items or services required under the applicable comprehen-
sive benefits package. A certified plan may not offer cov-
erage to eligible individuals under this title if such plan
does not ensure the provision of all items or services re-
quired under the comprehensive benefits package. Cer-
tified plans may provide a benefits package that is more
generous than the comprehensive benefits package re-
quired by the Secretary.
‘‘(f) EXCEPTION TO REQUIREMENTS OF CERTIFIED
PLAN.—In a case in which a State has determined that
no participating health plan is able to provide for or cover
all the services in the comprehensive benefits package, or
the State has determined that certain services are most
effectively delivered by providers other than participating
health plans, the State may elect to develop an alternative
mechanism, such as entering into agreements with other
providers, to provide for or cover specific services. In all
cases the State shall ensure that all services covered under
the comprehensive benefits package are of high quality
and are fully coordinated and integrated.
‘‘SEC. 2822. GENERAL CATEGORIES OF HEALTH BENEFITS.
‘‘(a) IN GENERAL.—At a minimum, the following
general categories of health benefits shall be included in
the comprehensive benefits package:
‘‘(1) CHILDREN.—With respect to the com-
prehensive benefits package for children (from birth
through the child’s seventh birthday) the package
shall require coverage for—
‘‘(A) preventive services (including immu-
nizations as recommended by the Advisory
Committee on Immunization Practices, well
baby/child care, routine medical examinations
and check ups, recommended screening tests,
dental prophylaxis and examinations, and pre-
ventive health counseling and health education);
‘‘(B) ambulatory care;
‘‘(C) laboratory services;
‘‘(D) prescription drugs;
‘‘(E) inpatient care;
‘‘(F) vision, audiology and aural rehabilita-
tive, and other rehabilitative services (including
prescription eyeglasses and hearing aids);
‘‘(G) durable medical equipment (including
orthotics and prosthetics);
‘‘(H) dental care, excluding orthodontic
care;
‘‘(I) mental health and substance abuse
services;
‘‘(J) long-term and chronic health care
services;
‘‘(K) special health care services for chil-
dren with disabilities or chronic health condi-
tions;
‘‘(L) occupational, physical, and res-
piratory therapy, and speech-language pathol-
ogy services; and
‘‘(M) investigational treatments (limited to
participation in a clinical investigation as part
of an approved research trial as defined by the
Secretary, services or other items related to the
trial that are normally paid for by other fund-
ing sources need not be covered);
‘‘(2) PREGNANT WOMEN.—With respect to the
comprehensive benefits package for pregnant women
(from diagnosis of pregnancy through 60 days after
the end of the pregnancy) the package shall require
coverage for—
‘‘(A) maternity care (including prenatal,
delivery, and postpartum care, preventive serv-
ices such as routine examinations and check
ups, recommended immunizations and screening
tests, family planning services, and preventive
health counseling including nutrition and health
education);
‘‘(B) ambulatory care;
‘‘(C) laboratory services;
‘‘(D) prescription drugs;
‘‘(E) inpatient care;
‘‘(F) inpatient hospital and nonhospital de-
livery services;
‘‘(G) mental health and substance abuse
services;
‘‘(H) other pregnancy- or nonpregnancy-re-
lated health conditions determined appropriate
by the Secretary; and
‘‘(I) investigational treatments (limited to
participation in a clinical investigation as part
of an approved research trial as defined by the
Secretary, and services or other items related to
the trial normally paid for by other funding
sources need not be covered).
‘‘(3) EXTENSION OF PERIOD OF COVERAGE.—
With respect to the comprehensive benefits package
for pregnant women, a participating State may elect
to extend coverage of selected health services under
the benefits package beyond the 60-day postpartum
period if Federal funds are not used for such addi-
tional coverage.
‘‘(b) LIMITATIONS AND REDUCTION IN COVERAGE.—
‘‘(1) INITIAL
IMPLEMENTATION.—During the
2-year period that begins on the date of the imple-
mentation of this title, the items and services cov-
ered under the comprehensive benefits package may
not be subject to any duration or scope limitation.
During such period, a certified plan may not require
any cost sharing that is not permitted under this
title.
‘‘(2) REDUCTION IN COVERAGE.—In years sub-
sequent to the period referred to in paragraph (1),
the Secretary, in consultation with professional orga-
nizations determined appropriate by the Secretary
and the Advisory Council, may implement utilization
limitations or other limitations on items or services
covered under the comprehensive benefits package
on a national basis if—
‘‘(A) the Secretary determines that such
limitations are necessary for the solvency of the
program established under this title; and
‘‘(B) additional funds are not appropriated
and deposited into the Trust Fund.
‘‘(3) ALTERNATIVES.—Prior to implementing
limitations under paragraph (2), the Secretary shall
consider alternatives such as minimizing administra-
tive costs, increasing cost sharing requirements, and
increasing Federal or State funding requirements. In
no case may the Secretary subject required preven-
tive services to such limitations.
‘‘(c) PERIODICITY SCHEDULES.—A certified plan
may not be required to provide coverage for the provision
of items or services under the comprehensive benefits
package that are greater in frequency than that required
under the periodicity schedules contained in the benefits
package. Notwithstanding the preceding sentence, a cer-
tified plan shall provide coverage for the provision of any
items or services, within the general scope of the com-
prehensive benefits package, that are medically necessary
or appropriate for children and pregnant women.
‘‘(d) RULES OF CONSTRUCTION.—Nothing in this
title shall be construed as—
‘‘(1) limiting the ability of a participating State
or a certified plan to provide items or services in ad-
dition to those required under the comprehensive
benefits package, so long as Federal funds are not
used to pay for the provision of such additional serv-
ices;
‘‘(2) limiting the ability of eligible individuals to
obtain items or services in addition to those required
under the comprehensive benefits package so long as
Federal funds are not used to pay for the provision
of such additional services.
A certified plan may provide coverage for extra contrac-
tual services and items determined to be appropriate by
the plan and individual or family involved.
‘‘(e) ENCOURAGING THE PROVISION OF BENEFITS.—
In the interest of ensuring that all children in the United
States receive comprehensive health services, it is the
sense of Congress that employer-based, self-insured, and
other health plans not participating in the program estab-
lished under this title be encouraged to provide com-
prehensive benefits to children and pregnant women simi-
lar to those required in this title.
‘‘SUBPART 2—COST SHARING REQUIREMENTS
‘‘SEC. 2825. PRINCIPLES OF COST SHARING.
‘‘(a) GENERAL PRINCIPLE.—All families who partici-
pate in the program established under this title shall be
required to contribute toward the cost of health care for
themselves or their children. Such required contribution
shall be in the form of a required premium or a copayment
requirement. In no case may a certified plan or participat-
ing State require the payment of deductibles.
‘‘(b) GENERAL STATE REQUIREMENTS AND LIMITA-
TIONS.—
‘‘(1) STATE SPECIFIC COST SHARING.—A par-
ticipating State may elect to develop State specific
cost sharing requirements that differ from those
specified in this section so long as such requirements
are consistent with the guidelines developed by the
Secretary that ensure that—
‘‘(A) all families participating in the pro-
gram contribute toward the program cost;
‘‘(B) all families participating in the pro-
gram receive premium subsidies;
‘‘(C) all families participating in the pro-
gram pay the same copayment for services; and
‘‘(D) coverage under the program is af-
fordable for families at all income levels.
‘‘(2) FUNDING LIMITATION.—State specific cost
sharing requirements developed under paragraph (1)
shall not result in any increase in overall Federal
funding obligations in excess of such obligations that
would exist under the cost sharing schedules de-
scribed in this title.
‘‘(3) ANNUAL CONTRIBUTION.—In all partici-
pating States, the annual family contribution under
this title shall not be less than $10 per eligible child
and $20 per eligible pregnant woman.
‘‘(4) REQUIREMENTS
APPLICABLE
WITH
RE-
SPECT TO LOW INCOME FAMILIES.—
‘‘(A) PROHIBITION.—A participating State
may not require cost sharing under a certified
plan, for families with annual incomes that are
less than 150 percent of the Federal poverty
level, in an amount that exceeds the applicable
cost sharing amount described in this title.
‘‘(B) ADDITIONAL SUBSIDIES.—A partici-
pating State may elect to provide additional
premium or copayment subsidies under certified
plans for families with annual incomes that are
less than 400 percent of the Federal poverty
level if there are sufficient funds in the State
trust fund to cover the costs of such subsidies
and if no additional Federal funds are used.
‘‘(C) MONITORING IMPACT OF COST SHAR-
ING.—Participating States, in consultation with
certified plans, shall monitor the impact of cost
sharing requirements (premiums and copay-
ments) on low income families and ensure that
any cost sharing requirements are not signifi-
cant barriers that prevent such families from
enrolling in a certified plan or from obtaining
medically appropriate care. An analysis of the
impact of cost sharing on low income families
shall be presented to the Secretary as part of
the annual quality assessment and improvement
plan of the State under section 2841.
‘‘SEC. 2826. PREMIUMS AND PREMIUM SUBSIDY.
‘‘(a) PAYMENT.—
‘‘(1) FAMILY PORTION.—A family enrolled in a
certified plan shall be responsible for paying the
family portion of the premium for coverage under
such plan. Premium payments under a certified plan
may be made directly to the plan or to the State (if
the State elects to accept such payments on behalf
of the certified plan) on a monthly, quarterly, or
other basis as determined by the State.
‘‘(2) SUBSIDY
PORTION.—Upon the final ap-
proval of an enrollment application under this title,
a participating State shall transfer to the certified
plan in which the family is enrolled an amount of
funds equal to the amount of the applicable pre-
mium subsidy under subsection (d) with respect to
the family that is enrolled in the plan.
‘‘(3) LIMITATION.—If the annual premium con-
tribution under a certified plan for an eligible fam-
ily, after the application of the appropriate premium
subsidy, exceeds the maximum annual family con-
tribution amount for such family under section
2828, such excess amount shall be paid by the State
directly to the plan.
‘‘(b) ANNUAL LIMITATION.—All eligible families in a
participating State, regardless of their incomes, shall re-
ceive a subsidy (in an amount determined under sub-
section (d)) with respect to the premiums required for en-
rollment in certified plans. The annual premium amount
that a certified plan may require an eligible family to pay
under this title shall be equal to—
‘‘(1) the annual per capita premium that is ne-
gotiated by the State with the certified plan; less
‘‘(2) the annual premium subsidy amount pro-
vided by the State.
In no case shall the annual premium subsidy amount be
greater than the annual per capita premium negotiated
with the certified plan.
‘‘(c) BASIS
FOR DETERMINATION
OF SUBSIDY.—
With respect to cases in which multiple certified plans are
available in a geographic area or in which certified plans
offer additional benefit package options at an additional
cost, the amount of the premium subsidy shall be deter-
mined based on the lowest priced certified plan that is
available in the area. A family shall be responsible for the
payment of any premium amounts not covered by the pre-
mium subsidy under this title. In addition, any such pre-
mium amounts that result from the selection of more ex-
pensive plans shall not be credited toward the maximum
annual family contribution under section 2828.
‘‘(d) SUBSIDY AMOUNT.—
‘‘(1) IN GENERAL.—The annual premium sub-
sidy amount to be applied to the premiums assessed
with respect to an eligible family enrolled in certified
plan under this title shall be equal to the product
of—
‘‘(A) the amount of the annual per capita
premium for the certified plan involved; and
‘‘(B) the annual premium subsidy percent-
age for the family as determined under para-
graph (2).
‘‘(2) ANNUAL
PREMIUM
SUBSIDY
PERCENT-
AGE.—The annual premium subsidy percentage
under this paragraph shall be—
‘‘(A) with respect to an eligible family with
an annual gross income that is less than 50
percent of the Federal poverty level, 99 percent;
‘‘(B) with respect to an eligible family with
an annual gross income that is equal to between
50 and 149 percent of the Federal poverty
level, 97.5 percent reduced by 1.5 percentage
points for each 10 percent increase in the an-
nual gross income of the family in excess of 49
percent of the Federal poverty level;
‘‘(C) with respect to an eligible family with
an annual gross income that is equal to between
150 and 299 percent of the Federal poverty
level, 80 percent reduced by 4 percentage points
for each 10 percent increase in the annual gross
income of the family in excess of 149 percent
of the Federal poverty level;
‘‘(D) with respect to an eligible family with
an annual gross income that is equal to between
300 and 399 percent of the Federal poverty
level, 22.5 percent reduced by 1.5 percentage
points for each 10 percent increase in the an-
nual gross income of the family in excess of 299
percent of the Federal poverty level; and
‘‘(E) with respect to an eligible family with
an annual gross income that is equal to 400
percent or more of the Federal poverty level, 5
percent.
‘‘SEC. 2827. UTILIZATION COPAYMENTS.
‘‘(a) GENERAL COPAYMENT.—With respect to items
or services designated by the Secretary under section
2821(c), and provided under a certified plan, the plan
shall assess an eligible family a $5 copayment for the pro-
vision of such items or services to such family. Preventive
services shall be exempt from such copayment require-
ment.
‘‘(b) HIGHER COPAYMENTS.—In addition to offering
certified plans with a $5 copayment, a participating State
may elect to permit the offering of certified plans that
have higher copayment requirements. With respect to such
plans, the copayment amount shall be the same for eligible
families at all income levels and the minimum copayment
amount shall be $5. Premium subsidies for an eligible
family who selects a high copayment plan may not exceed
the subsidy determined to be applicable to an similarly sit-
uated eligible family enrolled in a certified plan with a $5
utilization copayment requirement.
‘‘(c) LIMITATION.—An eligible family may not be re-
quired to make utilization copayments under this section
after the annual contributions of the family (including pre-
miums and copayments) have exceeded the maximum an-
nual family contribution for the family under section
2828.
‘‘SEC. 2828. MAXIMUM ANNUAL FAMILY CONTRIBUTION.
‘‘(a) FAMILIES WITH ELIGIBLE CHILDREN.—
‘‘(1) IN GENERAL.—With respect to a family
with an eligible child enrolled in a certified plan
under this title, the maximum annual family con-
tribution that such family may be required to pay
under this title (including premiums and copay-
ments) for such eligible child shall be—
‘‘(A) with respect to an eligible family with
an annual gross income that is less than 50
percent of the Federal poverty level, $10;
‘‘(B) with respect to an eligible family with
an annual gross income that is between 50 per-
cent and 149 percent of the Federal poverty
level, $15 increased by $5 for each 10 percent
increase in the annual gross income of the fam-
ily in excess of 49 percent;
‘‘(C) with respect to an eligible family with
an annual gross income that is between 150
percent and 299 percent of the Federal poverty
level, $110 increased by $50 for each 10 per-
cent increase in the annual gross income of the
family in excess of 149 percent;
‘‘(D) with respect to an eligible family with
an annual gross income that is between 300
percent and 399 percent of the Federal poverty
level, $960 increased by $150 for each 10 per-
cent increase in the annual gross income of the
family in excess of 299 percent; and
‘‘(E) with respect to an eligible family with
an annual gross income that is equal to 400
percent or more of the Federal poverty level,
$3,000.
‘‘(2) FAMILIES WITH MULTIPLE CHILDREN.—
With respect to an eligible family that enrolls more
than one eligible child in a certified plan under this
title, the maximum annual family contribution that
such family may be required to pay under paragraph
(1) shall be—
‘‘(A) in the case of a family enrolling two
eligible children, twice the amount under para-
graph (1) applicable to the family based on
family income;
‘‘(B) in the case of a family enrolling three
eligible children, twice the amount under para-
graph (1) applicable to the family based on
family income increased by an amount equal to
40 percent of such amount; and
‘‘(C) in the case of a family enrolling four
or more eligible children, twice the amount
under paragraph (1) applicable to the family
based on family income increased by an amount
equal to 80 percent of such amount.
‘‘(b) FAMILIES WITH PREGNANT WOMAN.—With re-
spect to a family with an eligible pregnant woman enrolled
in a certified plan under this title, the maximum annual
family contribution that such family may be required to
pay under this title (including premiums and copayments)
for such pregnant woman shall be—
‘‘(1) with respect to an eligible family with an
annual gross income that is less than 50 percent of
the Federal poverty level, $20;
‘‘(2) with respect to an eligible family with an
annual gross income that is between 50 percent and
149 percent of the Federal poverty level, $30 in-
creased by $10 for each 10 percent increase in the
annual gross income of the family in excess of 49
percent;
‘‘(3) with respect to an eligible family with an
annual gross income that is between 150 percent
and 299 percent of the Federal poverty level, $220
increased by $100 for each 10 percent increase in
the annual gross income of the family in excess of
149 percent;
‘‘(4) with respect to an eligible family with an
annual gross income that is between 300 percent
and 399 percent of the Federal poverty level, $1,820
increased by $200 for each 10 percent increased in
the annual gross income of the family in excess of
299 percent; and
‘‘(5) with respect to an eligible family with an
annual gross income that is equal to 400 percent or
more of the Federal poverty level, $5,000.
‘‘(c) FAMILIES WITH ELIGIBLE CHILDREN
AND
PREGNANT WOMEN.—In the case of an eligible family
with both an eligible child and eligible pregnant woman
enrolled in a certified plan, the maximum annual family
contribution that such family may be required to pay
under this title (including premiums and copayments)
shall be equal to the sum of—
‘‘(1) the amount determined under subsection
(a) with respect to the family involved; and
‘‘(2) the amount determined under subsection
(b) with respect to the family involved.
‘‘(d) ADJUSTMENT FOR SUBSEQUENT YEARS.—The
maximum annual family contribution amounts described
in subsections (a) and (b) shall remain in effect during
the first 2 fiscal years in which the program under this
title is in effect. In subsequent years, the maximum annual
family contribution amounts under such subsections shall
be increased annually (and adjusted to the nearest $5 in-
crement) based on the indexes used by the Secretary to
calculate funding allocations under section 2801(b)(1)(B).
‘‘(e) LIMITATION AND CALCULATIONS.—
‘‘(1) PROHIBITION ON PREMIUM INCREASES.—
The amount of the premium contribution or copay-
ments assessed to an eligible family enrolled in cer-
tified plans under this title shall not be increased
during the 1-year period beginning on the date of
such enrollment.
‘‘(2) 
PERMISSIBLE
ADJUSTMENTS.—The
amount of the premium subsidy and the maximum
annual family contribution applied under this part
with respect to an eligible family enrolled in a cer-
tified plan may be adjusted during the 1-year period
beginning on the date of enrollment, if the family
can demonstrate a decrease in income of an amount
to permit such family to qualify for a larger pre-
mium subsidy. In such case, the premium contribu-
tion for the family shall be recalculated based on the
larger premium
‘‘(3) APPLICATION
FOR
RECONCILIATION.—A
family that desires to have an income reconciliation
adjustment made under paragraph (2) shall apply
directly to the State. Such a family shall be limited
to one such income reconciliation adjustment during
each year in which the family is enrolled in a cer-
tified plan. In cases where premium subsidies have
been subject to income reconciliation under this sub-
section, the State shall appropriately adjust its pay-
ments to the respective certified plan.’’.
SEC. 203. STATE PROGRAM DEVELOPMENT AND ADMINIS-
TRATION.
Title XXVIII of the Public Health Service Act (as
added by section 201 and amended by section 202) is fur-
ther amended by adding at the end thereof the following
new part:
‘‘PART D—STATE PROGRAM DEVELOPMENT AND
ADMINISTRATION
‘‘SEC. 2831. APPLICATION AND DATE OF IMPLEMENTATION.
(a) IN GENERAL.—A State that desires to participate
in the program established under this title shall prepare
and submit to the Secretary an application at such time,
in such manner, and containing such information as the
Secretary may require, including the State strategic plan
under subsection (b). To be approved by the Secretary,
an application shall contain assurances that the State pro-
gram to be established under this title will fully implement
coverage for eligible children and pregnant women by Jan-
uary 1, 2002. The Secretary may approve the application
of a State that desires to implement a program under this
title as early as January 1, 1998.
‘‘(b) STATE STRATEGIC PLAN.—
‘‘(1) SUBMISSION.—A State that desires to par-
ticipate in the program established under this title
shall submit, as part of their application under sub-
section (a), an initial 5-year strategic plan.
‘‘(2) PLAN
GUIDELINES.—Not later than 90
days after the date of enactment of this title, the
Secretary, in consultation with the Maternal and
Child Health Bureau, shall develop and make avail-
able specific guidelines to assist States in preparing
and submitting an acceptable strategic plan under
this subsection. At a minimum, such guidelines shall
require that a strategic plan—
‘‘(A) describe the current health status of
the target population in the State;
‘‘(B) describe the short- and long-term
health objectives of the State, including time
schedules for the achievement of such objec-
tives;
‘‘(C) describe the performance and out-
come measures and mechanisms to be used by
the State for monitoring health indicators;
‘‘(D) describe specific details of the pro-
posed structure of the State program, analyses
of at least one alternative structure considered,
and cost estimates;
‘‘(E) in the case of a State that proposes
a structure that is different from that described
in this title, contain a comparative analysis of
the State’s proposed structure, including an
analysis of achievement of the objectives of the
State under this title and the program costs;
and
‘‘(F) contain an outline of the manner in
which coverage for all eligible individuals resid-
ing within the State will be achieved within the
first 5 years in which the program is in oper-
ation in the State.
Such plan may incorporate elements required under
current State application submitted under title V of
the Social Security Act.
‘‘(3) CRITERIA
FOR
EVALUATION.—Not later
than 90 days after the date of enactment of this
title, the Secretary, in consultation with Maternal
and Child Health Bureau, shall develop and make
available specific criteria that will serve as the basis
for the evaluation and approval of State strategic
plans by the Secretary.
‘‘(c) REQUIREMENTS.—In addition to otherwise
meeting the requirements of this title, a State program
under an application submitted under this section shall—
‘‘(1) ensure that affordable coverage is available
for comprehensive, high quality health care for all
children under seven years of age and all pregnant
women residing within the State within a time pe-
riod determined to be reasonable by the Secretary;
‘‘(2) ensure that each certified plan operating
in the State provide the comprehensive benefits
package required under section 2821;
‘‘(3) be consistent with the principle that all
families contribute towards their own or their chil-
dren’s health care;
‘‘(4) ensure that the State is responsible for the
certification of health plans, entering into agree-
ments with certified plans to provide health services,
and negotiating premiums with certified plans on be-
half of eligible individuals;
‘‘(5) have a quality assessment and improve-
ment program in effect under section 2841;
‘‘(6) have a utilization review program in effect
under section 2842;
‘‘(7) fulfill health information system require-
ments under sections 2843 and 2844; and
‘‘(8) have a program in effect for preventing
and controlling fraud and abuse under section 2845.
‘‘(d) DECISION BY SECRETARY.—Not later than 90
days after the date on which the Secretary receives the
application of a State under this section, the Secretary
shall notify the State concerning the final decision of the
Secretary with respect to such application. If the Sec-
retary fails to approve the State application, the Secretary
shall assist the State in modifying such application and
provide specific guidance on the manner in which to gain
approval. A State that has submitted an application that
is not approved may submit another application in the fol-
lowing fiscal year.
‘‘(e) STATE INNOVATION AND PROGRAM FLEXIBIL-
ITY.—A State with an application approved under this
section shall, at a minimum, implement a State program
that is consistent with the guidelines, principles and re-
quirements described in this title. In developing and imple-
menting such a program, a State is encouraged to be inno-
vative and propose structures or a blend of structures for
the State program that are different from that described
in this title. Such structures may include, modifications
of existing State or Federal programs, capitated pro-
grams, fee-for-service programs, subsidy programs for the
individual purchase of health insurance, and programs
where the State is the direct payer for services. Such
structures, however, must be shown to be or expected to
be, as effective or more effective in meeting the program
objectives of this title and containing program costs as the
structure described in this title. A State may establish a
State-specific program or participate in a program with
neighboring States.
‘‘SEC. 2832. SPECIAL STATUS STATES.
‘‘(a) PETITION.—
‘‘(1) EXISTING PROGRAMS.—A State that deter-
mines that the existing health care program of the
State provides, or that expects such provision to be
made within 1 year from the date of a petition
under this subsection, affordable, comprehensive,
high quality, health care coverage for all children
under seven years of age and pregnant women resid-
ing within the State, may petition the Secretary to
designate such State as a special status State.
‘‘(2) PARTICIPATING STATES.—A participating
State that determines that the program of the State
under this title has achieved the objective described
in paragraph (1), may, in their annual quality as-
sessment and improvement plan, petition the Sec-
‘‘SEC. 2833. STATES WITH MEDICAID WAIVERS.
‘‘A State that has in effect a waiver under section
1115 or 1915 of the Social Security Act shall be eligible
to be a participating State under this title. If such a State
desires to become a participating State, the State program
shall be subject to all program guidelines and require-
ments under this title. A State with a waiver described
in this section may submit a petition under section 2832
to be designated as a special status State.
‘‘SEC. 2834. DEVELOPMENT GRANTS FOR STATE PRO-
GRAMS.
‘‘(a) IN GENERAL.—Upon the approval of a State ap-
plication under section 2831, the Secretary, from the
Trust Fund, shall award a one-time program development
grant to the State.
‘‘(b) AMOUNT.—The amount of a grant awarded
under subsection (a), shall be determined based on a for-
mula developed by the Secretary.
‘‘(c) USE OF FUNDS.—Amounts received under a
grant under this section shall be used to develop and im-
plement the approved State program and State strategic
plan, including the development of community-based
health networks and health plans.
‘‘SEC. 2835. EXPANSION OF ELIGIBILITY.
‘‘(a) DETERMINATION BY SECRETARY.—
‘‘(1) IN
GENERAL.—Not later than the date
that is 2 years after the date of enactment of this
title, and every 2 years thereafter, the Secretary, in
consultation with the Advisory Council, shall deter-
mine whether sufficient funding and public support
exists to enable the Secretary to expand the cat-
egories of individuals eligible for coverage under this
title to include additional groups of children up to
21 years of age.
‘‘(2) REQUIREMENT.—If the Secretary deter-
mines under paragraph (1) that sufficient funding
and public support exists to permit the expansion of
individuals eligible for coverage to include additional
age groups on a national basis, the Secretary shall
implement guidelines to provide for such expansion.
‘‘(3) RECOMMENDATIONS.—If the Secretary de-
termines under paragraph (1) that public support
exists for the expansion of individuals eligible for
coverage but that funding is insufficient, the Sec-
retary may recommend to Congress that appropriate
legislation be considered to expand the program
under this title to expand such eligibility.
‘‘(b) PETITION BY STATES.—
‘‘(1) IN GENERAL.—A participating State that
does not qualify as a special status State under sec-
tion 2832 may, in the annual evaluation report of
the State, petition the Secretary to expand the State
program to provide coverage for additional age
groups if the State determines that sufficient funds
are available in the State trust fund or if additional
State funds are deposited into the State trust fund.
The Secretary shall make a final determination on
a State request for expanded eligibility within 90
days of the date of receiving the State petition.
‘‘(2) MATCHING
REQUIREMENT.—The Sec-
retary shall make available to a State, with respect
to additional funds deposited into the State trust
fund for the purpose of expanding eligibility under
paragraph (1) to children not eligible for coverage
on a national basis, Federal funds in an amount
equal to the amount of State funds so deposited.
‘‘(3) FUNDING.—An approved petition under
this section may be considered by the Secretary for
Federal funding only after funds are provided to all
participating States with approved programs and ap-
proved expanded eligibility programs of special sta-
tus States are allocated.
‘‘SEC. 2836. FAILURE OF STATE TO ADMINISTER A PRO-
GRAM IN COMPLIANCE WITH TITLE.
‘‘(a) FAILURE TO COMPLY.—If the Secretary deter-
mines that the State program of a participating State fails
to meet the requirements of this title, including require-
ments relating to cost containment and the prevention and
control of fraud and abuse, the Secretary shall notify the
State. Upon receiving such a notification, the State shall
be required to demonstrate that the State has made a rea-
sonable effort to address program deficiencies.
‘‘(b) ADMINISTRATION BY SECRETARY.—If the Sec-
retary determines that a State has failed to demonstrate
a reasonable effort under subsection (a), the Secretary
may elect to directly administer, or enter into agreement
with a non-State government organization to administer,
the State program.
‘‘(c) PREMIUMS AND COPAYMENTS.—Premiums and
copayments under this title for a State program adminis-
tered by a Federal or non-State government entity may
not be in excess of the premiums and copayments assessed
under this title.
‘‘(d) FUNDING
AND MATCHING REQUIREMENT.—
The costs of administering a State program under sub-
section (b) may not be in excess of that amount that would
be provided to the State under this title. A State shall
continue to provide matching funds in accordance with
section 2802.
‘‘SEC. 2837. LIMITS ON STATE AND FEDERAL ADMINISTRA-
TIVE COSTS.
‘‘The Secretary and a participating State shall, to the
maximum extent practicable, ensure that the administra-
tive complexity and costs of the program implemented
under this title are minimized. A participating State may
expend not to exceed 5 percent of the amount in the State
trust fund in any fiscal year for the administration of the
State program. The State shall be responsible for any ad-
ministrative costs in excess of such 5 percent.
‘‘PART E—ENSURING QUALITY, ESTABLISHING
INFORMATION SYSTEMS, AND PREVENTING ABUSE
‘‘SEC. 2841. ANNUAL QUALITY ASSESSMENT AND IMPROVE-
MENT PLANS.
‘‘(a) REQUIREMENT.—Not later than 1 year after the
date on which the Secretary approves the application of
a State under section 2831, and annually thereafter, the
State, in coordination with existing State programs under
title V of the Social Security Act, shall prepare and submit
to the Secretary a quality assessment and improvement
plan.
‘‘(b) GUIDELINES FOR PLANS.—Not later than 180
days after the date of enactment of this title, the Sec-
retary, in consultation with the Maternal and Child Health
Bureau, shall develop and submit to participating States
guidelines concerning the elements that must be included
in the annual quality assessment and improvement plan
of such participating State. At a minimum, such guide-
lines shall require a State plan to include an assessment
of the—
‘‘(1) progress the State had made towards en-
suring health care coverage for all eligible individ-
uals residing within the State;
‘‘(2) cost containment measures implemented
under the State program;
‘‘(3) assurances provided for ensuring the provi-
sion of high quality health care;
‘‘(4) impact within the State on the health sta-
tus of the target populations (including process and
outcome measures and objectives);
‘‘(5) the financial and administrative aspects of
the State program; and
‘‘(6) any proposed modifications to the State
program.
‘‘(c) RESPONSE BY SECRETARY.—Not later than 90
days after the date on which the Secretary has received
the quality assessment and improvement plan of a partici-
pating State, the Secretary shall provide a response to
such State concerning such plan. Such response shall in-
clude the determination of the Secretary with respect to
any proposed modifications in the State program as con-
tained in the plan. Evaluations of the State program by
the Secretary shall be based on an assessment of the per-
formance of the State program in meeting program objec-
tives rather than on the specific methods used to achieve
such objectives.
‘‘SEC. 2842. NATIONAL ADVISORY COUNCIL FOR MOTHERS’
AND CHILDREN’S HEALTH.
‘‘(a) ESTABLISHMENT.—The Secretary shall estab-
lish an advisory council to be known as the ‘‘National Ad-
visory Council for Mothers’ and Children’s Health’’ to pro-
vide advice to the Secretary concerning the administration
of and modifications to programs established under this
title.
‘‘(b) MEMBERSHIP.—
‘‘(1) IN GENERAL.—The Advisory Council shall
be composed of 11 individuals to be appointed by the
President in consultation with the Secretary, not
later than 90 days after the date of the enactment
of this title, with the advice and consent of the Sen-
ate. Members of the Advisory Council shall be ap-
pointed on the basis of their experience and exper-
tise.
‘‘(2) REPRESENTATION.—In appointing the
members of the Advisory Council under paragraph
(1), the Secretary shall ensure the appropriate rep-
resentation of—
‘‘(A) pediatricians, obstetricians, and other
health care providers;
‘‘(B) consumers;
‘‘(C) health policy experts;
‘‘(D) State and local government health of-
ficials;
‘‘(E) public health and maternal and child
health professionals;
‘‘(F) experts in population-based health in-
formation systems;
‘‘(G) experts in health promotion and dis-
ease prevention;
‘‘(H) health care managers and econo-
mists;
‘‘(I) medical ethicists;
‘‘(J) health care industry representatives;
and
‘‘(K) other related disciplines as deter-
mined appropriate by the Secretary.
In appointing such members, the Secretary shall en-
sure that not less than three members are health
care providers and not less than three members are
representatives of consumers.
‘‘(3) ENROLLED INDIVIDUALS.—After the expi-
ration of the initial terms of the members of the Ad-
visory Council appointed to represent consumers,
subsequent consumer representatives shall be from
families currently enrolled in a certified plan.
‘‘(4) CHAIRPERSON.—In appointing members of
the Advisory Council, the Secretary shall designate
one member to serve as chairperson and one member
to serve as vice chairperson. A Chairperson shall not
serve in that capacity for more than one full term.
‘‘(5) TERMS.—
‘‘(A) IN GENERAL.—A member of the Ad-
visory Council shall be appointed for a term of
2 years, except that of the members first ap-
pointed six such members shall be appointed for
a term of 3 years.
‘‘(B) LIMITATION.—No member of the Ad-
visory Council may serve more than two com-
plete terms.
‘‘(6) VACANCIES.—
‘‘(A) IN GENERAL.—A vacancy on the Ad-
visory Council shall be filled in the manner in
which the original appointment was made and
shall be subject to any conditions which applied
with respect to the original appointment.
‘‘(B) FILLING UNEXPIRED TERM.—An in-
dividual chosen to fill a vacancy shall be ap-
pointed for the unexpired term of the member
replaced.
‘‘(7) EXPIRATION OF TERMS.—The term of any
member shall not expire before the date on which
the member’s successor takes office.
‘‘(8) EMPLOYMENT
BY
FEDERAL
GOVERN-
MENT.—An individual may not be appointed to the
Advisory Council if such individual was employed
by the Federal Government at any time during the
1-year period prior to the appointment.
‘‘(9) NO FINANCIAL INTEREST.—A member of
the Advisory Council shall have no substantial finan-
cial interest in any entity related to any issue to be
addressed by the Council.
‘‘(c) RESPONSIBILITIES.—
‘‘(1) IN GENERAL.—The Advisory Council shall
evaluate programs established under this title and
provide advice to the Secretary concerning methods
to improve the health of children and pregnant
women. As part of such evaluation, the Advisory
Council shall include an assessment of the impact of
State programs under this title on the health status
of children and pregnant women. Specifically, the
Advisory Council shall evaluate and make rec-
ommendations concerning—
‘‘(A) items and services covered under the
comprehensive benefits package;
‘‘(B) State program cost sharing require-
ments;
‘‘(C) the allocation and management of
funds from the Trust Fund;
‘‘(D) eligibility and enrollment issues with
respect to State programs;
‘‘(E) standards for and the responsibilities
of certified plans, at both the Federal and State
level;
‘‘(F) national assessment and quality im-
provement program guidelines and utilization
review program guidelines;
‘‘(G) the development of pediatric and ma-
ternal health care practice guidelines;
‘‘(H) health care information systems and
reporting requirements;
‘‘(I) general State and Federal program
administration; and
‘‘(J) any other relevant matters deter-
mined to be appropriate by the Advisory Coun-
cil.
‘‘(2) ANNUAL SUMMARY.—The Advisory Coun-
cil shall prepare and submit to the Secretary an an-
nual summary of the Council’s activities, analyses,
and evaluations of State programs together with the
recommendations of the Council for program im-
provement.
‘‘(d) MEETINGS.—
‘‘(1) INITIAL
MEETING.—Not later than 30
days after the date on which all members of the Ad-
visory Council have been appointed, the Council shall
hold its first meeting.
‘‘(2) 
REGULAR
MEETINGS.—The 
Advisory
Council shall meet at the call of the Chairperson,
but not less than four times each year.
‘‘(3) QUORUM.—A majority of the members of
the Advisory Council shall constitute a quorum, but
a lesser number of members may hold hearings.
‘‘(e) TASK FORCES.—The Advisory Council may es-
tablish professional or technical task forces to carry out
specific functions if the Council determines that appro-
priate expertise is not otherwise available.
‘‘(f) INFORMATION FROM FEDERAL AGENCIES.—The
Secretary shall ensure that the Advisory Council has ac-
cess to all necessary logistic, administrative, and financial
support. Upon request of the chairperson of the Council,
the head of each Federal department or agency shall fur-
nish information to the Council.
‘‘(g) ADVISORY COUNCIL PERSONNEL MATTERS.—
‘‘(1) COMPENSATION.—Each member of the
Advisory Council shall be compensated at a rate
equal to the daily equivalent of the annual rate of
basic pay prescribed for level IV of the Executive
Schedule under section 5315 of title 5, United
States Code, for each day (including travel time)
during which such member is engaged in the per-
formance of the responsibilities of the Council.
‘‘(2) TRAVEL EXPENSES.—The members of the
Advisory Council shall be allowed travel expenses, in-
cluding per diem in lieu of subsistence, at rates au-
thorized for employees of agencies under subchapter
I of chapter 57 of title 5, United States Code, while
away from their homes or regular places of business
in the performance of services for the Council.
‘‘(h) REPORT
TO
CONGRESS.—If the Advisory
Council—
‘‘(1) irreconcilably differs with Secretary con-
cerning major policy issues related to the program
established under this title; or
‘‘(2) has evidence that the Secretary is not ful-
filling the responsibilities of the Secretary under this
title to ensure affordable, comprehensive, high qual-
ity health care coverage for all eligible individuals;
the Council may prepare and submit to Congress a report
concerning such matters.
‘‘SEC. 2843. NATIONAL QUALITY ASSESSMENT AND IM-
PROVEMENT 
PROGRAM 
GUIDELINES 
AND
UTILIZATION 
REVIEW 
PROGRAM 
GUIDE-
LINES.
‘‘(a) NATIONAL QUALITY ASSESSMENT
AND IM-
PROVEMENT PROGRAM GUIDELINES.—
‘‘(1) ESTABLISHMENT.—Not later than 1 year
after the date of enactment of this title, the Sec-
retary, in consultation with relevant governmental
and non-governmental organizations as determined
appropriate by the Secretary, shall develop national
quality assessment and improvement program guide-
lines for use by certified plans under this title.
‘‘(2) REQUIREMENT.—The guidelines developed
under paragraph (1) shall be consistent with the
concepts and principles established under the Con-
tinuous Quality Improvement/Total Quality Manage-
ment programs.
‘‘(b) NATIONAL UTILIZATION REVIEW PROGRAM
GUIDELINES.—
‘‘(1) ESTABLISHMENT.—Not later than 1 year
after the date of enactment of this title, the Sec-
retary, in consultation with relevant governmental
and non-governmental organizations as determined
appropriate by the Secretary, shall develop national
utilization review program guidelines for use by cer-
tified plans under this title.
‘‘(2) REQUIREMENTS.—The guidelines devel-
oped under paragraph (1) shall, at a minimum, re-
quire that a certified plan ensure that the following
attributes are incorporated into the utilization review
program of the plan:
‘‘(A) The utilization review program is
clearly documented in printed materials pro-
vided to the enrolled individual.
‘‘(B) That only qualified licensed or cer-
tified health professionals with training or expe-
rience in pediatric or obstetric care are used for
specific case utilization reviews.
‘‘(C) That individuals involved in specific
case utilization reviews do not have a financial
interest or incentive to deny or limit utilization.
‘‘(D) That descriptions and protocols for
utilization review are disclosed to enrollees, af-
filiated providers, and appropriate State offi-
cials upon demand, and that such descriptions
and protocols protect proprietary business infor-
mation.
‘‘(E) That criteria for utilization review
shall be based on sound scientific principles and
standard medical practice.
‘‘(F) That there is a mechanism for the
regular evaluation and modification of the utili-
zation review program.
‘‘(c) GENERAL REQUIREMENTS.—The guidelines de-
veloped under this section shall be specific with respect
to pediatric and maternal health care delivery systems to
the maximum extent practicable. Such guidelines shall be
flexible and adaptable, and serve as the basis for the qual-
ity assessment and improvement program and utilization
review program of a certified plan.
‘‘(d) CONSULTATION.—The Secretary, in developing
guidelines under this section shall, at a minimum, consult
with the National Committee on Quality Assurance, the
National Association of Insurance Commissioners, private
health care accreditation organizations, representatives of
certified plans, and relevant maternal and child health
care professional organizations.
‘‘SEC. 2844. NATIONAL HEALTH INFORMATION SYSTEMS
FOR MOTHERS AND CHILDREN.
‘‘(a) ESTABLISHMENT AND IMPLEMENTATION.—Not
later than 1 year after the date of enactment of this title,
the Secretary shall establish and implement a National
Health Information System for Mothers and Children.
The Secretary, in consultation with States and representa-
tives of certified plans, the Administrator of the Agency
for Health Care Policy Research, the Administrator of the
Health Resources and Services Administration, the Direc-
tor of the Centers for Disease Control and Prevention, and
the heads of other agencies or nongovernment organiza-
tions as determined appropriate by the Secretary, shall de-
velop specific data elements and operating procedures with
respect to such Information System.
‘‘(b) SUBMISSION OF DATA.—
‘‘(1) 
ELECTRONIC
FORM.—A 
participating
State shall be responsible for ensuring that certified
plans operating within the State submit the data re-
quired under this title. Such data shall be transmit-
ted to the Secretary. The State shall require that
each certified plan operating within the State submit
data to the Information System, as required by the
Secretary under the policies of the System, in elec-
tronic form.
‘‘(2) SOFTWARE.—The Secretary shall develop
and freely distribute to participating States, the
computer software necessary to permit such States
and certified plans to efficiently collect and transmit
data to the Information System. A participating
State or certified plan may not be required to use
such software if such State or plan is able to other-
wise comply with the data collection and reporting
requirements.
‘‘(3) INTEGRATION
OF
DATA
REPORTING
RE-
QUIREMENTS.—The Secretary, and each participat-
ing State, shall, to the maximum extent practicable,
integrate reporting requirements applicable to cer-
tified plans under other Federal and State health
programs with those established under this title to
ensure that duplicative requirements are eliminated.
‘‘(4) REASONABLE REQUIREMENTS.—The Sec-
retary, and each participating State, shall ensure
that, with respect to certified plans, the resources
and time required to comply with the information re-
quirements of the Secretary and State under this
title are reasonable and not excessive.
‘‘(5) MAINTENANCE OF RECORDS.—Any law of
a participating State that requires that medical or
health records, including billing information, be
maintained in written, rather than electronic, form
shall be satisfied if such records are maintained in
a manner consistent with the Information System
requirements developed by the Secretary under this
section.
‘‘(c) USE OF DATA.—Data received by the Informa-
tion System from States and certified plans shall be used
to—
‘‘(1) monitor and evaluate certified plans;
‘‘(2) monitor the health status of the popu-
lations served by such plans;
‘‘(3) support core public health functions;
‘‘(4) increase capacity for health policy and pro-
gram evaluation, planning, and research;
‘‘(5) provide for quality assessment and im-
provement activities;
‘‘(6) improve provider coordination and access
to care; and
‘‘(7) carry out other activities related to the
public health.
‘‘(d) PRIVACY.—
‘‘(1) IN GENERAL.—To ensure the privacy of
medical information provided under this title, the
Secretary and each participating State shall imple-
ment safeguards to prevent the unauthorized access
of individuals or entities to medically confidential in-
formation.
‘‘(2) APPLICABILITY OF STATE LAWS.—A par-
ticipating State shall ensure that State laws that
protect medical confidentiality are applicable to data
collected by the State or a certified plan operating
within the State under this title, except that such
laws that interfere with the use of the data as re-
quired under this title shall be preempted.
‘‘SEC. 
2845. 
NATIONAL 
CHILDHOOD 
IMMUNIZATION
DATABASE.
‘‘(a) ESTABLISHMENT.—In order to achieve the goal
of providing age-appropriate immunization coverage for
100 percent of the children in the United States, the Sec-
retary shall establish a National Childhood Immunization
Database as part of the Information System.
‘‘(b) REQUIREMENTS.—
‘‘(1) IN GENERAL.—As part of the data pro-
vided under section 2844, a certified plan shall en-
sure that the immunization records of all enrolled in-
dividuals are updated as required under guidelines
developed by the Secretary and the participating
State involved. Such immunization record data shall
be maintained in the database established under
subsection (a). The Secretary shall, to the maximum
extent practicable, ensure that the database contains
accurate and up-to-date information concerning the
immunization records of every child enrolled in a
certified plan under this title.
‘‘(2) APPLICATION TO ALL HEALTH PLANS.—
All certified plans participating in a State program
under this title and all other health plans that pro-
vide coverage for 10,000 or more childhood immuni-
zations per year that are not participating under
this title but that are offered within a participating
State, shall participate in the National Childhood
Immunization Database.
‘‘(3) AVAILABILITY
OF
INFORMATION.—The
database established under subsection (a) shall en-
sure that current immunization information is avail-
able on a real time basis to health care providers
who need such information to assess the appropriate
immunization needs of their patients.
‘‘(4) ACCESS.—
‘‘(A) IN
GENERAL.—Information in the
database shall be accessible to the certified plan
in which a child is enrolled electronically or
through a toll free telephone number.
‘‘(B) OTHER PLANS.—With respect to a
child accessing a certified plan, other than the
certified plan in which such child is enrolled,
such accessed plan or the public health authori-
ties involved may utilize the database to access
the immunization record of the child if such ac-
cess is needed to assess the need for appro-
priate immunization.
‘‘(c) RULE OF CONSTRUCTION.—Nothing in this sec-
tion shall be construed as preempting existing Federal or
State laws concerning disease reporting or the reporting
of other health-related data to local, State, and Federal
health authorities.
‘‘SEC. 2846. PREVENTION, MONITORING, AND CONTROL OF
FRAUD AND ABUSE.
‘‘(a) ESTABLISHMENT OF PROGRAM.—Not later than
180 days after the date of enactment of this title, the Sec-
retary, in consultation with the Attorney General, shall es-
tablish a program and develop State guidelines for pre-
venting, monitoring, and investigating fraud related to the
program established under this title. Under such Federal
program, the Secretary and the Attorney General shall
provide assistance to participating States for the monitor-
ing and control of fraud and abuse in the State programs,
and in investigating and prosecuting individuals and cer-
tified plans whose activities violate the provisions of this
title, any law enacted in the administration of this title,
or any act in violation of such laws that involve interstate
activity.
‘‘(b) STATE SYSTEMS.—
‘‘(1) CERTIFICATION.—Prior to making an allo-
cation to a participating State under section 2801,
the Secretary shall certify that the State has estab-
lished and implemented a Statewide system for pre-
venting, monitoring, and investigating fraud and
abuse that occurs within the State with respect to
the State program.
‘‘(2) REQUIREMENTS OF SYSTEM.—To be cer-
tified under paragraph (1), a State system shall—
‘‘(A) provide authority to State officials to
prosecute individuals or certified plans for
criminal violations of the provisions of this title
or any law enacted to administer or enforce this
title;
‘‘(B) solicit and receive consumer feedback
regarding compliance with requirements under
the State program;
‘‘(C) provide for the investigation of com-
plaints of violations of requirements under the
State program;
‘‘(D) assist in the resolution of consumer
complaints against certified plans;
‘‘(E) have a formal mechanism for the
sharing of information with and assisting the
Federal entity responsible for policing compli-
ance with this title; and
‘‘(F) prepare and submit to the Secretary
and the Attorney General an annual report
summarizing the activities under the State sys-
tem.
‘‘(3) INTEGRATION.—A State system estab-
lished under this subsection may be integrated into
existing State systems responsible for controlling
fraud and abuse under the State program under title
XIX of the Social Security Act.
‘‘(c) PENALTIES.—
‘‘(1) DEVELOPMENT
OF
LEGISLATIVE
PRO-
POSAL.—Not later than 180 days after the date of
the enactment of this title, the Secretary, in con-
sultation with the Attorney General, shall submit to
the Congress a legislative proposal to modify or es-
tablish civil and criminal penalties for fraud and
abuse or for other violations by individuals and cer-
tified plans related to the program established under
this title.
‘‘(2) DATA.—Not later than 1 year after the
date of enactment of this title, the Secretary, in con-
sultation with the Attorney General, shall submit to
the Congress a legislative proposal to modify or es-
tablish civil and criminal penalties for the unauthor-
ized use of data collected under this title, including
the sale or transfer of data for commercial use or
use of data for illegal activities.
‘‘(3) RECOVERY OF FUNDS.—Any funds recov-
ered or fines collected under any civil or criminal ac-
tions related to fraud and abuse under this title
shall be deposited into the trust fund of the State
or States in which the fraud and abuse occurred.
Funds recovered on a national level shall be depos-
ited into the Trust Fund.
‘‘(d) PROHIBITION ON PARTICIPATION.—A certified
plan, health care provider, or other individual or entity
participating in the Federal program or a State program
under this title, that has been found guilty of fraud or
abuse in connection with activities under this title, shall
be prohibited from participating in any manner in such
Federal or a State program, for a period of not less than
5 years. The Secretary may waive the 5-year limitation
if the Secretary determines that there is a compelling rea-
son to grant such waiver.
‘‘(e) APPLICABILITY OF GUIDELINES.—Federal and
State guidelines developed and implemented under this
section shall be developed in recognition of the differences
among the various types of health plans, and be applicable
to all health plans.’’.
SEC. 204. RESPONSIBILITIES OF FAMILIES, CERTIFIED
PLANS, EMPLOYERS, STATES, AND THE FED-
ERAL GOVERNMENT.
Title XXVIII of the Public Health Service Act (as
added by section 201 and amended by sections 202 and
203) is further amended by adding at the end thereof the
following new part:
‘‘PART F—RESPONSIBILITIES OF FAMILIES, CERTIFIED
PLANS, EMPLOYERS, STATES, AND THE FEDERAL
GOVERNMENT
‘‘SEC. 2851. RESPONSIBILITIES OF FAMILIES.
‘‘A family with an eligible child under seven years of
age, or an eligible pregnant woman, who is not covered
under a health plan shall—
‘‘(1) be responsible for enrolling such child or
pregnant woman in a certified plan;
‘‘(2) pay the share of premiums and copay-
ments required of such family under this title; and
‘‘(3) maintain an active role and participate in
the health care system to ensure that the child or
pregnant woman receives appropriate, high quality
health care.
‘‘SEC. 2852. RESPONSIBILITIES OF CERTIFIED PLANS.
‘‘(a) IN GENERAL.—A certified plan participating in
a State program under this title shall—
‘‘(1) be certified by the State and comply with
all requirements for such certification or recertifi-
cation;
‘‘(2) participate in a national open enrollment
period and permit enrollment at the point-of-service;
‘‘(3) in the case of a family that has at least
one eligible child enrolled in the certified plan and
one or more other children who are not eligible for
coverage under this title, offer optional family enroll-
ment with respect to such other children at a rea-
sonable cost;
‘‘(4) in the case of a family that has at least
one eligible child enrolled in the certified plan, and
one or more other children who are eligible for
health services under title XIX of the Social Security
Act but not eligible for coverage under this title,
offer health services under title XIX for such other
children in the family;
‘‘(5) not discriminate against individuals during
marketing, enrollment, or provision of services based
on pre-existing conditions, genetic predisposition of
health conditions, medical history, expected utiliza-
tion of services or health expenditures, race, eth-
nicity, national origin, religion, age (within the eligi-
ble age group), gender, income, or disability;
‘‘(6) accept any applicant for enrollment if such
applicant is an eligible individual and resides within
the geographic area served by the plan, and may not
deny enrollment to any eligible individual except on
the basis of documented plan capacity;
‘‘(7) in the case of enrolled individuals who are
re-enrolling in the plan, ensure that such individuals
are re-enrolled if eligibility is maintained;
‘‘(8) not use pressure, misleading advertising or
marketing, or other unethical practices to coerce or
discourage certain individuals or groups from enroll-
ing in the plan or disenrolling from the plan;
‘‘(9) establish a system for collecting premiums
and copayments;
‘‘(10) not terminate the enrollment of an indi-
vidual except in cases of failure to pay premiums or
copayments, fraud and abuse, or withdrawal of the
plan from the market, and notify the State of the in-
tention of the plan to terminate the enrollment of an
enrollee not later than 60 days prior to the date on
which coverage under such plan is terminated;
‘‘(11) not impose a waiting period prior to the
date on which coverage under the plan commences;
‘‘(12) directly provide or provide coverage for
all items and services required under the comprehen-
sive benefits package under part C, ensure that the
premium amount negotiated with the State under
this title is the full required premium, and not im-
pose any additional charges for covered items or
services;
‘‘(13) not exclude coverage or deny care for any
pre-existing conditions, congenital conditions, or ge-
netic predispositions to conditions that are covered
under the comprehensive benefits package;
‘‘(14) ensure that a choice of primary care pro-
viders is available to enrollees, that primary care
and preventive services are readily available and con-
venient to all enrollees within the geographic area
served, and that emergency services are available on
a 24-hour basis, 7 days a week;
‘‘(15) establish a program for the credentialing
and performance monitoring of providers under the
plan and ensure that adequate health provider to en-
rolled individual ratios are established and main-
tained;
‘‘(16) provide strong, comprehensive preventive
health and patient education services;
‘‘(17) ensure that the special health needs of
children with disabilities or chronic health conditions
are adequately met;
‘‘(18) if sufficient capacity to deliver health
services for children described in paragraph (16)
does not exist within the certified plan, including pe-
diatric specialty and subspecialty care, enter into
agreements with such providers or facilities to pro-
vide appropriate care;
‘‘(19) to the extent that resources or services
are not available within the plan, provide access to
an integrated child and maternal health care net-
work, which consists of a network of providers who
together can provide for the full continuum of health
care, including preventive, primary, secondary, ter-
tiary, rehabilitation, chronic and long-term care,
home care, and hospice care;
‘‘(20) ensure that with respect to any network
described in paragraph (19), the network specifically
provide access to pediatric and maternal specialty
and subspecialty care;
‘‘(21) enter into cooperative agreements with
providers or facilities to provide a continuum of care
if resources to provide such care are not available
within the plan;
‘‘(22) if medically-indicated subspecialty care is
not available within the geographic area served by
the plan, provide transportation to the nearest ap-
propriate facility;
‘‘(23) provide coverage for emergency care ob-
tained in out-of-area or out-of-State facilities so long
as the health condition was certified to be an emer-
gency by the attending physician or could have been
reasonably assumed to be an emergency by the fam-
ily;
‘‘(24) 
provide 
coverage 
for 
deliveries 
of
newborns at nonhospital facilities in areas where
such facilities are available;
‘‘(25) make a reasonable effort to provide lan-
guage translation services in areas where languages
other than English are relatively common;
‘‘(26) implement disincentives (such as higher
copayments) for the inappropriate use of emergency
rooms for nonemergency care;
‘‘(27) provide incentives (such as reduced pre-
miums, premium rebates, or additional services) for
enrollees who comply with medical and public health
recommendations for immunizations, prenatal care,
healthy behaviors, or other preventive health guide-
lines;
‘‘(28) implement an information system to col-
lect and report data as required under sections 2844
and 2845;
‘‘(29) implement a quality assessment and im-
provement program and utilization review program
as required under section 2843;
‘‘(30) pursuant to the guidelines developed by
the State, submit an annual evaluation and quality
improvement plan, including an evaluation of the
plan’s cost containment measures, assurance of qual-
ity care, impact on the health status of the enrolled
population (including outcome measures and process
objectives), a financial statement, proposed changes
in premium rates, and a description of other rel-
evant changes to the plan (the State shall provide
guidance to certified plans concerning the elements
of an acceptable annual evaluation and quality im-
provement plan, and may use the annual evaluation
and quality improvement plan as the basis for the
recertification of plans);
‘‘(31) establish a program for consumer feed-
back and the resolution of consumer complaints that
includes specified time frames for decisions, such
program to be clearly documented and made avail-
able to all enrollees;
‘‘(32) in consultation with local health depart-
ments and maternal and child health programs
under title V of the Social Security Act, establish,
support, or substantially participate in a community-
based maternal or child health program in the cov-
erage area served by the plan;
‘‘(33) comply with any other relevant State or
Federal regulations.
‘‘(b) REGULATORY BURDEN.—To minimize the regu-
latory burdens and potentially duplicative standards and
regulations that may be applied under this title or any
other Federal or State program that duplicates activities
undertaken under this title, a certified plan shall be con-
sidered as fulfilling a requirement or complying with a
standard under this title, if the plan is meeting an existing
State or Federal requirement or standard that has been
determined by the Secretary (or the State, as appropriate)
to be identical or at least as effective as that specified
under this title.
‘‘(c) NONAPPLICATION
OF PROVISIONS.—The re-
quirements and guidelines described in this title shall not
apply to health plans that do not participate in a State
program under this title (with the exception of health
plans complying with section 2845), and shall not apply
(unless the plan elects for such requirements to apply),
to the care and treatment of individuals in the plan who
are not enrolled in the State program under this title.
‘‘SEC. 2853. RESPONSIBILITIES OF EMPLOYERS.
‘‘With respect to the program established under this
title, an employer shall—
‘‘(1) in the case of an employer that provides
health benefits to pregnant women, not terminate
such benefits as result of the establishment of such
program;
‘‘(2) in the case of an employer that provides
health benefits to employee dependents under seven
years of age, not terminate such benefits unless the
employer agrees to pay the temporary maintenance-
of-effort fee required under section 2861(b).
An employer may not terminate the benefits described in
this section until the expiration of the 180-day period be-
ginning on the date on which the State in which such em-
ployer fully implements a State program.
‘‘SEC. 2854. RESPONSIBILITIES OF THE STATE.
‘‘A participating State shall—
‘‘(1) develop and submit an approved initial 5-
year strategic plan and annual evaluation and qual-
ity improvement plans to the Secretary as required
under this title;
‘‘(2) develop a process for certifying and re-cer-
tifying health plans under this title under which—
‘‘(A) the criteria for certification or recer-
tification shall include—
‘‘(i) an evaluation of minimum capital
requirements, solvency requirements, and
other standards related to the financial
stability of the plan;
‘‘(ii) premium rating methodology;
‘‘(iii) the quality of services to be pro-
vided by the plan; and
‘‘(iv) the ability of the plan to provide
the required items and services; and
‘‘(B) such plans shall be re-certified at
least once during every 4-year period and sub-
sequent to each instance in which the plan has
undergone significant changes (such as a merg-
er) as determined appropriate by the State;
‘‘(3) establish a system through which the State
can solicit and evaluate proposals from all health
plans desiring to be certified under this title, and
enter into cooperative agreements with such certified
plans;
‘‘(4) to maximize the choice of certified plans in
an area, ensure, through the system established
under paragraph (3), that any certified health plan
that fulfills all State and Federal requirements and
guidelines under this title, and is otherwise in good
standing with the State, is permitted to participate
in the State program;
‘‘(5) elect whether to enter into risk or profit
sharing agreements with all or selected certified
plans;
‘‘(6) elect whether to implement rate margin
provisions in agreements with certified plans such
that, at the end of a contract period, certified plans
would be reimbursed by the State if incurred costs
exceeded anticipated costs, and States could recover
excess premiums from the plan if incurred costs are
less than anticipated costs at the time of rate nego-
tiation;
‘‘(7) implement risk adjustment methods, rein-
surance mechanisms, or other appropriate mecha-
nisms to ensure that State payments to specific cer-
tified plans are reflective of the expected utilization
or expenditure rates of plan enrollees and to protect
specific certified plans that enroll a disproportionate
share of individuals who are expected to incur a
higher than average utilization or expenditure rate;
‘‘(8) ensure that the premium rating meth-
odologies of certified plans are well documented, ac-
tuarially sound, and minimize large variations in an-
nual premium rates;
‘‘(9) directly reimburse each certified plan for
the State portion of the negotiated premium for en-
rolling eligible children and pregnant women;
‘‘(10) ensure that the premiums negotiated with
each certified plan apply with respect to all eligible
children and all eligible pregnant women who enroll
in the plan;
‘‘(11) negotiate discounted premiums for fami-
lies with multiple children with certified plans;
‘‘(12) ensure that premium rates negotiated
with certified plans fairly compensate such plans for
the services provided, but that such rates do not re-
sult in excessive profits by plans;
‘‘(13) offer families a choice of certified plans
to the extent practicable so long as at least one man-
aged care plan for children is available to all eligible
children regardless of geographic location;
‘‘(14) elect whether to use financial or other in-
centives to encourage adequate coverage of rural and
underserved areas;
‘‘(15) develop and implement an open enroll-
ment system during the national open enrollment pe-
riod consistent with the guidelines described in sec-
tion 2815;
‘‘(16) implement an outreach program to maxi-
mize the enrollment of eligible individuals;
‘‘(17) ensure that certified plans accept any ap-
plicant who is eligible for coverage within the geo-
graphic area and that such plans do not discriminate
or use coercive or unethical practices to encourage or
dissuade enrollment into the plan;
‘‘(18) in determining or approving the bound-
aries of coverage areas for certified plans, ensure
that the coverage areas are consistent with the anti-
discrimination standards specified in subsection
(a)(4) or section 2852, and that such boundaries do
not result in plans avoiding enrollment of individuals
who are expected to have higher than average rates
of utilization or expenditures;
‘‘(19) impose a surcharge for persons who en-
roll outside of the regular open enrollment period as
required under section 2815;
‘‘(20) monitor, evaluate, and address the poten-
tial barriers, including cost sharing requirements,
that may prevent certain families, particularly low
income families, from enrolling in the State program
or from obtaining health services after enrollment;
‘‘(21) develop a mechanism to assist families
who cannot temporarily pay for premiums or copay-
ments due to unexpected shortfalls in income;
‘‘(22) in the case of fee-for-service plans, use
pediatric- and maternal-specific prospective payment
schedules for the reimbursement of services, such
schedules to be negotiated between providers, plans,
and the State;
‘‘(23) ensure that State maternal and child
health programs under title V of the Social Security
Act and any relevant health services provided by
local and State health departments are integrated
and coordinated with the State program under this
title;
‘‘(24) establish a State advisory council similar
in nature to the Advisory Council, except that the
composition, organization, and other guidelines for
the State council shall be determined by the State,
with the majority of State council members being
comprised of health care providers and consumers;
‘‘(25) develop and implement standards for the
dissemination of consumer information provided by
certified plans (including information concerning
services for children with special health care needs),
provide consumers with comparative information on
certified plans during the open enrollment period as
requested, and set up hotlines and other mechanisms
to assist consumers;
‘‘(26) approve all advertising or other market-
ing materials from certified plans to ensure that
such materials do not contain misleading or false in-
formation, and that the content of the material does
not selectively encourage or selectively discourage
certain groups of individuals, as referred to in sec-
tion 2852, from enrolling in or disenrolling from the
plan (a State may elect to contract with nongovern-
ment entities to perform such functions);
100
‘‘(27) ensure that decisions regarding the ap-
proval of the advertising or other marketing mate-
rials of a certified plan are made in a reasonable
time frame and are based on consistently applied cri-
teria as determined appropriate by the State;
‘‘(28) establish a mechanism for consumer feed-
back, the collection of complaints, filing of griev-
ances, and assist in the resolution of complaints
against certified plans;
‘‘(29) establish at least one alternative dispute
resolution mechanism for malpractice claims filed by
individuals enrolled in a certified plan;
‘‘(30) address deficiencies in enabling services
to ensure access to health services among under-
served areas or populations;
‘‘(31) ensure that primary care services are ac-
cessible by public transportation in municipalities
that have a public transport system;
‘‘(32) for a period of not less than 5 years after
the date of the implementation of the State pro-
gram, ensure that health facilities that provide care
to large numbers of children, pregnant women, chil-
dren with special health care needs, or low income
persons, including—
‘‘(A) non-investor-owned hospitals;
101
‘‘(B) community health centers;
‘‘(C) school-based health clinics;
‘‘(D) rural health clinics; and
‘‘(E) local health departments;
are able to participate fully in the State program,
are adequately reimbursed for their services, and are
able to enter into agreements with certified plans (in
cases where such providers are not affiliated with a
certified plan, the State may encourage such provid-
ers to form their own certified plan);
‘‘(33) enter into agreements with bordering
States to ensure that individuals who need to travel
across State borders for medically necessary health
services that are otherwise not accessible may do so
without penalty;
‘‘(34) if determined appropriate, elect to imple-
ment laws to take legal action against families who
fail to enroll their children or who fail to pay pre-
miums for children under their care who require
medical treatment for a health condition;
‘‘(35) establish a system for preventing, mon-
itoring, and controlling fraud and abuse as required
under section 2846, and establish a system to pre-
vent and address any conflicts of interest on the
part of the State or its designated representatives
102
regarding the award, management, or evaluation of
contracts with certified plans; and
‘‘(36) ensure that certified plans are in compli-
ance with State and Federal guidelines under this
title.
‘‘SEC. 2855. RESPONSIBILITIES OF THE SECRETARY.
‘‘With respect to the program established under this
title, the Secretary shall—
‘‘(1) administer amounts provided to the Sec-
retary from the Trust Fund;
‘‘(2) approve, evaluate, and monitor State pro-
grams as required under part D;
‘‘(3) provide participating States with technical
and other assistance;
‘‘(4) establish, appoint, and provide support for
the Advisory Council as required under section
2842;
‘‘(5) establish and coordinate the national open
enrollment period as required under section 2815;
‘‘(6) develop a specific comprehensive benefits
package required under part B;
‘‘(7) develop national guidelines for quality as-
sessment and improvement programs and utilization
review programs as required under section 2843;
103
‘‘(8) develop and implement the Information
System and the National Childhood Immunization
Database;
‘‘(9) review, prioritize, integrate, and coordinate
Federally funded health programs for children and
pregnant women as required under section 2863;
and
‘‘(10) in conjunction with the Attorney General,
establish a system for preventing, monitoring, and
controlling fraud and abuse as required under sec-
tion 2846.
‘‘SEC. 2856. RESPONSIBILITIES OF THE ATTORNEY GEN-
ERAL.
‘‘With respect to the program established under this
title, the Attorney General in conjunction with the Sec-
retary shall establish a system for preventing, monitoring,
and controlling fraud and abuse as required under section
2846.
‘‘SEC. 2857. RESPONSIBILITIES OF THE SECRETARY OF
AGRICULTURE.
‘‘With respect to the program established under this
title, the Secretary of Agriculture shall administer amount
distributed from the Tobacco Alternatives Trust Fund es-
tablished under section 9512 of the Internal Revenue Code
of 1986.’’.
104
SEC. 205. EXISTING PROGRAMS.
Title XXVIII of the Public Health Service Act (as
added by section 201 and amended by sections 202, 203,
and 204) is further amended by adding at the end thereof
the following new part:
‘‘PART G—IMPACT ON EMPLOYERS AND EXISTING
PROGRAMS
‘‘SEC. 2861. IMPACT ON EMPLOYERS.
‘‘(a) IN GENERAL.—The Congress encourages em-
ployers to provide, or continue to provide, comprehensive
health care coverage to the dependent children of their em-
ployees.
‘‘(b) DROPPING OF COVERAGE.—
‘‘(1) IN GENERAL.—With respect to a partici-
pating State, if the Secretary of Labor determines
that an employer who provided health care coverage
for the dependent children of the employees of the
employer, has terminated such coverage on or after
the date of enactment of this title, for all children
or children under 7 years of age, the Secretary may
impose a temporary annual maintenance of effort fee
on such employer, the proceeds of which shall be de-
posited into the Trust Fund. In no case may an em-
ployer drop coverage of employee-dependent children
until the date that is 180 days after the State fully
implements a State program. An employer may not
105
selectively drop health care coverage for specific em-
ployee-dependent children who have, or are expected
to have, higher than average utilization or health
care costs.
‘‘(2) AMOUNT OF FEE.—The amount of a fee
assessed under paragraph (1) shall be equivalent to
50 percent of the estimated annual cost of providing
comprehensive coverage for all employee-dependent
children.
‘‘(3) PERIOD OF FEE.—An annual fee imposed
under paragraph (1) shall be in effect for a period
not to exceed 5 years.
‘‘(4) PREGNANCY COVERAGE.—Employers who
provide pregnancy-related health care benefits for
their employees and dependents shall continue to do
so after the date of enactment of this Act.
‘‘SEC. 2862. IMPACT ON MEDICAID.
(a) AUTOMATIC ENROLLMENT.—With respect to a
participating State, children under 7 years of age, and
pregnant women, who are enrolled in the program under
title XIX of the Social Security Act shall be automatically
enrolled into the appropriate State program under this
title.
‘‘(b) BENEFITS.—All health benefits provided under
title XIX of the Social Security Act, including long-term
106
and chronic care services for children with disabilities or
chronic health conditions, shall be received under the State
program under this title. A participating State may elect
not to shift long-term and chronic care services for chil-
dren with disabilities or chronic health conditions under
such title XIX into the State program under this title,
if the State can demonstrate that doing so would signifi-
cantly compromise the quality of care for such children.
A participating State that elects not to shift such long-
term and chronic care services into the State program
under this Act shall develop health care coordination plans
that integrate the various sources of health services for
such children in consultation with State maternal and
child health programs under title V of such Act. A partici-
pating State may elect to establish a transitional period
to gradually phase in children with disabilities or chronic
health condition benefits into the State program.
‘‘SEC. 2863. INTEGRATION OF HEALTH SERVICES AND IM-
PACT ON EXISTING FEDERAL AND STATE
GOVERNMENT HEALTH PROGRAMS.
‘‘(a) REVIEW
BY SECRETARY
AND STATES.—Not
later than 2 years after the date of enactment of this Act,
and every 2 years thereafter—
‘‘(1) the Secretary, in consultation with the Ma-
ternal and Child Health Bureau, shall review all
107
Federal health programs that provide health services
to children under 7 years of age and pregnant
women; and
‘‘(2) a participating State, acting through a
designated single State agency or other entity, and
in consultation with State health programs author-
ized under title V of the Social Security Act, shall
review State-funded programs that provide health
services to children under seven years of age and
pregnant women;
to ensure that such programs are integrated and coordi-
nated with the services covered by this title.
‘‘(b) RECOMMENDATIONS.—If the Secretary, through
the review conducted under subsection (a), determines
that specific functions performed by Federal health pro-
grams under such review are duplicated or made extra-
neous by the programs and benefits provided under this
title, the Secretary shall submit recommendation to Con-
gress concerning the elimination or reduction in such pro-
grams or benefits. With respect to any amounts appro-
priated for any programs terminated, such remaining ap-
propriations shall be transferred to the Trust Fund.
‘‘(c) ASSURANCE.—The Secretary and all participat-
ing States shall ensure that Federal payments under title
V of the Social Security Act and matching State funds
108
provided under this title are retained within existing pro-
grams to—
‘‘(1) meet the health care needs of children over
7 years of age, and eligible children and pregnant
women who do not participate in the State program
under this title;
‘‘(2) perform core public health functions;
‘‘(3) coordinate care for children with special
health care needs; and
‘‘(4) otherwise to meet needs identified through
title V needs assessments consistent with Healthy
People 2000 objectives.
SEC. 206. GENERAL PROVISIONS.
Title XXVIII of the Public Health Service Act (as
added by section 201 and amended by sections 202, 203,
204, and 205) is further amended by adding at the end
thereof the following new part:
‘‘PART H—GENERAL PROVISIONS
‘‘SEC. 2871. DEFINITIONS.
‘‘Unless specifically provided otherwise, for purposes
of this title:
‘‘(1) ADJUSTED FAMILY GROSS INCOME.—The
term ‘adjusted family gross income’ means the sum
of all adjusted gross income of all family members
of the child or pregnant women involved in the most
109
recent tax year. In the case of a pregnant woman,
such term also includes the adjusted gross income of
the pregnant woman.
‘‘(2) ADVISORY COUNCIL.—The term ‘Advisory
Council’ means the National Advisory Council for
Mother’s and Children’s Health established under
section 2842.
‘‘(3) CERTIFIED
PLAN.—The term ‘certified
plan’ means the agreement entered into by an orga-
nized health care entity to cover or provide specified
health care services under State and Federal guide-
lines under this title. Organizations that may enter
into such agreement shall include health mainte-
nance organizations, preferred provider organiza-
tions, point-of-service plans, fee-for-service plans, in-
demnity insurance plans, hybrids of such plans, and
any other organized health care entities that fulfill
the requirements of this title.
‘‘(4) CHILD.—
‘‘(A) IN
GENERAL.—The term ‘child’
means an individual who has not attained the
age of 21.
‘‘(B) REFERENCES.—References in this
title to a child shall be construed to mean—
110
‘‘(i) in the case of a State program
that does not have an expanded eligibility
component, an individual under 7 years of
age; and
‘‘(ii) in the case of a State program
that offers an expanded eligibility compo-
nent, an individual under 21 years of age.
‘‘(5) COMPREHENSIVE
BENEFITS
PACKAGE.—
The term ‘comprehensive benefits package’ means
either the benefits package for children or the bene-
fits package for pregnant women, as the case may
be, developed by the Secretary under section
2821(a).
‘‘(6) CORE PUBLIC HEALTH FUNCTIONS.—The
term ‘core public health functions’ means the follow-
ing:
‘‘(A) The collection and analysis of public
health-related data and the technical aspects of
developing and operating information systems.
‘‘(B) Activities related to protecting the
environment and ensuring the safety of work-
places, food, and water.
‘‘(C) Investigation and control of adverse
health conditions and exposures to individuals
and the community.