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(1) IN GENERAL.—Not later than October 1 of
each year (beginning with 1994), the Secretary, in
consultation with the Attorney General, shall deter-
mine whether a State’s alternative dispute resolution
system meets the requirements of this part for the
following calendar year.
(2) BASIS FOR CERTIFICATION.—The Secretary
shall certify a State’s alternative dispute resolution
system under this subsection for a calendar year if
the Secretary determines under paragraph (1) that
the system meets the requirements of section 5201.
(b) APPLICABILITY OF ALTERNATIVE FEDERAL SYS-
TEM.—
(1) ESTABLISHMENT
AND
APPLICABILITY.—
Not later than October 1, 1994, the Secretary, in
consultation with the Attorney General, shall estab-
lish by rule an alternative Federal ADR system for
the resolution of medical malpractice liability claims
during a calendar year in States that do not have
in effect an alternative dispute resolution system
certified under subsection (a) for the year.
(2) REQUIREMENTS FOR SYSTEM.—Under the
alternative Federal ADR system established under
paragraph (1)—
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(A) paragraphs (1), (2), (6), and (7) of
section 5201(a) shall apply to claims brought
under the system;
(B) if the system provides for the resolu-
tion of claims through arbitration, the claims
brought under the system shall be heard and
resolved by arbitrators appointed by the Sec-
retary in consultation with the Attorney Gen-
eral; and
(C) with respect to a State in which the
system is in effect, the Secretary may (at the
State’s request) modify the system to take into
account the existence of dispute resolution pro-
cedures in the State that affect the resolution
of medical malpractice liability claims.
(3) TREATMENT
OF
STATES
WITH
ALTER-
NATIVE SYSTEM IN EFFECT.—If the alternative Fed-
eral ADR system established under this subsection is
applied with respect to a State for a calendar year,
the State shall make a payment to the United States
(at such time and in such manner as the Secretary
may require) in an amount equal to 110 percent of
the costs incurred by the United States during the
year as a result of the application of the system with
respect to the State.
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SEC. 5203. GRANTS TO STATES.
(a) IN GENERAL.—The Secretary shall make grants
to States for a 2-year period to assist States in implement-
ing and operating alternative dispute resolution systems
that meet the requirements of section 5201.
(b) ELIGIBILITY.—A State is eligible to receive a
grant under this section if the Secretary has certified the
State’s alternative dispute resolution system under section
5202(b).
(c) LIMITATION
ON
AMOUNT
OF
GRANT.—The
amount of funds provided to a State under a grant under
this section may not exceed $5,000,000 during the 2-year
period of the grant.
SEC. 5204. REPORTS ON IMPLEMENTATION AND EFFEC-
TIVENESS OF ALTERNATIVE DISPUTE RESO-
LUTION SYSTEMS.
(a) IN GENERAL.—Not later than 5 years after the
date of the enactment of this Act, the Secretary shall pre-
pare and submit to the Congress a report describing and
evaluating State alternative dispute resolution systems op-
erated pursuant to this subtitle and the alternative Fed-
eral system established under section 5202(b).
(b) CONTENTS OF REPORT.—The Secretary shall in-
clude in the report prepared and submitted under sub-
section (a)—
(1) information on—
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(A) the effect of the alternative dispute
resolution systems on the cost of health care
within each State,
(B) the impact of such systems on the ac-
cess of individuals to health care within the
State, and
(C) the effect of such systems on the qual-
ity of health care provided within the State; and
(2) to the extent that such report does not pro-
vide information on no-fault systems operated by
States as alternative dispute resolution systems pur-
suant to this part, an analysis of the feasibility and
desirability of establishing a system under which
medical malpractice liability claims shall be resolved
on a no-fault basis.
Subtitle D—Grants to States for
Development of Practice Guide-
lines
SEC. 5301. GRANTS TO STATES.
(a) IN GENERAL.—The Secretary shall make grants
to States for a 2-year period for the development of medi-
cal practice guidelines for health care professionals (in-
cluding mid-level practitioners) that may be applied to re-
solve medical malpractice liability claims and actions in
the State.
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(b) ELIGIBILITY.—A State is eligible to receive a
grant under this section if the State submits to the Sec-
retary an application at such time, in such form, and con-
taining such information and assurances as the Secretary
may require, including assurances that the State will sub-
mit such periodic reports on the development and applica-
tion of the State’s medical practice guidelines as the Sec-
retary may require.
(c) NUMBER OF GRANTS.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the Secretary shall award not less than
10 grants under this section.
(2) EXCEPTION.—Notwithstanding paragraph
(1), the Secretary may award less than 10 grants
under this section if the Secretary determines that
there are an inadequate number of applications sub-
mitted that meet the eligibility and approval require-
ments of this section.
(d) LIMITATION
ON
AMOUNT
OF
GRANT.—The
amount of funds provided to a State under a grant under
this section may not exceed $5,000,000 during the 2-year
period of the grant.
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TITLE VI—PAPERWORK REDUC-
TION AND ADMINISTRATIVE
SIMPLIFICATION
SEC. 6001. PREEMPTION OF STATE QUILL PEN LAWS.
After 1994, no effect shall be given to any provision
of State law that requires medical or health insurance
records (including billing information) to be maintained
in written, rather than electronic, form.
SEC. 6002. CONFIDENTIALITY OF ELECTRONIC HEALTH
CARE INFORMATION.
(a) PROMULGATION OF REQUIREMENTS.—
(1) IN GENERAL.—The Health Care Standards
Commission shall promulgate, and may modify from
time to time, requirements to facilitate and ensure
the uniform, confidential treatment of individually
identifiable health care information in electronic en-
vironments.
(2) ITEMS
TO
BE
INCLUDED.—The require-
ments under this subsection shall—
(A) provide for the preservation of con-
fidentiality and privacy rights in electronic
health care claims processing and payment;
(B) apply to the collection, storage, han-
dling, and transmission of individually identifi-
able health care data (including initial and sub-
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sequent disclosures) in electronic form by all ac-
countable health plans, public and private third-
party payers, providers of health care, and all
other entities involved in the transactions;
(C) not apply to public health reporting re-
quired under State or Federal law;
(D) delineate protocols for securing elec-
tronic storage, processing, and transmission of
health care data;
(E) specify fair information practices that
assure a proper balance between required dis-
closures and use of data, including—
(i) creating a proper balance between
what an individual is expected to divulge to
a record-keeping organization and what the
individual seeks in return,
(ii) minimizing the extent to which in-
formation concerning an individual is itself
a source of unfairness in any decision
made on the basis of such information, and
(iii) creating and defining obligations
respecting the uses and disclosures that
will be made of recorded information about
an individual;
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(F) require publication of the existence of
health care data banks;
(G) establish appropriate protections for
highly sensitive data (such as data concerning
mental health, substance abuse, and commu-
nicable and genetic diseases);
(H) encourage the use of alternative dis-
pute resolution mechanisms (where appro-
priate); and
(I) provide for the deletion of information
that is no longer needed to carry out the pur-
pose for which it was collected.
(3) CONSULTATION WITH WORKING GROUP.—In
promulgating and modifying requirements under this
subsection, the Commission shall consult with a
working group of knowledgeable individuals rep-
resenting all interested parties (including third-party
payers, providers, consumers, employers, information
managers, and technical experts).
(4) DEADLINE.—The Commission shall first
promulgate requirements under this subsection by
not later than six months after the date of the en-
actment of this Act.
(b) APPLICATION OF REQUIREMENTS.—
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(1) STATE
ENFORCEMENT
OF
SIMILAR
RE-
QUIREMENTS.—The 
requirements 
promulgated
under subsection (a) shall not apply to health care
information in a State if—
(A) the State has applied to the Health
Care Standards Commission for a determina-
tion that the State has in effect a law that pro-
vides for the application of requirements with
respect to such information (and enforcement
provisions with respect to such requirements)
consistent with such requirements (and with the
enforcement provisions of subsection (c)), and
(B) the Commission determines that the
State has such a law in effect.
(2) APPLICATION
TO
CURRENT
INFORMA-
TION.—The Health Care Standards Commission
shall specify the extent to which (and manner in
which) the requirements promulgated under sub-
section (a) apply to information collected before the
effective date of the requirements.
(c) DEFENSE FOR PROPER DISCLOSURES.—An en-
tity that establishes that is has disclosed health care infor-
mation in accordance with the requirements promulgated
under subsection (a) has established a defense in an action
brought for improper disclosure of such information.
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(d) PENALTIES FOR VIOLATIONS.—An entity that
collects, stores, handles, transmits, or discloses health care
information in violation of the requirements promulgated
under subsection (a) is liable for civil damages, equitable
remedies, and attorneys’ fees (if appropriate), in accord-
ance with regulations of the Health Care Standards Com-
mission.
SEC. 6003. STANDARDIZATION FOR THE ELECTRONIC RE-
CEIPT AND TRANSMISSION OF HEALTH PLAN
INFORMATION.
(a) GOALS.—The Health Care Standards Commis-
sion shall establish national goals, and time frameworks,
respecting the progress to be made by the health care in-
dustry in eliminating unnecessary paperwork and achiev-
ing appropriate standardization in the areas of electronic
receipt and transmission of health care claims and health
plan information and eligibility verification (consistent
with the requirements promulgated under section
6002(a)).
(b) CONTINGENT REQUIREMENTS.—If the Commis-
sion determines that the health care industry has failed
to meet the goals established under subsection (a) by the
deadlines established by the Commission under such sub-
section, the Commission shall promulgate (and may, from
time to time, modify) standards and requirements con-
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cerning the electronic receipt and transmission of health
plan claims forms and other health plan information.
(c) CONSULTATION.—The Commission shall conduct
activities under this section in consultation with the Ac-
credited Standards Committee X–12 of the American Na-
tional Standards Institute, insurers, providers, and others.
SEC. 6004. USE OF UNIFORM HEALTH CLAIMS FORMS AND
IDENTIFICATION NUMBERS.
(a) GOALS.—The Health Care Standards Commis-
sion shall establish national goals, and time frameworks,
respecting the progress to be made by the health care in-
dustry in achieving uniformity—
(1) in the format and content of basic claims
forms under health plans, and
(2) in the use of common identification num-
bers for beneficiaries and providers of health care
items or services under health plans.
(b) CONTINGENT REQUIREMENTS.—If the Commis-
sion determines that the health care industry has failed
to meet the goals established under subsection (a) by the
deadlines established by the Commission under such sub-
section, the Commission shall promulgate (and may, from
time to time, modify) standards and requirements con-
cerning—
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(1) the format and content of basic claims
forms under health plans, and
(2) the common identification numbers to be
used by health plans to identify health plan bene-
ficiaries and health care providers.
(c) CONSULTATION.—The Commission shall conduct
activities under this section in consultation with the
Workgroup for Electronic Data Interchange and with in-
surers, providers, and others.
SEC. 6005. PRIORITY AMONG INSURERS.
(a) GOALS.—The Health Care Standards Commis-
sion shall establish national goals, and time frameworks,
respecting the progress to be made by the health care in-
dustry in achieving uniformity in the rules for determining
the liability of insurers when benefits are payable under
two or more health plans.
(b) CONTINGENT REQUIREMENTS.—If the Commis-
sion determines that the health care industry has failed
to meet the goals established under subsection (a) by the
deadlines established by the Commission under such sub-
section, the Commission shall promulgate (and may, from
time to time, modify) rules for determining the liability
of health plans when benefits are payable under two or
more health plans.
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(c) CONSULTATION.—The Commission shall conduct
activities under this section in consultation with health
plans.
SEC. 6006. FURNISHING OF INFORMATION AMONG HEALTH
PLANS.
(a) GOALS.—The Health Care Standards Commis-
sion shall establish national goals, and time frameworks,
respecting the progress to be made by the health care in-
dustry in achieving uniformity in the availability of infor-
mation among health plans when benefits are payable
under two or more health plans.
(b) CONTINGENT REQUIREMENTS.—If the Commis-
sion determines that the health care industry has failed
to meet the goals established under subsection (a) by the
deadlines established by the Commission under such sub-
section, the Commission shall promulgate (and may, from
time to time, modify) requirements concerning the trans-
fer among health plans (and annual updating) of appro-
priate information (which may include requirements for
the use of unique identifiers, and for the listing of all indi-
viduals covered under a health plan).
(c) CONSULTATION.—The Commission shall conduct
activities under this section in consultation with health
plans.
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SEC. 6007. FAILURE TO SATISFY CERTAIN HEALTH PLAN
REQUIREMENTS.
(a) IN GENERAL.—Chapter 47 of the Internal Reve-
nue Code of 1986 (relating to taxes on group health plans)
is amended by adding at the end the following new section:
‘‘SEC. 5000A. FAILURE TO SATISFY CERTAIN HEALTH PLAN
REQUIREMENTS.
‘‘(a) GENERAL RULE.—There is hereby imposed, on
any administrator of a health plan, a tax on any failure
to comply with an applicable requirement of sections 6003
through 6006 of the Managed Competition Act of 1993.
The Health Care Standards Commission shall determine
whether any such administrator meets the requirements
of those sections.
‘‘(b) AMOUNT OF TAX.—The amount of tax imposed
by subsection (a) for a taxable year in which an adminis-
trator fails to comply with a requirement described in that
subsection shall be equal to $100 for each such failure.
‘‘(c) CONTROLLED GROUPS.—
‘‘(1) EMPLOYERS.—In the case of an adminis-
trator that is an employer, for purposes of this sec-
tion all persons that are treated as part of the same
employer (within the meaning of section 414) as the
administrator shall be treated as the same person.
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‘‘(2) OTHER ADMINISTRATORS.—In the case of
an administrator that is not an employer, for pur-
poses of this section—
‘‘(A) CONTROLLED
GROUP
OF
CORPORA-
TIONS.—All corporations which are members of
the same controlled group of corporations shall
be treated as 1 person. For purposes of the pre-
ceding sentence, the term ‘controlled group of
corporations’ has the meaning given to such
term by section 1563(a), except that—
‘‘(i) ‘more than 50 percent’ shall be
substituted for ‘at least 80 percent’ each
place it appears in section 1563(a)(1), and
‘‘(ii) the determination shall be made
without regard to subsections (a)(4) and
(e)(3)(C) of section 1563.
‘‘(B) PARTNERSHIPS, PROPRIETORSHIPS,
ETC., WHICH ARE UNDER COMMON CONTROL.—
Under regulations prescribed by the Secretary,
all trades or businesses (whether or not incor-
porated) which are under common control shall
be treated as 1 person. The regulations pre-
scribed under this subparagraph shall be based
on principles similar to the principles which
apply in the case of subparagraph (A).
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‘‘(d) LIMITATIONS ON TAX.—
‘‘(1) TAX NOT TO APPLY WHERE FAILURE NOT
DISCOVERED
EXERCISING
REASONABLE
DILI-
GENCE.—No tax shall be imposed by subsection (a)
with respect to any failure for which it is established
to the satisfaction of the Secretary that the person
liable for tax did not know, and by exercising rea-
sonable diligence would not have known, that the
failure existed.
‘‘(2) TAX NOT TO APPLY TO FAILURES COR-
RECTED WITHIN 30 DAYS.—No tax shall be imposed
by subsection (a) on any failure if—
‘‘(A) the failure was due to reasonable
cause and not to willful neglect, and
‘‘(B) the failure is corrected during the 30-
day period beginning on the 1st date the person
liable for the tax knew, or by exercising reason-
able diligence would have known, that the fail-
ure existed.
‘‘(3) WAIVER BY SECRETARY.—In the case of a
failure which is due to reasonable cause and not to
willful neglect, the Secretary may waive part or all
of the tax imposed by subsection (a) to the extent
that the payment of that tax would be excessive rel-
ative to the failure involved.’’
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(b) NONDEDUCTIBILITY OF TAX.—Paragraph (6) of
section 275(a) of that Code (relating to nondeductibility
of certain taxes) is amended by inserting ‘‘47,’’ after
‘‘46,’’.
(c) CLERICAL AMENDMENTS.—The table of sections
for chapter 47 of that Code is amended by adding at the
end the following new item:
‘‘5000A. Failure to satisfy certain health plan requirements.’’.
SEC. 6008. DEFINITIONS.
For purposes of this title—
(1) The term ‘‘health plan’’ means any contract
or arrangement under which an entity bears all or
part of the cost of providing health care items and
services, including a hospital or medical expense in-
curred policy or certificate, hospital or medical serv-
ice plan contract, or health maintenance subscriber
contract (including any closed accountable health
plan), but does not include (except for purposes of
sections 6005 and 6006)—
(A) coverage only for accident, dental, vi-
sion, disability, or long term care, medicare
supplemental health insurance, or any combina-
tion thereof,
(B) coverage issued as a supplement to li-
ability insurance,
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(C) workers’ compensation or similar in-
surance, or
(D) automobile medical-payment insur-
ance.
(2) The term ‘‘provider’’ means a physician,
hospital, pharmacy, laboratory, or other person li-
censed or otherwise authorized under applicable
State laws to furnish health care items or services.
TITLE VII—ADDITIONAL BENE-
FITS 
ON 
A 
PAY-AS-YOU-GO
BASIS
SEC. 7001. SENSE OF CONGRESS.
It is the sense of Congress that additional benefits
should be provided by the Federal Government to the ex-
tent that additional financing is made available for such
benefits on a pay-as-you-go basis, including the following
benefits:
(1) Providing tax preferences for expenses for
long-term care, including tax deductibility of em-
ployer contributions for long-term care insurance.
(2) Providing direct Federal subsidies for ex-
penses for long-term care.
(3) Expanding coverage under the medicare
program, including coverage of outpatient prescrip-
tion drugs and coverage of long-term care services.