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(2) a State may not prohibit or limit a network
plan from limiting coverage of services to those pro-
vided by a participating provider;
(3) a State may not prohibit or limit the nego-
tiation of rates and forms of payments for providers
under a network plan;
(4) a State may not prohibit or limit a network
plan from limiting the number of participating pro-
viders;
(5) a State may not prohibit or limit a network
plan from requiring that services be provided (or au-
thorized) by a practitioner selected by the enrollee
from a list of available participating providers; and
(6) a State may not prohibit or limit the cor-
porate practice of medicine.
(b) DEFINITIONS.—In this section:
(1) NETWORK
PLAN.—The term ‘‘network
plan’’ means an AHP—
(A) which—
(i) limits coverage of the uniform set
of effective benefits to those provided by
participating providers, or
(ii) provides, with respect to such
services provided by persons who are not
participating providers, for cost-sharing
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which are in excess of those permitted
under the uniform set of effective benefits
for participating providers;
(B) which has a sufficient number and dis-
tribution of participating providers to assure
that the uniform set of effective benefits (i) is
available and accessible to each enrollee, within
the area served by the plan, with reasonable
promptness and in a manner which assures con-
tinuity, and (ii) when medically necessary, is
available and accessible twenty-four hours a day
and seven days a week; and
(C) which provides benefits for the uniform
set of effective benefits not furnished by partici-
pating providers if the services are medically
necessary and immediately required because of
an unforeseen illness, injury, or condition.
(2) 
PARTICIPATING
PROVIDER.—The 
term
‘‘participating provider’’ means an entity or individ-
ual which provides, sells, or leases health care serv-
ices under a contract with a network plan, which
contract does not permit—
(A) cost-sharing in excess of the cost-shar-
ing permitted under the uniform set of effective
benefits, and
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(B) any enrollee charges (for such services
covered under such set) in excess of such cost-
sharing.
SEC. 1223. PREEMPTION OF STATE LAWS RESTRICTING UTI-
LIZATION REVIEW PROGRAMS.
(a) IN GENERAL.—Effective January 1, 1995, no
State law or regulation shall prohibit or regulate activities
under a utilization review program (as defined in sub-
section (b)).
(b) UTILIZATION REVIEW PROGRAM DEFINED.—In
this section, the term ‘‘utilization review program’’ means
a system of reviewing the medical necessity and appro-
priateness of patient services (which may include inpatient
and outpatient services) using specified guidelines. Such
a system may include preadmission certification, the appli-
cation of practice guidelines, continued stay review, dis-
charge planning, preauthorization of ambulatory proce-
dures, and retrospective review.
PART 3—ANTITRUST PROVISIONS
SEC. 1231. PUBLICATION OF GUIDELINES FOR ACCOUNT-
ABLE HEALTH PLANS.
(a) IN GENERAL.—The President shall provide for
the development and publication of explicit guidelines on
the application of Federal antitrust laws to AHPs. The
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guidelines shall be designed to facilitate AHP development
and operation, consistent with the Federal antitrust laws.
(b) REVIEW PROCESS.—The Attorney General shall
establish a review process under which an AHP (or organi-
zation that proposes to establish an AHP) may obtain a
prompt opinion from the Department of Justice on the
plan’s conformity with the Federal antitrust laws.
(c) ANTITRUST LAWS DEFINED.—In this section, the
term ‘‘antitrust laws’’ has the meaning given it in sub-
section (a) of the first section of the Clayton Act (15
U.S.C. 12(a)), except that such term includes section 5
of the Federal Trade Commission Act (15 U.S.C. 45) to
the extent such section applies to unfair methods of com-
petition.
SEC. 1232. ISSUANCE OF HEALTH CARE CERTIFICATES OF
PUBLIC ADVANTAGE.
(a) ISSUANCE AND EFFECT OF CERTIFICATE.—The
Attorney General, after consultation with the Secretary,
shall issue in accordance with this section a certificate of
public advantage to each eligible health care joint venture
that complies with the requirements in effect under this
section on or after the expiration of the 1-year period that
begins on the date of the enactment of this Act (without
regard to whether or not the Attorney General has pro-
mulgated regulations to carry out this section by such
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date). Such venture, and the parties to such venture, shall
not be liable under any of the antitrust laws for conduct
described in such certificate and engaged in by such ven-
ture if such conduct occurs while such certificate is in ef-
fect.
(b) REQUIREMENTS APPLICABLE TO ISSUANCE OF
CERTIFICATES.—
(1) STANDARDS
TO
BE
MET.—The Attorney
General shall issue a certificate to an eligible health
care joint venture if the Attorney General finds
that—
(A) the benefits that are likely to result
from carrying out the venture outweigh the re-
duction in competition (if any) that is likely to
result from the venture, and
(B) such reduction in competition is rea-
sonably necessary to obtain such benefits.
(2) FACTORS TO BE CONSIDERED.—
(A) WEIGHING OF BENEFITS AGAINST RE-
DUCTION
IN
COMPETITION.—For purposes of
making the finding described in paragraph
(1)(A), the Attorney General shall consider
whether the venture is likely —
(i) to maintain or to increase the
quality of health care,
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(ii) to increase access to health care,
(iii) to achieve cost efficiencies that
will be passed on to health care consumers,
such as economies of scale, reduced trans-
action costs, and reduced administrative
costs,
(iv) to preserve the operation of
health care facilities located in underserved
geographical areas,
(v) to improve utilization of health
care resources, and
(vi) to reduce inefficient health care
resource duplication.
(B) NECESSITY OF REDUCTION IN COM-
PETITION.—For purposes of making the finding
described in paragraph (1)(B), the Attorney
General shall consider—
(i) the ability of the providers of
health care services that are (or likely to
be) affected by the health care joint ven-
ture and the entities responsible for mak-
ing payments to such providers to nego-
tiate societally optimal payment and serv-
ice arrangements,
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(ii) the effects of the health care joint
venture on premiums and other charges
imposed by the entities described in clause
(i), and
(iii) the availability of equally effi-
cient, less restrictive alternatives to achieve
the benefits that are intended to be
achieved by carrying out the venture.
(c) ESTABLISHMENT
OF CRITERIA
AND PROCE-
DURES.—Subject to subsections (d) and (e), not later than
1 year after the date of the enactment of this Act, the
Attorney General and the Secretary shall establish jointly
by rule the criteria and procedures applicable to the issu-
ance of certificates under subsection (a). The rules shall
specify the form and content of the application to be sub-
mitted to the Attorney General to request a certificate,
the information required to be submitted in support of
such application, the procedures applicable to denying and
to revoking a certificate, and the procedures applicable to
the administrative appeal (if such appeal is authorized by
rule) of the denial and the revocation of a certificate. Such
information may include the terms of the health care joint
venture (in the case of a venture in existence as of the
time of the application) and implementation plan for the
joint venture.
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(d) ELIGIBLE HEALTH CARE JOINT VENTURE.—To
be an eligible health care joint venture for purposes of this
section, a health care joint venture shall submit to the At-
torney General an application that complies with the rules
in effect under subsection (c) and that includes—
(1) an agreement by the parties to the venture
that the venture will not foreclose competition by en-
tering into contracts that prevent health care provid-
ers from providing health care in competition with
the venture,
(2) an agreement that the venture will submit
to the Attorney General annually a report that de-
scribes the operations of the venture and informa-
tion regarding the impact of the venture on health
care and on competition in health care, and
(3) an agreement that the parties to the ven-
ture will notify the Attorney General and the Sec-
retary of the termination of the venture not later
than 30 days after such termination occurs.
(e) REVIEW OF APPLICATIONS FOR CERTIFICATES.—
Not later than 30 days after an eligible health care joint
venture submits to the Attorney General an application
that complies with the rules in effect under subsection (c)
and with subsection (d), the Attorney General shall issue
or deny the issuance of such certificate. If, before the expi-
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ration of such 30-day period, the Attorney General fails
to issue or deny the issuance of such certificate, the Attor-
ney General shall be deemed to have issued such certifi-
cate.
(f) REVOCATION OF CERTIFICATE.—Whenever the
Attorney General finds that a health care joint venture
with respect to which a certificate is in effect does not
meet the standards specified in subsection (b), the Attor-
ney General shall revoke such certificate.
(g) WRITTEN REASONS; JUDICIAL REVIEW.—
(1) DENIAL
AND
REVOCATION
OF
CERTIFI-
CATES.—If the Attorney General denies an applica-
tion for a certificate or revokes a certificate, the At-
torney General shall include in the notice of denial
or revocation a statement of the reasons relied upon
for the denial or revocation of such certificate.
(2) JUDICIAL REVIEW.—
(A) AFTER
ADMINISTRATIVE
PROCEED-
ING.—(i) If the Attorney General denies an ap-
plication submitted or revokes a certificate is-
sued under this section after an opportunity for
hearing on the record, then any party to the
health care joint venture involved may com-
mence a civil action, not later than 60 days
after receiving notice of the denial or revoca-
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tion, in an appropriate district court of the
United States for review of the record of such
denial or revocation.
(ii) As part of the Attorney General’s an-
swer, the Attorney General shall file in such
court a certified copy of the record on which
such denial or revocation is based. The findings
of fact of the Attorney General may be set aside
only if found to be unsupported by substantial
evidence in such record taken as a whole.
(B) DENIAL OR REVOCATION WITHOUT AD-
MINISTRATIVE
PROCEEDING.—If the Attorney
General denies an application submitted or re-
vokes a certificate issued under this section
without an opportunity for hearing on the
record, then any party to the health care joint
venture involved may commence a civil action,
not later than 60 days after receiving notice of
the denial or revocation, in an appropriate dis-
trict court of the United States for de novo re-
view of such denial or revocation.
(h) EXEMPTION.—A person shall not be liable under
any of the antitrust laws for conduct necessary—
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(1) to prepare, agree to prepare, or attempt to
agree to prepare an application to request a certifi-
cate under this section, or
(2) to attempt to enter into any health care
joint venture with respect to which such a certificate
is in effect.
(i) DEFINITIONS.—In this section:
(1) The term ‘‘antitrust laws’’—
(A) has the meaning given it in subsection
(a) of the first section of the Clayton Act (15
U.S.C. 12(a)), except that such term includes
section 5 of the Federal Trade Commission Act
(15 U.S.C. 45) to the extent such section ap-
plies to unfair methods of competition; and
(B) includes any State law similar to the
laws referred to in subparagraph (A).
(2) The term ‘‘certificate’’ means a certificate
of public advantage authorized to be issued under
subsection (a).
(3) The term ‘‘health care joint venture’’ means
an agreement (whether existing or proposed) be-
tween 2 or more providers of health care services
that is entered into solely for the purpose of sharing
in the provision of health care services and that in-
volves substantial integration or financial risk-shar-
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ing between the parties, but does not include the ex-
changing of information, the entering into of any
agreement, or the engagement in any other conduct
that is not reasonably required to carry out such
agreement.
(4) The term ‘‘health care services’’ includes
services related to the delivery or administration of
health care services.
(5) The term ‘‘liable’’ means liable for any civil
or criminal violation of the antitrust laws.
(6) The term ‘‘provider of health care services’’
means any individual or entity that is engaged in the
delivery of health care services in a State and that
is required by State law or regulation to be licensed
or certified by the State to engage in the delivery of
such services in the State.
Subtitle D—Health Care Standards
Commission
SEC. 1301. ESTABLISHMENT OF HEALTH CARE STANDARDS
COMMISSION.
(a) IN GENERAL.—There is hereby established, as an
independent agency in the Executive Branch, a Health
Care Standards Commission (in this title referred to as
the ‘‘Commission’’).
(b) COMPOSITION AND TERMS.—
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(1) APPOINTMENT.—The Commission shall be
composed of 5 members appointed by the President
by and with the advice and consent of the Senate.
In appointing members to the Commission, the
President shall provide that all members shall dem-
onstrate experience with and knowledge of the health
care system.
(2) CHAIRMAN.—The President shall designate
one of the members to be Chairman of the Commis-
sion.
(3) TERMS.—Each member of the Commission
shall be appointed for a term of 7 years, except that,
of the members first appointed, 1 shall each be ap-
pointed for terms of 3, 4, 5, 6, and 7 years, as des-
ignated by the President at the time of appointment.
Members appointed to fill vacancies shall serve for
the remainder of the terms of the vacating members.
(4) PARTY
AFFILIATION.—Not more than 3
members of the Commission shall be of the same po-
litical party.
(5) OTHER
EMPLOYMENT
PROHIBITED.—A
member of the Commission may not, during the
term as a member, engage in any other business, vo-
cation, profession, or employment.
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(6) QUORUM.—Three members of the Commis-
sion shall constitute a quorum, except that 2 mem-
bers may hold hearings.
(7) MEETINGS.—The Commission shall meet at
the call of the Chairman or 3 members of the Com-
mission.
(8) COMPENSATION.—Each member of the
Commission shall be entitled to compensation at the
rate provided for level II of the Executive Schedule,
subject to such amounts as are provided in advance
in appropriation Acts.
(c) PERSONNEL.—
(1) IN GENERAL.—The Commission shall ap-
point an Executive Director and such additional offi-
cers and employees as it considers necessary to carry
out its functions under this Act. Except as otherwise
provided in any other provision of law, such officers
and employees shall be appointed, and their com-
pensation shall be fixed, in accordance with title 5,
United States Code.
(2) EXPERTS AND CONSULTANTS.—The Com-
mission may procure the services of experts and con-
sultants in accordance with the provisions of section
3109 of title 5, United States Code.
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(d) USE OF U.S. MAIL.—The Commission may use
the United States mails in the same manner and under
the same conditions as other departments and agencies of
the United States.
SEC. 1302. SPECIFICATION OF UNIFORM SET OF EFFECTIVE
BENEFITS.
(a) SPECIFICATION OF UNIFORM SET OF EFFECTIVE
BENEFITS; CONGRESSIONAL CONSIDERATION.—
(1) TRANSMITTAL OF RECOMMENDATIONS TO
CONGRESS.—
(A) FOR
1995.—The Commission shall
transmit to Congress, by not later than July 1,
1994, recommendations for the uniform set of
effective benefits to apply under this title for
1995 and, subject to subparagraph (B), subse-
quent years.
(B) LATER YEARS.—The Commission may
transmit to Congress, by not later than July 1
of a subsequent year, recommendations for
changes in the uniform set of effective benefits
to apply under this title for the following year
(and, subject to this subparagraph, subsequent
years).
(C) CONGRESSIONAL CONSIDERATION.—
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(i) IN
GENERAL.—Recommendations
transmitted under subparagraph (A) or
(B) shall apply under this title unless a
joint resolution (described in clause (ii))
disapproving such recommendations is en-
acted, in accordance with the provisions of
clause (iii), before the end of the 44-day
period beginning on the date on which
such recommendations were transmitted.
For purposes of applying the preceding
sentence and clauses (ii) and (iii), the days
on which either House of Congress is not
in session because of an adjournment of
more than three days to a day certain shall
be excluded in the computation of a period.
(ii) JOINT
RESOLUTION
OF
DIS-
APPROVAL.—A joint resolution described in
this clause means only a joint resolution
which is introduced within the 10-day pe-
riod beginning on the date on which the
Commission transmits recommendations
under subparagraph (A) or (B) and—
(I) which does not have a pre-
amble;
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(II) the matter after the resolv-
ing clause of which is as follows:
‘‘That Congress disapproves the rec-
ommendations of the Health Care
Standards Commission concerning the
uniform set of effective benefits as
transmitted by the Commission on
lllllll.’’, the blank space
being filled in with the appropriate
date; and
(III) the title of which is as fol-
lows: ‘‘Joint resolution disapproving
the recommendations of the Health
Care Standards Commission concern-
ing the uniform set of effective bene-
fits as transmitted by the Commission
on 
lllllll.’’, 
the 
blank
space being filled in with the appro-
priate date.
(iii) PROCEDURES
FOR
CONSIDER-
ATION
OF
RESOLUTION
OF
DIS-
APPROVAL.—Subject to clause (iv), the
provisions of section 2908 (other than sub-
section (a)) of the Defense Base Closure
and Realignment Act of 1990 shall apply
107
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to the consideration of a joint resolution
described in clause (ii) in the same manner
as such provisions apply to a joint resolu-
tion described in section 2908(a) of such
Act.
(iv) SPECIAL
RULES.—For purposes
of applying clause (iii) with respect to such
provisions—
(I) any reference to the Commit-
tee on Armed Services of the House of
Representatives shall be deemed a ref-
erence to the Committee on Energy
and Commerce of the House of Rep-
resentatives and any reference to the
Committee on Armed Services of the
Senate shall be deemed a reference to
the Committee on Finance of the Sen-
ate; and
(II) any reference to the date on
which the President transmits a re-
port shall be deemed a reference to
the date on which the Commission
transmits a recommendation under
subparagraph (A) or (B).
(D) TREATMENT OF DISAPPROVAL.—
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(i) FOR
1995.—If recommendations
transmitted under subparagraph (A) are
disapproved by joint resolution under sub-
paragraph (C), then the Commission shall
transmit to Congress, by not later than 15
days after the date of adoption of the reso-
lution, recommendations for the uniform
set of effective benefits to apply under this
title for 1995 and, subject to subparagraph
(B), subsequent years. The provisions of
subparagraph (C) shall apply to such new
recommendations in the same manner as
they applied to the recommendations pre-
viously transmitted under subparagraph
(A), except that any time period specified
in such subparagraph shall be half the pe-
riod otherwise provided.
(ii) FOR SUBSEQUENT YEARS.—If rec-
ommendations transmitted under subpara-
graph (B) are disapproved by joint resolu-
tion under subparagraph (C), then such
recommendations shall not take effect and
the recommendations not previously dis-
approved under this paragraph shall con-
tinue in effect until otherwise changed.
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(2) SPECIFICATION OF ALL MEDICALLY APPRO-
PRIATE TREATMENTS.—
(A) MEDICALLY
APPROPRIATE
TREAT-
MENTS.—The uniform set of effective benefits
submitted under paragraph (1) shall include
such categories of health care services that the
Commission determines will provide for the de-
livery of medically appropriate treatment by
AHPs.
(B) COVERAGE OF CLINICAL PREVENTIVE
SERVICES.—Such benefits shall include the full
range of effective clinical preventive services
(including appropriate screening, counseling,
and immunization and chemoprophylaxis), spec-
ified by the Commission, appropriate to age and
other risk factors.
(C) COVERAGE
OF
DIAGNOSTIC
SERV-
ICES.—Such benefits shall include a full range
of diagnostic services not covered under sub-
paragraph (B).
(D) GUIDELINES.—Nothing in this para-
graph shall prohibit the Commission from devel-
oping guidelines that would specify the appro-
priate uses of treatment in greater detail.
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(D) ADDITIONAL COVERAGE.—Nothing in
this paragraph shall be construed as preventing
a plan from providing coverage of treatment
that has not been determined (under subsection
(b)) by the Commission to be medically appro-
priate for purposes of this paragraph.
(3) COST-SHARING.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), such set shall include uniform cost-
sharing associated with such benefits consistent
with subsection (c).
(B) TREATMENT OF NETWORK PLANS.—In
the case of a network plan (as defined in sec-
tion 1222(b)), the plan may provide for charg-
ing cost-sharing in excess of the uniform cost-
sharing under subparagraph (A) in the case of
services provided by providers that are not par-
ticipating providers (as defined in such section).
(b) CRITERIA FOR DETERMINATION OF MEDICALLY
APPROPRIATENESS FOR BENEFIT COVERAGE.—
(1) IN GENERAL.—An AHP is required to pro-
vide for coverage of the uniform set of effective ben-
efits only for treatments and diagnostic procedures
that are medically appropriate. Subject to the suc-
ceeding provision of this subsection, for purposes of
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this section, a treatment (as defined in paragraph
(6)(A)) or diagnostic procedure is considered to be
‘‘medically appropriate’’ if the following criteria are
met (as interpreted by the Commission):
(A) TREATMENT OR DIAGNOSIS OF MEDI-
CAL CONDITION.—
(i) IN GENERAL.—The treatment or
diagnostic procedure is for a medical con-
dition.
(ii) MEDICAL CONDITION DEFINED.—
The term ‘‘medical condition’’ means a dis-
ease, illness, injury, or biological or psycho-
logical condition or status for which treat-
ment is indicated to improve, maintain, or
stabilize a health outcome (as defined in
paragraph (6)(B)) or which, in the absence
of treatment, could lead to an adverse
change in a health outcome.
(iii) ADVERSE
CHANGE
IN
HEALTH
OUTCOME DEFINED.—In clause (ii), an ad-
verse change in a health outcome occurs if
there is a biological or psychological
decremental change in a health status or if
the original endowment for a feature lies
outside the normal range.
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(B) NOT INVESTIGATIONAL.—There must
be sufficient evidence on which to base conclu-
sions about the existence and magnitude of the
change in health outcome resulting from the
treatment or diagnostic procedure compared
with the best available alternative (or with no
treatment or diagnostic procedure if no alter-
native treatment or procedure is available).
(C) EFFECTIVE AND SAFE.—The evidence
must demonstrate that the treatment or diag-
nostic procedure can reasonably be expected to
produce the intended health result or provide
intended health information and is safe and the
treatment or diagnostic procedure provides a
clinically meaningful benefit with respect to
safety and effectiveness in comparison to other
available alternatives.
(2) TREATMENT
OR
DIAGNOSTIC
PROCEDURE
CONSISTENT WITH PRACTICE GUIDELINES.—A treat-
ment or diagnostic procedure that is provided con-
sistent with a practice guideline established by the
Agency for Clinical Evaluations, established under
section 1309, (or its predecessor) is deemed to be
medically appropriate.
(3) RELATIONSHIP TO FDA REVIEW.—
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(A) APPROVED DRUGS, BIOLOGICALS, AND
MEDICAL DEVICES.—
(i) DRUGS.—A drug that has been
found to be safe and effective under sec-
tion 505 of the Federal Food, Drug, and
Cosmetic Act is deemed to meet the re-
quirements of paragraphs (1)(B) and
(1)(C) (relating to not investigational and
safety and effectiveness).
(ii) BIOLOGICALS.—A biological that
has been found to be safe and effective
under section 351 of the Public Health
Service Act is deemed to meet the require-
ments of paragraphs (1)(B) and (1)(C)
(relating to not investigational and safety
and effectiveness).
(iii) MEDICAL
DEVICES.—A medical
device that is marketed after the provision
of a notice under section 510(k) of the
Federal Food, Drug, and Cosmetic Act or
that has an application for premarket ap-
proval approved under section 515 of such
Act is deemed to meet the requirements of
paragraphs (1)(B) and (1)(C) (relating to
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•HR 3222 SC2
not investigational and safety and effec-
tiveness).
(B) OTHER DRUGS, BIOLOGICALS, AND DE-
VICES.—A drug, biological, or medical device
not described in subparagraph (A) shall be con-
sidered to be investigational. Nothing shall pro-
hibit a AHP from covering such drugs,
biologicals, and medical devices, including treat-
ment investigational new drugs (IND).
(C) OFF-LABEL USE.—An off-label use for
a drug described in subparagraph (A)(i) is pre-
sumed to meet the requirements of paragraph
(1)(C) if the medical indication for which it is
used is listed in one of the following 3 compen-
dia: the American Hospital Formulary Service-
Drug Information, the American Medical Asso-
ciation Drug Evaluations, and the United
States Pharmacopeia-Drug Information.
(4) COVERAGE
OF
INVESTIGATIONAL
TREAT-
MENTS IN APPROVED RESEARCH TRIALS.—
(A) IN GENERAL.—Coverage of the routine
medical costs (as defined in subparagraph (C))
associated with the delivery of investigational
treatments (as defined in subparagraph (B))
shall be considered to be medically appropriate
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only if the treatment is part of an approved re-
search trial (as defined in subparagraph (D)).
(B) INVESTIGATIONAL
TREATMENT
DE-
FINED.—In subparagraph (A), the term ‘‘inves-
tigational treatment’’ means a treatment for
which there is not sufficient evidence to deter-
mine the health outcome of the treatment com-
pared with the best available alternative treat-
ment (or with no treatment if there is no alter-
native treatment).
(C) ROUTINE MEDICAL COSTS DEFINED.—
In subparagraph (A), the term ‘‘routine medical
costs’’ means the cost of health services re-
quired to provide treatment according to the de-
sign of the trial, except those costs normally
paid for by other funding sources (as defined by
the Commission). Such costs do not include the
cost of the investigational agent, devices or pro-
cedures themselves, the costs of any nonhealth
services that might be required for a person to
receive the treatment, or the costs of managing
the research.
(D) APPROVED
RESEARCH
TRIAL
DE-
FINED.—In subparagraph (A), the term ‘‘ap-
proved research trial’’ means a trial—
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(i) conducted for the primary purpose
of determining the safety, effectiveness, ef-
ficacy, or health outcomes of a treatment,
compared with the best available alter-
native treatment, and
(ii) approved by the Secretary of
Health and Human Services.
A trial is deemed to be approved under clause
(ii) if it is approved by the National Institutes
of Health, the Food and Drug Administration
(through an investigational new drug exemp-
tion), the Department of Veterans Affairs, or
by a qualified nongovernmental research entity
(as identified in guidelines issued by one or
more of the National Institutes of Health).
(5) DOCUMENTATION.—
(A) IN GENERAL.—Each AHP is respon-
sible for maintaining documentary evidence sup-
porting the plan’s decisions to cover or to deny
coverage based on the criteria specified in this
subsection.
(B) REFERENCES.—The evidence that may
be used in making such coverage decisions in-
cludes—
(i) published peer-reviewed literature,
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(ii) opinions of medical specialty
groups and other medical experts,
(iii) evidence of general acceptance by
the medical community, and
(iv) recommendations of the Commis-
sion.
(C) DISCLOSURE.—Each AHP shall dis-
close to its members, in a manner specified by
the Commission, its coverage decisions and
must submit information on such decisions to
the Benefits, Evaluations, and Data Standards
Board.
(6) TREATMENT AND HEALTH OUTCOME DE-
FINED.—In this subsection (and subsection (a)(2)):
(A) IN GENERAL.—The term ‘‘treatment’’
means any health care intervention undertaken,
with respect to a specific indication, to improve,
maintain, or stabilize a health outcome or to
prevent or mitigate an adverse change in a
health outcome.
(B) HEALTH
OUTCOME
DEFINED.—The
term ‘‘health outcome’’ means an outcome that
affects the length or quality of an enrollee’s life.
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(c) BASIS FOR COST-SHARING.—In establishing cost-
sharing that is part of the uniform set of effective benefits,
the Commission shall—
(1) include only such cost-sharing as will re-
strain consumers from seeking unnecessary services,
(2) not impose cost-sharing for covered clinical
preventive services,
(3) balance the effect of the cost-sharing in re-
ducing premiums and in affecting utilization of ap-
propriate services,
(4) establish a limit on the total cost-sharing
that may be incurred by an individual (or enrollee
unit) in a year, and
(5) incorporate, consistent with the previous
provisions, incentives for individuals to control their
utilization of health care services and shall (for this
purpose) consider incorporating the concepts of med-
ical savings accounts and wellness dividends.
To the extent consistent with the previous provisions, the
Commission shall design such cost-sharing in a manner
so to maintain overall utilization levels at a level no higher
than current overall utilization levels.
(d) AUTHORITY RESPECTING PROVIDERS.—
(1) NO AUTHORITY TO RESTRICT USE OF PRO-
VIDERS.—In the case of treatment included in the
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uniform set of effective benefits, the Commission is
not authorized—
(A) to restrict the coverage of such treat-
ment only to, or
(B) to require an AHP to provide coverage
of such treatment by,
a particular class (or classes) of providers, among
the providers that are legally authorized to provide
such treatment.
(2) AUTHORITY WITH RESPECT TO SCOPE OF
PRACTICE OF QUALIFIED PROVIDERS.—A State may
not prohibit or limit the scope of practice of a pro-
vider of health services, with respect to the provision
of the uniform set of effective benefits by an AHP,
to the extent that the Commission finds that such
prohibition or limitation restricts the utilization of
qualified providers.
SEC. 1303. BENEFITS, EVALUATIONS, AND DATA STAND-
ARDS BOARD.
(a) ESTABLISHMENT.—The Commission shall pro-
vide for the initial organization, as a nonprofit corporation
in the District of Columbia, of the Benefits, Evaluations,
and Data Standards Board (in this section referred to as
the ‘‘BEDS Board’’), under the direction of a board of
directors consisting of 5 directors.
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(b) APPOINTMENT OF DIRECTORS.—
(1) SOLICITATION.—The Commission shall so-
licit nominations for the initial board of directors of
the BEDS Board from organizations that represent
the various groups with an interest in the health
care system and the functions of the Board.
(2) CONTINUATION.—The by-laws of the BEDS
Board shall provide for the board of directors subse-
quently to be appointed by the board in a manner
that ensures a broad range of representation of
through groups with an interest in providing and
purchasing health care.
(3) TERMS OF DIRECTORS.—The term of each
member of the board of directors shall be for 7
years, except that in order to provide for staggered
terms, the terms of the members initially appointed
shall be for 3, 4, 5, 6, and 7 years. In the case of
a vacancy by death or resignation, the replacement
shall be appointed for the remainder of the term. No
individual may serve as a director of the board for
more than 14 years.
(c) FUNCTIONS.—
(1) IN
GENERAL.—The BEDS Board shall
make recommendations to the Commission concern-
ing each of the following:
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(A) The uniform set of effective benefits.
(B) The standards for information to be
provided by AHPs.
(C) Auditing standards to ensure the accu-
racy of such information.
(D) Aggregate data on coverage decisions
made by AHPs and recommendations for eval-
uations of particular technologies.
Before making recommendations described in sub-
paragraphs (B) and (D), the BEDS Board shall
consult with the Agency for Clinical Evaluations re-
garding the need for information in performing its
activities.
(2) EVALUATIONS.—The BEDS Board shall
advise the Commission on—
(A) matters related to the evaluation of
health care services, including information from
clinical and epidemiological studies, and
(B) information provided by AHPs, includ-
ing AHP-specific information on clinical health,
functional status, well-being, and plan satisfac-
tion of enrolled individuals.
(3) NATIONAL
HEALTH
DATA
SYSTEM.—The
BEDS Board shall provide the Commission with its
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assistance in the development of the standards for
the national health data system under section 1307.
(d) FUNDING.—
(1) IN GENERAL.—In order to provide funding
for the BEDS Board, the Health Care Standards
Commission shall establish an annual registration
fee for AHPs which is imposed on a per-covered-in-
dividual-basis and is sufficient, in the aggregate, to
provide each year for not more than the amount
specified in paragraph (2) for the operation of the
BEDS Board.
(2) AMOUNT OF FUNDS.—The amount specified
in this paragraph for each of fiscal years 1994 and
1995, is $50,000,000, and, for each succeeding fis-
cal year, is $25,000,000.
SEC. 1304. HEALTH PLAN STANDARDS BOARD.
(a) ESTABLISHMENT.—The Commission shall pro-
vide for the initial organization, as a nonprofit corporation
in the District of Columbia, of the Health Plan Standards
Board (in this section referred to as the ‘‘Plan Standards
Board’’), under the direction of a board of directors con-
sisting of 5 directors.
(b) APPOINTMENT OF DIRECTORS.—
(1) SOLICITATION.—The Commission shall so-
licit nominations for the initial board of directors of
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the Plan Standards Board from organizations that
represent the various groups with an interest in the
health care system and the functions of the Board.
(2) CONTINUATION.—The by-laws of the Plan
Standards Board shall provide for the board of di-
rectors subsequently to be appointed by the board in
a manner that ensures a broad range of representa-
tion of through groups with an interest in providing
and purchasing health care.
(3) TERMS OF DIRECTORS.—The term of each
member of the board of directors shall be for 7
years, except that in order to provide for staggered
terms, the terms of the members initially appointed
shall be for 3, 4, 5, 6, and 7 years. In the case of
a vacancy by death or resignation, the replacement
shall be appointed for the remainder of the term. No
individual may serve as a director of the board for
more than 12 years.
(c) FUNCTIONS.—
(1) IN GENERAL.—The Plan Standards Board
shall make recommendations to the Commission con-
cerning the standards for AHPs (other than stand-
ards relating to the uniform set of effective benefits
and the national health data system) and for
HPPCs.
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(2) ASSESSMENT
OF
RISK-ADJUSTMENT
FAC-
TORS.—The Plan Standards Board shall provide the
Commission with its assessment of the risk-adjust-
ment factors under section 1306.
(d) FUNDING.—In order to provide funding for the
Plan Standards Board, the Health Care Standards Com-
mission shall establish an annual registration fee for
AHPs which is imposed on a per-covered-individual-basis
and is sufficient, in the aggregate, to provide each year
for not more than 60 percent of the amount specified in
section 1303(d)(2) for the operation of the Plan Stand-
ards Board.
SEC. 1305. REGISTRATION OF ACCOUNTABLE HEALTH
PLANS.
(a) IN GENERAL.—The Commission shall register
those health plans that meet the standards under part 1
of subtitle C.
(b) TREATMENT OF STATE CERTIFICATION.—If (and
so long as) the Commission determines that a State super-
intendent of insurance, State insurance commissioner, or
other State official provides for the imposition of stand-
ards that the Commission finds are equivalent to the
standards established under part 1 of subtitle C for reg-
istration of a health plan as an AHP, the Commission may
provide for registration as AHPs of health plans that such
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official certifies as meeting the standards for registration.
Nothing in this subsection shall require a health plan to
be certified by such an official in order to be registered
by the Commission.
(c) REVOCATION OF REGISTRATION.—
(1) IN GENERAL.—The Commission shall pro-
vide for a process for revocation of such registration
in cases where the Commission finds, after notice to
the plan and appropriate due process specified by
the Commission, that a health plan no longer sub-
stantially meets the standards for such registration
or has failed to comply with a requirement under
section 1402(a).
(2) INITIATION
OF
PROCESS.—Such process
may be initiated upon the petition of a HPPC, the
ombudsman for a HPPC, or by the Commission it-
self. If the process is not initiated by a HPPC or
ombudsman, the Commission shall notify each
HPPC involved that such a process has been initi-
ated. A HPPC may provide notice to enrollees of an
AHP at the time such a process is initiated with re-
spect to the AHP.
(3) NOTICE
TO
HPPC
AND
ENROLLEES.—No
registration of an AHP may be revoked unless the
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Commission has provided for appropriate notice to
the HPPC and enrollees involved.
SEC. 1306. SPECIFICATION OF RISK-ADJUSTMENT FAC-
TORS.
(a) IN GENERAL.—The Commission shall establish
rules for the process of risk-adjustment of premiums
among AHPs by HPPCs under section 1102(d)(1).
(b) PROCESS.—
(1) IDENTIFICATION OF RELATIVE RISK.—The
Commission shall determine risk-adjustment factors
for types of enrollment that are correlated with in-
creased or diminished risk for consumption of the
type of health services included in the uniform set
of effective benefits, taking into account differences
in utilization resulting from low-income cost-sharing
assistance provided under section 2003. To the max-
imum extent practicable, such factors shall be deter-
mined without regard to the methodology used by in-
dividual AHPs in the provision of such benefits. In
determining such factors, with respect to an individ-
ual (in an enrollee unit) identified as having—
(A) a lower-than-average risk for consump-
tion of the services, the factor shall be a num-
ber, less than zero, reflecting the degree of such
lower risk;
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(B) an average risk for consumption of the
services, the factor shall be zero; or
(C) a higher-than-average risk for con-
sumption of the services, the factor shall be a
number, greater than zero, reflecting the degree
of such higher risk.
For an enrollee unit, the factor to be applied (pursu-
ant to section 1402(b)) shall reflect the factors ap-
plicable to all covered individuals in the unit.
(2) ADJUSTMENT
OF
FACTORS.—In applying
under section 1102(d)(1)(B) the risk-adjustment
factors determined under paragraphs (1) and (3),
each HPPC shall adjust such factors, in accordance
with a methodology established by the Commission,
so that the sum of such factors is zero for all en-
rollee units in each HPPC area for which a premium
payment is forwarded under section 1102(d) for
each premium payment period.
(3) SPECIAL RISK-ADJUSTMENT FACTORS FOR
UNDERSERVED AREAS.—The Commission shall de-
termine the special risk-adjustment factors that may
be applied in the case of individuals residing in areas
designated as rural or urban underserved areas
under section 1401.
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SEC. 1307. NATIONAL HEALTH DATA SYSTEM.
(a) STANDARDIZATION OF INFORMATION.—
(1) IN GENERAL.—The Commission shall estab-
lish standards for the periodic provision by AHPs of
information under section 1203(a) and the auditing
of the information so provided.
(2) PATIENT
CONFIDENTIALITY.—The stand-
ards shall be established in a manner that protects
the confidentiality of individual enrollees, but may
provide for the disclosure of information which dis-
closes particular providers within an AHP.
(b) ANALYSIS OF INFORMATION.—
(1) IN GENERAL.—The Commission shall ana-
lyze the information provided to the Commission
under section 1203(a) with respect to AHPs for
which a HPPC is not performing an analysis under
section 1104(c)(1).
(2) CENTRAL ACCESS.—The Commission shall
make available, in a central location and consistent
with subsection (a)(2), all of such analyses.
(3) DISTRIBUTION OF ANALYSES.—The Com-
mission shall distribute the analyses in a form, con-
sistent with subsection (a)(2), that reports, on a na-
tional, State, and community basis, the levels and
trends of health care expenditures, the rates and
trends in the provision of individual procedures, and
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(to the extent such procedures are priced separately)
the price levels and rates of price change for such
procedures. The reports shall include both aggregate
and per capita measures for areas and shall include
comparative data for different areas.
(c) DISTRIBUTION OF INFORMATION.—
(1) ANNUAL REPORT ON EXPENDITURES.—The
Commission shall publish annually (beginning with
1996) a report on expenditures on procedures, vol-
umes of procedures, and, to the extent such proce-
dures are priced separately, the prices of procedures.
Such report shall be distributed to each AHP, each
HPPC, each Governor, and each State legislature.
(2) ANNUAL REPORTS.—The Commission shall
also publish an annual report, based on analyses
under this section, that identifies—
(A) procedures for which, as reflected in
variations in use or rates of increase, there ap-
pear to be the greatest need to develop valid
clinical protocols for clinical decision-making
and review,
(B) procedures for which, as reflected in
price variations and price inflation, there ap-
pear to be the greatest need for strengthening
competitive purchasing, and
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(C) States and localities for which, as re-
flected in expenditure levels and rates of in-
crease, there appear to be the greatest need for
additional cost control measures.
(3) SPECIAL DISTRIBUTIONS.—The Commission
may, whenever it deems appropriate, provide for the
distribution—
(A) to an AHP of such information relat-
ing to the plan as may be appropriate in order
to encourage the plan to improve its delivery of
care, and
(B) to business, consumer, and other
groups and individuals of such information as
may improve their ability to effect improve-
ments in the outcomes, quality, and efficiency
of health services.
(4) ACCESS
BY
AGENCY
FOR
HEALTH
CARE
POLICY
AND
RESEARCH.—The Commission shall
make available to the Agency for Clinical Evalua-
tions information obtained under section 1203(a) in
a manner consistent with subsection (a)(2).
SEC. 1308. MEASURES OF QUALITY OF CARE OF SPECIAL-
IZED CENTERS OF CARE.
(a) COLLECTION OF INFORMATION.—The Commis-
sion shall provide a process whereby a specialized center
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1946, and the Commission shall apply for the registration
of such service mark under such Act. For purposes of such
Act, such service mark shall be deemed to be used in com-
merce. For purposes of this subsection, the ‘‘Trademark
Act of 1946’’ refers to the Act entitled ‘‘An Act to provide
for the registration and protection of trademarks used in
commerce, to carry out the provisions of international con-
ventions, and for other purposes’’, approved July 5, 1946
(15 U.S.C. 1051 and following).
(d) SPECIALIZED CENTER OF CARE DEFINED.—In
this section, the term ‘‘specialized center of care’’ means
an institution or other organized system for the provision
of specific services, which need not be multi-disciplinary,
and does not include (except as the Commission may pro-
vide) individual practitioners.
SEC. 1309. AGENCY FOR CLINICAL EVALUATIONS.
(a) ESTABLISHMENT.—There is established within
the Department of Health and Human Services an agency
to be known as the Agency for Clinical Evaluations (in
this section referred to as the ‘‘Agency’’).
(b) APPOINTMENT OF ADMINISTRATOR.—There shall
be at the head of the Agency an official to be known as
the Administrator for Clinical Evaluations (in this section
referred to as the ‘‘Administrator’’). The Administrator
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shall be appointed by the President, by and with the advice
and consent of the Senate.
(c) DUTIES.—
(1) IN GENERAL.—The Administrator shall as-
sume the following responsibilities:
(A) Responsibilities of the Administrator
for Health Care Policy and Research, under
title IX of the Public Health Service Act and
under section 1142 of the Social Security Act.
(B) Responsibilities of the Director of the
National Center for Health Statistics (under
section 306 of the Public Health Service Act).
(C) Responsibilities of the Director of the
Office of Medical Applications of Research at
the National Institutes of Health.
(D) Responsibilities of the Director of the
Office of Research and Demonstrations of the
Health Care Financing Administration, insofar
as such responsibilities relate to clinical evalua-
tions.
(2) SPECIFIC DUTIES.—In carrying out respon-
sibilities under paragraph (1), the Administrator
shall—
(A) set priorities for the research commu-
nity to strengthen the research base;
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(B) support research and evaluation (both
on a contract and investigator-initiated basis)
on medical effectiveness through technology as-
sessment, consensus development, outcomes re-
search practice guidelines, and other appro-
priate activities;
(C) conduct effectiveness trials in collabo-
ration with medical specialty societies, medical
educators, and AHPs;
(D) maintain a clearinghouse and other
registries on clinical trials and outcomes re-
search data;
(E) assure the systematic evaluation of ex-
isting as well as new treatments and diagnostic
technologies in a constant, continuous effort to
upgrade the knowledge base for clinical deci-
sionmaking and policy choice; and
(F) design a computerized dissemination
system for providers to provide an interactive
system of information on outcomes research,
practice guidelines, and other information.
(3) ASSISTANCE.—The Administrator shall pro-
vide the Benefits, Evaluations, and Data Standards
Board with such information, on evaluations related
to the uniform set of effective benefits and any other
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information developed in the scope of carrying out
the Administrator’s responsibilities, as may be ap-
propriate.
(4) COOPERATION WITH OTHER AGENCIES.—In
carrying out responsibilities under this subsection,
the Administrator shall cooperate and consult with
the Director of the National Institutes of Health,
the Commissioner of Food and Drugs, the Secretary
of Veterans Affairs, and the heads of any other in-
terested Federal department or agency.
(d) REFERENCES.—Any reference in any law to the
Administrator for Health Care Policy and Research or to
the Agency for Health Care Policy and Research is
deemed a reference to the Administrator and Agency, re-
spectively, under this section.
(e) TRANSFERS.—There are hereby transferred to
the Agency the staff, funds, and other assets of the agen-
cies for which the Agency is assuming responsibilities
under subsection (c)(1).
(f) ADDITIONAL AUTHORIZATION
OF APPROPRIA-
TIONS.—In addition to the amounts transferred under
subsection (e), there are authorized to be appropriated to
the Agency $250,000 for each fiscal year (beginning with
fiscal year 1995).
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SEC. 1310. REPORT AND RECOMMENDATIONS ON ACHIEV-
ING UNIVERSAL COVERAGE.
(a) FACTORS AFFECTING COVERAGE.—
(1) COLLECTION OF INFORMATION.—The Com-
mission, on a continuing basis, shall collect informa-
tion concerning and analyze the number and charac-
teristics of eligible individuals (as defined in sub-
section (c)) who are not enrolled with AHPs com-
pared to such number and characteristics of individ-
uals enrolled. Such characteristics shall include age,
sex, race, ethnicity, family status, employment sta-
tus, whether the individual is an eligible employee,
income, health status, health risk factors, geography,
whether the individual resides in a rural or medically
underserved area, and such other factors as may af-
fect the election of an eligible individual to obtain
health coverage.
(2) REPORT.—By not later than April 1 of each
year (beginning with 1996), the Commission shall
submit to Congress a report analyzing the informa-
tion collected under paragraph (1). Such report shall
include a description of the primary factors contrib-
uting to lack of coverage of identifiable groups of eli-
gible individuals.
(b) RECOMMENDATIONS
FOR
INCREASING
COV-
ERAGE.—
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(1) IN GENERAL.—By not later than January
1, 1997, the Commission shall submit to Congress
recommendations on the feasibility, cost-effective-
ness, and the economic impact of using different vol-
untary and other methods for increasing the cov-
erage of eligible individuals.
(2) INDIVIDUAL
MANDATE.—The Commission
shall specifically make recommendations under para-
graph (1) regarding establishing a requirement that
all eligible individuals obtain health coverage
through enrollment with an AHP.
(c) ELIGIBLE INDIVIDUAL DEFINED.—In this sec-
tion, the term ‘‘eligible individual’’—
(1) includes individuals who would be eligible
individuals but for section 1701(a)(4)(B), but
(2) does not include individuals eligible to enroll
for benefits under part B of title XVIII of the Social
Security Act.
SEC. 1311. NO AUTHORITY TO IMPOSE CONTROLS RELAT-
ING TO HEALTH CARE SPENDING.
The Commission is not authorized to establish or en-
force any controls (such as global budgets, price controls,
or premium limitations) on health care spending.
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SEC. 1312. MONITORING REINSURANCE MARKET.
(a) IN GENERAL.—The Commission shall monitor
the reinsurance market for AHPs.
(b) PERIODIC REPORTS.—The Commission shall pe-
riodically report to Congress respecting the availability of
reinsurance for AHPs at reasonable rates and the impact
of such availability on the establishment of new plans and
on the financial solvency of current plans.
SEC. 1313. AUTHORIZATION OF APPROPRIATIONS; SUNSET.
(a) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated to the Health Care
Standards Commission for each of fiscal years 1994
through 2000 such sums as may be necessary to carry
out activities under this Act.
(b) SUNSET.—Unless otherwise provided by law, the
Health Care Standards Commission shall terminate on
December 31, 1999.
Subtitle E—Managed Competition
in Rural and Urban Under-
served Areas
PART 1—SPECIAL TREATMENT OF DESIGNATED
UNDERSERVED AREAS
SEC. 1401. DESIGNATION OF UNDERSERVED AREAS.
(a) IN GENERAL.—The Governor of any State may,
subject to subsection (b), designate rural and urban areas
of a State as underserved areas for purposes of this part.
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In designating such areas, the Governor shall take into
account—
(1) financial and geographic access to AHPs by
residents of such areas, and
(2) the availability, adequacy, and quality of
qualified providers and health care facilities in such
areas.
(b) REVIEW BY COMMISSION.—No designation under
subsection (a) shall take effect under this subsection un-
less the Commission—
(1) has been notified of the proposed designa-
tion, and
(2) has not, within 60 days after the date of re-
ceipt of the notice, disapproved the designation.
(c) CONSTRUCTION.—An area need not be designated
as a medically underserved area (under section 330(b)(3)
of the Public Health Service Act) or as a health profes-
sional shortage area (under section 332(a) of such Act)
in order to be designated as an underserved area under
this section.
(d) PERIOD OF DESIGNATION.—A designation under
this section shall be effective for a period, specified by the
Governor, of not longer than 3 years, except that such des-
ignation may be extended for additional 3-year periods.
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SEC. 1402. SPECIAL TREATMENT.
(a) INCLUSION
IN
PLAN
SERVICE
AREA.—The
HPPC serving an area designated under section 1401 may
require AHPs, offered by the HPPC and with a service
area adjoining such area, to include the area as part of
their service area. The Commission may revoke under sec-
tion 1305(c) registration of an AHP that fails to comply
with such requirement.
(b) APPLICATION OF SPECIAL RISK ADJUSTMENT
FACTORS.—In accordance with rules established by the
Commission, for eligible individuals residing in an area
designated under section 1401 and enrolled with an AHP,
the HPPC may apply special risk-adjustment factors (de-
termined under section 1306(b)(3)) in order to increase
the compensation available to AHPs serving such individ-
uals.
(c) DIRECT STATE SUBSIDIES.—The HPPC shall in-
crease the amount of the payments made to AHPs serving
individuals residing in an area designated under section
1401 by such amounts as the State makes available for
this purpose.
(d) TECHNICAL ASSISTANCE IN ANTITRUST MAT-
TERS.—The Department of Justice shall provide ongoing
technical assistance to organizations in relation to the ap-
plication of the Federal antitrust laws to the establishment
of an AHP in an area designated under section 1401.
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Such assistance shall be in addition to the review process
provided under section 1231(b).
PART 2—TRANSITIONAL SUPPORT FOR DEVEL-
OPMENT OF ACCOUNTABLE HEALTH PLANS
IN UNDERSERVED AREAS
SEC. 1411. TECHNICAL ASSISTANCE FUNDING.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall make funds available under this sec-
tion to provide technical assistance and advice for entities
(including Federally qualified health centers and rural
health clinics) seeking to establish a network plan (as de-
fined in section 1222(b)(1)) in an underserved rural or
urban area.
(b) USE OF FUNDS.—Funds made available under
this section may be used for—
(1) assistance in network development, utilizing
existing local providers and facilities where appro-
priate;
(2) advice on obtaining the proper balance of
primary and secondary facilities for the local popu-
lation;
(3) assistance in coordinating arrangements for
tertiary care;
(4) assistance in recruitment and retention of
health care professionals; and
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(5) assistance in coordinating the delivery of
emergency services with the provision of services by
an AHP.
(c) USE OF RURAL HEALTH OFFICES.—In carrying
out this section with respect to entities in rural areas—
(1) the Secretary shall make funds available
through the Office of Rural Health Policy, and
(2) priority shall be given to making funds
available to State Offices of Rural Health.
(d) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated $5,000,000 for each of
fiscal years 1995 through 1999 to carry out this section.
Of the amounts appropriated to carry out this section,
one-half of such amounts shall be made available to enti-
ties for the establishment of network plans in rural areas
and one-half of such amounts shall be made available to
entities for the establishment of network plans in urban
areas. Amounts appropriated under this section shall be
available until expended.
SEC. 1412. RURAL DEVELOPMENT GRANTS.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall provide financial assistance to eligi-
ble entities in order to provide for the development and
implementation of AHPs in rural areas.
(b) ELIGIBLE ENTITIES.—
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(1) IN GENERAL.—An entity is eligible to re-
ceive financial assistance under this section only if
the entity—
(A) is based in a rural area, and
(B) is undertaking to develop and imple-
ment an AHP in a rural area with the active
participation of at least 3 health care providers
or facilities in the area.
(2) FEDERALLY QUALIFIED HEALTH CENTERS
AND RURAL HEALTH CLINICS.—Nothing in this sec-
tion shall be construed as preventing a Federally
qualified health center or rural health clinic from
qualifying for financial assistance under this section.
(c) USE OF FUNDS.—
(1) IN
GENERAL.—Financial assistance made
available to eligible entities under this section may
only be used for the following:
(A) For development and implementation.
(B) For information systems, including
telecommunications.
(C) For meeting solvency requirements for
an AHP.
(D) For recruiting health care providers.
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(2) LIMITATIONS.—Financial assistance made
available under this section may not be used for any
of the following:
(A) For a telecommunications system un-
less such system is coordinated with, and does
not duplicate, such a system existing in the
area.
(B) For construction or remodeling of
health care facilities.
(d) APPLICATION.—
(1) IN GENERAL.—No financial assistance shall
be provided under this section to an entity unless
the entity has submitted to the Secretary, in a time
and manner specified by the Secretary, and had ap-
proved by the Secretary an application.
(2) INFORMATION
TO
BE
INCLUDED.—Each
such application shall include—
(A) a description of the proposed AHP, in-
cluding service area and capacity,
(B) a plan for providing the continuum of
services included in the uniform set of effective
benefits, and
(C) a description of how the proposed
AHP will utilize existing health care facilities in
a manner that avoids unnecessary duplication.
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(e) AUTHORIZATION OF APPROPRIATIONS.—
(1) IN GENERAL.—There are authorized to be
appropriated $75,000,000 for each of fiscal years
1995 through 1999 to carry out this section.
Amounts appropriated under this section shall be
available until expended.
(2) INTEGRATION
OF
OTHER
AUTHORIZA-
TIONS.—In order to provide for the authorization of
appropriations under paragraph (1), notwithstanding
any other provision of law, no funds are authorized
to be appropriated to carry out the following pro-
grams in fiscal years after fiscal year 1994:
(A) The rural health transition grant pro-
gram (under section 4005(e) of the Omnibus
Budget Reconciliation Act of 1987).
(B) The rural health outreach program
(for which appropriations were annually pro-
vided under the Departments of Labor, Health
and Human Services, and Education, and Re-
lated Agencies Appropriation Acts).
SEC. 1413. MIGRANT HEALTH CENTERS.
Section 329(h) of the Public Health Service Act (42
U.S.C. 254b(h)) is amended—
(1) in paragraph (1)(A), by striking ‘‘through
1994’’ and inserting ‘‘through 1999’’,
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(2) in paragraph (2)(A), by striking ‘‘through
1994’’ and inserting ‘‘through 1999’’, and
(3) by redesignating paragraph (3) as para-
graph (4) and by inserting after paragraph (2) the
following new paragraph:
‘‘(3)(A) For the purpose of carrying out subpara-
graph (B), there are authorized to be appropriated
$11,500,000 for each of the fiscal years 1995 through
1999.
‘‘(B) The Secretary may make grants to migrant
health centers for the purpose of assisting such centers
in integrating with AHPs and in providing (and coordinat-
ing the provision of) the uniform set of effective benefits
under such a plan.’’.
SEC. 1414. COMMUNITY HEALTH CENTERS.
Section 330(g) of the Public Health Service Act (42
U.S.C. 254c(g)) is amended—
(1) in paragraph (1)(A), by striking ‘‘through
1994’’ and inserting ‘‘through 1999’’,
(2) in paragraph (2)(A), by striking ‘‘through
1994’’ and inserting ‘‘through 1999’’, and
(3) by redesignating paragraph (3) as para-
graph (4) and by inserting after paragraph (2) the
following new paragraph:
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‘‘(3)(A) For the purpose of carrying out subpara-
graph (B), there are authorized to be appropriated
$88,500,000 for each of the fiscal years 1995 through
1999.
‘‘(B) The Secretary may make grants to community
health centers for the purpose of assisting such centers
in developing and integrating with accountable health
plans and in providing (and coordinating the provision of)
the uniform set of effective benefits under such a plan.’’.
PART 3—ESTABLISHMENT OF RURAL
EMERGENCY ACCESS CARE HOSPITALS
SEC. 1421. RURAL EMERGENCY ACCESS CARE HOSPITALS
DESCRIBED.
Section 1861 of the Social Security Act (42 U.S.C.
1395x) is amended by adding at the end the following new
subsection:
‘‘Rural Emergency Access Care Hospital; Rural
Emergency Access Care Hospital Services
‘‘(oo)(1) The term ‘rural emergency access care hos-
pital’ means, for a fiscal year, a facility with respect to
which the Secretary finds the following:
‘‘(A) The facility is located in a rural area (as
defined in section 1886(d)(2)(D)).
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‘‘(B) The facility was a hospital under this title
at any time during the 5-year period that ends on
the date of the enactment of this subsection.
‘‘(C) The facility is in danger of closing due to
low inpatient utilization rates and negative operating
losses, and the closure of the facility would limit the
access of individuals residing in the facility’s service
area to emergency services.
‘‘(D) The facility has entered into (or plans to
enter into) an agreement with a hospital with a par-
ticipation agreement in effect under section 1866(a),
and under such agreement the hospital shall accept
patients transferred to the hospital from the facility
and receive data from and transmit data to the facil-
ity.
‘‘(E) There is a practitioner who is qualified to
provide advanced cardiac life support services (as de-
termined by the State in which the facility is lo-
cated) on-site at the facility on a 24-hour basis.
‘‘(F) A physician is available on-call to provide
emergency medical services on a 24-hour basis.
‘‘(G) The facility meets such staffing require-
ments as would apply under section 1861(e) to a
hospital located in a rural area, except that—
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‘‘(i) the facility need not meet hospital
standards relating to the number of hours dur-
ing a day, or days during a week, in which the
facility must be open, except insofar as the fa-
cility is required to provide emergency care on
a 24-hour basis under subparagraphs (E) and
(F) of this paragraph; and
‘‘(ii) the facility may provide any services
otherwise required to be provided by a full-time,
on-site dietician, pharmacist, laboratory techni-
cian, medical technologist, or radiological tech-
nologist on a part-time, off-site basis.
‘‘(H) The facility meets the requirements appli-
cable to clinics and facilities under subparagraphs
(C) through (J) of paragraph (2) of section
1861(aa) and of clauses (ii) and (iv) of the second
sentence of such paragraph (or, in the case of the
requirements of subparagraph (E), (F), or (J) of
such paragraph, would meet the requirements if any
reference in such subparagraph to a ‘nurse practi-
tioner’ or to ‘nurse practitioners’ was deemed to be
a reference to a ‘nurse practitioner or nurse’ or to
‘nurse practitioners or nurses’); except that in deter-
mining whether a facility meets the requirements of
this subparagraph, subparagraphs (E) and (F) of
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(2) PAYMENT
METHODOLOGY
DESCRIBED.—
Section 1834(g) of such Act (42 U.S.C. 1395m(g))
is amended—
(A) in the heading, by striking ‘‘SERV-
ICES’’ and inserting ‘‘SERVICES
AND RURAL
EMERGENCY ACCESS CARE HOSPITAL SERV-
ICES’’;
(B) in paragraph (1), by striking ‘‘during
a year before 1993’’ and inserting ‘‘during a
year before the prospective payment system de-
scribed in paragraph (2) is in effect’’;
(C) in paragraph (1), by adding at the end
the following:
‘‘The amount of payment shall be determined under
either method without regard to the amount of the
customary or other charge.’’;
(D) in paragraph (2), by striking ‘‘Janu-
ary 1, 1993,’’ and inserting ‘‘January 1,
1996,’’; and
(E) by adding at the end the following new
paragraph:
‘‘(3) APPLICATION OF METHODS TO PAYMENT
FOR
RURAL
EMERGENCY
ACCESS
CARE
HOSPITAL
SERVICES.—The amount of payment for rural emer-
gency access care hospital services provided during
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a year shall be determined using the applicable
method provided under this subsection for determin-
ing payment for outpatient rural primary care hos-
pital services during the year.’’.
SEC. 1423. EFFECTIVE DATE.
The amendments made by this part shall apply to fis-
cal years beginning on or after October 1, 1994.
PART 4—TRANSITIONAL ASSISTANCE FOR
SAFETY NET HOSPITALS
SEC. 1431. PAYMENTS TO HOSPITALS.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall make payments for transitional as-
sistance to eligible hospitals whose applications for assist-
ance have been approved under this part.
(b) GENERAL ELIGIBILITY REQUIREMENTS FOR AS-
SISTANCE.—
(1) HOSPITALS DESCRIBED.—
(A) IN GENERAL.—A hospital shall be gen-
erally eligible for assistance under this part if
the hospital—
(i) receives an additional payment
under section 1886(d)(5)(F) of the Social
Security Act and is described in clause
(i)(II) or clause (vii)(I) of such section, or
is deemed a disproportionate share hospital
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under a State plan for medical assistance
under title XIX of such Act on the basis
described in section 1923(b)(1) of such
Act; or
(ii) is a hospital that the Secretary
otherwise determines to be an appropriate
recipient of assistance under this part on
the basis of the existence of a patient care
operating deficit, a demonstrated inability
to secure or repay financing for a qualify-
ing project on reasonable terms, or such
other criteria as the Secretary considers
appropriate.
(B) DEVELOPMENT
OF
CRITERIA.—For
purposes of subparagraph (A)(ii), with respect
to rural hospitals which are at risk or critical
to health care access, the Prospective Payment
Review Commission, not later than 6 months
after the date of the enactment of this Act,
shall develop criteria to assist the Secretary in
deciding which such hospitals deserve assist-
ance.
(2) OWNERSHIP REQUIREMENTS.—In order to
qualify for assistance under this part, a hospital
must—
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(A) be owned or operated by a unit of
State or local government;
(B) be a quasi-public corporation, defined
as a private, nonprofit corporation or public
benefit corporation which is formally granted
one or more governmental powers by legislative
action through (or is otherwise partially funded
by) the State legislature, city or county council;
or
(C) be a private nonprofit hospital which
has contracted with, or is otherwise funded by,
a governmental agency to provide health care
services to low income individuals not eligible
for benefits under title XVIII or title XIX of
the Social Security Act, where revenue from
such contracts constitute at least 10 percent of
the hospital’s operating revenues over the prior
3 fiscal years.
(c) MEETING ADDITIONAL SPECIFIC CRITERIA.—
Hospitals that are generally eligible for assistance under
this part under subsection (b) may apply for the specific
programs described in this part and must meet any addi-
tional criteria for participation in such programs.
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SEC. 1432. APPLICATION FOR ASSISTANCE.
(a) IN GENERAL.—No hospital may receive assist-
ance for a project under this part unless the hospital—
(1) has filed with the Secretary, in a form and
manner specified by the Secretary an application for
assistance under this part;
(2) establishes in its application (for its most
recent cost reporting period) that it meets the cri-
teria for general eligibility under this part;
(3) includes a description of the project, includ-
ing the community in which it is located, and de-
scribes utilization and services characteristics of the
project and the hospital, and the patient population
that is to be served;
(4) describes the extent to which the project
will include the financial participation of State and
local governments, and all other sources of financing
sought for the project; and
(5) establishes, to the satisfaction of the Sec-
retary, that the project meets the additional criteria
for assistance under this part.
(b) CRITERIA FOR APPROVAL.—The Secretary shall
determine for each application for assistance under this
part—
(1) whether the hospital meets the general eligi-
bility criteria under section 1431(b);
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(2) whether the hospital meets any additional
eligibility criteria;
(3) whether the project for which assistance is
being requested meets the requirements of this part;
and
(4) whether funds are available, pursuant to the
limitations of each program, to fully fund the re-
quest for assistance.
SEC. 1433. PUBLIC SERVICE RESPONSIBILITIES.
(a) IN GENERAL.—Any hospital accepting assistance
under this part shall agree—
(1) to make the services of the facility or por-
tion thereof to be constructed, acquired, or modern-
ized available to all persons residing in the territorial
area of the applicant; and
(2) to provide a significant volume of services to
persons unable to pay therefore, consistent with
other provisions of this Act.
(b) ENFORCEMENT.—The Director of the Office of
Civil Rights of the Department of Health and Human
Services shall be given the power to enforce the public
service responsibilities described in this section.
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SEC. 1434. AUTHORIZATION OF APPROPRIATIONS.
There is authorized to be appropriated $50,000,000
for each of the fiscal years 1995 through 1999 to carry
out this part.
Subtitle F—Treatment of
Chronically Underserved Areas
SEC. 1501. PROMOTING STATE ACTION.
(a) STANDARDS FOR IDENTIFICATION OF CHRON-
ICALLY UNDERSERVED AREAS.—The Health Care Stand-
ards Commission shall develop, not later than 2 years
after the date of the enactment of this Act, standards for
the identification of chronically underserved areas in
which the special treatment provided under subsection (b)
may be appropriate. Such standards shall be based on—
(1) inadequate access in an area to services in-
cluded within the uniform set of effective benefits,
(2) insufficient price competition for such serv-
ices in an area, and
(3) poor quality of such services in an area.
(b) STATE IDENTIFICATION OF AREAS AND PLAN.—
On and after 3 years after the date of the enactment of
this Act, a State may submit to the Commission—
(1) a finding that an area within the State
meets the standards developed under subsection (a)
to be identified as a chronically underserved area,
and
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(2) a plan for addressing the problem of health
care delivery in such area.
No plan may be submitted under paragraph (2) for an
area unless the plan has been developed in cooperation
with each HPPC serving any portion of the area.
(c) CONTENTS OF PLAN.—A plan under subsection
(b)(2) for a chronically underserved area may provide for
the limitation of agreements under section 1102 to a sin-
gle AHP, with such contract awarded on a competitive
basis.
(d) REVIEW.—With respect to submissions under
subsection (b), the Commission shall review—
(1) each finding described in subsection (b)(1),
and
(2) each plan submitted under subsection
(b)(2).
The Commission shall approve or disapprove such a find-
ing and such a plan within 60 days of the date of its sub-
mission and shall notify the State of its decision. If the
Commission disapproves the finding or the plan, the Com-
mission shall provide the State with the reasons for the
disapproval. If the Commission does not act within such
period, the Commission is deemed to have approved the
finding and the plan.
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Subtitle G—Repeal of COBRA
Continuation Requirements
SEC. 1601. REPEAL OF COBRA CONTINUATION REQUIRE-
MENTS.
(a) INTERNAL REVENUE CODE PROVISIONS.—
(1) IN GENERAL.—Section 4980B of the Inter-
nal Revenue Code of 1986 is repealed.
(2) CONFORMING AMENDMENTS.—Section 414
of such Code is amended—
(A) in subsection (n)(3)(C), by striking
‘‘505, and 4980B’’ and inserting ‘‘and 505’’,
and
(B) in subsection (t)(2), by striking ‘‘505,
or 4980B’’ and inserting ‘‘or 505’’.
(b) ERISA.—
(1) IN GENERAL.—Part 6 of subtitle B of title
I of the Employee Retirement Income Security Act
of 1974 is amended—
(A) by striking sections 601 through 606,
and
(B) in section 609, as added by section
4301 of the Omnibus Budget Reconciliation Act
of 1993, by striking subsection (d).
(2) 
CONFORMING
AMENDMENT.—Section
502(c)(1) of such Act (29 U.S.C. 1132(c)(1)) is
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amended by striking ‘‘paragraph (1) or (4) of sec-
tion 606 or’’.
(c) PUBLIC HEALTH SERVICE ACT.—Title XXII of
the Public Health Service Act is repealed.
(d) EFFECTIVE DATE.—The repeals and amend-
ments made by this section shall apply to health plans of
employers as of the January 1, 1995.
(e) NOTICE OF BENEFITS.—In the case of continu-
ation coverage which is in effect on January 1, 1995,
under a provision of law repealed by this section, such con-
tinuation may not be discontinued without 30-day notice
to the individual of such discontinuation. Such notice shall
include such information with respect to continuation of
coverage through a health plan purchasing cooperative as
the Health Care Standards Commission shall specify.
Subtitle H—Definitions
SEC. 1701. DEFINITIONS.
(a) ELIGIBILITY.—In this title and title II:
(1) ELIGIBLE INDIVIDUAL.—The term ‘‘eligible
individual’’ means, with respect to a HPPC area, an
individual who—
(A) is an eligible employee,
(B) is an eligible resident, or
(C) an eligible family member of an eligible
employee or eligible resident.
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(2) ELIGIBLE EMPLOYEE.—The term ‘‘eligible
employee’’ means, with respect to a HPPC area, an
individual residing in the area who is the employee
of a small employer.
(3) ELIGIBLE FAMILY MEMBER.—The term ‘‘el-
igible family member’’ means, with respect to an eli-
gible employee or other principal enrollee, an individ-
ual who—
(A)(i) is the spouse of the employee or
principal enrollee, or
(ii) is an unmarried dependent child under
22 years of age, including—
(I) an adopted child or recognized
natural child, and
(II) a stepchild or foster child but
only if the child lives with the employee or
principal enrollee in a regular parent-child
relationship,
or such an unmarried dependent child regard-
less of age who is incapable of self-support be-
cause of mental or physical disability which ex-
isted before age 22;
(B) is a citizen or national of the United
States, an alien lawfully admitted to the United
States for permanent residence, or an alien oth-
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erwise lawfully residing permanently in the
United States under color of law; and
(C) with respect to an eligible resident, is
not a medicare-eligible individual.
(4) ELIGIBLE RESIDENT.—
(A) IN GENERAL.—The term ‘‘eligible resi-
dent’’ means, with respect to a HPPC area, an
individual who is not an eligible employee, is re-
siding in the area, and is a citizen or national
of the United States, an alien lawfully admitted
for permanent residence, and an alien granted
asylum, admitted as a refugee, or whose depor-
tation has been withheld.
(B) EXCLUSION OF CERTAIN INDIVIDUALS
OFFERED COVERAGE THROUGH A LARGE EM-
PLOYER.—
(i) IN GENERAL.—The term ‘‘eligible
resident’’ does not include an individual
who—
(I) is covered under an AHP pur-
suant to an offer made under section
1005(b)(1)(A), or
(II) subject to clause (ii), could
be covered under an AHP as the prin-
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cipal enrollee pursuant to such an
offer if such offer had been accepted.
(ii) EXCEPTION FOR PART-TIME, SEA-
SONAL, AND
TEMPORARY
EMPLOYEES.—
Subclause (II) of clause (i) shall not apply
to an individual who is offered coverage
under an AHP by an employer and who is
only a part-time, seasonal, or temporary
employee of that employer. For purposes of
the previous sentence, the term ‘‘part-
time’’ means employment for an average of
less than 25 hours a week on a monthly
basis and an employee who is employed for
more than 8 weeks in a 12-month period
for an employer shall not be considered to
be seasonal or temporary employee.
(C) TREATMENT
OF
MEDICARE
BENE-
FICIARIES.—The term ‘‘eligible resident’’ does
not include a medicare-eligible beneficiary.
(5) ENROLLEE
UNIT.—The term ‘‘enrollee
unit’’ means one unit in the case of coverage on an
individual basis or in the case of coverage on a fam-
ily basis.
(6) MEDICARE BENEFICIARY.—The term ‘‘med-
icare beneficiary’’ means an individual who is enti-
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(A) CLOSED.—
(i) IN GENERAL.—A plan is ‘‘closed’’
if the plan is limited by structure or law to
one or more large employers.
(ii) GRANDFATHER FOR TAFT-HART-
LEY
PLANS.—A plan not described in
clause (i) that is maintained pursuant to
one or more collective bargaining agree-
ments between one or more employee orga-
nizations and one or more employers and
that was established as of September 7,
1993, shall be considered to be a closed
plan.
(iii) UNIVERSITY PLANS.—Nothing in
this subparagraph shall be construed as
preventing a university from offering en-
rollment, in a closed plan maintained by a
university, to students matriculating at the
university.
(iv) SMALL EMPLOYERS.—Subject to
clause (ii), a plan is not a ‘‘closed’’ plan if
the plan was formed by one or more small
employers or for the benefit of employees
of such an employer.
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(B) OPEN.—A plan is ‘‘open’’ if the plan
is not closed (within the meaning of subpara-
graph (A)).
(c) OTHER TERMS.—In this title and titles II and
VI:
(1) HEALTH PLAN.—The term ‘‘health plan’’
means a plan that provides health benefits, whether
through directly, through insurance, or otherwise,
and includes a policy of health insurance, a contract
of a service benefit organization, or a membership
agreement with a health maintenance organization
or other prepaid health plan, and also includes an
employee welfare benefit plan or a multiple employer
welfare plan (as such terms are defined in section 3
of the Employee Retirement Income Security Act of
1974).
(2) SMALL EMPLOYER; LARGE EMPLOYER.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), the term ‘‘small employer’’ means
an employer that normally employed fewer than
101 employees during a typical business day in
the previous year and the term ‘‘large em-
ployer’’ means an employer that is not a small
employer.
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(B) SPECIAL RULE FOR LARGE EMPLOY-
ERS.—Subject to subparagraph (C), the Com-
mission shall provide a procedure by which, in
the case of an employer that is not a small em-
ployer but normally employs fewer than 101
employees (or, in the case of a State making an
election described in subparagraph (C)(i), the
number of employees specified under the State
law) in a HPPC area (or other locality identi-
fied by the Commission) during a typical busi-
ness day, the employer, upon application, would
be considered to be a small employer with re-
spect to such employees in the HPPC area (or
other locality). Such procedure shall be de-
signed so as to prevent the adverse selection of
employees with respect to which the previous
sentence is applied.
(C) STATE ELECTION.—
(i) IN GENERAL.—Subject to section
1101(a)(3) and clause (ii), a State may by
law, with respect to employers in the State,
substitute for ‘‘101’’ in subparagraphs (A)
and (B) any greater number, so long as—
(I) such number is applied uni-
formly to all employers (other than
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employers described in clause (ii)) in
a State, and
(II) the State demonstrates, to
the satisfaction of the Commission,
that as of the time of enactment of
the State law not more than 50 per-
cent of all employees in the State are
employees of small employers (as de-
termined based upon such substi-
tution).
(ii) EXCEPTION FOR CERTAIN LARGE
MULTI-STATE
EMPLOYERS.—Clause 
(i)
shall not apply to an employer that nor-
mally employed at least 500 employees
during a typical business day in the pre-
vious year in each of at least 2 different
States.
(3) PREMIUM
CLASS.—The term ‘‘premium
class’’ means a class established under section
1205(a)(2).
(4) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of Health and Human Services.
(5) STATE.—The term ‘‘State’’ includes the
District of Columbia, Puerto Rico, the Virgin Is-
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lands, Guam, American Samoa, and the Northern
Mariana Islands.
(6) TYPE
OF
ENROLLMENT.—There are 4
‘‘types of enrollment’’:
(A) Coverage only of an individual (re-
ferred to in this title as enrollment ‘‘on an indi-
vidual basis’’).
(B) Coverage of an individual and the indi-
vidual’s spouse.
(C) Coverage of an individual and one
child.
(D) Coverage of an individual and more
than one eligible family member.
The types of coverage described in subparagraphs
(B) through (D) are collectively referred to in this
title as enrollment ‘‘on a family basis’’.
(7) UNIFORM SET OF EFFECTIVE BENEFITS.—
The term ‘‘uniform set of effective benefits’’ means,
for a year, such set of benefits as recommended by
the Commission under section 1302(a), if not dis-
approved under such section.
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TITLE II—LOW-INCOME ASSIST-
ANCE 
FOR 
HEALTH 
COV-
ERAGE
Subtitle A—Low-Income Assistance
SEC. 2001. ELIGIBILITY.
(a) ENROLLEES UNDER ACCOUNTABLE HEALTH
PLANS.—Each low-income individual (as defined in sec-
tion 2009(a)(1)(A)) who is not a medicare-eligible individ-
ual is eligible—
(1) for assistance under section 2002(a) with
respect to premiums,
(2) for assistance under section 2003(a) with
respect to cost-sharing otherwise imposed by the
plan, and
(3) in the case of a very low-income individual,
for assistance under section 2004 with respect to
certain items and services.
(b) MEDICARE-ELIGIBLE INDIVIDUALS.—Each medi-
care-eligible individual who is a low-income individual is
eligible—
(1) for assistance under section 2002(b) with
premiums under the medicare program, and
(2) in the case of a very low-income individual,
for assistance under section 2003(b) with respect to
other medicare cost-sharing and for assistance under
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section 2004 with respect to certain items and serv-
ices.
SEC. 2002. PREMIUM ASSISTANCE.
(a) IN GENERAL.—
(1) VERY LOW-INCOME INDIVIDUALS.—In the
case of a very low-income individual (as defined in
section 2009(a)(3)) who is enrolled in an AHP, the
premium assistance under this section consists of—
(A) an adjustment in premiums charged
the individual under the plan, in accordance
with section 1205(c)(1); and
(B) payment to the accountable health
plan (on behalf of the individual and family
members) of the applicable Federal assistance
amount (as defined in section 2009(c)(1)) for
enrollment under the plan.
(2) MODERATELY LOW-INCOME INDIVIDUALS.—
In the case of a moderately low-income individual
(as defined in section 2009(a)(2)) who is enrolled in
an AHP, the premium assistance under this section
consists of—
(A) an adjustment in premiums charged
the individual under the plan, in accordance
with section 1205(c)(2); and
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(B) payment to the accountable health
plan (on behalf of the individual and family
members) of the applicable Federal assistance
amount (as defined in section 2009(c)(1)) for
enrollment under the plan.
(b) MEDICARE-ELIGIBLE INDIVIDUALS.—In the case
of a medicare-eligible individual described in section
2001(b), the premium assistance under this subsection
shall consist of payment for premiums imposed under part
A (if any) or part B of title XVIII of the Social Security
Act. Such assistance shall be provided in a manner so that
no such premium amount is deducted from monthly bene-
fits or transfers under section 1818 or 1840 of such Act.
SEC. 2003. COST-SHARING ASSISTANCE.
(a) NOMINAL COST-SHARING FOR LOW-INCOME IN-
DIVIDUALS.—
(1) IN GENERAL.—In the case of a low-income
individual described in section 2001(a) who is en-
rolled in an AHP in an enrollee unit, the cost-shar-
ing assistance under this subsection shall consist
of—
(A) an accountable health plan’s reduction,
in accordance with section 1202(c), in the cost-
sharing otherwise imposed to amounts that are
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nominal (as specified by the Commission, con-
sistent with paragraph (2)); and
(B) payment to the accountable health
plan (on behalf of the individual and family
members) by the Commission of the adjusted
per enrollee cost-sharing assistance amount de-
termined under paragraph (3).
(2) NOMINAL.—In establishing what is ‘‘nomi-
nal’’ for purposes of paragraph (1), the Commission
shall consider regulations established to carry out
section 1916(a)(3) of the Social Security Act (as in
effect before the date of the enactment of this Act).
(3) ADJUSTED PER ENROLLEE COST-SHARING
ASSISTANCE AMOUNT.—
(A) IN GENERAL.—For purposes of this
section, the term ‘‘adjusted per enrollee cost-
sharing assistance amount’’ means, for a year,
the product of—
(i) the amount determined under sub-
paragraph (B)(i), divided by the number
determined under subparagraph (B)(ii);
and
(ii) the premium class assistance fac-
tor established under subparagraph (C).
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(B) DETERMINATION
OF
AVERAGE
PER
ENROLLEE
COST-SHARING
AMOUNT.—Before
the beginning of each year the Commission
shall estimate—
(i) the total amount of cost-sharing
assistance to be provided under this section
to enrollee units in the year, and
(ii) the average number of enrollee
units (as defined in section 1701(a)(5)) to
be provided such assistance in the year.
(C) PREMIUM
CLASS
ASSISTANCE
FAC-
TOR.—The Commission shall establish a factor,
for each premium class, that reflects the ratio
of the—
(i) the average value of the cost-shar-
ing assistance furnished under this section
to individuals within the premium class, to
(ii) the average value of the cost-shar-
ing assistance furnished under this sub-
section to individuals within all the pre-
mium classes.
(b) CERTAIN MEDICARE-ELIGIBLE INDIVIDUALS.—
In the case of a very low-income individual described in
section 2001(b), the cost-sharing assistance under this
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subsection shall consist of payment being made under title
XVIII of the Social Security Act—
(1) without regard to coinsurance under such
title (including coinsurance described in section 1813
of such title);
(2) without regard to deductibles established
under such title (including those described in section
1813 and section 1833(b) of such title); and
(3) as though any reference to ‘‘80 percent’’ in
section 1833(a) of such title were a reference to
‘‘100 percent’’.
(c) APPROPRIATION TO COVER PART A ASSIST-
ANCE.—Section 1817(a) of the Social Security Act (42
U.S.C. 1395i(a)) is amended by adding at the end the fol-
lowing new sentence: ‘‘In addition to the amounts appro-
priated under this subsection, there are hereby appro-
priated to the Trust Fund, out of any moneys in the
Treasury not otherwise appropriated, amounts equivalent
to the reductions in the deductibles and coinsurance estab-
lished under section 1813 effected under section 2003(b)
of the Managed Competition Act of 1993.’’.
SEC. 2004. ASSISTANCE FOR CERTAIN ITEMS AND SERV-
ICES.
(a) IN GENERAL.—In the case of a very low-income
individual, the special assistance under this section con-
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sists of payment under this section with respect to items
and services described in subsection (b), subject to sub-
section (c).
(b) ITEMS AND SERVICES COVERED.—
(1) IN GENERAL.—Subject to paragraph (2),
the items and services described in this subsection
are—
(A) prescription drugs,
(B) eyeglasses and hearing aids, and
(C) such other items and services as the
Commission determines were commonly pro-
vided to individuals described in section
1902(a)(10)(A)(i) of the Social Security Act
under State medicaid plans under title XIX of
such Act (as in effect as of the date of the en-
actment of this Act).
(2) EXCLUSIONS.—Items and services described
in this subsection shall not include—
(A) items and services included in the uni-
form set of effective benefits, and
(B) 
services 
described 
in 
section
2101(c)(1)(A) and similar services.
(c) NOMINAL COPAYMENTS.—The Commission shall
provide for cost-sharing under this section in an amount
that is nominal (within the meaning of section 1916(a)(3)
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of the Social Security Act, as in effect as of the date of
the enactment of this Act).
(d) PAYMENT RULES.—The Commission shall pro-
vide for such rules relating to—
(1) qualifications of providers of items and serv-
ices, and
(2) use of carriers in the administration of this
section,
as may be appropriate to carry out this section.
SEC. 2005. COMPUTATION OF BASE FEDERAL PREMIUM
AMOUNT.
(a) FORMULA.—
(1) IN GENERAL.—For purposes of this Act,
the ‘‘base Federal premium amount’’ for an individ-
ual residing in a HPPC area is equal to the product
of—
(A) reference premium rate (as defined in
section 2009(c)(4)) for the individual, and
(B) the national subsidy percentage (com-
puted under paragraph (2)).
(2) 
NATIONAL
SUBSIDY
PERCENTAGE.—In
paragraph (1)(B), the term ‘‘national subsidy per-
centage’’ means, for a year—
(A) the amount specified under subsection
(b)(1), divided by
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(B) the total amount of low-income assist-
ance that would be provided if the national sub-
sidy percentage were equal to 100 percent;
expressed as a percentage.
(b) COMPUTATION
OF TOTAL FEDERAL AMOUNT
AVAILABLE FOR LOW-INCOME ASSISTANCE.—
(1) IN GENERAL.—The amount specified in this
paragraph for a year is—
(A) the sum determined under paragraph
(2) for the year, reduced by
(B) the total amount of reductions under
paragraph (3) for the year.
(2) AVAILABLE FEDERAL FUNDS.—
(A) 1995 THROUGH
1999.—The Health
Care Standards Commission shall compute, in
consultation with the Secretary of Health and
Human Services and the Director of the Office
of Management and Budget, before the begin-
ning of each of years 1995, 1996, 1997, 1998,
and 1999, the sum of—
(i) the total dollar amount of Federal
financial participation that would have
been payable to States under section 1903
of the Social Security Act (including such
a plan operating under a waiver under sec-
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tion 1115 of such Act) for calendar quar-
ters during the year, based on their plans
in effect as of the date of the enactment of
this Act, taking into account changes
scheduled to occur in such a plan as of
such date; and
(ii) subject to paragraph (4)(A), the
total net amount of additional revenues es-
timated by the Secretary of the Treasury
to be received during the year due to the
amendments made by subtitle A of title I
and subtitle C of this title.
(B) AFTER 1999.—The Health Care Stand-
ards Commission shall compute, in consultation
with the Secretary of Health and Human Serv-
ices and the Director of the Office of Manage-
ment and Budget, before the beginning of 2000
and each subsequent year the sum of—
(i) the total dollar amount computed
under subparagraph (A)(i) (or this clause)
for the previous year, increased by the per-
centage increase in the gross domestic
product (as determined by the Secretary of
Commerce) for the 4-quarter period ending
in June of the previous year; and
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(ii) subject to paragraph (4)(A), the
total net amount of additional revenues es-
timated by the Secretary of the Treasury
to be received during the year due to the
amendments made by subtitle A of title I
and subtitle C of this title.
(3) 
REDUCTIONS.—Subject 
to 
paragraph
(4)(B), the total amount of reductions described in
this paragraph for a year are the sum of the follow-
ing:
(A) LONG-TERM
CARE
PHASE-DOWN
AS-
SISTANCE.—The total amount of long-term care
phase-down assistance to which States are enti-
tled under section 2101 for calendar quarters
during the year.
(B) 
MEDICARE
LOW-INCOME
ASSIST-
ANCE.—The total amount, estimated by the
Commission, of the assistance to be provided
under sections 2002(b) and 2003(b) during the
year.
(C) COST-SHARING.—The total amount,
estimated by the Commission, of the cost-shar-
ing assistance to be provided under section
2003(a) during the year.
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(D) SPECIAL LOW-INCOME ASSISTANCE.—
The total amount, estimated by the Commis-
sion, of the special assistance to be provided
under section 2004 during the year.
(E) 
GRANTS
AND
OTHER
EXPENDI-
TURES.—In order to provide for grants under
section 2006(g) and additional expenditures
under subtitle E of title I, subtitle B of title
III, subtitle A of title IV, and title V,
$523,000,000.
(4) ADJUSTMENT FOR OVER- AND UNDER-ESTI-
MATES.—
(A) FUNDS AVAILABLE.—The amounts de-
termined under subparagraphs (A)(ii) and
(B)(ii) of paragraph (2) for a year shall be in-
creased or decreased by the amount by which
the amount estimated under such respective
subparagraph for the preceding year was below,
or above, the actual amount of revenues for
such year.
(B) REDUCTIONS.—The amounts specified
in subparagraphs (A) through (D) of paragraph
(3) for a year shall be increased or decreased
by the amount by which the respective amount
estimated under such subparagraph for the pre-
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ceding year was below, or above, the actual
amount described in such subparagraph for
such year.
SEC. 2006. APPLICATIONS FOR ASSISTANCE.
(a) IN GENERAL.—Subject to section 2008, any indi-
vidual who seeks assistance under this subtitle (with re-
spect to himself or herself or a family member) shall sub-
mit a written application, by person or mail, to the Com-
mission.
(b) BASIS FOR DETERMINATION.—Subject to section
2008 and reconciliation under section 2007(b), eligibility
for assistance under this subtitle shall be based on 4 times
the family adjusted total income (as defined in section
2009(b)(1)) during the 3 months preceding the month in
which the application is filed.
(c) FORM AND CONTENTS.—An application for as-
sistance under this subtitle shall be in a form and manner
specified by the Commission and shall require—
(1) the provision of information necessary to
make the determinations described in subsection (b),
(2) the provision of information respecting the
AHP in which the individual is enrolled (or is in the
process of enrolling), and
(3) the individual to assign rights to assistance
under section 2003 to such plan.
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Such form also shall include notice that the subsidies
under this subtitle will be made as a direct reduction of
premiums and cost-sharing under the AHP involved.
(d) FREQUENCY OF APPLICATIONS.—
(1) IN GENERAL.—An application for assistance
under this subtitle may be filed at any time during
the year and may be resubmitted (but, except as
provided in paragraph (3), not more frequently than
once every 3 months) based upon a change of in-
come or family composition.
(2) NEED TO REAPPLY.—In the case of an indi-
vidual who—
(A) is entitled to assistance under this sub-
title in September of a year, and
(B) wishes to remain eligible for assistance
for months beginning with January of the fol-
lowing year,
the individual (or a family member) must file with
the Commission in October of that preceding year a
new application for assistance. If a new application
under this paragraph is not filed with respect to an
individual, an application for such assistance with
respect to the individual may not be filed during No-
vember or December of that preceding year.
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(3) CORRECTION
OF
INCOME.—Nothing in
paragraph (1) shall be construed as preventing an
individual or family from, at any time, submitting an
application to reduce the amount of assistance under
this subtitle based upon an increase in income from
that stated in the previous application.
(e) TIMING OF ASSISTANCE.—
(1) IN GENERAL.—If an application for assist-
ance under this subtitle is filed—
(A) on or before the 15th day of a month,
assistance under this subtitle shall be available
for premiums for months after such month and,
with respect to the cost-sharing, for expenses
incurred after such month, and, with respect to
special assistance, for items and services fur-
nished after such month; or
(B) after the 15th day of a month, assist-
ance under this subtitle shall be available for
premiums for months after the month following
such month and, with respect to the cost-shar-
ing, for expenses incurred after such following
month, and, with respect to special assistance,
for items and services furnished after such fol-
lowing month.
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(2) WELFARE RECIPIENTS.—In the case of an
individual or family with respect to whom an appli-
cation for assistance is not required because of sec-
tion 2008, in applying paragraph (1), the date of ap-
proval of aid or benefits described in such section
shall be considered the date of filing of an applica-
tion for assistance under this subtitle.
(f) VERIFICATION.—The Commission shall provide
for verification, on a sample basis or other basis, of the
information supplied in applications under this subtitle.
This verification shall be separate from the reconciliation
provided under section 2007.
(g) HELP
IN COMPLETING APPLICATIONS.—The
Commission shall provide, from funds appropriated to
carry out this subtitle, for grants to public or private non-
profit entities that will make available assistance to indi-
viduals and families in filing applications for assistance
under this subtitle. The Commission shall make grants in
a manner that provides such assistance at a variety of
sites (such as low-income housing projects and shelters for
homeless individuals) that are readily accessible to individ-
uals and families eligible for assistance under this subtitle.
The total amount of the funds provided in any fiscal year
under grants under this subsection may not exceed
$10,000,000.
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(h) PENALTIES FOR INACCURATE INFORMATION.—
(1) INTEREST FOR UNDERSTATEMENTS.—Each
individual who knowingly understates income re-
ported in an application for assistance under this
subtitle or otherwise makes a material misrepresen-
tation of information in such an application shall be
liable to the Health Care Standards Commission for
excess payments made based on such understate-
ment or misrepresentation, and for interest on such
excess payments at a rate specified by the Commis-
sion.
(2) PENALTIES
FOR
MISREPRESENTATION.—
Each individual who knowingly misrepresents mate-
rial information in an application for assistance
under this subtitle shall be liable to the Health Care
Standards Commission for $1,000 or, if greater,
three times the excess payments made based on such
misrepresentation.
(i) FILING OF APPLICATION DEFINED.—Except as
provided in subsection (e)(2), for purposes of this subtitle,
an application under this subtitle is considered to be
‘‘filed’’ on the date on which the complete application, in-
cluding all documentation required to act on the applica-
tion, has been filed with the Commission.
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SEC. 2007. RECONCILIATION OF PREMIUM ASSISTANCE
THROUGH USE OF INCOME STATEMENTS.
(a) REQUIREMENT FOR FILING OF INCOME STATE-
MENT.—
(1) IN GENERAL.—Subject to section 2008, in
the case of a family which is receiving low-income
assistance under this subtitle for any month in a
year, a member of the family shall file with the
Commission, by not later than April 15 of the fol-
lowing year, a statement that verifies the family’s
total adjusted family income for the taxable year
ending during the previous year. Such a statement
shall provide information necessary to determine the
family adjusted total income during the year and the
number of family members in the family as of the
last day of the year.
(2) USE OF INCOME TAX RETURN.—The Com-
mission shall provide a process under which the fil-
ing of a Federal income tax return shall constitute
the filing of a income statement under paragraph
(2).
(3) EXTENSION.—The Commission shall permit
the extension of the filing deadline under paragraph
(1) in such cases as the Commission determines to
be appropriate. The Commission shall take into ac-
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•HR 3222 SC2
count the extensions permitted for the filing of Fed-
eral income tax returns.
(b) RECONCILIATION
OF
PREMIUM
ASSISTANCE
BASED ON ACTUAL INCOME.—Based on and using the in-
come reported in the statement filed under subsection (a)
with respect to a family or individual, subject to section
2008, the Commission shall compute the amount of assist-
ance that should have been provided under section 2002
with respect to premiums for the family in the year in-
volved. If the amount of such assistance computed is—
(1) greater than the amount of premium assist-
ance provided, the Commission shall provide for pay-
ment to the family or individual involved of an
amount equal to the amount of the deficit, or
(2) less than the amount of assistance provided,
the Commission shall require the family or individ-
ual to pay to the Commission (to the credit of the
program under this subtitle) an amount equal to the
amount of the excess payment.
(c) DISQUALIFICATION FOR FAILURE TO FILE.—
Subject to section 2008, in the case of any individual with
respect to whom an information statement under sub-
section (a) is required to be filed in a year and that fails
to file such a statement by the deadline specified in such
subsection, the individual is not eligible for assistance
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•HR 3222 SC2
under this subtitle after May 1 of such year. The Commis-
sion shall waive the application of this subsection if there
is established, to the satisfaction of the Commission, good
cause for the failure to file the statement on a timely
basis.
(d) PENALTIES FOR FALSE INFORMATION.—Any in-
dividual that provides false information in a statement
under subsection (a) is subject to a criminal penalty to
the same extent as a criminal penalty may be imposed
under section 1128B(a) of the Social Security Act with
respect to a person described in clause (ii) of such section.
(e) NOTICE
OF REQUIREMENT.—The Commission
shall provide for written notice, in March of each year,
of the requirement of subsection (a) to each family which
received assistance under this subtitle in any month dur-
ing the preceding year and to which such requirement ap-
plies.
(f) TRANSMITTAL OF INFORMATION.—The Commis-
sion of the Treasury shall transmit annually to the Com-
mission such information relating to the adjusted total in-
come of individuals for the taxable year ending in the pre-
vious year as may be necessary to verify the reconciliation
of assistance under this section.
(g) CONSTRUCTION.—Nothing in this section shall be
construed as authorizing reconciliation of assistance pro-
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•HR 3222 SC2
vided with respect to cost-sharing assistance under section
2003 or special assistance under section 2004.
SEC. 2008. TREATMENT OF CERTAIN CASH ASSISTANCE RE-
CIPIENTS.
In the case of a family that has been determined to
be eligible for aid under part A or E of title IV of the
Social Security Act or an individual who has been deter-
mined to be eligible for supplemental security income ben-
efits under title XVI of such Act—
(1) the family or individual is deemed, without
the need to file an application for assistance under
section 2006, to have adjusted total income below
100 percent of the State-adjusted poverty level for
the State,
(2) the family or individual need not file a
statement under section 2007(a), and
(3) the assistance received by the family is not
subject to reconciliation under section 2007(b).
SEC. 2009. DEFINITIONS.
(a) DEFINITIONS RELATING TO LOW-INCOME INDI-
VIDUALS.—In this subtitle:
(1) LOW-INCOME INDIVIDUAL.—
(A) IN GENERAL.—The term ‘‘low-income
individual’’ means, in the case of—
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•HR 3222 SC2
(i) a medicare-eligible individual resid-
ing in a State, such an individual whose
family adjusted total income (as defined in
subsection (b)(1)) is less than 120 percent
of the State-adjusted poverty level for the
State; or
(ii) an individual who is not a medi-
care-eligible individual and who resides in
a State, an eligible individual (as defined
in section 1701(a)(1)) whose family ad-
justed total income is less than 200 per-
cent of the State-adjusted poverty level for
the State.
(2) MODERATELY LOW-INCOME INDIVIDUAL.—
The term ‘‘moderately low-income individual’’ means
a low-income individual (as defined in paragraph
(1)) who is not a very low-income individual (as de-
fined in paragraph (3).
(3) VERY LOW-INCOME INDIVIDUAL.—The term
‘‘very low-income individual’’ means, with respect to
an individual residing in a State, a low-income indi-
vidual whose family adjusted total income is less
than 100 percent of the State-adjusted poverty level
for the State.
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(b) DEFINITIONS RELATING TO INCOME AND POV-
ERTY LINE.—In this subtitle:
(1) FAMILY
ADJUSTED
TOTAL
INCOME.—The
term ‘‘family adjusted total income’’ means, with re-
spect to an individual, the sum of the modified total
income for the individual and all the other eligible
family members.
(2) MODIFIED
FAMILY
INCOME.—The term
‘‘modified family income’’ means the sum of—
(A) the adjusted gross income (as defined
in section 62(a) of the Internal Revenue Code
of 1986) of the taxpayer and family members
for the taxable year determined without regard
to sections 911, 931, and 933 of such Code, de-
termined without the application of paragraphs
(6) and (7) of section 62(a) of such Code and
without the application of section 162(l) of such
Code, plus
(B) the interest received or accrued by the
taxpayer and family members during such tax-
able year which is exempt from income, plus
(C) the amount of social security benefits
(described in section 86(d) of such Code) which
is not includable in gross income of the tax-
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payer and family members under section 86 of
such Code.
(3) STATE-ADJUSTED
POVERTY
LEVEL
DE-
FINED.—
(A) IN
GENERAL.—The term ‘‘State-ad-
justed poverty level’’ means, with respect to an
individual resident in a State, the poverty line
(as defined in paragraph (4)) multiplied by the
State adjustment factor (established under sub-
paragraph (B)) for the State.
(B) STATE ADJUSTMENT FACTORS.—The
Health Care Standards Commission shall estab-
lish, for each State, a State adjustment factor
that reflects the relative cost-of-living in the
State compared to the cost-of-living in the con-
tinental United States (including Alaska) and
Hawaii. The weighted average of such factors
shall be 1. Such factors shall be updated annu-
ally.
(4) POVERTY LINE.—The term ‘‘poverty line’’
means the income official poverty line as defined by
the Office of Management and Budget, and revised
annually in accordance with section 673(2) of the
Omnibus Budget Reconciliation Act of 1981.
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(5) FAMILY SIZE.—The family size to be ap-
plied under this subtitle, with respect to family ad-
justed total income, is the number of eligible family
members (as defined in section 1701(a)(3)).
(c) DEFINITIONS RELATING
TO ASSISTANCE
AND
PREMIUM AMOUNTS.—In this Act:
(1) 
APPLICABLE
FEDERAL
ASSISTANCE
AMOUNT.—The term ‘‘applicable Federal assistance
amount’’ means, with respect to—
(A) a very low-income individual, the base
Federal premium amount (as determined under
section 2005(a)(1)), or
(B) a moderately low-income individual,
the amount by which (i) the applicable low-in-
come premium amount (as defined in para-
graph (2)), exceeds (ii) the base individual pre-
mium (as defined in paragraph (3)),
reduced by the amount of any contribution made by
an employer with respect to coverage of the individ-
ual.
(2) 
APPLICABLE
LOW-INCOME
PREMIUM
AMOUNT.—The term ‘‘applicable low-income pre-
mium amount’’ means, with respect to a low-income
individual, the base Federal premium amount (deter-
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mined under section 2005(a)(1)) plus the product
of—
(A) the individual responsibility percentage
(as defined in paragraph (5)), and
(B) the amount by which (i) the reference
premium rate (as defined in paragraph (4)), ex-
ceeds (ii) the base Federal premium amount.
(3) BASE
INDIVIDUAL
PREMIUM.—The term
‘‘base individual premium’’ means, with respect to
an individual, the product of—
(A) the individual responsibility percentage
(as defined in paragraph (5)), and
(B) the reference premium rate (as defined
in paragraph (4)).
(4) REFERENCE
PREMIUM
RATE.—The term
‘‘reference premium rate’’ means, with respect to an
individual residing in a HPPC area, the lowest pre-
mium—
(A) established by an open AHP which en-
rolls at least such proportion of eligible individ-
uals in the HPPC area as the Commission shall
specify, and
(B) offered in the area for the premium
class applicable to such individual (including
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•HR 3222 SC2
the HPPC overhead amount established under
section 1105(b)(3)).
(5) INDIVIDUAL
RESPONSIBILITY
PERCENT-
AGE.—The term ‘‘individual responsibility percent-
age’’ means—
(A) with respect to a very low-income indi-
vidual, 0 percentage points,
(B) with respect to a moderately low-in-
come individual, the number of percentage
points by which the family’s family adjusted
total income (expressed as a percent of the ap-
plicable poverty line) exceeds 100 percentage
points, and
(C) with respect to any other individual,
100 percentage points.
Subtitle B—Long-Term Care Phase-
Down Assistance to States
SEC. 2101. LONG-TERM CARE PHASE-DOWN ASSISTANCE.
(a) IN GENERAL.—Subject to subsection (b), if the
excess percentage (as defined in subsection (c)(3)) for a
State is greater than 0 percentage points, the State is en-
titled for each calendar quarter in 1995 through 1998 to
payment equal to 1⁄4 of the product of—
(1) such excess percentage,
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•HR 3222 SC2
(2) the applicable phase-down percentage for
the year, described in subsection (c)(4)), and
(3) 1⁄2 of the amount described in subsection
(c)(1)(B).
(b) MAINTENANCE OF EFFORT REQUIRED.—A State
is not eligible for assistance under subsection (a) for a
calendar quarter unless the State provides assurances sat-
isfactory to the Commission that the State is incurring
expenses (for services described in subsection (c)(1)(A))
in an amount not less than the sum of—
(1) the amount of assistance under subsection
(a), and
(2) 1⁄4 of the product of—
(A) the State’s effective State medicaid
percentage (as defined in subsection (c)(2)),
and
(B) 1⁄2 of the amount described in sub-
section (c)(1)(B).
(c) DEFINITIONS.—For purposes of this section:
(1) 
LONG-TERM
CARE
PERCENTAGE.—The
‘‘long-term care percentage’’ for a State is—
(A) the portion of the amount described in
subparagraph (B) that is are attributable to
medical assistance for nursing facility services,
intermediate care facility services for the men-
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tally retarded, home health care services, and
home and community-based services, divided by
(B) the total amount of Federal and State
expenditures for medical assistance under the
State plan under title XIX of the Social Secu-
rity Act for calendar quarters during fiscal
years 1992 and 1993;
expressed as a percentage.
(2) EFFECTIVE
STATE
MEDICAID
PERCENT-
AGE.—The ‘‘effective State medicaid percentage’’ for
a State is—
(A)(i) the amount described in subpara-
graph (B), reduced by (ii) the sum of the
amount of the Federal financial participation
under section 1903(a) of the Social Security
Act paid to the State for calendar quarters dur-
ing fiscal years 1992 and 1993 and the amount
of health-care related taxes (as defined in sec-
tion 1903(w)(3)(A) of such Act) received by the
State during such fiscal years, divided by
(B) the total amount of the Federal and
State expenditures under its plan under title
XIX of the Social Security Act during calendar
quarters in fiscal years 1992 and 1993.
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(3) EXCESS PERCENTAGE.—The term ‘‘excess
percentage’’ means, for a State, percentage by which
(A) the long-term care percentage (as defined in
paragraph (1)) exceeds (B) 2 percentage points plus
the effective State medicaid percentage (as defined
in paragraph (2)).
(4) APPLICABLE PHASE-DOWN PERCENTAGE.—
The ‘‘applicable phase-down percentage’’ for—
(A) 1995, is 80 percent,
(B) 1996, is 60 percent,
(C) 1997, is 40 percent, and
(D) 1998, is 20 percent.
Subtitle C—Financing
PART 1—MEDICARE SAVINGS
SEC. 2201. REDUCTION IN UPDATE FOR INPATIENT HOS-
PITAL SERVICES.
(a) PPS HOSPITALS.—Section 1886(b)(3)(B)(i) of
the Social Security Act (42 U.S.C. 1395ww(b)(3)(B)(i)),
as amended by section 13501(a)(1) of the Omnibus Budg-
et Reconciliation Act of 1993 (hereafter in this part re-
ferred to as ‘‘OBRA–1993’’), is amended—
(1) in subclause (XII), by striking ‘‘fiscal year
1997, the market basket percentage increase minus
0.5 percentage point’’ and inserting ‘‘each of the fis-
cal years 1997, 1998, and 1999, the market basket
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percentage increase minus 2.5 percentage points’’;
and
(2) in subclause (XIII), by striking ‘‘fiscal year
1998’’ and inserting ‘‘fiscal year 2000’’.
(b) 
PPS-EXEMPT
HOSPITALS.—Section
1886(b)(3)(B)(ii)(V) 
of 
such 
Act 
(42 
U.S.C.
1395ww(b)(3)(B)(ii)(V)), 
as 
amended 
by 
section
13502(a)(1) of OBRA–1993, is amended by striking
‘‘through 1997’’ and inserting ‘‘through 1999’’.
SEC. 2202. REDUCTION IN CONVERSION FACTOR FOR PHY-
SICIAN FEE SCHEDULE FOR NON-PRIMARY
CARE SERVICES.
Section 1848(d)(3)(A) of the Social Security Act (42
U.S.C. 1395w–4(d)(3)(A)), as amended by section
13511(a)(1) of OBRA–1993, is amended—
(1) in clause (i), by striking ‘‘through (v)’’ and
inserting ‘‘through (vi)’’;
(2) in clause (vi), by striking ‘‘(iv) and (v)’’ and
inserting ‘‘(iv), (v), and (vi)’’;
(3) by redesignating clause (vi) as clause (vii);
and
(4) by inserting after clause (v) the following
new clause:
‘‘(vi) ADJUSTMENT
IN
PERCENTAGE
INCREASE
FOR
YEARS
FROM
1996
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THROUGH 1999.—In applying clause (i) for
services furnished during the period begin-
ning January 1, 1996, and ending Decem-
ber 31, 1999, the percentage increase in
the appropriate update index shall be re-
duced by such percent as the Secretary de-
termines will result in a reduction in ag-
gregate payments for physicians’ services
under this part during such period of at
least $6,300,000,000 from the amount of
aggregate payments for such services that
would otherwise have been made during
the period.’’.
SEC. 2203. REDUCTION IN HOSPITAL OUTPATIENT SERV-
ICES THROUGH ESTABLISHMENT OF PRO-
SPECTIVE PAYMENT SYSTEM.
(a) IN GENERAL.—Section 1833(a)(2)(B) of the So-
cial Security Act (42 U.S.C. 1395l(a)(2)(B)) is amended
by striking ‘‘section 1886)—’’ and all that follows and in-
serting the following: ‘‘section 1886), an amount equal to
a prospectively determined payment rate established by
the Secretary that provides for payments for such items
and services to be based upon a national rate adjusted
to take into account the relative costs of furnishing such
items and services in various geographic areas, except that
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for items and services furnished during cost reporting pe-
riods (or portions thereof) in years beginning with 1995,
such amount shall be equal to 90 percent of the amount
that would otherwise have been determined;’’.
(b) ESTABLISHMENT
OF PROSPECTIVE PAYMENT
SYSTEM.—Not later than July 1, 1994, the Secretary of
Health and Human Services shall establish the prospective
payment system for hospital outpatient services necessary
to carry out section 1833(a)(2)(B) of the Social Security
Act (as amended by subsection (a)).
(c) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to items and services furnished
on or after January 1, 1995.
SEC. 2204. INCREASE IN MEDICARE PART B PREMIUM FOR
INDIVIDUALS WITH HIGH INCOME.
(a) IN GENERAL.—Subchapter A of chapter 1 of the
Internal Revenue Code of 1986 is amended by adding at
the end thereof the following new part:
‘‘PART VIII—MEDICARE PART B PREMIUMS FOR
HIGH-INCOME INDIVIDUALS
‘‘Sec. 59B. Medicare part B premium tax.
‘‘SEC. 59B. MEDICARE PART B PREMIUM TAX.
‘‘(a) IMPOSITION OF TAX.—In the case of an individ-
ual to whom this section applies for the taxable year, there
is hereby imposed (in addition to any other tax imposed
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by this subtitle) a tax for such taxable year equal to the
aggregate of the Medicare part B premium taxes for each
of the months during such year that such individual is
covered by Medicare part B.
‘‘(b) INDIVIDUALS TO WHOM SECTION APPLIES.—
This section shall apply to any individual for any taxable
year if—
‘‘(1) such individual is covered under Medicare
part B for any month during such year, and
‘‘(2) the modified adjusted gross income of the
taxpayer for such taxable year exceeds the threshold
amount.
‘‘(c) MEDICARE
PART
B PREMIUM
TAX
FOR
MONTH.—
‘‘(1) IN GENERAL.—The Medicare part B pre-
mium tax for any month is the applicable percentage
(as defined in paragraph (2)) of the amount equal
to the excess of—
‘‘(A) 150 percent of the monthly actuarial
rate for enrollees age 65 and over determined
for that calendar year under section 1839(b) of
the Social Security Act, over
‘‘(B) the total monthly premium under sec-
tion 1839 of the Social Security Act (deter-
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mined without regard to subsections (b) and (f)
of section 1839 of such Act).
‘‘(2) PHASE-IN OF TAX.—If the modified ad-
justed gross income of the taxpayer for any taxable
years exceeds the threshold amount by—
‘‘(A) less than $25,000, the applicable per-
centage under this paragraph is 331⁄3 percent;
‘‘(B) at least $25,000, but less than
$50,000, the applicable percentage under this
paragraph is 662⁄3 percent,
‘‘(C) at least $50,000, but less than
$75,000, the applicable percentage under this
paragraph is 65/75 (expressed as a percent), or
‘‘(D) at least $75,000, the applicable per-
centage under this paragraph is 100 percent.
‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.—
For purposes of this section—
‘‘(1) THRESHOLD AMOUNT.—The term ‘thresh-
old amount’ means—
‘‘(A) except as otherwise provided in this
paragraph, $75,000,
‘‘(B) $100,000 in the case of a joint re-
turn, and
‘‘(C) zero in the case of a taxpayer who—
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‘‘(i) is married at the close of the tax-
able year but does not file a joint return
for such year, and
‘‘(ii) does not live apart from his
spouse at all times during the taxable year.
‘‘(2) MODIFIED
ADJUSTED
GROSS
INCOME.—
The term ‘modified adjusted gross income’ means
adjusted gross income—
‘‘(A) determined without regard to sections
135, 911, 931, and 933, and
‘‘(B) increased by the amount of interest
received or accrued by the taxpayer during the
taxable year which is exempt from tax.
‘‘(3) MEDICARE PART B COVERAGE.—An indi-
vidual shall be treated as covered under Medicare
part B for any month if a premium is paid under
part B of title XVIII of the Social Security Act for
the coverage of the individual under such part for
the month.
‘‘(4) MARRIED
INDIVIDUAL.—The determina-
tion of whether an individual is married shall be
made in accordance with section 7703.’’.
(b) CLERICAL AMENDMENT.—The table of parts for
subchapter A of chapter 1 of such Code is amended by
adding at the end thereof the following new item:
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‘‘Part VIII. Medicare Part B Premiums For High-Income Individ-
uals.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to months after December 1993
in taxable years ending after December 31, 1993.
SEC. 2205. PHASED-IN ELIMINATION OF MEDICARE HOS-
PITAL DISPROPORTIONATE SHARE ADJUST-
MENT PAYMENTS.
Section 1886(d)(5)(F) of the Social Security Act (42
U.S.C. 1395ww(d)(5)(F)) is amended—
(1) in clause (i), by inserting ‘‘and before Sep-
tember 30, 1998,’’ after ‘‘1986,’’;
(2) in clause (ii), by striking ‘‘The amount of
such payment’’ and inserting ‘‘Subject to clause (ix),
the amount of such payment’’; and
(3) by adding at the end the following new
clause:
‘‘(ix) The amount of the additional payment made
under this paragraph for a discharge shall be equal to—
‘‘(I) for discharges occurring during fiscal year
1995, 80 percent of the amount otherwise deter-
mined for the discharge under clause (ii);
‘‘(II) for discharges occurring during fiscal year
1996, 60 percent of the amount otherwise deter-
mined for the discharge under clause (ii);
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‘‘(III) for discharges occurring during fiscal
year 1997, 40 percent of the amount otherwise de-
termined for the discharge under clause (ii); and
‘‘(IV) for discharges occurring during fiscal
year 1998, 20 percent of the amount otherwise de-
termined for the discharge under clause (ii).’’.
SEC. 2206. REDUCTION IN ROUTINE COST LIMITS FOR
HOME HEALTH SERVICES.
Section 1861(v)(1)(L)(i) of the Social Security Act
(42 U.S.C. 1395x(v)(1)(L)(i)) is amended—
(1) in subclause (II), by striking ‘‘or’’ at the
end;
(2) in subclause (III)—
(A) by inserting ‘‘and before July 1,
1995,’’ after ‘‘1977,’’, and
(B) by adding ‘‘or’’ at the end; and
(3) by inserting after subclause (III) the follow-
ing new subclause:
‘‘(IV) July 1, 1995, 103 percent,’’.
SEC. 2207. REDUCTION IN ROUTINE COST LIMITS FOR EX-
TENDED CARE SERVICES.
(a) IN GENERAL.—Section 1888(a) of the Social Se-
curity Act (42 U.S.C. 1395yy(a)) is amended—
(1) by striking ‘‘112 percent’’ and inserting
‘‘102 percent’’ each place it appears.
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(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to cost reporting periods begin-
ning on or after October 1, 1994.
SEC. 2208. REDUCTIONS IN PAYMENTS FOR HOSPICE SERV-
ICES.
Section 1814(i)(1)(C)(ii) of the Social Security Act
(42 U.S.C. 1395f(i)(1)(C)(ii)), as amended by section
13504 of OBRA–1993, is amended—
(1) in subclause (III), by striking ‘‘1.5 percent-
age points’’ and inserting ‘‘2.5 percentage points’’;
(2) in subclause (IV), by striking ‘‘1.5 percent-
age points’’ and inserting ‘‘2.5 percentage points’’;
(3) in subclause (V), by striking ‘‘0.5 percent-
age point’’ and inserting ‘‘1.5 percentage points’’
and by striking ‘‘and’’ at the end;
(4) 
by 
redesignating 
subclause 
(VI) 
as
subclause (VIII) ; and
(5) by inserting after subclause (V) the follow-
ing new subclauses:
‘‘(VI) for fiscal year 1998, the market basket
percentage increase for the fiscal year minus 1.0
percentage point;
‘‘(VII) for fiscal year 1999, the market basket
percentage increase for the fiscal year minus 1.0
percentage point; and’’.
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PART 2—OTHER SAVINGS
SEC. 
2211. 
REQUIREMENT 
THAT 
CERTAIN 
AGENCIES
PREFUND GOVERNMENT HEALTH BENEFITS
CONTRIBUTIONS FOR THEIR ANNUITANTS.
(a) DEFINITIONS.—For the purpose of this section—
(1) the term ‘‘agency’’ means any agency or
other instrumentality within the executive branch of
the Government, the receipts and disbursements of
which are not generally included in the totals of the
budget of the United States Government submitted
by the President;
(2) the term ‘‘health benefits plan’’ means, with
respect to an agency, a health benefits plan, estab-
lished by or under Federal law, in which employees
or annuitants of such agency may participate;
(3) the term ‘‘health-benefits coverage’’ means
coverage under a health benefits plan’’;
(4) an individual shall be considered to be an
‘‘annuitant of an agency’’ if such individual is enti-
tled to an annuity, under a retirement system estab-
lished by or under Federal law, by virtue of—
(A) such individual’s service with, and sep-
aration from, such agency; or
(B) being the survivor of an annuitant
under subparagraph (A) or of an individual who
died while employed by such agency; and
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(5) the term ‘‘Office’’ means the Office of Per-
sonnel Management.
(b) PREFUNDING REQUIREMENT.—
(1) IN GENERAL.—Effective as of October 1,
1994, each agency (or February 1, 1995, in the case
of the agency with the greatest number of employ-
ees, as determined by the Office) shall be required
to prepay the Government contributions which are
or will be required in connection with providing
health-benefits coverage for annuitants of such agen-
cy.
(2) REGULATIONS.—The Office shall prescribe
such regulations as may be necessary to carry out
this section. The regulations shall be designed to en-
sure at least the following:
(A) Amounts paid by each agency shall be
sufficient to cover the amounts which would
otherwise be payable by such agency (on a
‘‘pay-as-you-go’’ basis), on or after the applica-
ble effective date under paragraph (1), on be-
half of—
(i) individuals who are annuitants of
the agency as of such effective date; and
(ii) individuals who are employed by
the agency as of such effective date, or
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who become employed by the agency after
such effective date, after such individuals
have become annuitants of the agency (in-
cluding their survivors).
(B)(i) For purposes of determining any
amounts payable by an agency—
(I) this section shall be treated as if
it had taken effect at the beginning of the
20-year period which ends on the effective
date applicable under paragraph (1) with
respect to such agency; and
(II) in addition to any amounts pay-
able under subparagraph (A), each agency
shall also be responsible for paying any
amounts for which it would have been re-
sponsible, with respect to the 20-year pe-
riod described in subclause (I), in connec-
tion with any individuals who are annu-
itants or employees of the agency as of the
applicable effective date under paragraph
(1).
(ii) Any amounts payable under this sub-
paragraph for periods preceding the applicable
effective date under paragraph (1) shall be pay-
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able in equal installments over the 20-year pe-
riod beginning on such effective date.
(c) FASB STANDARDS.—Regulations under sub-
section (b) shall be in conformance with the provisions of
standard 106 of the Financial Accounting Standards
Board, issued in December 1990.
(d) CLARIFICATION.—Nothing in this section shall be
considered to permit or require duplicative payments on
behalf of any individuals.
(e) DRAFT LEGISLATION.—The Office shall prepare
and submit to Congress any draft legislation which may
be necessary in order to carry out this section.
Subtitle D—Repeal of Medicaid
Program
SEC. 2301. REPEAL OF MEDICAID PROGRAM.
(a) IN GENERAL.—Title XIX of the Social Security
Act is repealed.
(b) REPORT ON CONFORMING CHANGES.—By not
later than May 1, 1994, the Health Care Standards Com-
mission shall submit to Congress a report on—
(1) changes in laws that should be made in
order to conform those laws to the repeal in the
medicaid program effected under subsection (a), and
(2) the need for any special or transitional pro-
visions that should be made in order to ensure con-
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tinuous assistance for the medical needs of the med-
icaid population.
(c) EFFECTIVE DATE.—The repeal made by sub-
section (a) shall apply to items and service furnished on
or after January 1, 1995.
TITLE III—TRAINING AND EDU-
CATION 
OF 
HEALTH 
CARE
PROFESSIONALS
Subtitle 
A—Reform 
of 
Federal
Funding for Medical Residency
Training
SEC. 3001. DEFINITIONS.
In this subtitle, the following definitions shall apply:
(1) The term ‘‘entry position’’ means, with re-
spect to a medical residency training program, a po-
sition as a resident in the initial year of study in the
program.
(2) The term ‘‘Fund’’ means the National Med-
ical Education Fund established under section 3005.
(3) The term ‘‘medical residency training pro-
gram’’ means a residency or other postgraduate
medical training program participation in which may
be counted toward certification in a specialty or sub-
specialty and includes formal postgraduate training
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programs in geriatric medicine approved by the
Health Care Standards Commission.
(4) The term ‘‘primary care resident’’ means a
resident enrolled in a medical residency training pro-
gram in family medicine, general internal medicine,
general pediatrics, preventive medicine, geriatric
medicine, or osteopathic general practice.
(5) The term ‘‘resident’’ includes any partici-
pant in a medical residency training program (or,
for purposes of section 3003, a physician retraining
program).
(6) The term ‘‘United States medical graduate’’
means a resident who is a graduate of —
(A) a school of medicine accredited by the
Liaison Committee on Medical Education of the
American Medical Association (or approved by
such Committee as meeting the standards nec-
essary for such accreditation); or
(B) a school of osteopathy accredited by
the American Osteopathic Association (or ap-
proved by such Association as meeting the
standards necessary for such accreditation).
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SEC. 3002. APPROVAL OF MEDICAL RESIDENCY TRAINING
POSITIONS.
(a) IN GENERAL.—The Health Care Standards Com-
mission shall approve a resident training position in a
medical residency training program for purposes of fund-
ing under section 3003(a) if—
(1) the program submits an application for ap-
proval of the position to the Commission (at such
time and in such manner as the Commission may re-
quire); and
(2) the Commission determines that the entry
position relating to such resident training position in
the program has been allocated to the program
under subsection (b).
(b) ALLOCATION OF ENTRY POSITIONS AMONG PRO-
GRAMS.—
(1) IN GENERAL.—For purposes of subsection
(a)(2), the Commission shall establish a process for
the allocation of entry positions among medical resi-
dency training programs consistent with this sub-
section.
(2) TOTAL NUMBER OF FUNDED POSITIONS.—
(A) IN GENERAL.—In consultation with ac-
countable health plans, medical societies, and
medical specialty societies, the Commission
shall determine the appropriate total number of
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entry positions that will be allocated to medical
residency training programs under this sub-
section in the United States for each residency
year. In this subsection, the term ‘‘residency
year’’ means a 12-month period beginning with
July of the year in which the program begins.
(B) BASIS FOR TOTAL NUMBER OF ENTRY
POSITIONS.—Subject to subparagraph (C), such
total number of entry positions shall be based
on the need for health care professionals to pro-
vide cost effective health care services in the
United States. In determining such number the
Commission shall take into account the popu-
lation-to-physician ratio, consistent with de-
mand for health care services.
(C) LIMIT ON TOTAL NUMBER OF ENTRY
POSITIONS.—The total number of entry posi-
tions determined under this paragraph for any
residency year shall not exceed 110 percent of
the number of United States medical graduates
who complete undergraduate medical education
in the previous year.
(D) NO APPLICATION TO RESIDENTS WHO
HAVE
COMPLETED
ANOTHER
TRAINING
PRO-
GRAM.—The total number determined under
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this paragraph shall only apply to residents who
may enroll in a program without having pre-
viously completed another medical residency
training program.
(3) GENERAL
DISTRIBUTION
OF
POSITIONS
AMONG SPECIALITIES.—
(A) IN GENERAL.—In consultation with ac-
countable health plans, medical societies, and
medical specialty societies, the Commission
shall determine the appropriate distribution of
the total number of entry positions determined
under paragraph (2) among the various medical
specialties.
(B) BASIS FOR DISTRIBUTION.—Such dis-
tribution shall be based on the need for health
care professionals in different medical speciali-
ties to provide cost effective health care services
in the United States. In determining such dis-
tribution the Commission shall take into ac-
count the population-to-physician ratio with re-
spect to each medical specialty, consistent with
demand for health care services, and the spe-
cific needs of accountable health plans.
(4) ALLOCATION AMONG PROGRAMS.—
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(A) IN GENERAL.—The Commission shall
allocate entry positions, distributed among med-
ical specialties under paragraph (3), among spe-
cific medical residency training programs.
(B) BASIS FOR ALLOCATION.—Such alloca-
tion shall be based on the recommendations (if
any) submitted by the Accreditation Council for
Graduate Medical Education and the Residency
Review Committees of such Council and the fol-
lowing objectives:
(i) Allocating positions among pro-
grams on the basis of quality.
(ii) Allocating positions among pro-
grams to avoid an inappropriate geo-
graphic distribution of physicians.
(iii) Allocating positions among pro-
grams to assure a sufficient number of
residents in outpatient settings.
SEC. 3003. FUNDING FOR APPROVED MEDICAL RESIDENCY
TRAINING PROGRAMS AND PHYSICIAN RE-
TRAINING PROGRAMS.
(a) IN GENERAL.—In the case of an entry position
in a medical residency training program that is approved
by the Commission under section 3002(a) and in the case
of an entry position in a physician retraining program de-
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scribed in subsection (d)(1) for a residency year, the Com-
mission shall provide a payment to the program on the
first day of each month of the year from the National
Medical Education Fund established under section 3005
in the amount determined under subsection (b). This sub-
section constitutes budget authority in advance of appro-
priations Acts, and represents the obligation of the Fed-
eral Government to make payments to such programs in
accordance with this subtitle. No payment shall be made
under this subsection for a month before July 1995.
(b) PAYMENT AMOUNT.—
(1) IN
GENERAL.—Subject to subsection (e),
the amount of payment made to an approved medi-
cal residency training program or a physician re-
training program for each approved entry position
for a full-time equivalent resident, shall be equal to
the applicable percentage (as defined in paragraph
(3)) of the base per resident amount established by
the Commission for the year under paragraph (2)
for that resident.
(2) BASE PER RESIDENT AMOUNT.—The Com-
mission shall establish a base per resident amount
for each year (beginning with 1995) that reflects an
appropriate measure of the salary and benefits paid
to residents in medical residency training programs
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during the year. The Commission may vary such
amount for residents to take into account—
(A) increases provided in the salaries and
benefits of residents on the basis of the length
of service in the program; and
(B) the relative wages and other costs of
goods and services among the various geo-
graphic areas in which such programs are oper-
ated.
(3) APPLICABLE
PERCENTAGE
DEFINED.—In
paragraph (1), the ‘‘applicable percentage’’ with re-
spect to a resident is equal to—
(A) 175 percent, in the case of a primary
care resident; and
(B) 150 percent, in the case of a resident
who is not a primary care resident.
(c) LIMIT ON LENGTH OF SERVICE OF RESIDENT.—
(1) IN GENERAL.—No payment shall be made
under subsection (a) for any resident who has com-
pleted 4 years of medical residency training in any
program.
(2) EXCEPTION.—Paragraph (1) shall not
apply to a resident enrolled in a physician retraining
program described in subsection (d)(1).
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(d) FUNDING
OF PHYSICIAN RETRAINING PRO-
GRAMS.—
(1) PROGRAM DESCRIBED.—A physician re-
training program described in this paragraph is a
program that—
(A) provides training over a period of not
to exceed 2 years for primary care residents for
physicians who have completed training in a
medical residency training program (other than
as a primary care resident); and
(B) meets such other requirements as the
Commission (in consultation with the Accredita-
tion Council for Graduate Medical Education)
may impose.
(2) FUNDING
FOR
PILOT
PROGRAMS.—The
Health Care Standards Commission shall make pay-
ments from the Fund to assist the development of
physician retraining programs described in para-
graph (1).
(e) LIMIT ON EXPENDITURES FOR PROGRAMS.—The
amounts otherwise payable under this section shall be re-
duced, in a pro rata manner, to the extent necessary to
assure that the total amount expended by the Health Care
Standards Commission during a year for payments under
this section do not exceed the Commission’s estimate of
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the amount of funds available for expenditure from the
Fund in the year.
SEC. 3004. FINANCING.
(a) ASSESSMENT AGAINST PREMIUMS OF ACCOUNT-
ABLE HEALTH PLANS.—For requirement of payment by
accountable health plans to the National Medical Edu-
cation Fund of 1 percent of gross premium receipts, see
section 1211.
(b) PAYMENTS FROM MEDICARE.—Title XVIII of
the Social Security Act (42 U.S.C. 1395 et seq.) is amend-
ed by inserting after section 1889 the following new
section:
‘‘PAYMENTS TO NATIONAL MEDICAL EDUCATION FUND
‘‘SEC. 1890. (a) ANNUAL PAYMENT REQUIRED.—
For each month (beginning with July 1995), the Secretary
shall make a payment to the National Medical Education
Fund established under section 3005 of the Managed
Competition Act of 1993 in an amount that is equal, for
a month in a fiscal year, to 1⁄12 of 1 percent of the Sec-
retary’s estimate of the total expenditures made by the
Secretary under this title during the preceding fiscal year,
adjusted 
to 
the 
extent 
of 
any 
overpayment 
or
underpayment which the Secretary determines was made
under this section for any prior fiscal year and with re-
spect to which adjustment has not already been made
under this subsection.
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‘‘(b) ALLOCATION AMONG TRUST FUNDS.—The Sec-
retary shall provide for an allocation of the payment made
under subsection (a) between the Federal Hospital Insur-
ance Trust Fund and the Federal Supplementary Medical
Insurance Trust Fund in a proportion that reasonably re-
flects the proportion of medical education costs of hos-
pitals for which payment was made under this title for
cost reporting periods during fiscal year 1993 that are as-
sociated with the provision of services under part A and
part B.’’.
SEC. 3005. NATIONAL MEDICAL EDUCATION FUND.
(a) ESTABLISHMENT.—There is hereby established in
the Treasury of the United States a fund to be known
as the ‘‘National Medical Education Fund’’, which shall
consist of—
(1) amounts paid into the Fund by (or on be-
half of) accountable health plans pursuant to section
1211;
(2) amounts paid into the Fund by the Sec-
retary of Health and Human Services under section
1890 of the Social Security Act (as added by section
3004(b)); and
(3) such other amounts that may otherwise be
deposited in or appropriated to the Fund.
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(b) USE OF AMOUNTS IN FUND.—Amounts in the
Fund shall be used by the Health Care Standards Com-
mission to make payments to medical residency training
programs and physician retraining programs under sec-
tion 3003(b).
(c) MANAGEMENT OF FUND.—
(1) IN GENERAL; REPORTS ON OPERATION.—
The Secretary of the Treasury shall, in consultation
with the Health Care Standards Commission, man-
age the Fund, and shall report to Congress each
year on the financial condition and the results of the
operation of the Fund during the preceding year and
on the expected condition and operations of the
Fund during the next 5 years.
(2) INVESTMENT.—The Secretary of the Treas-
ury shall invest the portion of the Fund that is not,
in the judgment of the Secretary and of the Health
Care Standards Commission, required to meet cur-
rent withdrawals. Any investments of monies in the
Fund may be made only in interest-bearing obliga-
tions of the United States.
SEC. 3006. REPEAL OF SEPARATE MEDICAL EDUCATION
PAYMENTS UNDER MEDICARE.
(a) PROHIBITING RECOGNITION OF MEDICAL EDU-
CATION COSTS UNDER PART B.—Section 1861(v)(1) of
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the Social Security Act (42 U.S.C. 1395x(v)(1)) is amend-
ed by adding at the end the following new subparagraph:
‘‘(T) In determining such reasonable costs, the Sec-
retary may not include any costs incurred by a provider
for graduate medical education.’’.
(b) REPEAL OF ADJUSTMENT FOR INDIRECT MEDI-
CAL EDUCATION COSTS.—Section 1886(d)(5) of such Act
(42 U.S.C. 1395ww(d)(5)) is amended by striking sub-
paragraph (B).
(c) REPEAL OF PAYMENTS FOR DIRECT GRADUATE
MEDICAL EDUCATION COSTS.—Section 1886 of such Act
(42 U.S.C. 1395ww) is amended by striking subsection (h)
and redesignating subsection (i) as subsection (h).
(d) CONFORMING AMENDMENTS.—Section 1886(d)
of such Act (42 U.S.C. 1395ww(d)) is amended—
(1) in paragraph (3)(C)(ii)—
(A) by inserting ‘‘and before October 1,
1994,’’ after ‘‘September 30, 1986,’’; and
(B) by inserting ‘‘and on or before Sep-
tember 30, 1994,’’ after ‘‘October 1, 1986,’’;
and
(2) in paragraph (9)(D), by striking clause (ii)
and redesignating clauses (iii) and (iv) as clauses (ii)
and (iii).
(e) EFFECTIVE DATES.—
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(1) REASONABLE
COSTS.—The amendment
made by subsection (a) shall apply to costs incurred
on or after July 1, 1995.
(2) INDIRECT
MEDICAL
EDUCATION
ADJUST-
MENT.—The amendments made by subsections (b)
and (d) shall apply to discharges occurring on or
after July 1, 1995.
(3) 
DIRECT
MEDICAL
EDUCATION.—The
amendment made by subsection (c) shall apply to
portions of cost reporting periods beginning on or
after July 1, 1995.
Subtitle B—Other Medical
Education Grants and Programs
SEC. 3101. SCHOLARSHIP AND LOAN REPAYMENT PRO-
GRAMS 
OF 
NATIONAL 
HEALTH 
SERVICE
CORPS.
Section 338H(b)(1) of the Public Health Service Act
(42 U.S.C. 254q(b)(1)) is amended—
(1) by striking ‘‘and’’ after ‘‘1991,’’; and
(2) by striking ‘‘through 2000.’’ and inserting
‘‘through 1994, $150,000,000 for fiscal year 1995,
$175,000,000 for fiscal year 1996, $200,000,000 for
fiscal year 1997, $225,000,000 for fiscal year 1998,
and $250,000,000 for fiscal year 1999.’’.
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SEC. 3102. AREA HEALTH EDUCATION CENTERS.
Section 746(i)(1)(A) of the Public Health Service Act
(42 U.S.C. 293j(i)(1)(A)) is amended by striking
‘‘through 1995’’ and inserting ‘‘through 1994 and
$30,000,000 for each of the fiscal years 1995 through
1999’’.
SEC. 3103. PUBLIC HEALTH AND PREVENTIVE MEDICINE.
Section 765(a) of the Public Health Service Act (42
U.S.C. 294c(a)) is amended by striking ‘‘through 1995’’
and inserting ‘‘through 1999’’.
SEC. 3104. FAMILY MEDICINE.
Section 747(d)(1) of the Public Health Service Act
(42 U.S.C. 293k(d)(1)) is amended by striking ‘‘through
1995’’ and inserting ‘‘through 1999’’.
SEC. 3105. GENERAL INTERNAL MEDICINE AND PEDIAT-
RICS.
Section 748(c) of the Public Health Service Act (42
U.S.C. 293l(c)) is amended by striking ‘‘through 1995’’
and inserting ‘‘through 1999’’.
SEC. 3106. PHYSICIAN ASSISTANTS.
Section 750(d)(1) of the Public Health Service Act
(42 U.S.C. 293n(d)(1)) is amended by striking ‘‘through
1995’’ and inserting ‘‘through 1999’’.
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SEC. 3107. ALLIED HEALTH PROJECT GRANTS AND CON-
TRACTS.
Section 767(d) of the Public Health Service Act (42
U.S.C. 294e(d)) is amended by striking ‘‘through 1995’’
and inserting ‘‘through 1999’’.
SEC. 3108. NURSE ALLIED HEALTH PROJECT GRANTS AND
CONTRACTS.
Section 767(d) of the Public Health Service Act (42
U.S.C. 294e(d)) is amended by striking ‘‘through 1995’’
and inserting ‘‘through 1999’’.
SEC. 3109. NURSE PRACTITIONER AND NURSE MIDWIFE
PROGRAMS.
Section 822(d) of the Public Health Service Act (42
U.S.C. 296m(d)) is amended by striking ‘‘and 1994’’ and
inserting ‘‘through 1999’’.
SEC. 3110. USE OF HEALTH CARE POLICY AND RESEARCH
FUNDS FOR PRIMARY CARE.
Section 926 of the Public Health Service Act (42
U.S.C. 299c–5), as amended by section 10 of Public Law
102–410 (106 Stat. 2101), is amended by adding at the
end the following subsection:
‘‘(f) ALLOCATION REGARDING PRIMARY CARE.—Of
the amounts made available for a fiscal year for carrying
out this title, the Secretary shall obligate not less than
15 percent for carrying out section 902 with respect to
primary care.’’.
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TITLE IV—PREVENTIVE HEALTH
AND 
INDIVIDUAL 
RESPON-
SIBILITY
Subtitle A—Expansion of Public
Health Programs
SEC. 4001. IMMUNIZATIONS AGAINST VACCINE-PREVENT-
ABLE DISEASES.
Section 317(j)(1)(A) of the Public Health Service Act
(42 U.S.C. 247b(j)(1)(A)) is amended by striking
‘‘through 1995’’ and inserting ‘‘through 1999’’.
SEC. 4002. PREVENTION, CONTROL, AND ELIMINATION OF
TUBERCULOSIS.
Section 317(j)(2) of the Public Health Service Act
(42 U.S.C. 247b(j)(2)) is amended by striking ‘‘through
1995’’ and inserting ‘‘through 1999’’.
SEC. 4003. LEAD POISONING PREVENTION.–
Section 317A(l)(1) of the Public Health Service Act
(42 U.S.C. 247b–1(l)(1)) is amended by striking ‘‘through
1997’’ and inserting ‘‘through 1999’’.
SEC. 4004. PREVENTIVE HEALTH MEASURES WITH RE-
SPECT TO BREAST AND CERVICAL CANCERS.
Section 1509(a) of the Public Health Service Act (42
U.S.C. 300n–5(a)) is amended—
(1) by striking ‘‘and’’ after ‘‘1991,’’, and
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(2) by striking ‘‘1993.’’ and inserting ‘‘1993,
$100,000,000 for each of the fiscal years 1994
through 1996, and such sums as may be necessary
for each of the fiscal years 1997 through 1999.’’.
SEC. 4005. OFFICE OF DISEASE PREVENTION AND HEALTH
PROMOTION.
(a) IN GENERAL.—Section 1701(b) of the Public
Health Service Act (42 U.S.C. 300u(b)) is amended by
striking ‘‘through 1996’’ and inserting ‘‘through 1999’’.
(b) PROMOTION OF INDIVIDUAL RESPONSIBILITY.—
Section 1701(a)(11) of such Act (42 U.S.C. 300u(a)(11))
is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (C),
(2) by redesignating subparagraph (D) as sub-
paragraph (E), and
(3) by inserting after subparagraph (C) the fol-
lowing new subparagraph:
‘‘(D) promote individual responsibility in
personal health care and in the use of valuable
health care resources; and’’.
(c) MINORITY HEALTH.—Section 1707(f) of such Act
(42 U.S.C. 300u–6(f)) is amended by striking ‘‘1993.’’
and inserting ‘‘1993, $35,000,000 for each of the fiscal
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years 1994 through 1996, and such sums as may be nec-
essary for each of the fiscal years 1997 through 1999.’’.
SEC. 4006. PREVENTIVE HEALTH AND HEALTH SERVICES
BLOCK GRANT.
Section 1901(a) of the Public Health Service Act (42
U.S.C. 300w(a)) is amended by striking ‘‘through 1997’’
and inserting ‘‘through 1999’’.
SEC. 4007. CATEGORICAL GRANTS FOR EARLY INTERVEN-
TION REGARDING ACQUIRED IMMUNE DEFI-
CIENCY SYNDROME.
Section 2655 of the Public Health Service Act (42
U.S.C. 300ff–55) is amended by striking ‘‘through 1995’’
and inserting ‘‘through 1999’’.
SEC. 4008. PROGRAMS OF OFFICE OF SMOKING AND
HEALTH.
In addition to any other authorization of appropria-
tions that is available for programs of the Centers for Dis-
ease Control regarding the smoking of tobacco products,
there is authorized to be appropriated for such programs
$10,000,000 for each of the fiscal years 1995 through
1999.
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Subtitle B—Medicare
PART 1—COVERAGE OF PREVENTIVE SERVICES
SEC. 4101. COVERAGE OF COLORECTAL SCREENING.
(a) IN GENERAL.—Section 1834 of the Social Secu-
rity Act (42 U.S.C. 1395m) is amended by inserting after
subsection (c) the following new subsection:
‘‘(d) FREQUENCY
AND
PAYMENT
LIMITS
FOR
SCREENING FECAL-OCCULT BLOOD TESTS AND SCREEN-
ING FLEXIBLE SIGMOIDOSCOPIES.—
‘‘(1) 
SCREENING
FECAL-OCCULT
BLOOD
TESTS.—
‘‘(A) PAYMENT LIMIT.—In establishing fee
schedules under section 1833(h) with respect to
screening fecal-occult blood tests provided for
the purpose of early detection of colon cancer,
except as provided by the Secretary under para-
graph (3)(A), the payment amount established
for tests performed—
‘‘(i) in 1995 shall not exceed $5; and
‘‘(ii) in a subsequent year, shall not
exceed the limit on the payment amount
established under this subsection for such
tests for the preceding year, adjusted by
the applicable adjustment under section
1833(h) for tests performed in such year.
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‘‘(B) FREQUENCY LIMIT.—Subject to revi-
sion by the Secretary under paragraph (3)(B),
no payment may be made under this part for
a screening fecal-occult blood test provided to
an individual for the purpose of early detection
of colon cancer—
‘‘(i) if the individual is under 50 years
of age; or
‘‘(ii) if the test is performed within
the 11 months after a previous screening
fecal-occult blood test.
‘‘(2) 
SCREENING
FLEXIBLE
SIGMOIDOS-
COPIES.—
‘‘(A) PAYMENT AMOUNT.—The Secretary
shall establish a payment amount under section
1848 
with 
respect 
to 
screening 
flexible
sigmoidoscopies provided for the purpose of
early detection of colon cancer that is consistent
with payment amounts under such section for
similar or related services, except that such
payment amount shall be established without
regard to subsection (a)(2)(A) of such section.
‘‘(B) FREQUENCY LIMIT.—Subject to revi-
sion by the Secretary under paragraph (3)(B),
no payment may be made under this part for
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a screening flexible sigmoidoscopy provided to
an individual for the purpose of early detection
of colon cancer—
‘‘(i) if the individual is under 50 years
of age; or
‘‘(ii) if the procedure is performed
within the 59 months after a previous
screening flexible sigmoidoscopy.
‘‘(3) REDUCTIONS IN PAYMENT LIMIT AND RE-
VISION OF FREQUENCY.—
‘‘(A) REDUCTIONS IN PAYMENT LIMIT.—
The Secretary shall review from time to time
the appropriateness of the amount of the pay-
ment limit established for screening fecal-occult
blood tests under paragraph (1)(A). The Sec-
retary may, with respect to tests performed in
a year after 1997, reduce the amount of such
limit as it applies nationally or in any area to
the amount that the Secretary estimates is re-
quired to assure that such tests of an appro-
priate quality are readily and conveniently
available during the year.
‘‘(B) REVISION OF FREQUENCY.—
‘‘(i) REVIEW.—The Secretary, in con-
sultation with the Director of the National
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Cancer Institute, shall review periodically
the appropriate frequency for performing
screening fecal-occult blood tests and
screening flexible sigmoidoscopies based on
age and such other factors as the Sec-
retary believes to be pertinent.
‘‘(ii) REVISION OF FREQUENCY.—The
Secretary, taking into consideration the re-
view made under clause (i), may revise
from time to time the frequency with
which such tests and procedures may be
paid for under this subsection, but no such
revision shall apply to tests or procedures
performed before January 1, 1998.
‘‘(4) LIMITING CHARGES OF NONPARTICIPATING
PHYSICIANS.—
‘‘(A) IN
GENERAL.—In the case of a
screening flexible sigmoidoscopy provided to an
individual for the purpose of early detection of
colon cancer for which payment may be made
under this part, if a nonparticipating physician
provides the procedure to an individual enrolled
under this part, the physician may not charge
the individual more than the limiting charge (as
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defined in subparagraph (B), or, if less, as de-
fined in section 1848(g)(2)).
‘‘(B) LIMITING
CHARGE
DEFINED.—In
subparagraph (A), the term ‘limiting charge’
means 115 percent of the payment limit estab-
lished under paragraph (2)(A).
‘‘(C) ENFORCEMENT.—If a physician or
supplier knowing and willfully imposes a charge
in violation of subparagraph (A), the Secretary
may apply sanctions against such physician or
supplier 
in 
accordance 
with 
section
1842(j)(2).’’.
(b) CONFORMING AMENDMENTS.—(1) Paragraphs
(1)(D) and (2)(D) of section 1833(a) of such Act (42
U.S.C. 1395l(a)) are each amended by striking ‘‘sub-
section (h)(1),’’ and inserting ‘‘subsection (h)(1) or section
1834(d)(1),’’.
(2) Section 1833(h)(1)(A) of such Act (42 U.S.C.
1395l(h)(1)(A)) is amended by striking ‘‘The Secretary’’
and inserting ‘‘Subject to paragraphs (1) and (3)(A) of
section 1834(d), the Secretary’’.
(3) Clauses (i) and (ii) of section 1848(a)(2)(A) of
such Act (42 U.S.C. 1395w–4(a)(2)(A)) are each amended
by striking ‘‘a service’’ and inserting ‘‘a service (other
than a screening flexible sigmoidoscopy provided to an in-
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dividual for the purpose of early detection of colon can-
cer)’’.
(4) Section 1862(a) of such Act (42 U.S.C. 1395y(a))
is amended—
(A) in paragraph (1)—
(i) in subparagraph (E), by striking ‘‘and’’
at the end,
(ii) in subparagraph (F), by striking the
semicolon at the end and inserting ‘‘, and’’, and
(iii) by adding at the end the following new
subparagraph:
‘‘(G) in the case of screening fecal-occult blood
tests and screening flexible sigmoidoscopies provided
for the purpose of early detection of colon cancer,
which are performed more frequently than is covered
under section 1834(d);’’; and
(B) in paragraph (7), by striking ‘‘paragraph
(1)(B) or under paragraph (1)(F)’’ and inserting
‘‘subparagraphs (B), (F), or (G) of paragraph (1)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to screening fecal-occult blood tests
and screening flexible sigmoidoscopies performed on or
after January 1, 1995.
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(A) in subsection (a)(2), by striking ‘‘(b) and
(e)’’ and inserting ‘‘(b), (e), and (g)’’,
(B) in subsection (a)(3), by striking ‘‘subsection
(e)’’ and inserting ‘‘subsections (e) and (g)’’, and
(C) in subsection (b), by striking ‘‘determined
under subsection (a) or (e)’’ and inserting ‘‘other-
wise determined under this section (without regard
to subsection (f))’’.
PART 2—NOTICE OF ADVANCE DIRECTIVE
RIGHTS
SEC. 4111. PROVIDING NOTICE OF RIGHTS REGARDING
MEDICAL CARE TO INDIVIDUALS ENTERING
MEDICARE.
(a) IN GENERAL.—Section 1804 of the Social Secu-
rity Act (42 U.S.C. 1395b–2) is amended—
(1) in paragraph (2), by striking ‘‘and’’ at the
end;
(2) in paragraph (3), by striking the period at
the end and inserting ‘‘, and’’; and
(3) by inserting after paragraph (3) the follow-
ing new paragraph:
‘‘(4) a description of an individual’s rights
under State law to make decisions concerning medi-
cal care, including the right to accept or refuse med-
ical or surgical treatment and the right to formulate