section 201(a).
(b) MENTAL HEALTH SERVICES AND SUBSTANCE
ABUSE TREATMENT SERVICES.—
(1) IN GENERAL.—Mental health services and
substance abuse treatment services furnished for an
individual in excess of a threshold specified in para-
graph (2) are not covered services unless the services
are determined under a utilization review program to
meet the standards specified in section 201(a) and,
with respect to inpatient or residential treatment
services, to be provided in the least restrictive and
most appropriate setting.
(2) UTILIZATION REVIEW THRESHOLD.—
(A) IN
GENERAL.—Subject to subpara-
graphs (B) and (C), the thresholds specified in
this paragraph are—
(i) 20 outpatient visits in a year, and
(ii) 15 days of inpatient services in a
year.
(B) ALTERNATIVE
NATIONAL
THRESH-
OLDS.—The Board may specify alternative
thresholds to those specified in subparagraph
(A).
(C) ADDITIONAL STATE THRESHOLDS.—A
State health security program may specify
thresholds in addition to those established
under 
the 
previous 
subparagraphs, 
which
thresholds may be higher or lower than the
number of outpatient visits or days of inpatient
services otherwise specified.
(c) TREATMENT OF EXPERIMENTAL SERVICES.—In
applying subsection (a), the Board shall make, after con-
sultation with a technical advisory committee, national
coverage determinations with respect to those services that
are experimental in nature. Such determinations shall be
made consistent with a process that provides for profes-
sional input and public comment.
(d) APPLICATION OF NATIONAL PRACTICE GUIDE-
LINES.—In the case of services for which the Board has
recognized national practice guidelines, the services are
considered to meet the standards specified in section
201(a) only if they have been provided in accordance with
such guidelines or in accordance with such guidelines as
are provided by the State health security program consist-
ent with title V.
(e) SPECIFIC LIMITATIONS.—
(1) LIMITATIONS
ON
EYEGLASSES, CONTACT
LENSES, HEARING
AIDS, AND
DURABLE
MEDICAL
EQUIPMENT.—Subject to section 201(e), the Board
may impose such limits relating to the costs and fre-
quency of replacement of eyeglasses, contact lenses,
hearing aids, and durable medical equipment to
which individuals enrolled for benefits under this Act
are entitled to have payment made under a State
health security program as the Board deems appro-
priate.
(2) OVERLAP WITH PREVENTIVE SERVICES.—
The coverage of services described in section 201(a)
(other than paragraph (3)) which also are preventive
services are required to be covered only to the extent
that they are required to be covered as preventive
services.
(3) MISCELLANEOUS EXCLUSIONS FROM COV-
ERED SERVICES.—Covered services under this Act
do not include the following:
(A) Surgery and other procedures (such as
orthodontia) performed solely for cosmetic pur-
poses (as defined in regulations) and hospital or
other services incident thereto, unless—
(i) required to correct a congenital
anomaly;
(ii) required to restore or correct a
part of the body which has been altered as
a result of accidental injury, disease, or
surgery; or
(iii) otherwise determined to be medi-
cally necessary and appropriate under sec-
tion 201(a).
(B) Personal comfort items or private
rooms in inpatient facilities, unless determined
to be medically necessary and appropriate
under section 201(a).
(C) The services of a professional practi-
tioner if they are furnished in a hospital or
other facility which is not a participating pro-
vider.
(f) NURSING
FACILITY
SERVICES
AND
HOME
HEALTH SERVICES.—Nursing facility services and home
health services (other than post-hospital services, as de-
fined by the Board) furnished to an individual who is not
described in section 203(a) are not covered services unless
the services are determined to meet the standards speci-
fied in section 201(a) and, with respect to nursing facility
services, to be provided in the least restrictive and most
appropriate setting.
SEC. 205. CERTIFICATION; QUALITY REVIEW; PLANS OF
CARE.
(a) CERTIFICATIONS.—State health security pro-
grams may require, as a condition of payment for institu-
tional health care services and other services of the type
described in such sections 1814(a) and 1835(a) of the So-
cial Security Act, periodic professional certifications of the
kind described in such sections.
(b) QUALITY REVIEW.—For requirement that each
State health security program establish a quality review
program that meets the requirements for such a program
under title V, see section 405(b)(1)(H).
(c) PLAN OF CARE REQUIREMENTS.—A State health
security program may require, consistent with standards
established by the Board, that payment for services ex-
ceeding specified levels or duration be provided only as
consistent with a plan of care or treatment formulated by
one or more providers of the services or other qualified
professionals. Such a plan may include, consistent with
subsection (b), case management at specified intervals as
a further condition of payment for services.
TITLE III—PROVIDER
PARTICIPATION
SEC. 301. PROVIDER PARTICIPATION AND STANDARDS.
(a) IN GENERAL.—An individual or other entity fur-
nishing any covered service under a State health security
program under this Act is not a qualified provider unless
the individual or entity—
(1) is a qualified provider of the services under
section 302;
(2) has filed with the State health security pro-
gram a participation agreement described in sub-
section (b); and
(3) meets such other qualifications and condi-
tions as are established by the Board or the State
health security program under this Act.
(b) REQUIREMENTS
IN
PARTICIPATION
AGREE-
MENT.—
(1) IN
GENERAL.—A participation agreement
described in this subsection between a State health
security program and a provider shall provide at
least for the following:
(A) Services to eligible persons will be fur-
nished by the provider without discrimination
on the ground of race, national origin, income,
religion, age, sex or sexual orientation, disabil-
ity, handicapping condition, or (subject to the
professional qualifications of the provider) ill-
ness. Nothing in this subparagraph shall be
construed as requiring the provision of a type
or class of services which services are outside
the scope of the provider’s normal practice.
(B) No charge will be made for any cov-
ered services other than for payment authorized
by this Act.
(C) The provider agrees to furnish such in-
formation as may be reasonably required by the
Board or a State health security program, in
accordance with uniform reporting standards
established under section 401(g)(1), for—
(i) quality review by designated enti-
ties;
(ii) the making of payments under
this Act (including the examination of
records as may be necessary for the ver-
ification of information on which payments
are based);
(iii) statistical or other studies re-
quired for the implementation of this Act;
and
(iv) such other purposes as the Board
or State may specify.
(D) The provider agrees not to bill the pro-
gram for any services for which benefits are not
available because of section 204(d).
(E) In the case of a provider that is not
an individual, the provider agrees not to employ
or use for the provision of health services any
individual or other provider who or which has
had a participation agreement under this sub-
section terminated for cause.
(F) In the case of a provider paid under a
fee-for-service basis under section 612, the pro-
vider agrees to submit bills and any required
supporting documentation relating to the provi-
sion of covered services within 30 days (or such
shorter period as a State health security pro-
gram may require) after the date of providing
such services.
(2) TERMINATION
OF
PARTICIPATION
AGREE-
MENTS.—
(A) IN
GENERAL.—Participation agree-
ments may be terminated, with appropriate no-
tice—
(i) by the Board or a State health se-
curity program for failure to meet the
requirements of this title, or
(ii) by a provider.
(B) TERMINATION
PROCESS.—Providers
shall be provided notice and a reasonable oppor-
tunity to correct deficiencies before the Board
or a State health security program terminates
an agreement unless a more immediate termi-
nation is required for public safety or similar
reasons.
SEC. 302. QUALIFICATIONS FOR PROVIDERS.
(a) IN GENERAL.—A health care provider is consid-
ered to be qualified to provide covered services if the pro-
vider is licensed or certified and meets—
(1) all the requirements of State law to provide
such services,
(2) applicable requirements of Federal law to
provide such services, and
(3) any applicable standards established under
subsection (b).
(b) MINIMUM PROVIDER STANDARDS.—
(1) IN GENERAL.—The Board shall establish,
evaluate, and update national minimum standards to
assure the quality of services provided under this
Act and to monitor efforts by State health security
programs to assure the quality of such services. A
State health security program may also establish ad-
ditional minimum standards which providers must
meet.
(2) NATIONAL MINIMUM STANDARDS.—The na-
tional minimum standards under paragraph (1) shall
be established for institutional providers of services,
individual health care practitioners, and comprehen-
sive health service organizations. Except as the
Board may specify in order to carry out this title,
a hospital, nursing facility, or other institutional
provider of services shall meet standards for such a
facility under the medicare program under title
XVIII of the Social Security Act. Such standards
also may include, where appropriate, elements relat-
ing to—
(A) adequacy and quality of facilities;
(B) training and competence of personnel
(including continuing education requirements);
(C) comprehensiveness of service;
(D) continuity of service;
(E) patient satisfaction (including waiting
time and access to services); and
(F) performance standards (including or-
ganization, facilities, structure of services, effi-
ciency of operation, and outcome in palliation,
improvement of health, stabilization, cure, or
rehabilitation).
(3) TRANSITION
IN
APPLICATION.—If the
Board provides for additional requirements for pro-
viders under this subsection, any such additional re-
quirement shall be implemented in a manner that
provides for a reasonable period during which a pre-
viously qualified provider is permitted to meet such
an additional requirement.
(4) EXCHANGE OF INFORMATION.—The Board
shall provide for an exchange, at least annually,
among State health security programs of informa-
tion with respect to quality assurance and cost
containment.
SEC. 303. QUALIFICATIONS FOR COMPREHENSIVE HEALTH
SERVICE ORGANIZATIONS.
(a) IN GENERAL.—For purposes of this Act, a com-
prehensive health service organization (in this section re-
ferred to as a ‘‘CHSO’’) is a public or private organization
which, in return for a capitated payment amount, under-
takes to furnish, arrange for the provision of, or provide
payment with respect to—
(1) a full range of health services (as identified
by the Board), including at least hospital services
and physicians services, and
(2) out-of-area coverage in the case of urgently
needed services,
to an identified population which is living in or near a
specified service area and which enrolls voluntarily in the
organization.
(b) ENROLLMENT.—
(1) IN GENERAL.—All eligible persons living in
or near the specified service area of a CHSO are eli-
gible to enroll in the organization; except that the
number of enrollees may be limited to avoid overtax-
ing the resources of the organization.
(2) MINIMUM ENROLLMENT PERIOD.—Subject
to paragraph (3), the minimum period of enrollment
with a CHSO shall be twelve months, unless the en-
rolled individual becomes ineligible to enroll with the
organization.
(3) WITHDRAWAL
FOR
CAUSE.—Each CHSO
shall permit an enrolled individual to disenroll from
the organization for cause at any time.
(c) REQUIREMENTS FOR CHSOS.—
(1) ACCESSIBLE
SERVICES.—Each CHSO, to
the maximum extent feasible, shall make all services
readily and promptly accessible to enrollees who live
in the specified service area.
(2) CONTINUITY OF CARE.—Each CHSO shall
furnish services in such manner as to provide con-
tinuity of care and (when services are furnished by
different providers) shall provide ready referral of
patients to such services and at such times as may
be medically appropriate.
(3) BOARD OF DIRECTORS.—In the case of a
CHSO that is a private organization—
(A) 
CONSUMER
REPRESENTATION.—At
least one-third of the members of the CHSO’s
board of directors must be consumer members
with no direct or indirect, personal or family
financial relationship to the organization.
(B) PROVIDER
REPRESENTATION.—The
CHSO’s board of directors must include at
least one member who represents health care
providers.
(4) PATIENT
GRIEVANCE
PROGRAM.—Each
CHSO must have in effect a patient grievance pro-
gram and must conduct regularly surveys of the sat-
isfaction of members with services provided by or
through the organization.
(5) MEDICAL STANDARDS.—Each CHSO must
provide that a committee or committees of health
care practitioners associated with the organization
will promulgate medical standards, oversee the pro-
fessional aspects of the delivery of care, perform the
functions of a pharmacy and drug therapeutics com-
mittee, and monitor and review the quality of all
health services (including drugs, education, and pre-
ventive services).
(6) PREMIUMS.—Premiums or other charges by
a CHSO for any services not paid for under this Act
must be reasonable.
(7) UTILIZATION AND BONUS INFORMATION.—
Each CHSO must—
(A) comply with the requirements of sec-
tion 1876(i)(8) of the Social Security Act (re-
lating to prohibiting physician incentive plans
that provide specific inducements to reduce or
limit medically necessary services), and
(B) make available to its membership utili-
zation information and data regarding financial
performance, including bonus or incentive pay-
ment arrangements to practitioners.
(8) PROVISION OF SERVICES TO ENROLLEES AT
INSTITUTIONS
OPERATING
UNDER
GLOBAL
BUDG-
ETS.—The organization shall arrange to reimburse
for hospital services and other facility-based services
(as identified by the Board) for services provided to
members of the organization in accordance with the
global operating budget of the hospital or facility ap-
proved under section 611.
(9) BROAD
MARKETING.—Each CHSO must
provide for the marketing of its services (including
dissemination of marketing materials) to potential
enrollees in a manner that is designed to enroll indi-
viduals representative of the different population
groups and geographic areas included within its
service area and meets such requirements as the
Board or a State health security program may
specify.
(10) 
ADDITIONAL
REQUIREMENTS.—Each
CHSO must meet—
(A) such requirements relating to mini-
mum enrollment,
(B) such requirements relating to financial
solvency,
(C) such requirements relating to quality
and availability of care, and
(D) such other requirements,
as the Board or a State health security program
may specify.
(d) PROVISION
OF
EMERGENCY
SERVICES
TO
NONENROLLEES.—A CHSO may furnish emergency serv-
ices to persons who are not enrolled in the organization.
Payment for such services, if they are covered services to
eligible persons, shall be made to the organization unless
the organization requests that it be made to the individual
provider who furnished the services.
SEC. 304. LIMITATION ON CERTAIN PHYSICIAN REFERRALS.
(a) APPLICATION TO AMERICAN HEALTH SECURITY
PROGRAM.—Section 1877 of the Social Security Act, as
amended by subsections (b) and (c), shall apply under this
Act in the same manner as it applies under title XVIII
of the Social Security Act; except that in applying such
section under this Act any references in such section to
the Secretary or title XVIII of the Social Security Act are
deemed references to the Board and the American Health
Security Program under this Act, respectively.
(b) EXPANSION OF PROHIBITION TO CERTAIN DES-
IGNATED SERVICES.—Section 1877 of the Social Security
Act (42 U.S.C. 1395nn) is amended—
(1) by striking ‘‘clinical laboratory services’’
and ‘‘CLINICAL LABORATORY SERVICES’’ and insert-
ing ‘‘designated health services’’ and ‘‘DESIGNATED
(3) in subsection (d)(2), by striking ‘‘labora-
tory’’ and by inserting ‘‘entity’’;
(4) in subsection (g)(1), by striking ‘‘clinical
laboratory service’’ and by inserting ‘‘designated
health service’’; and
(5) in subsection (h)(7)(B), by striking ‘‘clinical
laboratory service’’ and by inserting ‘‘designated
health service’’.
(c) CONFORMING AMENDMENTS.—Such section is
further amended—
(1) in subsection (a)(1)(A), by striking ‘‘for
which payment otherwise may be made under this
title’’ and by inserting ‘‘for which a charge is
imposed’’;
(2) in subsection (a)(1)(B), by striking ‘‘under
this title’’;
(3) by amending paragraph (1) of subsection
(g) to read as follows:
‘‘(1) DENIAL OF PAYMENT.—No payment may
be made under a State health security program for
a designated health service for which a claim is pre-
sented in violation of subsection (a)(1)(B). No indi-
vidual, third party payor, or other entity is liable for
payment for designated health services for which a
claim is presented in violation of such subsection.’’;
and
(4) In subsection (g)(3), by striking ‘‘for which
payment may not be made under paragraph (1)’’
and by inserting ‘‘for which such a claim may not
be presented under subsection (a)(1)’’.
TITLE IV—ADMINISTRATION
Subtitle A—General Administrative
Provisions
SEC. 
401. 
AMERICAN 
HEALTH 
SECURITY 
STANDARDS
BOARD.
(a) ESTABLISHMENT.—There is hereby established
an American Health Security Standards Board.
(b) APPOINTMENT AND TERMS OF MEMBERS.—
(1) IN
GENERAL.—The Board shall be com-
posed of—
(A) the Secretary of Health and Human
Services, and
(B) 6 other individuals (described in para-
graph (2)) appointed by the President with the
advice and consent of the Senate.
The President shall first nominate individuals under
subparagraph (B) on a timely basis so as to provide
for the operation of the Board by not later than
January 1, 1995.
(2) SELECTION
OF
APPOINTED
MEMBERS.—
With respect to the individuals appointed under
paragraph (1)(B):
(A) They shall be chosen on the basis of
backgrounds in health policy, health economics,
the healing professions, and the administration
of health care institutions.
(B) They shall provide a balanced point of
view with respect to the various health care in-
terests and at least two of them shall represent
the interests of individual consumers.
(C) Not more than three of them shall be
from the same political party.
(3) TERMS OF APPOINTED MEMBERS.—Individ-
uals appointed under paragraph (1)(B) shall serve
for a term of 6 years, except that the terms of 5 of
the individuals initially appointed shall be, as des-
ignated by the President at the time of their ap-
pointment, for 1, 2, 3, 4, and 5 years. During a
term of membership on the Board, no member shall
engage in any other business, vocation or employ-
ment.
(c) VACANCIES.—
(1) IN GENERAL.—The President shall fill any
vacancy in the membership of the Board in the same
manner as the original appointment. The vacancy
shall not affect the power of the remaining members
to execute the duties of the Board.
(2) VACANCY
APPOINTMENTS.—Any member
appointed to fill a vacancy shall serve for the re-
mainder of the term for which the predecessor of the
member was appointed.
(3) REAPPOINTMENT.—The President may re-
appoint an appointed member of the Board for a
second term in the same manner as the original ap-
pointment. A member who has served for two con-
secutive 6-year terms shall not be eligible for re-
appointment until two years after the member has
ceased to serve.
(4) REMOVAL FOR CAUSE.—Upon confirmation,
members of the Board may not be removed except
by the President for cause.
(d) CHAIR.—The President shall designate one of the
members of the Board, other than the Secretary, to serve
at the will of the President as Chair of the Board.
(e) COMPENSATION.—Members of the Board (other
than the Secretary) shall be entitled to compensation at
a level equivalent to level II of the Executive Schedule,
in accordance with section 5313 of title 5, United States
Code.
(f) GENERAL DUTIES OF THE BOARD.—
(1) IN
GENERAL.—The Board shall develop
policies, procedures, guidelines, and requirements to
carry out this Act, including those related to—
(A) eligibility;
(B) enrollment;
(C) benefits;
(D) provider participation standards and
qualifications, as defined in title III;
(E) national and State funding levels;
(F) methods for determining amounts of
payments to providers of covered services, con-
sistent with subtitle B of title VI;
(G) the determination of medical necessity
and appropriateness with respect to coverage of
certain services;
(H) assisting State health security pro-
grams with planning for capital expenditures
and service delivery;
(I) planning for health professional edu-
cation funding (as specified in title VI);
(J) allocating funds provided under title
VII; and
(K) encouraging States to develop regional
planning mechanisms (described in section
405(a)(3)).
(2) REGULATIONS.—Regulations authorized by
this Act shall be issued by the Board in accordance
with the provisions of section 553 of title 5, United
States Code.
(g) UNIFORM REPORTING STANDARDS; ANNUAL RE-
PORT; STUDIES.—
(1) UNIFORM REPORTING STANDARDS.—
(A) IN GENERAL.—The Board shall estab-
lish uniform reporting requirements and stand-
ards to ensure an adequate national data base
regarding health services practitioners, services
and finances of State health security programs,
approved plans, providers, and the costs of fa-
cilities and practitioners providing services.
Such standards shall include, to the maximum
extent feasible, health outcome measures.
(B) REPORTS.—The Board shall analyze
regularly information reported to it, and to
State health security programs pursuant to
such requirements and standards.
(2) ANNUAL REPORT.—Beginning January 1,
of the second year beginning after the date of the