242
Title I, Subtitle H
‘‘(2) REPORTS.—Not later than 3 years after
the date of the enactment of this section (and at
such subsequent intervals as the Secretary considers
appropriate), the Secretary shall submit a report on
the program to Congress.’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply to calendar quarters beginning on
or after October 1, 1996.
SEC. 1702. OPTIONAL USE OF PROGRAM TO OFFER COV-
ERAGE TO SOME OR ALL STATE RESIDENTS.
Section 1932 of the Social Security Act, as inserted
by section 1701(a)(2), is amended—
(1) in subsection (c)(2)(A), in the matter before
clause (i), by inserting ‘‘, except as provided in sub-
section (d)(4)(B)(iii),’’ after ‘‘unless’’, and
(2) by adding at the end of subsection (d) the
following new paragraphs:
‘‘(4) OPTIONAL ENROLLMENT OF OTHER INDI-
VIDUALS.—
‘‘(A) IN GENERAL.—Subject to subsection
(e), a State operating a State health allowance
program under this section may make any indi-
vidual (or class of individuals) who is not de-
scribed in paragraph (1), (2), or (3) and who
is not offered coverage under an employer
243
Title I, Subtitle H
group health plan eligible to participate in the
program.
‘‘(B) SPECIAL RULES.—
‘‘(i) CONTRIBUTION
MAY
BE
RE-
QUIRED.—In the case of an individual who
is participating in the program under this
paragraph, the program may require such
an individual to contribute all (or a por-
tion) of the premiums and cost-sharing of
such a group health plan.
‘‘(ii) NO
FEDERAL
MATCHING
PAY-
MENTS.—For purposes of payment to
States under section 1903(a), no amounts
expended by the State under the program
during a fiscal year on behalf of an indi-
vidual enrolled under subparagraph (A)
may be included in the total amount ex-
pended during the fiscal year as medical
assistance under the State plan.
‘‘(5) 
OFFERING
OF
COVERAGE
THROUGH
OTHER PROGRAMS.—Nothing in this section shall be
construed as preventing a State which—
‘‘(A) does not operate a State health allow-
ance program under this section from assuring
that individuals in the State who are not of-
244
Title I, Subtitle H
fered coverage under an employer group health
plan are offered coverage under a health plan,
or
‘‘(B) does operate such a program from as-
suring that individuals in the State who are not
described in paragraph (1), (2), or (3) and who
are not offered coverage under an employer
group health plan are offered coverage under a
health plan other than through such program.’’.
PART 2—MEDICAID PROGRAM FLEXIBILITY
SEC. 1711. MODIFICATION OF FEDERAL REQUIREMENTS TO
ALLOW STATES MORE FLEXIBILITY IN CON-
TRACTING FOR COORDINATED CARE SERV-
ICES UNDER MEDICAID.
(a) IN GENERAL.—Section 1903(m) of the Social Se-
curity Act (42 U.S.C. 1396b(m)) is amended—
(1) by striking all that precedes paragraph (4)
and inserting the following:
‘‘(m) COORDINATED CARE.—
‘‘(1) PAYMENT
CONDITIONED
ON
COMPLI-
ANCE.—
‘‘(A) GENERAL RULE.—No payment shall
be made under this title to a State with respect
to expenditures incurred by it for payment to a
risk contracting entity or primary care case
245
Title I, Subtitle H
management entity (as defined in subparagraph
(B)), or with respect to an undertaking de-
scribed in paragraph (6), unless the State and
the entity or undertaking meet the applicable
requirements of this subsection. For purposes
of determining whether payment may be made
under this section, the Secretary may reject a
State’s determination of compliance with any
provision of this subsection.
‘‘(B) GENERAL
DEFINITIONS.—For pur-
poses of this title:
‘‘(i) RISK
CONTRACTING
ENTITY.—
The term ‘risk contracting entity’ means
an entity that has a contract with the
State agency under which the entity—
‘‘(I) provides or arranges for the
provision of health care items or serv-
ices to individuals eligible for medical
assistance under the State plan under
this title, and
‘‘(II) is at risk (as defined in
clause (iv)) for part or all of the cost
of such items or services furnished to
such individuals.
246
Title I, Subtitle H
‘‘(ii) PRIMARY
CARE
CASE
MANAGE-
MENT PROGRAM.—The term ‘primary care
case management program’ means a State
program under which individuals eligible
for medical assistance under the State plan
under this title are enrolled with primary
care case management entities, and are en-
titled to receive specified health care items
and services covered under such plan only
as arranged for and approved by such enti-
ties.
‘‘(iii) AT RISK.—An entity is ‘at risk’,
for purposes of this subparagraph, if it has
a contract with the State agency under
which it is paid a fixed amount for provid-
ing or arranging for the provision of speci-
fied health care items or services to an in-
dividual eligible for medical assistance and
enrolled with the entity, regardless of
whether such items or services are fur-
nished to such individual, and is liable for
all or part of the cost of furnishing such
items or services, regardless of whether or
the extent to which such cost exceeds such
fixed payment.
247
Title I, Subtitle H
‘‘(iv) PRIMARY CARE CASE MANAGE-
MENT
ENTITY.—The term ‘primary care
case management entity’ means a health
care provider (whether an individual or an
entity) that, under a State primary care
case management program meeting the re-
quirements of paragraph (7), has a con-
tract with the State agency under which
the entity arranges for or authorizes the
provision of health care items and services
to individuals eligible for medical assist-
ance under the State plan under this title,
but is not at risk (as defined in clause (iv))
for the cost of such items or services pro-
vided to such individuals.
‘‘(2) GENERAL REQUIREMENTS FOR RISK CON-
TRACTING ENTITIES.—
‘‘(A) FEDERAL
OR
STATE
QUALIFICA-
TION.—Subject to paragraph (3), a risk con-
tracting entity meets the requirements of this
subsection only if it either—
‘‘(i) is a qualified health maintenance
organization as defined in section 1310(d)
of the Public Health Service Act, as deter-
248
Title I, Subtitle H
mined by the Secretary pursuant to section
1312 of that Act, or
‘‘(ii) is an entity which the State
agency has determined—
‘‘(I) affords, to individuals eligi-
ble for medical assistance under the
State plan and enrolled with the en-
tity, access to health care items and
services furnished by the entity, with-
in the area served by the entity, at
least equivalent to the access such in-
dividuals would have to such health
care items and services in such area if
not enrolled with the entity, and
‘‘(II) has made adequate provi-
sion against the risk of insolvency,
and assures that individuals eligible
for medical assistance under this title
are not held liable for the entity’s
debts in case of the entity’s insol-
vency.
‘‘(B) INTERNAL
QUALITY
ASSURANCE.—
Subject to paragraph (3), a risk contracting en-
tity meets the requirements of this subsection
only if it has in effect an internal quality assur-
249
Title I, Subtitle H
ance program that meets the requirements of
paragraph (9).
‘‘(C) CONTRACT WITH STATE AGENCY.—
Subject to paragraph (3), a risk contracting en-
tity meets the requirements of this subsection
only if the entity has a written contract with
the State agency that provides—
‘‘(i) that the entity will comply with
all applicable provisions of this subsection;
‘‘(ii) for a payment methodology based
on experience rating or another actuarially
sound methodology approved by the Sec-
retary, which guarantees (as demonstrated
by such models or formulas as the Sec-
retary may approve) that payments to the
entity under the contract shall not exceed
100 percent of expenditures that would
have been made by the State agency in the
absence of the contract;
‘‘(iii) that the Secretary and the State
(or any person or organization designated
by either) shall have the right to audit and
inspect any books and records of the entity
(and of any subcontractor) that pertain—
250
Title I, Subtitle H
‘‘(I) to the ability of the entity to
bear the risk of potential financial
losses, or
‘‘(II) to services performed or de-
terminations 
of 
amounts 
payable
under the contract;
‘‘(iv) that in the entity’s enrollment,
reenrollment, or disenrollment of individ-
uals eligible for medical assistance under
this title and eligible to enroll, reenroll, or
disenroll with the entity pursuant to the
contract, the entity will not discriminate
among such individuals on the basis of
their health status or requirements for
health care services;
‘‘(v)(I) that individuals eligible for
medical assistance under the State plan
who have enrolled with the entity are per-
mitted to terminate such enrollment with-
out cause as of the beginning of the first
calendar month following a full calendar
month after the request is made for such
termination (or at such times as required
pursuant to paragraph (8)), and
251
Title I, Subtitle H
‘‘(II) for notification of each such in-
dividual, at the time of the individual’s en-
rollment, of the right to terminate enroll-
ment;
‘‘(vi) for reimbursement, either by the
entity or by the State agency, for medically
necessary services provided—
‘‘(I) to an individual eligible for
medical assistance under the State
plan and enrolled with the entity, and
‘‘(II) other than through the en-
tity because the services were imme-
diately required due to an unforeseen
illness, injury, or condition;
‘‘(vii) for disclosure of information in
accordance with paragraph (4);
‘‘(viii) in the case of an entity that
has entered into a contract with a Feder-
ally-qualified health center for the provi-
sion of services of such center—
‘‘(I) that rates of prepayment
from the State are adjusted to reflect
fully the rates of payment specified in
section 1902(a)(13)(E), and
252
Title I, Subtitle H
‘‘(II) that, at the election of such
center, payments made by the entity
to such center for services described
in section 1905(a)(2)(C) are made at
the rates of payment specified in sec-
tion 1902(a)(13)(E);
‘‘(ix) that any physician incentive plan
that the entity operates meets the require-
ments of section 1876(i)(8);
‘‘(x) for maintenance of sufficient pa-
tient encounter data to identify the physi-
cian who delivers services to patients; and
‘‘(xi) that the entity complies with the
requirement of section 1902(w) with re-
spect to each enrollee.
‘‘(3) EXCEPTIONS TO REQUIREMENTS FOR RISK
CONTRACTING
ENTITIES.—The 
requirements 
of
paragraph (2) (other than subparagraph (C)(viii))
do not apply to an entity that—
‘‘(A)(i) received a grant of at least
$100,000 in the fiscal year ending June 30,
1976, under section 329(d)(1)(A) or 330(d)(1)
of the Public Health Service Act, and for the
period beginning July 1, 1976, and ending on
the expiration of the period for which payments
253
Title I, Subtitle H
are to be made under this title, has been the re-
cipient of a grant under either such section;
and
‘‘(ii) provides to its enrollees, on a prepaid
capitation or other risk basis, all of the services
described in paragraphs (1), (2), (3), (4)(C),
and (5) of section 1905(a) and, to the extent
required by section 1902(a)(10)(D) to be pro-
vided under the State plan, the services de-
scribed in section 1905(a)(7);
‘‘(B) is a nonprofit primary health care en-
tity located in a rural area (as defined by the
Appalachian Regional Commission)—
‘‘(i) which received in the fiscal year
ending June 30, 1976, at least $100,000
(by grant, subgrant, or subcontract) under
the Appalachian Regional Development Act
of 1965), and
‘‘(ii) for the period beginning July 1,
1976, and ending on the expiration of the
period for which payments are to be made
under this title either has been the recipi-
ent of a grant, subgrant, or subcontract
under such Act or has provided services
under a contract (initially entered into dur-
254
Title I, Subtitle H
ing a year in which the entity was the re-
cipient of such a grant, subgrant, or sub-
contract) with a State agency under this
title on a prepaid capitation or other risk
basis; or
‘‘(C) which has contracted with the State
agency for the provision of services (but not in-
cluding inpatient hospital services) to persons
eligible for medical assistance under this title
on a prepaid risk basis prior to 1970.’’; and
(2) by adding after paragraph (6) the following
new paragraphs:
‘‘(7) GENERAL REQUIREMENTS FOR PRIMARY
CARE CASE MANAGEMENT.—A State that elects in
its State plan under this title to implement a pri-
mary care case management program under this
subsection shall include in the plan methods for the
selection and monitoring of participating primary
care case management entities to ensure that—
‘‘(A) the numbers, geographic locations,
hours of operation, and other relevant charac-
teristics of such entities are sufficient to afford
individuals eligible for medical assistance rea-
sonable access to and choice among such enti-
ties;
255
Title I, Subtitle H
‘‘(B) such entities and their professional
personnel are qualified to provide health care
case management services, through methods in-
cluding ongoing monitoring of compliance with
applicable requirements for licensing of health
care providers, providing training and certifi-
cation of primary care case managers, and pro-
viding information and technical assistance; and
‘‘(C) such entities are making timely and
appropriate decisions with respect to enrollees’
need for health care items and services, and are
giving timely approval and referral to providers
of adequate quality where such items and serv-
ices are determined to be medically necessary.
‘‘(8) STATE OPTIONS WITH RESPECT TO EN-
ROLLMENT AND DISENROLLMENT.—
‘‘(A) 
MANDATORY
ENROLLMENT
OP-
TION.—A State plan may require an individual
eligible for medical assistance under the State
plan (other than a medicare qualified bene-
ficiary) to enroll with a risk contracting entity
or primary care case management entity, with-
out regard to the requirement of section
1902(a)(1) (concerning statewideness), the re-
quirements of section 1902(a)(10)(B) (concern-
256
Title I, Subtitle H
ing comparability of benefits), or the require-
ments of section 1902(a)(23) (concerning free-
dom of choice of provider), if the individual is
permitted a choice—
‘‘(i) between or among two or more
risk contracting entities,
‘‘(ii) between a risk contracting entity
and a primary care case management en-
tity, or
‘‘(iii) between or among two or more
primary care case management entities.
‘‘(B)(i) 
RESTRICTIONS
ON
DISEN-
ROLLMENT
WITHOUT
CAUSE.—A State plan
may restrict the period in which individuals en-
rolled with a qualifying risk contracting entity
(as defined in clause (ii)) may terminate such
enrollment without cause to the first month of
each period of enrollment (as defined in clause
(iii)), but only if the State provides notification,
at least once during each such enrollment pe-
riod, to individuals enrolled with such entity of
the right to terminate such enrollment and the
restriction on the exercise of this right. Such
restriction shall not apply to requests for termi-
nation of enrollment for cause.
257
Title I, Subtitle H
‘‘(ii) For purposes of this subparagraph,
the term ‘qualifying risk contracting entity’
means a risk contracting entity that is—
‘‘(I) a qualified health maintenance
organization as defined in section 1310(d)
of the Public Health Service Act;
‘‘(II) an eligible organization with a
contract under section 1876;
‘‘(III) an entity that is receiving (and
has received during the previous 2 years)
a grant of at least $100,000 under section
329(d)(1)(A) or 330(d)(1) of the Public
Health Service Act;
‘‘(IV) an entity that is receiving (and
has received during the previous 2 years)
at least $100,000 (by grant, subgrant, or
subcontract) under the Appalachian Re-
gional Development Act of 1965;
‘‘(V) a program pursuant to an under-
taking described in paragraph (6) in which
at least 25 percent of the membership en-
rolled on a prepaid basis are individuals
who (I) are not insured for benefits under
part B of title XVIII or eligible for medical
assistance under this title, and (II) (in the
258
Title I, Subtitle H
case of such individuals whose prepay-
ments are made in whole or in part by any
government entity) had the opportunity at
the time of enrollment in the program to
elect other coverage of health care costs
that would have been paid in whole or in
part by any governmental entity; or
‘‘(VI) an entity that, on the date of
enactment of this provision, had a contract
with the State agency under a waiver
under section 1115 or 1915(b) and was
not subject to a requirement under this
subsection to permit disenrollment without
cause.
‘‘(iii) For purposes of this subparagraph,
the term ‘period of enrollment’ means—
‘‘(I) a period not to exceed 6 months
in duration, or
‘‘(II) a period not to exceed one year
in duration, in the case of a State that, on
the effective date of this subparagraph,
had in effect a waiver under section 1115
of requirements under this title under
which the State could establish a 1-year
259
Title I, Subtitle H
minimum period of enrollment with risk
contracting entities.
‘‘(C) REENROLLMENT
OF
INDIVIDUALS
WHO REGAIN ELIGIBILITY.—In the case of an
individual who—
‘‘(i) in a month is eligible for medical
assistance under the State plan and en-
rolled with a risk contracting entity with a
contract under this subsection,
‘‘(ii) in the next month (or next 2
months) is not eligible for such medical as-
sistance, but
‘‘(iii) in the succeeding month is again
eligible for such benefits,
the State plan may enroll the individual for
that succeeding month with such entity, if the
entity continues to have a contract with the
State agency under this subsection.
‘‘(9) REQUIREMENTS FOR INTERNAL QUALITY
ASSURANCE PROGRAMS.—The requirements for an
internal quality assurance program of a risk con-
tracting entity are that program is written and the
program—
‘‘(A) specifies a systematic process includ-
ing ongoing monitoring, corrective action, and
260
Title I, Subtitle H
other appropriate activities to achieve specified
and measurable goals and objectives for quality
of care, and including annual evaluation of the
program;
‘‘(B) identifies the organizational units re-
sponsible for performing specific quality assur-
ance functions, and ensure that they are ac-
countable to the governing body of the entity
and that they have adequate supervision, staff,
and other necessary resources to perform these
functions effectively;
‘‘(C) if any quality assistance functions are
delegated to other entities, ensures that the risk
contracting entity remains accountable for all
quality assurance functions, and has mecha-
nisms to ensure that all quality assurance ac-
tivities are carried out;
‘‘(D) includes methods to ensure that phy-
sicians and other health care professionals
under contract with the entity are qualified to
perform the services they provide, and that
these qualifications are ensured through appro-
priate credentialing and recredentialing proce-
dures;
261
Title I, Subtitle H
‘‘(E) includes policies addressing enrollee
rights and responsibilities, including grievance
mechanisms and mechanisms to inform enroll-
ees about access to and use of services provided
by the entity;
‘‘(F) provides for continuous monitoring of
the delivery of health care, including—
‘‘(i) identification of clinical areas to
be monitored,
‘‘(ii) use of quality indicators and
standards for assessing care delivered, in-
cluding availability and accessibility of
care,
‘‘(iii) monitoring, through use of epi-
demiological data or chart review, the care
of individuals, as appropriate, and patterns
of care overall, and
‘‘(iv) implementation of corrective ac-
tions; and
‘‘(G) meets any other requirements pre-
scribed by the Secretary after consultation with
States.
‘‘(10) INDEPENDENT REVIEW AND QUALITY AS-
SURANCE.—
262
Title I, Subtitle H
‘‘(A) STATE GRIEVANCE PROCEDURE.—A
State contracting with a risk contracting entity
or primary care case management entity under
this subsection shall provide for a grievance
procedure for enrollees of such entity with at
least the following elements:
‘‘(i) A toll-free telephone number for
enrollee questions and grievances.
‘‘(ii) A State-operated enrollee griev-
ance procedure.
‘‘(iii) Periodic notification of enrollees
of their rights with respect to such entity
or program.
‘‘(iv) Periodic sample reviews of griev-
ances registered with such entity or pro-
gram or with the State.
‘‘(v) Periodic survey and analysis of
enrollee satisfaction with such entity or
program.
‘‘(B) STATE
MONITORING
OF
RISK
CON-
TRACTING ENTITIES’ QUALITY ASSURANCE PRO-
GRAMS.—A State contracting with a risk con-
tracting entity under this subsection shall peri-
odically review such entity’s quality assurance
263
Title I, Subtitle H
program to ensure that it meets the require-
ments of paragraph (9).
‘‘(C) EXTERNAL
INDEPENDENT
REVIEW
OF INTERNAL QUALITY ASSURANCE.—A State
contracting with a risk contracting entity under
this subsection shall provide for annual external
independent review (by a utilization control and
peer review organization with a contract under
section 1153, or another organization unaffili-
ated with the State government approved by the
Secretary) of such entity’s internal quality as-
surance activities. Such independent review
shall include—
‘‘(i) review of the entity’s medical
care, through sampling of medical records
or other appropriate methods, for indica-
tions of inappropriate utilization and treat-
ment,
‘‘(ii) review of enrollee inpatient and
ambulatory data, through sampling of
medical records or other appropriate meth-
ods, to determine quality trends,
‘‘(iii) review of the entity’s internal
quality assurance activities, and
264
Title I, Subtitle H
‘‘(iv) notification of the entity and the
State, and appropriate followup activities,
when the review under this subparagraph
indicates inappropriate care or treat-
ment.’’.
(b) STATE OPTION TO GUARANTEE MEDICAID ELI-
GIBILITY.—Section 1902(e)(2) of such Act (42 U.S.C.
1396a(e)(2)) is amended—
(A) in subparagraph (A), by striking all
that precedes ‘‘(but for this paragraph)’’ and
inserting ‘‘In the case of an individual who is
enrolled—
‘‘(i) with a risk contracting entity (as
defined in section 1903(m)(1)(B)(i)) re-
sponsible for the provision of inpatient hos-
pital services and any other service de-
scribed in paragraphs (2), (3), (4), (5),
and (7) of section 1905(a),
‘‘(ii) with any risk contracting entity
(as so defined) in a State that, on the ef-
fective date of this provision, had in effect
a waiver under section 1115 of require-
ments under this title under which the
State could extend eligibility for medical
assistance for enrollees of such entity, or
265
Title I, Subtitle H
‘‘(iii) with an eligible organization
with a contract under section 1876 and
who would’’, and
(B) in subparagraph (B), by striking ‘‘or-
ganization or’’ each place it appears.
(c) CONFORMING AMENDMENTS.—
(1) Section 1128(b)(6)(C)(i) of such Act (42
U.S.C. 1320a–7(b)(6)(C)(i)) is amended by striking
‘‘health maintenance organization’’ and inserting
‘‘risk contracting entity’’.
(2) Section 1902(a)(25)(A) of such Act (42
U.S.C. 1396a(a)(25)(A)), as amended by section
13622(a)(1) of the Omnibus Budget Reconciliation
Act of 1993, is amended by striking ‘‘health mainte-
nance organizations’’ and inserting ‘‘risk contracting
entities’’.
(3) Section 1902(a)(25)(H) of such Act (42
U.S.C. 1396a(a)(25)(H)), as added by section
13622(b)(3) of the Omnibus Budget Reconciliation
Act of 1993, is amended by striking ‘‘health mainte-
nance organization’’ and inserting ‘‘risk contracting
entity’’.
(4) Section 1902(a)(30)(C) of such Act (42
U.S.C. 1396a(a)(30)(C)) is amended by striking all
that precedes ‘‘with the results’’ and inserting ‘‘pro-
266
Title I, Subtitle H
vide for independent review and quality assurance of
entities with contracts under section 1903(m), in ac-
cordance with paragraph (10) of such section,’’.
(5) Section 1902(a)(57) of such Act (42 U.S.C.
1396a(a)(57)) is amended by striking ‘‘or health
maintenance organization’’ and inserting ‘‘or risk
contracting entity’’.
(6) Section 1902(a) of such Act (42 U.S.C.
1396a(a)), as amended by sections 13623(a),
13625(a), and 13631(a) of the Omnibus Budget
Reconciliation Act of 1993, is amended—
(A) by striking ‘‘and’’ at the end of para-
graph (61);
(B) by striking the period at the end of
paragraph (62) and inserting ‘‘; and’’; and
(C) by adding at the end the following new
paragraph:
‘‘(63) at State option, provide for a primary
care case management program in accordance with
section 1903(m)(7).’’.
(7) Section 1902(p)(2) of such Act (42 U.S.C.
1396a(p)(2)) is amended by striking ‘‘health mainte-
nance organization’’ and inserting ‘‘risk contracting
entity’’.
267
Title I, Subtitle H
(8) Section 1902(w) of such Act (42 U.S.C.
1396a(w)) is amended—
(A) in paragraph (1), by striking ‘‘section
1903(m)(1)(A)’’ 
and 
inserting 
‘‘section
1903(m)(2)(C)(xi)’’, and
(B) in paragraph (2)(E), by striking
‘‘health maintenance organization’’ and ‘‘the or-
ganization’’ and inserting ‘‘risk contracting en-
tity’’ and ‘‘the entity’’, respectively.
(9) Section 1903(k) of such Act (42 U.S.C.
1396b(k)) is amended by striking ‘‘health mainte-
nance organization’’ and inserting ‘‘risk contracting
entity’’.
(10) Section 1903(m)(4)(A) of such Act (42
U.S.C. 1396b(m)(4)(A)) is amended—
(A) in the first sentence, by striking ‘‘Each
health maintenance organization’’ and inserting
‘‘Each risk contracting entity’’,
(B) in the first sentence, by striking ‘‘the
organization’’ each place it appears and insert-
ing ‘‘the entity’’, and
(C) in the second sentence, by striking ‘‘an
organization’’ and ‘‘the organization’’ and in-
serting ‘‘a risk contracting entity’’ and ‘‘the
risk contracting entity’’, respectively.
268
Title I, Subtitle H
(11) Section 1903(m)(4)(B) of such Act (42
U.S.C. 1396b(m)(4)(B)) is amended by striking ‘‘or-
ganization’’ and inserting ‘‘risk contracting entity’’.
(12) Section 1903(m)(5) of such Act (42
U.S.C. 1396b(m)(5)) is amended in paragraphs
(A)(iii) and (B)(ii) by striking ‘‘organization’’ and
inserting ‘‘entity’’.
(13) Section 1903(o) (42 U.S.C. 1396b(o)), as
amended by section 13622(a)(2) of the Omnibus
Budget Reconciliation Act of 1993, is amended by
striking ‘‘health maintenance organization’’ and in-
serting ‘‘risk contracting entity’’.
(14) Section 1903(w)(7)(A)(viii) of such Act
(42 U.S.C. 1396b(w)(7)(A)(viii)) is amended by
striking ‘‘health maintenance organizations (and
other organizations with contracts under section
1903(m))’’ and inserting ‘‘risk contracting entities
with contracts under section 1903(m)’’.
(15) Section 1905(a) of such Act (42 U.S.C.
1396d(a)) is amended, in the matter preceding
clause (i), by inserting ‘‘(which may be on a prepaid
capitation or other risk basis)’’ after ‘‘payment’’ the
first place it appears.
(16) Section 1908(b) of such Act, as added by
section 13623(b) of the Omnibus Budget Reconcili-
269
Title I, Subtitle H
ation Act of 1993, is amended by striking ‘‘health
maintenance organization’’ and inserting ‘‘risk con-
tracting entity’’.
(17) Section 1916(b)(2)(D) of such Act (42
U.S.C. 1396o(b)(2)(D)) is amended by striking
‘‘health maintenance organization’’ and inserting
‘‘risk contracting entity’’.
(18) Section 1925(b)(4)(D)(iv) of such Act (42
U.S.C. 1396r–6(b)(4)(D)(iv)) is amended—
(A) in the heading, by striking ‘‘HMO’’ and
inserting ‘‘RISK CONTRACTING ENTITY’’,
(B) by striking ‘‘health maintenance orga-
nization’’ and inserting ‘‘risk contracting en-
tity’’ each place it appears, and
(C) by striking ‘‘section 1903(m)(1)(A)’’
and inserting ‘‘section 1903(m)(1)(B)(i)’’.
(19) Paragraphs (1) and (2) of section 1926(a)
of such Act (42 U.S.C. 1396r–7(a)) are each amend-
ed by striking ‘‘health maintenance organizations’’
and inserting ‘‘risk contracting entities’’.
(20) Section 1927 of such Act (42 U.S.C.
1396s) is amended—
(A) in subsection (c)(1)(C)(i), as amended
by section 13602(a)(1) of the Omnibus Budget
Reconciliation Act of 1993, by striking ‘‘health
270
Title I, Subtitle H
maintenance organization’’ and inserting ‘‘risk
contracting entity’’, and
(B) in subsection (j)(1), by striking ‘‘***
Health Maintenance Organizations, including
those organizations’’ and inserting ‘‘risk con-
tracting entities’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall become effective with respect to calendar
quarters beginning on or after January 1, 1995.
SEC. 1712. PERIOD OF CERTAIN WAIVERS.
(a) IN GENERAL.—Section 1915(h) of the Social Se-
curity Act (42 U.S.C. 1396n(h)) is amended by striking
‘‘No waiver’’ and all that follows through ‘‘unless the Sec-
retary’’ and inserting ‘‘A waiver under this section (other
than under subsection (c), (d), or (e)) shall be for an ini-
tial term of 3 years and, upon the request of a State, shall
be extended for additional 5 year periods unless the Sec-
retary’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to waivers pursuant to applica-
tions which are approved, and with respect to continu-
ations of waivers for which requests are made, later than
30 days after the date of the enactment of this Act.
271
Title I, Subtitle H
SEC. 1713. ELIMINATION OF DUPLICATIVE PEDIATRIC IM-
MUNIZATION PROGRAM.
Effective as if included in the enactment of the 13621
of the Omnibus Budget Reconciliation Act of 1993, title
XIX of the Social Security Act is amended as follows:
(1) Section 1902(a) is amended—
(A) by adding ‘‘and’’ at the end of para-
graph (60),
(B) by striking ‘‘; and’’ at the end of para-
graph (61) and inserting a period, and
(C) by striking paragraph (62).
(2) Section 1928 is repealed.
(3) Section 1903(i) is amended—
(A) by inserting ‘‘or’’ at the end of para-
graph (12),
(B) by striking the semicolon at the end of
paragraph (13) and inserting a period, and
(C) by striking paragraphs (14) and (15).
(4) Section 1902(a)(32)(D) is amended by
striking ‘‘before October 1, 1994’’.
(5) Section 1902(a) is amended—
(A) in paragraph (11)(B)—
(i) by inserting ‘‘and’’ before ‘‘(ii)’’,
and
(ii) by striking ‘‘to the individual
under section 1903, and
272
Title I, Subtitle H
(iii) providing for coordination of in-
formation and education on pediatric vac-
cinations and delivery of immunization
services’’ and inserting ‘‘to him under sec-
tion 1903’’;
(B) in paragraph (11)(C), by striking ‘‘,
including the provision of information and edu-
cation on pediatric vaccinations and the delivery
of immunization services,’’ and
(C) in paragraph (43)(A), by striking ‘‘and
the need for age-appropriate immunizations
against vaccine-preventable diseases’’.
(6) Section 1905(r)(1) is amended—
(A) in subparagraph (A)(i), by striking
‘‘and, with respect to immunizations under sub-
paragraph (B)(iii), in accordance with the
schedule referred to in section 1928(c)(2)(B)(i)
for pediatric vaccines’’; and
(B) in subparagraph (B)(iii), by striking
‘‘(according to the schedule referred to in sec-
tion 1928(c)(2)(B)(i) for pediatric vaccines)’’.
273
Title I, Subtitle H
PART 3—MEDICAID DISPROPORTIONATE SHARE
ADJUSTMENT
SEC. 1721. 25 PERCENT REDUCTION IN AMOUNT OF PAY-
MENT ADJUSTMENTS FOR DISPROPORTION-
ATE SHARE HOSPITALS.
(a) IN GENERAL.—Section 1923 of the Social Secu-
rity Act (42 U.S.C. 1396r–4) is amended by adding at
the end the following new subsection:
‘‘(h) REDUCTION IN FEDERAL FINANCIAL PARTICI-
PATION
FOR
DISPROPORTIONATE
SHARE
ADJUST-
MENTS.—Notwithstanding any other provision of this sec-
tion, the amount of payments under section 1903(a) with
respect to any payment adjustment made under this sec-
tion for hospitals in a State for quarters in a fiscal year
shall not exceed—
‘‘(1) for quarters in fiscal years 1995 and 1996,
88 percent of the amount otherwise determined
under subsection (f); and
‘‘(2) for quarters in fiscal year 1997 and each
succeeding fiscal year, 75 percent of the amount oth-
erwise determined under subsection (f).’’.
(b) CONFORMING AMENDMENT.—Section 1923(c) of
such Act (42 U.S.C. 1396r–4(c)) is amended in the matter
preceding paragraph (1) by striking ‘‘(f) and (g)’’ and in-
serting ‘‘(f), (g), and (h)’’.
274
Title I, Subtitle I
(c) EFFECTIVE DATE.—The amendments made by
subsections (a) and (b) shall apply to quarters in fiscal
years beginning on or after October 1, 1996.
Subtitle I—Remedies and Enforce-
ment With Respect to Group
Health Plans
SEC. 1801. CLAIMS PROCEDURE FOR GROUP HEALTH
PLANS.
(a) IN GENERAL.—Section 503 of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 1133)
is amended—
(1) by inserting ‘‘(a) IN GENERAL.—’’ after
‘‘SEC. 503.’’; and
(2) by adding at the end the following new sub-
section:
‘‘(b) SPECIAL RULES FOR GROUP HEALTH PLANS.—
‘‘(1) IN GENERAL.—In addition to meeting the
requirements of subsection (a), every group health
plan shall afford a reasonable opportunity to any
participant or beneficiary, whose request for a
preauthorization, an emergency preauthorization, a
utilization review determination, or an emergency
utilization review determination has been denied, for
a full and fair review by the appropriate fiduciary of
the decision denying the request.
275
Title I, Subtitle I
‘‘(2) TIME LIMITS FOR DECIDING CLAIMS.—
‘‘(A) INITIAL DECISIONS.—A group health
plan shall issue an initial approval or denial of
any claim for medical, surgical, or hospital ben-
efits not later than 30 days after its filing com-
pletion date. Failure to approve or deny such a
claim within such 30-day period shall be treated
as a denial of the claim.
‘‘(B) REVIEWS OF INITIAL DECISIONS.—
Every review by a fiduciary required under
paragraph (1) of an initial denial under sub-
paragraph (A) shall be completed not later than
30 days after the review filing date. Failure to
issue a decision affirming, reversing, or modify-
ing the initial denial shall be treated as a final
decision denying the claim.
‘‘(3) TIME LIMIT FOR DECIDING REQUESTS FOR
PREAUTHORIZATION.—
‘‘(A) GENERAL RULE.—Except as provided
in subparagraph (B):
‘‘(i) INITIAL DECISIONS.—If a request
for preauthorization is required under the
terms of a group health plan, the plan
shall approve or deny any such request not
later than 30 days after its filing comple-
276
Title I, Subtitle I
tion date. Failure to approve or deny such
a request within such 30-day period shall
be treated as a denial of the request.
‘‘(ii) REVIEWS
OF
INITIAL
DECI-
SIONS.—Every review by a fiduciary re-
quired under paragraph (1) of an initial
denial under clause (i) shall be completed
not later than 30 days after the review fil-
ing date. Failure to issue a decision affirm-
ing, reversing, or modifying the initial de-
nial within such 30-day period shall be
treated as a final decision denying the re-
quest.
‘‘(B) 
REQUESTS
FOR
EMERGENCY
PREAUTHORIZATION.—
‘‘(i) INITIAL DECISIONS.—In any case
in which a request for preauthorization re-
quired under the terms of a group health
plan 
is 
a 
request 
for 
emergency
preauthorization, the plan shall approve or
deny any such request not later than 10
days after its filing completion date (24
hours after such date in cases involving
emergency medical care). Failure to ap-
prove or deny such a request within such
277
Title I, Subtitle I
10-day period (or 24-hour period) shall be
treated as a denial of the request.
‘‘(ii) REVIEWS
OF
INITIAL
DECI-
SIONS.—Every review by a fiduciary re-
quired under paragraph (1) of an initial
denial under clause (i) shall be completed
not later than 10 days after the review fil-
ing date (24 hours after such date in cases
involving emergency medical care). Failure
to issue a decision affirming, reversing, or
modifying the initial denial within such 10-
day period (or 24-hour period) shall be
treated as a final decision denying the re-
quest.
‘‘(4) TIME LIMIT FOR DECIDING REQUESTS FOR
UTILIZATION REVIEW DETERMINATIONS.—
‘‘(A) GENERAL RULE.—Except as provided
in subparagraph (B):
‘‘(i) INITIAL DECISIONS.—If a request
for a utilization review determination is re-
quired under the terms of a group health
plan, the plan shall approve or deny any
such request not later than 30 days after
its filing completion date. Failure to ap-
prove or deny such a request within such
278
Title I, Subtitle I
30-day period shall be treated as a denial
of the request.
‘‘(ii) REVIEWS
OF
INITIAL
DECI-
SIONS.—Every review by a fiduciary re-
quired under paragraph (1) of an initial
denial under clause (i) shall be completed
not later than 30 days after the review fil-
ing date. Failure to issue a decision affirm-
ing, reversing, or modifying the initial de-
nial within such 30-day period shall be
treated as a final decision denying the re-
quest.
‘‘(B) REQUESTS FOR EMERGENCY UTILIZA-
TION REVIEW DETERMINATIONS.—
‘‘(i) INITIAL DECISIONS.—In any case
in which a request for a utilization review
determination required under the terms of
a group health plan is a request for an
emergency utilization review determination,
the plan shall approve or deny any such re-
quest not later than 10 days after its filing
completion date (24 hours after such date
in cases involving emergency medical care).
Failure to approve or deny such a request
within such 10-day period (or 24-hour pe-
279
Title I, Subtitle I
riod) shall be treated as a denial of the re-
quest.
‘‘(ii) REVIEWS
OF
INITIAL
DECI-
SIONS.—Every review by a fiduciary re-
quired under paragraph (1) of an initial
denial under clause (i) shall be completed
not later than 10 days after the review fil-
ing date (24 hours after such date in cases
involving emergency medical care). Failure
to issue a decision affirming, reversing, or
modifying the initial denial within such 10-
day period (or 24-hour period) shall be
treated as a final decision denying the re-
quest.
‘‘(5) DEFINITIONS.—For purposes of this sub-
section:
‘‘(A) CLAIM FOR MEDICAL, SURGICAL, OR
HOSPITAL
BENEFITS.—The term ‘claim for
medical, surgical, or hospital benefits’ means a
request for payment by a group health plan of
such benefits made by or on behalf of a partici-
pant or beneficiary after the expense for medi-
cal, surgical, or hospital care has been incurred.
‘‘(B) UTILIZATION
REVIEW
DETERMINA-
TION.—The term ‘utilization review determina-
280
Title I, Subtitle I
tion’ means a determination under a group
health plan solely that proposed medical, sur-
gical, or hospital care is medically necessary (as
defined in section 1131(7) of the Health Secu-
rity Act). Unless otherwise expressly provided
under the terms of the plan, any such deter-
mination shall not by itself constitute a guaran-
tee that benefits under the plan will be pro-
vided.
‘‘(C) 
PREAUTHORIZATION.—The 
term
‘preauthorization’ means a determination under
a group health plan that proposed medical, sur-
gical, or hospital care meets the plan’s terms
and conditions of coverage. Such a determina-
tion shall constitute a guarantee that benefits
under the plan will be provided.
‘‘(D) 
REQUEST
FOR
PREAUTHOR-
IZATION.—The 
term 
‘request 
for
preauthorization’ 
means 
a 
request 
for
preauthorization by a group health plan of med-
ical, surgical, or hospital benefits made by or on
behalf of a participant or beneficiary before the
expense for such care has been incurred.
‘‘(E) 
REQUEST
FOR
EMERGENCY
PREAUTHORIZATION.—The term ‘request for
352
Title II, Subtitle B
Federal Acquisition Regulation), any non-identifiable
health information, including non-identifiable health
information that is derived from protected health in-
formation, that—
(A) is held by the service or may be ob-
tained by the service under paragraph (2) or
subsection (b);
(B) consists of data elements that are sub-
ject to a standard under subpart A; and
(C) is requested by the agency to fulfill a
requirement under this Act.
(2) CERTAIN INFORMATION AVAILABLE AT LOW
COST.—If a health information protection service re-
quires health information consisting of data elements
that are subject to a standard under subpart A from
a plan sponsor or a health provider in order to com-
ply with a request made by a Federal or State agen-
cy under paragraph (1), the sponsor or provider
shall make such information available to such orga-
nization for a charge that does not exceed the rea-
sonable cost of transmitting the information.
(b) PROCUREMENT RULE FOR INFORMATION PRO-
TECTION SERVICES.—A health information protection
service that makes non-identifiable health information
available to a Federal or State agency under subsection
614
Title III, Subtitle B
plies with the standards established under section
2701(a).
‘‘(g) PENALTIES.—Any agent who sells, offers for
sale, or issues a long-term care insurance policy in viola-
tion of this section may be imprisoned not more than 5
years, or fined in accordance with title 18, United States
Code, and, in addition, is subject to a civil money penalty
of not to exceed $15,000 for each such violation. Any asso-
ciation or its subsidiary or carrier that sells, offers for
sale, or issues a long-term care insurance policy in viola-
tion of this section may be fined in accordance with title
18, United States Code, and in addition, is subject to a
civil money penalty of not to exceed $25,000 for each vio-
lation.
‘‘(h) AGENT TRAINING
AND CERTIFICATION RE-
QUIREMENTS.—The NAIC, shall establish requirements
for long-term care insurance agent training and certifi-
cation that—
‘‘(1) specify requirements for training insurance
agents who desire to sell or offer for sale long-term
care insurance policies; and
‘‘(2) specify procedures for certifying agents
who have completed such training and who are as
qualified to sell or offer for sale long-term care in-
surance policies.