[Congressional Bills 103th Congress]
[From the U.S. Government Printing Office]
[H.R. 5300 Introduced in House (IH)]
103d CONGRESS
2d Session
H. R. 5300
To improve access to health insurance and contain health care costs,
and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
November 29, 1994
Mr. Michel introduced the following bill; which was referred jointly to
the Committees on Energy and Commerce, Ways and Means, Education and
Labor, and the Judiciary
_______________________________________________________________________
A BILL
To improve access to health insurance and contain health care costs,
and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Affordable Health
Care Now Act of 1994''.
(b) Table of Contents of Titles and Subtitles in Act.--The
following are the titles and subtitles contained in this Act:
TITLE I--IMPROVED ACCESS TO AFFORDABLE HEALTH CARE
Subtitle A--Increased Availability and Continuity of Health Coverage
for Individuals and Their Families
Subtitle B--Reform of Health Insurance
Subtitle C--Preemption
Subtitle D--Health Deduction Fairness
Subtitle E--Improved Access to Community Health Services
Subtitle F--Improved Access to Rural Health Services
Subtitle G--Assistance in Enrolling Uninsured Children in Health
Insurance
Subtitle H--Medicaid Reform
Subtitle I--Remedies and Enforcement with Respect to Group Health Plans
Subtitle J--Delivery of Health Care Services to Illegal Immigrants
TITLE II--HEALTH CARE COST CONTAINMENT AND QUALITY ENHANCEMENT
Subtitle A--Medical Malpractice Liability Reform
Subtitle B--Administrative Cost Savings and Fair Health Information
Practices
Subtitle C--Deduction for Cost of Catastrophic Health Plan; Medical
Savings Accounts
Subtitle D--Anti-Fraud
Subtitle E--Increased Medicare Beneficiary Choice; Additional Medicare
Reforms
Subtitle F--Health Care Antitrust Improvements
Subtitle G--Encouraging Enforcement Activities of Medical Self-
Regulatory Entities
Subtitle H--Reform of Clinical Laboratory Requirements for Simple Tests
Subtitle I--Miscellaneous Provisions
TITLE III--LONG-TERM CARE
Subtitle A--Tax Treatment of Long-term Care Insurance
Subtitle B--Establishment of Federal Standards for Long-term Care
Insurance
Subtitle C--Protection of Assets Under Medicaid Through Use of
Qualified Long-term Care Insurance
Subtitle D--Studies
Subtitle E--Volunteer Service Credit Demonstration Projects
TITLE I--IMPROVED ACCESS TO AFFORDABLE HEALTH CARE
Title I
table of contents of title
TITLE I--IMPROVED ACCESS TO AFFORDABLE HEALTH CARE
Subtitle A--Increased Availability and Continuity of Health Coverage
for Individuals and Their Families
Part 1--Required Coverage Options for Eligible Employees, Spouses, and
Dependents
Sec. 1001. Requiring employers to offer option of coverage for eligible
individuals.
Part 2--Portability and Nondiscrimination
Sec. 1011. Nondiscrimination based on health status.
Sec. 1012. Portability.
Sec. 1013. Requirements relating to renewability generally.
Part 3--Standards for Managed Care Arrangements
Sec. 1021. Standards for managed care arrangements.
Sec. 1022. Utilization review.
Part 4--Enforcement; Effective Dates; Definitions
Sec. 1031. Enforcement.
Sec. 1032. Effective dates.
Sec. 1033. Definitions and special rules.
Subtitle B--Reform of Health Insurance
Part 1--Marketplace for Small Business
Sec. 1101. Requirement for insurers to offer MedAccess coverage.
Sec. 1102. MedAccess coverage defined.
Sec. 1103. Establishment of other MedAccess standards.
Sec. 1104. Use of modified community rating, uniform marketing
materials, and miscellaneous consumer
protections.
Sec. 1105. Monitoring and response to adverse selection; risk
adjustment programs.
Sec. 1106. Establishment of reinsurance or allocation of risk
mechanisms for high risk individuals in
marketplace for small business and
marketplace for individuals.
Part 2--Marketplace for Individuals
Sec. 1111. Application of similar requirements.
Part 3--Voluntary Health Purchasing Arrangements
Sec. 1121. Establishment and organization.
Sec. 1122. Agreements with insurers.
Sec. 1123. Provision of information.
Sec. 1124. Enrolling eligible employees and eligible individuals
through a purchasing arrangement.
Sec. 1125. Restriction on charges.
Part 4--Definitions and Miscellaneous Provisions
Sec. 1131. Definitions.
Sec. 1132. Prohibition of improper incentives.
Sec. 1133. Enforcement.
Sec. 1134. Annual reports.
Sec. 1135. Research and demonstration projects; development of a health
risk pooling model.
Subtitle C--Preemption
Part 1--Scope of State Regulation
Sec. 1201. Prohibition of State benefit mandates for group health
plans.
Sec. 1202. Prohibition of provisions prohibiting employer groups from
purchasing health insurance.
Sec. 1203. Preemption of State anti-managed care laws.
Sec. 1204. Definitions.
Part 2--Multiple Employer Health Benefits Protections
Sec. 1211. Limited exemption from certain restrictions on ERISA
preemption of State law for health plans
maintained by multiple employers subject to
certain Federal standards.
``Part 7--Multiple Employer Health Plans
``Sec. 701. Definitions.
``Sec. 702. Exempted multiple employer health plans relieved of
certain restrictions on preemption of State
law and treated as employee welfare benefit
plans.
``Sec. 703. Exemption procedure.
``Sec. 704. Eligibility requirements.
``Sec. 705. Additional requirements applicable to exempted
multiple employer health plans.
``Sec. 706. Disclosure to participating employers by
arrangements providing medical care.
``Sec. 707. Maintenance of reserves.
``Sec. 708. Corrective actions.
``Sec. 709. Expiration, suspension, or revocation of exemption.
``Sec. 710. Review of actions of the Secretary''.
Sec. 1212. Clarification of scope of preemption rules.
Sec. 1213. Clarification of treatment of single employer arrangements.
Sec. 1214. Clarification of treatment of certain collectively bargained
arrangements.
Sec. 1215. Employee leasing healthcare arrangements.
Sec. 1216. Enforcement provisions relating to multiple employer welfare
arrangements and employee leasing
healthcare arrangements.
Sec. 1217. Solvency requirements for certain self-insured group health
plans.
Sec. 1218. Filing requirements for multiple employer welfare
arrangements providing health benefits.
Sec. 1219. Cooperation between Federal and State authorities.
Sec. 1220. Effective date; transitional rules.
Part 3--Encouragement of Multiple Employer Arrangements Providing Basic
Health Benefits
Sec. 1221. Eliminating commonality of interest or geographic location
requirement for tax exempt trust status.
Sec. 1222. Single annual filing for all participating employers.
Sec. 1223. Compliance with coverage requirements through multiple
employer health arrangements.
Subtitle D--Health Deduction Fairness
Sec. 1301. Permanent extension and increase in health insurance tax
deduction for self-employed individuals.
Sec. 1302. Deduction of health insurance premiums for certain
previously uninsured individuals.
Subtitle E--Improved Access to Community Health Services
Part 1--Increased Authorization for Community and Migrant Health
Centers
Sec. 1401. Grant program to promote primary health care services for
underserved populations.
Part 2--Grants for Projects for Coordinating Delivery of Services
Sec. 1411. Projects for coordinating delivery of outpatient primary
health services.
Part 3--Community Health Networks
Sec. 1421. Qualifications for community health networks.
Subtitle F--Improved Access to Rural Health Services
Part 1--Establishment of Rural Emergency Access Care Hospitals under
Medicare
Sec. 1501. Rural emergency access care hospitals described.
Sec. 1502. Coverage of and payment for services.
Sec. 1503. Effective date.
Part 2--Rural Medical Emergencies Air Transport
Sec. 1511. Grants to States regarding aircraft for transporting rural
victims of medical emergencies.
Part 3--Emergency Medical Services Amendments
Sec. 1521. Establishment of Office of Emergency Medical Services.
Sec. 1522. State offices of emergency medical services.
Sec. 1523. Programs for rural areas.
Sec. 1524. Funding.
Sec. 1525. Conforming amendments.
Sec. 1526. Effective date.
Part 4--Additional Rural Health Care Provisions
Sec. 1531. Development of community-operated health plans in rural and
frontier areas.
Sec. 1532. Primary health care for medically underserved rural
communities; increased capacity of
hospitals and outpatient facilities.
Sec. 1533. Innovative approaches to delivery of health services in
rural areas.
Sec. 1534. Training of rural health professionals other than
physicians.
Sec. 1535. General provisions.
Subtitle G--Assistance in Enrolling Uninsured Children in Health
Insurance
Sec. 1601. Establishment of State programs.
Subtitle H--Medicaid Reform
Part 1--State Flexibility in the Medicaid Program: the Medical Health
Allowance Program
Sec. 1701. Establishment of program.
Sec. 1702. Optional use of program to offer coverage to some or all
State residents.
Part 2--Medicaid Program Flexibility
Sec. 1711. Modification of Federal requirements to allow States more
flexibility in contracting for coordinated
care services under medicaid.
Sec. 1712. Period of certain waivers.
Sec. 1713. Elimination of duplicative pediatric immunization program.
Part 3--Medicaid Disproportionate Share Adjustment
Sec. 1721. 25 percent reduction in amount of payment adjustments for
disproportionate share hospitals.
Subtitle I--Remedies and Enforcement With Respect to Group Health Plans
Sec. 1801. Claims procedure for group health plans.
Sec. 1802. Mediation of group health plan claims.
``Subpart B--Mediation of Group Health Plan Claims
``Sec. 521. Eligibility for submission to mediation.
``Sec. 522. Facilitators.
``Sec. 523. Role of attorneys.
``Sec. 524. Initiation of mediation.
``Sec. 525. Mediation procedure.
``Sec. 526. Mediation time limit.
``Sec. 527. Cost of mediation.
``Sec. 528. Legal effect of participation in mediation program.
``Sec. 529. Confidentiality and admissibility''.
Sec. 1803. Available court remedies.
Sec. 1804. Effective date.
Subtitle J--Delivery of Health Care Services to Illegal Immigrants
Sec. 1901. Study on the delivery of health care services to illegal
immigrants.
Sec. 1902. Report.
Subtitle A--Increased Availability and Continuity of Health Coverage
for Individuals and Their Families
PART 1--REQUIRED COVERAGE OPTIONS FOR ELIGIBLE EMPLOYEES, SPOUSES, AND
DEPENDENTS
SEC. 1001. REQUIRING EMPLOYERS TO OFFER OPTION OF COVERAGE FOR ELIGIBLE
INDIVIDUALS.
Title I, Subtitle A
(a) In General.--Each employer shall make available with respect to
each eligible employee a group health plan under which--
(1) coverage of each eligible individual with respect to
such an eligible employee may be elected on an annual basis for
each plan year,
(2) subject to subsection (d), coverage is provided for at
least the required coverage specified in subsection (c), and
(3) each eligible employee electing such coverage may elect
to have any premiums owed by the employee collected through
payroll deduction.
An employer is not required under this subsection to make any
contribution to the cost of coverage under such a plan.
(b) Special Rules.--
(1) Exclusion of new employers and certain small
employers.--Subsection (a) shall not apply to any employer for
any plan year if, as of the beginning of such plan year--
(A) such employer (including any predecessor
thereof) has been an employer for less than 2 years,
(B) such employer has no more than 2 eligible full-
time employees, or
(C) there are no more than 2 full-time eligible
employees who both are not covered under any group
health plan and do not have health insurance coverage.
(2) Exclusion of family members.--Under such procedures as
the Secretary may prescribe, any relative of an employer may
be, at the election of the employer, excluded from
consideration as an eligible employee for purposes of applying
the requirements of subsection (a). In the case of an employer
that is not an individual, an employee who is a relative of a
key employee (as defined in section 416(i)(1) of the Internal
Revenue Code of 1986) of the employer may, at the election of
the key employee, be considered a relative excludable under
this paragraph.
(3) Optional application of waiting period.--A group health
plan shall not be treated as failing to meet the requirements
of subsection (a) solely because a period of service by an
eligible employee of not more than 60 days is required under
the plan for coverage under the plan of eligible individuals
with respect to such employee.
(c) Required Coverage.--
(1) In general.--Except as provided in paragraph (2), the
required coverage specified in this subsection is standard
coverage (consistent with section 1102(c)), including at least
one option (either a fee-for-service option or a point-of-
service option) that permits covered individuals an unlimited
choice of the lawful providers for which covered benefits are
made available.
(2) Special treatment of small employers not contributing
to employee coverage.--In the case of a small employer (as
defined in section 1131(9)) that has not contributed during the
previous plan year to the cost of coverage for any eligible
employee under any group health plan, the required coverage
specified in this subsection for the plan year (with respect to
each eligible employee) is--
(A) MedAccess standard coverage, with a fee-for-
service option and, if available, a point-of-service
option and a managed care option (as defined in section
1033);
(B) MedAccess catastrophic coverage; and
(C) if available, MedAccess medisave coverage,
as such terms are defined in section 1102(a)(2).
(3) Construction.--Nothing in this section shall be
construed as limiting the group health plans, or types of
coverage under such a plan, that an employer may offer to an
employee.
(d) 5-Year Transition for Existing Group Health Plans.--
(1) In general.--The requirement of subsection (a)(2) shall
not apply to a group health plan for a plan year if--
(A) the group health plan is in effect in the plan
year in which July 1, 1994, occurs, and
(B) the employer makes (or offers to make), in such
plan year and each subsequent plan year through the
plan year involved, a contribution to the plan on
behalf of each employee who is eligible to participate
in the plan.
(2) Sunset.--Paragraph (1) shall only apply to a group
health plan until the expiration of a contract in effect on the
date of the enactment of this Act or, if earlier, January 1,
2000.
PART 2--PORTABILITY AND NONDISCRIMINATION
SEC. 1011. NONDISCRIMINATION BASED ON HEALTH STATUS.
(a) In General.--A group health plan and an insurer providing
health insurance coverage may not deny or impose (and an insurer may
not require an employer under a group health plan to impose or
otherwise to impose through a waiting period for coverage under a plan
or similar requirement) a limitation or exclusion of benefits relating
to treatment of a condition based on health status or based on the fact
that the condition preexisted the effective date of coverage of the
individual under the plan if--
(1) in the case of any individual eligible for such
coverage, such individual has such coverage at the time at
which such individual first becomes eligible;
(2) the limitation or exclusion applies to an individual
who, as of the date of birth, was covered under the plan;
(3) the limitation or exclusion relates to pregnancy;
(4) the condition relates to a condition that was not
diagnosed or treated within 3 months (or 6 months in the case
of coverage not under a group health plan) before the date of
such coverage; or
(5) the limitation or exclusion extends over more than 6
months (or 12 months in the case of coverage not under a group
health plan) after the date of such coverage.
In the case of an individual who is eligible for coverage but for a
waiting period imposed by the employer, in applying paragraphs (4) and
(5), the individual shall be treated as having had such coverage as of
the earliest date of the beginning of the waiting period.
(b) One-Time Amnesty Period.--
(1) In general.--In the case of an individual who, as of
the first date of the amnesty period is--
(A) covered under a group health plan or has health
insurance coverage, such coverage shall not be subject
to pre-existing condition exclusions on and after such
date; or
(B) not so covered, if the individual obtains
coverage under a group health plan or health insurance
coverage during the next available open enrollment
period with respect to the individual, coverage so
obtained shall not be subject to pre-existing condition
exclusions on and after the effective date of such
coverage.
(2) Amnesty period.--The amnesty period described in this
paragraph, with respect to an individual who is a resident of a
State, is the 45-calendar-day period beginning on the effective
date of this part (under section 1032(b)).
(3) Establishment of special allocation of risk pool for
amnesty.--Each State shall establish rules and requirements
relating to the allocation of risk among insurers with respect
to additional risks assumed as a result of the amnesty period
under this subsection (including individuals previously covered
for whom a preexisting condition exclusion will be no longer
applicable).
(c) Application of Rules by Certain Health Maintenance
Organizations.--A health maintenance organization that provides health
insurance coverage shall not be considered as failing to meet the
requirements of section 1301 of the Public Health Service Act
notwithstanding that it provides for an exclusion of the coverage based
on a preexisting condition consistent with the provisions of this part
so long as such exclusion is applied consistent with the provisions of
this part.
SEC. 1012. PORTABILITY.
(a) In General.--Each group health plan and an insurer providing
health insurance coverage shall waive any period applicable to a
preexisting condition for similar benefits with respect to an
individual to the extent that the individual, immediately prior to the
date of such individual's enrollment in such plan, had health insurance
coverage for the condition, or was covered for the condition under a
group health plan, that was in effect before such date.
(b) Continuous Coverage Required.--
(1) In general.--Subsection (a) shall no longer apply if
there is a continuous period of more than 60 days (or, in the
case of an individual described in paragraph (2), 6 months) for
which the individual did not have health insurance coverage for
the condition or was not covered under a group health plan for
the condition.
(2) Job termination.--An individual is described in this
paragraph if the individual loses coverage under a group health
plan due to termination of employment.
(3) Exclusion of cash-only and dread disease plans.--In
this subsection, the term ``group health plan'' does not
include any group health plan which is offered primarily to
provide--
(A) coverage for a specified disease or illness, or
(B) a hospital or fixed indemnity policy, unless
the Secretary determines that such a plan provides
sufficiently comprehensive coverage of a benefit so
that it should be treated as a group health plan under
this subsection.
(c) Transition for Non-Conforming Policies.--Notwithstanding State
law or the provision of any agreement to the contrary, effective
January 1, 1997, an insurer may cancel or refuse to renew health
insurance coverage in a State prior to the application of this subtitle
to health insurance coverage issued in the State if the coverage does
not provide for either standard or catastrophic coverage, but only if
the insurer offers the covered individual affected the opportunity to
obtain health insurance coverage that meets the applicable requirements
of this title.
(d) Applicability of Coverage Under Public Insurance.--In this
section, an individual shall be considered to have health insurance
coverage for a condition without regard to whether such coverage is
under a private or public plan.
SEC. 1013. REQUIREMENTS RELATING TO RENEWABILITY GENERALLY.
(a) Multiemployer Plans and Exempted Multiple Employer Health
Plans.--A multiemployer plan and an exempted multiple employer health
plan may not cancel coverage or deny renewal of coverage under such a
plan with respect to an employer other than--
(1) for nonpayment of contributions,
(2) for fraud or other misrepresentation by the employer,
(3) for noncompliance with plan provisions, or
(4) because the plan is ceasing to provide any coverage in
a geographic area.
(b) Insurers.--
(1) In general.--An insurer may not cancel health insurance
coverage or deny renewal of such coverage other than--
(A) for nonpayment of premiums,
(B) for fraud or other misrepresentation by the
insured,
(C) for noncompliance with plan provisions, or
(D) subject to paragraph (2), because the insurer
is ceasing to provide any health insurance coverage (or
the same type of health insurance coverage in the same
individual or small employer insurance market) in a
State, or, in the case of a health maintenance
organization or other network plan, in a geographic
area.
(2) Notice requirement for market exit.--Paragraph (1)(D)
shall not apply to an insurer ceasing to provide coverage
unless the insurer provides notice of such termination to
employers and individuals covered at least 180 days before the
date of termination of coverage.
(3) Limitation on reentry in employer and individual
markets.--If an insurer ceases to offer or provide health
insurance coverage (or a type of insurance coverage) in an area
with respect to the individual or small group market, the
insurer may not offer such health insurance coverage (or type
of coverage) in the area in such market until 5 years after the
date of the termination.
(4) Type of coverage and insurance market defined.--In this
subsection--
(A) MedAccess standard coverage, MedAccess
catastrophic coverage, and MedAccess medisave coverage
shall each be considered to be separate types of health insurance
coverage; and
(B) the term ``small group market'' means the
insurance market offered to individuals seeking health
care coverage on behalf of themselves (and their
dependents) on the basis of employment or other
relationship with respect to an employer or an
association.
PART 3--STANDARDS FOR MANAGED CARE ARRANGEMENTS
SEC. 1021. STANDARDS FOR MANAGED CARE ARRANGEMENTS.
(a) Requirement.--
(1) In general.--Each group health plan, and each insurer
providing health insurance coverage, for health care through a
managed care arrangement shall comply with the applicable
requirements of this section.
(2) Definitions.--In this section:
(A) Managed care arrangement defined.--The term
``managed care arrangement'' means, with respect to an
arrangement under a group health plan or under health
insurance coverage, providers who have entered into an
agreement under the arrangement under which such
providers are obligated to provide items and services
covered under the arrangement to individuals covered
under the plan or who have such coverage.
(B) Provider network.--The term ``provider
network'' means, with respect to a group health plan or
health insurance coverage, providers who have entered
into an agreement described in subparagraph (A) under a
managed care arrangement.
(b) Scope of Arrangements With Providers.--
(1) In general.--The entity providing for a managed care
arrangement on behalf of a group health plan or under health
insurance coverage shall enter into such agreements with health
care providers (including primary and specialty providers for
children) or have such other arrangements as may be necessary
to assure that covered individuals have reasonably prompt
access through the entity's provider network to all items and
services contained in the package of benefits for which
coverage is provided (including access to emergency services on
a 24-hour basis where medically necessary), in a manner that
assures the continuity of the provision of such items and
services.
(2) Access to centers of excellence.--
(A) In general.--The entity providing for a managed
care arrangement on behalf of a group health plan or
under health insurance coverage shall demonstrate that
covered individuals (including individuals with chronic
diseases) have access through the entity's provider
network to specialized treatment expertise of
designated centers of excellence. Such entity shall
demonstrate such access according to standards
developed by the Secretary, including requirements
relating to arrangements with such centers and referral
of patients to such centers.
(B) Designation of centers of excellence.--The
Secretary shall establish a process for the designation
of facilities, including children's hospitals and other
pediatric facilities, as centers of excellence for
purposes of this paragraph. A facility may not be
designated unless the facility is determined--
(i) to provide specialty care,
(ii) to deliver care for complex cases
requiring specialized treatment and for
individuals with chronic diseases, and
(iii) to meet other requirements that may
be established by the Secretary relating to
specialized education and training of health
professionals, participation in peer-reviewed
research, or treatment of patients from outside
the geographic area of the facility.
(3) No referral required for obstetrics and gynecology.--An
entity providing for a managed care arrangement may not require
an individual to obtain a referral from a physician in order to
obtain covered items and services within the network of the
arrangement from a physician who specializes in obstetrics and
gynecology.
(c) Provision of Emergency and Urgent Care Services.--
(1) In general.--The entity providing for a managed care
arrangement on behalf of a group health plan or under health
insurance coverage must cover medically necessary emergency and
urgent care services provided to covered individuals (including
trauma services provided by designated trauma centers), without
regard to whether or not the provider furnishing such services
has a contractual (or other) arrangement with the entity to
provide items or services to covered individuals and, in the
case of services furnished for the treatment of an emergency
medical condition (as defined in section 1867(e)(1) of the
Social Security Act), without regard to prior authorization.
(2) Designated trauma centers defined.--In paragraph (1),
the term ``designated trauma center''--
(A) has the meaning given such term in section 1231
of the Public Health Service Act, and
(B) includes (for years prior to 2001) a trauma
center that--
(i) is located in a State that has not
designated trauma centers under section 1213 of
such Act, and
(ii) the Secretary finds meets the
standards under such section to be a designated
trauma center.
(d) Due Process Standards Relating to Provider Networks.--
(1) Standards for selection of providers for network.--
(A) Establishment.--The entity providing for a
managed care arrangement on behalf of a group health
plan or under health insurance coverage shall establish
standards to be used by the entity for contracting with
health care providers with respect the entity's
provider network. Such standards shall be established
in consultation with providers who are members of the
network.
(B) Distribution of information.--Descriptive
information regarding these standards shall be made
available upon request to enrollees, providers who are
members of the network, and prospective enrollees and
prospective participating providers.
(2) Notice requirement.--
(A) In general.--The entity may not terminate or
refuse to renew an agreement with a provider to
participate in the entity's provider network unless the
entity provides written notification to the provider of
the entity's decision to terminate or to refuse to
renew the agreement. The notification shall include a
statement of the reasons for the entity's decision,
consistent with the standards established under
paragraph (1).
(B) Timing of notification.--The entity shall
provide the notification required under subparagraph
(A) at least 45 days prior to the effective date of the
termination or expiration of the agreement (whichever
is applicable). The previous sentence shall not apply
if failure to terminate the agreement prior to the
deadline would adversely affect the health or safety of
a covered individual.
(3) Review process.--
(A) In general.--The entity shall provide a process
under which the provider may request a review of the
entity's decision to terminate or refuse to renew the
provider's participation agreement. Such review shall
be conducted by a group of individuals the majority of
whom are health care providers who are members of the
entity's provider network or employees of the entity,
and who are members of the same profession as the
provider who requests the review.
(B) Counsel.--If the provider requests in advance,
the entity shall permit an attorney representing the
provider to be present at the provider's review.
(C) Review advisory.--The findings and conclusions
of a review under this paragraph shall be advisory and
non-binding.
(4) Construction.--Nothing in this subsection shall be
construed to affect any other provision of law that provides an
appeals process or other form of relief to a provider of health
care services.
SEC. 1022. UTILIZATION REVIEW.
(a) Requiring Review to Meet Standards.--A group health plan or
insurer providing health insurance coverage may not deny coverage of or
payment for items and services on the basis of a utilization review
program unless the program meets the standards established by the
Secretary under this section.
(b) Establishment of Standards by Secretary.--The Secretary shall
establish standards for utilization review programs, consistent with
subsection (c), and shall periodically review and update such standards
to reflect changes in the delivery of health care services. The
Secretary shall establish such standards in consultation with
appropriate parties, including representatives of health care
providers, specialists, insurers, plan administrators, and other
experts.
(c) Requirements for Standards.--Under the standards established
under subsection (a)--
(1) individuals performing utilization review may not
receive financial compensation based upon the number of denials
of coverage;
(2) negative determinations of the medical necessity or
appropriateness of services or the site at which services are
furnished may be made only by clinically qualified personnel;
(3) the utilization review program shall provide for a
process under which an enrollee or provider may obtain timely
review of a denial of coverage;
(4) utilization review shall be conducted in accordance
with uniformly applied standards that are based on the most
currently available medical evidence; and
(5) providers shall participate in the development of the
utilization review program.
(d) Preemption.--For provision preempting State laws relating to
utilization review, see section 1203(a)(3).
PART 4--ENFORCEMENT; EFFECTIVE DATES; DEFINITIONS
SEC. 1031. ENFORCEMENT.
(a) Enforcement by Department of Labor for Employers and Group
Health Plans.--
(1) In general.--For purposes of part 5 of subtitle B of
title I of the Employee Retirement Income Security Act of 1974,
the provisions of parts 1 and 2 of this subtitle and part 1 of
subtitle B shall be deemed to be provisions of title I of such
Act irrespective of exclusions under section 4(b) of such Act.
(2) Regulatory authority.--With respect to the regulatory
authority of the Secretary of Labor under this subtitle
pursuant to subsection (a), section 505 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1135) shall
apply.
(b) Enforcement by Penalty for Insurers.--
(1) In general.--Chapter 43 of the Internal Revenue Code of
1986 (relating to qualified pension, etc., plans) is amended by
adding at the end thereof the following new section:
``SEC. 4980C. FAILURE OF INSURER TO COMPLY WITH HEALTH INSURANCE
STANDARDS.
``(a) Imposition of Penalty.--
``(1) In general.--There is hereby imposed a tax on the
failure of an insurer to comply with the requirements
applicable to the insurer under parts 2 and 3 of subtitle A of
title I and subtitle B of the Affordable Health Care Now Act of
1994.
``(2) Exception.--Paragraph (1) shall not apply to a
failure by an insurer in a State if the Secretary of Health and
Human Services determines that the State has in effect a
regulatory enforcement mechanism that provides adequate
sanctions with respect to such a failure by such an insurer.
``(b) Amount of Penalty.--
``(1) In general.--Subject to paragraph (2), the amount of
the tax imposed by subsection (a) shall be $100 for each day
during which such failure persists for each individual to which
such failure relates. A rule similar to the rule of section
4980B(b)(3) shall apply for purposes of this section.
``(2) Limitation.--The amount of the tax imposed by
subsection (a) for an insurer with respect to health insurance
coverage shall not exceed 25 percent of the amounts received
for such coverage during the period such failure persists.
``(c) Liability for Penalty.--The penalty imposed by this section
shall be paid by the insurer.
``(d) Exceptions.--
``(1) Corrections within 30 days.--No tax shall be imposed
by subsection (a) by reason of any failure if--
``(A) such failure was due to reasonable cause and
not to willful neglect, and
``(B) such failure is corrected within the 30-day
period beginning on the earliest date the insurer knew,
or exercising reasonable diligence would have known,
that such failure existed.
``(2) Waiver by secretary.--In the case of a failure which
is due to reasonable cause and not to willful neglect, the
Secretary may waive part or all of the tax imposed by
subsection (a) to the extent that payment of such tax would be
excessive relative to the failure involved.
``(e) Definitions.--For purposes of this section, the terms `health
insurance coverage' and `insurer' have the respective meanings given
such terms in section 1033 of the Affordable Health Care Now Act of
1994.''.
(2) Clerical amendment.--The table of sections for chapter
43 of such Code is amended by adding at the end thereof the
following new items:
``Sec. 4980C. Failure of insurer to
comply with health insurance
standards.''
SEC. 1032. EFFECTIVE DATES.
(a) Part 1.--The requirements of part 1 shall apply to plans years
beginning after December 31, 1996.
(b) Parts 2 and 3.--The requirements of parts 2 and 3 shall apply
with respect to--
(1) group health plans and employers shall apply to plans
years beginning after December 31, 1996, and
(2) insurers shall take effect on January 1, 1997.
SEC. 1033. DEFINITIONS AND SPECIAL RULES.
(a) In General.--For purposes of this subtitle:
(1) Dependent.--The term ``dependent'' means, with respect
to any individual, any person who is--
(A) the spouse or surviving spouse of the
individual, or
(B) under regulations of the Secretary, a child
(including an adopted child) of such individual and--
(i) under 19 years of age, or
(ii) under 25 years of age and a full-time
student.
(2) Eligible employee.--The term ``eligible employee''
means, with respect to an employer, an employee who normally
performs on a monthly basis at least 10 hours of service per
week for that employer. Such term shall not include any
employee who is not reasonably expected as of the 1st day of a
month to be employed by the employer for a period of 120
consecutive days during any 365-day period that includes such
1st day.
(3) Eligible individual.--The term ``eligible individual''
means, with respect to an eligible employee, such employee, and
any dependent of such employee.
(4) Employer.--The term ``employer'' shall have the meaning
applicable under section 3(5) of the Employee Retirement Income
Security Act of 1974.
(5) Exempted multiple employer health plan.--The term
``exempted multiple employer health plan'' means a multiple
employer welfare arrangement treated as an employee welfare
benefit plan by reason of an exemption under part 7 of subtitle
B of title I of the Employee Retirement Income Security Act of
1974 (as added by part 2 of subtitle C of this title).
(6) Group health plan; plan.--(A) The term ``group health
plan'' means an employee welfare benefit plan providing medical
care (as defined in section 213(d) of the Internal Revenue Code
of 1986) to participants or beneficiaries directly or through
insurance, reimbursement, or otherwise, but does not include
any type of coverage excluded from the definition of a health
insurance coverage under section 1131(4)(B).
(B) The term ``plan'' means a group health plan (including
any such plan which is a multiemployer plan) and an exempted
multiple employer health plan.
(7) Health insurance coverage.--The term ``health insurance
coverage'' shall have the meaning applicable under section
1131(4).
(8) Fully insured.--The term ``fully insured'' shall have
the meaning applicable under section 701(9) of Employee
Retirement Income Security Act of 1974 (as added by section
1211 of this title).
(9) Insurer.--The term ``insurer'' has the meaning given
such term in section 1131(6).
(10) Multiple employer welfare arrangement.--The term
``multiple employer welfare arrangement'' shall have the
meaning applicable under section 3(40) of the Employee
Retirement Income Security Act of 1974.
(11) Options.--
(A) Fee-for-service option.--Standard coverage is
considered to provide a ``fee-for-service option'' if
benefits with respect to the covered items and services
in the coverage are made available for such items and services provided
through any lawful provider of such covered items and services.
(B) Managed care option.--Standard coverage is
considered to provide a ``managed care option'' if
benefits with respect to the covered items and services
in the coverage are made available exclusively through
a managed care arrangement (as defined in section
1021(a)(2)), except in the case of emergency and urgent
services and as otherwise required under law.
(C) Point-of-service option.--Standard coverage is
considered to provide a ``point-of-service option'' if
the benefits with respect to covered items and services
in the coverage are made available principally through
a managed care arrangement, with the choice of the
enrollee to obtain such benefits for items and services
provided through any lawful provider of such covered
items and services. The coverage may provide for
different cost sharing schedules based on whether the
items and services are provided through such an
arrangement or outside such an arrangement.
(b) Application of ERISA Definitions.--Except as otherwise provided
in this subtitle, terms used in this subtitle shall have the meanings
applicable to such terms under section 3 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1002).
(c) Secretary.--Except with respect to references specifically to
the Secretary of Labor, the term ``Secretary'' means the Secretary of
Health and Human Services.
Subtitle B--Reform of Health Insurance
PART 1--MARKETPLACE FOR SMALL BUSINESS
Title I, Subtitle B
SEC. 1101. REQUIREMENT FOR INSURERS TO OFFER MEDACCESS COVERAGE.
(a) Requirement.--
(1) In general.--Each insurer (as defined in section
1131(6)) that makes available any health insurance coverage (as
defined in section 1131(4)) to a small employer (as defined in
section 1131(9)) in a State--
(A) shall make available to each small employer in
the State MedAccess standard coverage (as defined in
section 1102(a)(2)), with a fee-for-service option and,
if available, a point-of-service option and a managed
care option (as defined in section 1033),
(B) shall make available to each small employer in
the State MedAccess catastrophic coverage (as defined
in section 1102(a)(2)), and
(C) may make available to each small employer in
the State MedAccess medisave coverage (as defined in
section 1102(a)(2)).
(2) Special rule for health maintenance organizations.--The
requirements of paragraph (1)(A) (with regard to requiring a
fee-for-service option), and paragraphs (1)(B) and (1)(C) shall
not apply with respect to a health insurance coverage that--
(A) is provided by a Federally qualified health
maintenance organization (as defined in section 1301(a)
of the Public Health Service Act), or
(B) is not provided by such an organization but is
provided by an organization recognized under State law
as a health maintenance organization or managed care
organization or a similar organization regulated under
State law for solvency.
(3) Exception if state provides for guaranteed availability
(rather than guaranteed issue).--Paragraph (1) shall not apply
to an insurer in a State if the State is providing--
(A) access to each small employer in the State to
MedAccess standard coverage, to MedAccess catastrophic
coverage, and to a MedAccess medisave coverage, and
(B) a risk allocation mechanism described in
subsection (c).
(b) Guaranteed Issue of MedAccess Coverage.--Subject to subsection
(c)--
(1) In general.--Subject to paragraphs (2) and (3), each
insurer that offers MedAccess coverage to a small employer in a
State--
(A) must accept every small employer in the State
that applies for such coverage; and
(B) must accept for enrollment under such coverage
every eligible individual (as defined in paragraph (5))
who applies for enrollment on a timely basis
(consistent with paragraph (4)) and may not place any
restriction on the eligibility of an individual to
enroll so long as such individual is an eligible
individual.
(2) Special rules for health maintenance organizations.--In
the case of coverage offered by a health maintenance
organization or other network plan, the organization may--
(A) limit the employers that may apply for such
coverage to those with eligible individuals residing in
the service area of the plan;
(B) limit the individuals who may be enrolled under
such coverage to those who reside in the service area
for such organization; and
(C) within the service area of such organization,
deny such coverage to such employers if the
organization demonstrates that--
(i) it will not have the capacity to
deliver services adequately to enrollees of any
additional groups because of its obligations to
existing group contract holders and enrollees,
(ii) it is applying this subparagraph
uniformly to all employers without regard to
the health status, claims experience, or
duration of coverage of those employers and
their employees, and
(iii) it will not offer coverage to such
employers within such service area for a period
of at least 180 days after such coverage is denied.
In this paragraph, the term ``health maintenance organization''
includes an organization recognized under State law as a health
maintenance organization or managed care organization or a
similar organization regulated under State law for solvency.
(3) Special rule for financial capacity limits.--In the
case of coverage offered by an insurer other than a health
maintenance organization or network plan, the insurer may deny
such coverage to small employers if the organization
demonstrates that--
(A) it does not have the financial reserves
necessary to underwrite additional coverage,
(B) it is applying this paragraph uniformly to all
employers without regard to the health status, claims
experience, or duration of coverage of those employers
and their employees, and
(C) it shall not offer coverage to such employers
within such service area for a period of at least 180
days after such coverage is denied.
(4) Clarification of timely enrollment.--
(A) General initial enrollment requirement.--Except
as provided in this paragraph, enrollment of an
eligible individual for MedAccess coverage may be
considered not to be timely if the eligible employee or
dependent fails to enroll under such coverage during an
initial enrollment period, if such period is at least
30 days long.
(B) Enrollment due to loss of previous coverage.--
Enrollment under MedAccess coverage is considered to be
timely in the case of an eligible individual who--
(i) was covered under a group health plan
or had other health insurance coverage at the
time of the individual's initial enrollment
period,
(ii) stated at the time of the initial
enrollment period that coverage under a group
health plan or other health insurance coverage
was the reason for declining enrollment,
(iii) lost coverage under a group health
plan or other health insurance coverage (as a
result of the termination of the coverage,
termination or reduction of employment, or
other reason), and
(iv) requests enrollment within 30 days
after termination of the coverage.
(C) Requirement applies during open enrollment
periods.--Each insurer and each group health plan
providing MedAccess coverage shall provide for at least
one period (of not less than 30 days) each year during
which enrollment under such coverage shall be
considered to be timely.
(D) Exception for court orders.--Enrollment of a
spouse or minor child of an employee shall be
considered to be timely if--
(i) a court has ordered that coverage be
provided for the spouse or child under a
covered employee's group health plan, and
(ii) a request for enrollment is made
within 30 days after the date the court issues
the order.
(E) Enrollment of spouses and dependents.--
(i) In general.--Enrollment of the spouse
(including a child of the spouse) and any
dependent child of an eligible employee shall
be considered to be timely if a request for
enrollment is made either--
(I) within 30 days of the date of
the marriage or of the date of the
birth or adoption of a child, if family
coverage is available as of such date,
or
(II) within 30 days of the date
family coverage is first made
available.
(ii) Coverage.--If available coverage
includes family coverage and enrollment is made
under such coverage on a timely basis under
clause (i)(I), the coverage shall become
effective not later than the first day of the
first month beginning after the date of the
marriage or the date of birth or adoption of
the child (as the case may be).
(5) Definitions.--In this subsection, the terms ``eligible
individual'' and ``group health plan'' have the meanings given
such terms in section 1023(a).
(c) State Option of Guaranteed Availability Through Allocation of
Risk (Rather than Through Guaranteed Issue).--The requirements of
subsection (b) shall not apply in a State if the State has provided (in
accordance with standards established under this part) a mechanism
under which--
(1) each insurer offering health insurance coverage to a
small employer in the State must participate in a program for
assigning high-risk small employer groups (or individuals
within such a group) among some or all such insurers, and
(2) the insurers to which such high-risk small employer
groups or individuals are so assigned comply with the
requirements of subsection (b).
SEC. 1102. MEDACCESS COVERAGE DEFINED.
(a) MedAccess Coverage Defined.--In this subtitle:
(1) In general.--The term ``MedAccess coverage'' means a
health insurance coverage (whether under a managed-care plan,
indemnity plan, or other plan) that meets the following
requirements:
(A) The coverage--
(i) is designed to provide standard
coverage (consistent with subsection (c)) with
substantial cost-sharing,
(ii) is designed to provide only
catastrophic coverage (consistent with
subsection (d)), or
(iii) is designed to provide medisave
coverage (consistent with subsection (e)).
(B) The coverage includes only services, including
(but not limited to) medical, surgical, hospital, and
preventive services, which are essential and medically
necessary; except that no specific procedure or
treatment, or classes thereof, is required to be
included in such coverage, by this Act or through
regulations.
(C) The coverage meets the applicable requirements
of section 1101(b) (relating to guaranteed issue).
(D) The coverage meets the consumer protection
standards established under section 1103(a)(1)(B).
(2) Medaccess standard, catastrophic, and medisave
coverage.--The terms ``MedAccess standard coverage'',
``MedAccess catastrophic coverage'', ``MedAccess medisave
coverage'' mean MedAccess coverage that provides for at least
standard coverage (referred to in paragraph (1)(A)(i)), for
only catastrophic coverage (referred to in paragraph
(1)(A)(ii)), or medisave coverage (referred to in paragraph
(1)(A)(iii)), respectively.
(b) Set of Rules of Actuarial Equivalence.--
(1) Initial determination.--The NAIC is requested to submit
to the Secretary, within 6 months after the date of the
enactment of this Act, a set of rules, including an appropriate
set of safe-harbors, which the NAIC determines is sufficient
for determining, in the case of any health insurance coverage
and for purposes of this section, the actuarial value of the
coverage offered.
(2) Certification.--If the Secretary determines that the
NAIC has submitted a set of rules that comply with the
requirements of paragraph (1), the Secretary shall certify such
set of rules for use under this part. If the Secretary
determines that such a set of rules has not been submitted or
does not comply with such requirements, the Secretary shall
promptly establish a set of rules that meets such requirements.
(c) Standard Coverage.--
(1) In general.--For purposes of this Act, health insurance
coverage is considered to provide standard coverage consistent
with this subsection if the benefits are specified in a written
instrument providing for such coverage as essential and
medically necessary services described in subsection (a)(1)(B)
and determined, in accordance with the set of actuarial
equivalence rules certified under subsection (b), to have a
value that is within 5 percentage points of the applicable
target actuarial value for standard coverage established under
paragraph (2).
(2) Initial determination of applicable target actuarial
value for standard coverage.--
(A) Initial determination.--The NAIC is requested
to submit to the Secretary, within 6 months after the
date of the enactment of this Act, a procedure for
determining the applicable target actuarial value for
standard coverage (which may vary by geographic area).
Such value shall be equal to the average actuarial
value of a representative range of the different types
of health benefits provisions (which include cost-
sharing) typically offered as standard coverage in the
small employer health coverage market. In determining
the actuarial value, the benefits considered should be
sufficient to cover only services, including (but not
limited to) medical, surgical, hospital, and preventive
services, which are essential and medically necessary;
except that no specific procedure or treatment, or
classes thereof, is required to be considered in such
determination by this Act or through regulations. The
determination of such value shall be based on a
representative distribution of the population of
eligible employees offered such coverage and a single
set of standardized utilization and cost factors (which
may vary by geographic area).
(B) Certification.--If the Secretary determines
that the NAIC has submitted a procedure for determining
the applicable target actuarial value for standard
coverage that complies with the requirements of
subparagraph (A), the Secretary shall certify such
procedure for use under this part. If the Secretary
determines that such a procedure has not been submitted
or does not comply with such requirements, the
Secretary shall promptly prescribe such a procedure
that meets such requirements.
(d) Catastrophic Coverage.--
(1) In general.--For purposes of subsection (a)(1)(B),
health insurance coverage is considered to provide catastrophic
coverage consistent with this subsection if--
(A) benefits are available under such coverage for
a year only to the extent that expenses for covered
services in a year exceed a deductible amount that is
consistent with the dollar amounts specified in section
220(c)(2)(A) of the Internal Revenue Code of 1986, as
added by section 2202, and
(B) the benefits are determined, in accordance with
the set of actuarial equivalence rules certified under
subsection (b), to have a value that is within 5
percentage points of the target actuarial value for
catastrophic coverage established under paragraph (2).
(2) Initial determination of target actuarial value for
catastrophic coverage.--
(A) Initial determination.--The NAIC is requested
to submit to the Secretary, within 6 months after the
date of the enactment of this Act, a target actuarial
value for catastrophic coverage equal to the actuarial
value that would have been computed under subsection
(c)(2)(A) if a deductible that represents the midpoint
of the range of deductibles permitted consistent with
subsections (b)(2) and (c)(2)(A) of section 220 of the Internal Revenue
Code of 1986 were used in place of any deductible that otherwise would
be applicable.
(B) Certification.--If the Secretary determines
that the NAIC has submitted a target actuarial value
for catastrophic coverage that comply with the
requirements of subparagraph (A), the Secretary shall
certify such value for use under this part. If the
Secretary determines that such a value has not been
submitted or does not comply with such requirements,
the Secretary shall promptly determine such a target
actuarial value that meets such requirements.
(e) Medisave Coverage.--
(1) In general.--For purposes of subsection (a)(1)(C),
health insurance coverage is considered to provide medisave
coverage consistent with this subsection if such coverage
consists of--
(A) coverage under a catastrophic health plan
(within the meaning of section 220(c)(2) of the
Internal Revenue Code of 1986, as inserted by section
2202 of this Act), and
(B) a medical savings account described in section
220(d)(1)(B) of such Code.
(f) Subsequent Revisions.--
(1) NAIC.--The NAIC may submit from time to time to the
Secretary revisions of the set of rules of actuarial
equivalence previously established or determined under this
section if the NAIC determines such revision necessary to take
into account changes in the relevant types of health benefits
provisions, in deductible levels for catastrophic coverage, or
in demographic conditions which form the basis for such set of
rules. The provisions of subsection (b)(2) shall apply to such
a revision in the same manner as they apply to the initial
determination of the set of rules.
(2) Secretary.--The Secretary may by regulation revise such
set or rules and values from time to time if the Secretary
determines such revision necessary to take into account changes
described in paragraph (1).
SEC. 1103. ESTABLISHMENT OF OTHER MEDACCESS STANDARDS.
(a) Establishment of General Standards.--
(1) Role of naic.--The Secretary shall request the NAIC to
develop, within 9 months after the date of the enactment of
this Act, model regulations that specify standards with respect
to each of the following:
(A)(i) The requirement, under section 1101(a), that
insurers make available MedAccess coverage.
(ii) The requirements of guaranteed availability of
MedAccess coverage to small employers under section
1101(b).
(B) The requirements of section 1104 (relating to
use of modified community rating, uniform marketing
materials, and miscellaneous consumer protections).
If the NAIC develops recommended regulations specifying such
standards within such period, the Secretary shall review the
standards. Such review shall be completed within 60 days after
the date the regulations are developed. Unless the Secretary
determines within such period that the standards do not meet
the requirements, such standards shall serve as the standards
under this section, with such amendments as the Secretary deems
necessary.
(2) Contingency.--If the NAIC does not develop such model
regulations within such period or the Secretary determines that
such regulations do not specify standards that meet the
requirements described in paragraph (1), the Secretary shall
specify, within 15 months after the date of the enactment of
this Act, standards to carry out those requirements.
(3) Effective date.--The MedAccess standards and consumer
protection standards (as defined in paragraph (5)) shall apply
to MedAccess coverage and health insurance coverage provided in
a State on or after the respective date the standards are
implemented in the State under subsections (b) and (c).
(4) Preemption of state law.--
(A) In general.--Except as provided in subparagraph
(B), a State may not establish or enforce standards for
health insurance coverage made available to small
employers and individuals that are different from the
standards established under this part.
(B) Grandfather.--In the case of a State that, as
of August 1, 1994, required that premiums in the
individual and small group market sectors be community-
rated and not vary based on age, the State continue
such standards (and reasonable modifications thereof)
in force.
(5) Definitions.--In this section:
(A) Consumer protection standards.--The term
``consumer protection standards'' means the standards
established under paragraph (1)(B).
(B) MedAccess standards.--The term ``MedAccess
standards'' means the standards established under
paragraph (1)(A) (relating to the requirements of
section 1101), and includes the consumer protection
standards insofar as they relate to MedAccess coverage.
(b) Application of Standards Through States.--
(1) Application of medaccess standards.--
(A) In general.--Each State shall submit to the
Secretary, by the deadline specified in subparagraph
(B), a report on steps the State is taking to implement
and enforce the consumer protection standards with
respect to insurers, and MedAccess coverage offered,
not later than such deadline.
(B) Deadline for report.--
(i) 1 year after standards established.--
Subject to clause (ii), the deadline under this
subparagraph is 1 year after the date the
MedAccess standards are established under subsection (a).
(ii) Exception for legislation.--In the
case of a State which the Secretary identifies,
in consultation with the NAIC, as--
(I) requiring State legislation
(other than legislation appropriating
funds) in order for insurers and plans
providing MedAccess coverage offered to
meet the MedAccess standards
established under subsection (a), but
(II) having a legislature which is
not scheduled to meet in 1995 in a
legislative session in which such
legislation may be considered,
the date specified in this subparagraph is the
first day of the first calendar quarter
beginning after the close of the first
legislative session of the State legislature
that begins on or after January 1, 1996. For
purposes of the previous sentence, in the case
of a State that has a 2-year legislative
session, each year of such session shall be
deemed to be a separate regular session of the
State legislature.
(2) Federal role.--If the Secretary determines that a State
has failed to submit a report by the deadline specified under
paragraph (1) or finds that the State has not implemented and
provided adequate enforcement of the MedAccess standards under
such paragraph, the Secretary shall notify the State and
provide the State a period of 60 days in which to submit such
report or to implement and enforce such standards under such
paragraph. If, after such 60-day period, the Secretary finds
that such a failure has not been corrected, the Secretary shall
provide for such mechanism for the implementation and
enforcement of such standards in the State as the Secretary
determines to be appropriate. Such implementation and
enforcement shall take effect with respect to insurers, and
plans providing MedAccess coverage offered or renewed, on or
after 3 months after the date of the Secretary's finding under
the previous sentence, and until the date the Secretary finds
that such a failure has been corrected. In exercising authority
under this subparagraph, the Secretary shall determine whether
the use of a risk-allocation mechanism, described in section
1101(c), would be more consistent with the small employer group
health coverage market in the State than the guaranteed
availability provisions of section 1101(b).
(3) Application of consumer protection standards.--
(A) In general.--Each State shall submit to the
Secretary, by the deadline specified in subparagraph
(B), a report on steps the State is taking to implement
and enforce the MedAccess standards with respect to
insurers, and health insurance coverage (other than
MedAccess coverage) offered, not later than such
deadline.
(B) Deadline for report.--
(i) 1 year after standards established.--
Subject to clause (ii), the deadline under this
subparagraph is 1 year after the date the
consumer protection standards are established
under subsection (a).
(ii) Exception for legislation.--In the
case of a State which the Secretary identifies,
in consultation with the NAIC, as--
(I) requiring State legislation
(other than legislation appropriating
funds) in order for insurers and plans
providing health insurance coverage
offered to meet the consumer protection
standards established under subsection
(a), but
(II) having a legislature which is
not scheduled to meet in 1995 in a
legislative session in which such
legislation may be considered,
the date specified in this subparagraph is the
first day of the first calendar quarter
beginning after the close of the first
legislative session of the State legislature
that begins on or after January 1, 1996. For
purposes of the previous sentence, in the case
of a State that has a 2-year legislative
session, each year of such session shall be
deemed to be a separate regular session of the
State legislature.
(4) Federal role.--If the Secretary determines that a State
has failed to submit a report by the deadline specified under
paragraph (1) or finds that the State has not implemented and
provided adequate enforcement of the consumer protection
standards under such paragraph, the Secretary shall notify the
State and provide the State a period of 60 days in which to
submit such report or to implement and enforce such standards
under such paragraph. If, after such 60-day period, the
Secretary finds that such a failure has not been corrected, the
Secretary shall provide for such mechanism for the
implementation and enforcement of such standards in the State
as the Secretary determines to be appropriate. Such
implementation and enforcement shall take effect with respect
to insurers, and health insurance coverage (other than
MedAccess coverage) offered or renewed, on or after 3 months
after the date of the Secretary's finding under the previous
sentence, and until the date the Secretary finds that such a
failure has been corrected.
SEC. 1104. USE OF MODIFIED COMMUNITY RATING, UNIFORM MARKETING
MATERIALS, AND MISCELLANEOUS CONSUMER PROTECTIONS.
(a) Use of Modified Community Rating.--
(1) In general.--As a standard under section 1103(a)(1)(B),
subject to paragraph (2), the premium rate established by an
insurer for coverage may not vary within a type of product
except by the following:
(A) Age.--By age, based on classes of age
established by a State.
(B) Geographic area.--By geographic area, based on
3-digit zip code or counties, as identified by a State.
(C) Family size.--Family size, based on a
classification of individual, individual with one or
more children, married couple without children, and
married couple with children.
(2) Discount for employer wellness program.--An insurer may
provide for a group discount with respect to an employer that
provides for a wellness program for employees.
(b) Full Disclosure of Rating Practices.--At the time an insurer
offers health insurance coverage to a small employer, the insurer shall
fully disclose to the employer rating practices for health insurance
coverage, including rating practices for different plan designs.
(c) Actuarial Certification.--Each insurer that offers health
insurance coverage to a small employer in a State shall file annually
with the State commissioner of insurance a written statement by a
member of the American Academy of Actuaries (or other individual
acceptable to the commissioner) that, based upon an examination by the
individual which includes a review of the appropriate records and of
the actuarial assumptions of the insurer and methods used by the
insurer in establishing premium rates for applicable health insurance
coverage--
(1) the insurer is in compliance with the applicable
provisions of this section, and
(2) the rating methods are actuarially sound.
Each such insurer shall retain a copy of such statement for examination
at its principal place of business.
(d) Registration and Reporting.--Each insurer that issues any
health insurance coverage to a small employer in a State shall be
registered or licensed with the State commissioner of insurance and
shall comply with any reporting requirements of the commissioner
relating to such coverage.
(e) Marketing Material.--Each insurer that issues any health
insurance coverage to a small employer in a State shall file with the
State those marketing materials relating to the offer and sale of
health insurance coverage to be used for distribution before the
materials are used. Such materials shall be in a uniform format
specified under the standards established under section 1101. Such
materials (including information on plan designs offered by different
insurers) shall be distributed to employers that do not contribute to
health insurance coverage for their employees, in order to distribute
such information to their employees as part of the offer of coverage
under section 1001(a).
SEC. 1105. MONITORING AND RESPONSE TO ADVERSE SELECTION; RISK
ADJUSTMENT PROGRAMS.
(a) Monitoring.--The Secretary of Labor shall monitor the
prevalence and impact of adverse risk selection in the fully insured
plans made available to small employers resulting from the decision of
small employers to self insure. State insurance commissioners may
submit to the Secretary such information on such adverse risk selection
as they determine to be appropriate.
(b) Response.--If the Secretary of Labor determines, on the basis
of such information or otherwise, that, due to decisions of small
employers to self-insure, there has been substantial or significant
favorable selection with respect to self-insured plans or unfavorable
selection with respect to fully insured plans in a State, the Secretary
shall develop a risk adjustment program under subsection (c) that
responds to such a pattern in the State. The Secretary shall request
the NAIC to submit to the Secretary recommendations regarding the
structure and operation of such a program.
(c) Establishment of Risk Adjustment Program.--The risk adjustment
program applied in a State under this subsection--
(1) shall be designed to be operated on a non-governmental
basis,
(2) shall require participation of each small employer in
the State that is self-insured,
(3) shall require the imposition of such assessments on
self-insured plans offered by such employers as may be
appropriate to prevent further adverse or favorable selection,
and
(4) shall provide for the distribution of such assessments
to the State involved for purposes of making payments to
insurers to stabilize the small group insurance market.
The amounts of the assessments under paragraph (3) for individual
employers may take into account the number of lives covered under the
plans of such employers and the area of residence of the lives covered.
SEC. 1106. ESTABLISHMENT OF REINSURANCE OR ALLOCATION OF RISK
MECHANISMS FOR HIGH RISK INDIVIDUALS IN MARKETPLACE FOR
SMALL BUSINESS AND MARKETPLACE FOR INDIVIDUALS.
(a) Establishment of Standards.--
(1) Role of naic.--The Secretary shall request the NAIC to
develop, within 9 months after the date of the enactment of
this Act, models for reinsurance or allocation of risk
mechanisms (each in this section referred to as a ``reinsurance
or allocation of risk mechanism'') for health insurance
coverage made available to small employers and for whom an
insurer is at risk of incurring high costs in providing such
coverage. If the NAIC develops such models within such period,
the Secretary shall review such models to determine if they
provide for an effective reinsurance or allocation of risk
mechanism. Such review shall be completed within 30 days after
the date the models are developed. Unless the Secretary
determines within such period that such a model is not an
effective reinsurance or allocation of risk mechanism, such
remaining models shall serve as the models under this section,
with such amendments as the Secretary deems necessary.
(2) Contingency.--If the NAIC does not develop such models
within such period or the Secretary determines that all such
models do not provide for an effective reinsurance or
allocation of risk mechanism, the Secretary shall specify,
within 15 months after the date of the enactment of this Act,
models to carry out this section.
(b) Implementation of Reinsurance or Allocation of Risk
Mechanisms.--
(1) By states.--Each State shall establish and maintain one
or more reinsurance or allocation of risk mechanisms that are
consistent with a model established under subsection (a) by not
later than the deadline specified in section 1103(b)(1)(B). A
State may establish and maintain such a mechanism jointly with
one or more other States.
(2) Federal role.--
(A) In general.--If the Secretary determines that a
State has failed to establish or maintain a reinsurance
or allocation of risk mechanism in accordance with
paragraph (1), the Secretary shall establish and
maintain such a reinsurance or allocation of risk
mechanism meeting the requirements of this paragraph.
(B) Reinsurance mechanism.--Unless the Secretary
determines under subparagraph (C) that an allocation of
risk mechanism is the appropriate mechanism to use in a
State under this paragraph, the Secretary shall
establish and maintain for use under this section for
each State an appropriate reinsurance mechanism.
(C) Allocation of risk mechanism.--If the Secretary
determines that, due to the nature of the health
coverage market in the State (including a relatively
small number of plans offered providing health
insurance coverage or a relatively small number of
uninsurable small employers), an allocation of risk
mechanism would be a better mechanism than a
reinsurance mechanism, the Secretary shall establish
and maintain for use under this section for a State an
allocation of risk mechanism under which small
employers with employees who are at higher risk of
significantly higher claims would be equitably assigned
among insurers offering health insurance coverage to
small employers.
(c) Construction.--Nothing in this section shall be construed to
prohibit reinsurance or allocation of risk arrangements relating to
health insurance coverage, whether on a State or multi-State basis, not
required under this section.
PART 2--MARKETPLACE FOR INDIVIDUALS
SEC. 1111. APPLICATION OF SIMILAR REQUIREMENTS.
(a) In General.--Except as provided in subsection (c)--
(1) the provisions of part 1 of this subtitle shall apply
to insurers offering health insurance coverage to individuals
in the individual market (as defined in subsection (b)) in the
same manner as such provisions apply to insurers offering
health insurance coverage to employers, and
(2) the standards established under section 1103 shall
apply under this part in the same manner as they apply under
part 1.
For purposes of this subsection, any reference to an employee or
eligible employee is deemed a reference to such an individual.
(b) Individual Market Defined.--In subsection (a), the term
``individual market'' means the insurance market offered to individuals
seeking health care coverage on behalf of themselves (and their
dependents) and not seeking coverage on the basis of employment,
membership in a organization, or through another group purchasing
arrangement.
(c) Exception and Special Rule.--
(1) Wellness discounts.--Section 1104(a)(2) (relating to
discounts for employer wellness programs) shall not apply under
this part.
(2) Separate application of risk adjustment to individual
market sector.--Section 1105 (relating to monitoring and
response to adverse selection; risk adjustment programs) shall
be applied under this part in a manner that is separate from
its application under part A.
(3) Separate age rating factor for the individual market.--
The provisions regarding age under section 1104(a)(1)(A) shall
be determined separately for each year of age and not by the
classes of age referred to in such section.
(4) Conversion of permanent health insurance policies.--The
provisions of section 1104 shall not apply in connection with a
permanent policy of health insurance existing on the effective
date, if each individual covered under the policy is given the
option to convert the policy to a policy of health insurance
subject to this part.
(d) Application of Requirements.--Coverage offered by an insurer
shall not be treated as MedAccess coverage under this part unless the
insurer complies with the requirements of part 3 of subtitle A
(relating to standards for managed care arrangements and essential
community providers) in the same manner as such requirements apply to a
group health plan.
PART 3--VOLUNTARY HEALTH PURCHASING ARRANGEMENTS
SEC. 1121. ESTABLISHMENT AND ORGANIZATION.
(a) In General.--Voluntary health purchasing arrangements (in this
part referred to as ``purchasing arrangements'') may be established in
accordance with this part. Each purchasing arrangement shall be
chartered under State law and operated as a not-for-profit corporation.
An insurer may not form, underwrite, or possess a majority vote of a
purchasing arrangement, but may administer such an arrangement.
(b) Board of Directors.--
(1) In general.--Each purchasing arrangement shall be
governed by a Board of Directors. Such Board shall initially be
appointed under procedures established by the State in which it
operates. Subsequently, the Board shall be elected by the
members of the arrangement in accordance with paragraph (3).
Such Board shall be composed of individuals who are small
employers (or representatives of small employers), eligible
employees of small employers (or representatives of such
employees), and eligible individuals in the area in which the
arrangement operates.
(2) Membership.--A purchasing arrangement shall accept all
small employers, eligible employees, and eligible individuals
residing within the area served by the arrangement as members
if such employers, employees or individuals request such
membership.
(3) Voting.--Members of a purchasing arrangement shall have
voting rights consistent with the rules established under the
bylaws governing the arrangement.
(c) Duties of Purchasing Arrangements.--
(1) In general.--Subject to paragraph (2), each purchasing
arrangement shall--
(A) market MedAccess coverage to members throughout
the entire area served by the arrangement;
(B) enter into agreements with insurers offering
MedAccess coverage under section 1122;
(C) enter into agreements with small employers
under section 1123;
(D) enroll individuals in MedAccess coverage, only
in accordance with section 1124; and
(E) carry out other functions provided for under
this part.
(2) Limitation on activities.--A purchasing arrangement
shall not--
(A) perform any activity (including review,
approval, or enforcement) relating to payment rates for
providers;
(B) perform any activity (including certification
or enforcement) relating to compliance of insurers or
coverage with the requirements of parts 1 or 2;
(C) assume financial risk in relation to any such
coverage; or
(D) perform other activities identified by the
State as being inconsistent with the performance of its
duties under paragraph (1).
(3) Characteristics of service area.--A purchasing
arrangement need not serve areas that are contiguous, but the
geographic boundaries of such areas shall be consistent with
the boundaries established for geographic areas used in
establishing premium rates in the individual and small group
marketplace. If a purchasing arrangement serves a part of a
metropolitan statistical area the arrangement shall serve the
entire area.
(d) Establishment Not Required.--Nothing in this section shall be
construed as requiring--
(1) that a purchasing arrangement be established in each
area of a State in which it operates; and
(2) that there be only one purchasing arrangement
established with respect to any area.
SEC. 1122. AGREEMENTS WITH INSURERS.
(a) Agreements.--
(1) In general.--Except as provided in paragraph (3), each
purchasing arrangement for an area shall enter into an
agreement under this section with each insurer that desires to
make MedAccess coverage available through the purchasing
arrangement (consistent with any procedures established by the
State).
(2) Termination of agreement.--An agreement under paragraph
(1) shall remain in effect for a 12-month period, except that
the purchasing arrangement may terminate an agreement under
paragraph (1) if the insurer's license or certification under
State law is terminated or for other good cause shown.
(3) Limitation on renewal of agreements.--Subsequent to the
12-month period described in paragraph (2), a purchasing
arrangement may--
(A) refuse to enter into a subsequent agreement
with an insurer if the arrangement determines that the
enrollment or premium is too low, and
(B) if a previous agreement with an insurer was
terminated for good cause and the arrangement
determines appropriate actions have not been taken to
correct the problems, refuse to enter into a subsequent
agreement with the insurer.
(4) No prohibition on offering of coverage.--Nothing in
this subsection shall be construed as prohibiting an insurer
that does not enter into an agreement under paragraph (1) from
offering health insurance coverage to small employers and
eligible individuals within any area, so long as the premium
rates charged outside such arrangement are the same as those
charged within the arrangement (subject to reasonable
differences in premiums that only reflect savings in
administrative costs under such an arrangement).
(b) Receipt of Premiums on Behalf of Plans.--
(1) In general.--Under an agreement under this section
between a purchasing arrangement and an insurer--
(A) premiums shall be payable, and
(B) payment of premiums may be made by individuals
(or employers on their behalf) directly to the
purchasing arrangement for the benefit of the insurer.
(2) Timing of payment of premiums.--Premiums may be payable
on a monthly basis (or, at the option of an eligible employee
or individual, on a quarterly basis). The purchasing
arrangement may provide for reasonable penalties and grace
periods for late payment.
(3) Qualified health plans retain risk of nonpayment.--
Nothing in this subsection shall be construed as placing upon a
purchasing arrangement any risk associated with the failure of
individuals and employers to make prompt payment of premiums to
the purchasing arrangement (other than the portion of the
premium representing the purchasing arrangement administrative
fee under section 1125). Each small employer and eligible
individual who enrolls with an insurer through the
purchasing arrangement is liable to the insurer for premiums.
(c) Forwarding of Premiums.--
(1) In general.--If, under an agreement under subsection
(a), premium payments for an insurer are made to the purchasing
arrangement, the purchasing arrangement shall forward to the
insurer the amount of the premiums and the purchasing
arrangement (and not the employer or individual) shall be
liable for the premium payment collected under such
arrangement.
(2) Payments.--Payments shall be made by the purchasing
arrangement under this subsection within a period of days
(specified by the Secretary and not to exceed 7 days) after
receipt of the premium from the small employer of the eligible
employee or the eligible individual, as the case may be.
SEC. 1123. PROVISION OF INFORMATION.
(a) In General.--Each purchasing arrangement for an area shall
provide, upon request, to each small employer that employs individuals
in the area and to each eligible individual who resides in the area--
(1) information provided to the purchasing arrangement by
the State or insurers in accordance with rules by the State in
which such arrangement is located, and
(2) the opportunity to enter into an agreement with the
arrangement for the purchase of coverage through the insurer.
(b) Forwarding Information and Payroll Deductions.--As part of an
agreement entered into under this section, a small employer shall
forward the information and make the payroll deductions required under
section 1001.
SEC. 1124. ENROLLING ELIGIBLE EMPLOYEES AND ELIGIBLE INDIVIDUALS
THROUGH A PURCHASING ARRANGEMENT.
A purchasing arrangement shall offer, on behalf of each insurer
with which an agreement was entered into under section 1122 and in
accordance with the enrollment procedures of such insurers, enrollment
in health insurance coverage only to--
(1) all eligible employees employed by small employers in
the area served by the purchasing arrangement; and
(2) all eligible individuals residing in such area.
SEC. 1125. RESTRICTION ON CHARGES.
(a) In General.--A purchasing arrangement may impose an
administrative fee with respect to an eligible employee or eligible
individual obtaining coverage through the purchasing arrangement.
(b) Fee.--A purchasing arrangement that elects to impose a fee
under subsection (a) shall ensure that such fee is set as a percentage
of the premium for such coverage and is imposed uniformly with respect
to all coverage provided through the arrangement.
PART 4--DEFINITIONS AND MISCELLANEOUS PROVISIONS
SEC. 1131. DEFINITIONS.
Except as otherwise specifically provided, for purposes of this
subtitle:
(1) Dependent child.--The term ``dependent child'' means a
child (including an adopted child) who is under 19 years of age
or who is a full-time student and under 25 years of age.
(2) Eligible employee.--The term ``eligible employee''
means, with respect to an employer, an employee who--
(A) normally performs on a monthly basis at least
10 hours of service per week for that employer; or
(B) is reasonably expected as of the 1st day of
such month to be employed by the employer for a period
of 120 consecutive days during any 365-day period that
includes such 1st day.
(3) Employer.--The term ``employer'' shall have the meaning
applicable under section 3(5) of the Employee Retirement Income
Security Act of 1974.
(4) Health insurance coverage.--
(A) In general.--Except as provided in subparagraph
(B), the term ``health insurance coverage'' means any
hospital or medical service policy or certificate,
hospital or medical service plan contract, or health
maintenance organization group contract offered by an
insurer.
(B) Exception.--Such term does not include any of
the following:
(i) Coverage only for accident, dental,
vision, disability income, or long-term care
insurance, or any combination thereof.
(ii) Medicare supplemental health
insurance.
(iii) Coverage issued as a supplement to
liability insurance.
(iv) Liability insurance, including general
liability insurance and automobile liability
insurance.
(v) Worker's compensation or similar
insurance.
(vi) Automobile medical-payment insurance.
(vii) Coverage for a specified disease or
illness.
(viii) A hospital or fixed indemnity
policy.
(5) Network plan.--The term ``network plan'' includes, as
defined in standards established under section 1103, an
organization that provides health insurance coverage which
meets specified standards and under which health services are
offered to be provided on an at-risk basis primarily through a
defined set of providers.
(6) Insurer.--The term ``insurer'' means a licensed
insurance company, an entity offering prepaid hospital or
medical services, and a health maintenance organization
offering such services to an employer, and includes a similar
organization regulated under State law for solvency.
(7) NAIC.--The term ``NAIC'' means the National Association
of Insurance Commissioners.
(8) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(9) Small employer.--The term ``small employer'' means,
with respect to a calendar year, an employer that normally
employs more than 1 but less than 51 eligible employees on a
typical business day. For the purposes of this paragraph, the
term ``employee'' includes a self-employed individual. For
purposes of determining if an employer is a small employer,
rules similar to the rules of subsection (b) and (c) of section
414 of the Internal Revenue Code of 1986 shall apply.
(10) State.--The term ``State'' means the 50 States, the
District of Columbia, Puerto Rico, the Virgin Islands, Guam,
and American Samoa.
(11) State commissioner of insurance.--The term ``State
commissioner of insurance'' includes a State superintendent of
insurance.
SEC. 1132. ENFORCEMENT.
For enforcement of requirements of this subtitle, see section 1031.
SEC. 1133. PROHIBITION OF IMPROPER INCENTIVES.
(a) Limitation on Financial Incentives.--No insurer that offers
health insurance coverage may vary the commission or financial or other
remuneration to a person based on the claims experience or health
status of individuals enrolled by or through the person.
(b) Prohibition of Tie-in Arrangements.--No insurer that offers
health insurance coverage may require the purchase of any other
insurance or product as a condition for the purchase of such coverage.
SEC. 1134. ANNUAL REPORTS.
(a) In General.--The Secretary shall submit to Congress an annual
report on the implementation of this subtitle and the need for
additional reforms to assure and expand coverage.
(b) Information Regarding Impact of Reforms.--Each annual report
shall include information concerning at least the following:
(1) Implementation and enforcement of the applicable
MedAccess standards and consumer protection standards under
this subtitle by the States and by the Secretary.
(2) An evaluation of the impact of the reforms under this
subtitle on the availability of affordable health coverage for
individuals and for small employers that purchase group health
coverage and for their employees, and, in particular, the
impact of--
(A) guaranteed availability of health coverage,
(B) limitations of restrictions from coverage of
preexisting conditions,
(C) requirement for continuity of coverage,
(D) risk-management mechanisms for health coverage,
(E) limits on premium variations, and
(F) preemption of State benefit mandates.
In performing such evaluation, the Secretary shall seek to
discount the effect of the insurance cycle on health insurance
premiums.
(3) An assessment of the implications of the reforms on
adverse selection among health insurance plans and the
distribution of risk among health insurance plans.
(c) Information Regarding Coverage of the Uninsured.--The report
submitted under this section 5 years after the date of the enactment of
this Act also shall include findings and recommendations regarding each
of the following:
(1) Characteristics of the insured and uninsured, including
demographic characteristics, working status, health status, and
geographic distribution.
(2) Steps which should be taken to improve access to health
care and increase health insurance coverage of the chronically
uninsured.
(3) Effectiveness of efforts to measure and improve health
care outcomes in the public and private sectors.
(4) Effectiveness of initiatives targeted to improving
access of underserved urban and rural populations to health
care services.
(5) Effectiveness of new Federal subsidy programs,
including recommendations to restrain future growth of such
programs.
SEC. 1135. RESEARCH AND DEMONSTRATION PROJECTS; DEVELOPMENT OF A HEALTH
RISK POOLING MODEL.
(a) Research and Demonstrations.--The Secretary is authorized,
directly, by contract, and through grants and cooperative agreements
within the Department of Health and Human Services and outside the
Department--
(1) to conduct research on the impact of this subtitle on
the availability of affordable health coverage for employees
and dependents in the small employers group and individual
health care coverage market and other topics described in
section 1134(b), and
(2) to conduct demonstration projects relating to such
topics.
(b) Development of Methods of Measuring Relative Health Risk.--
(1) In general.--The Secretary shall develop methods for
measuring, in terms of the expected costs of providing benefits
under health insurance plans and, in particular, MedAccess
plans, the relative health risks of eligible individuals.
(2) Methodology.--The methods--
(A) shall rely on diagnosis or other health-related
information that is predictive of individual health
care needs,
(B) may rely upon information routinely collected
in the process of making payments under group health
plans, and
(C) may provide for such random, sample audits of
records as may be necessary to verify the accuracy of
measurements.
(c) Development of a Health Risk Pooling Model.--
(1) In general.--The Secretary shall develop a model, based
on the methods of measuring risks under subsection (b), for
equitably distributing health risks among insurers and group
health plans in the small employer and individual health care
coverage market.
(2) Redistribution of risk.--Under such model, insurers and
group health plans with below average health risks would be
required to contribute to a common fund for payment to insurers
and group health plans with above average health risks, each in
relation to the degree of their favorable or adverse risk
selection.
(3) Incentives.--Such model shall include incentives to
encourage continuous coverage of individuals and eligible
individuals and small employers.
(d) Consultation.--The methods and model under this section shall
be developed in consultation with the NAIC.
(e) Report.--By not later than January 1, 1996, the Secretary shall
submit to Congress a report on the methods and model developed under
this section (as well as on research and demonstration projects
conducted under subsection (a)). The Secretary shall include in the
report such recommendations respecting the application of the model to
insurers and group health plans (and, in particular, to MedAccess
plans) under this subtitle as the Secretary deems appropriate.
(f) Authorization of Appropriations.--There are authorized to be
appropriated to carry out this section, $5,000,000 in each of fiscal
years 1995 through 1999.
Subtitle C--Preemption
PART 1--SCOPE OF STATE REGULATION
SEC. 1201. PROHIBITION OF STATE BENEFIT MANDATES FOR GROUP HEALTH
PLANS.
Title I, Subtitle C
In the case of a group health plan, no provision of State or local
law shall apply that requires the coverage of one or more specific
benefits, services, or categories of health care, or services of any
class or type of provider of health care.
SEC. 1202. PROHIBITION OF PROVISIONS PROHIBITING EMPLOYER GROUPS FROM
PURCHASING HEALTH INSURANCE.
No provision of State or local law shall apply that prohibits 2 or
more employers from obtaining coverage under a multiple employer
welfare arrangement under which all coverage consists of medical care
described in section 607(1) of the Employee Retirement Income Security
Act of 1974 and is fully insured.
SEC. 1203. PREEMPTION OF STATE ANTI-MANAGED CARE LAWS.
(a) Preemption of State Law Provisions.--Subject to subsection (c),
the following provisions of State law are preempted and may not be
enforced:
(1) Restrictions on reimbursement rates or selective
contracting.--Any law that restricts the ability of a group
health plan or insurer to negotiate reimbursement rates with
providers or to contract selectively with one provider or a
limited number of providers.
(2) Restrictions on differential financial incentives.--Any
law that limits the financial incentives that a group health
plan or insurer may require a beneficiary to pay when a non-
plan provider is used on a non-emergency basis.
(3) Restrictions on utilization review methods.--Any law
that--
(A) prohibits utilization review of any or all
treatments and conditions,
(B) requires that such review be made (i) by a
resident of the State in which the treatment is to be
offered or by an individual licensed in such State, or
(ii) by a physician in any particular specialty or with
any board certified specialty of the same medical
specialty as the provider whose services are being
reviewed,
(C) requires the use of specified standards of
health care practice in such reviews or requires the
disclosure of the specific criteria used in such
reviews,
(D) requires payments to providers for the expenses
of responding to utilization review requests,
(E) imposes liability for delays in performing such
review, or
(F) requires standards in addition to or
inconsistent with standards established under section
1022(b).
Nothing in subparagraph (B) shall be construed as prohibiting a
State from (i) requiring a licensed physician or other health
care professional be available at some time in the review or
appeal process, or (ii) requiring that any decision in an
appeal from such a review be made by a licensed physician.
(b) GAO Study.--
(1) In general.--The Comptroller General shall conduct a
study of the benefits and cost effectiveness of the use of
managed care in the delivery of health services.
(2) Report.--By not later than 4 years after the date of
the enactment of this Act, the Comptroller General shall submit
a report to Congress on the study conducted under paragraph (1)
and shall include in the report such recommendations (including
whether the provisions of subsection (a) should be extended) as
may be appropriate.
(c) Sunset.--Unless otherwise provided, subsection (a) shall not
apply 5 years after the date of the enactment of this Act.
SEC. 1204. DEFINITIONS.
For purposes of this part, the terms ``dependent'', ``employee'',
``employer'', ``fully insured'', ``group health plan'', ``health
insurance plan'', ``multiple employer welfare arrangement'', and
``State'' have the meanings given such terms in section 1023(a).
PART 2--MULTIPLE EMPLOYER HEALTH BENEFITS PROTECTIONS
SEC. 1211. LIMITED EXEMPTION FROM CERTAIN RESTRICTIONS ON ERISA
PREEMPTION OF STATE LAW FOR HEALTH PLANS MAINTAINED BY
MULTIPLE EMPLOYERS SUBJECT TO CERTAIN FEDERAL STANDARDS.
(a) In General.--Subtitle B of title I of the Employee Retirement
Income Security Act of 1974 is amended by adding at the end the
following new part:
``Part 7--Multiple Employer Health Plans
``SEC. 701. DEFINITIONS.
``For purposes of this part--
``(1) Insurer.--The term `insurer' means an insurance
company, insurance service, or insurance organization, licensed
to engage in the business of insurance by a State.
``(2) Participating employer.--The term `participating
employer' means, in connection with a multiple employer welfare
arrangement, any employer if any of its employees, or any of
the dependents of its employees, are or were covered under such
arrangement in connection with the employment of the employees.
``(3) Excess/stop loss coverage.--The term `excess/stop
loss coverage' means, in connection with a multiple employer
welfare arrangement, a contract under which an insurer provides
for payment with respect to claims under the arrangement,
relating to participants or beneficiaries individually or
otherwise, in excess of an amount or amounts specified in such
contract.
``(4) Qualified actuary.--The term `qualified actuary'
means an individual who is a member of the American Academy of
Actuaries or meets such reasonable standards and qualifications
as the Secretary may provide by regulation.
``(5) Sponsor.--The term `sponsor' means, in connection
with a multiple employer welfare arrangement, the association
or other entity which establishes or maintains the arrangement.
``(6) State insurance commissioner.--The term `State
insurance commissioner' means the insurance commissioner (or
similar official) of a State.
``(7) Domicile state.--The term `domicile State' means, in
connection with a multiple employer welfare arrangement, the
State in which, according to the application for an exemption
under this part, most individuals to be covered under the
arrangement are located, except that, in any case in which
information contained in the latest annual report of the
arrangement filed under this part indicates that most
individuals covered under the arrangement are located in a
different State, such term means such different State.
``(8) Fully insured.--Coverage under a multiple employer
welfare arrangement is `fully insured' if one or more insurers,
health maintenance organizations, similar organizations
regulated under State law for solvency, or any combination
thereof are liable under one or more insurance policies or
contracts for all benefits under the arrangement (irrespective
of any recourse they may have against other parties).
``(9) Exempted multiple employer health plan.--The term
`exempted multiple employer health plan' means a multiple
employer welfare arrangement treated as an employee welfare
benefit plan by reason of an exemption under this part.
``(10) Community health network.--The term `community
health network' has the meaning given such term in section 1421
of the Affordable Health Care Now Act of 1994.
``SEC. 702. EXEMPTED MULTIPLE EMPLOYER HEALTH PLANS RELIEVED OF CERTAIN
RESTRICTIONS ON PREEMPTION OF STATE LAW AND TREATED AS
EMPLOYEE WELFARE BENEFIT PLANS.
``(a) In General.--Subject to subsection (b), a multiple employer
welfare arrangement under which coverage is not fully insured and with
respect to which there is in effect an exemption granted by the
Secretary under this part (or with respect to which there is pending a
complete application for such an exemption and the Secretary determines
that provisional protection under this part is appropriate)--
``(1) shall be treated for purposes of subtitle A and the
preceding parts of this subtitle as an employee welfare benefit
plan, irrespective of whether such arrangement is an employee
welfare benefit plan, and
``(2) shall be exempt from section 514(b)(6)(A)(ii).
``(b) Benefits Must Consist of Medical Care.--Subsection (a) shall
apply to a multiple employer welfare arrangement only if the benefits
provided thereunder consist solely of medical care described in section
607(1) (disregarding such incidental benefits as the Secretary shall
specify by regulation).
``(c) Restriction on Commencement of New Arrangements.--A multiple
employer welfare arrangement providing benefits which consist of
medical care described in section 607(1) which has not commenced
operations as of January 1, 1995, may commence operations only if an
exemption granted to the arrangement under this part is in effect (or
there is pending with respect to the arrangement a complete application
for such an exemption and the Secretary determines that provisional
protection under this part is appropriate).
``SEC. 703. EXEMPTION PROCEDURE.
``(a) In General.--The Secretary shall grant an exemption described
in section 702(a) to a multiple employer welfare arrangement if--
``(1) an application for such exemption with respect to
such arrangement, identified individually or by class, has been
duly filed in complete form with the Secretary in accordance
with this part,
``(2) such application demonstrates compliance with the
requirements of section 704 with respect to such arrangement,
and
``(3) the Secretary finds that such exemption is--
``(A) administratively feasible,
``(B) not adverse to the interests of the
individuals covered under the arrangement, and
``(C) protective of the rights and benefits of the
individuals covered under the arrangement.
``(b) Notice and Hearing.--Before granting an exemption under this
section, the Secretary shall publish notice in the Federal Register of
the pendency of the exemption, shall require that adequate notice be
given to interested persons, including the State insurance commissioner
of each State in which covered individuals under the arrangement are,
or are expected to be, located, and shall afford interested persons
opportunity to present views. The Secretary may not grant an exemption
under this section unless the Secretary affords an opportunity for a
hearing and makes a determination on the record with respect to the
findings required under subsection (a)(3). The Secretary shall, to the
maximum extent practicable, make a final determination with respect to
any application filed under this section in the case of a newly
established arrangement within 90 days after the date which the
Secretary determines is the date on which such application is filed in
complete form.
``SEC. 704. ELIGIBILITY REQUIREMENTS.
``(a) Application for Exemption.--
``(1) In general.--An exemption may be granted by the
Secretary under this part only on the basis of an application
filed with the Secretary in such form and manner as shall be
prescribed in regulations of the Secretary. Any such
application shall be signed by the operating committee and the
sponsor of the arrangement.
``(2) Filing fee.--The arrangement shall pay to the
Secretary at the time of filing an application under this
section a filing fee in the amount of $5,000, which shall be
available, to the extent provided in appropriation Acts, to the
Secretary for the sole purpose of administering the exemption
procedures under this part.
``(3) Information included.--An application filed under
this section shall include, in a manner and form prescribed in
regulations of the Secretary, at least the following
information:
``(A) Identifying information.--The names and
addresses of--
``(i) the sponsor, and
``(ii) the members of the operating
committee of the arrangement.
``(B) States in which arrangement intends to do
business.--The States in which individuals covered
under the arrangement are to be located and the number
of such individuals expected to be located in each such
State.
``(C) Bonding requirements.--Evidence provided by
the operating committee that the bonding requirements
of section 412 will be met as of the date of the
application.
``(D) Plan documents.--A copy of the documents
governing the arrangement (including any bylaws and
trust agreements), the summary plan description, and
other material describing the benefits and coverage
that will be provided to individuals covered under the
arrangement.
``(E) Agreements with service providers.--A copy of
any agreements between the arrangement and contract
administrators and other service providers.
``(F) Funding report.--A report setting forth
information determined as of a date within the 120-day
period ending with the date of the application,
including the following:
``(i) Reserves.--A statement, certified by
the operating committee of the arrangement, and
a statement of actuarial opinion, signed by a
qualified actuary, that all applicable
requirements of section 707 are or will be met
in accordance with regulations which the
Secretary shall prescribe.
``(ii) Adequacy of contribution rates.--A
statement of actuarial opinion, signed by a
qualified actuary, which sets forth a
description of the extent to which contribution
rates are adequate to provide for the payment
of all obligations and the maintenance of
required reserves under the arrangement for the
12-month period beginning with such date within
such 120-day period, taking into account the
expected coverage and experience of the
arrangement. If the contribution rates are not
fully adequate, the statement of actuarial
opinion shall indicate the extent to which the
rates are inadequate and the changes needed to
ensure adequacy.
``(iii) Current and projected value of
assets and liabilities.--A statement of
actuarial opinion signed by a qualified
actuary, which sets forth the current value of
the assets and liabilities accumulated under
the arrangement and a projection of the assets,
liabilities, income, and expenses of the
arrangement for the 12-month period referred to
in clause (ii). The income statement shall
identify separately the arrangement's
administrative expenses and claims.
``(iv) Costs of coverage to be charged and
other expenses.--A statement of the costs of
coverage to be charged, including an
itemization of amounts for administration,
reserves, and other expenses associated with
the operation of the arrangement.
``(v) Other information.--Any other
information which may be prescribed in
regulations of the Secretary as necessary to
carry out the purposes of this part.
``(b) Other Requirements.--A complete application for an exemption
under this part shall include information which the Secretary
determines to be complete and accurate and sufficient to demonstrate
that the following requirements are met with respect to the
arrangement:
``(1) Sponsor.--
``(A) In general.--Except in a case to which
subparagraph (B) or (C) applies, the sponsor is, and
has been (together with its immediate predecessor, if
any) for a continuous period of not less than 3 years
before the date of the application, organized and
maintained in good faith, with a constitution and
bylaws specifically stating its purpose, as a trade
association, an industry association, a professional
association, or a chamber of commerce (or similar
business group), for substantial purposes other than
that of obtaining or providing medical care described
in section 607(1), and the applicant demonstrates to the satisfaction
of the Secretary that the sponsor is established as a permanent entity
which receives the active support of its members.
``(B) Special rule for community health networks.--
In the case of an arrangement that is a community
health network (as defined in section 701(11)), the
sponsor is the operating committee of the network.
``(C) Special rule for employers in the same trade
or business.--In the case of an arrangement under which
all participating employers are engaged in a common
type of trade or business, the sponsor is the operating
committee of the arrangement.
``(2) Operating committee.--
``(A) In general.--Except as provided in
subparagraph (B), the arrangement is operated, pursuant
to a trust agreement, by an operating committee which
has complete fiscal control over the arrangement and
which is responsible for all operations of the
arrangement, and the operating committee has in effect
rules of operation and financial controls, based on a
3-year plan of operation, adequate to carry out the
terms of the arrangement and to meet all requirements
of this title applicable to the arrangement. The
members of the committee are individuals selected from
individuals who are the owners, officers, directors, or
employees of the participating employers or who are
partners in the participating employers and actively
participate in the business. No such member is an
owner, officer, director, or employee of, or partner
in, a contract administrator or other service provider
to the arrangement, except that officers or employees
of a sponsor which is a service provider (other than a
contract administrator) to the arrangement may be
members of the committee if they constitute not more
than 25 percent of the membership of the committee and
they do not provide services to the arrangement other
than on behalf of the sponsor. The committee has sole
authority to approve applications for participation in
the arrangement and to contract with a service provider
to administer the day-to-day affairs of the
arrangement.
``(B) Special rule for community health networks.--
In the case of an arrangement that is a community
health network (as defined in section 701(11)), the
operating committee is the board of the entity that is
the network.
``(3) Contents of governing instruments.--The instruments
governing the arrangement include a written instrument, meeting
the requirements of an instrument required under section
1212(a)(1), which--
``(A) provides that the committee serves as the
named fiduciary required for plans under section
1212(a)(1) and serves in the capacity of a plan
administrator (referred to in section 3(16)(A)),
``(B) provides that the sponsor is to serve as plan
sponsor (referred to in section 3(16)(B)),
``(C) incorporates the requirements of section 707,
and
``(D) provides that, effective upon the granting of
an exemption under this part--
``(i) all participating employers must be
members or affiliated members of the sponsor,
except that, in the case of a sponsor which is
a professional association or other individual-
based association, if at least one of the
officers, directors, or employees of an
employer, or at least one of the individuals
who are partners in an employer and who
actively participates in the business, is a
member or affiliated member of the sponsor,
participating employers may also include such
employer, and
``(ii) all individuals thereafter
commencing coverage under the arrangement must
be--
``(I) active or retired owners,
officers, directors, or employees of,
or partners in, participating
employers, or
``(II) the beneficiaries of
individuals described in subclause (I).
``(4) Contribution rates.--The contribution rates referred
to in subsection (a)(3)(F)(ii) are adequate.
``(5) Regulatory requirements.--Such other requirements as
the Secretary may prescribe by regulation as necessary to carry
out the purposes of this part.
``(c) Treatment of Party Seeking Exemption Where Party is Subject
to Disqualification.--
``(1) In general.--In the case of any application for an
exemption under this part with respect to a multiple employer
welfare arrangement, if the Secretary determines that the
sponsor of the arrangement or any other person associated with
the arrangement is subject to disqualification under paragraph
(2), the Secretary may deny the exemption with respect to such
arrangement.
``(2) Disqualification.--A person is subject to
disqualification under this paragraph if such person--
``(A) has intentionally made a material
misstatement in the application for exemption;
``(B) has obtained or attempted to obtain an
exemption under this part through misrepresentation or
fraud;
``(C) has misappropriated or converted to such
person's own use, or improperly withheld, money held
under a plan or any multiple employer welfare
arrangement;
``(D) is prohibited (or would be prohibited if the
arrangement were a plan) from serving in any capacity
in connection with the arrangement under section 411,
``(E) has failed to appear without reasonable cause
or excuse in response to a subpoena, examination,
warrant, or any other order lawfully issued by the
Secretary compelling such response,
``(F) has previously been subject to a
determination under this part resulting in the denial,
suspension, or revocation of an exemption under this
part on similar grounds, or
``(G) has otherwise violated any provision of this
title with respect to a matter which the Secretary
determines of sufficient consequence to merit
disqualification for purposes of this part.
``(d) Franchise Networks.--In the case of a multiple employer
welfare arrangement established and maintained by a franchisor for a
franchise network consisting of its franchisees, such franchisor shall
be treated as the sponsor referred to in the preceding provisions of
this section, such network shall be treated as an association referred
to in such provisions, and each franchisee shall be treated as a member
(of the association and the sponsor) referred to in such provisions, if
all participating employers are such franchisees and the requirements
of subsection (b)(1) with respect to a sponsor are met with respect to
the network.
``(e) Certain Collectively Bargained Arrangements.--In applying the
preceding provisions of this section in the case of a multiple employer
welfare arrangement which would be described in section 3(40)(A)(i) but
for the failure to meet any requirement of section 3(40)(C)--
``(1) paragraphs (1) and (2) of subsection (b) and
subparagraphs (A), (B), and (D) of paragraph (3) of subsection
(b) shall be disregarded, and
``(2) the joint board of trustees shall be considered the
operating committee of the arrangement.
``(f) Certain Arrangements Not Meeting Single Employer
Requirement.--
``(1) In general.--In any case in which the majority of the
employees covered under a multiple employer welfare arrangement
are employees of a single employer (within the meaning of
clauses (i) and (ii) of section 3(40)(B)), if all other
employees covered under the arrangement are employed by
employers who are related to such single employer, subsection
(b)(3)(D) shall be disregarded.
``(2) Related employers.--For purposes of paragraph (1),
employers are `related' if there is among all such employers a
common ownership interest or a substantial commonality of
business operations based on common suppliers or customers.
``SEC. 705. ADDITIONAL REQUIREMENTS APPLICABLE TO EXEMPTED MULTIPLE
EMPLOYER HEALTH PLANS.
``(a) Notice of Material Changes.--In the case of any exempted
multiple employer health plan, descriptions of material changes in any
information which was required to be submitted with the application for
the exemption granted under this part shall be filed in such form and
manner as shall be prescribed in regulations of the Secretary. The
Secretary may require by regulation prior notice of material changes
with respect to specified matters which might serve as the basis for
suspension or revocation of the exemption.
``(b) Reporting Requirements.--Under regulations of the Secretary,
the requirements of sections 102, 103, and 104 shall apply with respect
to any multiple employer welfare arrangement which is or has been an
exempted multiple employer health plan in the same manner and to the
same extent as such requirements apply to employee welfare benefit
plans, irrespective of whether such exemption continues in effect. The
annual report required under section 103 for any plan year in the case
of any such multiple employer welfare arrangement shall also include
information described in section 704(a)(3)(F) with respect to the plan
year and, notwithstanding section 104(a)(1)(A), shall be filed not
later than 90 days after the close of the plan year.
``(c) Engagement of Qualified Actuary.--The operating committee of
each multiple employer welfare arrangement which is or has been an
exempted multiple employer health plan shall engage, on behalf of all
covered individuals, a qualified actuary who shall be responsible for
the preparation of the materials comprising information necessary to be
submitted by a qualified actuary under this part. The qualified actuary
shall utilize such assumptions and techniques as are necessary to
enable such actuary to form an opinion as to whether the contents of
the matters reported under this part--
``(1) are in the aggregate reasonably related to the
experience of the arrangement and to reasonable expectations,
and
``(2) represent such actuary's best estimate of anticipated
experience under the arrangement.
The opinion by the qualified actuary shall be made with respect to, and
shall be made a part of, the annual report.
``(d) Filing Notice of Exemption With States.--An exemption granted
to a multiple employer welfare arrangement under this part shall not be
effective unless written notice of such exemption is filed with the
State insurance commissioner of each State in which at least 5 percent
of the individuals covered under the arrangement are located. For
purposes of this paragraph, an individual shall be considered to be
located in the State in which a known address of such individual is
located or in which such individual is employed. The Secretary may by
regulation provide in specified cases for the application of the
preceding sentence with lesser percentages in lieu of such 5 percent
amount.
``SEC. 706. DISCLOSURE TO PARTICIPATING EMPLOYERS BY ARRANGEMENTS
PROVIDING MEDICAL CARE.
``(a) In General.--A multiple employer welfare arrangement
providing benefits consisting of medical care described in section
607(1) shall issue to each participating employer--
``(1) a document equivalent to the summary plan description
required of plans under part 1,
``(2) information describing the contribution rates
applicable to participating employers, and
``(3) a statement indicating--
``(A) that the arrangement is not a licensed
insurer under the laws of any State,
``(B) whether coverage under the arrangement is
fully insured, and
``(C) if coverage under the arrangement if not
fully insured, (i) whether the arrangement is (or has
ceased to be) an exempted multiple employer health
plan, and (ii) if such an arrangement is an exempted
multiple employer health plan, that such arrangement is
treated as an employee welfare benefit plan under this
title.
``(b) Time for Disclosure.--Such information shall be issued to
employers within such reasonable period of time before becoming
participating employers as may be prescribed in regulations of the
Secretary.
``SEC. 707. MAINTENANCE OF RESERVES.
``(a) In General.--Each multiple employer welfare arrangement which
is or has been an exempted multiple employer health plan and under
which coverage is not fully insured shall establish and maintain
reserves, consisting of--
``(1) a reserve for unearned contributions,
``(2) a reserve for payment of claims reported and not yet
paid and claims incurred but not yet reported, and for expected
administrative costs with respect to such claims, and
``(3) a reserve, in an amount recommended by the qualified
actuary, for any other obligations of the arrangement.
``(b) Minimum Amount for Certain Reserves.--The total of the
reserves described in subsection (a)(2) shall not be less than an
amount equal to 25 percent of expected incurred claims and expenses for
the plan year.
``(c) Required Margin.--In determining the amounts of reserves
required under this section in connection with any multiple employer
welfare arrangement, the qualified actuary shall include a margin for
error and other fluctuations taking into account the specific
circumstances of such arrangement.
``(d) Additional Requirements.--The Secretary may provide such
additional requirements relating to reserves and excess/stop loss
coverage as the Secretary considers appropriate. Such requirements may
be provided, by regulation or otherwise, with respect to any
arrangement or any class of arrangements.
``(e) Adjustments for Excess/Stop Loss Coverage.--The Secretary may
provide for adjustments to the levels of reserves otherwise required
under subsections (a) and (b) with respect to any arrangement or class
of arrangements to take into account excess/stop loss coverage provided
with respect to such arrangement or arrangements.
``(f) Alternative Means of Compliance.--The Secretary may permit an
arrangement (including a community health network) to substitute, for
all or part of the reserves required under subsection (a), such
security, guarantee, or other financial arrangement as the Secretary
determines to be adequate to enable the arrangement to fully meet all
its financial obligations on a timely basis.
``SEC. 708. CORRECTIVE ACTIONS.
``(a) Actions To Avoid Depletion of Reserves.--A multiple employer
welfare arrangement with respect to which there is or has been in
effect an exemption granted under this part shall continue to meet the
requirements of section 707, irrespective of whether such exemption
continues in effect. The operating committee of such arrangement shall
determine semiannually whether the requirements of section 707 are met.
In any case in which the committee determines that there is reason to
believe that there is or will be a failure to meet such requirements,
or the Secretary makes such a determination and so notifies the
committee, the committee shall immediately notify the qualified actuary
engaged by the arrangement, and such actuary shall, not later than the
end of the next following month, make such recommendations to the
committee for corrective action as the actuary determines necessary to
ensure compliance with section 707. Not later than 10 days after
receiving from the actuary recommendations for corrective actions, the
committee shall notify the Secretary (in such form and manner as the
Secretary may prescribe by regulation) of such recommendations of the
actuary for corrective action, together with a description of the
actions (if any) that the committee has taken or plans to take in
response to such recommendations. The committee shall thereafter report
to the Secretary, in such form and frequency as the Secretary may
specify to the committee, regarding corrective action taken by the
committee until the requirements of section 707 are met.
``(b) Termination.--
``(1) Notice of termination.--In any case in which the
operating committee of a multiple employer welfare arrangement
which is or has been an exempted multiple employer health plan
determines that there is reason to believe that the arrangement
will terminate, the committee shall so inform the Secretary,
shall develop a plan for winding up the affairs of the
arrangement in connection with such termination in a manner
which will result in timely payment of all benefits for which
the arrangement is obligated, and shall submit such plan in
writing to the Secretary. Actions required under this paragraph
shall be taken in such form and manner as may be prescribed in
regulations of the Secretary.
``(2) Actions required in connection with termination.--In
any case in which--
``(A) the Secretary has been notified under
subsection (a) of a failure of a multiple employer
welfare arrangement which is or has been an exempted
multiple employer health plan to meet the requirements
of section 707 and has not been notified by the
operating committee of the arrangement that corrective
action has restored compliance with such requirements,
and
``(B) the Secretary determines that the continuing
failure to meet the requirements of section 707 can be
reasonably expected to result in a continuing failure
to pay benefits for which the arrangement is obligated,
the operating committee of the arrangement shall, at the
direction of the Secretary, terminate the arrangement and, in
the course of the termination, take such actions as the
Secretary may require as necessary to ensure that the affairs
of the arrangement will be, to the maximum extent possible,
wound up in a manner which will result in timely payment of all
benefits for which the arrangement is obligated.
``SEC. 709. EXPIRATION, SUSPENSION, OR REVOCATION OF EXEMPTION.
``(a) Expiration and Renewal of Exemption.--An exemption granted to
a multiple employer welfare arrangement under this part shall expire 3
years after the date on which the exemption is granted. An exemption
which has expired may be renewed by means of application for an
exemption in accordance with section 704.
``(b) Suspension or Revocation of Exemption by Secretary.--The
Secretary may suspend or revoke an exemption granted to a multiple
employer welfare arrangement under this part--
``(1) for any cause that may serve as the basis for the
denial of an initial application for such an exemption under
section 704, or
``(2) if the Secretary finds that--
``(A) the arrangement, or the sponsor thereof, in
the transaction of business while under the exemption,
has used fraudulent, coercive, or dishonest practices,
or has demonstrated incompetence, untrustworthiness, or
financial irresponsibility,
``(B) the arrangement, or the sponsor thereof, is
using such methods or practices in the conduct of its
operations, so as to render its further transaction of
operations hazardous or injurious to participating
employers, or covered individuals,
``(C) the arrangement, or the sponsor thereof, has
refused to be examined in accordance with this part or
to produce its accounts, records, and files for
examination in accordance with this part, or
``(D) any of the officers of the arrangement, or
the sponsor thereof, has refused to give information
with respect to the affairs of the arrangement or the
sponsor or to perform any other legal obligation
relating to such an examination when required by the
Secretary in accordance with this part.
Any such suspension or revocation under this subsection shall be
effective only upon a final decision of the Secretary made after notice
and opportunity for a hearing is provided in accordance with section
710.
``(c) Suspension or Revocation of Exemption Under Court
Proceedings.--An exemption granted to a multiple employer welfare
arrangement under this part may be suspended or revoked by a court of
competent jurisdiction in an action by the Secretary brought under
paragraph (2), (5), or (6) of section 502(a), except that the
suspension or revocation under this subsection shall be effective only
upon notification of the Secretary of such suspension or revocation.
``(d) Notification of Participating Employers.--All participating
employers in a multiple employer welfare arrangement shall be notified
of the expiration, suspension, or revocation of an exemption granted to
such arrangement under this part, by such persons and in such form and
manner as shall be prescribed in regulations of the Secretary, not
later than 20 days after such expiration or after receipt of notice of
a final decision requiring such suspension or revocation.
``(e) Publication of Expirations, Suspensions, and Revocations.--
The Secretary shall publish all expirations of, and all final decisions
to suspend or revoke, exemptions granted under this part.
``SEC. 710. REVIEW OF ACTIONS OF THE SECRETARY.
``(a) In General.--Any decision by the Secretary which involves the
denial of an application by a multiple employer welfare arrangement for
an exemption under this part or the suspension or revocation of such an
exemption shall contain a statement of the specific reason or reasons
supporting the Secretary's action, including reference to the specific
terms of the exemption and the statutory provision or provisions
relevant to the determination.
``(b) Denials of Applications.--In the case of the denial of an
application for an exemption under this part, the Secretary shall send
a copy of the decision to the applicant by certified or registered mail
at the address specified in the records of the Secretary. Such decision
shall constitute the final decision of the Secretary unless the
arrangement, or any party that would be prejudiced by the decision,
files a written appeal of the denial within 30 days after the mailing
of such decision. The Secretary may affirm, modify, or reverse the
initial decision. The decision on appeal shall become final upon the
mailing of a copy by certified or registered mail to the arrangement or
party that filed the appeal.
``(c) Suspensions or Revocations of Exemption.--In the case of the
suspension or revocation of an exemption granted under this part, the
Secretary shall send a copy of the decision to the arrangement by
certified or registered mail at its address, as specified in the
records of the Secretary. Upon the request of the arrangement, or any
party that would be prejudiced by the suspension or revocation, filed
within 15 days of the mailing of the Secretary's decision, the
Secretary shall schedule a hearing on such decision by written notice,
sent by certified or registered mail to the arrangement or party
requesting such hearing. Such notice shall set forth--
``(1) a specific date and time for the hearing, which shall
be within the 10-day period commencing 20 days after the date
of the mailing of the notice, and
``(2) a specific place for the hearing, which shall be in
the District of Columbia or in the State and county thereof (or
parish or other similar political subdivision thereof) in which
is located the arrangement's principal place of business.
The decision as affirmed or modified in such hearing shall constitute
the final decision of the Secretary, unless such decision is reversed
in such hearing.''.
(b) Conforming Amendment to Definition of Plan Sponsor.--Section
3(16)(B) of such Act (29 U.S.C. 1002(16)(B)) is amended by adding at
the end the following new sentence: ``Such term also includes the
sponsor (as defined in section 701(5)) of a multiple employer welfare
arrangement which is or has been an exempted multiple employer health
plan (as defined in section 701(10)).''.
(c) Alternative Means of Distribution of Summary Plan
Descriptions.--Section 110 of such Act (29 U.S.C. 1030) is amended by
adding at the end the following new subsection:
``(c) The Secretary shall prescribe, as an alternative method for
distributing summary plan descriptions in order to meet the
requirements of section 104(b)(1) in the case of multiple employer
welfare arrangements providing benefits consisting of medical care
described in section 607(1), a means of distribution of such
descriptions by participating employers.''.
(d) Clerical Amendment.--The table of contents in section 1 of the
Employee Retirement Income Security Act of 1974 is amended by inserting
after the item relating to section 608 the following new items:
``Part 7--Multiple Employer Health Plans
``Sec. 701. Definitions.
``Sec. 702. Exempted multiple employer health plans relieved of certain
restrictions on preemption of State law and
treated as employee welfare benefit plans.
``Sec. 703. Exemption procedure.
``Sec. 704. Eligibility requirements.
``Sec. 705. Additional requirements applicable to exempted multiple
employer health plans.
``Sec. 706. Disclosure to participating employers by arrangements
providing medical care.
``Sec. 707. Maintenance of reserves.
``Sec. 708. Corrective actions.
``Sec. 709. Expiration, suspension, or revocation of exemption.
``Sec. 710. Review of actions of the secretary.''
SEC. 1212. CLARIFICATION OF SCOPE OF PREEMPTION RULES.
(a) In General.--Section 514(b)(6)(A)(ii) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1144(b)(6)(A)(ii)) is
amended by inserting ``, but only, in the case of an arrangement which
provides medical care described in section 607(1) and with respect to
which an exemption under part 7 is not in effect,'' before ``to the
extent not inconsistent with the preceding sections of this title''.
(b) Cross-Reference.--Section 514(b)(6) of such Act (29 U.S.C.
1144(b)(6)) is amended by adding at the end the following new
subparagraph:
``(E) For additional rules relating to exemption from subparagraph
(A)(ii) of multiple employer welfare arrangements providing medical
care, see part 7.''.
SEC. 1213. CLARIFICATION OF TREATMENT OF SINGLE EMPLOYER ARRANGEMENTS.
Section 3(40)(B) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1002(40)(B)) is amended--
(1) in clause (i), by inserting ``for any plan year of any
such plan, or any fiscal year of any such other arrangement,''
after ``single employer'', and by inserting ``during such year
or at any time during the preceding 1-year period'' after
``common control'';
(2) in clause (iii), by striking ``common control shall not
be based on an interest of less than 25 percent'' and inserting
``an interest of greater than 25 percent may not be required as
the minimum interest necessary for common control'', and by
striking ``and'' at the end,
(3) by redesignating clause (iv) as clause (v), and
(4) by inserting after clause (iii) the following new
clause:
``(iv) in determining, after the application of clause (i),
whether benefits are provided to employees of two or more
employers, the arrangement shall be treated as having only 1
participating employer if, at the time the determination under
clause (i) is made, the number of individuals who are employees
and former employees of any one participating employer and who
are covered under the arrangement is greater than 95 percent of
the aggregate number of all individuals who are employees or
former employees of participating employers and who are covered
under the arrangement.''.
SEC. 1214. CLARIFICATION OF TREATMENT OF CERTAIN COLLECTIVELY BARGAINED
ARRANGEMENTS.
(a) In General.--Section 3(40)(A)(i) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1002(40)(A)(i)) is amended to
read as follows:
``(i) under or pursuant to one or more collective
bargaining agreements,''.
(b) Limitations.--Section 3(40) of such Act (29 U.S.C. 1002(40)) is
amended by adding at the end the following new subparagraphs:
``(C) Clause (i) of subparagraph (A) shall apply
only if--
``(i) the plan or other arrangement, and
the employee organization or any other entity
sponsoring the plan or other arrangement, do
not--
``(I) utilize the services of any
licensed insurance agent or broker for
soliciting or enrolling employers or
individuals as participating employers
or covered individuals under the plan
or other arrangement, or
``(II) pay a commission or any
other type of compensation to a person
that is related either to the volume or
number of employers or individuals
solicited or enrolled as participating
employers or covered individuals under
the plan or other arrangement, or to
the dollar amount or size of the
contributions made by participating
employers or covered individuals to the
plan or other arrangement,
``(ii) not less than 85 percent of the
covered individuals under the plan or other
arrangement are individuals who--
``(I) are employed within a
bargaining unit covered by at least one
of the collective bargaining agreements
with a participating employer (or are
covered on the basis of an
individual's employment in such a bargaining unit), or
``(II) are present or former
employees of the sponsoring employee
organization, of an employer who is or
was a party to at least one of the
collective bargaining agreements, or of
the plan or other arrangement or a
related plan or arrangement (or are
covered on the basis of such present or
former employment),
``(iii) the plan or other arrangement does
not provide benefits to individuals (other than
individuals described in clause (ii)(II)) who
work outside the standard metropolitan
statistical area in which the sponsoring
employee organization represents employees (or
to individuals (other than individuals
described in clause (ii)(II)) on the basis of
such work by others), except that in the case
of a sponsoring employee organization that
represents employees who work outside of any
standard metropolitan statistical area, this
clause shall be applied by reference to the
State in which the sponsoring organization
represents employees,
``(iv) the employee organization or other
entity sponsoring the plan or other arrangement
certifies to the Secretary each year, in a form
and manner which shall be prescribed in
regulations of the Secretary--
``(I) that the plan or other
arrangement meets the requirements of
clauses (i), (ii), and (iii), and
``(II) if, for any year, 10 percent
or more of the covered individuals
under the plan are individuals not
described in subclause (I) or (II) of
clause (ii), the total number of
covered individuals and the total
number of covered individuals not so
described.
``(D)(i) Clause (i) of subparagraph (A) shall not
apply to a plan or other arrangement that is
established or maintained pursuant to one or more
collective bargaining agreements which the National
Labor Relations Board determines to have been
negotiated or otherwise agreed to in a manner or
through conduct which violates section 8(a)(2) of the
National Labor Relations Act (29 U.S.C. 158(a)(2)).
``(ii)(I) Whenever a State insurance commissioner
has reason to believe that this subparagraph is
applicable to part or all of a plan or other
arrangement, the State insurance commissioner may file
a petition with the National Labor Relations Board for
a determination under clause (i), along with sworn
written testimony supporting the petition.
``(II) The Board shall give any such petition
priority over all other petitions and cases, other than
other petitions under subclause (I) or cases given
priority under section 10 of the National Labor
Relations Act (29 U.S.C. 160).
``(III) The Board shall determine, upon the
petition and any response, whether, on the facts before
it, the plan or other arrangement was negotiated,
created, or otherwise agreed to in a manner or through
conduct which violates section 8(a)(2) of the National
Labor Relations Act (29 U.S.C. 158(a)(2)). Such
determination shall constitute a final determination
for purposes of this subparagraph and shall be binding
in all Federal or State actions with respect to the
status of the plan or other arrangement under this
subparagraph.
``(IV) A person aggrieved by the determination of
the Board under subclause (III) may obtain review of
the determination in any United States court of appeals
in the circuit in which the collective bargaining at
issue occurred. Commencement of proceedings under this
subclause shall not, unless specifically ordered by the
court, operate as a stay of any State administrative or
judicial action or proceeding related to the status of
the plan or other arrangement, except that in no case
may the court stay, before the completion of the
review, an order which prohibits the enrollment of new
individuals into coverage under a plan or
arrangement.''.
SEC. 1215. EMPLOYEE LEASING HEALTHCARE ARRANGEMENTS.
(a) Employee Leasing Healthcare Arrangement Defined.--Section 3 of
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002) is
amended by adding at the end the following new paragraph:
``(43) Employee Leasing Healthcare Arrangement.--
``(A) In general.--Subject to subparagraph (B), the term
`employee leasing healthcare arrangement' means any labor
leasing arrangement, staff leasing arrangement, extended
employee staffing or supply arrangement, or other arrangement
under which--
``(i) one business or other entity (hereinafter in
this paragraph referred to as the `lessee'), under a
lease or other arrangement entered into with any other
business or other entity (hereinafter in this paragraph
referred to as the `lessor'), receives from the lessor
the services of individuals to be performed under such
lease or other arrangement, and
``(ii) benefits consisting of medical care
described in section 607(1) are provided to such
individuals or such individuals and their dependents as
participants and beneficiaries.
``(B) Exception.--Such term does not include an arrangement
described in subparagraph (A) if, under such arrangement, the
lessor retains, both legally and in fact, a complete right of
direction and control within the scope of employment over
the individuals whose services are supplied under such lease or other
arrangement, and such individuals perform a specified function for the
lessee which is separate and divisible from the primary business or
operations of the lessee.''.
(b) Treatment of Employee Leasing Healthcare Arrangements as
Multiple Employer Welfare Arrangements.--Section 3(40) of such Act (29
U.S.C. 1002(40)) (as amended by the preceding provisions of this title)
is further amended by adding at the end the following new subparagraph:
``(E) The term `multiple employer welfare arrangement' includes any
employee leasing healthcare arrangement.''.
(c) Special Rules for Employee Leasing Healthcare Arrangements.--
(1) In general.--Part 7 of subtitle B of title I of such
Act (as added by the preceding provisions of this Act) is
amended by adding at the end the following new section:
``SEC. 711. SPECIAL RULES FOR EMPLOYEE LEASING HEALTHCARE ARRANGEMENTS.
``(a) In General.--The requirements of paragraphs (1), (2), and (3)
of section 704(b) shall be treated as satisfied in the case of a
multiple employer welfare arrangement that is an employee leasing
healthcare arrangement if the application for exemption includes
information which the Secretary determines to be complete and accurate
and sufficient to demonstrate that the following requirements are met
with respect to the arrangement:
``(1) 3-year tenure.--The lessor has been in operation for
not less than 3 years.
``(2) Solicitation restrictions.--Employee leasing services
provided under the arrangement are not solicited, advertised,
or marketed through licensed insurance agents or brokers acting
in such capacity.
``(3) Creation of employment relationship.--
``(A) Disclosure statement.--Written notice is
provided to each applicant for employment subject to
coverage under the arrangement, at the time of
application for employment and before commencing
coverage under the arrangement, stating that the
employer is the lessor under the arrangement.
``(B) Informed consent.--Each such applicant signs
a written statement consenting to the employment
relationship with the lessor.
``(C) Informed recruitment of lessee's employees.--
In any case in which the lessor offers employment to an
employee of a lessee under the arrangement, the lessor
informs each employee in writing that his or her
acceptance of employment with the lessor is voluntary
and that refusal of such offer will not be deemed to be
resignation from or abandonment of current employment.
``(4) Requisite employer-employee relationship under
arrangement.--Under the employer-employee relationship with the
employees of the lessor--
``(A) the lessor retains the ultimate authority to
hire, terminate, and reassign such employees,
``(B) the lessor is responsible for the payment of
wages, payroll-related taxes, and employee benefits,
without regard to payment by the lessee to the lessor
for its services,
``(C) the lessor maintains the right of direction
and control over its employees, except to the extent
that the lessee is responsible for supervision of the
work performed consistent with the lessee's
responsibility for its product or service, and
``(D) in accordance with section 301(a) of the
Labor Management Relations Act, 1947 (29 U.S.C.
185(a)), the lessor retains in the absence of an
applicable collective bargaining agreement, the right
to enter into arbitration and to decide employee
grievances, and
``(E) no owner, officer, or director of, or partner
in, a lessee is an employee of the lessor, and not more
than 10 percent of the individuals covered under the
arrangement consist of owners, officers, or directors
of, or partners in, such a lessee (or any combination
thereof).
``(b) Definitions.--For purposes of this section--
``(1) Lessor.--The term `lessor' means the business or
other entity from which services of individuals are obtained
under an employee leasing healthcare arrangement.
``(2) Lessee.--The term `lessee' means a business or other
entity which receives the services of individuals provided
under an employee leasing healthcare arrangement.''.
(2) Clerical amendment.--The table of contents in section 1
of such Act (as amended by the preceding provisions of this
title) is further amended by inserting after the item relating
to section 710 the following new item:
``Sec. 711. Employee leasing healthcare arrangements.''.
SEC. 1216. ENFORCEMENT PROVISIONS RELATING TO MULTIPLE EMPLOYER WELFARE
ARRANGEMENTS AND EMPLOYEE LEASING HEALTHCARE
ARRANGEMENTS.
(a) Enforcement of Filing Requirements.--Section 502 of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1132) is
amended--
(1) in subsection (a)(6), by striking ``subsection (c)(2)
or (i) or (l)'' and inserting ``paragraph (2) or (4) of
subsection (c) or subsection (i) or (l)''; and
(2) by adding at the end of subsection (c) the following
new paragraph:
``(4) The Secretary may assess a civil penalty against any person
of up to $1,000 a day from the date of such person's failure or refusal
to file the information required to be filed with the Secretary under
section 101(e).''.
(b) Actions by States in Federal Court.--Section 502(a) of such Act
(29 U.S.C. 1132(a)) is amended--
(1) in paragraph (5), by striking ``or'' at the end;
(2) in paragraph (6), by striking the period and inserting
``, or''; and
(3) by adding at the end the following:
``(7) by a State official having authority under the law of
such State to enforce the laws of such State regulating
insurance, to enjoin any act or practice which violates any
provision of part 7 which such State has the power to enforce
under part 7.''.
(c) Criminal Penalties for Certain Willful Misrepresentations.--
Section 501 of such Act (29 U.S.C. 1131) is amended--
(1) by inserting ``(a)'' after ``Sec. 501.''; and
(2) by adding at the end the following new subsection:
``(b) Any person who, either willfully or with willful blindness,
falsely represents, to any employee, any employee's beneficiary, any
employer, the Secretary, or any State, an arrangement established or
maintained for the purpose of offering or providing any benefit
described in section 3(1) to employees or their beneficiaries as--
``(1) being an exempted multiple employer welfare
arrangement (as defined in section 701(10)),
``(2) being an employee leasing healthcare arrangement
under an exemption granted under part 7, or
``(3) having been established or maintained under or
pursuant to a collective bargaining agreement,
shall, upon conviction, be imprisoned not more than five years, be
fined under title 18, United States Code, or both.''.
(d) Cease Activities Orders.--Section 502 of such Act (29 U.S.C.
1132) is amended by adding at the end the following new subsection:
``(m)(1) Subject to paragraph (2), upon application by the
Secretary showing the operation, promotion, or marketing of a multiple
employer welfare arrangement providing benefits consisting of medical
care described in section 607(1) that--
``(A) is not licensed, registered, or otherwise approved
under the insurance laws of the States in which the arrangement
offers or provides benefits, or
``(B) is not operating in accordance with the terms of an
exemption granted by the Secretary under part 7,
a district court of the United States shall enter an order requiring
that the arrangement cease activities.
``(2) Paragraph (1) shall not apply in the case of a multiple
employer welfare arrangement if the arrangement shows that--
``(A) coverage under it is fully insured, within the
meaning of section 701(9),
``(B) it is licensed, registered, or otherwise approved in
each State in which it offers or provides benefits, except to
the extent that such State does not require licensing,
registration, or approval of multiple employer welfare
arrangements under which all coverage is fully insured, and
``(C) with respect to each such State, it is operating in
accordance with applicable State insurance laws that are not
superseded under section 514.
``(3) The court may grant such additional equitable or remedial
relief, including any relief available under this title, as it deems
necessary to protect the interests of the public and of persons having
claims for benefits against the arrangement.''.
(e) Responsibility for Claims Procedure.--Section 503 of such Act
(29 U.S.C. 1133) is amended by adding at the end (after and below
paragraph (2)) the following new sentence: ``The terms of each multiple
employer welfare arrangement to which this section applies and which
provides benefits consisting of medical care described in section
607(1) shall require the operating committee or the named fiduciary (as
applicable) to ensure that the requirements of this section are met in
connection with claims filed under the arrangement.''.
SEC. 1217. SOLVENCY REQUIREMENTS FOR CERTAIN SELF-INSURED GROUP HEALTH
PLANS.
(a) In General.--The Secretary of Labor shall prescribe by
regulation provisions described in subsection (b) applicable to group
health plans which are not multiple employer health plans, which offer
coverage with respect to employees of small employers (as defined in
section 1131), and under which some or all coverage is not fully
insured (within the meaning of section 701(9) of the Employee
Retirement Income Security Act of 1974)), for the purpose of promoting
adequate funding of such plans.
(b) Requirements.--
(1) General rule.--Except as provided in paragraph (2), the
provisions described in subsection (a) shall require the group
health plan to establish and maintain reserves, consisting of--
(A) a reserve for unearned contributions, and
(B) a reserve for payment of claims reported and
not yet paid and claims incurred but not yet reported,
and for expected administrative costs with respect to
such claims.
(2) Exception.--The Secretary may in such regulations
permit a group health plan to substitute, for all or part of
the reserves required under paragraph (1), such security,
guarantee, or other financial arrangement as the Secretary
determines to be adequate to enable the plan to fully meet all
its financial obligations on a timely basis.
(c) Criteria for Compliance.--The criteria that the Secretary shall
take into account in determining compliance with the requirements
described in subsection (b) shall include--
(1) the size of the employer involved;
(2) the benefit package provided under the plan;
(3) whether the coverage provided under the plan is in the
form of a fee-for-service arrangement, a health maintenance
organization, or any other type of coverage;
(4) the extent to which excess/stop loss coverage is
maintained for the plan; and
(5) the nature of any security, guarantee, or other
financial arrangement described in subsection (b)(2) obtained
for the plan.
SEC. 1218. FILING REQUIREMENTS FOR MULTIPLE EMPLOYER WELFARE
ARRANGEMENTS PROVIDING HEALTH BENEFITS.
Section 101 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1021) is amended--
(1) by redesignating subsection (e) as subsection (f); and
(2) by inserting after subsection (d) the following new
subsection:
``(e)(1) Each multiple employer welfare arrangement shall file with
the Secretary a registration statement described in paragraph (2)
within 60 days before commencing operations (in the case of an
arrangement commencing operations on or after January 1, 1995) and no
later than February 15 of each year (in the case of an arrangement in
operation since the beginning of such year), unless, as of the date by
which such filing otherwise must be made, such arrangement provides no
benefits consisting of medical care described in section 607(1).
``(2) Each registration statement--
``(A) shall be filed in such form, and contain such
information concerning the multiple employer welfare
arrangement and any persons involved in its operation
(including whether coverage under the arrangement is fully
insured), as shall be provided in regulations which shall be
prescribed by the Secretary, and
``(B) if coverage under the arrangement is not fully
insured, shall contain a certification that copies of such
registration statement have been transmitted by certified mail
to--
``(i) in the case of an arrangement which is an
exempted multiple employer health plan (as defined in
section 701(10)), the State insurance commissioner of
the domicile State of such arrangement, or
``(ii) in the case of an arrangement which is not
an exempted multiple employer health plan, the State
insurance commissioner of each State in which the
arrangement is located.
``(3) The person or persons responsible for filing the annual
registration statement are--
``(A) the trustee or trustees so designated by the terms of
the instrument under which the multiple employer welfare
arrangement is established or maintained, or
``(B) in the case of a multiple employer welfare
arrangement for which the trustee or trustees cannot be
identified, or upon the failure of the trustee or trustees of
an arrangement to file, the person or persons actually
responsible for the acquisition, disposition, control, or
management of the cash or property of the arrangement,
irrespective of whether such acquisition, disposition, control,
or management is exercised directly by such person or persons
or through an agent designated by such person or persons.
``(4) Any agreement entered into under section 506(c) with a State
as the primary domicile State with respect to any multiple employer
welfare arrangement shall provide for simultaneous filings of reports
required under this subsection with the Secretary and with the State
insurance commissioner of such State.''.
SEC. 1219. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.
Section 506 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1136) is amended by adding at the end the following new
subsection:
``(c) Responsibility With Respect to Multiple Employer Welfare
Arrangements.--
``(1) State enforcement.--
``(A) Agreements with states.--A State may enter
into an agreement with the Secretary for delegation to
the State of some or all of the Secretary's authority
under sections 502 and 504 to enforce the provisions of
this title applicable to multiple employer welfare
arrangements which are or have been exempted multiple
employer health plans (as defined in section 701(10)).
The Secretary shall enter into the agreement if the
Secretary determines that the delegation provided for
therein would not result in a lower level or quality of
enforcement of the provisions of this title.
``(B) Delegations.--Any department, agency, or
instrumentality of a State to which authority is
delegated pursuant to an agreement entered into under
this paragraph may, if authorized under State law and
to the extent consistent with such agreement, exercise
the powers of the Secretary under this title which
relate to such authority.
``(C) Concurrent authority of the secretary.--If
the Secretary delegates authority to a State in an
agreement entered into under subparagraph (A), the
Secretary may continue to exercise such authority
concurrently with the State.
``(D) Recognition of primary domicile state.--In
entering into any agreement with a State under
subparagraph (A), the Secretary shall ensure that, as a
result of such agreement and all other agreements
entered into under subparagraph (A), only one State
will be recognized, with respect to any particular
multiple employer welfare arrangement, as the primary
domicile State to which authority has been delegated
pursuant to such agreements.
``(2) Assistance to states.--The Secretary shall--
``(A) provide enforcement assistance to the States
with respect to multiple employer welfare arrangements,
including, but not limited to, coordinating Federal and
State efforts through the establishment of cooperative
agreements with appropriate State agencies under which
the Pension and Welfare Benefits Administration keeps
the States informed of the status of its cases and
makes available to the States information obtained by
it,
``(B) provide continuing technical assistance to
the States with respect to issues involving multiple
employer welfare arrangements and this Act,
``(C) assist the States in obtaining from the
Office of Regulations and Interpretations timely and
complete responses to requests for advisory opinions on
issues described in subparagraph (B), and
``(D) distribute copies of all advisory opinions
described in subparagraph (C) to the State insurance
commissioner of each State.''.
SEC. 1220. EFFECTIVE DATE; TRANSITIONAL RULES.
(a) Effective Date.--The amendments made by this part shall take
effect January 1, 1995, except that the Secretary of Labor may issue
regulations before such date under such amendments. The Secretary shall
issue all regulations necessary to carry out the amendments made by
this title before the effective date thereof.
(b) Transitional Rules.--If the sponsor of a multiple employer
welfare arrangement which, as of January 1, 1995, provides benefits
consisting of medical care described in section 607(1) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1167(1)) files with
the Secretary of Labor an application for an exemption under part 7 of
subtitle B of title I of such Act within 180 days after such date and
the Secretary has not, as of 90 days after receipt of such application,
found such application to be materially deficient, section 514(b)(6)(A)
of such Act (29 U.S.C. 1144(b)(6)(A)) shall not apply with respect to
such arrangement during the 18-month period following such date. If the
Secretary determines, at any time after the date of enactment of this
Act, that any such exclusion from coverage under the provisions of such
section 514(b)(6)(A) of such Act of a multiple employer welfare
arrangement would be detrimental to the interests of individuals
covered under such arrangement, such exclusion shall cease as of the
date of the determination. Any determination made by the Secretary
under this subsection shall be in the Secretary's sole discretion.
PART 3--ENCOURAGEMENT OF MULTIPLE EMPLOYER ARRANGEMENTS PROVIDING BASIC
HEALTH BENEFITS
SEC. 1221. ELIMINATING COMMONALITY OF INTEREST OR GEOGRAPHIC LOCATION
REQUIREMENT FOR TAX EXEMPT TRUST STATUS.
(a) In General.--Paragraph (9) of section 501(c) of the Internal
Revenue Code of 1986 (relating to exempt organizations) is amended--
(1) by inserting ``(A)'' after ``(9)''; and
(2) by adding at the end the following:
``(B) Any determination of whether a multiple employer
health plan (as defined in section 701(10) of the Employee
Retirement Income Security Act of 1974) or an insured multiple
employer health plan (as defined in section 701(11) of such
Act) is a voluntary employees' beneficiary association meeting
the requirements of this paragraph shall be made without regard
to any determination of commonality of interest or geographic
location if--
``(i) such plan provides at least standard coverage
(consistent with section 102(c) of the Affordable
Health Care Now Act of 1994), and
``(ii) in the case of an insured multiple employer
health plan, it meets the requirements enforceable
under section 514(b)(6)(B)(i) of the Employee
Retirement Income Security Act of 1974 to the extent
not preempted by section 1202 of the Affordable Health
Care Now Act of 1994.''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply with respect to determinations made on or after January 1, 1995.
SEC. 1222. SINGLE ANNUAL FILING FOR ALL PARTICIPATING EMPLOYERS.
(a) In General.--Section 110 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1030), as amended by section 1211(c) of
this subtitle, is amended by adding at the end the following new
subsection:
``(d) The Secretary shall prescribe by regulation or otherwise an
alternative method providing for the filing of a single annual report
(as referred to in section 104(a)(1)(A)) with respect to all employers
who are participating employers under a multiple employer welfare
arrangement under which all coverage consists of medical care
(described in section 607(1)) and is fully insured (as defined in
section 701(9)).''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on the date of the enactment of this Act. The Secretary of
Labor shall prescribe the alternative method referred to in section
110(d) of the Employee Retirement Income Security Act of 1974, as added
by such amendment, within 90 days after the date of the enactment of
this Act.
SEC. 1223. COMPLIANCE WITH COVERAGE REQUIREMENTS THROUGH MULTIPLE
EMPLOYER HEALTH ARRANGEMENTS.
(a) Compliance with Applicable Requirements Through Multiemployer
Plans.--In any case in which an eligible employee is, for any plan
year, a participant in a group health plan which is a multiemployer
plan, the requirements of section 1001(a) shall be deemed to be met
with respect to such employee for such plan year if the employer
requirements of subsection (c) are met with respect to the eligible
employee, irrespective of whether, or to what extent, the employer
makes employer contributions on behalf of the eligible employee.
(b) Compliance With Applicable Requirements Through Other Multiple
Employer Health Arrangements.--
(1) In general.--In any case in which an employer is, for
any plan year, a participating employer (as defined in
paragraph (3)) in an exempted multiple employer health plan or
in a multiple employer welfare arrangement under which all
coverage consists of medical care (described in section 607(1)
of the Employee Retirement Income Security Act of 1974) and is
fully insured (as defined in section 701(9) of such Act), the
requirements of section 1001(a) shall be deemed to be met (and
the ERISA requirements of paragraph (2) shall be deemed to be
met by the employer) with respect to an eligible employee of
the employer if--
(A) the employer requirements of subsection (c) are
met with respect to the eligible employee, and
(B) the applicable ERISA requirements of paragraph
(2) are met by the plan or arrangement with respect to
the plan or arrangement,
irrespective of whether, or to what extent, the employer makes
employer contributions on behalf of the eligible employee.
(2) Applicable erisa requirements.--The applicable ERISA
requirements of this paragraph are the requirements of--
(A) part 1 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974 (relating to
reporting and disclosure),
(B) section 503 of such Act (relating to claims
procedure), and
(C) part 6 of subtitle B of such title I (relating
to group health plans),
to the extent that such requirements relate to employers as
plan sponsors or plan administrators.
(3) Participating employer.--In this subsection, the term
``participating employer'' means, in connection with an
exempted multiple employer health plan or a multiple employer
welfare arrangement under which all coverage consists of
medical care (described in section 607(1) of the Employee
Retirement Income Security Act of 1974) and is fully insured
(as defined in section 701(9) of such Act), any employer if any
of its employees, or any of the dependents of its employees,
are or were covered under such plan or arrangement in
connection with the employment of the employees.
(c) Employer Requirements.--The employer requirements of this
subsection are met under a plan or arrangement with respect to an
eligible employee if--
(1) the employee is eligible under the plan or arrangement
to elect coverage on an annual basis and is provided a
reasonable opportunity to make the election in such form and
manner and at such times as are provided by the plan or
arrangement,
(2) subject to section 1001(c), such coverage includes at
least the standard coverage (consistent with section 1102(c)),
(3) the employer facilitates collection of any employee
contributions under the plan or arrangement and permits the
employee to elect to have employee contributions under the plan
or arrangement collected through payroll deduction, and
(4) in the case of a plan or arrangement to which part 1 of
subtitle B of title I of the Employee Retirement Income
Security Act of 1974 does not otherwise apply, the employer
provides to the employee a summary plan description described
in section 102(a)(1) of such Act in the form and manner and at
such times as are required under such part 1 with respect to
employee welfare benefit plans.
Title I, Subtitle D
Subtitle D--Health Deduction Fairness
SEC. 1301. PERMANENT EXTENSION AND INCREASE IN HEALTH INSURANCE TAX
DEDUCTION FOR SELF-EMPLOYED INDIVIDUALS.
(a) Permanent Extension of Deduction.--
(1) In general.--Subsection (l) of section 162 of the
Internal Revenue Code of 1986 (relating to special rules for
health insurance costs of self-employed individuals) is amended
by striking paragraph (6).
(2) Effective date.--The amendment made by this subsection
shall apply to taxable years beginning after December 31, 1993.
(b) Increase in Amount of Deduction; Insurance Purchased Must Meet
Certain Standards.--
(1) Increase in amount of deduction.--Paragraph (1) of
section 162(l) of such Code is amended by striking ``25 percent
of'' and inserting ``100 percent (25 percent in the case of
taxable years beginning in 1994 or 1995 and 50 percent in the
case of taxable years beginning in 1996 or 1997) of''.
(2) Insurance purchased must meet certain standards.--
Paragraph (2) of section 162(l) of such Code is amended by
adding at the end thereof the following new subparagraph:
``(C) Treatment of group health plans.--For
purposes of this subsection, an amount paid into a
multiple employer health plan (as defined in section
701(10) of the Employee Retirement Income Security Act
of 1974) shall be deemed to be an amount paid for
insurance which constitutes medical care.''.
(3) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after December 31, 1994.
SEC. 1302. DEDUCTION OF HEALTH INSURANCE PREMIUMS FOR CERTAIN
PREVIOUSLY UNINSURED INDIVIDUALS.
(a) In General.--Section 213 of the Internal Revenue Code of 1986
(relating to medical, dental, etc., expenses) is amended by adding at
the end thereof the following new subsection:
``(f) Deduction for Certain Health Insurance Costs Determined
Without Regard to Adjusted Gross Income Threshold.--
``(1) In general.--Subsection (a) shall be applied without
regard to the limitation based on adjusted gross income in the
case of the applicable percentage of the amounts paid for
insurance referred to in section 162(l)(2)(C) (and including
payments referred to in section 162(l)(2)(D)).
``(2) Applicable percentage.--For purposes of paragraph
(1), the term `applicable percentage' means--
``(A) 25 percent for taxable years beginning in
1994 or 1995,
``(B) 50 percent for taxable years beginning in
1996 or 1997, and
``(C) 100 percent for taxable years beginning after
1997.
``(3) Deduction not allowed to individuals eligible for
employer-subsidized coverage.--
``(A) In general.--Paragraph (1) shall not apply to
any individual--
``(i) who is eligible to participate in any
subsidized health plan maintained by an
employer of such individual or the spouse of
such individual, or
``(ii) who is (or whose spouse is) a member
of a subsidized class of employees of an
employer of such individual or spouse.
``(B) Subsidized class.--For purposes of
subparagraph (A), an individual is a member of a
subsidized class of employees of an employer if, at any
time during the 3 calendar years ending with or within
the taxable year, any member of such class was eligible
to participate in any subsidized health plan maintained
by such employer.
``(C) Special rules.--
``(i) Controlled groups.--All persons
treated as a single employer under subsection
(a) or (b) of section 52 or subsection (m) or
(o) of section 414 shall be treated as a single
employer for purposes of subparagraph (B).
``(ii) Classes.--Classes of employees shall
be determined under regulations prescribed by
the Secretary based on such factors as the
Secretary determines appropriate to carry out
the purposes of this subsection.
``(4) Coordination with deduction for other amounts.--
Amounts allowable as a deduction under subsection (a) by reason
of this subsection shall not be taken into account in
determining the deduction under subsection (a) for other
amounts.
``(5) Subsection not to apply to individuals eligible for
medicare.--This subsection shall not apply to amount paid for
insurance covering an individual who is eligible for benefits
under title XVIII of the Social Security Act.''.
(b) Deduction Allowed Whether or Not Individual Itemizes Other
Deductions.--Subsection (a) of section 62 of such Code is amended by
inserting after paragraph (15) the following new paragraph:
``(16) Costs of certain health insurance.--The deduction
allowed by section 213 to the extent allowable by reason of
section 213(f).''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1994.
Subtitle E--Improved Access to Community Health Services
PART 1--INCREASED AUTHORIZATION FOR COMMUNITY AND MIGRANT HEALTH
CENTERS
SEC. 1401. GRANT PROGRAM TO PROMOTE PRIMARY HEALTH CARE SERVICES FOR
UNDERSERVED POPULATIONS.
Title I, Subtitle E
(a) Authorization.--The Secretary of Health and Human Services
shall provide for a program of grants to migrant and community health
centers (receiving grants or contracts under section 329, 330, or 340
of the Public Health Service Act) in order to promote the provision of
primary health care services for underserved individuals. Such grants
may be used--
(1) to promote the provision of off-site services (through
means such as mobile medical clinics);
(2) to improve birth outcomes in areas with high infant
mortality and morbidity;
(3) to establish primary care clinics in areas identified
as in need of such clinics; and
(4) for recruitment and training costs of necessary
providers and operating costs for unreimbursed services.
(b) Conditions.--(1) Grants under this subsection shall only be
made upon application, approved by the Secretary.
(2) The amount of grants made under this section shall be
determined by the Secretary.
(c) Authorization of Appropriations.--There are authorized to be
appropriated--
(1) in fiscal year 1995, $100,000,000,
(2) in fiscal year 1996, $200,000,000,
(3) in fiscal year 1997, $300,000,000,
(4) in fiscal year 1998, $400,000,000, and
(5) in fiscal year 1999, $500,000,000,
to carry out this section. Of the amounts appropriated each fiscal year
under this section, at least 10 percent shall be used for grants
described in subsection (a)(1) and at least 10 percent shall be used
for grants described in subsection (a)(2). The Secretary may use not to
exceed 50 percent of the amounts appropriated to carry out this section
for the purpose of making new grants or contracts under sections 329,
330, and 340 of the Public Health Service Act.
(d) Study and Report.--The Secretary shall conduct a study of the
impact of the grants made under this section to migrant and community
health centers on access to health care, birth outcomes, and the use of
emergency room services. Not later than 2 years after the date of the
enactment of this Act, the Secretary shall submit to Congress a report
on such study and on recommendations for changes in the programs under
this section in order to promote the appropriate use of cost-effective
outpatient services.
PART 2--GRANTS FOR PROJECTS FOR COORDINATING DELIVERY OF SERVICES
SEC. 1411. PROJECTS FOR COORDINATING DELIVERY OF OUTPATIENT PRIMARY
HEALTH SERVICES.
Part D of title III of the Public Health Service Act (42 U.S.C.
254b et seq.) is amended by adding at the end the following new
subpart:
``Subpart VII--Delivery of Services
``projects for coordinating delivery of services
``Sec. 340E. (a) Authority for Grants.--
``(1) In general.--The Secretary may make grants to public
and nonprofit private entities to carry out demonstration
projects for the purpose of increasing access to outpatient
primary health services in geographic areas described in
subsection (b) through coordinating the delivery of such
services under Federal, State, local, and private programs.
``(2) Requirement regarding plan.--The Secretary may make a
grant under paragraph (1) only if--
``(A) the applicant involved has received a grant
under subsection (l) and the Secretary has approved the
plan developed with such grant; and
``(B) the applicant agrees to carry out the project
under paragraph (1) in accordance with the plan.
``(b) Qualified Health Service Areas.--
``(1) In general.--A geographic area described in this
subsection is a geographic area that--
``(A) is a rational area for the delivery of health
services;
``(B) has a population of not more than 500,000
individuals; and
``(C)(i) has been designated by the Secretary as an
area with a shortage of personal health services; or
``(ii) has a significant number of individuals who
have low incomes or who have insufficient insurance
regarding health care.
``(2) Authority regarding multiple political
subdivisions.--The Secretary shall make a determination of
whether a geographic area is a geographic area described in
paragraph (1) without regard to whether the area is a political
subdivision, without regard to whether the area is located in 2
or more political subdivisions or States, and without regard to
whether the area encompasses 2 or more political subdivisions.
``(c) Preferences in Making Grants.--In making grants under
subsection (a), the Secretary shall give preference to applicants
demonstrating that, with respect to the outpatient primary health
services that will be the subject of the project conducted by the
applicant under such subsection--
``(1)(A) the project will result in the reduction of
administrative expenses associated with such services by
increasing the efficiency of the administrative processes of
the providers participating in the project, and
``(B) the resulting savings will be expended for the direct
provision of such services for the designated population; or
``(2) the services that will be the subject of the project
will be provided in facilities that are underutilized.
``(d) Activities of Project Must Serve Designated Population.--The
Secretary may make a grant under subsection (a) to an applicant only if
the applicant demonstrates that carrying out the project under such
subsection will increase access to outpatient primary health services
for a significant segment of the designated population.
``(e) Matching Funds.--
``(1) In general.--With respect to the costs of the project
to be carried out under subsection (a) by an applicant, the
Secretary may make a grant under such subsection only if the
applicant agrees to make available (directly or through
donations from public or private entities) non-Federal
contributions toward such costs in an amount that is not less
than 50 percent of such costs.
``(2) Determination of amount contributed.--Non-Federal
contributions required in paragraph (1) may be in cash or in
kind, fairly evaluated, including plant, equipment, or
services. Amounts provided by the Federal Government, or
services assisted or subsidized to any significant extent by
the Federal Government, may not be included in determining the
amount of such non-Federal contributions.
``(f) Certain Limitations Regarding Grants.--
``(1) Provision of health services; construction of
facilities.--The Secretary may make a grant under subsection
(a) only if the applicant involved agrees that the grant will
not be expended for the direct provision of any health service
or for the construction or renovation of facilities.
``(2) Duration and amount of grant.--The period during
which payments are made for a project under subsection (a) may
not exceed 4 years, and the aggregate amount of such payments
for the period may not exceed $200,000. The provision of such
payments shall be subject to annual approval by the Secretary
of the payments and subject to the availability of
appropriations for the fiscal year involved to make the
payments.
``(3) Financial capacity for continuation of project after
termination of grant.--The Secretary may make a grant under
subsection (a) only if the Secretary determines that there is a
reasonable basis for believing that, after termination of
payments under such subsection pursuant to paragraph (2), the
project under such subsection will have the financial capacity
to continue operating.
``(g) Agreements Among Participants in Projects.--
``(1) Required participants.--The Secretary may make a
grant under subsection (a) only if the applicant for the grant
has, for purposes of carrying out a project under such
subsection, entered into agreements with--
``(A) the chief public health officers, and the
chief health officers for the elementary and secondary
schools, of each of the political subdivisions of the
qualified health service area in which the project
under such subsection is to be carried out (or, in the
case of a political subdivision that does not have such
an official, with another appropriate official of such
subdivision);
``(B) each hospital in the qualified health service
area;
``(C) representatives of entities in such area that
provide outpatient primary health services under
Federal, State, local, or private programs;
``(D) representatives of businesses in such area,
including small businesses; and
``(E) representatives of nonprofit private entities
in such area.
``(2) Optional participants.--With respect to compliance
with this section, a grantee under subsection (a) may, for
purposes of carrying out a project under such subsection, enter
into such agreements with public and private entities in the
qualified health service area involved (in addition to the
entities specified in paragraph (1)) as the grantee may elect.
``(h) Expenditures of Grant.--With respect to a project under
subsection (a), the purposes for which a grant under such subsection
may be expended include (but are not limited to) expenditures to
increase the efficiency of the administrative processes of providers
participating in the project, paying the costs of hiring and
compensating staff, obtaining computers and other equipment (including
vehicles to transport individuals to programs providing outpatient
primary health services), and developing and operating provider
networks.
``(i) Maintenance of Effort.--In the case of services and
populations that are the subject of a project under subsection (a), the
Secretary may make such a grant for a fiscal year only if the applicant
involved agrees that the applicant, and each entity making an agreement
under subsection (g), will maintain expenditures of non-Federal amounts
for such services and populations at a level that is not less than the
level of such expenditures maintained by the applicant and the entity,
respectively, for the fiscal year preceding the first fiscal year for
which the applicant receives such a grant.
``(j) Reports to Secretary.--The Secretary may make a grant under
subsection (a) only if the applicant involved agrees to submit to the
Secretary such reports on the project carried out under such subsection
as the Secretary may require.
``(k) Evaluations and Dissemination of Information.--The Secretary
shall provide for evaluations of projects carried out under subsection
(a), and for the collection and dissemination of information developed
as a result of such projects and as a result of similar projects.
``(l) Planning Grants.--
``(1) In general.--The Secretary may make grants to public
and nonprofit private entities for the purpose of developing
plans to carry out projects under subsection (a). Such a grant
may be made only if the applicant involved submits to the
Secretary information--
``(A) providing a detailed statement of the
proposal of the applicant for carrying out the project;
``(B) identifying the geographic area in which the
project is to be carried out; and
``(C) demonstrating that the area is a qualified
health service area and that the proposal otherwise is
in accordance with the requirements established in this
section for the receipt of a grant under subsection
(a).
``(2) Duration and amount of grant.--The period during
which payments are made under paragraph (1) for the development
of a plan under such paragraph may not exceed 1 year, and the
amount of such payments may not exceed $100,000.
``(m) Application for Grant.--The Secretary may make a grant under
subsection (a) or (l) only if the applicant for the grant submits an
application to the Secretary that--
``(1) contains any agreements, assurances, and information
required in this section with respect to the grant; and
``(2) is in such form, is made in such manner, and contains
such other agreements, assurances, and information as the
Secretary determines to be necessary to carry out the purpose
for which the grant is to be provided.
``(n) Definitions.--For purposes of this section:
``(1) The term `designated population' means individuals
described in subsection (b)(1)(C)(ii).
``(2) The term `primary health services' includes
preventive health services.
``(3) The term `qualified health service area' means a
geographic area described in subsection (b).
``(o) Authorization of Appropriations.--
``(1) Planning for projects.--For the purpose of grants
under subsection (l), there is authorized to be appropriated
$5,000,000 for fiscal year 1995, to remain available until
expended.
``(2) Operation of projects.--For the purpose of grants
under subsection (a), there is authorized to be appropriated an
aggregate $10,000,000 for the fiscal years 1996 through
1999.''.
PART 3--COMMUNITY HEALTH NETWORKS
SEC. 1421. QUALIFICATIONS FOR COMMUNITY HEALTH NETWORKS.
(a) Community Health Network Defined.--For purposes of part 7 of
subtitle B of title I of Employee Retirement Income Security Act of
1974 and this Act, added by section 1211(a) of this title, the term
``community health network'' means an arrangement that--
(1) is organized by health care providers (including
medical practitioners), community groups, or both, and such
other organizations as may be designated by the arrangement, to
provide health care services to an enrolled population in a
service area,
(2) provides to its enrollees at least the benefits
included in standard coverage (consistent with section
1102(c)),
(3) receives payment for such services on a prospective
capitated basis, which may vary only by family composition,
geographic area, and age,
(4) meets the requirements of subsection (b) (relating to
public accountability),
(5) meets the requirements of subsection (c) (relating to
coordination and integration of care),
(6) meets the requirements of subsection (d) to the extent
the arrangement is organized as a nonprofit entity, and
(7) meets the requirements of section 707 of the Employee
Retirement Income Security Act of 1974 (relating to maintenance
of reserves), added by section 1211.
(b) Public Accountability Requirements.--The public accountability
requirements of this subsection, with respect to a network, are as
follows:
(1) Performance measures.--The network must establish and
implement procedures for developing, compiling, evaluating, and
reporting performance measures, statistics, and other
information on--
(A) the cost and financial performance of network
operations,
(B) the service utilization patterns of enrollees,
(C) the availability, accessibility, and
acceptability of health care services to enrollees,
(D) ownership and governance of the network, and
(E) demographic characteristics of enrollees.
Such information shall be published annually and disseminated
to enrollees and the public.
(2) Quality assurance program.--The network must have an
organizational arrangement for an ongoing quality assurance
program for all health services it provides which--
(A) stresses health outcomes,
(B) to the maximum extent possible, relies
primarily on evaluating and comparing practice patterns
(rather than routine case-by-case review) to identify
problems,
(C) provides review by physicians and other health
professionals of the outcomes and process followed in
the provision of health services, and
(D) makes the coverage and utilization review
requirements of the plan, and the standards applied for
such review, available to providers and the public.
(3) Enrollment.--The network does not expel or refuse to
enroll any applicant or limit coverage of services included in
standard coverage for any applicant because of the health
status or requirements for health services.
(4) Credentialing.--The network must develop and implement
a process for the credentialing (and renewal of credentials) of
network providers (including practitioners).
(5) Grievance process.--The network must have an enrollee
complaint and grievance resolution process which shall meet any
requirements of applicable law.
(c) Coordination and Integration of Care Requirements.--The
coordination and integration of care requirements of this subsection,
with respect to a network, are as follows:
(1) Coordination and integration of care.--The network must
establish and implement mechanisms for coordinating the
delivery of care across provider settings and over time,
including at least mechanisms for--
(A) linking patient registration and medical record
information so that it is accessible to all parts of
the network and, consistent with State law, assures the
confidentiality of patient information,
(B) assisting enrollees to obtain necessary care,
including preventive services, and
(C) coordinating the services furnished to an
enrollee when more than one practitioner or provider is
involved.
(2) Out-of-area coverage.--The network must provide care
within a defined service area established by the arrangement
and must provide for reimbursement for standard coverage
(consistent with section 1102(c)) for enrollees who are
temporarily outside such area.
(3) Common malpractice policy.--Providers (including
practitioners) that provide standard coverage to network
enrollees must be covered for malpractice in accordance with
documented criteria established by the arrangement.
(4) Record keeping.--The network must use a unified patient
registration system and medical records system that is
accessible to all parts of the network and assures
confidentiality of patient information, consistent with State
law.
(d) Requirements for Networks Organized as Nonprofit Entities.--The
requirements of this subsection, with respect to a network, are as
follows:
(1) Community health status improvement process.--The
network develops and implements a community health status
improvement process, in cooperation with other existing
networks and community organizations from the same service
area, that--
(A) provides for an assessment of community health
status that identifies important health status problems
in such area,
(B) implements measures to address such problems,
and
(C) evaluates the efficiency and effectiveness of
such measures in addressing such problems.
The results of evaluations made pursuant to subparagraph (C)
shall be made publicly available on at least an annual basis.
(2) Enrollment.--The network enrolls individuals who are
broadly representative of the various age, social, and income
groups within the area it serves.
Subtitle F--Improved Access to Rural Health Services
Title I, Subtitle F
PART 1--ESTABLISHMENT OF RURAL EMERGENCY ACCESS CARE HOSPITALS UNDER
MEDICARE
SEC. 1501. RURAL EMERGENCY ACCESS CARE HOSPITALS DESCRIBED.
(a) In General.--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 hospital' 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)).
``(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), with a hospital with a participation agreement in effect
under section 1866(a), and under such agreement the hospital
shall accept patients transferred to the hospital from the
facility and receives data from and transmits data to the
facility.
``(E) There is a practitioner who is qualified to provide
advanced cardiac life support services (as determined by the
State in which the facility is located) 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 requirements as
would apply under section 1861(e) to a hospital located in a
rural area, except that--
``(i) the facility need not meet hospital standards
relating to the number of hours during a day, or days
during a week, in which the facility must be open,
except insofar as the facility is required to provide
emergency care on a 24-hour basis under subparagraphs
(E) and (F); and
``(ii) the facility may provide any services
otherwise required to be provided by a full-time, on-
site dietitian, pharmacist, laboratory technician,
medical technologist, or radiological technologist on a
part-time, off-site basis.
``(H) The facility meets the requirements applicable 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 practitioner' 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 determining whether a facility meets the requirements of
this subparagraph, subparagraphs (E) and (F) of that paragraph shall be
applied as if any reference to a `physician' is a reference to a
physician as defined in section 1861(r)(1).
``(2) The term `rural emergency access care hospital services'
means the following services provided by a rural emergency access care
hospital:
``(A) An appropriate medical screening examination (as
described in section 1867(a)).
``(B) Necessary stabilizing examination and treatment
services for an emergency medical condition and labor (as
described in section 1867(b)).''.
(b) Requiring Rural Emergency Access Care Hospitals To Meet
Hospital Anti-Dumping Requirements.--Section 1867(e)(5) of such Act (42
U.S.C. 1395dd(e)(5)) is amended by striking ``1861(mm)(1))'' and
inserting ``1861(mm)(1)) and a rural emergency access care hospital (as
defined in section 1861(oo)(1))''.
SEC. 1502. COVERAGE OF AND PAYMENT FOR SERVICES.
(a) Coverage Under Part B.--Section 1832(a)(2) of the Social
Security Act (42 U.S.C. 1395k(a)(2)) is amended--
(1) by striking ``and'' at the end of subparagraph (I);
(2) by striking the period at the end of subparagraph (J)
and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(K) rural emergency access care hospital services
(as defined in section 1861(oo)(2)).''.
(b) Payment Based on Payment for Outpatient Rural Primary Care
Hospital Services.--
(1) In general.--Section 1833(a)(6) of the Social Security
Act (42 U.S.C. 1395l(a)(6)) is amended by striking
``services,'' and inserting ``services and rural emergency
access care hospital services,''.
(2) Payment methodology described.--Section 1834(g) of such
Act (42 U.S.C. 1395m(g)) is amended--
(A) in the heading, by striking ``Services'' and
inserting ``Services and Rural Emergency Access Care
Hospital Services''; and
(B) in paragraph (1), by striking ``during a year
before 1993'' and inserting ``during a year before the
prospective payment system described 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 ``January 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
emergency access care hospital services provided during a year
shall be determined using the applicable method provided under
this subsection for determining payment for outpatient rural
primary care hospital services during the year.''.
SEC. 1503. EFFECTIVE DATE.
The amendments made by sections 1501 and 1502 shall apply to fiscal
years beginning on or after October 1, 1994.
PART 2--RURAL MEDICAL EMERGENCIES AIR TRANSPORT
SEC. 1511. GRANTS TO STATES REGARDING AIRCRAFT FOR TRANSPORTING RURAL
VICTIMS OF MEDICAL EMERGENCIES.
Part E of title XII of the Public Health Service Act (42 U.S.C.
300d-51 et seq.) is amended by adding at the end thereof the following
new section:
``SEC. 1252. GRANTS FOR SYSTEMS TO TRANSPORT RURAL VICTIMS OF MEDICAL
EMERGENCIES.
``(a) In General.--The Secretary shall make grants to States to
assist such States in the creation or enhancement of air medical
transport systems that provide victims of medical emergencies in rural
areas with access to treatments for the injuries or other conditions
resulting from such emergencies.
``(b) Application and Plan.--
``(1) Application.--To be eligible to receive a grant under
subsection (a), a State shall prepare and submit to the
Secretary an application in such form, made in such manner, and
containing such agreements, assurances, and information,
including a State plan as required in paragraph (2), as the
Secretary determines to be necessary to carry out this section.
``(2) State plan.--An application submitted under paragraph
(1) shall contain a State plan that shall--
``(A) describe the intended uses of the grant
proceeds and the geographic areas to be served;
``(B) demonstrate that the geographic areas to be
served, as described under subparagraph (A), are rural
in nature;
``(C) demonstrate that there is a lack of
facilities available and equipped to deliver advanced
levels of medical care in the geographic areas to be
served;
``(D) demonstrate that in utilizing the grant
proceeds for the establishment or enhancement of air
medical services the State would be making a cost-
effective improvement to existing ground-based or air
emergency medical service systems;
``(E) demonstrate that the State will not utilize
the grant proceeds to duplicate the capabilities of
existing air medical systems that are effectively
meeting the emergency medical needs of the populations
they serve;
``(F) demonstrate that in utilizing the grant
proceeds the State is likely to achieve a reduction in
the morbidity and mortality rates of the areas to be
served, as determined by the Secretary;
``(G) demonstrate that the State, in utilizing the
grant proceeds, will--
``(i) maintain the expenditures of the
State for air and ground medical transport
systems at a level equal to not less than the
level of such expenditures maintained by the
State for the fiscal year preceding the fiscal
year for which the grant is received; and
``(ii) ensure that recipients of direct
financial assistance from the State under such
grant will maintain expenditures of such
recipients for such systems at a level at least
equal to the level of such expenditures
maintained by such recipients for the fiscal
year preceding the fiscal year for which the
financial assistance is received;
``(H) demonstrate that persons experienced in the
field of air medical service delivery were consulted in
the preparation of the State plan; and
``(I) contain such other information as the
Secretary may determine appropriate.
``(c) Considerations in Awarding Grants.--In determining whether to
award a grant to a State under this section, the Secretary shall--
``(1) consider the rural nature of the areas to be served
with the grant proceeds and the services to be provided with
such proceeds, as identified in the State plan submitted under
subsection (b); and
``(2) give preference to States with State plans that
demonstrate an effective integration of the proposed air
medical transport systems into a comprehensive network or plan
for regional or statewide emergency medical service delivery.
``(d) State Administration and Use of Grant.--
``(1) In general.--The Secretary may not make a grant to a
State under subsection (a) unless the State agrees that such
grant will be administered by the State agency with principal
responsibility for carrying out programs regarding the
provision of medical services to victims of medical emergencies
or trauma.
``(2) Permitted uses.--A State may use amounts received
under a grant awarded under this section to award subgrants to
public and private entities operating within the State.
``(3) Opportunity for public comment.--The Secretary may
not make a grant to a State under subsection (a) unless that
State agrees that, in developing and carrying out the State
plan under subsection (b)(2), the State will provide public
notice with respect to the plan (including any revisions
thereto) and facilitate comments from interested persons.
``(e) Number of Grants.--The Secretary shall award grants under
this section to not less than 7 States.
``(f) Reports.--
``(1) Requirement.--A State that receives a grant under
this section shall annually (during each year in which the
grant proceeds are used) prepare and submit to the Secretary a
report that shall contain--
``(A) a description of the manner in which the
grant proceeds were utilized;
``(B) a description of the effectiveness of the air
medical transport programs assisted with grant
proceeds; and
``(C) such other information as the Secretary may
require.
``(2) Termination of funding.--In reviewing reports
submitted under paragraph (1), if the Secretary determines that
a State is not using amounts provided under a grant awarded
under this section in accordance with the State plan submitted
by the State under subsection (b), the Secretary may terminate
the payment of amounts under such grant to the State until such
time as the Secretary determines that the State comes into
compliance with such plan.
``(g) Definition.--As used in this section, the term `rural areas'
means geographic areas that are located outside of standard
metropolitan statistical areas, as identified by the Secretary.
``(h) Authorization of Appropriations.--There are authorized to be
appropriated to make grants under this section, $15,000,000 for fiscal
year 1994, and such sums as may be necessary for each of the fiscal
years 1996 and 1997.''.
PART 3--EMERGENCY MEDICAL SERVICES AMENDMENTS
SEC. 1521. ESTABLISHMENT OF OFFICE OF EMERGENCY MEDICAL SERVICES.
Title XII of the Public Health Service Act (42 U.S.C. 300d et seq.)
is amended--
(1) in the heading for the title, by striking ``TRAUMA
CARE'' and inserting ``EMERGENCY MEDICAL SERVICES'';
(2) in the heading for part A, by striking ``General'' and
all that follows and inserting ``General Authorities and
Duties''; and
(3) by amending section 1201 to read as follows:
``SEC. 1201. ESTABLISHMENT OF OFFICE OF EMERGENCY MEDICAL SERVICES.
``(a) In General.--The Secretary shall establish an office to be
known as the Office of Emergency Medical Services, which shall be
headed by a director appointed by the Secretary. The Secretary shall
carry out this title acting through the Director of such Office.
``(b) General Authorities and Duties.--With respect to emergency
medical services (including trauma care), the Secretary shall--
``(1) conduct and support research, training, evaluations,
and demonstration projects;
``(2) foster the development of appropriate, modern systems
of such services through the sharing of information among
agencies and individuals involved in the study and provision of
such services;
``(3) sponsor workshops and conferences;
``(4) as appropriate, disseminate to public and private
entities information obtained in carrying out paragraphs (1)
through (4);
``(5) provide technical assistance to State and local
agencies;
``(6) coordinate activities of the Department of Health and
Human Services; and
``(7) as appropriate, coordinate activities of such
Department with activities of other Federal agencies.
``(c) Certain Requirements.--With respect to emergency medical
services (including trauma care), the Secretary shall ensure that
activities under subsection (b) are carried out regarding--
``(1) maintaining an adequate number of health
professionals with expertise in the provision of the services,
including hospital-based professionals and prehospital-based
professionals;
``(2) developing, periodically reviewing, and revising as
appropriate, in collaboration with appropriate public and
private entities, guidelines for the provision of such services
(including, for various typical circumstances, guidelines on
the number and variety of professionals, on equipment, and on
training);
``(3) the appropriate use of available technologies,
including communications technologies; and
``(4) the unique needs of underserved inner-city areas and
underserved rural areas.
``(d) Grants, Cooperative Agreements, and Contracts.--In carrying
out subsections (b) and (c), the Secretary may make grants and enter
into cooperative agreements and contracts.
``(e) Definitions.--For purposes of this part:
``(1) The term `hospital-based professional' means a health
professional (including an allied health professional) who has
expertise in providing one or more emergency medical services
and who normally provides the services at a medical facility.
``(2) The term `prehospital-based professional' means a
health professional (including an allied health professional)
who has expertise in providing one or more emergency medical
services and who normally provides the services at the site of
the medical emergency or during transport to a medical
facility.''.
SEC. 1522. STATE OFFICES OF EMERGENCY MEDICAL SERVICES.
(a) Technical Amendments To Facilitate Establishment of Program.--
(1) In general.--Title XII of the Public Health Service Act
(42 U.S.C. 300d et seq.) is amended--
(A) by redesignating section 1239 as section 1235;
(B) by redesignating sections 1231 and 1233 as
sections 1236 and 1237, respectively; and
(C) by redesignating sections 1211 through 1222 as
sections 1221 through 1232, respectively.
(2) Modifications in format of title xii.--Title XII of the
Public Health Service Act, as amended by paragraph (1) of this
subsection, is amended--
(A) by striking ``Part B'' and all that follow
through ``State Plans'' and inserting the following:
``Subpart II--Formula Grants With Respect to Modifications of State
Plans'';
(B) by striking ``Part C--General Provisions'' and
inserting the following:
``Subpart III--General Provisions'';
(C) by redesignating sections 1202 and 1203 as
sections 1211 and 1212, respectively; and
(D) by inserting before section 1211 (as so
redesignated) the following:
``Part B--Trauma Care
``Subpart I--Advisory Council; Clearinghouse''.
(b) State Offices.--Title XII of the Public Health Service Act, as
amended by subsection (a) of this section, is amended by inserting
after section 1201 the following new section:
``SEC. 1202. STATE OFFICES OF EMERGENCY MEDICAL SERVICES.
``(a) Program of Grants.--The Secretary may make grants to States
for the purpose of improving the availability and quality of emergency
medical services through the operation of State offices of emergency
medical services.
``(b) Requirement of Matching Funds.--
``(1) In general.--The Secretary may not make a grant under
subsection (a) unless the State involved agrees, with respect
to the costs to be incurred by the State in carrying out the
purpose described in such subsection, to provide non-Federal
contributions toward such costs in an amount that--
``(A) for the first fiscal year of payments under
the grant, is not less than $1 for each $3 of Federal
funds provided in the grant;
``(B) for any second fiscal year of such payments,
is not less than $1 for each $1 of Federal funds
provided in the grant; and
``(C) for any third fiscal year of such payments,
is not less than $3 for each $1 of Federal funds
provided in the grant.
``(2) Determination of amount of non-federal
contribution.--
``(A) Subject to subparagraph (B), non-Federal
contributions required in paragraph (1) may be in cash
or in kind, fairly evaluated, including plant,
equipment, or services. Amounts provided by the Federal
Government, or services assisted or subsidized to any
significant extent by the Federal Government, may not
be included in determining the amount of such non-
Federal contributions.
``(B) The Secretary may not make a grant under
subsection (a) unless the State involved agrees that--
``(i) for the first fiscal year of payments
under the grant, 100 percent or less of the
non-Federal contributions required in paragraph
(1) will be provided in the form of in-kind
contributions;
``(ii) for any second fiscal year of such
payments, not more than 50 percent of such non-
Federal contributions will be provided in the
form of in-kind contributions; and
``(iii) for any third fiscal year of such
payments, such non-Federal contributions will
be provided solely in the form of cash.
``(c) Certain Required Activities.--The Secretary may not make a
grant under subsection (a) unless the State involved agrees that
activities carried out by an office operated pursuant to such
subsection will include--
``(1) coordinating the activities carried out in the State
that relate to emergency medical services;
``(2) activities regarding the matters described in
paragraphs (1) through (4) section 1201(b); and
``(3) identifying Federal and State programs regarding
emergency medical services and providing technical assistance
to public and nonprofit private entities regarding
participation in such programs.
``(d) Requirement Regarding Annual Budget for Office.--The
Secretary may not make a grant under subsection (a) unless the State
involved agrees that, for any fiscal year for which the State receives
such a grant, the office operated pursuant to subsection (a) will be
provided with an annual budget of not less than $50,000.
``(e) Certain Uses of Funds.--
``(1) Restrictions.--The Secretary may not make a grant
under subsection (a) unless the State involved agrees that--
``(A) if research with respect to emergency medical
services is conducted pursuant to the grant, not more
than 10 percent of the grant will be expended for such
research; and
``(B) the grant will not be expended to provide
emergency medical services (including providing cash
payments regarding such services).
``(2) Establishment of office.--Activities for which a
State may expend a grant under subsection (a) include paying
the costs of establishing an office of emergency medical
services for purposes of such subsection.
``(f) Reports.--The Secretary may not make a grant under subsection
(a) unless the State involved agrees to submit to the Secretary reports
containing such information as the Secretary may require regarding
activities carried out under this section by the State.
``(g) Requirement of Application.--The Secretary may not make a
grant under subsection (a) unless an application for the grant is
submitted to the Secretary and the application is in such form, is made
in such manner, and contains such agreements, assurances, and
information as the Secretary determines to be necessary to carry out
this section.''.
SEC. 1523. PROGRAMS FOR RURAL AREAS.
(a) In General.--Title XII of the Public Health Service Act, as
amended by section 1522, is amended--
(1) by transferring section 1204 to part A;
(2) by redesignating such section as section 1203;
(3) by inserting such section after section 1202; and
(4) in section 1203 (as so redesignated)--
(A) by redesignating subsection (c) as subsection
(d); and
(B) by inserting after subsection (b) the following
new subsection:
``(c) Demonstration Program Regarding Telecommunications.--
``(1) Linkages for rural facilities.--Projects under
subsection (a)(1) shall include demonstration projects to
establish telecommunications between rural medical facilities
and medical facilities that have expertise or equipment that
can be utilized by the rural facilities through the
telecommunications.
``(2) Modes of communication.--The Secretary shall ensure
that the telecommunications technologies demonstrated under
paragraph (1) include interactive video telecommunications,
static video imaging transmitted through the telephone system,
and facsimiles transmitted through such system.''.
(b) Conforming Amendment.--Section 1203 of the Public Health
Service Act, as redesignated by subsection (a)(2) of this section, is
amended in the heading for the section by striking ``establishment''
and all that follows and inserting ``programs for rural areas.''.
SEC. 1524. FUNDING.
Title XII of the Public Health Service Act, as amended by the
preceding provisions of this title, is amended--
(1) by redesignating parts C through F as parts D through
G, respectively;
(2) by inserting after subpart III of part B the following:
``Part C--Funding'';
(3) by transferring section 1239 to part C (as so added);
and
(4) in such section, by striking subsections (a) and (b)
and inserting the following:
``(a) Emergency Medical Services Generally.--
``(1) In general.--For the purpose of carrying out section
1201 other than with respect to trauma care, there are
authorized to be appropriated $2,000,000 for fiscal year 1995,
and such sums as may be necessary for each of the fiscal years
1996 and 1997.
``(2) State offices.--For the purpose of carrying out
section 1202, there are authorized to be appropriated
$3,000,000 for fiscal year 1995, and such sums as may be
necessary for each of the fiscal years 1996 and 1997.
``(3) Certain telecommunications demonstrations.--For the
purpose of carrying out section 1203(c), there are authorized
to be appropriated $10,000,000 for fiscal year 1995 and
such sums as may be necessary for each of the fiscal years 1996 and
1997.
``(b) Trauma Care and Certain Other Activities.--
``(1) In general.--For the purpose of carrying out part B,
section 1201 with respect to trauma care, and section 1203
(other than subsection (c) of such section), there are
authorized to be appropriated $60,000,000 for fiscal year 1995,
and such sums as may be necessary for each of the fiscal years
1996 and 1997.
``(2) Allocation of funds by secretary.--
``(A) For the purpose of carrying out subpart I of
part B, section 1201 with respect to trauma care, and
section 1203 (other than subsection (c) of such
section), the Secretary shall make available 10 percent
of the amounts appropriated for a fiscal year under
paragraph (1).
``(B) For the purpose of carrying out section 1203
(other than subsection (c) of such section), the
Secretary shall make available 10 percent of the
amounts appropriated for a fiscal year under paragraph
(1).
``(C)(i) For the purpose of making allotments under
section 1221(a), the Secretary shall, subject to
subsection (c), make available 80 percent of the
amounts appropriated for a fiscal year under paragraph
(1).
``(ii) Amounts paid to a State under section
1221(a) for a fiscal year shall, for the purposes for
which the amounts were paid, remain available for
obligation until the end of the fiscal year immediately
following the fiscal year for which the amounts were
paid.''.
SEC. 1525. CONFORMING AMENDMENTS.
Title XII of the Public Health Service Act, as amended by the
preceding provisions of this title, is amended--
(1) in section 1203(b), by striking ``1214(c)(1)'' and
inserting ``1224(c)(1)'';
(2) in section 1211(b)(3), by striking ``1213(c)'' and
inserting ``1223(c)'';
(3) in section 1221--
(A) in subsection (a)--
(i) by striking ``1218'' and inserting
``1228''; and
(ii) by striking ``1217'' and inserting
``1227''; and
(B) in subsection (b)--
(i) by striking ``1233'' and inserting
``1237''; and
(ii) by striking ``1213'' and inserting
``1223'';
(4) in section 1222--
(A) in subsection (a)--
(i) in paragraph (1), by striking
``1211(a)'' and inserting ``1221(a)''; and
(ii) in paragraph (2)(A), by striking
``1211(c)'' and inserting ``1221(c)''; and
(B) in subsection (b), by striking ``1211(a)'' and
inserting ``1221(a)'';
(5) in section 1223--
(A) in subsection (a), by striking ``1211(b)'' and
inserting ``1221(b)'';
(B) in subsection (b)--
(i) in paragraph (1), by striking
``1211(a)'' and inserting ``1221(a)''; and
(ii) in paragraph (3), by striking
``1211(a)'' and inserting ``1221(a)''; and
(C) in subsection (d), by striking ``1211(a)'' and
inserting ``1221(a)'';
(6) in section 1224--
(A) in each of subsections (a) through (c), by
striking ``1211(a)'' and inserting ``1221(a)''; and
(B) in subsection (b), by striking ``1213(a)(7)''
and inserting ``1223(a)(7)'';
(7) in section 1225--
(A) in subsection (a)--
(i) by striking ``1211(a)'' and inserting
``1221(a)''; and
(ii) by striking ``1233'' and inserting
``1237''; and
(B) in subsection (b), by striking ``1211(b)'' and
inserting ``1221(b)'';
(8) in section 1226, in each of subsections (a) through
(c), by striking ``1211(a)'' and inserting ``1221(a)'';
(9) in section 1227--
(A) by striking ``1211(a)'' and inserting
``1221(a)''; and
(B) by striking ``1214'' and inserting ``1224'';
(10) in section 1228--
(A) in each of subsections (a) through (c), by
striking ``1211(a)'' each place such term appears and
inserting ``1221(a)'';
(B) in subsection (b), in each of paragraphs (2)(A)
and (3)(A), by striking ``1232(a)'' and inserting
``1239(a)''; and
(C) in subsection (c)(2)--
(i) by striking ``1232(b)(3)'' and
inserting ``1239(b)(3)''; and
(ii) by striking ``1217'' and inserting
``1227'';
(11) in section 1229(a), by striking ``1211(a)'' each place
such term appears and inserting ``1221(a)'';
(12) in section 1230(a), by striking ``1211(a)'' each place
such term appears and inserting ``1221(a)'';
(13) in section 1231--
(A) in each of subsections (a) and (b), by striking
``1211(a)'' each place such term appears and inserting
``1221(a)''; and
(B) in each of subsections (a) and (b), by striking
``1211(b)'' and inserting ``1221(b)'';
(14) in section 1232, by striking ``1211'' and inserting
``1221'';
(15) in section 1236--
(A) in the matter preceding paragraph (1), by
striking ``this title'' and inserting ``this part'';
and
(B) in paragraph (1), by striking ``1213'' and
inserting ``1223'';
(16) in section 1237--
(A) in each of subsections (a) and (b), by striking
``1211'' each place such term appears and inserting
``1221'';
(B) in subsection (b)--
(i) by striking ``part B'' and inserting
``subpart II''; and
(ii) by striking ``1214(c)(1)'' and
inserting ``1224(c)(1)''; and
(C) in subsection (c), by striking ``1213'' and
inserting ``1223''; and
(17) in section 1239(c)(1)--
(A) by striking ``1211(a)'' and inserting
``1221(a)'';
(B) by striking ``1218(a)(2)'' and inserting
``1228(a)(2)''; and
(C) by striking ``part B'' and inserting ``subpart
II''.
SEC. 1526. EFFECTIVE DATE.
The amendments made by this part shall take effect October 1, 1994,
or upon the date of the enactment of this Act, whichever occurs later.
PART 4--ADDITIONAL RURAL HEALTH CARE PROVISIONS
SEC. 1531. DEVELOPMENT OF COMMUNITY-OPERATED HEALTH PLANS IN RURAL AND
FRONTIER AREAS.
(a) Community-Operated Health Plans.--The Secretary of Health and
Human Services (in this part referred to as the ``Secretary'') may make
grants to public and nonprofit private entities for the purpose of
carrying out projects to develop health plans to provide services
exclusively in rural and frontier areas.
(b) Community Involvement.--The Secretary may make a grant under
subsection (a) only if the applicant involved meets the following
conditions:
(1) In developing the proposal of the applicant for a
project under such subsection, the applicant has consulted with
the local governments of the geographic area to be served by
the health plan developed through the project, with individuals
who reside in the area, and with a reasonable number and
variety of health professionals who provide services in the
area.
(2) The applicant agrees that the principal legal authority
over the operation of the health plan will be vested in
individuals who reside in such geographic area.
(3) In the proposal the applicant specifies how a full
continuum of services will be provided.
(4) In the proposal the applicant specifies how the
proposed health plan will utilize existing health care
facilities in a manner that avoids unnecessary duplication.
(c) Use of Funds.--
(1) In general.--Funds made available under this section
may be used for the following:
(A) To develop integrated health networks,
utilizing existing local providers and facilities where
appropriate, with community involvement.
(B) For information systems, including
telecommunications.
(C) For transportation services.
(D) To develop rural emergency access care
hospitals (as defined in section 1861(oo)(1) of the
Social Security Act, as added by section 1501).
(2) Limitations.--Funds made available under this section
shall not be used for the following:
(A) For a telecommunications system, unless the
system is coordinated with, and does not duplicate,
such a system existing in the area.
(B) For paying off existing debt.
(d) Authorization of Appropriations.--There are authorized to be
appropriated $25,000,000 in each of fiscal years 1996, 1997, and 1998
to carry out this section.
SEC. 1532. PRIMARY HEALTH CARE FOR MEDICALLY UNDERSERVED RURAL
COMMUNITIES; INCREASED CAPACITY OF HOSPITALS AND
OUTPATIENT FACILITIES.
(a) In General.--The Secretary may make grants to public and
nonprofit private hospitals in medically underserved rural communities,
and to public and nonprofit outpatient facilities in such communities,
for the purpose of carrying out projects to develop or increase the
capacity of the hospitals and facilities to provide primary health
services.
(b) Medically Underserved Rural Community.--For purposes of this
section, the term ``medically underserved rural community'' means--
(1) a rural area that has a substantial number of
individuals who are members of a medically underserved
population, as defined in section 330 of the Public Health
Service Act; or
(2) a rural area a significant portion of which is a health
professional shortage area designated under section 332 of such
Act.
(c) Certain Expenditures.--The purposes for which the Secretary may
authorize a grant under subsection (a) to be expended include the
renovation of facilities, the purchase of equipment, and the training
of personnel.
(d) Authorization of Appropriations.--
(1) Hospitals.--There are authorized to be appropriated
$50,000,000 in each of fiscal years 1996, 1997, and 1998 for
the purpose of making grants to hospitals under subsection (a).
(2) Outpatient facilities.--There are authorized to be
appropriated $25,000,000 in each of fiscal years 1996, 1997,
and 1998 for the purpose of making grants to outpatient
facilities under subsection (a).
SEC. 1533. INNOVATIVE APPROACHES TO DELIVERY OF HEALTH SERVICES IN
RURAL AREAS.
(a) In General.--The Secretary, acting through the Administrator
for Health Care Policy and Research, may make grants to public and
nonprofit private entities for the purposes of conducting research and
carrying out demonstration projects to develop innovative approaches to
the delivery of health care in rural areas, such as the use of
telemedicine and the use of mobile delivery units.
(b) Authorization of Appropriations.--There are authorized to be
appropriated $15,000,000 in each of fiscal years 1996 through 2000 to
carry out this section.
SEC. 1534. TRAINING OF RURAL HEALTH PROFESSIONALS OTHER THAN
PHYSICIANS.
(a) Funding for Programs Under Public Health Service Act.--With
respect to programs of title VII or VIII of the Public Health Service
Act that provide for the training of individuals as health
professionals other than physicians, there are authorized to be
appropriated, in addition to amounts otherwise authorized to be
appropriated, $50,000,000 in each of fiscal years 1996 through 2000 for
the purpose of the Secretary carrying out such programs through
entities described in subsection (b).
(b) Eligibility.--With respect to a program referred to in
subsection (a), an entity described in this subsection is an entity--
(1) that is eligible to receive grants or contracts under
the program (as provided in the applicable provisions of title
VII or VIII of the Public Health Service Act); and
(2) a substantial number of whose designated graduates are
providing health services in a rural area.
(c) Definition of Designated Graduate.--For purposes of this
section, the term ``designated graduate'', with respect to an entity,
means an individual completing the training involved during the 5-year
period preceding the fiscal year for which the entity is applying to
receive a grant or contract under the applicable program referred to in
subsection (a).
(d) Relationship to Other Funds.--The amounts made available in
subsection (a) for carrying out programs referred to in such subsection
are in addition to any other amounts that are available for carrying
out the programs.
SEC. 1535. GENERAL PROVISIONS.
(a) Application for Grant.--The Secretary may make a grant under
any section of this part only if an application for the grant is
submitted to the Secretary and the application is in such form, is made
in such manner, and contains such agreements, assurances, and
information as the Secretary determines to be necessary to carry out
the program involved.
(b) Technical Assistance.--The Secretary may provide technical
assistance to recipients of grants or contracts under this part with
respect to the planning, development, and operation of activities under
the grants or contracts.
Subtitle G--Assistance in Enrolling Uninsured Children in Health
Insurance
Title I, Subtitle G
SEC. 1601. ESTABLISHMENT OF STATE PROGRAMS.
(a) Medicaid State Plan Requirement.--Section 1902(a) of the Social
Security Act (42 U.S.C. 1396a(a)) is amended--
(1) by striking ``and'' at the end of paragraph (61);
(2) by striking the period at the end of paragraph (62) and
inserting ``; and''; and
(3) by adding at the end the following new paragraph:
``(63) provide for a State program furnishing premium
subsidies for needy children in accordance with section
1931.''.
(b) State Programs for Premium Subsidies for Needy Children.--Title
XIX of the Social Security Act (42 U.S.C. 1396 et seq.) is amended by
redesignating section 1931 as section 1932 and by inserting after
section 1930 the following new section:
``state premium subsidy programs for needy children
``Sec. 1931. (a) Requirement To Operate State Program.--
``(1) In general.--A State with a State plan approved under
this title shall have in effect a premium subsidy program for
furnishing premium subsidy under subsection (b) to premium
subsidy eligible children in the State in fiscal years
beginning with fiscal year 1997.
``(2) Designation of state agency.--A State may designate
any appropriate State agency to administer the program under
this section.
``(b) Assistance With Premiums for Standard Health Coverage.--
``(1) Eligibility.--An eligible individual who has been
determined by a State to be a premium subsidy eligible child
(as defined in paragraph (2)) shall be entitled to premium
subsidies in the amount determined under subsection (c).
``(2) Premium subsidy eligible child.--For purposes of this
section, the term `premium subsidy eligible child' means an
individual who is provided certified standard health coverage
(as defined in subsection (j)(1)) and--
``(A) who is under 20 years of age,
``(B) whose family has a family income determined
under this section which does not exceed 240 percent
(or such lesser percent as the Secretary shall specify
so that the total Federal payments to States under this
section for the fiscal year do not exceed the amount
specified for the fiscal year under subsection (i)(1))
of the poverty line, and
``(C) except as provided in paragraph (3), who is
not otherwise eligible for medical assistance under the
State plan (or would be eligible for such assistance on
the basis of the plan in effect as of the date of the
enactment of the Affordable Health Care Now Act of
1994).
``(3) Eligibility of children becoming eligible for
medicaid.--At the option of the State, a premium subsidy
eligible child may include an individual who meets the
requirements of subparagraphs (A) and (B) of paragraph (2) and
is eligible for medical assistance under the State plan if the
individual was formerly a premium subsidy eligible child under
paragraph (2). The exercise of such option shall not diminish
the benefits to which such a child is otherwise entitled under
the State plan.
``(4) Additional children using state-only funds.--Nothing
in this section shall be construed as preventing a State, using
its own funds and without any Federal financial participation,
from covering additional children as premium subsidy eligible
children.
``(c) Amount of Premium Subsidy.--
``(1) In general.--
``(A) In general.--The premium subsidy amount
determined under this paragraph is a monthly amount
equal to the subsidy percentage of \1/12\th of the
lesser of--
``(i) the annual premium for certified
standard health coverage provided the child, or
``(ii) the actuarial value of the standard
option, nationwide service benefit plan (taking
into account cost sharing) made available under
chapter 89 of title, United States Code for the year, adjusted to
reflect a premium for a single child of the age involved and adjusted
to reflect the relative cost of premiums for health coverage of premium
subsidy eligible children in the geographic area in which the child
resides compared to the national average and adjusted to reflect the
reduction in cost-sharing effected under subsection (j)(4).
``(B) Subsidy percentage.--For purposes of
paragraph (1), an individual's `subsidy percentage'
means 100 percent reduced (but not below zero percent)
by 1.8 percentage points for each percentage point (or
portion thereof) such individual's income equals or
exceeds 185 percent of the poverty line.
``(d) Payments.--
``(1) In general.--The amount of the premium subsidy
available to a premium subsidy eligible child under subsection
(b) shall be paid by the State in which the individual resides
directly to the insurer that provides the coverage for the
premium subsidy eligible child. Payments under the preceding
sentence shall commence in the first month during which the
individual is provided coverage and determined under this
section to be a premium subsidy eligible child.
``(2) Administrative errors.--A State is financially
responsible for premium subsidy paid based on an eligibility
determination error to the extent the State's error rate for
eligibility determinations exceeds a maximum permissible error
rate to be specified by the Secretary.
``(e) Eligibility Determinations.--
``(1) In general.--The Secretary shall promulgate
regulations specifying requirements for State programs under
this section with respect to determining eligibility for
premium subsidy, including requirements with respect to--
``(A) application procedures;
``(B) information verification procedures;
``(C) timeliness of eligibility determinations;
``(D) procedures for applicants to appeal adverse
decisions; and
``(E) any other matters determined appropriate by
the Secretary.
``(2) Specifications for regulations.--The regulations
promulgated by the Secretary under paragraph (1) shall include
the following requirements:
``(A) Frequency of applications.--A State program
shall provide that an individual may file an
application for assistance with an agency designated by
the State at any time, in person or by mail.
``(B) Application form.--A State program shall
provide for the use of an application form developed by
the Secretary under this section.
``(C) Distribution of Applications.--A State
program shall distribute applications for assistance
through employers and appropriate public agencies.
``(D) Requirement to submit revised application.--A
State program shall, in accordance with regulations
promulgated by the Secretary, require individuals to
submit revised applications during a year to reflect
changes in estimated family incomes, including changes
in employment status of family members, during the
year. The State shall revise the amount of any premium
subsidy based on such a revised application.
``(E) Verification.--A State program shall provide
for verification of the information supplied in
applications under this section. Such verification may
include examining return information disclosed to the
State for such purpose under section 6103(l)(15) of the
Internal Revenue Code of 1986.
``(f) Administration of State Programs.--
``(1) In general.--The Secretary shall establish standards
for States operating programs under this section which ensure
that such programs are operated in a uniform manner with
respect to application procedures, data processing systems, and
such other administrative activities as the Secretary
determines to be necessary.
``(2) Application forms.--The Secretary shall develop an
application form for assistance which shall--
``(A) be simple in form and understandable to the
average individual;
``(B) require the provision of information
necessary to make a determination as to whether an
individual is a premium subsidy eligible child
including a declaration of estimated income by the
individual based, at the election of the individual--
``(i) on multiplying by a factor of 4 the
individual's family income for the 3-month
period immediately preceding the month in which
the application is made, or
``(ii) on estimated income for the entire
year for which the application is submitted;
and
``(C) require attachment of such documentation as
deemed necessary by the Secretary in order to ensure
eligibility for assistance.
``(3) Outreach activities.--A State operating a program
under this section shall conduct such outreach activities as
the Secretary determines appropriate.
``(4) Effectiveness of eligibility for premium subsidies.--
A determination by a State that an individual is a premium
subsidy eligible child shall be effective for the calendar year
for which such determination is made unless a revised
application submitted under paragraph (2) indicates that an
individual is no longer eligible for premium subsidies.
``(5) Penalties for material misrepresentations.--
``(A) In general.--Any individual who knowingly
makes a material misrepresentation of information in an
application for assistance under this section shall be
liable to the Federal Government for the amount of any
premium subsidy received by individual on the basis of
a misrepresentation and interest on such amount at a
rate specified by the Secretary, and shall, in
addition, be liable to the Federal Government for
$2,000 or, if greater, 3 times the amount any premium
subsidy received by individual on the basis of a
misrepresentation.
``(B) Collection of penalty amounts.--A State which
receives an application for assistance with respect to
which a material misrepresentation has been made shall
collect the penalty amount required under subparagraph
(A) and submit 50 percent of such amount to the
Secretary in a timely manner.
``(g) End-of-year Reconciliation for Premium Subsidy.--
``(1) In general.--
``(A) Requirement to file statement.--An individual
who received premium subsidies under this section from
a State for any month in a calendar year shall file
with the State an income reconciliation statement to
verify the individual's family income for the year.
Such a statement shall be filed at such time, and
contain such information, as the State may specify in
accordance with regulations promulgated by the
Secretary.
``(B) Notice of requirement.--A State shall provide
a written notice of the requirement under subparagraph
(A) at the end of the year to an individual who
received premium subsidies under this part from such
State in any month during the year.
``(2) Reconciliation of premium subsidy based on actual
income.--
``(A) In general.--Based on and using the income
reported in the reconciliation statement filed under
paragraph (1) with respect to an individual, the State
shall compute the amount of premium subsidy that should
have been provided under this section with respect to
the individual for the year involved.
``(B) Overpayment of assistance.--If the total
amount of the premium subsidy provided was greater than
the amount computed under subparagraph (A), the
individual is liable to the State to pay an amount
equal to the amount of the excess payment. Any amount
collected by a State under this subparagraph shall be
submitted to the Secretary in a timely manner.
``(C) Underpayment of assistance.--If the total
amount of the premium subsidy provided was less than
the amount computed under subparagraph (A), the State
shall pay to the individual an amount equal to the
amount of the deficit.
``(D) State option.--A State may, in accordance
with regulations promulgated by the Secretary,
establish a procedure under which any overpayments or
underpayments of premium subsidy determined under
subparagraphs (A) and (B) with respect to an individual
for a year may be collected or paid, as appropriate,
through adjustments to the premium subsidy furnished to
such individual in the succeeding year.
``(3) Verification.--Each State may use such information as
it has available to verify income of individuals with
applications filed under this section, including return
information disclosed to the state for such purpose under
section 6103(l)(15) of the internal revenue code of 1986.
``(4) Penalties for failure to file.--In the case of an
individual who is required to file a statement under this
subsection in a year who fails to file such a statement by such
date as the Secretary shall specify in regulations, the entire
amount of the premium subsidy provided in such year shall be
considered an excess amount under paragraph (2)(A) and such
individual shall not be eligible for premium subsidy assistance
under this section until such statement is filed. A State,
using rules established by the Secretary, shall waive the
application of this paragraph if the individual establishes, to
the satisfaction of the State under such rules, good cause for
the failure to file the statement on a timely basis.
``(5) Penalties for false information.--Any individual who
provides false information in a statement filed under paragraph
(1) is subject to the same penalties as are provided under
subsection (f)(5) for a misrepresentation of material fact
described in such section.
``(h) Special Rules on Federal Financial Participation.--
``(1) Premium subsidy.--In applying section 1903(a)(1) with
respect to expenditures for premium subsidy (other than
administrative expenses) under this section--
``(A) such expenditures shall be considered to be
expenditures on medical assistance;
``(B) in the case of assistance for a premium
subsidy eligible child not described in subsection
(b)(3), the Federal medical assistance percentage is
deemed to be 100 percent; and
``(C) the total amount of Federal financial
participation with respect to any State for quarters in
any fiscal year (with respect to premium subsidy
eligible children not described in subsection (b)(3))
shall not exceed the State allotment under subsection
(i)(2) for that year.
``(2) Administration expenses.--The amount of expenditures
that may be taken into account in computing amounts that are
payable to a State under section 1903(a) (other than paragraph
(1)) with respect to the administration of the program under
this section may not exceed 3 percent of the total
expenditures.
``(i) Total Federal Budget for Program; Allotments to States.--
``(1) Total federal budget.--
``(A) Fiscal years 1997 through 2004.--Subject to
subparagraph (E)(iii), for purposes of this section,
the total Federal payments to States under this section
may not exceed the following:
``(i) For fiscal year 1997, $4.7 billion.
``(ii) For fiscal year 1998, $5.2 billion.
``(iii) For fiscal year 1999, $6.5 billion.
``(iv) For fiscal year 2000, $9.8 billion.
``(v) For fiscal year 2001, $12.3 billion.
``(vi) For fiscal year 2002, $15.3 billion.
``(vii) For fiscal year 2003, $20.0
billion.
``(viii) For fiscal year 2004, $24.4
billion.
``(B) Subsequent fiscal years.--For purposes of
this section, the total Federal budget for State plans
under this part for each fiscal year after fiscal year
2004 is the total Federal budget under this subsection
for the preceding fiscal year multiplied by the
Secretary's estimate of the percentage increase in
private sector health expenditures for the year.
``(2) Allotments to states.--
``(A) In general.--The amount of a State's
allotment under this section for a fiscal year shall be
equal to the product of--
``(i) the limit on the total amount of
Federal payments for the year under paragraph
(1)(A); and
``(ii) the State's allotment percentage
under subparagraph (B).
``(B) State allotment percentage.--In subparagraph
(A), a State's allotment percentage for a fiscal year
is equal to the percentage of all premium subsidy
eligible children in the United States who are
residents of the State (as estimated by the Secretary
prior to the beginning of the fiscal year).
``(3) Limitation on premium payments for abortion
services.--Notwithstanding any other provision of this title or
the Affordable Health Care Now Act of 1994, none of the funds
appropriated to carry out this section shall be expended to
assist in the purchase, in whole or in part, of a health
benefit package that includes abortion except in cases (A)
where the life of the mother would be endangered if the fetus
were carried to term, or (B) where the pregnancy is the result
of rape or incest.
``(j) Certified Standard Health Coverage Defined.--
``(1) In general.--In this section, health insurance
coverage is considered to provide certified standard health
coverage if--
``(A) benefits under such coverage are provided
within at least each of the required categories of
benefits described in subparagraph (A) of paragraph (2)
and consistent with such paragraph;
``(B) the actuarial value of the benefits meets the
requirements of paragraph (3); and
``(C) the benefits comply with the minimum
requirements specified in paragraph (4).
``(2) Required categories of covered benefits.--
``(A) In general.--The categories of covered
benefits described in this subparagraph are the types
of benefits specified in subparagraphs (A), (B), (C),
(D), and (F) of paragraph (1), and subparagraphs (E)
and (F) of paragraph (2), of section 8904(a) of title
5, United States Code (relating to types of benefits
required to be in health insurance offered to Federal
employees) and includes the category of preventive
benefits.
``(B) Coverage of off-label use.--An off-label use
for a drug that has been found to be safe and effective
under section 505 of the Federal Food, Drug, and
Cosmetic Act shall be covered if the medical indication
for which it is used is listed in one of the following
3 compendia: the American Hospital Formulary Service-
Drug Information, the American Medical Association Drug
Evaluations, and the United States Pharmacopeia-Drug
Information.
``(C) No coverage of specific treatment,
procedures, or classes required.--Nothing in this
subsection may be construed to require the coverage of
any specific procedure or treatment or class of service
in certified standard health coverage under this Act or
through regulation.
``(3) Standard actuarial value.--
``(A) In general.--The actuarial value of the
benefits under standard coverage in a rating area meets
the requirements of this paragraph if such value is
equivalent to the standard actuarial value described in
subparagraph (B) for the area, as adjusted for
inflation under subparagraph (D). The actuarial value
of benefits under standard coverage shall be determined
using the standardized population and set of
standardized utilization and cost factors described in
subparagraph (C). Such actuarial value shall be
adjusted to reflect the reduction in cost-sharing
effected under paragraph (4).
``(B) Standard actuarial value described.--The
standard actuarial value described in this subparagraph
for coverage in a geographic area is the actuarial
value of benchmark coverage during 1994 in such area.
Such actuarial value shall be determined using the
standardized population and set of standardized
utilization and cost factors described in subparagraph
(C) and shall be adjusted to reflect the age of the
population of premium subsidy eligible children under
this section.
``(C) Adjustments for standardized population,
standardized utilization and cost factors, and
geographic area.--The adjustment under this
subparagraph--
``(i) for a standardized population shall
be made by not taking into account individuals
65 years of age or older, employees of the
United States Postal Service, and retirees; and
``(ii) for a geographic area shall be made
in a manner that reflects the ratio of the
actuarial value of benchmark coverage in such
geographic area (as adjusted under clause (i))
to such actuarial value for such benchmark
coverage for the United States as a whole,
taking into account standardized actuarial
utilization and cost factors.
``(D) Adjustment for inflation.--
``(i) In general.--The adjustment under
this paragraph for a year (beginning with 1995)
is the FEHBP national rolling increase
percentage for the year involved, compounded by
such increase for each preceding year after
1994.
``(ii) FEHBP national rolling increase
percentage.--For purposes of this paragraph,
the term `FEHBP national rolling increase
percentage' means, for a year, the 5-year
average of the annual national percentage
increase in the premiums for health plans
offered under the Federal Employees Health
Benefits Program (under chapter 89 of title 5,
United States Code) for the period ending with
the previous year. Such increase shall be
determined by the Secretary in consultation
with the Director of Office of Personnel
Management based on the best information
available.
``(4) Minimum requirements.--Benefits offered under
standard coverage within any category shall be not less than
the narrowest scope and shortest duration of benefits within
that category, in an approved health benefits plan under
chapter 89 of title 5, United States Code, except that under
such coverage--
``(A) no cost-sharing may be imposed for preventive
services (as specified by the Secretary); and
``(B) with respect to individuals with family
income below 100 percent of the poverty line, any cost-
sharing imposed for other items and services may only
be nominal.
``(k) Definitions; Determinations of Income.--For purposes of this
part:
``(1) Determinations of income.--
``(A) Family income.--The term `family income'
means, with respect to an individual who--
``(i) is not a dependent (as defined in
subparagraph (B)) of another individual, the
sum of the modified adjusted gross incomes (as
defined in subparagraph (D)) for the
individual, the individual's spouse, and
dependents of the individual; or
``(ii) is a dependent of another
individual, the sum of the modified adjusted
gross incomes for the other individual, the
other individual's spouse, and dependents of
the other individual.
``(B) Dependent.--The term `dependent' shall have
the meaning given such term under paragraphs (1) or (2)
of section 152(a) of the Internal Revenue Code of 1986.
``(C) Special rule for foster children.--For
purposes of subparagraph (A), a child who is placed in
foster care by a State agency shall not be considered a
dependent of another individual.
``(D) Modified adjusted gross income.--The term
`modified adjusted gross income' means adjusted gross
income (as defined in section 62(a) of the Internal
Revenue Code of 1986)--
``(i) determined without regard to sections
135, 162(l), 911, 931, and 933 of such Code,
and
``(ii) increased by--
``(I) the amount of interest
received or accrued by the individual
during the taxable year which is exempt
from tax, and
``(II) the amount of the social
security benefits (as defined in
section 86(d) of such Code) received
during the taxable year to the extent
not included in gross income under
section 86 of such Code.
The determination under the preceding sentence shall be
made without regard to any carryover or carryback.
``(2) Eligible individual.--
``(A) In general.--Except as provided in
subparagraph (B), the term `eligible individual' means
any individual who is residing in the United States.
``(B) Exclusion.--The term `eligible individual'
does not include--
``(i) an alien who is ineligible for
assistance under this title pursuant to section
2802 of the Affordable Health Care Now Act of
1994; or
``(ii) an individual who is an inmate of a
public institution (except as a patient of a
medical institution).
``(3) 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) that--
``(A) in the case of a family of less than five
individuals, is applicable to a family of the size
involved; and
``(B) in the case of a family of more than four
individuals, is applicable to a family of four persons.
``(4) Premium.--Any reference to the term `premium'
includes a reference to premium equivalence for self-insured
plans.
``(5) Benchmark coverage.--The term `benchmark coverage'
means the standard option of the Blue Cross-Blue Shield plan
offered under the Federal Employees Health Benefits Program
under chapter 89 of title 5, United States Code, as in effect
during 1994.''.
Subtitle H--Medicaid Reform
PART 1--STATE FLEXIBILITY IN THE MEDICAID PROGRAM: THE MEDICAL HEALTH
ALLOWANCE PROGRAM
SEC. 1701. ESTABLISHMENT OF PROGRAM.
(a) In General.--Title XIX of the Social Security Act (42 U.S.C.
1396 et seq.), as amended by section 1601, is further amended--
Title I, Subtitle H
(1) by redesignating section 1932 as section 1933; and
(2) by inserting after section 1931 the following new
section:
``state health allowance programs
``Sec. 1932. (a) Treatment of Expenditures Under Health Allowance
Programs as Medical Assistance Under State Plan.--
``(1) In general.--Notwithstanding any other provision of
this title, for purposes of determining the amount to be paid
to a State under section 1903(a)(1) for quarters in any fiscal
year, amounts expended by an eligible State (as described in
subsection (b)) during the fiscal year under a State health
allowance program (as described in subsection (c)) shall be
included in the total amount expended during the fiscal year as
medical assistance under the State plan (except as provided
under paragraphs (2) and (3) and under subsection (d)(1)(C)).
``(2) Federal payment restricted to acute care services.--
No amounts expended under a State health allowance program that
are attributable to medical assistance described in paragraphs
(4), (14), (15), (23), or (24) of section 1905(a) shall be
included in the total amount expended as medical assistance
under the State plan.
``(3) Amount of federal payment based upon unused premium
subsidy program allotment.--In no case shall this subsection
result in the total Federal payments to the State under this
title (including payments attributable to this section and
section 1923) for quarters in a fiscal year exceeding an amount
equal to the difference between--
``(A) the State's allotment for the premium subsidy
program for children under section 1931(i)(2) for such
fiscal year; and
``(B) the amount paid to the State for such program
for such fiscal year.
``(4) Limitation on premium payments for abortion
services.--Notwithstanding any other provision of this title or
the Affordable Health Care Now Act of 1994, none of the funds
appropriated to carry out this section shall be expended to
assist in the purchase, in whole or in part, of a health
benefit package that includes abortion except in cases (A)
where the life of the mother would be endangered if the fetus
were carried to term, or (B) where the pregnancy is the result
of rape or incest.
``(b) Eligibility of State.--A State is eligible for purposes of
subsection (a) if the State submits (at such time and in such form as
the Secretary may require) an application to the Secretary containing
such information and assurances as the Secretary may require, including
assurances that the State has adopted and is enforcing standards
regarding quality assurance for group health plans participating in the
State health allowance program, including standards regarding--
``(1) uniform reporting requirements for such plans
relating to a minimum set of clinical data, patient
satisfaction data, and other information that may be used by
individuals to compare the quality of various plans; and
``(2) the establishment or designation of an entity of the
State government to collect the data described in subparagraph
(A) and to regularly report such data to the Secretary.
``(c) State Health Allowance Program Described.--
``(1) Enrollment of participating individuals in approved
group health plans.--In this section, a State health allowance
program is a program in effect in all the political
subdivisions of the State (except as provided in (c)) under
which the State makes payments to a group health plan (approved
under paragraph (2)) which provides coverage to the individual
as an allowance towards the costs of providing the individual
with benefits under the plan.
``(2) Approved plans described.--For purposes of paragraph
(1), a State shall approve group health plans in accordance
with such standards as the State may establish, except that--
``(A) the State may not approve a plan for a year
unless the plan provides certified standard health
coverage described in section 1931(j);
``(B) at least one of the plans approved by the
State shall be a health maintenance organization or
other plan under which payments are otherwise made on a
capitated basis for providing medical assistance to
individuals enrolled in the State plan under this
title; and
``(C) in the case of an individual who is entitled
to benefits under the State plan under this title as of
the first month during which the State health allowance
program is in effect, an approved plan may not require
the individual to contribute a greater amount of cost-
sharing than the individual would have been required to
contribute under the State plan (except as may be
imposed on an individual described in subparagraph (B)
or subparagraph (C) of subsection (d)(1)).
In applying subparagraph (A), in determining the standard
actuarial value, instead of adjustments made to reflect the
population under section 1931 there shall be adjustments made
to reflect the population covered under this section.
``(3) Waiver of statewideness requirement.--At the request
of a State, the Secretary may waive for a period not to exceed
3 years (subject to one 3-year extension) the requirement under
paragraph (1) that the State health allowance program be in
effect in all political subdivisions of the State.
``(d) Eligibility of Individuals To Participate in Allowance
Program.--
``(1) Automatic eligibility of medicaid categorically
eligible individuals.--Subject to subsection (e), any
individual to whom the State makes medical assistance available
under the State plan under this title pursuant to clause (i) of
section 1902(a)(10)(A) shall be eligible to participate in the
State health allowance program.
``(2) Mandatory eligibility of pregnant women with income
under 150 percent of the poverty level.--
``(A) In general.--Subject to subsection (e) and
subparagraph (B), an individual lawfully residing in
the State shall be eligible to participate in the
program if the individual is a pregnant woman and the
income of the individual's family is equal to or less
than 240 percent of the 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 1991)
applicable to a family of the size involved.
``(B) Exception.--If the application of
subparagraph (A) would result in--
``(i) the total State expenditures for a
quarter under this title (including
expenditures attributable to this section and
section 1923, but not including expenditures
under section 1931), exceeding
``(ii) the total State expenditures that
the Secretary estimates would have been made
under this title for the quarter if the State
did not have a program under this section,
then there shall be substituted for 150 percent in
subparagraph (A) such percent as would result in the
amount described in clause (i) equaling the amount
described in clause (ii).
``(C) Phasing out premium subsidy for certain
individuals.--
``(i) In general.--In the case of an
individual eligible to participate in the
program pursuant to this paragraph who has
income equal to or greater than 185 percent of
the official poverty line applicable to a
family of the size involved, the amount paid by
the State under subsection (c)(1) with respect
to the individual shall be equal to the individual's subsidy percentage
of the amount that would otherwise be paid under such subsection with
respect to the individual but for this subparagraph.
``(ii) Subsidy percentage defined.--In
clause (i), an individual's `subsidy
percentage' means 100 percent reduced (but not
below zero percent) by 1.8 percentage points
for each percentage point (or portion thereof)
by which the individual's income equals or
exceeds 185 percent of the official poverty
line.
``(3) Optional eligibility of other individuals with income
up to 150 percent of poverty level.--
``(A) In general.--Subject to subsection (e), a
State operating a State health allowance program under
this section may make an individual lawfully residing
in the State who is not described in paragraph (2)
eligible to participate in the program if the income of
the individual's family is not greater than 150 percent
of such official poverty line.
``(B) Contribution may be required.--In the case of
an individual who is participating in the program under
this paragraph and whose family income is greater than
100 percent of the official poverty line, the program
may require such an individual to contribute all (or a
portion) of the premiums for such a group health plan
if the amount of such contribution is determined in
accordance with a sliding scale based on the
individual's family income.
``(4) Restriction on eligibility of other medicaid
beneficiaries.--An individual is not eligible to participate in
the program pursuant to paragraph (2) or paragraph (3) if the
individual is eligible for medical assistance under the State
plan under this title (or would be eligible for such assistance
on the basis of the plan in effect as of the date of the
enactment of the Affordable Health Care Now Act of 1994).
``(e) Exclusion and Use of Resource Standard.--
``(1) Exclusion of elderly medicare-eligible individuals.--
No individual shall be eligible to participate in the program
if the individual is entitled to benefits under title XVIII
pursuant to section 226.
``(2) Use of resource standard.--A State may require an
individual to meet a resource standard as a condition of
eligibility to participate in the program only if the Secretary
approves the State's use of such a standard.
``(f) Construction.--No provision of any Federal law shall prevent
a State from enrolling any employee or other individual in accordance
with this section. The previous sentence shall not be construed as
permitting a State to require the employer of an individual
participating in the program to contribute toward the individual's
premium required for such participation.
``(g) Evaluations and Reports.--
``(1) Evaluations.--Not later than 3 years after the date
of the enactment of this section (and at such subsequent
intervals as the Secretary considers appropriate), the
Secretary shall evaluate the effectiveness of the State health
allowance programs for which Federal financial participation is
provided under this section, and the impact of such programs on
increasing the number of individuals with health insurance
coverage in participating States and in controlling the costs
of health care in such States.
``(2) Reports.--Not later than 3 years after the date of
the enactment of this section (and at such subsequent intervals
as the Secretary considers appropriate), the Secretary shall
submit a report on the program to Congress.''.
(b) Effective Date.--The amendments made by this section shall
apply to calendar quarters beginning on or after October 1, 1996.
SEC. 1702. OPTIONAL USE OF PROGRAM TO OFFER COVERAGE TO SOME OR ALL
STATE RESIDENTS.
Section 1932 of the Social Security Act, as inserted by section
1701(a)(2), is amended--
(1) in subsection (c)(2)(A), in the matter before clause
(i), by inserting ``, except as provided in subsection
(d)(4)(B)(iii),'' after ``unless'', and
(2) by adding at the end of subsection (d) the following
new paragraphs:
``(4) Optional enrollment of other individuals.--
``(A) In general.--Subject to subsection (e), a
State operating a State health allowance program under
this section may make any individual (or class of
individuals) who is not described in paragraph (1),
(2), or (3) and who is not offered coverage under an
employer group health plan eligible to participate in
the program.
``(B) Special rules.--
``(i) Contribution may be required.--In the
case of an individual who is participating in
the program under this paragraph, the program
may require such an individual to contribute
all (or a portion) of the premiums and cost-
sharing of such a group health plan.
``(ii) No federal matching payments.--For
purposes of payment to States under section
1903(a), no amounts expended by the State under
the program during a fiscal year on behalf of
an individual enrolled under subparagraph (A)
may be included in the total amount expended
during the fiscal year as medical assistance
under the State plan.
``(5) Offering of coverage through other programs.--Nothing
in this section shall be construed as preventing a State
which--
``(A) does not operate a State health allowance
program under this section from assuring that
individuals in the State who are not offered coverage
under an employer group health plan are offered
coverage under a health plan, or
``(B) does operate such a program from assuring
that individuals in the State who are not described in
paragraph (1), (2), or (3) and who are not offered
coverage under an employer group health plan are
offered coverage under a health plan other than through
such program.''.
PART 2--MEDICAID PROGRAM FLEXIBILITY
SEC. 1711. MODIFICATION OF FEDERAL REQUIREMENTS TO ALLOW STATES MORE
FLEXIBILITY IN CONTRACTING FOR COORDINATED CARE SERVICES
UNDER MEDICAID.
(a) In General.--Section 1903(m) of the Social Security Act (42
U.S.C. 1396b(m)) is amended--
(1) by striking all that precedes paragraph (4) and
inserting the following:
``(m) Coordinated Care.--
``(1) Payment conditioned on compliance.--
``(A) General rule.--No payment shall be made under
this title to a State with respect to expenditures
incurred by it for payment to a risk contracting entity
or primary care case management entity (as defined in
subparagraph (B)), or with respect to an undertaking
described in paragraph (6), unless the State and the
entity or undertaking meet the applicable requirements
of this subsection. For purposes of determining whether
payment may be made under this section, the Secretary
may reject a State's determination of compliance with
any provision of this subsection.
``(B) General definitions.--For purposes of this
title:
``(i) Risk contracting entity.--The term
`risk contracting entity' means an entity that
has a contract with the State agency under
which the entity--
``(I) provides or arranges for the
provision of health care items or
services to individuals eligible for
medical assistance under the State plan
under this title, and
``(II) is at risk (as defined in
clause (iv)) for part or all of the
cost of such items or services
furnished to such individuals.
``(ii) Primary care case management
program.--The term `primary care case
management program' means a State program under
which individuals eligible for medical
assistance under the State plan under this
title are enrolled with primary care case
management entities, and are entitled to
receive specified health care items and
services covered under such plan only as
arranged for and approved by such entities.
``(iii) At risk.--An entity is `at risk',
for purposes of this subparagraph, if it has a
contract with the State agency under which it
is paid a fixed amount for providing or
arranging for the provision of specified health
care items or services to an individual
eligible for medical assistance and enrolled
with the entity, regardless of whether such
items or services are furnished to such
individual, and is liable for all or part of
the cost of furnishing such items or services,
regardless of whether or the extent to which
such cost exceeds such fixed payment.
``(iv) Primary care case management
entity.--The term `primary care case management
entity' means a health care provider (whether
an individual or an entity) that, under a State
primary care case management program meeting
the requirements of paragraph (7), has a
contract with the State agency under which the
entity arranges for or authorizes the provision
of health care items and services to
individuals eligible for medical assistance
under the State plan under this title, but is
not at risk (as defined in clause (iv)) for the
cost of such items or services provided to such
individuals.
``(2) General requirements for risk contracting entities.--
``(A) Federal or state qualification.--Subject to
paragraph (3), a risk contracting entity meets the
requirements of this subsection only if it either--
``(i) is a qualified health maintenance
organization as defined in section 1310(d) of
the Public Health Service Act, as determined by
the Secretary pursuant to section 1312 of that
Act, or
``(ii) is an entity which the State agency
has determined--
``(I) affords, to individuals
eligible for medical assistance under
the State plan and enrolled with the
entity, access to health care items and
services furnished by the entity,
within the area served by the entity,
at least equivalent to the access such
individuals would have to such health
care items and services in such area if
not enrolled with the entity, and
``(II) has made adequate provision
against the risk of insolvency, and
assures that individuals eligible for
medical assistance under this title are
not held liable for the entity's debts
in case of the entity's insolvency.
``(B) Internal quality assurance.--Subject to
paragraph (3), a risk contracting entity meets the
requirements of this subsection only if it has in
effect an internal quality assurance program that meets
the requirements of paragraph (9).
``(C) Contract with state agency.--Subject to
paragraph (3), a risk contracting entity meets the
requirements of this subsection only if the entity has
a written contract with the State agency that
provides--
``(i) that the entity will comply with all
applicable provisions of this subsection;
``(ii) for a payment methodology based on
experience rating or another actuarially sound
methodology approved by the Secretary, which
guarantees (as demonstrated by such models or
formulas as the Secretary may approve) that
payments to the entity under the contract shall
not exceed 100 percent of expenditures that
would have been made by the State agency in the
absence of the contract;
``(iii) that the Secretary and the State
(or any person or organization designated by
either) shall have the right to audit and
inspect any books and records of the entity
(and of any subcontractor) that pertain--
``(I) to the ability of the entity
to bear the risk of potential financial
losses, or
``(II) to services performed or
determinations of amounts payable under
the contract;
``(iv) that in the entity's enrollment,
reenrollment, or disenrollment of individuals
eligible for medical assistance under this
title and eligible to enroll, reenroll, or
disenroll with the entity pursuant to the
contract, the entity will not discriminate
among such individuals on the basis of their
health status or requirements for health care
services;
``(v)(I) that individuals eligible for
medical assistance under the State plan who
have enrolled with the entity are permitted to
terminate such enrollment without cause as of
the beginning of the first calendar month
following a full calendar month after the
request is made for such termination (or at
such times as required pursuant to paragraph
(8)), and
``(II) for notification of each such
individual, at the time of the individual's
enrollment, of the right to terminate
enrollment;
``(vi) for reimbursement, either by the
entity or by the State agency, for medically
necessary services provided--
``(I) to an individual eligible for
medical assistance under the State plan
and enrolled with the entity, and
``(II) other than through the
entity because the services were
immediately required due to an
unforeseen illness, injury, or
condition;
``(vii) for disclosure of information in
accordance with paragraph (4);
``(viii) in the case of an entity that has
entered into a contract with a Federally-
qualified health center for the provision of
services of such center--
``(I) that rates of prepayment from
the State are adjusted to reflect fully
the rates of payment specified in
section 1902(a)(13)(E), and
``(II) that, at the election of
such center, payments made by the
entity to such center for services
described in section 1905(a)(2)(C) are
made at the rates of payment specified
in section 1902(a)(13)(E);
``(ix) that any physician incentive plan
that the entity operates meets the requirements
of section 1876(i)(8);
``(x) for maintenance of sufficient patient
encounter data to identify the physician who
delivers services to patients; and
``(xi) that the entity complies with the
requirement of section 1902(w) with respect to
each enrollee.
``(3) Exceptions to requirements for risk contracting
entities.--The requirements of paragraph (2) (other than
subparagraph (C)(viii)) do not apply to an entity that--
``(A)(i) received a grant of at least $100,000 in
the fiscal year ending June 30, 1976, under section
329(d)(1)(A) or 330(d)(1) of the Public Health Service
Act, and for the period beginning July 1, 1976, and
ending on the expiration of the period for which
payments are to be made under this title, has been the
recipient of a grant under either such section; and
``(ii) provides to its enrollees, on a prepaid
capitation or other risk basis, all of the services
described in paragraphs (1), (2), (3), (4)(C), and (5)
of section 1905(a) and, to the extent required by
section 1902(a)(10)(D) to be provided under the State
plan, the services described in section 1905(a)(7);
``(B) is a nonprofit primary health care entity
located in a rural area (as defined by the Appalachian
Regional Commission)--
``(i) which received in the fiscal year
ending June 30, 1976, at least $100,000 (by
grant, subgrant, or subcontract) under the
Appalachian Regional Development Act of 1965),
and
``(ii) for the period beginning July 1,
1976, and ending on the expiration of the
period for which payments are to be made under
this title either has been the recipient of a
grant, subgrant, or subcontract under such Act
or has provided services under a contract
(initially entered into during a year in which
the entity was the recipient of such a grant,
subgrant, or subcontract) with a State agency
under this title on a prepaid capitation or
other risk basis; or
``(C) which has contracted with the State agency
for the provision of services (but not including
inpatient hospital services) to persons eligible for
medical assistance under this title on a prepaid risk
basis prior to 1970.''; and
(2) by adding after paragraph (6) the following new
paragraphs:
``(7) General requirements for primary care case
management.--A State that elects in its State plan under this
title to implement a primary care case management program under
this subsection shall include in the plan methods for the
selection and monitoring of participating primary care case
management entities to ensure that--
``(A) the numbers, geographic locations, hours of
operation, and other relevant characteristics of such
entities are sufficient to afford individuals eligible
for medical assistance reasonable access to and choice
among such entities;
``(B) such entities and their professional
personnel are qualified to provide health care case
management services, through methods including ongoing
monitoring of compliance with applicable requirements
for licensing of health care providers, providing
training and certification of primary care case
managers, and providing information and technical
assistance; and
``(C) such entities are making timely and
appropriate decisions with respect to enrollees' need
for health care items and services, and are giving
timely approval and referral to providers of adequate
quality where such items and services are determined to
be medically necessary.
``(8) State options with respect to enrollment and
disenrollment.--
``(A) Mandatory enrollment option.--A State plan
may require an individual eligible for medical
assistance under the State plan (other than a medicare
qualified beneficiary) to enroll with a risk
contracting entity or primary care case management
entity, without regard to the requirement of section
1902(a)(1) (concerning statewideness), the requirements
of section 1902(a)(10)(B) (concerning comparability of
benefits), or the requirements of section 1902(a)(23)
(concerning freedom of choice of provider), if the
individual is permitted a choice--
``(i) between or among two or more risk
contracting entities,
``(ii) between a risk contracting entity
and a primary care case management entity, or
``(iii) between or among two or more
primary care case management entities.
``(B)(i) Restrictions on disen rollment without
cause.--A State plan may restrict the period in which
individuals enrolled with a qualifying risk contracting
entity (as defined in clause (ii)) may terminate such
enrollment without cause to the first month of each
period of enrollment (as defined in clause (iii)), but
only if the State provides notification, at least once
during each such enrollment period, to individuals
enrolled with such entity of the right to terminate
such enrollment and the restriction on the exercise of
this right. Such restriction shall not apply to
requests for termination of enrollment for cause.
``(ii) For purposes of this subparagraph, the term
`qualifying risk contracting entity' means a risk
contracting entity that is--
``(I) a qualified health maintenance
organization as defined in section 1310(d) of
the Public Health Service Act;
``(II) an eligible organization with a
contract under section 1876;
``(III) an entity that is receiving (and
has received during the previous 2 years) a
grant of at least $100,000 under section
329(d)(1)(A) or 330(d)(1) of the Public Health
Service Act;
``(IV) an entity that is receiving (and has
received during the previous 2 years) at least
$100,000 (by grant, subgrant, or subcontract)
under the Appalachian Regional Development Act
of 1965;
``(V) a program pursuant to an undertaking
described in paragraph (6) in which at least 25
percent of the membership enrolled on a prepaid
basis are individuals who (I) are not insured
for benefits under part B of title XVIII or
eligible for medical assistance under this
title, and (II) (in the case of such
individuals whose prepayments are made in whole
or in part by any government entity) had the
opportunity at the time of enrollment in the
program to elect other coverage of health care
costs that would have been paid in whole or in
part by any governmental entity; or
``(VI) an entity that, on the date of
enactment of this provision, had a contract
with the State agency under a waiver under
section 1115 or 1915(b) and was not subject to
a requirement under this subsection to permit
disenrollment without cause.
``(iii) For purposes of this subparagraph, the term
`period of enrollment' means--
``(I) a period not to exceed 6 months in
duration, or
``(II) a period not to exceed one year in
duration, in the case of a State that, on the
effective date of this subparagraph, had in
effect a waiver under section 1115 of
requirements under this title under which the
State could establish a 1-year minimum period of enrollment with risk
contracting entities.
``(C) Reenrollment of individuals who regain
eligibility.--In the case of an individual who--
``(i) in a month is eligible for medical
assistance under the State plan and enrolled
with a risk contracting entity with a contract
under this subsection,
``(ii) in the next month (or next 2 months)
is not eligible for such medical assistance,
but
``(iii) in the succeeding month is again
eligible for such benefits,
the State plan may enroll the individual for that
succeeding month with such entity, if the entity
continues to have a contract with the State agency
under this subsection.
``(9) Requirements for internal quality assurance
programs.--The requirements for an internal quality assurance
program of a risk contracting entity are that program is
written and the program--
``(A) specifies a systematic process including
ongoing monitoring, corrective action, and other
appropriate activities to achieve specified and
measurable goals and objectives for quality of care,
and including annual evaluation of the program;
``(B) identifies the organizational units
responsible for performing specific quality assurance
functions, and ensure that they are accountable to the
governing body of the entity and that they have
adequate supervision, staff, and other necessary
resources to perform these functions effectively;
``(C) if any quality assistance functions are
delegated to other entities, ensures that the risk
contracting entity remains accountable for all quality
assurance functions, and has mechanisms to ensure that
all quality assurance activities are carried out;
``(D) includes methods to ensure that physicians
and other health care professionals under contract with
the entity are qualified to perform the services they
provide, and that these qualifications are ensured
through appropriate credentialing and recredentialing
procedures;
``(E) includes policies addressing enrollee rights
and responsibilities, including grievance mechanisms
and mechanisms to inform enrollees about access to and
use of services provided by the entity;
``(F) provides for continuous monitoring of the
delivery of health care, including--
``(i) identification of clinical areas to
be monitored,
``(ii) use of quality indicators and
standards for assessing care delivered,
including availability and accessibility of
care,
``(iii) monitoring, through use of
epidemiological data or chart review, the care
of individuals, as appropriate, and patterns of
care overall, and
``(iv) implementation of corrective
actions; and
``(G) meets any other requirements prescribed by
the Secretary after consultation with States.
``(10) Independent review and quality assurance.--
``(A) State grievance procedure.--A State
contracting with a risk contracting entity or primary
care case management entity under this subsection shall
provide for a grievance procedure for enrollees of such
entity with at least the following elements:
``(i) A toll-free telephone number for
enrollee questions and grievances.
``(ii) A State-operated enrollee grievance
procedure.
``(iii) Periodic notification of enrollees
of their rights with respect to such entity or
program.
``(iv) Periodic sample reviews of
grievances registered with such entity or
program or with the State.
``(v) Periodic survey and analysis of
enrollee satisfaction with such entity or
program.
``(B) State monitoring of risk contracting
entities' quality assurance programs.--A State
contracting with a risk contracting entity under this
subsection shall periodically review such entity's
quality assurance program to ensure that it meets the requirements of
paragraph (9).
``(C) External independent review of internal
quality assurance.--A State contracting with a risk
contracting entity under this subsection shall provide
for annual external independent review (by a
utilization control and peer review organization with a
contract under section 1153, or another organization
unaffiliated with the State government approved by the
Secretary) of such entity's internal quality assurance
activities. Such independent review shall include--
``(i) review of the entity's medical care,
through sampling of medical records or other
appropriate methods, for indications of
inappropriate utilization and treatment,
``(ii) review of enrollee inpatient and
ambulatory data, through sampling of medical
records or other appropriate methods, to
determine quality trends,
``(iii) review of the entity's internal
quality assurance activities, and
``(iv) notification of the entity and the
State, and appropriate followup activities,
when the review under this subparagraph
indicates inappropriate care or treatment.''.
(b) State Option To Guarantee Medicaid Eligibility.--Section
1902(e)(2) of such Act (42 U.S.C. 1396a(e)(2)) is amended--
(A) in subparagraph (A), by striking all that
precedes ``(but for this paragraph)'' and inserting
``In the case of an individual who is enrolled--
``(i) with a risk contracting entity (as
defined in section 1903(m)(1)(B)(i))
responsible for the provision of inpatient
hospital services and any other service
described in paragraphs (2), (3), (4), (5), and
(7) of section 1905(a),
``(ii) with any risk contracting entity (as
so defined) in a State that, on the effective
date of this provision, had in effect a waiver
under section 1115 of requirements under this
title under which the State could extend
eligibility for medical assistance for
enrollees of such entity, or
``(iii) with an eligible organization with
a contract under section 1876 and who would'',
and
(B) in subparagraph (B), by striking ``organization
or'' each place it appears.
(c) Conforming Amendments.--
(1) Section 1128(b)(6)(C)(i) of such Act (42 U.S.C. 1320a-
7(b)(6)(C)(i)) is amended by striking ``health maintenance
organization'' and inserting ``risk contracting entity''.
(2) Section 1902(a)(25)(A) of such Act (42 U.S.C.
1396a(a)(25)(A)), as amended by section 13622(a)(1) of the
Omnibus Budget Reconciliation Act of 1993, is amended by
striking ``health maintenance organizations'' and inserting
``risk contracting entities''.
(3) Section 1902(a)(25)(H) of such Act (42 U.S.C.
1396a(a)(25)(H)), as added by section 13622(b)(3) of the
Omnibus Budget Reconciliation Act of 1993, is amended by
striking ``health maintenance organization'' and inserting
``risk contracting entity''.
(4) Section 1902(a)(30)(C) of such Act (42 U.S.C.
1396a(a)(30)(C)) is amended by striking all that precedes
``with the results'' and inserting ``provide for independent
review and quality assurance of entities with contracts under
section 1903(m), in accordance with paragraph (10) of such
section,''.
(5) Section 1902(a)(57) of such Act (42 U.S.C.
1396a(a)(57)) is amended by striking ``or health maintenance
organization'' and inserting ``or risk contracting entity''.
(6) Section 1902(a) of such Act (42 U.S.C. 1396a(a)), as
amended by sections 13623(a), 13625(a), and 13631(a) of the
Omnibus Budget Reconciliation Act of 1993, is amended--
(A) by striking ``and'' at the end of paragraph
(61);
(B) by striking the period at the end of paragraph
(62) and inserting ``; and''; and
(C) by adding at the end the following new
paragraph:
``(63) at State option, provide for a primary care case
management program in accordance with section 1903(m)(7).''.
(7) Section 1902(p)(2) of such Act (42 U.S.C. 1396a(p)(2))
is amended by striking ``health maintenance organization'' and
inserting ``risk contracting entity''.
(8) Section 1902(w) of such Act (42 U.S.C. 1396a(w)) is
amended--
(A) in paragraph (1), by striking ``section
1903(m)(1)(A)'' and inserting ``section
1903(m)(2)(C)(xi)'', and
(B) in paragraph (2)(E), by striking ``health
maintenance organization'' and ``the organization'' and
inserting ``risk contracting entity'' and ``the
entity'', respectively.
(9) Section 1903(k) of such Act (42 U.S.C. 1396b(k)) is
amended by striking ``health maintenance organization'' and
inserting ``risk contracting entity''.
(10) Section 1903(m)(4)(A) of such Act (42 U.S.C.
1396b(m)(4)(A)) is amended--
(A) in the first sentence, by striking ``Each
health maintenance organization'' and inserting ``Each
risk contracting entity'',
(B) in the first sentence, by striking ``the
organization'' each place it appears and inserting
``the entity'', and
(C) in the second sentence, by striking ``an
organization'' and ``the organization'' and inserting
``a risk contracting entity'' and ``the risk
contracting entity'', respectively.
(11) Section 1903(m)(4)(B) of such Act (42 U.S.C.
1396b(m)(4)(B)) is amended by striking ``organization'' and
inserting ``risk contracting entity''.
(12) Section 1903(m)(5) of such Act (42 U.S.C. 1396b(m)(5))
is amended in paragraphs (A)(iii) and (B)(ii) by striking
``organization'' and inserting ``entity''.
(13) Section 1903(o) (42 U.S.C. 1396b(o)), as amended by
section 13622(a)(2) of the Omnibus Budget Reconciliation Act of
1993, is amended by striking ``health maintenance
organization'' and inserting ``risk contracting entity''.
(14) Section 1903(w)(7)(A)(viii) of such Act (42 U.S.C.
1396b(w)(7)(A)(viii)) is amended by striking ``health
maintenance organizations (and other organizations with
contracts under section 1903(m))'' and inserting ``risk
contracting entities with contracts under section 1903(m)''.
(15) Section 1905(a) of such Act (42 U.S.C. 1396d(a)) is
amended, in the matter preceding clause (i), by inserting
``(which may be on a prepaid capitation or other risk basis)''
after ``payment'' the first place it appears.
(16) Section 1908(b) of such Act, as added by section
13623(b) of the Omnibus Budget Reconciliation Act of 1993, is
amended by striking ``health maintenance organization'' and
inserting ``risk contracting entity''.
(17) Section 1916(b)(2)(D) of such Act (42 U.S.C.
1396o(b)(2)(D)) is amended by striking ``health maintenance
organization'' and inserting ``risk contracting entity''.
(18) Section 1925(b)(4)(D)(iv) of such Act (42 U.S.C.
1396r-6(b)(4)(D)(iv)) is amended--
(A) in the heading, by striking ``hmo'' and
inserting ``risk contracting entity'',
(B) by striking ``health maintenance organization''
and inserting ``risk contracting entity'' each place it
appears, and
(C) by striking ``section 1903(m)(1)(A)'' and
inserting ``section 1903(m)(1)(B)(i)''.
(19) Paragraphs (1) and (2) of section 1926(a) of such Act
(42 U.S.C. 1396r-7(a)) are each amended by striking ``health
maintenance organizations'' and inserting ``risk contracting
entities''.
(20) Section 1927 of such Act (42 U.S.C. 1396s) is
amended--
(A) in subsection (c)(1)(C)(i), as amended by
section 13602(a)(1) of the Omnibus Budget
Reconciliation Act of 1993, by striking ``health
maintenance organization'' and inserting ``risk
contracting entity'', and
(B) in subsection (j)(1), by striking ``*** Health
Maintenance Organizations, including those
organizations'' and inserting ``risk contracting
entities''.
(d) Effective Date.--The amendments made by this section shall
become effective with respect to calendar quarters beginning on or
after January 1, 1995.
SEC. 1712. PERIOD OF CERTAIN WAIVERS.
(a) In General.--Section 1915(h) of the Social Security Act (42
U.S.C. 1396n(h)) is amended by striking ``No waiver'' and all that
follows through ``unless the Secretary'' and inserting ``A waiver under
this section (other than under subsection (c), (d), or (e)) shall be
for an initial term of 3 years and, upon the request of a State, shall
be extended for additional 5 year periods unless the Secretary''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to waivers pursuant to applications which are approved, and with
respect to continuations of waivers for which requests are made, later
than 30 days after the date of the enactment of this Act.
SEC. 1713. ELIMINATION OF DUPLICATIVE PEDIATRIC IMMUNIZATION PROGRAM.
Effective as if included in the enactment of the 13621 of the
Omnibus Budget Reconciliation Act of 1993, title XIX of the Social
Security Act is amended as follows:
(1) Section 1902(a) is amended--
(A) by adding ``and'' at the end of paragraph (60),
(B) by striking ``; and'' at the end of paragraph
(61) and inserting a period, and
(C) by striking paragraph (62).
(2) Section 1928 is repealed.
(3) Section 1903(i) is amended--
(A) by inserting ``or'' at the end of paragraph
(12),
(B) by striking the semicolon at the end of
paragraph (13) and inserting a period, and
(C) by striking paragraphs (14) and (15).
(4) Section 1902(a)(32)(D) is amended by striking ``before
October 1, 1994''.
(5) Section 1902(a) is amended--
(A) in paragraph (11)(B)--
(i) by inserting ``and'' before ``(ii)'',
and
(ii) by striking ``to the individual under
section 1903, and
(iii) providing for coordination of
information and education on pediatric
vaccinations and delivery of immunization
services'' and inserting ``to him under section
1903'';
(B) in paragraph (11)(C), by striking ``, including
the provision of information and education on pediatric
vaccinations and the delivery of immunization
services,'' and
(C) in paragraph (43)(A), by striking ``and the
need for age-appropriate immunizations against vaccine-
preventable diseases''.
(6) Section 1905(r)(1) is amended--
(A) in subparagraph (A)(i), by striking ``and, with
respect to immunizations under subparagraph (B)(iii),
in accordance with the schedule referred to in section
1928(c)(2)(B)(i) for pediatric vaccines''; and
(B) in subparagraph (B)(iii), by striking
``(according to the schedule referred to in section
1928(c)(2)(B)(i) for pediatric vaccines)''.
PART 3--MEDICAID DISPROPORTIONATE SHARE ADJUSTMENT
SEC. 1721. 25 PERCENT REDUCTION IN AMOUNT OF PAYMENT ADJUSTMENTS FOR
DISPROPORTIONATE SHARE HOSPITALS.
(a) In General.--Section 1923 of the Social Security Act (42 U.S.C.
1396r-4) is amended by adding at the end the following new subsection:
``(h) Reduction in Federal Financial Participation for
Disproportionate Share Adjustments.--Notwithstanding any other
provision of this section, the amount of payments under section 1903(a)
with respect to any payment adjustment made under this section for
hospitals in a State for quarters in a fiscal year shall not exceed--
``(1) for quarters in fiscal years 1995 and 1996, 88
percent of the amount otherwise determined under subsection
(f); and
``(2) for quarters in fiscal year 1997 and each succeeding
fiscal year, 75 percent of the amount otherwise determined
under subsection (f).''.
(b) Conforming Amendment.--Section 1923(c) of such Act (42 U.S.C.
1396r-4(c)) is amended in the matter preceding paragraph (1) by
striking ``(f) and (g)'' and inserting ``(f), (g), and (h)''.
(c) Effective Date.--The amendments made by subsections (a) and (b)
shall apply to quarters in fiscal years beginning on or after October
1, 1996.
Title I, Subtitle I
Subtitle I--Remedies and Enforcement With Respect to Group Health Plans
SEC. 1801. CLAIMS PROCEDURE FOR GROUP HEALTH PLANS.
(a) In General.--Section 503 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1133) is amended--
(1) by inserting ``(a) In General.--'' after ``Sec. 503.'';
and
(2) by adding at the end the following new subsection:
``(b) Special Rules for Group Health Plans.--
``(1) In general.--In addition to meeting the requirements
of subsection (a), every group health plan shall afford a
reasonable opportunity to any participant or beneficiary, whose
request for a preauthorization, an emergency preauthorization,
a utilization review determination, or an emergency utilization
review determination has been denied, for a full and fair
review by the appropriate fiduciary of the decision denying the
request.
``(2) Time limits for deciding claims.--
``(A) Initial decisions.--A group health plan shall
issue an initial approval or denial of any claim for
medical, surgical, or hospital benefits not later than
30 days after its filing completion date. Failure to
approve or deny such a claim within such 30-day period
shall be treated as a denial of the claim.
``(B) Reviews of initial decisions.--Every review
by a fiduciary required under paragraph (1) of an
initial denial under subparagraph (A) shall be
completed not later than 30 days after the review
filing date. Failure to issue a decision affirming,
reversing, or modifying the initial denial shall be
treated as a final decision denying the claim.
``(3) Time limit for deciding requests for
preauthorization.--
``(A) General rule.--Except as provided in
subparagraph (B):
``(i) Initial decisions.--If a request for
preauthorization is required under the terms of
a group health plan, the plan shall approve or
deny any such request not later than 30 days
after its filing completion date. Failure to
approve or deny such a request within such 30-
day period shall be treated as a denial of the
request.
``(ii) Reviews of initial decisions.--Every
review by a fiduciary required under paragraph
(1) of an initial denial under clause (i) shall
be completed not later than 30 days after the
review filing date. Failure to issue a decision
affirming, reversing, or modifying the initial
denial within such 30-day period shall be
treated as a final decision denying the
request.
``(B) Requests for emergency preauthorization.--
``(i) Initial decisions.--In any case in
which a request for preauthorization required
under the terms of a group health plan is a
request for emergency preauthorization, the
plan shall approve or deny any such request not
later than 10 days after its filing completion
date (24 hours after such date in cases
involving emergency medical care). Failure to
approve or deny such a request within such 10-
day period (or 24-hour period) shall be treated
as a denial of the request.
``(ii) Reviews of initial decisions.--Every
review by a fiduciary required under paragraph
(1) of an initial denial under clause (i) shall
be completed not later than 10 days after the
review filing date (24 hours after such date in
cases involving emergency medical care).
Failure to issue a decision affirming,
reversing, or modifying the initial denial
within such 10-day period (or 24-hour period)
shall be treated as a final decision denying
the request.
``(4) Time limit for deciding requests for utilization
review determinations.--
``(A) General rule.--Except as provided in
subparagraph (B):
``(i) Initial decisions.--If a request for
a utilization review determination is required
under the terms of a group health plan, the
plan shall approve or deny any such request not
later than 30 days after its filing completion
date. Failure to approve or deny such a request
within such 30-day period shall be treated as a
denial of the request.
``(ii) Reviews of initial decisions.--Every
review by a fiduciary required under paragraph
(1) of an initial denial under clause (i) shall
be completed not later than 30 days after the
review filing date. Failure to issue a decision
affirming, reversing, or modifying the initial
denial within such 30-day period shall be
treated as a final decision denying the
request.
``(B) Requests for emergency utilization review
determinations.--
``(i) Initial decisions.--In any case in
which a request for a utilization review
determination required under the terms of a
group health plan is a request for an emergency
utilization review determination, the plan
shall approve or deny any such request not
later than 10 days after its filing completion
date (24 hours after such date in cases
involving emergency medical care). Failure to
approve or deny such a request within such 10-
day period (or 24-hour period) shall be treated
as a denial of the request.
``(ii) Reviews of initial decisions.--Every
review by a fiduciary required under paragraph
(1) of an initial denial under clause (i) shall
be completed not later than 10 days after the
review filing date (24 hours after such date in
cases involving emergency medical care).
Failure to issue a decision affirming,
reversing, or modifying the initial denial
within such 10-day period (or 24-hour period)
shall be treated as a final decision denying
the request.
``(5) Definitions.--For purposes of this subsection:
``(A) Claim for medical, surgical, or hospital
benefits.--The term `claim for medical, surgical, or
hospital benefits' means a request for payment by a
group health plan of such benefits made by or on behalf
of a participant or beneficiary after the expense for
medical, surgical, or hospital care has been incurred.
``(B) Utilization review determination.--The term
`utilization review determination' means a
determination under a group health plan solely that
proposed medical, surgical, or hospital care is
medically necessary (as defined in section 1131(7) of
the Health Security Act). Unless otherwise expressly
provided under the terms of the plan, any such
determination shall not by itself constitute a
guarantee that benefits under the plan will be
provided.
``(C) preauthorization.--The term
`preauthorization' means a determination under a group
health plan that proposed medical, surgical, or
hospital care meets the plan's terms and conditions of
coverage. Such a determination shall constitute a
guarantee that benefits under the plan will be
provided.
``(D) Request for preauthor ization.--The term
`request for preauthorization' means a request for
preauthorization by a group health plan of medical,
surgical, or hospital benefits made by or on behalf of
a participant or beneficiary before the expense for
such care has been incurred.
``(E) Request for emergency preauthorization.--The
term `request for emergency preauthorization' means a
request for preauthorization.0 by a group health plan
in any case in which the medical, surgical, or hospital
benefits for which the expense is to be incurred
constitutes urgent medical care or emergency medical
care.
``(F) Request for utilization review
determination.--The term `request for a utilization
review determination' means a request by or on behalf
of a participant or beneficiary, made before an expense
for medical, hospital, or surgical care has been
incurred, for a utilization review determination by a
plan.
``(G) Request for emergency utilization review
determination.--The term `request for an emergency
utilization review determination' means a request for a
utilization review determination in any case in which
the medical, hospital, or surgical care to be incurred
constitutes urgent medical care or emergency medical
care.
``(H) Urgent medical care.--The term `urgent
medical care' means medical, surgical, or hospital care
in any case in which a physician with appropriate
expertise has certified in writing that failure to
provide the participant or beneficiary with such care
within 45 days will result in either--
``(i) the death of the participant or
beneficiary within 120 days, or
``(ii) the immediate, serious, and
irreversible deterioration of the health of the
participant or beneficiary within 120 days
which will significantly increase the
reasonable likelihood of death of the
participant or beneficiary.
``(I) Emergency medical care.--The term `emergency
medical care' means medical, surgical, or hospital care
in any case in which a physician with appropriate
expertise has certified in writing--
``(i) that failure to immediately provide
the care to the participant or beneficiary
could reasonably be expected to result in--
``(I) placing the health of such
participant or beneficiary (or, with
respect to such a participant or
beneficiary who is a pregnant woman,
the health of the woman or her unborn
child) in serious jeopardy,
``(II) serious impairment to bodily
functions, or
``(III) serious dysfunction of any
bodily organ or part,
or
``(ii) that immediate provision of the care
is necessary because the participant or
beneficiary has made or is at serious risk of
making an attempt to harm himself or herself or
another individual.
``(J) Filing completion date.--The term `filing
completion date' means, in connection with a group
health plan, the date as of which the plan is in
receipt of all information reasonably required to make
an initial decision to approve or deny a claim for
medical, surgical, or hospital benefits, a request for
preauthorization, a request for emergency
preauthorization, a request for a utilization review
determination or a request for an emergency utilization
review determination.
``(K) Review filing date.--The term `review filing
date' means, in connection with a group health plan,
the date as of which the appropriate fiduciary is in
receipt of all information reasonably required to make
a decision upon a full and fair review of the denial,
in whole or in part, of a claim for medical, surgical,
or hospital benefits, a request for preauthorization, a
request for emergency preauthorization, a request for a
utilization review determination or a request for an
emergency utilization review determination.
``(L) Appropriate fiduciary.--The term `appropriate
fiduciary' means with respect to any determination
under a group health plan a person designated by the
plan to make such determination. One or more
appropriate fiduciaries shall be designated under each
group health plan for making determinations under the
plan.''.
(b) Definition of Group Health Plan.--
(1) In general.--Section 3 of such Act (29 U.S.C. 1002) is
amended by adding at the end the following new paragraph:
``(42) The term `group health plan' means an employee welfare
benefit plan providing medical care (as defined in section 213(d) of
the Internal Revenue Code of 1986) to participants or beneficiaries
directly or through insurance, reimbursement, or otherwise.''.
(2) Conforming amendment.--Section 607 of such Act (29
U.S.C. 1167) is amended by striking paragraph (1).
SEC. 1802. MEDIATION OF GROUP HEALTH PLAN CLAIMS.
(a) In General.--Part 5 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974 is amended--
(1) by inserting below the heading for part 5 the
following:
``Subpart A--In General'';
and
(2) by adding at the end the following new subpart:
``Subpart B--Mediation of Group Health Plan Claims
``SEC. 521. ELIGIBILITY FOR SUBMISSION TO MEDIATION.
``(a) In General.--The Secretary shall establish a mediation
program under this subpart (hereinafter in this subpart referred to as
the `mediation program') for the purpose of facilitating mediation of
disputes meeting the requirements specified in subsection (b). At the
time notice is provided to any participant or beneficiary of a group
health plan's denial of any claim for benefits pursuant to section 503,
the plan shall provide reasonable notice in writing to the participant
or beneficiary whose claim for benefits under the plan has been denied
of the availability of mediation under this subpart at the election of
either the claimant or the plan.
``(b) Dispute Criteria.--A dispute may be submitted for mediation
under the mediation program only if the following requirements are met
with respect to such dispute:
``(1) Parties.--The dispute consists of an assertion by a
participant, a beneficiary, or the duly authorized
representative of a participant or beneficiary (or, in the case
of an assignment, the assignee) of one or more claims under a
group health plan, and a denial of such claims, or a denial of
appropriate reimbursement based on such claims, by such plan or
an appropriate fiduciary.
``(2) Nature of claim.--The claim consists of a claim for
benefits for medical, surgical, or hospital expenses under a
group health plan which consist of benefits described in
section 3(1).
``(3) Submission after exhaustion of plan remedies.--The
claimant has received a final determination regarding the claim
under the plans' claims procedure under section 503, or
has otherwise exhausted all remedies under the plan provided pursuant
to section 503.
``(4) Appropriate fiduciary.--For purposes of this subpart,
the term `appropriate fiduciary' has the meaning provided in
section 503(b)(5)(K).
``SEC. 522. FACILITATORS.
``(a) Roster.--The Secretary shall maintain a list of individuals
with appropriate expertise to serve as facilitators in proceedings
under the mediation program.
``(b) Criteria.--In identifying individuals to serve as
facilitators, the Secretary shall consider the following:
``(1) The individual's experience in dispute resolution.
``(2) The individual's ability to act impartially.
``(3) The individual's ability to perform evaluations
quickly and to present them in nontechnical terms.
``(4) The individual's experience in employee medical,
hospital, and surgical benefits.
``(c) Appointment of Facilitator.--Within 15 days after either
party files with the Secretary an election of mediation with respect to
a dispute, the Secretary shall propose a facilitator, selected under a
random selection procedure prescribed in regulations, and notify the
parties of such selection. Within 10 days after receipt of the
notification of the selection of a facilitator, either party may reject
the proposed facilitator. If neither party objects to the Secretary's
proposed facilitator within such 10-day period, the appointment shall
become final. If either party objects to the Secretary's proposed
facilitator, the procedure set forth in the preceding provisions of
this subsection shall be repeated. Each party is limited to 1 objection
to the Secretary's proposed facilitator for each mediation.
``SEC. 523. ROLE OF ATTORNEYS.
``Parties may represent themselves or be represented by attorneys
throughout the mediation process.
``SEC. 524. INITIATION OF MEDIATION.
``(a) Claimant Initiation.--A claimant may initiate mediation of a
dispute under this subpart only if no action has been commenced by the
claimant under section 502 with respect to any claim involved. To
initiate mediation, a claimant shall file an election for mediation
with the Secretary (and shall file a copy of the election with the plan
or the appropriate fiduciary) within 30 days after a final
determination regarding the claim pursuant to section 503.
``(b) Plan Initiation.--A participant or beneficiary may not
commence an action under section 502 with respect to any claim until
the participant or beneficiary has provided to the plan or the
appropriate fiduciary 10 days advance notice of the filing of such
action. Within the earlier of (1) 25 days after receipt of such a
notice with respect to any claim or (2) the date preceding the date on
which such claim is filed in court, the plan or the appropriate
fiduciary may elect mediation of a dispute under this subpart involving
such claim by filing an election for mediation with the Secretary (and
a copy of the election with the claimant). Upon a timely election of
mediation by the plan or the appropriate fiduciary, the claimant's
right to pursue the claim under section 502 shall be suspended until
the earlier of 75 days after the date of the filing of the election of
mediation or the termination of the mediation proceedings.
``(c) Election for Mediation.--An election by any party for
mediation under this subpart shall be in such form and manner as the
Secretary shall prescribe by regulation.
``(d) Participation.--The claimant and the plan shall participate
in the mediation. Each party shall provide the facilitator a written
summary of its position with respect to the dispute accompanied by
supporting documentation.
``(e) Filing Fee.--The party initiating mediation under this
section shall include with any election for mediation under this
subpart a reasonable nonrefundable filing fee payable to the Secretary.
The filing fee shall be determined pursuant to regulations prescribed
by the Secretary.
``(f) Tolling of Statutes of Limitations.--The applicable statute
of limitations with respect to any claim involved in a dispute subject
to mediation proceedings under this subpart shall be tolled for the
period commencing with the 10-day notice period required under
subsection (b) and ending with the termination of the mediation
proceedings with respect to such dispute. In no event shall the
applicable statute of limitations be tolled beyond the 60-day-time
limit for completion of mediation provided under section 526.
``SEC. 525. MEDIATION PROCEDURE.
``(a) In General.--Mediation proceedings under this subpart shall
be conducted, at locations convenient to complainants, by facilitators
recruited and assigned by the Secretary under section 522.
``(b) Duties of Facilitator.--The Secretary shall prescribe by
regulation the duties and role of the facilitator during the mediation
process. Such regulations may require the facilitator to identify
parties, establish a schedule, request position papers from the
parties, and evaluate positions of the parties. Such regulations
shall provide that the mediation will be informal, convenient,
inexpensive, and expeditious for all parties.
``(c) Neutrality of Facilitator.--The facilitator shall maintain a
neutral stance between the parties.
``SEC. 526. MEDIATION TIME LIMIT.
``Any mediation proceedings commenced under this subpart shall be
completed within 60 days from the final appointment of a facilitator
pursuant to section 522(c).
``SEC. 527. COST OF MEDIATION.
``All reasonable costs of the mediation process under this subpart
with respect to any dispute, including the cost of the facilitator,
shall be divided equally among the parties. Facilitators shall be
compensated at a rate established by the Secretary by regulation. The
Secretary shall prescribe regulations specifying reasonable mediation
costs and alternative means of allocating the costs in cases of
hardship on the part of the claimant.
``SEC. 528. LEGAL EFFECT OF PARTICIPATION IN MEDIATION PROGRAM.
``(a) Nonbinding Mediation.--The results of any mediation under
this subpart shall be treated as advisory in nature and nonbinding.
Except as provided in subsection (b), the rights of the parties shall
not be affected by participation in the mediation program.
``(b) Resolution Through Settlement Agreement.--If a dispute is
settled through participation in the mediation program, the facilitator
shall, upon the request of either party, assist the parties in drawing
up a settlement agreement between the parties.
``SEC. 529. CONFIDENTIALITY AND ADMISSIBILITY.
``(a) In General.--All documents and communications made during or
generated in connection with the mediation program, as well as any
settlement offers or agreements made or entered into under such
program--
``(1) shall be privileged and confidential, and
``(2) shall not be admissible as evidence in any Federal or
State judicial proceeding unless all parties to the mediation
consent in writing.
``(b) Execution of Privilege.--Any individual or entity involved in
the mediation (including any party or facilitator or other individual
who acts on behalf of a party or who provides information or an opinion
in connection with the mediation) receiving a subpoena or other lawful
process seeking disclosure of any information or documents rendered
privileged and confidential under subsection (a) shall assert the
privilege provided under subsection (a) and promptly notify all parties
to the mediation proceedings of the request for disclosure. The
privilege provided for in this section shall be in addition to any
attorney-client privilege or other privilege which may be asserted by a
party and nothing in this section shall constitute a waiver of such
attorney-client privilege or other privilege.''.
(b) Clerical Amendments.--The table of contents in section 1 of
such Act is amended--
(1) by inserting after the item relating to the heading for
part 5 of subtitle B of title I the following new item:
``Subpart A--General Provisions'';
and
(2) by inserting after the item relating to section 514 the
following new items:
``Subpart B--Mediation of Group Health Plan Claims
``Sec. 521. Eligibility for submission to mediation.
``Sec. 522. Facilitators.
``Sec. 523. Role of attorneys.
``Sec. 524. Initiation of mediation.
``Sec. 525. Mediation procedure.
``Sec. 526. Mediation time limit.
``Sec. 527. Cost of mediation.
``Sec. 528. Legal effect of participation in mediation program.
``Sec. 529. Confidentiality and admissibility.''.
SEC. 1803. AVAILABLE COURT REMEDIES.
(a) In General.--Section 502(c) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1132) is amended by adding at the end
the following new paragraphs:
``(5) In any action commenced under subsection (a) by a participant
or beneficiary with respect to a group health plan in which the
plaintiff alleges that a person, in the capacity of a fiduciary and in
violation of the terms of the plan or this title, has taken an action
resulting in a failure to provide an item or service, or payment
therefor, or has failed to take an action for which such person is
responsible under the plan and which is necessary under the plan for
provision of such item or service, or payment therefor, upon finding in
favor of the plaintiff, the court shall cause to be served on the
defendant an order requiring the defendant--
``(i) to cease and desist from the alleged action or
failure to act,
``(ii) to provide the item or service, or payment therefor,
and to otherwise comply with the terms of the plan and the
applicable requirements of this title,
``(iii) to pay to the plaintiff prejudgment interest on the
actual costs incurred in obtaining any item or service, or
payment therefor, at issue in the complaint, and
``(iv) to pay to the plaintiff a reasonable attorney's fee,
reasonable expert witness fees, and other reasonable costs
relating to the action on the charges on which the plaintiff prevails.
The remedies provided under this paragraph shall be in addition to
remedies otherwise provided under this section.
``(6)(A) The Secretary may assess a civil penalty against the plan
administrator of, or the appropriate fiduciary (as defined in section
503(b)(5)(K)) of, one or more group health plans for any pattern or
practice thereof of repeated failures to provide benefits under the
terms of the plan or plans without any reasonable basis or repeated
violations thereby of the requirements of section 503 with respect to
such plan or plans. Such penalty shall be payable only upon proof by
clear and convincing evidence of such pattern or practice.
``(B) Such penalty shall be in an amount not to exceed the lesser
of--
``(i) 20 percent of the aggregate value of claims shown by
the Secretary to have been denied, or unlawfully delayed in
violation of section 503, under such pattern or practice, or
``(ii) $1,000,000.
``(C) The plan administrator or the appropriate fiduciary of any
group health plan or plans who has engaged in any such pattern or
practice with respect to such plans, upon the petition of the
Secretary, may be removed by the court from that position, and from any
other involvement, with respect to such plan or plans, for a period of
not less than 7 years.
``(D) For purposes of this paragraph, the phrase `without any
reasonable basis' means, in connection with any denial of claims for
benefits under a group health plan, that such denial does not have any
reasonable basis, support, or justification under--
``(i) the facts regarding such claim which were reasonably
available to the plan administrator or the appropriate
fiduciary at the time the claim was denied, and
``(ii) the terms of the plan.''.
(b) Conforming Amendment.--Section 502(a)(6) of such Act (29 U.S.C.
1132(a)(6)) is amended by inserting ``or (c)(6)'' after ``(c)(2)''.
SEC. 1804. EFFECTIVE DATE.
The amendments made by this subtitle shall take effect January 1,
1995, except that the Secretary of Labor may issue regulations before
such date under such amendments. The Secretary shall issue all
regulations necessary to carry out the amendments made by this subtitle
before the effective date thereof.
Subtitle J--Delivery of Health Care Services to Illegal Immigrants
SEC. 1901. STUDY ON THE DELIVERY OF HEALTH CARE SERVICES TO ILLEGAL
IMMIGRANTS.
Title I, Subtitle J
(a) In General.--As soon as practicable after the date of the
enactment of this Act, the Secretary of Health and Human Services shall
conduct a detailed study of health care in the United States to
populations of individuals immigrating to the United States illegally,
including the effect of illegal immigration on levels of health costs
and the shifting of health costs.
(b) Matters To Be Analyzed.--In conducting the study under this
section, the Secretary shall analyze--
(1) the extent to which individuals illegally immigrating
into the United States obtain health care services in the
United States,
(2) the costs of such services,
(3) the means currently used to finance such costs,
(4) the means currently used for identifying, evaluating,
preventing, and resolving health problems of populations
comprised of such individuals,
(5) the extent of efforts currently being undertaken to
prevent or resolve such health problems,
(6) the extent of efforts currently being undertaken to
educate populations comprised of such individuals concerning
such health problems and to coordinate such efforts,
(7) the programs currently in place for carrying out the
activities described in paragraphs (3) through (6), and
(8) the extent of intergovernmental cooperation currently
in place between the United States and other countries in
dealing with health problems described in the preceding
provisions of this subsection.
SEC. 1902. REPORT.
Not later than one year after the date of the enactment of this
Act, the Secretary of Health and Human Services shall submit to each
House of the Congress a final report on the matters analyzed in the
study conducted under section 1801. The Secretary shall include in such
report any recommendations derived by the Secretary regarding
appropriate means of--
(1) alleviating the health problems peculiar to populations
of individuals who have immigrated to the United States
illegally,
(2) financing health care provided to such populations, and
(3) increasing intergovernmental cooperation and
coordination of efforts between the United States and other
countries to alleviate such health problems and to finance such
efforts.
TITLE II--HEALTH CARE COST CONTAINMENT AND QUALITY ENHANCEMENT
Title II
table of contents of subtitle
Subtitle A--Medical Malpractice Liability Reform
Part 1--General Provisions
Sec. 2001. Federal reform of medical malpractice liability actions.
Sec. 2002. Definitions.
Sec. 2003. Effective date.
Part 2--Medical Malpractice and Product Liability Reform
Sec. 2011. Requirement for initial resolution of action through
alternative dispute resolution.
Sec. 2012. Calculation and payment of damages.
Sec. 2013. Treatment of attorney's fees and other costs.
Sec. 2014. Joint and several liability.
Sec. 2015. Statute of limitations.
Sec. 2016. Uniform standard for determining negligence.
Sec. 2017. Special provision for certain obstetric services.
Part 3--Requirements for State Alternative Dispute Resolution Systems
(ADR)
Sec. 2031. Basic requirements.
Sec. 2032. Certification of State systems; applicability of alternative
Federal system.
Sec. 2033. Reports on implementation and effectiveness of alternative
dispute resolution systems.
Part 4--Other Provisions Relating to Medical Malpractice Liability
Sec. 2041. Permitting State professional societies to participate in
disciplinary activities.
Sec. 2042. Study of incentives to encourage voluntary service by
physicians.
Sec. 2043. Requirements for risk management programs.
Sec. 2044. Grants for medical safety promotion.
Subtitle B--Administrative Cost Savings and Fair Health Information
Practices
Part 1--Administrative Cost Savings
Sec. 2100. Purpose.
Sec. 210subpart a--standards for data elements and transactions
Sec. 2103. General requirements on Secretary.
Sec. 2104. Standards for data elements of health information.
Sec. 2105. Information transaction standards.
Secsubpart b--requirements with respect to certain transactions and
information
Sec. 2111. Standard transactions and information.
Sec. 2112. Accessing health information for authorized purposes.
Sec. 2113. Ensuring availability of information.
Sec. 2114. Timetabsubpart c--miscellaneous provisionss.
Sec. 2121. Standards and certification for health information network
services.
Sec. 2122. Imposition of additional requirements.
Sec. 2123. Effect on State law.
Sec. 2124. Grantssubpart d--assistance to the secretary
Sec. 2131. General requirement on Secretary.
Sec. 2132. Health Information Advisory Committee.
Part 2--Fair Health Information Practices
Sec. 2140. Dsubpart a--duties of health information trustees
Sec. 2141. Inspection of protected health information.
Sec. 2142. Amendment of protected health information.
Sec. 2143. Notice of information practices.
Sec. 2144. Accounting for disclosures.
Sec. subpart b--use and disclosure of protected health information
Sec. 2151. General limitations on use and disclosure.
Sec. 2152. Authorizations for disclosure of protected health
information.
Sec. 2153. Treatment, payment, and oversight.
Sec. 2154. Next of kin and directory information.
Sec. 2155. Public health.
Sec. 2156. Health research.
Sec. 2157. Emergency circumstances.
Sec. 2158. Judicial and administrative purposes.
Sec. 2159. Law enforcement.
Sec. 2160. Subpoenas, warrants, and search warrants.
Sec. 2161. subpart c--access procedures and challenge rights
Sec. 2171. Access procedures for law enforcement subpoenas, warrants,
and search warrants.
Sec. 2172. Challenge procedures for law enforcement subpoenas.
Sec. 2173. Access and challenge procedures for other subpoenas.
Sec. 2174. Construction of subpart; suspension of statute of
limitations.
Sec. 2175. Responssubpart d--miscellaneous provisions
Sec. 2181. Payment card and electronic payment transactions.
Sec. 2182. Access to protected health information outside of the United
States.
Sec. 2183. Standards for electronic documents and communications.
Sec. 2184. Duties and authorities of affiliated persons.
Sec. 2185. Agents and attorneys.
Sec. 2186. Minors.
Sec. 2187. Maintenance ofsubpart e--enforcementlth information.
Sec. 2191. Civil actions.
Sec. 2192. Civil money penalties.
Sec. 2193. Alternative dispute resolution.
Sec. 2194.subpart f--amendments to title 5, united states code
Secsubpart g--regulations, research, and education; effective dates;
applicability; and relationship to other laws
Sec. 2196. Regulations; research and education.
Sec. 2197. Effective dates.
Sec. 2198. Applicability.
Sec. 2199. Relationship to other laws.
Subtitle C--Deduction for Cost of Catastrophic Health Plan; Medical
Savings Accounts
Sec. 2201. Individuals allowed deduction from gross income for cost of
catastrophic health plan.
Sec. 2202. Medical savings accounts.
Subtitle D--Anti-Fraud
Part 1--Establishment of All-payer Health Care Fraud and Abuse Control
Program
Sec. 2301. All-payer health care fraud and abuse control program.
Sec. 2302. Authorization of additional appropriations for investigators
and other personnel.
Sec. 2303. Establishment of anti-fraud and abuse trust fund.
Part 2--Revisions to Current Sanctions for Fraud and Abuse
Sec. 2311. Mandatory exclusion from participation in medicare and State
health care programs.
Sec. 2312. Establishment of minimum period of exclusion for certain
individuals and entities subject to
permissive exclusion from medicare and
State health care programs.
Sec. 2313. Revisions to criminal penalties.
Sec. 2314. Revisions to limitations on physician self-referral.
Sec. 2315. Medicare health maintenance organizations.
Sec. 2316. Effective date.
Part 3--Amendments to Criminal Law
Sec. 2321. Penalties for health care fraud.
Sec. 2322. Rewards for information leading to prosecution and
conviction.
Sec. 2323. Broadening application of mail fraud statute.
Part 4--Advisory Opinions
Sec. 2331. Authorizing the Secretary of Health and Human Services to
issue advisory opinions under title XI.
Sec. 2332. Authorizing the Secretary of Health and Human Services to
issue advisory opinions relating to
physician ownership and referral.
Sec. 2333. Effective date.
Subtitle E--Increased Medicare Beneficiary Choice; Additional Medicare
Reforms
Part 1--Increased Medicare Beneficiary Choice
Sec. 2401. Requirements for health maintenance organizations under
medicare.
Sec. 2402. Expansion and revision of medicare select policies.
Sec. 2403. Including notice of available health maintenance
organizations in annual notice to
beneficiaries.
Sec. 2404. Legislative proposal on enrolling medicare beneficiaries in
qualified health plans.
Sec. 2405. Optional interim enrollment of medicare beneficiaries in
private health plans.
Part 2--Medicare Part B Premium; Other Medicare Payment Changes
Sec. 2411. Extension of current rules for computing medicare part B
premium.
Sec. 2412. Increase in medicare part B premium for individuals with
high income.
Sec. 2413. Improved efficiency through consolidation of administration
of parts A and B.
Sec. 2414. Extension of medicare secondary payment provisions.
Subtitle F--Health Care Antitrust Improvements
Sec. 2501. Protection from antitrust laws for certain competitive and
collaborative activities.
Sec. 2502. Designation of safe harbors.
Sec. 2503. Certificates of review.
Sec. 2504. Notifications providing reduction in certain penalties under
antitrust law for health care joint
ventures.
Sec. 2505. Review and reports on safe harbors, certificates of review,
and notifications.
Sec. 2506. Rules, regulations, and guidelines.
Sec. 2507. Establishment of HHS Office of Health Care Competition
Policy.
Sec. 2508. Definitions.
Subtitle G--Encouraging Enforcement Activities of Medical Self-
Regulatory Entities
Part 1--Application of the Clayton Act to Medical Self-regulatory
Entities
Sec. 2601. Antitrust exemption for medical self-regulatory entities.
Sec. 2602. Definitions.
Part 2--Consultation by Federal Agencies
Sec. 2611. Consultation with medical self-regulatory entities
respecting medical professional guidelines
and standards.
Subtitle H--Reform of Clinical Laboratory Requirements for Simple Tests
Sec. 2701. Eliminating CLIA requirement for certificate of waiver for
simple laboratory examinations and
procedures.
Sec. 2702. Amendment related to simple laboratory examinations.
Sec. 2703. Amendment related to study.
Sec. 2704. Amendments related to the Clinical Laboratory Improvement
Advisory Committee.
Subtitle I--Miscellaneous Provisions
Sec. 2801. Requirement that certain agencies prefund government health
benefits contributions for their
annuitants.
Sec. 2802. Ineligibility of aliens for SSI and medicaid.
Sec. 2803. Limitation on SSI benefits for drug and alcohol addicts.
Subtitle A--Medical Malpractice Liability Reform
Title II, Subtitle A
PART 1--GENERAL PROVISIONS
SEC. 2001. FEDERAL REFORM OF MEDICAL MALPRACTICE LIABILITY ACTIONS.
(a) Applicability.--This subtitle shall apply with respect to any
medical malpractice liability claim and to any medical malpractice
liability action brought in any State or Federal court, except that
this subtitle shall not apply to a claim or action for damages arising
from a vaccine-related injury or death to the extent that title XXI of
the Public Health Service Act applies to the claim or action.
(b) Preemption.--The provisions of this subtitle shall preempt any
State law to the extent such law is inconsistent with the limitations
contained in such provisions. The provisions of this subtitle shall not
preempt any State law that provides for defenses or places limitations
on a person's liability in addition to those contained in this
subtitle, places greater limitations on the amount of attorneys' fees
that can be collected, or otherwise imposes greater restrictions than
those provided in this subtitle.
(c) Effect on Sovereign Immunity and Choice of Law or Venue.--
Nothing in subsection (b) shall be construed to--
(1) waive or affect any defense of sovereign immunity
asserted by any State under any provision of law;
(2) waive or affect any defense of sovereign immunity
asserted by the United States;
(3) affect the applicability of any provision of the
Foreign Sovereign Immunities Act of 1976;
(4) preempt State choice-of-law rules with respect to
claims brought by a foreign nation or a citizen of a foreign
nation; or
(5) affect the right of any court to transfer venue or to
apply the law of a foreign nation or to dismiss a claim of a
foreign nation or of a citizen of a foreign nation on the
ground of inconvenient forum.
(d) Federal Court Jurisdiction Not Established on Federal Question
Grounds.--Nothing in this subtitle shall be construed to establish any
jurisdiction in the district courts of the United States over medical
malpractice liability actions on the basis of section 1331 or 1337 of
title 28, United States Code.
SEC. 2002. DEFINITIONS.
As used in this subtitle:
(1) Alternative dispute resolution system; adr.--The term
``alternative dispute resolution system'' or ``ADR'' means a
system established under this subtitle that provides for the
resolution of medical malpractice liability claims in a manner
other than through medical malpractice liability actions.
(2) Claimant.--The term ``claimant'' means any person who
alleges a medical malpractice liability claim, and any person
on whose behalf such a claim is alleged, including the decedent
in the case of an action brought through or on behalf of an
estate.
(3) Clear and convincing evidence.--The term ``clear and
convincing evidence'' is that measure or degree of proof that
will produce in the mind of the trier of fact a firm belief or
conviction as to the truth of the allegations sought to be
established, except that such measure or degree of proof is
more than that required under preponderance of the evidence,
but less than that required for proof beyond a reasonable
doubt.
(4) Economic damages.--The term ``economic damages'' means
damages paid to compensate an individual for hospital and other
medical expenses, lost wages, lost employment, and other
pecuniary losses.
(5) Health care professional.--The term ``health care
professional'' means any individual who provides health care
services in a State and who is required by the laws or
regulations of the State to be licensed or certified by the
State to provide such services in the State.
(6) Health care provider.--The term ``health care
provider'' means any organization or institution that is
engaged in the delivery of health care services in a State and
that is required by the laws or regulations of the State to be
licensed or certified by the State to engage in the delivery of such
services in the State.
(7) Injury.--The term ``injury'' means any illness,
disease, or other harm that is the subject of a medical
malpractice liability action or a medical malpractice liability
claim.
(8) Medical malpractice liability action.--The term
``medical malpractice liability action'' means a civil action
brought in a State or Federal court against a health care
provider or health care professional in which the plaintiff
alleges a medical malpractice liability claim, but does not
include any action in which the plaintiff's sole allegation is
an allegation of an intentional tort.
(9) Medical malpractice liability claim.--The term
``medical malpractice liability claim'' means a claim in which
the claimant alleges that injury was caused by the provision of
(or the failure to provide) health care services or the use of
a medical product.
(10) Medical product.--
(A) In general.--The term ``medical product''
means, with respect to the allegation of a claimant, a
drug (as defined in section 201(g)(1) of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 321(g)(1)) or a
medical device (as defined in section 201(h) of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321(h))
if--
(i) such drug or device was subject to
premarket approval under section 505, 507, or
515 of the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 355, 357, or 360e) or section 351 of
the Public Health Service Act (42 U.S.C. 262)
with respect to the safety of the formulation
or performance of the aspect of such drug or
device which is the subject of the claimant's
allegation or the adequacy of the packaging or
labeling of such drug or device, and such drug
or device is approved by the Food and Drug
Administration; or
(ii) the drug or device is generally
recognized as safe and effective under
regulations issued by the Secretary of Health
and Human Services under section 201(p) of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C.
321(p)).
(B) Exception in case of misrepresentation or
fraud.--Notwithstanding subparagraph (A), the term
``medical product'' shall not include any product
described in such subparagraph if the claimant shows
that the product is approved by the Food and Drug
Administration for marketing as a result of withheld
information, misrepresentation, or an illegal payment
by manufacturer of the product.
(11) Noneconomic damages.--The term ``noneconomic damages''
means damages paid to compensate an individual for physical and
emotional pain, suffering, inconvenience, physical impairment,
mental anguish, disfigurement, loss of enjoyment of life, loss
of consortium, and other nonpecuniary losses, but does not
include punitive damages.
(12) Punitive damages; exemplary damages.--The terms
``punitive damages'' and ``exemplary damages'' mean
compensation, in addition to compensation for actual harm
suffered, that is awarded for the purpose of punishing a person
for conduct deemed to be malicious, wanton, willful, or
excessively reckless.
(13) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(14) State.--The term ``State'' means each of the several
States, the District of Columbia, the Commonwealth of Puerto
Rico, the Virgin Islands, Guam, and American Samoa.
SEC. 2003. EFFECTIVE DATE.
(a) In General.--Except as provided in subsection (b) and section
2017(c), this subtitle shall apply with respect to claims accruing or
actions brought on or after the expiration of the 3-year period that
begins on the date of the enactment of this Act.
(b) Exception for States Requesting Earlier Implementation of
Reforms.--
(1) Application.--A State may submit an application to the
Secretary requesting the early implementation of this subtitle
with respect to claims or actions brought in the State.
(2) Decision by secretary.--The Secretary shall issue a
response to a State's application under paragraph (1) not later
than 90 days after receiving the application. If the Secretary
determines that the State meets the requirements of this
subtitle at the time of submitting its application, the
Secretary shall approve the State's application, and this
subtitle shall apply with respect to actions brought in the
State on or after the expiration of the 90-day period that
begins on the date the Secretary issues the response. If the Secretary
denies the State's application, the Secretary shall provide the State
with a written explanation of the grounds for the decision.
PART 2--MEDICAL MALPRACTICE AND PRODUCT LIABILITY REFORM
SEC. 2011. REQUIREMENT FOR INITIAL RESOLUTION OF ACTION THROUGH
ALTERNATIVE DISPUTE RESOLUTION.
(a) In General.--
(1) State cases.--A medical malpractice liability action
may not be brought in any State court during a calendar year
unless the medical malpractice liability claim that is the
subject of the action has been initially resolved under an
alternative dispute resolution system certified for the year by
the Secretary under section 2032(a), or, in the case of a State
in which such a system is not in effect for the year, under the
alternative Federal system established under section 2032(b).
(2) Federal diversity actions.--A medical malpractice
liability action may not be brought in any Federal court under
section 1332 of title 28, United States Code, during a calendar
year unless the medical malpractice liability claim that is the
subject of the action has been initially resolved under the
alternative dispute resolution system referred to in paragraph
(1) that applied in the State whose law applies in such action.
(3) Claims against united states.--
(A) Establishment of process for claims.--The
Attorney General shall establish an alternative dispute
resolution process for the resolution of tort claims
consisting of medical malpractice liability claims
brought against the United States under chapter 171 of
title 28, United States Code. Under such process, the
resolution of a claim shall occur after the completion
of the administrative claim process applicable to the
claim under section 2675 of such title.
(B) Requirement for initial resolution under
process.--A medical malpractice liability action based
on a medical malpractice liability claim described in
subparagraph (A) may not be brought in any Federal
court unless the claim has been initially resolved
under the alternative dispute resolution process
established by the Attorney General under such
subparagraph.
(b) Initial Resolution of Claims Under ADR.--For purposes of
subsection (a), an action is ``initially resolved'' under an
alternative dispute resolution system if--
(1) the ADR reaches a decision on whether the defendant is
liable to the plaintiff for damages; and
(2) if the ADR determines that the defendant is liable, the
ADR reaches a decision on the amount of damages assessed
against the defendant.
(c) Procedures for Filing Actions.--
(1) Notice of intent to contest decision.--Not later than
60 days after a decision is issued with respect to a medical
malpractice liability claim under an alternative dispute
resolution system, each party affected by the decision shall
submit a sealed statement to a court of competent jurisdiction
indicating whether or not the party intends to contest the
decision.
(2) Deadline for filing action.--A medical malpractice
liability action may not be brought by a party unless--
(A) the party has filed the notice of intent
required by paragraph (1); and
(B) the party files the action in a court of
competent jurisdiction not later than 90 days after the
decision resolving the medical malpractice liability
claim that is the subject of the action is issued under
the applicable alternative dispute resolution system.
(3) Court of competent jurisdiction.--For purposes of this
subsection, the term ``court of competent jurisdiction''
means--
(A) with respect to actions filed in a State court,
the appropriate State trial court; and
(B) with respect to actions filed in a Federal
court, the appropriate United States district court.
(d) Legal Effect of Uncontested ADR Decision.--The decision reached
under an alternative dispute resolution system shall, for purposes of
enforcement by a court of competent jurisdiction, have the same status
in the court as the verdict of a medical malpractice liability action
adjudicated in a State or Federal trial court. The previous sentence
shall not apply to a decision that is contested by a party affected by
the decision pursuant to subsection (c)(1).
SEC. 2012. CALCULATION AND PAYMENT OF DAMAGES.
(a) Limitation on Noneconomic Damages.--The total amount of
noneconomic damages that may be awarded to a claimant and the members
of the claimant's family for losses resulting from the injury which is
the subject of a medical malpractice liability action may not exceed
$250,000, regardless of the number of parties against whom the action
is brought or the number of actions brought with respect to the injury.
(b) Treatment of Punitive Damages.--
(1) Basis for recovery.--Punitive or exemplary damages
shall not be awarded in a medical malpractice liability action
unless the claimant establishes by clear and convincing
evidence that the injury suffered was the direct result of
conduct manifesting a malicious, wanton, willful, or
excessively reckless disregard of the safety of others.
(2) No award against manufacturer of medical product.--In
the case of a medical malpractice liability action in which the
plaintiff alleges a claim against the manufacturer of a medical
product, no punitive or exemplary damages may be awarded
against such manufacturer.
(3) Payments to state for medical quality assurance
activities.--
(A) In general.--Any punitive or exemplary damages
awarded in a medical malpractice liability action shall
be paid to the State in which the action is brought or,
in a case brought in Federal court, in the State in
which the health care services that caused the injury
that is the subject of the action were provided.
(B) Activities described.--A State shall use
amounts paid pursuant to subparagraph (A) to carry out
activities to assure the safety and quality of health
care services provided in the State, including (but not
limited to)--
(i) licensing or certifying health care
professionals and health care providers in the
State;
(ii) operating alternative dispute
resolution systems;
(iii) carrying out public education
programs relating to medical malpractice and
the availability of alternative dispute
resolution systems in the State; and
(iv) carrying out programs to reduce
malpractice-related costs for retired providers
or other providers volunteering to provide
services in medically underserved areas.
(C) Maintenance of effort.--A State shall use any
amounts paid pursuant to subparagraph (A) to supplement
and not to replace amounts spent by the State for the
activities described in subparagraph (B).
(c) Periodic Payments for Future Losses.--
(1) General rule.--In any medical malpractice liability
action in which the damages awarded for future economic loss
exceeds $100,000, a defendant may not be required to pay such
damages in a single, lump-sum payment, but shall be permitted
to make such payments periodically based on when the damages
are found likely to occur, as such payments are determined by
the court.
(2) Waiver.--A court may waive the application of paragraph
(1) with respect to a defendant if the court determines that it
is not in the best interests of the plaintiff to receive
payments for damages on such a periodic basis.
(d) Mandatory Offsets for Damages Paid by a Collateral Source.--
(1) In general.--With respect to a medical malpractice
liability claim or action, the total amount of damages received
by an individual under such claim or action shall be reduced,
in accordance with paragraph (2), by any other payment that has
been, or will be, made to an individual to compensate such
individual for the injury that was the subject of such claim or
action.
(2) Amount of reduction.--The amount by which an award of
damages to an individual for an injury shall be reduced under
paragraph (1) shall be--
(A) the total amount of any payments (other than
such award) that have been made or that will be made to
such individual to pay costs of or compensate such
individual for the injury that was the subject of the
claim or action; minus
(B) the amount paid by such individual (or by the
spouse, parent, or legal guardian of such individual)
to secure the payments described in subparagraph (A).
SEC. 2013. TREATMENT OF ATTORNEY'S FEES AND OTHER COSTS.
(a) Limitation on Amount of Contingency Fees.--
(1) In general.--An attorney who represents, on a
contingency fee basis, a claimant in a medical malpractice
liability claim may not charge, demand, receive, or collect for
services rendered in connection with such claim in excess of
the following amount recovered by judgment or settlement under
such claim:
(A) 25 percent of the first $150,000 (or portion
thereof) recovered, plus
(B) 10 percent of any amount in excess of $150,000
recovered.
(2) Calculation of periodic payments.--In the event that a
judgment or settlement includes periodic or future payments of
damages, the amount recovered for purposes of computing the
limitation on the contingency fee under paragraph (1) shall be
based on the cost of the annuity or trust established to make
the payments. In any case in which an annuity or trust is not
established to make such payments, such amount shall be based
on the present value of the payments.
(b) Requiring Party Contesting ADR Ruling to Pay Attorney's Fees
and Other Costs.--
(1) In general.--The court in a medical malpractice
liability action shall require the party that (pursuant to
section 2011(c)(1)) contested the ruling of the alternative
dispute resolution system with respect to the medical
malpractice liability claim that is the subject of the action
to pay to the opposing party the costs incurred by the opposing
party under the action, including attorney's fees, fees paid to
expert witnesses, and other litigation expenses (but not
including court costs, filing fees, or other expenses paid
directly by the party to the court, or any fees or costs
associated with the resolution of the claim under the
alternative dispute resolution system), but only if--
(A) in the case of an action in which the party
that contested the ruling is the claimant, the amount
of damages awarded to the party under the action does
not exceed the amount of damages awarded to the party
under the ADR system by at least 10 percent; and
(B) in the case of an action in which the party
that contested the ruling is the defendant, the amount
of damages assessed against the party under the action
is not at least 10 percent less than the amount of
damages assessed under the ADR system.
(2) Exceptions.--Paragraph (1) shall not apply if--
(A) the party contesting the ruling made under the
previous alternative dispute resolution system shows
that--
(i) the ruling was procured by corruption,
fraud, or undue means,
(ii) there was partiality or corruption
under the system,
(iii) there was other misconduct under the
system that materially prejudiced the party's
rights, or
(iv) the ruling was based on an error of
law;
(B) the party contesting the ruling made under the
alternative dispute resolution system presents new
evidence before the trier of fact that was not
available for presentation under the ADR system;
(C) the medical malpractice liability action raised
a novel issue of law; or
(D) the court finds that the application of such
paragraph to a party would constitute an undue
hardship, and issues an order waiving or modifying the
application of such paragraph that specifies the
grounds for the court's decision.
(3) Requirement for performance bond.--The court in a
medical malpractice liability action shall require the party
that (pursuant to section 2011(c)(1)) contested the ruling of
the alternative dispute resolution system with respect to the
medical malpractice liability claim that is the subject of the
action to post a performance bond (in such amount and
consisting of such funds and assets as the court determines to
be appropriate), except that the court may waive the
application of such requirement to a party if the court
determines that the posting of such a bond is not necessary to
ensure that the party shall meet the requirements of this
subsection to pay the opposing party the costs incurred by the
opposing party under the action.
(4) Limit on attorney's fees paid.--Attorneys' fees that
are required to be paid under paragraph (1) by the contesting
party shall not exceed the amount of the attorneys' fees
incurred by the contesting party in the action. If the
attorneys' fees of the contesting party are based on a
contingency fee agreement, the amount of attorneys' fees for
purposes of the preceding sentence shall not exceed the reasonable
value of those services.
(5) Records.--In order to receive attorneys' fees under
paragraph (1), counsel of record in the medical malpractice
liability action involved shall maintain accurate, complete
records of hours worked on the action, regardless of the fee
arrangement with the client involved.
(c) Contingency Fee Defined.--As used in this section, the term
``contingency fee'' means any fee for professional legal services which
is, in whole or in part, contingent upon the recovery of any amount of
damages, whether through judgment or settlement.
SEC. 2014. JOINT AND SEVERAL LIABILITY.
A defendant may be held severally but not jointly liable in a
medical malpractice action. A person found liable for damages in any
such action may be found liable, if at all, only for those damages
directly attributable to the person's proportionate share of fault or
responsibility for the injury, and may not be found liable for damages
attributable to the proportionate share of fault or responsibility of
any other person (without regard to whether that person is a party to
the action) for the injury, including any person bringing the action.
SEC. 2015. STATUTE OF LIMITATIONS.
A medical malpractice liability claim may not be brought after the
expiration of the 7-year period that begins on the date the alleged
injury that is the subject of the claim occurred. If the commencement
of such an action is stayed or enjoined, the running of the statute of
limitations under this section shall be suspended for the period of the
stay or injunction.
SEC. 2016. UNIFORM STANDARD FOR DETERMINING NEGLIGENCE.
A defendant in a medical malpractice liability action may not be
found to have acted negligently unless the defendant's conduct at the
time of providing the health care services that are the subject of the
action was not reasonable.
SEC. 2017. SPECIAL PROVISION FOR CERTAIN OBSTETRIC SERVICES.
(a) Imposition of Higher Standard of Proof.--In the case of a
medical malpractice liability claim relating to services provided
during labor or the delivery of a baby, if the health care professional
against whom the claim is brought did not previously treat the
individual alleged to have been injured for the pregnancy, the trier of
fact may not find that the defendant committed malpractice and may not
assess damages against the health care professional unless the
malpractice is proven by clear and convincing evidence.
(b) Applicability to Group Practices or Agreements Among
Providers.--For purposes of subsection (a), a health care professional
shall be considered to have previously treated an individual for a
pregnancy if the professional is a member of a group practice whose
members previously treated the individual for the pregnancy or is
providing services to the individual during labor or the delivery of a
baby pursuant to an agreement with another health care professional.
(c) Effective Date.--This section shall apply with respect to
claims accruing or actions brought on or after the expiration of the 2-
year period that begins on the date of the enactment of this Act.
PART 3--REQUIREMENTS FOR STATE ALTERNATIVE DISPUTE RESOLUTION SYSTEMS
(ADR)
SEC. 2031. BASIC REQUIREMENTS.
(a) In General.--A State's alternative dispute resolution system
meets the requirements of this section if the system--
(1) applies to all medical malpractice liability claims
under the jurisdiction of the courts of that State;
(2) requires that a written opinion resolving the dispute
be issued not later than 6 months after the date by which each
party against whom the claim is filed has received notice of
the claim (other than in exceptional cases for which a longer
period is required for the issuance of such an opinion), and
that the opinion contain--
(A) findings of fact relating to the dispute, and
(B) a description of the costs incurred in
resolving the dispute under the system (including any
fees paid to the individuals hearing and resolving the
claim), together with an appropriate assessment of the
costs against any of the parties;
(3) requires individuals who hear and resolve claims under
the system to meet such qualifications as the State may require
(in accordance with regulations of the Secretary);
(4) is approved by the State or by local governments in the
State;
(5) with respect to a State system that consists of
multiple dispute resolution procedures--
(A) permits the parties to a dispute to select the
procedure to be used for the resolution of the dispute
under the system, and
(B) if the parties do not agree on the procedure to
be used for the resolution of the dispute, assigns a
particular procedure to the parties;
(6) provides for the transmittal to the State agency
responsible for monitoring or disciplining health care
professionals and health care providers of any findings made
under the system that such a professional or provider committed
malpractice, unless, during the 90-day period beginning on the
date the system resolves the claim against the professional or
provider, the professional or provider brings an action
contesting the decision made under the system; and
(7) provides for the regular transmittal to the
Administrator for Health Care Policy and Research of
information on disputes resolved under the system, in a manner
that assures that the identity of the parties to a dispute
shall not be revealed.
(b) Application of Malpractice Liability Standards to Alternative
Dispute Resolution.--The provisions of part 2 shall apply with respect
to claims brought under a State alternative dispute resolution system
or the alternative Federal system in the same manner as such provisions
apply with respect to medical malpractice liability actions brought in
the State.
SEC. 2032. CERTIFICATION OF STATE SYSTEMS; APPLICABILITY OF ALTERNATIVE
FEDERAL SYSTEM.
(a) Certification.--
(1) In general.--Not later than October 1 of each year
(beginning with 1995), the Secretary, in consultation with the
Attorney General, shall determine whether a State's alternative
dispute resolution system meets the requirements of this part
for the following calendar year.
(2) Basis for certification.--The Secretary shall certify a
State's alternative dispute resolution system under this
subsection for a calendar year if the Secretary determines
under paragraph (1) that the system meets the requirements of
section 2031.
(b) Applicability of Alternative Federal System.--
(1) Establishment and applicability.--Not later than
October 1, 1995, the Secretary, in consultation with the
Attorney General, shall establish by rule an alternative
Federal ADR system for the resolution of medical malpractice
liability claims during a calendar year in States that do not
have in effect an alternative dispute resolution system
certified under subsection (a) for the year.
(2) Requirements for system.--Under the alternative Federal
ADR system established under paragraph (1)--
(A) paragraphs (1), (2), (6), and (7) of section
2031(a) shall apply to claims brought under the system;
(B) if the system provides for the resolution of
claims through arbitration, the claims brought under
the system shall be heard and resolved by arbitrators
appointed by the Secretary in consultation with the
Attorney General; and
(C) with respect to a State in which the system is
in effect, the Secretary may (at the State's request)
modify the system to take into account the existence of
dispute resolution procedures in the State that affect
the resolution of medical malpractice liability claims.
(3) Treatment of states with alternative system in
effect.--If the alternative Federal ADR system established
under this subsection is applied with respect to a State for a
calendar year--
(A) the State shall reimburse the United States (at
such time and in such manner as the Secretary may
require) for the costs incurred by the United States
during the year as a result of the application of the
system with respect to the State; and
(B) notwithstanding any other provision of law, no
funds may be paid to the State (or to any unit of local
government in the State) or to any entity in the State
pursuant to the Public Health Service Act.
SEC. 2033. REPORTS ON IMPLEMENTATION AND EFFECTIVENESS OF ALTERNATIVE
DISPUTE RESOLUTION SYSTEMS.
(a) In General.--Not later than 5 years after the date of the
enactment of this Act, the Secretary shall prepare and submit to the
Congress a report describing and evaluating State alternative dispute
resolution systems operated pursuant to this part and the alternative
Federal system established under section 2032(b).
(b) Contents of Report.--The Secretary shall include in the report
prepared and submitted under subsection (a)--
(1) information on--
(A) the effect of the alternative dispute
resolution systems on the cost of health care within
each State,
(B) the impact of such systems on the access of
individuals to health care within the State, and
(C) the effect of such systems on the quality of
health care provided within the State; and
(2) to the extent that such report does not provide
information on no-fault systems operated by States as
alternative dispute resolution systems pursuant to this part,
an analysis of the feasibility and desirability of establishing
a system under which medical malpractice liability claims shall
be resolved on a no-fault basis.
PART 4--OTHER PROVISIONS RELATING TO MEDICAL MALPRACTICE LIABILITY
SEC. 2041. PERMITTING STATE PROFESSIONAL SOCIETIES TO PARTICIPATE IN
DISCIPLINARY ACTIVITIES.
(a) Role of Professional Societies.--Notwithstanding any other
provision of State or Federal law, a State agency responsible for the
conduct of disciplinary actions for a type of health care practitioner
may enter into agreements with State or county professional societies
of such type of health care practitioner to permit such societies to
participate in the licensing of such health care practitioner, and to
review any health care malpractice action, health care malpractice
claim or allegation, or other information concerning the practice
patterns of any such health care practitioner. Any such agreement shall
comply with subsection (b).
(b) Requirements of Agreements.--Any agreement entered into under
subsection (a) for licensing activities or the review of any health
care malpractice action, health care malpractice claim or allegation,
or other information concerning the practice patterns of a health care
practitioner shall provide that--
(1) the health care professional society conducts such
activities or review as expeditiously as possible;
(2) after the completion of such review, such society shall
report its findings to the State agency with which it entered
into such agreement;
(3) the conduct of such activities or review and the
reporting of such findings be conducted in a manner which
assures the preservation of confidentiality of health care
information and of the review process; and
(4) no individual affiliated with such society is liable
for any damages or injury directly caused by the individual's
actions in conducting such activities or review.
(c) Agreements Not Mandatory.--Nothing in this section may be
construed to require a State to enter into agreements with societies
described in subsection (a) to conduct the activities described in such
subsection.
(d) Effective Date.--This section shall take effect 2 years after
the date of the enactment of this Act.
SEC. 2042. STUDY OF INCENTIVES TO ENCOURAGE VOLUNTARY SERVICE BY
PHYSICIANS.
(a) Study.--The Secretary shall conduct a study analyzing the
existence and effectiveness of incentives adopted by State and local
governments, insurers, medical societies, and other entities to
encourage physicians (whether practicing or retired) to volunteer to
provide health care services in medically underserved areas.
(b) Reports.--(1) Not later than 1 year after the date of the
enactment of this Act, the Secretary shall submit an interim report to
Congress on the study conducted under subsection (a), together with the
Secretary's recommendations for actions to increase the number of
physicians volunteering to provide health care services in medically
underserved areas.
(2) Not later than 5 years after the date of the enactment of this
Act, the Secretary shall submit a final report to the Congress on the
study conducted under subsection (a) (taking into account the effects
of this subtitle on the incidence and costs of medical malpractice),
together with the Secretary's recommendations for actions to increase
the number of physicians volunteering to provide health care services
in medically underserved areas.
SEC. 2043. REQUIREMENTS FOR RISK MANAGEMENT PROGRAMS.
(a) Requirements for Providers.--Each State shall require each
health care professional and health care provider providing services in
the State to participate in a risk management program to prevent and
provide early warning of practices which may result in injuries to
patients or which otherwise may endanger patient safety.
(b) Requirements for Insurers.--Each State shall require each
entity which provides health care professional or provider liability
insurance to health care professionals and health care providers in the
State to--
(1) establish risk management programs based on data
available to such entity or sanction programs of risk
management for health care professionals and health care
providers provided by other entities; and
(2) require each such professional or provider, as a
condition of maintaining insurance, to participate in one
program described in paragraph (1) at least once in each 3-year period.
(c) Effective Date.--This section shall take effect 2 years after
the date of the enactment of this Act.
SEC. 2044. GRANTS FOR MEDICAL SAFETY PROMOTION.
(a) Research on Medical Injury Prevention and Compensation.
(1) In general.--The Secretary shall make grants for the
conduct of basic research in the prevention of and compensation
for injuries resulting from health care professional or health
care provider malpractice, and research of the outcomes of
health care procedures.
(2) Preference for research on certain activities.--In
making grants under paragraph (1), the Secretary shall give
preference to applications for grants to conduct research on
the behavior of health care providers and health care
professionals in carrying out their professional duties and of
other participants in systems for compensating individuals
injured by medical malpractice, the effects of financial and
other incentives on such behavior, the determinants of
compensation system outcomes, and the costs and benefits of
alternative compensation policy options.
(3) Application.--The Secretary may not make a grant under
paragraph (1) unless an applicant submits an application to the
Secretary at such time, in such form, in such manner, and
containing such information as the Secretary may require.
(b) Grants for Licensing and Disciplinary Activities.--
(1) In general.--The Secretary shall make grants to States
to assist States in improving the State's ability to license
and discipline health care professionals.
(2) Uses for grants.--A State may use a grant awarded under
subsection (a) to develop and implement improved mechanisms for
monitoring the practices of health care professionals or for
conducting disciplinary activities.
(3) Technical assistance.--The Secretary shall provide
technical assistance to States receiving grants under paragraph
(1) to assist them in evaluating their medical practice acts
and procedures and to encourage the use of efficient and
effective early warning systems and other mechanisms for
detecting practices which endanger patient safety and for
disciplining health care professionals.
(4) Applications.--The Secretary may not make a grant under
paragraph (1) unless the applicant submits an application to
the Secretary at such time, in such form, in such manner, and
containing such information as the Secretary shall require.
(c) Grants for Public Education Programs.--
(1) In general.--The Secretary shall make grants to States
and to local governments, private nonprofit organizations, and
health professional schools (as defined in paragraph (3)) for--
(A) educating the general public about the
appropriate use of health care and realistic
expectations of medical intervention;
(B) educating the public about the resources and
role of health care professional licensing and
disciplinary boards in investigating claims of
incompetence or health care malpractice; and
(C) developing programs of faculty training and
curricula for educating health care professionals in
quality assurance, risk management, and medical injury
prevention.
(2) Applications.--The Secretary may not make a grant under
paragraph (1) unless the applicant submits an application to
the Secretary at such time, in such form, in such manner, and
containing such information as the Secretary shall require.
(3) Health professional school defined.--In paragraph (1),
the term ``health professional school'' means a school of
nursing (as defined in section 853(2) of the Public Health
Service Act) or a school or program under section 799(1) of
such Act.
(d) Authorization of Appropriations.--There are authorized to be
appropriated not more than $15,000,000 for each of the first 5 fiscal
years beginning on or after the date of the enactment of this Act for
grants under this section.
Subtitle B--Administrative Cost Savings and Fair Health Information
Practices
Title II, Subtitle B
PART 1--ADMINISTRATIVE COST SAVINGS
SEC. 2100. PURPOSE.
It is the purpose of this part to improve the efficiency and
effectiveness of the health care system, including the medicare program
under title XVIII of the Social Security Act and the medicaid program
under title XIX of such Act, by encouraging the development of a health
information network through the adoption of standards and the
establishment of requirements for the electronic transmission of
certain health information.
SEC. 2101. DEFINITIONS.
For purposes of this part:
(1) Code set.--The term ``code set'' means any set of codes
used for encoding data elements, such as tables of terms,
medical concepts, medical diagnostic codes, or medical
procedure codes.
(2) Coordination of benefits.--The term ``coordination of
benefits'' means determining and coordinating the financial
obligations of plan sponsors when health care benefits are
payable by more than one such sponsor.
(3) Employer.--The term ``employer'' has the meaning given
such term in section 3(5) of the Employee Retirement Income
Security Act of 1974.
(4) Health information.--The term ``health information''
means any information that relates to the past, present, or
future physical or mental health or condition or functional
status of an individual, the provision of health care to an
individual, or payment for the provision of health care to an
individual.
(5) Health information network.--The term ``health
information network'' means the health information system that
is formed through the application of the requirements and
standards established under this part.
(6) Health information network service.--The term ``health
information network service''--
(A) means a private entity or an entity operated by
a State that enters into contracts--
(i) to process or facilitate the processing
of nonstandard data elements of health
information into standard data elements;
(ii) to provide the means by which persons
are connected to the health information network
for purposes of meeting the requirements of
this part, including the holding of standard
data elements of health information;
(iii) to provide authorized access to
health information through the health
information network; or
(iv) to provide specific information
processing services, such as automated
coordination of benefits and claims transaction
routing; and
(B) includes a health information protection
service.
(7) Health information protection service.--The term
``health information protection service'' means a private
entity or an entity operated by a State that accesses standard
data elements of health information through the health
information network, processes such information into non-
identifiable health information, and may store such
information.
(8) Health provider.--The term ``health provider'' includes
a provider of services (as defined in section 1861(u) of the
Social Security Act), a provider of medical or other health
services (as defined in section 1861(s) of such Act), and any
other person (other than a plan sponsor) furnishing health care
items or services.
(9) Non-identifiable health information.--The term ``non-
identifiable health information'' means health information that
is not protected health information (as defined in part 2).
(10) Plan sponsor.--The term ``plan sponsor'' means--
(A) a plan (as defined in section 1033(6)(B));
(B) an insurer (as defined in section 1131(6))
providing health insurance coverage (as defined in
section 1131(4)); and
(C) a State, or the Federal Government, acting in a
capacity as a provider of health benefits to eligible
individuals that is equivalent to that of an insurer.
(11) Purchasing arrangement.--The term ``purchasing
arrangement'' means a voluntary health purchasing arrangement
described in part 3 of subtitle B of title I.
(12) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(13) Standard.--The term ``standard'', when used with
reference to a transaction or to data elements of health
information, means that the transaction or data elements meet
any standard adopted by the Secretary under subpart A that
applies to the transaction or data elements.
Subpart A--Standards for Data Elements and Transactions
SEC. 2103. GENERAL REQUIREMENTS ON SECRETARY.
(a) In General.--The Secretary shall adopt standards and
modifications to standards under this part that are--
(1) consistent with the objective of reducing the costs of
providing and paying for health care; and
(2) in use and generally accepted, developed, or modified
by the standard-setting organizations accredited by the
American National Standard Institute.
(b) Initial Standards.--The Secretary may develop an expedited
process for the adoption of initial standards under this subpart.
(c) Protection of Commercial Information.--In adopting standards
under this part, the Secretary may not require disclosure of trade
secrets and confidential commercial information by any person.
SEC. 2104. STANDARDS FOR DATA ELEMENTS OF HEALTH INFORMATION.
(a) In General.--The Secretary shall adopt standards necessary to
make uniform and compatible for electronic transmission through the
health information network the data elements of any health information
that the Secretary determines is appropriate for transmission in
connection with a transaction described in section 2111.
(b) Additions.--The Secretary may make additions to any set of data
elements adopted under subsection (a) as the Secretary determines
appropriate in a manner that minimizes the disruption and cost of
compliance with such additions.
(c) Certain Data Elements.--
(1) Unique health identifiers.--The Secretary shall
establish a system to provide for a standard unique health
identifier for each individual, employer, plan sponsor, and
health provider for use in the health care system.
(2) Code sets.--
(A) In general.--The Secretary, in consultation
with experts from the private sector and Federal
agencies, shall--
(i) select code sets for appropriate data
elements from among the code sets that have
been developed by private and public entities;
or
(ii) establish code sets for such data
elements if no code sets for the data elements
have been developed.
(B) Distribution.--The Secretary shall establish
efficient and low-cost procedures for distribution of
code sets and modifications to code sets.
SEC. 2105. INFORMATION TRANSACTION STANDARDS.
(a) In General.--The Secretary shall adopt technical standards that
are consistent with part 2 relating to the method by which standard
data elements of health information may be transmitted electronically,
including standards with respect to the format in which such data
elements may be transmitted.
(b) Special Rule for Coordination of Benefits.--Any standard
adopted by the Secretary under paragraph (1) that relates to
coordination of benefits shall provide that a claim for reimbursement
for health services furnished shall be tested, by an algorithm
specified by the Secretary, against all records of enrollment and
eligibility for the individual who received such services that are
available to the recipient of the claim through the health information
network to determine any primary and secondary obligors for payment.
(c) Electronic Signature.--The Secretary, in coordination with the
Secretary of Commerce, shall promulgate regulations specifying
procedures for the electronic transmission and authentication of
signatures, compliance with which shall be deemed to satisfy State and
Federal statutory requirements for written signatures with respect to
transactions described in section 2111 and written signatures on health
records and prescriptions.
(d) Standards for Claims for Clinical Laboratory Tests.--The
standards under this section shall provide that claims for clinical
laboratory tests for which benefits are payable by a plan sponsor shall
be submitted directly by the person or entity that performed (or
supervised the performance of) the tests to the sponsor in a manner
consistent with (and subject to such exceptions as are provided under)
the requirement for direct submission of such claims under the medicare
program.
SEC. 2106. TIMETABLES FOR ADOPTION OF STANDARDS.
(a) Initial Standards for Data Elements.--The Secretary shall adopt
standards relating to--
(1) the data elements for the information described in
section 2104(a) not later than 9 months after the date of the
enactment of this Act (except in the case of standards with
respect to data elements for claims attachments, which shall be
adopted not later than 24 months after the date of the
enactment of this Act); and
(2) any addition to a set of data elements, in conjunction
with making such an addition.
(b) Initial Standards for Information Transactions.--The Secretary
shall adopt standards relating to information transactions under
section 2105 not later than 9 months after the date of the enactment of
this Act (except in the case of standards for claims attachments, which
shall be adopted not later than 24 months after the date of the
enactment of this Act).
(c) Modifications to Standards.--
(1) In general.--Except as provided in paragraph (2), the
Secretary shall review the standards adopted under this subpart
and shall adopt modified standards as determined appropriate,
but not more frequently than once every 6 months. Any
modification to standards shall be completed in a manner which
minimizes the disruption to, and costs of compliance incurred
by, a plan sponsor, health provider, or purchasing arrangement
that is required to comply with subpart B.
(2) Special rules.--
(A) Modifications during first 12-month period.--
Except with respect to additions and modifications to
code sets under subparagraph (B), the Secretary may not
adopt any modification to a standard adopted under this
subpart during the 12-month period beginning on the
date the standard is adopted, unless the Secretary
determines that the modification is necessary in order
to permit a plan sponsor, a health provider, or a
purchasing arrangement to comply with subpart B.
(B) Additions and modifications to code sets.--
(i) In general.--The Secretary shall ensure
that procedures exist for the routine
maintenance, testing, enhancement, and
expansion of code sets.
(ii) Additional Rules.--If a code set is
modified under this subsection, the modified
code set shall include instructions on how data
elements that were encoded prior to the
modification are to be converted or translated
so as to preserve the value of the data
elements. Any modification to a code set under
this subsection shall be implemented in a
manner that minimizes the disruption to, and
costs of compliance incurred by, a plan
sponsor, health provider, or purchasing
arrangement that is required to comply with
subpart B.
(d) Evaluation of Standards.--The Secretary may establish a process
to measure or verify the consistency of standards adopted or modified
under this subpart. Such process may include demonstration projects and
analyses of the cost of implementing such standards and modifications.
Subpart B--Requirements With Respect to Certain Transactions and
Information
SEC. 2111. STANDARD TRANSACTIONS AND INFORMATION.
(a) Transactions by Sponsors.--
(1) Transactions with providers.--If a plan sponsor
conducts any of the transactions described in paragraph (3)
with a health provider--
(A) the transaction shall be a standard
transaction; and
(B) the health information transmitted by the
sponsor to the provider or by the provider to the
sponsor in connection with the transaction shall be in
the form of standard data elements.
(2) Transactions with sponsors.--If a plan sponsor conducts
any of the transactions described in paragraph (3) with another
plan sponsor--
(A) the transaction shall be a standard
transaction; and
(B) the health information transmitted by either
sponsor in connection with the transaction shall be in
the form of standard data elements.
(3) Transactions.--The transactions referred to in
paragraphs (1) and (2) are the following:
(A) Verification of eligibility for benefits.
(B) Coordination of benefits.
(C) Claim submission.
(D) Claim attachment submission.
(E) Claim status notification.
(F) Claim status verification.
(G) Claim adjudication.
(H) Payment and remittance advice.
(I) Certification or authorization of a referral to
a health provider who is not part of the defined set of
providers providing items and services under a network
plan (as defined in section 1131(5)).
(b) Transactions by Purchasing Arrangements.--
(1) In general.--If a purchasing arrangement conducts any
of the transactions described in paragraph (2) with a plan
sponsor--
(A) the transaction shall be a standard
transaction; and
(B) the health information transmitted by the
arrangement to the sponsor or by the sponsor to the
arrangement in connection with the transaction shall be
in the form of standard data elements.
(2) Transactions.--The transactions referred to in
paragraph (1) are the following:
(A) Enrollment and disenrollment.
(B) Premium payment.
(c) Use of Health Information Network Services.--A plan sponsor, a
health provider, or a purchasing arrangement may comply with any
provision of this section by entering into an agreement or other
arrangement with a health information network service certified under
section 2121 pursuant to which the service undertakes the duties
applicable to the sponsor, provider, or arrangement under the
provision.
SEC. 2112. ACCESSING HEALTH INFORMATION FOR AUTHORIZED PURPOSES.
(a) Procurement Rule for Government Agencies.--
(1) In general.--A health information protection service
that is certified under section 2121 shall make available to a
Federal or State agency, pursuant to a cost-type contract
(as defined under the Federal Acquisition Regulation), any non-
identifiable health information, including non-identifiable health
information that is derived from protected health information, that--
(A) is held by the service or may be obtained by
the service under paragraph (2) or subsection (b);
(B) consists of data elements that are subject to a
standard under subpart A; and
(C) is requested by the agency to fulfill a
requirement under this Act.
(2) Certain information available at low cost.--If a health
information protection service requires health information
consisting of data elements that are subject to a standard
under subpart A from a plan sponsor or a health provider in
order to comply with a request made by a Federal or State
agency under paragraph (1), the sponsor or provider shall make
such information available to such organization for a charge
that does not exceed the reasonable cost of transmitting the
information.
(b) Procurement Rule for Information Protection Services.--A health
information protection service that makes non-identifiable health
information available to a Federal or State agency under subsection (a)
shall make such non-identifiable information available, for a charge
that does not exceed the reasonable cost of transmitting the
information, to any other health information protection service that--
(A) is certified under section 2121; and
(B) requests the information.
SEC. 2113. ENSURING AVAILABILITY OF INFORMATION.
The Secretary shall establish a procedure under which a plan
sponsor or health provider that does not have the ability to transmit
standard data elements directly, and does not have access to a health
information network service certified under section 2121, may comply
with the provisions of this subpart.
SEC. 2114. TIMETABLES FOR COMPLIANCE WITH REQUIREMENTS.
(a) Initial Compliance.--
(1) In general.--Not later than 12 months after the date on
which standards are adopted under subpart A with respect to a
type of transaction, or data elements for a type of health
information, a plan sponsor, health provider, or purchasing
arrangement shall comply with the requirements of this subpart
with respect to such transaction or information.
(2) Additional data elements.--Not later than 12 months
after the date on which the Secretary adopts an addition to a
set of data elements for health information under section 2104,
a plan sponsor, health provider, or purchasing arrangement
shall comply with the requirements of this subpart using such
data elements.
(b) Compliance with Modified Standards.--
(1) In general.--If the Secretary adopts a modified
standard under section 2106(c), a plan sponsor, health
provider, or purchasing arrangement shall comply with the
modified standard at such time as the Secretary determines
appropriate, taking into account the time needed to comply due
to the nature and extent of the modification.
(2) Special rule.--In the case of a modification to a
standard that does not occur within the 12-month period
beginning on the date the standard is adopted, the time
determined appropriate by the Secretary under paragraph (1) may
not be--
(A) earlier than the last day of the 90-day period
beginning on the date the modified standard is adopted;
or
(B) later than the last day of the 12-month period
beginning on the date the modified standard is adopted.
Subpart C--Miscellaneous Provisions
SEC. 2121. STANDARDS AND CERTIFICATION FOR HEALTH INFORMATION NETWORK
SERVICES.
(a) Standards for Operation.--The Secretary shall establish
standards with respect to the operation of health information network
services, including standards ensuring that such services--
(1) develop, operate, and cooperate with one another to
form the health information network;
(2) meet all of the requirements under part 2 that are
applicable to the services;
(3) make public information concerning their performance,
as measured by uniform indicators such as accessibility,
transaction responsiveness, administrative efficiency,
reliability, dependability, and any other indicator determined
appropriate by the Secretary;
(4) have security procedures that are consistent with the
requirements under part 2, including secure methods of
accessing and transmitting data; and
(5) if they are part of a larger organization, have
policies and procedures in place which isolate their activities
with respect to processing information in a manner that
prevents access to such information by such larger
organization.
(b) Certification by the Secretary.--
(1) Establishment.--Not later than 12 months after the date
of the enactment of this Act, the Secretary shall establish a
certification procedure for health information network services
which ensures that certified services are qualified to meet the
requirements of this part and the standards established by the
Secretary under this section. Such certification procedure
shall be implemented in a manner that minimizes the costs and
delays of operations for such services.
(2) Application.--Each entity desiring to be certified as a
health information network service shall apply to the Secretary
for certification in a form and manner determined appropriate
by the Secretary.
(3) Audits and reports.--The procedure established under
paragraph (1) shall provide for audits by the Secretary and
reports by an entity certified under this section as the
Secretary determines appropriate in order to monitor such
entity's compliance with the requirements of this part, part 2,
and the standards established by the Secretary under this
section.
(4) Recertification.--A health information network service
shall be recertified under this subsection at least every 3
years.
(c) Loss of Certification.--
(1) Mandatory termination.--Except as provided in paragraph
(2), if a health information network service violates a
requirement imposed on such service under part 2, its
certification under this section shall be terminated unless the
Secretary determines that appropriate corrective action has
been taken.
(2) Conditional certification.--The Secretary may establish
a procedure under which a health information network service
may remain certified on a conditional basis if the service is
operating consistently with a plan intended to correct any
violations described in paragraph (1). Such procedure may
provide for the appointment of a trustee to continue operation
of the service until the requirements for full certification
are met.
(d) Certification by Private Entities.--The Secretary may designate
private entities to conduct the certification procedures established by
the Secretary under this section. A health information network service
certified by such an entity in accordance with such designation shall
be considered to be certified by the Secretary.
(e) Information Held by Health Information Network Services.--If a
health information network service certified under this section loses
its certified status or takes any action that would threaten the
continued availability of the standard data elements of health
information held by such service, such data elements shall be
transferred to another health information network service certified
under this section that has been designated by the Secretary.
SEC. 2122. IMPOSITION OF ADDITIONAL REQUIREMENTS.
(a) In General.--Except as provided in subsection (c), after the
Secretary has established standards under section 2104 that are
necessary to make uniform and compatible for electronic transmission
the data elements that the Secretary determines are appropriate for
transmission in connection with a transaction described in subpart B,
an individual or entity may not require an individual or entity, to
provide in any manner any additional data element in connection with--
(1) the transaction; or
(2) an inquiry with respect to the transaction.
(b) Transmission Method.--Except as provided in subsection (c),
after the Secretary has established standards under section 2105
relating to the method by which data elements that the Secretary
determines are appropriate for transmission in connection with a
transaction described in subpart B may be transmitted electronically,
an individual or entity may not require an individual or entity to
transmit any data element in a manner inconsistent with the standards
in connection with--
(1) the transaction; or
(2) an inquiry with respect to the transaction.
(c) Exception.--Subsections (a) and (b) do not apply if--
(1) an individual or entity voluntarily agrees to provide
the additional data element; or
(2) a waiver is granted under subsection (d) to permit the
requirement.
(d) Conditions for Waivers.--
(1) In general.--An individual or entity may request a
waiver from the Secretary in order to impose on an individual
or entity a requirement otherwise prohibited under subsection
(a) or (b).
(2) Consideration of waiver requests.--A waiver may not be
granted under this subsection to impose an otherwise prohibited
requirement unless the Secretary determines that the value of
any additional information to be provided under the requirement
for research or other purposes significantly outweighs the
administrative cost of the imposition of the requirement,
taking into account the burden of the timing of the imposition
of the requirement.
(3) Anonymous reporting.--If an individual or entity
attempts to impose on an individual or entity a requirement
prohibited under subsection (a) or (b), the individual or
entity on whom the requirement is being imposed may contact the
Secretary. The Secretary shall develop a procedure under which
an individual or entity that contacts the Secretary under the
preceding sentence shall remain anonymous. The Secretary shall
notify the individual or entity imposing the requirement that
the requirement may not be imposed unless the other individual
or entity voluntarily agrees to such requirement or a waiver is
obtained under this subsection.
SEC. 2123. EFFECT ON STATE LAW.
(a) In General.--Except as otherwise provided in this section, a
provision, requirement, or standard under this part shall supersede any
contrary provision of State law.
(b) State ``Quill and Pen'' Laws.--A State may not establish,
continue in effect, or enforce any provision of State law that requires
medical or health plan records (including billing information) to be
maintained or transmitted in written rather than electronic form,
except where the Secretary determines that the provision is necessary
to prevent fraud and abuse, with respect to controlled substances, or
for other purposes.
(c) Public Health Reporting.--Nothing in this part shall be
construed to invalidate or limit the authority, power, or procedures
established under any law providing for the reporting of disease or
injury, child abuse, birth, or death, public health surveillance, or
public health investigation or intervention.
(d) Public Use Functions.--Nothing in this part shall be construed
to limit the authority of a Federal or State agency to make non-
identifiable health information available for public use.
(e) Payment for Health Care Services or Premiums.--Nothing in this
part shall be construed to prohibit a consumer from paying for health
care items or services, or plan or health insurance coverage premiums,
by debit, credit, or other payment cards or numbers or other electronic
payment means.
SEC. 2124. GRANTS FOR DEMONSTRATION PROJECTS.
(a) In General.--The Secretary may make grants for demonstration
projects to promote the development and use of electronically
integrated community-based clinical information systems and
computerized patient medical records.
(b) Applications.--
(1) Submission.--To apply for a grant under this section
for any fiscal year, an applicant shall submit an application
to the Secretary in accordance with the procedures established
by the Secretary.
(2) Criteria for approval.--The Secretary may not approve
an application submitted under paragraph (1) unless the
application includes assurances satisfactory to the Secretary
regarding the following:
(A) Use of existing technology.--Funds received
under this section will be used to apply
telecommunications and information systems technology
that is in existence on the date the application is
submitted in a manner that improves the quality of
health care, reduces the costs of such care, and
protects the privacy and confidentiality of information
relating to the physical or mental condition of an
individual.
(B) Use of existing information systems.--Funds
received under this section will be used--
(i) to enhance telecommunications or
information systems that are operating on the
date the application is submitted;
(ii) to integrate telecommunications or
information systems that are operating on the
date the application is submitted; or
(iii) to connect additional users to
telecommunications or information networks or
systems that are operating on the date the
application is submitted.
(C) Matching funds.--The applicant shall make
available funds for the demonstration project in an
amount that equals at least 20 percent of the cost of
the project.
(c) Geographic Diversity.--In making any grants under this section,
the Secretary shall, to the extent practicable, make grants to persons
representing different geographic areas of the United States, including
urban and rural areas.
(d) Review and Sanctions.--The Secretary shall review at least
annually the compliance of a person receiving a grant under this
section with the provisions of this section. The Secretary shall
establish a procedure for determining whether such a person has failed
to comply substantially within the provisions of this section and the
sanctions to be imposed for any such noncompliance.
(e) Annual Report.--The Secretary shall submit an annual report to
the President for transmittal to Congress containing a description of
the activities carried out under this section.
Subpart D--Assistance to the Secretary
SEC. 2131. GENERAL REQUIREMENT ON SECRETARY.
In complying with any requirements imposed on the Secretary under
this part, the Secretary shall rely on recommendations of the Health
Information Advisory Committee established under section 2132 and shall
consult with appropriate Federal agencies.
SEC. 2132. HEALTH INFORMATION ADVISORY COMMITTEE.
(a) Establishment.--There is established a committee to be known as
the Health Care Information Advisory Committee.
(b) Duty.--
(1) In general.--The committee shall--
(A) provide assistance to the Secretary in
complying with the requirements imposed on the
Secretary under this part and part 2;
(B) be generally responsible for advising the
Secretary and the Congress on the status of the health
information network; and
(C) make recommendations to correct any problems
that may occur in the network's implementation and
ongoing operations and to refine and improve the
network.
(2) Technical assistance.--In performing its duties under
this subsection, the committee shall receive technical
assistance from appropriate Federal agencies.
(c) Membership.--
(1) In general.--The committee shall consist of 15 members
to be appointed by the President not later than 60 days after
the date of the enactment of this part. The President shall
designate 1 member as the Chair.
(2) Expertise.--The membership of the committee shall
consist of individuals who are of recognized standing and
distinction and who possess the demonstrated capacity to
discharge the duties imposed on the committee.
(3) Terms.--Each member of the committee shall be appointed
for a term of 5 years, except that the members first appointed
shall serve staggered terms such that the terms of no more than
3 members expire at one time.
(4) Vacancies.--
(A) In general.--A vacancy on the committee shall
be filled in the manner in which the original
appointment was made and shall be subject to any
conditions which applied with respect to the original
appointment.
(B) Filling unexpired term.--An individual chosen
to fill a vacancy shall be appointed for the unexpired
term of the member replaced.
(C) Expiration of terms.--The term of any member
shall not expire before the date on which the member's
successor takes office.
(5) Conflicts of interest.--Members of the committee shall
disclose upon appointment to the committee or at any subsequent
time that it may occur, conflicts of interest.
(d) Meetings.--
(1) In general.--Except as provided in paragraph (2), the
committee shall meet at the call of the Chair.
(2) Initial meeting.--Not later than 30 days after the date
on which all members of the committee have been appointed, the
committee shall hold its first meeting.
(3) Quorum.--A majority of the members of the committee
shall constitute a quorum, but a lesser number of members may
hold hearings.
(e) Power to Hold Hearings.--The committee may hold such hearings,
sit and act at such times and places, take such testimony, and receive
such evidence as the committee considers advisable to carry out the
purposes of this section.
(f) Other Administrative Provisions.--Subparagraphs (C), (D), and
(H) of section 1886(e)(6) of the Social Security Act shall apply to the
committee in the same manner as they apply to the Prospective Payment
Assessment Commission.
(g) Reports.--
(1) In general.--The committee shall annually prepare and
submit to Congress and the Secretary a report including at
least an analysis of--
(A) the status of the health information network
established under this part, including whether the
network is fulfilling the purpose described in section
2100;
(B) the savings and costs of the network;
(C) the activities of health information network
services certified under section 2121, health
providers, and plan sponsors under this part;
(D) the extent to which entities described in
subparagraph (C) are meeting the standards adopted
under this part and working together to form an
integrated network that meets the needs of its users;
(E) the extent to which entities described in
subparagraph (C) are meeting the privacy and security
protections of part 2;
(F) whether the Federal Government and State
Governments are receiving information of sufficient
quality to meet their responsibilities under this Act;
(G) any problems with respect to implementation of
the network;
(H) the extent to which timetables under this part
for the adoption and implementation of standards are
being met; and
(I) any legislative recommendations related to the
health information network.
(2) Availability to the public.--Any information in the
report submitted to Congress under paragraph (1) shall be made
available to the public, unless such information may not be
disclosed by law.
(h) Duration.--Notwithstanding section 14(a) of the Federal
Advisory Committee Act, the committee shall continue in existence until
otherwise provided by law.
PART 2--FAIR HEALTH INFORMATION PRACTICES
SEC. 2140. DEFINITIONS.
(a) Definitions Relating to Protected Health Information.--For
purposes of this part:
(1) Disclose.--The term ``disclose'', when used with
respect to protected health information that is held by a
health information trustee, means to provide access to the
information, but only if such access is provided by the trustee
to a person other than--
(A) the trustee or an officer or employee of the
trustee;
(B) an affiliated person of the trustee; or
(C) a protected individual who is a subject of the
information.
(2) Disclosure.--The term ``disclosure'' means the act or
an instance of disclosing.
(3) Protected health information.--The term ``protected
health information'' means any information, whether oral or
recorded in any form or medium--
(A) that is created or received in a State by--
(i) a health care provider;
(ii) a health benefit plan sponsor;
(iii) a health oversight agency;
(iv) a health information service
organization; or
(v) a public health authority;
(B) that relates in any way to the past, present,
or future physical or mental health or condition or
functional status of a protected individual, the
provision of health care to a protected individual, or
payment for the provision of health care to a protected
individual; and
(C) that--
(i) identifies the individual; or
(ii) with respect to which there is a
reasonable basis to believe that the
information can be used to identify the
individual.
(4) Protected individual.--The term ``protected
individual'' means an individual who, with respect to a date--
(A) is living on the date; or
(B) has died within the 2-year period ending on the
date.
(5) Use.--The term ``use'', when used with respect to
protected health information that is held by a health
information trustee, means--
(A) to use, or provide access to, the information
in any manner that does not constitute a disclosure; or
(B) any act or instance of using, or providing
access, described in subparagraph (A).
(b) Definitions Relating to Health Information Trustees.--For
purposes of this part:
(1) Carrier.--The term ``carrier'' means a licensed
insurance company, a hospital or medical service corporation
(including an existing Blue Cross or Blue Shield organization,
within the meaning of section 833(c)(2) of the Internal Revenue
Code of 1986), a health maintenance organization, or other
entity licensed or certified by a State to provide health
insurance or health benefits.
(2) Health benefit plan.--The term ``health benefit plan''
means--
(A) any contract of health insurance, including any
hospital or medical service policy or certificate,
hospital or medical service plan contract, or health
maintenance organization group contract, that is
provided by a carrier; and
(B) an employee welfare benefit plan or other
arrangement insofar as the plan or arrangement provides
health benefits and is funded in a manner other than
through the purchase of one or more policies or
contracts described in subparagraph (A).
(3) Health benefit plan sponsor.--The term ``health benefit
plan sponsor'' means a person who, with respect to a specific
item of protected health information, receives, creates, uses,
maintains, or discloses the information while acting in whole
or in part in the capacity of--
(A) a carrier providing a health benefit plan;
(B) any other provider of a health benefit plan,
including any public entity that provides payments for
health care items and services under a health benefit
plan that are equivalent to payments provided by a
private person under such a plan; or
(C) an officer or employee of a person described in
subparagraph (A) or (B).
(4) Health care provider.--The term ``health care
provider'' means a person who, with respect to a specific item
of protected health information, receives, creates, uses,
maintains, or discloses the information while acting in whole
or in part in the capacity of--
(A) a person who is licensed, certified,
registered, or otherwise authorized by law to provide
an item or service that constitutes health care in the
ordinary course of business or practice of a
profession;
(B) a Federal or State program that directly
provides items or services that constitute health care
to beneficiaries; or
(C) an officer or employee of a person described in
subparagraph (A) or (B).
(5) Health information service organization.--The term
``health information service organization'' means a person who,
with respect to a specific item of protected health
information, receives, creates, uses, maintains, or discloses
the information while acting in whole or in part in the
capacity of--
(A) a person, other than an affiliated person, who
performs specific functions for which the Secretary has
authorized (by means of a designation or certification)
the person to receive access to health care data in
electronic or magnetic form that are regulated by this
Act; or
(B) an officer or employee of a person described in
subparagraph (A).
(6) Health information trustee.--The term ``health
information trustee'' means--
(A) a health care provider;
(B) a health information service organization;
(C) a health oversight agency;
(D) a health benefit plan sponsor;
(E) a public health authority;
(F) a health researcher;
(G) a person who, with respect to a specific item
of protected health information, is not described in
subparagraphs (A) through (F) but receives the
information--
(i) pursuant to--
(I) section 2157 (relating to
emergency circumstances);
(II) section 2158 (relating to
judicial and administrative purposes);
(III) section 2159 (relating to law
enforcement); or
(IV) section 2160 (relating to
subpoenas, warrants, and search
warrants); or
(ii) while acting in whole or in part in
the capacity of an officer or employee of a
person described in clause (i).
(7) Health oversight agency.--The term ``health oversight
agency'' means a person who, with respect to a specific item of
protected health information, receives, creates, uses,
maintains, or discloses the information while acting in whole
or in part in the capacity of--
(A) a person who performs or oversees the
performance of an assessment, evaluation,
determination, or investigation relating to the
licensing, accreditation, or certification of health
care providers;
(B) a person who--
(i) performs or oversees the performance of
an audit, assessment, evaluation,
determination, or investigation relating to the
effectiveness of, compliance with, or
applicability of, legal, fiscal, medical, or
scientific standards or aspects of performance
related to the delivery of, or payment for,
health care; and
(ii) is a public agency, acting on behalf
of a public agency, acting pursuant to a
requirement of a public agency, or carrying out
activities under a State or Federal statute
regulating the assessment, evaluation,
determination, or investigation; or
(C) an officer or employee of a person described in
subparagraph (A) or (B).
(8) Health researcher.--The term ``health researcher''
means a person who, with respect to a specific item of
protected health information, receives the information--
(A) pursuant to section 2156 (relating to health
research); or
(B) while acting in whole or in part in the
capacity of an officer or employee of a person
described in subparagraph (A).
(9) Public health authority.--The term ``public health
authority'' means a person who, with respect to a specific item
of protected health information, receives, creates, uses,
maintains, or discloses the information while acting in whole
or in part in the capacity of--
(A) an authority of the United States, a State, or
a political subdivision of a State that is responsible
for public health matters;
(B) a person acting under the direction of such an
authority; or
(C) an officer or employee of a person described in
subparagraph (A) or (B).
(c) Other Definitions.--For purposes of this part:
(1) Affiliated person.--The term ``affiliated person''
means a person who--
(A) is not a health information trustee;
(B) is a contractor, subcontractor, associate, or
subsidiary of a person who is a health information
trustee; and
(C) pursuant to an agreement or other relationship
with such trustee, receives, creates, uses, maintains,
or discloses protected health information.
(2) Approved health research project.--The term ``approved
health research project'' means a biomedical, epidemiological,
or health services research or statistics project, or a
research project on behavioral and social factors affecting
health, that has been approved by a certified institutional
review board.
(3) Certified institutional review board.--The term
``certified institutional review board'' means a board--
(A) established by an entity to review research
involving protected health information and the rights
of protected individuals conducted at or supported by
the entity;
(B) established in accordance with regulations of
the Secretary under section 2156(e)(1); and
(C) certified by the Secretary under section
2156(e)(2).
(4) Health care.--The term ``health care''--
(A) means--
(i) any preventive, diagnostic,
therapeutic, rehabilitative, maintenance, or
palliative care, counseling, service, or
procedure--
(I) with respect to the physical or
mental condition, or functional status,
of an individual; or
(II) affecting the structure or
function of the human body or any part
of the human body, including banking of
blood, sperm, organs, or any other
tissue; or
(ii) any sale or dispensing of a drug,
device, equipment, or other item to an
individual, or for the use of an individual,
pursuant to a prescription; but
(B) does not include any item or service that is
not furnished for the purpose of maintaining or
improving the health of an individual.
(5) Law enforcement inquiry.--The term ``law enforcement
inquiry'' means a lawful investigation or official proceeding
inquiring into a violation of, or failure to comply with, any
criminal or civil statute or any regulation, rule, or order
issued pursuant to such a statute.
(6) Person.--The term ``person'' includes an authority of
the United States, a State, or a political subdivision of a
State.
Subpart A--Duties of Health Information Trustees
SEC. 2141. INSPECTION OF PROTECTED HEALTH INFORMATION.
(a) In General.--Except as provided in subsection (b), a health
information trustee described in subsection (g)--
(1) shall permit a protected individual to inspect any
protected health information about the individual that the
trustee maintains, any accounting with respect to such
information required under section 2144, and any copy of an
authorization required under section 2152 that pertains to such
information;
(2) shall provide the protected individual with a copy of
the information upon request by the individual and subject to
any conditions imposed by the trustee under subsection (d);
(3) shall permit a person who has been designated in
writing by the protected individual to inspect the information
on behalf of the individual or to accompany the individual
during the inspection; and
(4) may offer to explain or interpret information that is
inspected or copied under this subsection.
(b) Exceptions.--A health information trustee is not required by
this section to permit inspection or copying of protected health
information by a protected individual if any of the following
conditions apply:
(1) Mental health treatment notes.--The information
consists of psychiatric, psychological, or mental health
treatment notes about the individual, the trustee determines in
the exercise of reasonable professional judgment that
inspection or copying of the notes would cause sufficient harm
to the protected individual so as to outweigh the desirability
of permitting access, and the trustee does not disclose the
notes to any person not directly engaged in treating the
individual, except with the authorization of the individual or
under compulsion of law.
(2) Information about others.--The information relates to
an individual, other than the protected individual or a health
care provider, and the trustee determines in the exercise of reasonable
professional judgment that inspection or copying of the information
would cause sufficient harm to one or both of the individuals so as to
outweigh the desirability of permitting access.
(3) Endangerment to life or safety.--Inspection or copying
of the information could reasonably be expected to endanger the
life or physical safety of an individual.
(4) Confidential source.--The information identifies or
could reasonably lead to the identification of an individual
(other than a health care provider) who provided information
under a promise of confidentiality to a health care provider
concerning a protected individual who is a subject of the
information.
(5) Administrative purposes.--The information--
(A) is used by the trustee solely for
administrative purposes and not in the provision of
health care to a protected individual who is a subject
of the information; and
(B) is not disclosed by the trustee to any person.
(6) Duplicative information.--The information duplicates
information available for inspection under subsection (a).
(7) Information compiled in anticipation of litigation.--
The information is compiled principally--
(A) in anticipation of a civil, criminal, or
administrative action or proceeding; or
(B) for use in such an action or proceeding.
(c) Inspection and Copying of Segregable Portion.--A health
information trustee shall permit inspection and copying under
subsection (a) of any reasonably segregable portion of a record after
deletion of any portion that is exempt under subsection (b).
(d) Conditions.--A health information trustee may--
(1) require a written request for the inspection and
copying of protected health information under this section; and
(2) charge a reasonable cost-based fee for--
(A) permitting inspection of information under this
section; and
(B) providing a copy of protected health
information under this section.
(e) Statement of Reasons for Denial.--If a health information
trustee denies in whole or in part a request for inspection or copying
under this section, the trustee shall provide the protected individual
who made the request with a written statement of the reasons for the
denial.
(f) Deadline.--A health information trustee shall comply with or
deny a request for inspection or copying of protected health
information under this section within the 30-day period beginning on
the date the trustee receives the request.
(g) Applicability.--This section applies to a health information
trustee who is--
(1) a health benefit plan sponsor;
(2) a health care provider;
(3) a health information service organization;
(4) a health oversight agency; or
(5) a public health authority.
SEC. 2142. AMENDMENT OF PROTECTED HEALTH INFORMATION.
(a) In General.--A health information trustee described in
subsection (f) shall, within the 45-day period beginning on the date
the trustee receives from a protected individual about whom the trustee
maintains protected health information a written request that the
trustee correct or amend the information, complete the duties described
in one of the following paragraphs:
(1) Correction or amendment and notification.--The trustee
shall--
(A) make the correction or amendment requested;
(B) inform the protected individual of the
amendment or correction that has been made;
(C) make reasonable efforts to inform any person
who is identified by the protected individual, who is
not an employee of the trustee, and to whom the
uncorrected or unamended portion of the information was
previously disclosed of the correction or amendment
that has been made; and
(D) at the request of the individual, make
reasonable efforts to inform any known source of the
uncorrected or unamended portion of the information
about the correction or amendment that has been made.
(2) Reasons for refusal and review procedures.--The trustee
shall inform the protected individual of--
(A) the reasons for the refusal of the trustee to
make the correction or amendment;
(B) any procedures for further review of the
refusal; and
(C) the individual's right to file with the trustee
a concise statement setting forth the requested
correction or amendment and the individual's reasons
for disagreeing with the refusal of the trustee.
(b) Standards for Correction or Amendment.--A trustee shall correct
or amend protected health information in accordance with a request made
under subsection (a) if the trustee determines that the information is
not accurate, relevant, timely, or complete for the purposes for which
the information may be used or disclosed by the trustee.
(c) Statement of Disagreement.--After a protected individual has
filed a statement of disagreement under subsection (a)(2)(C), the
trustee, in any subsequent disclosure of the disputed portion of the
information, shall include a copy of the individual's statement and may
include a concise statement of the trustee's reasons for not making the
requested correction or amendment.
(d) Construction.--This section may not be construed to require a
health information trustee to conduct a hearing or proceeding
concerning a request for a correction or amendment to protected health
information the trustee maintains.
(e) Correction.--For purposes of subsection (a), a correction is
deemed to have been made to protected health information when--
(1) information that is not timely, accurate, relevant, or
complete is clearly marked as incorrect; or
(2) supplementary correct information is made part of the
information and adequately cross-referenced.
(f) Applicability.--This section applies to a health information
trustee who is--
(1) a health benefit plan sponsor;
(2) a health care provider;
(3) a health information service organization;
(4) a health oversight agency; or
(5) a public health authority.
SEC. 2143. NOTICE OF INFORMATION PRACTICES.
(a) Preparation of Notice.--A health information trustee described
in subsection (d) shall prepare a written notice of information
practices describing the following:
(1) The rights under this part of a protected individual
who is the subject of protected health information, including
the right to inspect and copy such information and the right to
seek amendments to such information, and the procedures for
authorizing disclosures of protected health information and for
revoking such authorizations.
(2) The procedures established by the trustee for the
exercise of such rights.
(3) The uses and disclosures of protected health
information that are authorized under this part.
(b) Dissemination of Notice.--A health information trustee--
(1) shall, upon request, provide any person with a copy of
the trustee's notice of information practices (described in
subsection (a)); and
(2) shall make reasonable efforts to inform persons in a
clear and conspicuous manner of the existence and availability
of such notice.
(c) Model Notices.--Not later than July 1, 1996, the Secretary,
after notice and opportunity for public comment, shall develop and
disseminate model notices of information practices for use by health
information trustees under this section.
(d) Applicability.--This section applies to a health information
trustee who is--
(1) a health benefit plan sponsor;
(2) a health care provider;
(3) a health information service organization; or
(4) a health oversight agency.
SEC. 2144. ACCOUNTING FOR DISCLOSURES.
(a) In General.--Except as provided in subsection (b) and section
2154, each health information trustee shall create and maintain, with
respect to any protected health information the trustee discloses, a
record of--
(1) the date and purpose of the disclosure;
(2) the name of the person to whom the disclosure was made;
(3) the address of the person to whom the disclosure was
made or the location to which the disclosure was made; and
(4) where practicable, a description of the information
disclosed.
(b) Regulations.--Not later than July 1, 1996, the Secretary shall
promulgate regulations that exempt a health information trustee from
maintaining a record under subsection (a) with respect to protected
health information disclosed by the trustee for purposes of peer
review, licensing, certification, accreditation, and similar
activities.
SEC. 2145. SECURITY.
(a) In General.--Each health information trustee who receives or
creates protected health information that is subject to this part shall
maintain reasonable and appropriate administrative, technical, and
physical safeguards--
(1) to ensure the integrity and confidentiality of the
information;
(2) to protect against any reasonably anticipated--
(A) threats or hazards to the security or integrity
of the information; and
(B) unauthorized uses or disclosures of the
information; and
(3) otherwise ensure compliance with this part by the
trustee and the officers and employees of the trustee.
(b) Guidelines.--Not later than July 1, 1996, the Secretary, after
notice and opportunity for public comment, shall develop and
disseminate guidelines for the implementation of this section. The
guidelines shall take into account--
(1) the technical capabilities of record systems used to
maintain protected health information;
(2) the costs of security measures;
(3) the need for training persons who have access to
protected health information; and
(4) the value of audit trails in computerized record
systems.
Subpart B--Use and Disclosure of Protected Health Information
SEC. 2151. GENERAL LIMITATIONS ON USE AND DISCLOSURE.
(a) Use.--Except as otherwise provided under this part, a health
information trustee may use protected health information only for a
purpose--
(1) that is compatible with and directly related to the
purpose for which the information--
(A) was collected; or
(B) was received by the trustee; or
(2) for which the trustee is authorized to disclose the
information under this part.
(b) Disclosure.--A health information trustee may disclose
protected health information only as authorized under this part.
(c) Scope of Uses and Disclosures.--
(1) In general.--A use or disclosure of protected health
information by a health information trustee shall be limited,
when practicable, to the minimum amount of information
necessary to accomplish the purpose for which the information
is used or disclosed.
(2) Guidelines.--Not later than July 1, 1996, the
Secretary, after notice and opportunity for public comment,
shall issue guidelines to implement paragraph (1), which shall
take into account the technical capabilities of the record
systems used to maintain protected health information and the
costs of limiting use and disclosure.
(d) Identification of Disclosed Information as Protected
Information.--Except with respect to protected health information that
is disclosed under section 2154 (relating to next of kin and directory
information), a health information trustee may disclose protected
health information only if the recipient has been notified that the
information is protected health information that is subject to this
part.
(e) Agreement to Limit Use or Disclosure.--A health information
trustee who receives protected health information from any person
pursuant to a written agreement to restrict use or disclosure of the
information to a greater extent than otherwise would be required under
this part shall comply with the terms of the agreement, except where
use or disclosure of the information in violation of the agreement is
required by law. A trustee who fails to comply with the preceding
sentence shall be subject to section 2191 (relating to civil actions)
with respect to such failure.
(f) No General Requirement to Disclose.--Nothing in this part shall
be construed to require a health information trustee to disclose
protected health information not otherwise required to be disclosed by
law.
SEC. 2152. AUTHORIZATIONS FOR DISCLOSURE OF PROTECTED HEALTH
INFORMATION.
(a) Written Authorizations.--A health information trustee, other
than a health information service organization, may disclose protected
health information pursuant to an authorization executed by the
protected individual who is the subject of the information, if each of
the following requirements is satisfied:
(1) Writing.--The authorization is in writing, signed by
the individual, and dated on the date of such signature.
(2) Separate form.--The authorization is not on a form used
to authorize or facilitate the provision of, or payment for,
health care.
(3) Trustee described.--The trustee is specifically named
or generically described in the authorization as authorized to
disclose such information.
(4) Recipient described.--The person to whom the
information is to be disclosed is specifically named or
generically described in the authorization as a person to whom
such information may be disclosed.
(5) Statement of intended uses and disclosures received.--
The authorization contains an acknowledgment that the
individual has received a statement described in subsection (b)
from such person.
(6) Information described.--The information to be disclosed
is described in the authorization.
(7) Authorization timely received.--The authorization is
received by the trustee during a period described in subsection
(c)(1).
(8) Disclosure timely made.--The disclosure occurs during a
period described in subsection (c)(2).
(b) Statement of Intended Uses and Disclosures.--
(1) In general.--A person who wishes to receive from a
health information trustee protected health information about a
protected individual pursuant to an authorization executed by
the individual shall supply the individual, in writing and on a
form that is distinct from the authorization, with a statement
of the uses for which the person intends the information and
the disclosures the person intends to make of the information.
Such statement shall be supplied before the authorization is
executed.
(2) Enforcement.--If the person uses or discloses the
information in a manner that is inconsistent with such
statement, the person shall be subject to section 2191
(relating to civil actions) with respect to such failure,
except where such use or disclosure is required by law.
(3) Model statements.--Not later than July 1, 1996, the
Secretary, after notice and opportunity for public comment,
shall develop and disseminate model statements of intended uses
and disclosures of the type described in paragraph (1).
(c) Time Limitations on Authorizations.--
(1) Receipt by trustee.--For purposes of subsection (a)(7),
an authorization is timely received if it is received by the
trustee during--
(A) the 1-year period beginning on the date that
the authorization is signed under subsection (a)(1), if
the authorization permits the disclosure of protected
health information to--
(i) a health benefit plan sponsor;
(ii) a health care provider;
(iii) a health oversight agency;
(iv) a public health authority;
(v) a health researcher; or
(vi) a person who provides counseling or
social services to individuals; or
(B) the 30-day period beginning on the date that
the authorization is signed under subsection (a)(1), if
the authorization permits the disclosure of protected
health information to a person other than a person
described in subparagraph (A).
(2) Disclosure by trustee.--For purposes of subsection
(a)(8), a disclosure is timely made if it occurs before--
(A) the date or event (if any) specified in the
authorization upon which the authorization expires; and
(B) the expiration of the 6-month period beginning
on the date the trustee receives the authorization.
(d) Revocation or Amendment of Authorization.--
(1) In general.--A protected individual in writing may
revoke or amend an authorization described in subsection (a),
in whole or in part, at any time, except insofar as--
(A) disclosure of protected health information has
been authorized to permit validation of expenditures
based on health condition by a government authority; or
(B) action has been taken in reliance on the
authorization.
(2) Notice of revocation.--A health information trustee who
discloses protected health information in reliance on an
authorization that has been revoked shall not be subject to any
liability or penalty under this part if--
(A) the reliance was in good faith;
(B) the trustee had no notice of the revocation;
and
(C) the disclosure was otherwise in accordance with
the requirements of this section.
(e) Additional Requirements of Trustee.--A health information
trustee may impose requirements for an authorization that are in
addition to the requirements in this section.
(f) Copy.--A health information trustee who discloses protected
health information pursuant to an authorization under this section
shall maintain a copy of the authorization.
(g) Construction.--This section may not be construed--
(1) to require a health information trustee to disclose
protected health information; or
(2) to limit the right of a health information trustee to
charge a fee for the disclosure or reproduction of protected
health information.
(h) Subpoenas, Warrants, and Search Warrants.--If a health
information trustee discloses protected health information pursuant to
an authorization in order to comply with an administrative subpoena or
warrant or a judicial subpoena or search warrant, the authorization--
(1) shall specifically authorize the disclosure for the
purpose of permitting the trustee to comply with the subpoena,
warrant, or search warrant; and
(2) shall otherwise meet the requirements in this section.
SEC. 2153. TREATMENT, PAYMENT, AND OVERSIGHT.
(a) Disclosures by Plans, Providers, and Oversight Agencies.--A
health information trustee described in subsection (d) may disclose
protected health information to a health benefit plan sponsor, health
care provider, or health oversight agency if the disclosure is--
(1) for the purpose of providing health care and a
protected individual who is a subject of the information has
not previously objected to the disclosure in writing;
(2) for the purpose of providing for the payment for health
care furnished to an individual; or
(3) for use by a health oversight agency for a purpose that
is described in subparagraph (A) or (B)(i) of section
2140(b)(7).
(b) Disclosures by Certain Other Trustees.--A health information
trustee may disclose protected health information to a health care
provider if--
(1) the disclosure is for the purpose described in
subsection (a)(1); and
(2) the trustee--
(A) is a public health authority;
(B) received protected health information pursuant
to section 2157 (relating to emergency circumstances);
or
(C) is an officer or employee of a trustee
described in subsection (B).
(c) Use in Action Against Individual.--A person who receives
protected health information about a protected individual through a
disclosure under this section may not use or disclose the information
in any administrative, civil, or criminal action or investigation
directed against the individual, except an action or investigation
arising out of and related to receipt of health care or payment for
health care.
(d) Applicability.--A health information trustee referred to in
subsection (a) is any of the following:
(1) A health benefit plan sponsor.
(2) A health care provider.
(3) A health oversight agency.
(4) A health information service organization.
SEC. 2154. NEXT OF KIN AND DIRECTORY INFORMATION.
(a) Next of Kin.--A health information trustee who is a health care
provider, who received protected health information pursuant to section
2157 (relating to emergency circumstances), or who is an officer or
employee of such a recipient may orally disclose protected health
information about a protected individual to the next of kin of the
individual (as defined under State law), or to a person with whom the
individual has a close personal relationship, if--
(1) the trustee has no reason to believe that the
individual would consider the information especially sensitive;
(2) the individual has not previously objected to the
disclosure;
(3) the disclosure is consistent with good medical or other
professional practice; and
(4) the information disclosed is limited to information
about health care that is being provided to the individual at
or about the time of the disclosure.
(b) Directory Information.--
(1) In General.--A health information trustee who is a
health care provider, who received protected health information
pursuant to section 2157 (relating to emergency circumstances),
or who is an officer or employee of a such a recipient may
disclose to any person the information described in paragraph
(2) if--
(A) a protected individual who is a subject of the
information has not objected in writing to the
disclosure;
(B) the disclosure is otherwise consistent with
good medical and other professional practice; and
(C) the information does not reveal specific
information about the physical or mental condition or
functional status of a protected individual or about
the health care provided to a protected individual.
(2) Information described.--The information referred to in
paragraph (1) is the following:
(A) The name of an individual receiving health care
from a health care provider on a premises controlled by
the provider.
(B) The location of the individual on such
premises.
(C) The general health status of the individual,
described in terms of critical, poor, fair, stable,
satisfactory, or terms denoting similar conditions.
(c) No Accounting Required.--A health information trustee who
discloses protected health information under this section is not
required to maintain an accounting of the disclosure under section
2144.
(d) Recipients.--A person to whom protected health information is
disclosed under this section shall not, by reason of such disclosure,
be subject to any requirement under this part.
SEC. 2155. PUBLIC HEALTH.
(a) In General.--A health information trustee who is a health care
provider or a public health authority may disclose protected health
information to--
(1) a public health authority for use in legally
authorized--
(A) disease or injury reporting;
(B) public health surveillance; or
(C) public health investigation or intervention; or
(2) an individual who is authorized by law to receive the
information in a public health intervention.
(b) Use in Action Against Individual.--A public health authority
who receives protected health information about a protected individual
through a disclosure under this section may not use or disclose the
information in any administrative, civil, or criminal action or
investigation directed against the individual, except where the use or
disclosure is authorized by law for protection of the public health.
(c) Individual Recipients.--An individual to whom protected health
information is disclosed under subsection (a)(2) shall not, by reason
of such disclosure, be subject to any requirement under this part.
SEC. 2156. HEALTH RESEARCH.
(a) In General.--A health information trustee described in
subsection (d) may disclose protected health information to a person
if--
(1) the person is conducting an approved health research
project;
(2) the information is to be used in the project; and
(3) the project has been determined by a certified
institutional review board to be--
(A) of sufficient importance so as to outweigh the
intrusion into the privacy of the protected individual
who is the subject of the information that would result
from the disclosure; and
(B) impracticable to conduct without the
information.
(b) Disclosures by Health Information Service Organizations.--A
health information service organization may disclose protected health
information under subsection (a) only if the certified institutional
review board referred to in subsection (a)(3) has been certified as
being qualified to make determinations under such subsection with
respect to disclosures by such organizations.
(c) Limitations on Use and Disclosure; Obligations of Recipient.--A
health researcher who receives protected health information about a
protected individual pursuant to subsection (a)--
(1) may use the information solely for purposes of an
approved health research project;
(2) may not use or disclose the information in any
administrative, civil, or criminal action or investigation
directed against the individual; and
(3) shall remove or destroy, at the earliest opportunity
consistent with the purposes of the approved health research
project in connection with which the disclosure was made,
information that would enable an individual to be identified,
unless a certified institutional review board has determined
that there is a health or research justification for retention
of such identifiers and there is an adequate plan to protect
the identifiers from use and disclosure that is inconsistent
with this part.
(d) Applicability.--A health information trustee referred to in
subsection (a) is any health information trustee other than a person
who, with respect to the specific protected health information to be
disclosed under such subsection, received the information--
(1) pursuant to--
(A) section 2158 (relating to judicial and
administrative purposes);
(B) paragraph (1), (2), or (3) of section 2159(a)
(relating to law enforcement); or
(C) section 2160 (relating to subpoenas, warrants,
and search warrants); or
(2) while acting in whole or in part in the capacity of an
officer or employee of a person described in paragraph (1).
(e) Requirements for Institutional Review Boards.--
(1) Regulations.--Not later than July 1, 1996, the
Secretary, after opportunity for notice and comment, shall
promulgate regulations establishing requirements for certified
institutional review boards under this part. The regulations
shall be based on regulations promulgated under section 491(a)
of the Public Health Service Act and shall ensure that
certified institutional review boards are qualified to assess
and protect the confidentiality of research subjects. The
regulations shall include specific requirements for certified
institutional review boards that make determinations under
subsection (a)(3) with respect to disclosures by health
information service organizations.
(2) Certification.--The Secretary shall certify that an
institutional review board satisfies the requirements of the
regulations promulgated under paragraph (1).
SEC. 2157. EMERGENCY CIRCUMSTANCES.
(a) In General.--A health information trustee may disclose
protected health information if the trustee believes, on reasonable
grounds, that the disclosure is necessary to prevent or lessen a
serious and imminent threat to the health or safety of an individual.
(b) Use in Action Against Individual.--A person who receives
protected health information about a protected individual through a
disclosure under this section may not use or disclose the information
in any administrative, civil, or criminal action or investigation
directed against the individual, except an action or investigation
arising out of and related to receipt of health care or payment for
health care.
SEC. 2158. JUDICIAL AND ADMINISTRATIVE PURPOSES.
(a) In General.--A health information trustee described in
subsection (d) may disclose protected health information--
(1) pursuant to the Federal Rules of Civil Procedure, the
Federal Rules of Criminal Procedure, or comparable rules of
other courts or administrative agencies in connection with
litigation or proceedings to which a protected individual who
is a subject of the information is a party and in which the
individual has placed the individual's physical or mental
condition or functional status in issue;
(2) if directed by a court in connection with a court-
ordered examination of an individual; or
(3) to assist in the identification of a dead individual.
(b) Written Statement.--A person seeking protected health
information about a protected individual held by health information
trustee under--
(1) subsection (a)(1)--
(A) shall notify the protected individual or the
attorney of the protected individual of the request for
the information;
(B) shall provide the trustee with a signed
document attesting--
(i) that the protected individual is a
party to the litigation or proceedings for
which the information is sought;
(ii) that the individual has placed the
individual's physical or mental condition or
functional status in issue; and
(iii) the date on which the protected
individual or the attorney of the protected
individual was notified under subparagraph (A);
and
(C) shall not accept any requested protected health
information from the trustee until the termination of
the 10-day period beginning on the date notice was
given under subparagraph (A); or
(2) subsection (a)(3) shall provide the trustee with a
written statement that the information is sought to assist in
the identification of a dead individual.
(c) Use and Disclosure.--A person to whom protected health
information is disclosed under this section may use and disclose the
information only to accomplish the purpose for which the disclosure was
made.
(d) Applicability.--A health information trustee referred to in
subsection (a) is any of the following:
(1) A health benefit plan sponsor.
(2) A health care provider.
(3) A health oversight agency.
(4) A person who, with respect to the specific protected
health information to be disclosed under such subsection,
received the information--
(A) pursuant to--
(i) section 2157 (relating to emergency
circumstances); or
(ii) section 2160 (relating to subpoenas,
warrants, and search warrants); or
(B) while acting in whole or in part in the
capacity of an officer or employee of a person
described in subparagraph (A).
SEC. 2159. LAW ENFORCEMENT.
(a) In General.--A health information trustee, other than a health
information service organization, may disclose protected health
information to a law enforcement agency, other than a health oversight
agency--
(1) if the information is disclosed for use in an
investigation or prosecution of a health information trustee;
(2) in connection with criminal activity committed against
the trustee or an affiliated person of the trustee or on
premises controlled by the trustee; or
(3) if the information is needed to determine whether a
crime has been committed and the nature of any crime that may
have been committed (other than a crime that may have been
committed by the protected individual who is the subject of the
information).
(b) Additional Authority of Certain Trustees.--A health information
trustee who is not a health information service organization, a public
health authority, or a health researcher may disclose protected health
information to a law enforcement agency (other than a health oversight
agency)--
(1) to assist in the identification or location of a
victim, fugitive, or witness in a law enforcement inquiry;
(2) pursuant to a law requiring the reporting of specific
health care information to law enforcement authorities; or
(3) if the information is specific health information
described in paragraph (2) and the trustee is operated by a
Federal agency;
(c) Certification.--Where a law enforcement agency requests a
health information trustee to disclose protected health information
under subsection (a) or (b)(1), the agency shall provide the trustee
with a written certification that--
(1) is signed by a supervisory official of a rank
designated by the head of the agency;
(2) specifies the information requested; and
(3) states that the information is needed for a lawful
purpose under this section.
(d) Restrictions on Disclosure and Use.--A person who receives
protected health information about a protected individual through a
disclosure under this section may not use or disclose the information--
(1) in any administrative, civil, or criminal action or
investigation directed against the individual, except an action
or investigation arising out of and directly related to the
action or investigation for which the information was obtained;
and
(2) otherwise unless the use or disclosure is necessary to
fulfill the purpose for which the information was obtained and
is not prohibited by any other provision of law.
SEC. 2160. SUBPOENAS, WARRANTS, AND SEARCH WARRANTS.
(a) In General.--A health information trustee described in
subsection (g) may disclose protected health information if the
disclosure is pursuant to any of the following:
(1) A subpoena issued under the authority of a grand jury
and the trustee is provided a written certification by the
grand jury that the grand jury has complied with the applicable
access provisions of section 2171.
(2) An administrative subpoena or warrant or a judicial
subpoena or search warrant and the trustee is provided a
written certification by the person seeking the information
that the person has complied with the applicable access
provisions of section 2171 or 2173(a).
(3) An administrative subpoena or warrant or a judicial
subpoena or search warrant and the disclosure otherwise meets
the conditions of one of sections 2153 through 2159.
(b) Authority of All Trustees.--Any health information trustee may
disclose protected health information if the disclosure is pursuant to
subsection (a)(3).
(c) Restrictions on Use and Disclosure.--Protected health
information about a protected individual that is disclosed by a health
information trustee pursuant to--
(1) subsection (a)(2) may not be otherwise used or
disclosed by the recipient unless the use or disclosure is
necessary to fulfill the purpose for which the information was
obtained; and
(2) subsection (a)(3) may not be used or disclosed by the
recipient unless the recipient complies with the conditions and
restrictions on use and disclosure with which the recipient
would have been required to comply if the disclosure by the
trustee had been made under the section referred to in
subsection (a)(3) the conditions of which were met by the
disclosure.
(d) Restrictions on Grand Juries.--Protected health information
that is disclosed by a health information trustee under subsection
(a)(1)--
(1) shall be returnable on a date when the grand jury is in
session and actually presented to the grand jury;
(2) shall be used only for the purpose of considering
whether to issue an indictment or report by that grand jury, or
for the purpose of prosecuting a crime for which that
indictment or report is issued, or for a purpose authorized by
rule 6(e) of the Federal Rules of Criminal Procedure or a
comparable State rule;
(3) shall be destroyed or returned to the trustee if not
used for one of the purposes specified in paragraph (2); and
(4) shall not be maintained, or a description of the
contents of such information shall not be maintained, by any
government authority other than in the sealed records of the
grand jury, unless such information has been used in the
prosecution of a crime for which the grand jury issued an
indictment or presentment or for a purpose authorized by rule
6(e) of the Federal Rules of Criminal Procedure or a comparable
State rule.
(e) Use in Action Against Individual.--A person who receives
protected health information about a protected individual through a
disclosure under this section may not use or disclose the information
in any administrative, civil, or criminal action or investigation
directed against the individual, except an action or investigation
arising out of and directly related to the inquiry for which the
information was obtained;
(f) Construction.--Nothing in this section shall be construed as
authority for a health information trustee to refuse to comply with a
valid administrative subpoena or warrant or a valid judicial subpoena
or search warrant that meets the requirements of this part.
(g) Applicability.--A health information trustee referred to in
subsection (a) is any trustee other than the following:
(1) A health information service organization.
(2) A public health authority.
(3) A health researcher.
SEC. 2161. HEALTH INFORMATION SERVICE ORGANIZATIONS.
A health information trustee may disclose protected health
information to a health information service organization for the
purpose of permitting the organization to perform a function for which
the Secretary has authorized (by means of a designation or
certification) the organization to receive access to health care data
in electronic or magnetic form that are regulated by this Act.
Subpart C--Access Procedures and Challenge Rights
SEC. 2171. ACCESS PROCEDURES FOR LAW ENFORCEMENT SUBPOENAS, WARRANTS,
AND SEARCH WARRANTS.
(a) Probable Cause Requirement.--A government authority may not
obtain protected health information about a protected individual from a
health information trustee under paragraph (1) or (2) of section
2160(a) for use in a law enforcement inquiry unless there is probable
cause to believe that the information is relevant to a legitimate law
enforcement inquiry being conducted by the government authority.
(b) Warrants and Search Warrants.--A government authority that
obtains protected health information about a protected individual from
a health information trustee under circumstances described in
subsection (a) and pursuant to a warrant or search warrant shall, not
later than 30 days after the date the warrant was served on the
trustee, serve the individual with, or mail to the last known address
of the individual, a copy of the warrant.
(c) Subpoenas.--Except as provided in subsection (d), a government
authority may not obtain protected health information about a protected
individual from a health information trustee under circumstances
described in subsection (a) and pursuant to a subpoena unless a copy of
the subpoena has been served by hand delivery upon the individual, or
mailed to the last known address of the individual, on or before the
date on which the subpoena was served on the trustee, together with a
notice (published by the Secretary under section 2175(1)) of the
individual's right to challenge the subpoena in accordance with section
2172, and--
(1) 30 days have passed from the date of service, or 30
days have passed from the date of mailing, and within such time
period the individual has not initiated a challenge in
accordance with section 2172; or
(2) disclosure is ordered by a court under section 2172.
(d) Application for Delay.--
(1) In general.--A government authority may apply to an
appropriate court to delay (for an initial period of not longer
than 90 days) serving a copy of a subpoena and a notice
otherwise required under subsection (c) with respect to a law
enforcement inquiry. The government authority may apply to the
court for extensions of the delay.
(2) Reasons for delay.--An application for a delay, or
extension of a delay, under this subsection shall state, with
reasonable specificity, the reasons why the delay or extension
is being sought.
(3) Ex parte order.--The court shall enter an ex parte
order delaying, or extending the delay of, the notice and an
order prohibiting the trustee from revealing the request for,
or the disclosure of, the protected health information being
sought if the court finds that--
(A) the inquiry being conducted is within the
lawful jurisdiction of the government authority seeking
the protected health information;
(B) there is probable cause to believe that the
protected health information being sought is relevant
to a legitimate law enforcement inquiry being conducted
by the government authority;
(C) the government authority's need for the
information outweighs the privacy interest of the
protected individual who is the subject of the
information; and
(D) there are reasonable grounds to believe that
receipt of a notice by the individual will result in--
(i) endangering the life or physical safety
of any individual;
(ii) flight from prosecution;
(iii) destruction of or tampering with
evidence or the information being sought; or
(iv) intimidation of potential witnesses.
(4) Service of application on individual.--Upon the
expiration of a period of delay of notice under this
subsection, the government authority shall serve upon the
individual, with the service of the subpoena and the notice, a
copy of any applications filed and approved under this
subsection.
SEC. 2172. CHALLENGE PROCEDURES FOR LAW ENFORCEMENT SUBPOENAS.
(a) Motion to Quash Subpoena.--Within 30 days of the date of
service, or 30 days of the date of mailing, of a subpoena of a
government authority seeking protected health information about a
protected individual from a health information trustee under paragraph
(1) or (2) of section 2160(a) (except a subpoena to which section 2173
applies), the individual may file (without filing fee) a motion to
quash the subpoena--
(1) in the case of a State judicial subpoena, in the court
which issued the subpoena;
(2) in the case of a subpoena issued under the authority of
a State that is not a State judicial subpoena, in a court of
competent jurisdiction;
(3) in the case of a subpoena issued under the authority of
a Federal court, in any court of the United States of competent
jurisdiction; or
(4) in the case of any other subpoena issued under the
authority of the United States, in--
(A) the United States district court for the
district in which the individual resides or in which
the subpoena was issued; or
(B) another United States district court of
competent jurisdiction.
(b) Copy.--A copy of the motion shall be served by the individual
upon the government authority by delivery of registered or certified
mail.
(c) Affidavits and Sworn Documents.--The government authority may
file with the court such affidavits and other sworn documents as
sustain the validity of the subpoena. The individual may file with the
court, within 5 days of the date of the authority's filing, affidavits
and sworn documents in response to the authority's filing. The court,
upon the request of the individual, the government authority, or both,
may proceed in camera.
(d) Proceedings and Decision on Motion.--The court may conduct such
proceedings as it deems appropriate to rule on the motion. All such
proceedings shall be completed, and the motion ruled on, within 10
calendar days of the date of the government authority's filing.
(e) Extension of Time Limits for Good Cause.--The court, for good
cause shown, may at any time in its discretion enlarge the time limits
established by subsections (c) and (d).
(f) Standard for Decision.--A court may deny a motion under
subsection (a) if it finds that there is probable cause to believe that
the protected health information being sought is relevant to a
legitimate law enforcement inquiry being conducted by the government
authority, unless the court finds that the individual's privacy
interest outweighs the government authority's need for the information.
The individual shall have the burden of demonstrating that the
individual's privacy interest outweighs the need established by the
government authority for the information.
(g) Specific Considerations With Respect to Privacy Interest.--In
determining under subsection (f) whether an individual's privacy
interest outweighs the government authority's need for the information,
the court shall consider--
(1) the particular purpose for which the information was
collected by the trustee;
(2) the degree to which disclosure of the information will
embarrass, injure, or invade the privacy of the individual;
(3) the effect of the disclosure on the individual's future
health care;
(4) the importance of the inquiry being conducted by the
government authority, and the importance of the information to
that inquiry; and
(5) any other factor deemed relevant by the court.
(h) Attorney's Fees.--In the case of any motion brought under
subsection (a) in which the individual has substantially prevailed, the
court, in its discretion, may assess against a government authority a
reasonable attorney's fee and other litigation costs (including expert
fees) reasonably incurred.
(i) No Interlocutory Appeal.--A court ruling denying a motion to
quash under this section shall not be deemed a final order and no
interlocutory appeal may be taken therefrom by the individual. An
appeal of such a ruling may be taken by the individual within such
period of time as is provided by law as part of any appeal from a final
order in any legal proceeding initiated against the individual arising
out of or based upon the protected health information disclosed.
SEC. 2173. ACCESS AND CHALLENGE PROCEDURES FOR OTHER SUBPOENAS.
(a) In General.--A person (other than a government authority
seeking protected health information under circumstances described in
section 2171(a)) may not obtain protected health information about a
protected individual from a health information trustee pursuant to a
subpoena under section 2160(a)(2) unless--
(1) a copy of the subpoena has been served upon the
individual or mailed to the last known address of the
individual on or before the date on which the subpoena was
served on the trustee, together with a notice (published by the
Secretary under section 2175(2)) of the individual's right to
challenge the subpoena, in accordance with subsection (b); and
(2) either--
(A) 30 days have passed from the date of service or
30 days have passed from the date of the mailing and
within such time period the individual has not
initiated a challenge in accordance with subsection
(b); or
(B) disclosure is ordered by a court under such
subsection.
(b) Motion to Quash.--Within 30 days of the date of service or 30
days of the date of mailing of a subpoena seeking protected health
information about a protected individual from a health information
trustee under subsection (a), the individual may file (without filing
fee) in any court of competent jurisdiction, a motion to quash the
subpoena, with a copy served on the person seeking the information. The
individual may oppose, or seek to limit, the subpoena on any grounds
that would otherwise be available if the individual were in possession
of the information.
(c) Standard for Decision.--The court shall grant an individual's
motion under subsection (b) if the person seeking the information has
not sustained the burden of demonstrating that--
(1) there are reasonable grounds to believe that the
information will be relevant to a lawsuit or other judicial or
administrative proceeding; and
(2) the need of the person for the information outweighs
the privacy interest of the individual.
(d) Specific Considerations With Respect to Privacy Interest.--In
determining under subsection (c) whether the need of the person for the
information outweighs the privacy interest of the individual, the court
shall consider--
(1) the particular purpose for which the information was
collected by the trustee;
(2) the degree to which disclosure of the information will
embarrass, injure, or invade the privacy of the individual;
(3) the effect of the disclosure on the individual's future
health care;
(4) the importance of the information to the lawsuit or
proceeding; and
(5) any other factor deemed relevant by the court.
(e) Attorney's Fees.--In the case of any motion brought under
subsection (b) by an individual against a person in which the
individual has substantially prevailed, the court, in its discretion,
may assess against the person a reasonable attorney's fee and other
litigation costs (including expert fees) reasonably incurred.
SEC. 2174. CONSTRUCTION OF SUBPART; SUSPENSION OF STATUTE OF
LIMITATIONS.
(a) In General.--Nothing in this subpart shall affect the right of
a health information trustee to challenge a request for protected
health information. Nothing in this subpart shall entitle a protected
individual to assert the rights of a health information trustee.
(b) Effect of Motion on Statute of Limitations.--If an individual
who is the subject of protected health information files a motion under
this subpart which has the effect of delaying the access of a
government authority to such information, the period beginning on the
date such motion was filed and ending on the date on which the motion
is decided shall be excluded in computing any period of limitations
within which the government authority may commence any civil or
criminal action in connection with which the access is sought.
SEC. 2175. RESPONSIBILITIES OF SECRETARY.
Not later than July 1, 1996, the Secretary, after notice and
opportunity for public comment, shall develop and disseminate brief,
clear, and easily understood model notices--
(1) for use under subsection (c) of section 2171, detailing
the rights of a protected individual who wishes to challenge,
under section 2172, the disclosure of protected health
information about the individual under such subsection; and
(2) for use under subsection (a) of section 2173, detailing
the rights of a protected individual who wishes to challenge,
under subsection (b) of such section, the disclosure of
protected health information about the individual under such
section.
Subpart D--Miscellaneous Provisions
SEC. 2181. PAYMENT CARD AND ELECTRONIC PAYMENT TRANSACTIONS.
(a) Payment for Health Care Through Card or Electronic Means.--If a
protected individual pays a health information trustee for health care
by presenting a debit, credit, or other payment card or account number,
or by any other electronic payment means, the trustee may disclose to a
person described in subsection (b) only such protected health
information about the individual as is necessary for the processing of
the payment transaction or the billing or collection of amounts charged
to, debited from, or otherwise paid by, the individual using the card,
number, or other electronic payment means.
(b) Transaction Processing.--A person who is a debit, credit, or
other payment card issuer, is otherwise directly involved in the
processing of payment transactions involving such cards or other
electronic payment transactions, or is otherwise directly involved in
the billing or collection of amounts paid through such means, may only
use or disclose protected health information about a protected
individual that has been disclosed in accordance with subsection (a)
when necessary for--
(1) the authorization, settlement, billing or collection of
amounts charged to, debited from, or otherwise paid by, the
individual using a debit, credit, or other payment card or
account number, or by other electronic payment means;
(2) the transfer of receivables, accounts, or interest
therein;
(3) the audit of the credit, debit, or other payment card
account information;
(4) compliance with Federal, State, or local law; or
(5) a properly authorized civil, criminal, or regulatory
investigation by Federal, State, or local authorities.
SEC. 2182. ACCESS TO PROTECTED HEALTH INFORMATION OUTSIDE OF THE UNITED
STATES.
(a) In General.--Notwithstanding the provisions of subpart B, and
except as provided in subsection (b), a health information trustee may
not permit any person who is not in a State to have access to protected
health information about a protected individual unless one or more of
the following conditions exist:
(1) Specific authorization.--The individual has
specifically consented to the provision of such access outside
of the United States in an authorization that meets the
requirements of section 2152.
(2) Equivalent protection.--The provision of such access is
authorized under this part and the Secretary has determined
that there are fair information practices for protected health
information in the jurisdiction where the access will be
provided that provide protections for individuals and protected
health information that are equivalent to the protections
provided for by this part.
(3) Access required by law.--The provision of such access
is required under--
(A) a Federal statute; or
(B) a treaty or other international agreement
applicable to the United States.
(b) Exceptions.--Subsection (a) does not apply where the provision
of access to protected health information--
(1) is to a foreign public health authority;
(2) is authorized under section 2154 (relating to next of
kin and directory information), 2156 (relating to health
research), or 2157 (relating to emergency circumstances); or
(3) is necessary for the purpose of providing for payment
for health care that has been provided to an individual.
SEC. 2183. STANDARDS FOR ELECTRONIC DOCUMENTS AND COMMUNICATIONS.
(a) Standards.--Not later than July 1, 1996, the Secretary, after
notice and opportunity for public comment and in consultation with
appropriate private standard-setting organizations and other interested
parties, shall establish standards with respect to the creation,
transmission, receipt, and maintenance, in electronic and magnetic
form, of each type of written document specifically required or
authorized under this part. Where a signature is required under any
other provision of this part, such standards shall provide for an
electronic or magnetic substitute that serves the functional equivalent
of a signature.
(b) Treatment of Complying Documents and Communications.--An
electronic or magnetic document or communication that satisfies the
standards established under subsection (a) with respect to such
document or communication shall be treated as satisfying the
requirements of this part that apply to an equivalent written document.
SEC. 2184. DUTIES AND AUTHORITIES OF AFFILIATED PERSONS.
(a) Requirements on Trustees.--
(1) Provision of information.--A health information trustee
may provide protected health information to a person who, with
respect to the trustee, is an affiliated person and may permit
the affiliated person to use such information, only for the
purpose of conducting, supporting, or facilitating an activity
that the trustee is authorized to undertake.
(2) Notice to affiliated person.--A health information
trustee shall notify a person who, with respect to the trustee,
is an affiliated person of any duties under this part that the
affiliated person is required to fulfill and of any authorities
under this part that the affiliated person is authorized to
exercise.
(b) Duties of Affiliated Persons.--
(1) In general.--An affiliated person shall fulfill any
duty under this part that--
(A) the health information trustee with whom the
person has an agreement or relationship described in
section 2140(c)(1)(C) is required to fulfill; and
(B) the person has undertaken to fulfill pursuant
to such agreement or relationship.
(2) Construction of other subparts.--With respect to a duty
described in paragraph (1) that an affiliated person is
required to fulfill, the person shall be considered a health
information trustee for purposes of this part. The person shall
be subject to subpart E (relating to enforcement) with respect
to any such duty that the person fails to fulfill.
(3) Effect on trustee.--An agreement or relationship with
an affiliated person does not relieve a health information
trustee of any duty or liability under this part.
(b) Authorities of Affiliated Persons.--
(1) In general.--An affiliated person may only exercise an
authority under this part that the health information trustee
with whom the person is affiliated may exercise and that the
person has been given by the trustee pursuant to an agreement
or relationship described in section 2140(c)(1)(C). With
respect to any such authority, the person shall be considered a
health information trustee for purposes of this part. The
person shall be subject to subpart E (relating to enforcement)
with respect to any act that exceeds such authority.
(2) Effect on trustee.--An agreement or relationship with
an affiliated person does not affect the authority of a health
information trustee under this part.
SEC. 2185. AGENTS AND ATTORNEYS.
(a) In General.--Except as provided in subsections (b) and (c), a
person who is authorized by law (on grounds other than an individual's
minority), or by an instrument recognized under law, to act as an
agent, attorney, proxy, or other legal representative for a protected
individual or the estate of a protected individual, or otherwise to
exercise the rights of the individual or estate, may, to the extent
authorized, exercise and discharge the rights of the individual or
estate under this part.
(b) Health Care Power of Attorney.--A person who is authorized by
law (on grounds other than an individual's minority), or by an
instrument recognized under law, to make decisions about the provision
of health care to an individual who is incapacitated may exercise and
discharge the rights of the individual under this part to the extent
necessary to effectuate the terms or purposes of the grant of
authority.
(c) No Court Declaration.--If a health care provider determines
that an individual, who has not been declared to be legally
incompetent, suffers from a medical condition that prevents the
individual from acting knowingly or effectively on the individual's own
behalf, the right of the individual to authorize disclosure under
section 2152 may be exercised and discharged in the best interest of
the individual by--
(1) a person described in subsection (b) with respect to
the individual;
(2) a person described in subsection (a) with respect to
the individual, but only if a person described in paragraph (1)
cannot be contacted after a reasonable effort;
(3) the next of kin of the individual, but only if a person
described in paragraph (1) or (2) cannot be contacted after a
reasonable effort; or
(4) the health care provider, but only if a person
described in paragraph (1), (2), or (3) cannot be contacted
after a reasonable effort.
SEC. 2186. MINORS.
(a) Individuals Who Are 18 or Legally Capable.--In the case of an
individual--
(1) who is 18 years of age or older, all rights of the
individual shall be exercised by the individual, except as
provided in section 2185; or
(2) who, acting alone, has the legal capacity to apply for
and obtain health care and has sought such care, the individual
shall exercise all rights of an individual under this part with
respect to protected health information relating to such care.
(b) Individuals Under 18.--Except as provided in subsection (a)(2),
in the case of an individual who is--
(1) under 14 years of age, all the individual's rights
under this part shall be exercised through the parent or legal
guardian of the individual; or
(2) 14, 15, 16, or 17 years of age, the right of inspection
(under section 2141), the right of amendment (under section
2142), and the right to authorize disclosure of protected
health information (under section 2152) of the individual may
be exercised either by the individual or by the parent or legal
guardian of the individual.
SEC. 2187. MAINTENANCE OF CERTAIN PROTECTED HEALTH INFORMATION.
(a) In General.--A State shall establish a process under which the
protected health information described in subsection (b) that is
maintained by a person described in subsection (c) is delivered to, and
maintained by, the State or an individual or entity designated by the
State.
(b) Information Described.--The protected health information
referred to in subsection (a) is protected health information that--
(1) is recorded in any form or medium;
(2) is created by--
(A) a health care provider; or
(B) a health benefit plan sponsor that provides
benefits in the form of items and services to enrollees
and not in the form of reimbursement for items and
services; and
(3) relates in any way to the past, present, or future
physical or mental health or condition or functional status of
a protected individual or the provision of health care to a
protected individual.
(c) Persons Described.--A person referred to in subsection (a) is
any of the following:
(A) A health care facility previously located in
the State that has closed.
(B) A professional practice previously operated by
a health care provider in the State that has closed.
(C) A health benefit plan sponsor that--
(i) previously provided benefits in the
form of items and services to enrollees in the
State; and
(ii) has ceased to do business.
Subpart E--Enforcement
SEC. 2191. CIVIL ACTIONS.
(a) In General.--Any individual whose right under this part has
been knowingly or negligently violated--
(1) by a health information trustee, or any other person,
who is not described in paragraph (2), (3), (4), or (5) may
maintain a civil action for actual damages and for equitable
relief against the health information trustee or other person;
(2) by an officer or employee of the United States while
the officer or employee was acting within the scope of the
office or employment may maintain a civil action for actual
damages and for equitable relief against the United States;
(3) by an officer or employee of any government authority
of a State that has waived its sovereign immunity to a claim
for damages resulting from a violation of this part while the
officer or employee was acting within the scope of the office
or employment may maintain a civil action for actual
damages and for equitable relief against the State government;
(4) by an officer or employee of a government of a State
that is not described in paragraph (3) may maintain a civil
action for actual damages and for equitable relief against the
officer or employee; or
(5) by an officer or employee of a government authority
while the officer or employee was not acting within the scope
of the office or employment may maintain a civil action for
actual damages and for equitable relief against the officer or
employee.
(b) Knowing Violations.--Any individual entitled to recover actual
damages under this section because of a knowing violation of a
provision of this part (other than subsection (c) or (d) of section
2151) shall be entitled to recover the amount of the actual damages
demonstrated or $5000, whichever is greater.
(c) Actual Damages.--For purposes of this section, the term
``actual damages'' includes damages paid to compensate an individual
for nonpecuniary losses such as physical and mental injury as well as
damages paid to compensate for pecuniary losses.
(d) Punitive Damages; Attorney's Fees.--In any action brought under
this section in which the complainant has prevailed because of a
knowing violation of a provision of this part (other than subsection
(c) or (d) of section 2151), the court may, in addition to any relief
awarded under subsections (a) and (b), award such punitive damages as
may be warranted. In such an action, the court, in its discretion, may
allow the prevailing party a reasonable attorney's fee (including
expert fees) as part of the costs, and the United States shall be
liable for costs the same as a private person.
(e) Limitation.--A civil action under this section may not be
commenced more than 2 years after the date on which the aggrieved
individual discovered the violation or the date on which the aggrieved
individual had a reasonable opportunity to discover the violation,
whichever occurs first.
(f) Inspection and Amendment.--If a health information trustee has
established a formal internal procedure that allows an individual who
has been denied inspection or amendment of protected health information
to appeal the denial, the individual may not maintain a civil action in
connection with the denial until the earlier of--
(1) the date the appeal procedure has been exhausted; or
(2) the date that is 4 months after the date on which the
appeal procedure was initiated.
(g) No Liability for Permissible Disclosures.--A health information
trustee who makes a disclosure of protected health information about a
protected individual that is permitted by this part and not otherwise
prohibited by State or Federal statute shall not be liable to the
individual for the disclosure under common law.
(h) No Liability for Institutional Review Board Determinations.--If
the members of a certified institutional review board have in good
faith determined that an approved health research project is of
sufficient importance so as to outweigh the intrusion into the privacy
of an individual pursuant to section 2156(a)(1), the members, the
board, and the parent institution of the board shall not be liable to
the individual as a result of such determination.
(i) Good Faith Reliance on Certification.--A health information
trustee who relies in good faith on a certification by a government
authority or other person and discloses protected health information
about an individual in accordance with this part shall not be liable to
the individual for such disclosure.
SEC. 2192. CIVIL MONEY PENALTIES.
(a) Violation.--Any health information trustee who the Secretary
determines has demonstrated a pattern or practice of failure to comply
with the provisions of this part shall be subject, in addition to any
other penalties that may be prescribed by law, to a civil money penalty
of not more than $10,000 for each such failure. In determining the
amount of any penalty to be assessed under the procedures established
under subsection (b), the Secretary shall take into account the
previous record of compliance of the person being assessed with the
applicable requirements of this part and the gravity of the violation.
(b) Procedures for Imposition of Penalties.--The provisions of
section 1128A of the Social Security Act (other than subsections (a)
and (b)) shall apply to the imposition of a civil monetary penalty
under this section in the same manner as such provisions apply with
respect to the imposition of a penalty under section 1128A of such Act.
SEC. 2193. ALTERNATIVE DISPUTE RESOLUTION.
(a) In General.--Not later than July 1, 1996, the Secretary shall,
by regulation, develop alternative dispute resolution methods for use
by individuals, health information trustees, and other persons in
resolving claims under section 2191.
(b) Effect on Initiation of Civil Actions.--
(1) In general.--Subject to paragraph (2), the regulations
established under subsection (a) may provide that an individual
alleging that a right of the individual under this part has
been violated shall pursue at least one alternative dispute resolution
method developed under such subsection as a condition precedent to
commencing a civil action under section 2191.
(2) Limitation.--Such regulations may not require an
individual to refrain from commencing a civil action to pursue
one or more alternative dispute resolution method for a period
that is greater than 6 months.
(3) Suspension of statute of limitations.--The regulations
established by the Secretary under subsection (a) may provide
that a period in which an individual described in paragraph (1)
pursues (as defined by the Secretary) an alternative dispute
resolution method under this section shall be excluded in
computing the period of limitations under section 2191(e).
(c) Methods.--The methods under subsection (a) shall include at
least the following:
(1) Arbitration.--The use of arbitration.
(2) Mediation.--The use of mediation.
(3) Early offers of settlement.--The use of a process under
which parties make early offers of settlement.
(d) Standards for Establishing Methods.--In developing alternative
dispute resolution methods under subsection (a), the Secretary shall
ensure that the methods promote the resolution of claims in a manner
that--
(1) is affordable for the parties involved;
(2) provides for timely and fair resolution of claims; and
(3) provides for reasonably convenient access to dispute
resolution for individuals.
SEC. 2194. AMENDMENTS TO CRIMINAL LAW.
(a) In General.--Title 18, United States Code, is amended by
inserting after chapter 89 the following:
``CHAPTER 90--PROTECTED HEALTH INFORMATION
``Sec.
``1831. Definitions.
``1832. Obtaining protected health information under false pretenses.
``1833. Monetary gain from obtaining protected health information under
false pretenses.
``1834. Knowing and unlawful obtaining of protected health information.
``1835. Monetary gain from knowing and unlawful obtaining of protected
health information.
``1836. Knowing and unlawful use or disclosure of protected health
information.
``1837. Monetary gain from knowing and unlawful sale, transfer, or use
of protected health information.
``Sec. 1831. Definitions
``As used in this chapter--
``(1) the term `health information trustee' has the meaning
given such term in section 2140(b)(6) of the Affordable Health
Care Now Act of 1994;
``(2) the term `protected health information' has the
meaning given such term in section 2140(a)(3) of such Act; and
``(3) the term `protected individual' has the meaning given
such term in section 2140(a)(4) of such Act.
``Sec. 1832. Obtaining protected health information under false
pretenses
``Whoever under false pretenses--
``(1) requests or obtains protected health information from
a health information trustee; or
``(2) obtains from a protected individual an authorization
for the disclosure of protected health information about the
individual maintained by a health information trustee;
shall be fined under this title or imprisoned not more than 5 years, or
both.
``Sec. 1833. Monetary gain from obtaining protected health information
under false pretenses
``Whoever under false pretenses--
``(1) requests or obtains protected health information from
a health information trustee with the intent to sell, transfer,
or use such information for profit or monetary gain; or
``(2) obtains from a protected individual an authorization
for the disclosure of protected health information about the
individual maintained by a health information trustee with the
intent to sell, transfer, or use such authorization for profit
or monetary gain;
and knowingly sells, transfers, or uses such information or
authorization for profit or monetary gain shall be fined under this
title or imprisoned not more than 10 years, or both.
``Sec. 1834. Knowing and unlawful obtaining of protected health
information
``Whoever knowingly obtains protected health information from a
health information trustee in violation of part 2 of subtitle B of
title II of the Affordable Health Care Now Act of 1994, knowing that
such obtaining is unlawful, shall be fined under this title or
imprisoned not more than 5 years, or both.
``Sec. 1835. Monetary gain from knowing and unlawful obtaining of
protected health information
``Whoever knowingly--
``(1) obtains protected health information from a health
information trustee in violation of part 2 of subtitle B of
title II of the Affordable Health Care Now Act of 1994, knowing
that such obtaining is unlawful and with the intent to sell,
transfer, or use such information for profit or monetary gain; and
``(2) knowingly sells, transfers, or uses such information
for profit or monetary gain;
shall be fined under this title or imprisoned not more than 10 years,
or both.
``Sec. 1836. Knowing and unlawful use or disclosure of protected health
information
``Whoever knowingly uses or discloses protected health information
in violation of part 2 of subtitle B of title II of the Affordable
Health Care Now Act of 1994, knowing that such use or disclosure is
unlawful, shall be fined under this title or imprisoned not more than 5
years, or both.
``Sec. 1837. Monetary gain from knowing and unlawful sale, transfer, or
use of protected health information
``Whoever knowingly sells, transfers, or uses protected health
information in violation of part 2 of subtitle B of title II of the
Affordable Health Care Now Act of 1994, knowing that such sale,
transfer, or use is unlawful, shall be fined under this title or
imprisoned not more than 10 years, or both.''.
(b) Clerical Amendment.--The table of chapters for part I of title
18, United States Code, is amended by inserting after the item relating
to chapter 89 the following:
``90. Protected health information.......................... 1831''.
Subpart F--Amendments to Title 5, United States Code
SEC. 2195. AMENDMENTS TO TITLE 5, UNITED STATES CODE.
(a) New Subsection.--Section 552a of title 5, United States Code,
is amended by adding at the end the following:
``(w) Medical Exemptions.--The head of an agency that is a health
information trustee (as defined in section 2140(b)(6) of the Affordable
Health Care Now Act of 1994) shall promulgate rules, in accordance with
the requirements (including general notice) of subsections (b)(1),
(b)(2), (b)(3), (c), and (e) of section 553 of this title, to exempt a
system of records within the agency, to the extent that the system of
records contains protected health information (as defined in section
2140(a)(3) of such Act), from all provisions of this section except
subsections (e)(1), (e)(2), subparagraphs (A) through (C) and (E)
through (I) of subsection (e)(4), and subsections (e)(5), (e)(6),
(e)(9), (e)(12), (l), (n), (o), (p), (q), (r), and (u).''.
(b) Repeal.--Section 552a(f)(3) of title 5, United States Code, is
amended by striking ``pertaining to him,'' and all that follows through
the semicolon and inserting ``pertaining to the individual;''.
Subpart G--Regulations, Research, and Education; Effective Dates;
Applicability; and Relationship to Other Laws
SEC. 2196. REGULATIONS; RESEARCH AND EDUCATION.
(a) Regulations.--Not later than July 1, 1996, the Secretary shall
prescribe regulations to carry out this part.
(b) Research and Technical Support.--The Secretary may sponsor--
(1) research relating to the privacy and security of
protected health information;
(2) the development of consent forms governing disclosure
of such information; and
(3) the development of technology to implement standards
regarding such information.
(c) Education.--The Secretary shall establish education and
awareness programs--
(1) to foster adequate security practices by health
information trustees;
(2) to train personnel of health information trustees
respecting the duties of such personnel with respect to
protected health information; and
(3) to inform individuals and employers who purchase health
care respecting their rights with respect to such information.
SEC. 2197. EFFECTIVE DATES.
(a) In General.--Except as provided in subsection (b), this part,
and the amendments made by this part, shall take effect on January 1,
1997.
(b) Provisions Effective Immediately.--A provision of this part
shall take effect on the date of the enactment of this Act if the
provision--
(1) imposes a duty on the Secretary to develop, establish,
or promulgate regulations, guidelines, notices, statements, or
education and awareness programs; or
(2) authorizes the Secretary to sponsor research or the
development of forms or technology.
SEC. 2198. APPLICABILITY.
(a) Protected Health Information.--Except as provided in
subsections (b) and (c), the provisions of this part shall apply to any
protected health information that is received, created, used,
maintained, or disclosed by a health information trustee in a State on
or after January 1, 1997, regardless of whether the information existed
or was disclosed prior to such date.
(b) Exception.--
(1) In general.--The provisions of this part shall not
apply to a trustee described in paragraph (2), except with
respect to protected health information that is received by the
trustee on or after January 1, 1997.
(2) Applicability.--A trustee referred to in paragraph (1)
is--
(A) a health researcher; or
(B) a person who, with respect to specific
protected health information, received the
information--
(i) pursuant to--
(I) section 2157 (relating to
emergency circumstances);
(II) section 2158 (relating to
judicial and administrative purposes);
(III) section 2159 (relating to law
enforcement); or
(IV) section 2160 (relating to
subpoenas, warrants, and search
warrants); or
(ii) while acting in whole or in part in
the capacity of an officer or employee of a
person described in clause (i).
(c) Authorizations for Disclosures.--An authorization for the
disclosure of protected health information about a protected individual
that is executed by the individual before January 1, 1997, and is
recognized and valid under State law on December 31, 1996, shall remain
valid and shall not be subject to the requirements of section 2152
until January 1, 1998, or the occurrence of the date or event (if any)
specified in the authorization upon which the authorization expires,
whichever occurs earlier.
SEC. 2199. RELATIONSHIP TO OTHER LAWS.
(a) State Law.--Except as otherwise provided in subsections (b),
(c), (d), and (f), a State may not establish, continue in effect, or
enforce any State law to the extent that the law is inconsistent with,
or imposes additional requirements with respect to, any of the
following:
(1) A duty of a health information trustee under this part.
(2) An authority of a health information trustee under this
part to disclose protected health information.
(3) A provision of subpart C (relating to access procedures
and challenge rights), subpart D (miscellaneous provisions), or
subpart (E) (relating to enforcement).
(b) Laws Relating to Public Health and Mental Health.--This part
does not preempt, supersede, or modify the operation of any State law
regarding public health or mental health to the extent that the law
prohibits or regulates a disclosure of protected health information
that is permitted under this part.
(c) Criminal Penalties.--A State may establish and enforce criminal
penalties with respect to a failure to comply with a provision of this
part.
(d) Privileges.--A privilege that a person has under law in a court
of a State or the United States or under the rules of any agency of a
State or the United States may not be diminished, waived, or otherwise
affected by--
(1) the execution by a protected individual of an
authorization for disclosure of protected health information
under this part, if the authorization is executed for the
purpose of receiving health care or providing for the payment
for health care; or
(2) any provision of this part that authorizes the
disclosure of protected health information for the purpose of
receiving health care or providing for the payment for health
care.
(e) Department of Veterans Affairs.--The limitations on use and
disclosure of protected health information under this part shall not be
construed to prevent any exchange of such information within and among
components of the Department of Veterans Affairs that determine
eligibility for or entitlement to, or that provide, benefits under laws
administered by the Secretary of Veterans Affairs.
(f) Certain Duties Under State or Federal Law.--This part shall not
be construed to preempt, supersede, or modify the operation of any of
the following:
(1) Any law that provides for the reporting of vital
statistics such as birth or death information.
(2) Any law requiring the reporting of abuse or neglect
information about any individual.
(3) Subpart II of part E of title XXVI of the Public Health
Service Act (relating to notifications of emergency response
employees of possible exposure to infectious diseases).
(4) The Americans with Disabilities Act of 1990.
(5) Any Federal or State statute that establishes a
privilege for records used in health professional peer review
activities.
(g) Secretarial Authority.--
(1) Secretary of health and human services.--A provision of
this part does not preempt, supersede, or modify the operation
of section 543 of the Public Health Service Act, except to the extent
that the Secretary of Health and Human Services determines through
regulations promulgated by such Secretary that the provision provides
greater protection for protected health information, and the rights of
protected individuals, than is provided under such section 543.
(2) Secretary of veterans affairs.--A provision of this
part does not preempt, supersede, or modify the operation of
section 7332 of title 38, United States Code, except to the
extent that the Secretary of Veterans Affairs determines
through regulations promulgated by such Secretary that the
provision provides greater protection for protected health
information, and the rights of protected individuals, than is
provided under such section 7332.
Subtitle C--Deduction for Cost of Catastrophic Health Plan; Medical
Savings Accounts
Title II, Subtitle C
SEC. 2201. INDIVIDUALS ALLOWED DEDUCTION FROM GROSS INCOME FOR COST OF
CATASTROPHIC HEALTH PLAN.
(a) In General.--Subsection (a) of section 62 of the Internal
Revenue Code of 1986, as amended by title I, is amended by inserting
after paragraph (16) the following new paragraph:
``(17) Medical expenses attributable to catastrophic health
plan coverage.--
``(A) In general.--The deduction allowed by section
213 to the extent attributable to coverage under a
catastrophic health plan (as defined in section
220(c)(2)).
``(B) Exception.--Subparagraph (A) shall not apply
to coverage of an individual who has coverage described
in section 220(c)(1)(B)(i).''.
(b) Coordination With Deduction for Other Medical Expenses.--
Subsection (a) of section 213 of such Code is amended to read as
follows:
``(a) Allowance of Deduction.--There shall be allowed as a
deduction the expenses paid during the taxable year, not compensated by
insurance or otherwise, for medical care of the taxpayer, his spouse,
or a dependent (as defined in section 152) in an amount equal to the
sum of--
``(1) the portion of such expenses attributable to coverage
under a catastrophic health plan (as defined in section
220(c)(2)), and
``(2) the excess of such expenses (other than expenses
described in paragraph (1)) over 7.5 percent of the adjusted
gross income of the taxpayer.''
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1993.
SEC. 2202. MEDICAL SAVINGS ACCOUNTS.
(a) In General.--Part VII of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 (relating to additional itemized
deductions for individuals) is amended by redesignating section 220 as
section 221 and by inserting after section 219 the following new
section:
``SEC. 220. MEDICAL SAVINGS ACCOUNTS.
``(a) Deduction Allowed.--
``(1) In general.--In the case of an eligible individual,
there shall be allowed as a deduction the applicable percentage
of the amounts paid in cash during the taxable year by or on
behalf of such individual to a medical savings account for the
benefit of such individual and (if any) such individual's
spouse and dependents if such spouse and dependents are
eligible individuals.
``(2) Applicable percentage.--For purposes of paragraph
(1), the term `applicable percentage' means--
``(A) 25 percent for taxable years beginning in
1994 or 1995,
``(B) 50 percent for taxable years beginning in
1996 or 1997, and
``(C) 100 percent for taxable years beginning after
1997.
``(b) Limitations.--
``(1) Only 1 account per family.--Except as provided in
regulations prescribed by the Secretary, no deduction shall be
allowed under subsection (a) for amounts paid to any medical
savings account for the benefit of an individual, such
individual's spouse, or any dependent of such individual or
spouse if such individual, spouse, or dependent is a
beneficiary of any other medical savings account.
``(2) Dollar limitation.--The amount allowable as a
deduction under subsection (a) for the taxable year shall not
exceed whichever of the following is the least:
``(A) The lowest deductible under any catastrophic
health plan providing coverage to any beneficiary of
the medical savings account.
``(B) $2,500 ($5,000 if the catastrophic health
plan covering the taxpayer provides coverage for more
than 1 individual).
``(C) The excess of--
``(i) the applicable target actuarial value
for standard coverage established under section
1102(c)(2) of the Affordable Health Care Now
Act of 1994, over
``(ii) the deduction allowed by section 213
for the taxable year to the extent attributable
to coverage under a catastrophic health plan.
Under rules of the Secretary, the target actuarial
value under subparagraph (C)(i) shall be made
applicable to individual and family coverage. A
beneficiary of such account who has attained age 65
before the close of the taxable year shall not be taken
into account in determining the limitation under the
preceding sentence.
``(c) Definitions.--For purposes of this section--
``(1) Eligible individual.--
``(A) In general.--The term `eligible individual'
means any individual who is covered under a
catastrophic health plan throughout the calendar year
in which or with which the taxable year ends.
``(B) Limitations.--Such term does not include--
``(i) an individual who is 65 years of age
or older, unless the individual is covered
under a catastrophic health plan that is a
primary plan (within the meaning of section
1862(b)(2)(A) of the Social Security Act); and
``(ii) an individual who has coverage under
a group health plan or health insurance plan
(other than a plan described in 1131(4)(B) of
the Affordable Health Care Now Act of 1994)
that has either a deductible that is less than
the minimum deductible required under a
catastrophic health plan (as defined in
paragraph (2)) or has an actuarial value that
is greater than the value for MedAccess
catastrophic coverage (as provided in section
1102(d) of such Act).
``(C) Deduction not allowed before 1999 to
individuals eligible for employer-subsidized
coverage.--In the case of any taxable year beginning
before January 1, 1999, such term does not include an
individual--
``(i) who is eligible to participate in any
subsidized health plan maintained by an
employer of such individual or the spouse of
such individual, or
``(ii) who is (or whose spouse is) a member
of a subsidized class of employees of an
employer.
The rules of subparagraphs (B) and (C) of section
213(f)(3) shall apply for purposes of this preceding
sentence.
``(2) Catastrophic health plan.--For purposes of paragraph
(1)--
``(A) In general.--The term `catastrophic health
plan' means a health plan covering specified expenses
incurred by an individual for medical care for such
individual and the spouse and dependents (as defined in
section 152) of such individual only to the extent such
expenses covered by the plan for any calendar year
exceed $1,800 ($3,600 if the catastrophic health plan
covering the taxpayer provides coverage for more than 1
individual) or such higher amounts as may be specified
by the plan.
``(B) Cost-of-living adjustment.--In the case of
any calendar year after 1994, each dollar amount in
subparagraph (A) shall be increased by an amount equal
to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment
determined under section 1(f)(3) for such
calendar year.
If any increase under the preceding sentence is not a
multiple of $50, such increase shall be rounded to the
nearest multiple of $50.
``(d) Medical Savings Accounts.--For purposes of this section--
``(1) Medical savings account.--
``(A) In general.--The term `medical savings
account' means a trust created or organized in the
United States exclusively for the purpose of paying the
medical expenses of the beneficiaries of such trust,
but only if the written governing instrument creating
the trust meets the following requirements:
``(i) Except in the case of a rollover
contribution described in subsection (e)(4), no
contribution will be accepted unless it is in
cash, and contributions will not be accepted in
excess of the amount allowed as a deduction under this section for the
taxable year (or would be allowed as such a deduction but for
subsection (c)(1)(C)).
``(ii) The trustee is a bank (as defined in
section 408(n)) or another person who
demonstrates to the satisfaction of the
Secretary that the manner in which such person
will administer the trust will be consistent
with the requirements of this section.
``(iii) No part of the trust assets will be
invested in life insurance contracts.
``(iv) The assets of the trust will not be
commingled with other property except in a
common trust fund or common investment fund.
``(v) The interest of an individual in the
balance in his account is nonforfeitable.
``(vi) Under regulations prescribed by the
Secretary, rules similar to the rules of
section 401(a)(9) shall apply to the
distribution of the entire interest of
beneficiaries of such trust.
``(B) Treatment of comparable accounts held by
insurance companies.--For purposes of this section, an
account held by an insurance company in the United
States shall be treated as a medical savings account
(and such company shall be treated as a bank) if--
``(i) such account is part of a health
insurance plan that includes a catastrophic
health plan (as defined in subsection (c)(2)),
``(ii) such account is exclusively for the
purpose of paying the medical expenses of the
beneficiaries of such account who are covered
under such catastrophic health plan, and
``(iii) the written instrument governing
the account meets the requirements of clauses
(i), (v), and (vi) of subparagraph (A).
``(2) Medical expenses.--
``(A) In general.--The term `medical expenses'
means, with respect to an individual, amounts paid or
incurred by such individual for--
``(i) medical care (as defined in section
213), or
``(ii) long-term care (as defined in
paragraph (3)),
for such individual, the spouse of such individual, and
any dependent (as defined in section 152) of such
individual, but only to the extent such amounts are not
compensated for by insurance or otherwise.
``(B) Health plan coverage may not be purchased
from account.--
``(i) In general.--Such term shall not
include any amount paid for coverage under a
health plan.
``(ii) Exception.--Clause (i) shall not
apply--
``(I) in the case of coverage of an
individual under 65 years of age under
a catastrophic health plan or under a
long-term care insurance plan, or
``(II) in the case of coverage of
an individual 65 years of age or older
under a medicare supplemental policy or
under a long-term care insurance plan
or for payment of premiums under part A
or part B of title XVIII of the Social
Security Act.
``(3) Long-term care.--
``(A) In general.--The term `long-term care' means
diagnostic, preventive, therapeutic, rehabilitative,
maintenance, or personal care services which are
required by, and provided to, a chronically ill
individual, which have as their primary purpose the
direct provision of needed assistance with 1 or more
activities of daily living (or the alleviation of the
conditions necessitating such assistance) that the
individual is certified under subparagraph (B) as being
unable to perform, and which are provided in a setting
other than an acute care unit of a hospital pursuant to
a continuing plan of care prescribed by a physician or
registered professional nurse. Such term does not
include food or lodging provided in an institutional or
other setting, or basic living services associated with
the maintenance of a household or participation in
community life, such as case management, transportation
or legal services, or the performance of home
maintenance or household chores.
``(B) Chronically ill individual.--The term
`chronically ill individual' means an individual who is
certified by a physician or registered professional
nurse as being unable to perform at least 3 activities
of daily living without substantial assistance from
another individual. For purposes of this paragraph, the
term `activities of daily living' means bathing,
dressing, eating, toileting, transferring, and walking.
``(4) Time when contributions deemed made.--A contribution
shall be deemed to be made on the last day of the preceding
taxable year if the contribution is made on account of such
taxable year and is made not later than the time prescribed by
law for filing the return for such taxable year (not including
extensions thereof).
``(e) Tax Treatment of Distributions.--
``(1) In general.--Any amount paid or distributed out of a
medical savings account shall be included in the gross income
of the individual for whose benefit such account was
established unless such amount is used exclusively to pay the
medical expenses of such individual.
``(2) Excess contributions returned before due date of
return.--Paragraph (1) shall not apply to the distribution of
any contribution paid during a taxable year to a medical
savings account to the extent that such contribution exceeds
the amount allowable as a deduction under subsection (a) if--
``(A) such distribution is received by the
individual on or before the last day prescribed by law
(including extensions of time) for filing such
individual's return for such taxable year, and
``(B) such distribution is accompanied by the
amount of net income attributable to such excess
contribution.
Any net income described in subparagraph (B) shall be included
in the gross income of the individual for the taxable year in
which it is received.
``(3) Penalty for distributions not used for medical
expenses.--
``(A) In general.--The tax imposed by this chapter
for any taxable year in which there is a payment or
distribution from a medical savings account which is
not used to pay the medical expenses of the individual
for whose benefit the account was established shall be
increased by 10 percent of the amount of such payment
or distribution which is includible in gross income
under paragraph (1).
``(B) Account balance limitation.--If--
``(i) the tax imposed by this chapter is
required to be increased under subparagraph (A)
by reason of a distribution, and
``(ii) after such distribution, the
aggregate balance of all medical savings
accounts established for the benefit of the
individual, is less than the amount of the
deductible under the catastrophic health plan
covering such individual,
subparagraph (A) shall be applied by substituting `50
percent' for `10 percent'.
``(4) Rollovers.--Paragraph (1) shall not apply to any
amount paid or distributed out of a medical savings account to
the individual for whose benefit the account is maintained if
the entire amount received (including money and any other
property) is paid into another medical savings account for the
benefit of such individual not later than the 60th day after
the day on which he received the payment or distribution.
``(5) Penalty for mandatory distributions not made from
account.--
``(A) In general.--If during any taxable year--
``(i) there is a payment of a mandatory
distribution expense incurred by a beneficiary
of a medical savings account, and
``(ii) the person making such payment is
not reimbursed for such payment with a
distribution from such account before the 60th
day after such payment,
the taxpayer's tax imposed by this chapter for such
taxable year shall be increased by 100 percent of the
excess of the amount of such payment over the amount of
reimbursement made before such 60th day.
``(B) Mandatory distribution expense.--For purposes
of subparagraph (A), the term `mandatory distribution
expense' means--
``(i) any expense incurred which may be
counted towards a deductible, or for a
copayment or coinsurance, under
the catastrophic health plan covering such beneficiary, and
``(ii) in the case of a beneficiary who has
attained age 65, any expense for coverage
described in subsection (d)(2)(B)(ii)(II) and
any expense incurred which may be counted
toward a deductible, or for a copayment or
coinsurance, under title XVIII of the Social
Security Act.
``(f) Tax Treatment of Accounts.--
``(1) Exemption from tax.--Any medical savings account is
exempt from taxation under this subtitle unless such account
has ceased to be a medical savings account by reason of
paragraph (2) or (3). Notwithstanding the preceding sentence,
any such account shall be subject to the taxes imposed by
section 511 (relating to imposition of tax on unrelated
business income of charitable, etc. organizations).
``(2) Account terminates if individual engages in
prohibited transaction.--
``(A) In general.--If, during any taxable year of
the individual for whose benefit the medical savings
account was established, such individual engages in any
transaction prohibited by section 4975 with respect to
the account, the account ceases to be a medical savings
account as of the first day of that taxable year.
``(B) Account treated as distributing all its
assets.--In any case in which any account ceases to be
a medical savings account by reason of subparagraph (A)
on the first day of any taxable year, paragraph (1) of
subsection (e) shall be applied as if there were a
distribution on such first day in an amount equal to
the fair market value (on such first day) of all assets
in the account (on such first day) and no portion of
such distribution were used to pay medical expenses.
``(3) Effect of pledging account as security.--If, during
any taxable year, the individual for whose benefit a medical
savings account was established uses the account or any portion
thereof as security for a loan, the portion so used is treated
as distributed to that individual and not used to pay medical
expenses.
``(g) Custodial Accounts.--For purposes of this section, a
custodial account shall be treated as a trust if--
``(1) the assets of such account are held by a bank (as
defined in section 408(n)) or another person who demonstrates
to the satisfaction of the Secretary that the manner in which
he will administer the account will be consistent with the
requirements of this section, and
``(2) the custodial account would, except for the fact that
it is not a trust, constitute a medical savings account
described in subsection (d).
For purposes of this title, in the case of a custodial account treated
as a trust by reason of the preceding sentence, the custodian of such
account shall be treated as the trustee thereof.
``(h) Reports.--The trustee of a medical savings account shall make
such reports regarding such account to the Secretary and to the
individual for whose benefit the account is maintained with respect to
contributions, distributions, and such other matters as the Secretary
may require under regulations. The reports required by this subsection
shall be filed at such time and in such manner and furnished to such
individuals at such time and in such manner as may be required by those
regulations.''
(b) Deduction Allowed Whether or Not Individual Itemizes Other
Deductions.--Subsection (a) of section 62 of such Code is amended by
inserting after paragraph (17) the following new paragraph:
``(18) Medical savings accounts.--The deduction allowed by
section 220.''
(c) Distributions From Medical Savings Accounts Not Allowed as
Medical Expense Deduction.--Section 213 of such Code is amended by
adding at the end thereof the following new subsection:
``(g) Coordination With Medical Savings Accounts.--The amount
otherwise taken into account under subsection (a) as expenses paid for
medical care shall be reduced by the amount (if any) of the
distributions from any medical savings account of the taxpayer during
the taxable year which is not includible in gross income by reason of
being used for medical care.''
(d) Exclusion of Employer Contributions To Medical Savings Accounts
From Employment Taxes.--
(1) Social security taxes.--
(A) Subsection (a) of section 3121 of such Code is
amended by striking ``or'' at the end of paragraph
(20), by striking the period at the end of paragraph
(21) and inserting ``; or'', and by inserting after
paragraph (21) the following new paragraph:
``(22) remuneration paid to or on behalf of an employee if
(and to the extent that) at the time of payment of such
remuneration it is reasonable to believe that a corresponding
deduction is allowable under section 220.''
(B) Subsection (a) of section 209 of the Social
Security Act is amended by striking ``or'' at the end
of paragraph (17), by striking the period at the end of
paragraph (18) and inserting ``; or'', and by inserting
after paragraph (18) the following new paragraph:
``(19) remuneration paid to or on behalf of an employee if
(and to the extent that) at the time of payment of such
remuneration it is reasonable to believe that a corresponding
deduction is allowable under section 220 of the Internal
Revenue Code of 1986.''
(2) Railroad retirement tax.--Subsection (e) of section
3231 of such Code is amended by adding at the end thereof the
following new paragraph:
``(10) Employer contributions to medical savings
accounts.--The term `compensation' shall not include any
payment made to or on behalf of an employee if (and to the
extent that) at the time of payment of such remuneration it is
reasonable to believe that a corresponding deduction is
allowable under section 220.''
(3) Unemployment tax.--Subsection (b) of section 3306 of
such Code is amended by striking ``or'' at the end of paragraph
(15), by striking the period at the end of paragraph (16) and
inserting ``; or'', and by inserting after paragraph (16) the
following new paragraph:
``(17) remuneration paid to or on behalf of an employee if
(and to the extent that) at the time of payment of such
remuneration it is reasonable to believe that a corresponding
deduction is allowable under section 220.''
(4) Withholding tax.--Subsection (a) of section 3401 of
such Code is amended by striking ``or'' at the end of paragraph
(19), by striking the period at the end of paragraph (20) and
inserting ``; or'', and by inserting after paragraph (20) the
following new paragraph:
``(21) remuneration paid to or on behalf of an employee if
(and to the extent that) at the time of payment of such
remuneration it is reasonable to believe that a corresponding
deduction is allowable under section 220.''
(e) Tax on Excess Contributions.--Section 4973 of such Code
(relating to tax on excess contributions to individual retirement
accounts, certain section 403(b) contracts, and certain individual
retirement annuities) is amended--
(1) by inserting ``medical savings accounts,'' after
``accounts,'' in the heading of such section,
(2) by redesignating paragraph (2) of subsection (a) as
paragraph (3) and by inserting after paragraph (1) the
following:
``(2) a medical savings account (within the meaning of
section 220(d)),'',
(3) by striking ``or'' at the end of paragraph (1) of
subsection (a), and
(4) by adding at the end thereof the following new
subsection:
``(d) Excess Contributions to Medical Savings Accounts.--For
purposes of this section, in the case of a medical savings account
(within the meaning of section 220(d)), the term `excess contributions'
means the amount by which the amount contributed for the taxable year
to the account exceeds the amount excludable from gross income under
section 220 for such taxable year. For purposes of this subsection, any
contribution which is distributed out of the medical savings account in
a distribution to which section 220(e)(2) applies shall be treated as
an amount not contributed.''
(f) Tax on Prohibited Transactions.--Section 4975 of such Code
(relating to prohibited transactions) is amended--
(1) by adding at the end of subsection (c) the following
new paragraph:
``(4) Special rule for medical savings accounts.--An
individual for whose benefit a medical savings account (within
the meaning of section 220(d)) is established shall be exempt
from the tax imposed by this section with respect to any
transaction concerning such account (which would otherwise be
taxable under this section) if, with respect to such
transaction, the account ceases to be a medical savings account
by reason of the application of section 220(e)(2)(A) to such
account.'', and
(2) by inserting ``or a medical savings account described
in section 220(d)'' in subsection (e)(1) after ``described in
section 408(a)''.
(g) Failure To Provide Reports on Medical Savings Accounts.--
Section 6693 of such Code (relating to failure to provide reports on
individual retirement account or annuities) is amended--
(1) by inserting ``or on medical savings accounts'' after
``annuities'' in the heading of such section, and
(2) by adding at the end of subsection (a) the following:
``The person required by section 220(h) to file a report
regarding a medical savings account at the time and in the
manner required by such section shall pay a penalty of $50 for
each failure unless it is shown that such failure is due to
reasonable cause.''
(h) Clerical Amendments.--
(1) The table of sections for part VII of subchapter B of
chapter 1 of such Code is amended by striking the last item and
inserting the following:
``Sec. 220. Medical savings accounts.
``Sec. 221. Cross reference.''
(2) The table of sections for chapter 43 of such Code is
amended by striking the item relating to section 4973 and
inserting the following:
``Sec. 4973. Tax on excess contributions
to individual retirement
accounts, medical savings
accounts, certain 403(b)
contracts, and certain
individual retirement
annuities.''
(3) The table of sections for subchapter B of chapter 68 of
such Code is amended by inserting ``or on medical savings
accounts'' after ``annuities'' in the item relating to section
6693.
(i) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1993.
Title II, Subtitle D
Subtitle D--Anti-Fraud
PART 1--ESTABLISHMENT OF ALL-PAYER HEALTH CARE FRAUD AND ABUSE CONTROL
PROGRAM
SEC. 2301. ALL-PAYER HEALTH CARE FRAUD AND ABUSE CONTROL PROGRAM.
(a) In General.--Not later than January 1, 1996, the Attorney
General shall establish a program--
(1) to coordinate Federal, State, and local law enforcement
programs to control fraud and abuse with respect to the
delivery of and payment for health care in the United States,
(2) to conduct investigations, audits, evaluations, and
inspections relating to the delivery of and payment for health
care in the United States, and
(3) in consultation with the Inspector General of the
Department of Health and Human Services, to facilitate the
enforcement of the provisions of sections 1128, 1128A, and
1128B of the Social Security Act and other statutes applicable
to health care fraud and abuse.
(b) Coordination With Law Enforcement Agencies.--In carrying out
the program under subsection (a), the Attorney General shall consult
with, and arrange for the sharing of data and resources with Federal,
State and local law enforcement agencies, State Medicaid Fraud Control
Units, and State agencies responsible for the licensing and
certification of health care providers.
(c) Coordination With Third Party Insurers.--In carrying out the
program established under subsection (a), the Attorney General shall
consult with, and arrange for the sharing of data with representatives
of private sponsors of health benefit plans and other providers of
health insurance.
(d) Regulations.--
(1) In general.--The Attorney General shall by regulation
establish standards to carry out the program under subsection
(a).
(2) Information standards.--
(A) In general.--Such standards shall include
standards relating to the furnishing of information by
health insurers (including self-insured health benefit
plans), providers, and others to enable the Attorney
General to carry out the program (including
coordination with law enforcement agencies under
subsection (b) and third party insurers under
subsection (c)).
(B) Confidentiality.--Such standards shall include
procedures to assure that such information is provided
and utilized in a manner that protects the
confidentiality of the information and the privacy of
individuals receiving health care services.
(C) Qualified immunity for providing information.--
The provisions of section 1157(a) of the Social
Security Act (relating to limitation on liability)
shall apply to a person providing information to the
Attorney General under the program under this section,
with respect to the Attorney General's performance of
duties under the program, in the same manner as such
section applies to information provided to
organizations with a contract under part B of title XI
of such Act, with respect to the performance of such a
contract.
SEC. 2302. AUTHORIZATION OF ADDITIONAL APPROPRIATIONS FOR INVESTIGATORS
AND OTHER PERSONNEL.
In addition to any other amounts authorized to be appropriated to
the Attorney General for health care anti-fraud and abuse activities
for a fiscal year, there are authorized to be appropriated such sums as
may be necessary to enable the Attorney General to conduct
investigations of allegations of health care fraud and otherwise carry
out the program established under section 2301 in a fiscal year.
SEC. 2303. ESTABLISHMENT OF ANTI-FRAUD AND ABUSE TRUST FUND.
(a) Establishment.--There is hereby created on the books of the
Treasury of the United States a trust fund to be known as the ``Anti-
Fraud and Abuse Trust Fund'' (in this section referred to as the
``Trust Fund''). The Trust Fund shall consist of such amounts as may be
deposited in, or appropriated to, such Trust Fund as provided in this
part and section 1128A(f)(3) of the Social Security Act.
(b) Management.--
(1) In general.--The Trust Fund shall be managed by the
Attorney General through a Managing Trustee designated by the
Attorney General.
(2) Investment of funds.--It shall be the duty of the
Managing Trustee to invest such portion of the Trust Fund as is
not, in the trustee's judgment, required to meet current
withdrawals. Such investments may be made only in interest-
bearing obligations of the United States or in obligations
guaranteed as to both principal and interest by the United
States. For such purpose such obligations may be acquired on
original issue at the issue price, or by purchase of
outstanding obligations at market price. The purposes for which
obligations of the United States may be issued under chapter 31
of title 31, United States Code, are hereby extended to
authorize the issuance at par of public-debt obligations for
purchase by the Trust Fund. Such obligations issued for
purchase by the Trust Fund shall have maturities fixed with due
regard for the needs of the Trust Fund and shall bear interest
at a rate equal to the average market yield (computed by the
Managing Trustee on the basis of market quotations as of the
end of the calendar month next preceding the date of such
issue) on all marketable interest-bearing obligations of the
United States then forming a part of the public debt which are
not due or callable until after the expiration of 4 years from
the end of such calendar month, except that where such average
is not a multiple of \1/8\ of 1 percent, the rate of interest
on such obligations shall be the multiple of \1/8\ of 1 percent
nearest such market yield. The Managing Trustee may purchase
other interest-bearing obligations of the United States or
obligations guaranteed as to both principal and interest by the
United States, on original issue or at the market price, only
where the Trustee determines that the purchase of such other
obligations is in the public interest.
(3) Any obligations acquired by the Trust Fund (except
public-debt obligations issued exclusively to the Trust Fund)
may be sold by the Managing Trustee at the market price, and
such public-debt obligations may be redeemed at par plus
accrued interest.
(4) The interest on, and the proceeds from the sale or
redemption of, any obligations held in the Trust Fund shall be
credited to and form a part of the Trust Fund.
(5) The receipts and disbursements of the Attorney General
in the discharge of the functions of the Attorney General shall
not be included in the totals of the budget of the United
States Government. For purposes of part C of the Balanced
Budget and Emergency Deficit Control Act of 1985, the Attorney
General and the Trust Fund shall be treated in the same manner
as the Federal Retirement Thrift Investment Board and the
Thrift Savings Fund, respectively. The United States is not
liable for any obligation or liability incurred by the Trust
Fund.
(c) Use of Funds.--Of the amounts in the Trust Fund--
(1) not less than 60 percent shall be used to support
educational activities to prevent the occurrence of violations
of anti-fraud and abuse laws, including the issuance of
advisory opinions under section 1129 and 1877(i) of the Social
Security Act (as added by part 4) and fraud alerts, seminars
for providers, and program updates; and
(2) any amounts remaining after use for activities under
paragraph (1) shall be used to assist the Attorney General in
carrying out the all-payor fraud and abuse control program
established under section 2301(a) in the fiscal year involved.
(d) Deposit of Federal Health Anti-Fraud and Abuse Penalties Into
Trust Fund.--Section 1128A(f)(3) of the Social Security Act (42 U.S.C.
1320a-7a(f)(3)) is amended by striking ``as miscellaneous receipts of
the Treasury of the United States'' and inserting ``in the Anti-Fraud
and Abuse Trust Fund established under section 2303(a) of the
Affordable Health Care Now Act of 1994''.
(e) Use of Federal Health Anti-Fraud and Abuse Penalties to Repay
Beneficiaries for Cost-Sharing.--Section 1128A(f) of the Social
Security Act (42 U.S.C. 1320a-7a(f)) is amended in the matter preceding
paragraph (1) by striking ``Secretary and disposed of as follows:'' and
inserting the following: ``Secretary. If the person against whom such a
penalty or assessment was assessed collected a payment from an
individual for providing to the individual the service that is the
subject of the penalty or assessment, the Secretary shall pay a portion
of the amount recovered to the individual in the nature of restitution
in an amount equal to the payment so collected. The Secretary shall
dispose of any remaining amounts recovered under this section as
follows:''.
PART 2--REVISIONS TO CURRENT SANCTIONS FOR FRAUD AND ABUSE
SEC. 2311. MANDATORY EXCLUSION FROM PARTICIPATION IN MEDICARE AND STATE
HEALTH CARE PROGRAMS.
(a) Individual Convicted of Felony Relating to Fraud.--
(1) In general.--Section 1128(a) of the Social Security Act
(42 U.S.C. 1320a-7(a)) is amended by adding at the end the
following new paragraph:
``(3) Felony conviction relating to fraud.--Any individual
or entity that has been convicted, under Federal or State law,
in connection with the delivery of a health care item or
service on or after the date of the enactment of this
paragraph, or with respect to any act or omission on or after
such date in a program (other than those specifically described
in paragraph (1)) operated by or financed in whole or in part
by any Federal, State, or local government agency, of a
criminal offense consisting of a felony relating to fraud,
theft, embezzlement, breach of fiduciary responsibility, or
other financial misconduct.''.
(2) Conforming amendment.--Section 1128(b)(1) of such Act
(42 U.S.C. 1320a-7(b)(1)) is amended--
(A) in the heading, by striking ``Conviction'' and
inserting ``Misdemeanor conviction''; and
(B) by striking ``criminal offense'' and inserting
``criminal offense consisting of a misdemeanor''.
(b) Individual Convicted of Felony Relating to Controlled
Substance.--
(1) In general.--Section 1128(a) of the Social Security Act
(42 U.S.C. 1320a-7(a)), as amended by subsection (a), is
amended by adding at the end the following new paragraph:
``(4) Felony conviction relating to controlled substance.--
Any individual or entity that has been convicted, under Federal
or State law, of a criminal offense consisting of a felony
relating to the unlawful manufacture, distribution,
prescription, or dispensing of a controlled substance.''.
(2) Conforming amendment.--Section 1128(b)(3) of such Act
(42 U.S.C. 1320a-7(b)(3)) is amended--
(A) in the heading, by striking ``Conviction'' and
inserting ``Misdemeanor conviction''; and
(B) by striking ``criminal offense'' and inserting
``criminal offense consisting of a misdemeanor''.
SEC. 2312. ESTABLISHMENT OF MINIMUM PERIOD OF EXCLUSION FOR CERTAIN
INDIVIDUALS AND ENTITIES SUBJECT TO PERMISSIVE EXCLUSION
FROM MEDICARE AND STATE HEALTH CARE PROGRAMS.
Section 1128(c)(3) of the Social Security Act (42 U.S.C. 1320a-
7(c)(3)) is amended by adding at the end the following new
subparagraphs:
``(D) In the case of an exclusion of an individual or entity under
paragraph (1), (2), or (3) of subsection (b), the period of the
exclusion shall be 3 years, unless the Secretary determines in
accordance with published regulations that a shorter period is
appropriate because of mitigating circumstances or that a longer period
is appropriate because of aggravating circumstances.
``(E) In the case of an exclusion of an individual or entity under
subsection (b)(4) or (b)(5), the period of the exclusion shall not be
less than the period during which the individual's or entity's license
to provide health care is revoked, suspended, or surrendered, or the
individual or the entity is excluded or suspended from a Federal or
State health care program.
``(F) In the case of an exclusion of an individual or entity under
subsection (b)(6)(B), the period of the exclusion shall be not less
than 1 year.''.
SEC. 2313. REVISIONS TO CRIMINAL PENALTIES.
(a) Clarification of Discount Exception to Anti-Kickback
Provisions.--Section 1128B(b)(3)(A) of the Social Security Act (42
U.S.C. 1320a-7b(b)(3)(A)) is amended--
(1) by inserting ``(regardless of its timing or
availability)'' after ``in price''; and
(2) by striking ``program;'' and inserting ``program and is
not paid in the form of currency or coin;''.
(b) Exemption From Anti-Kickback Penalties for Certain Managed Care
Arrangements.--Section 1128B(b)(3) of such Act (42 U.S.C. 1320a-
7b(b)(3)) is amended--
(1) by striking ``and'' at the end of subparagraph (D);
(2) by striking the period at the end of subparagraph (E)
and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(F) any reduction in cost sharing or increased benefits
given to an individual, any amounts paid to a provider for an
item or service furnished to an individual, or any discount or
reduction in price given by the provider for such an item or
service, if--
``(i) the item or service is provided through an
organization described in section 1877(b)(3), or
``(ii) the item or service is provided through such
an organization on behalf of another entity (including
but not limited to a self-insured employer or indemnity
plan) that assumes financial risk for the provision of
the item or service.''.
(c) Exemption From Anti-Kickback Penalties for Certain Protected
Financial Relationships.--Section 1128B(b)(3) of such Act (42 U.S.C.
1320a-7b(b)(3)), as amended by subsection (b), is further amended--
(1) by striking ``and'' at the end of subparagraph (E);
(2) by striking the period at the end of subparagraph (F)
and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(G) any amount in a financial relationship of a physician
(or an immediate family member of such physician) with an
entity specified in section 1877(a)(2), if section 1877(a)(1)
does not apply to that amount or financial relationship.''.
SEC. 2314. REVISIONS TO LIMITATIONS ON PHYSICIAN SELF-REFERRAL.
(a) Clarification of Coverage of Radiology or Diagnostic
Services.--Section 1877(h)(6) of the Social Security Act (42 U.S.C.
1395nn(h)(6)) is amended by striking subparagraph (D).
(b) New Exception for Shared Facility Services.--Section 1877(b) of
such Act (42 U.S.C. 1395nn(b)) is amended--
(1) by redesignating paragraph (4) as paragraph (5); and
(2) by inserting after paragraph (3) the following new
paragraph:
``(4) Shared facility services.--
``(A) In general.--In the case of a shared facility
service of a shared facility--
``(i) that is furnished--
``(I) personally by the referring
physician who is a shared facility
physician or personally by an
individual directly employed by such a
physician,
``(II) by a shared facility in a
building in which the referring
physician furnishes substantially all
of the services of the physician that
are unrelated to the furnishing of
shared facility services, and
``(III) to a patient of a shared
facility physician; and
``(ii) that is billed by the referring
physician.
``(B) Shared facility related definitions.--
``(i) Shared facility service.--The term
`shared facility service' means, with respect
to a shared facility, a designated health
service furnished by the facility to patients
of shared facility physicians.
``(ii) Shared facility.--The term `shared
facility' means an entity that furnishes shared
facility services under a shared facility
arrangement.
``(iii) Shared facility physician.--The
term `shared facility physician' means, with
respect to a shared facility, a physician who
has a financial relationship under a shared
facility arrangement with the facility.
``(iv) Shared facility arrangement.--The
term `shared facility arrangement' means, with
respect to the provision of shared facility
services in a building, a financial
arrangement--
``(I) which is only between
physicians who are providing services
(unrelated to shared facility services)
in the same building,
``(II) in which the overhead
expenses of the facility are shared, in
accordance with methods
previously determined by the physicians in the arrangement, among the
physicians in the arrangement, and
``(III) which, in the case of a
corporation, is wholly owned and
controlled by shared facility
physicians.''.
(c) Revision to Rural Provider Exception.--Section 1877(d)(2) of
such Act (42 U.S.C. 1395nn(d)(2)) is amended by striking
``substantially all'' and inserting ``not less than 75 percent (as
determined in accordance with regulations of the Secretary)''.
(d) Clarification of Referrals by Nephrologists.--Section
1877(h)(5)(C) of such Act (42 U.S.C. 1395nn(H)(5)(C)) is amended--
(1) by striking ``and a request'' and inserting ``a
request'';
(2) by inserting after ``radiation therapy,'' the
following: ``and a request by a nephrologist for items or
services related to renal dialysis,''; and
(3) by striking ``or radiation oncologist'' and inserting
``radiation oncologist, or nephrologist''.
(e) Revision of Reporting Requirements.--Section 1877(f) of such
Act (42 U.S.C. 1395nn(f)) is amended--
(1) by striking ``Each entity'' and all that follows
through paragraph (2) and inserting the following: ``The
Secretary may require each entity (other than a physician or
physician group practice) providing designated health services
to provide the Secretary with the following information
concerning the entity's ownership, investment, and compensation
arrangements:
``(1) the designated health services provided by the
entity; and
``(2) the names and unique physician identifier numbers of
all physicians with an ownership or investment interest (as
described in subsection (a)(2)(A)) or with a compensation
interest (as described in subsection (a)(2)(B)) in the entity,
or whose immediate relatives have such an ownership,
investment, or compensation interest in the entity.''; and
(2) by striking the fifth sentence.
(f) Exception for Certain Managed Care Arrangements.--Section
1877(b)(3) of such Act (42 U.S.C. 1395nn(b)(3)) is amended--
(1) by striking ``or'' at the end of subparagraph (C);
(2) by striking the period at the end of subparagraph (D)
and inserting a comma; and
(3) by adding at the end the following new subparagraphs:
``(E) with a contract with a State to provide
services under the State plan under title XIX (in
accordance with section 1903(m)); or
``(F) which meets State regulatory requirements
applicable to health maintenance organizations and
which--
``(i) provides designated health services
directly or through contractual arrangements
with providers;
``(ii) assumes financial risk for the
provision of services or provides services on
behalf of another individual or entity
(including but not limited to a self-insured
employer, indemnity plan, physician, or
physician group) that assumes financial risk
for the provision of the item or service; and
``(iii) subjects the services to a program
of utilization review offered by an
organization described in a preceding
subparagraph, an organization meeting State
regulatory requirements applicable to
utilization review, or an organization
accredited to perform utilization review
considered appropriate by the Secretary.''.
(g) Preemption of State Law.--Section 1877(g) of such Act (42
U.S.C. 1395nn(g)) is amended by adding at the end the following new
paragraph:
``(6) Preemption of state law.--The provisions of this
section shall supersede any State law to the extent State law
prohibits a physician from making a referral, or an entity from
presenting a bill, for the furnishing of a service which is not
subject to the restrictions applicable under paragraph (1).''.
(h) Revision of Effective Date Exception Provision.--Section
13562(b)(2) of the Omnibus Budget Reconciliation Act of 1993 is amended
by striking subparagraphs (A) and (B) and inserting the following:
``(A) the second sentence of subsection (a)(2), and
subsections (b)(2)(B) and (d)(2), of section 1877 of
the Social Security Act (as in effect on the day before
the date of the enactment of this Act) shall apply
instead of the corresponding provisions in section 1877
(as amended by this Act);
``(B) section 1877(b)(4) of the Social Security Act
(as in effect on the day before the date of the
enactment of this Act) shall apply;
``(C) the requirements of section 1877(c)(2) of the
Social Security Act (as amended by this Act) shall not
apply to any securities of a corporation that meets the
requirements of section 1877(c)(2) of the Social
Security Act (as in effect on the day before the date
of the enactment of this Act);
``(D) section 1877(e)(3) of the Social Security Act
(as amended by this Act) shall apply, except that it
shall not apply to any arrangement that meets the
requirements of subsection (e)(2) or subsection (e)(3)
of section 1877 of the Social Security Act (as in
effect on the day before the date of the enactment of
this Act);
``(E) the requirements of clauses (iv) and (v) of
section 1877(h)(4)(A), and of clause (i) of section
1877(h)(4)(B), of the Social Security Act (as amended
by this Act) shall not apply; and
``(F) section 1877(h)(4)(B) of the Social Security
Act (as in effect on the day before the date of the
enactment of this Act) shall apply instead of section
1877(h)(4)(A)(ii) of such Act (as amended by this
Act).''.
(i) Effective Date.--The amendments made by this section shall
apply to referrals made on or after January 1, 1995, except that the
amendments made by subsection (h) shall apply as if included in the
enactment of the Omnibus Budget Reconciliation Act of 1993.
SEC. 2315. MEDICARE HEALTH MAINTENANCE ORGANIZATIONS.
(a) Study on Costs of Peer Review Contracts for Medicare HMOs.--The
Comptroller General shall conduct a study of the costs incurred by
eligible organizations with risk-sharing contracts under section
1876(b) of the Social Security Act of complying with the requirement of
entering into a written agreement with an entity providing peer review
services with respect to services provided by the organization,
together with an analysis of how information generated by such entities
is used by the Secretary of Health and Human Services to assess the
quality of services provided by such eligible organizations.
(b) Report to Congress.--Not later than July 1, 1997, the
Comptroller General shall submit a report to the Committee on Ways and
Means and the Committee on Energy and Commerce of the House of
Representatives and the Committee on Finance and the Special Committee
on Aging of the Senate on the study conducted under subsection (a).
SEC. 2316. EFFECTIVE DATE.
Except as otherwise provided, the amendments made by this part
shall take effect January 1, 1996.
PART 3--AMENDMENTS TO CRIMINAL LAW
SEC. 2321. PENALTIES FOR HEALTH CARE FRAUD.
(a) In General.--
(1) Fines and imprisonment for health care fraud
violations.--Chapter 63 of title 18, United States Code, is
amended by adding at the end the following:
``Sec. 1347. Health care fraud
``(a) Whoever knowingly executes, or attempts to execute, a scheme
or artifice--
``(1) to defraud any health care plan or other person, in
connection with the delivery of or payment for health care
benefits, items, or services; or
``(2) to obtain, by means of false or fraudulent pretenses,
representations, or promises, any of the money or property
owned by, or under the custody or control of, any health care
plan, or person in connection with the delivery of or payment
for health care benefits, items, or services;
shall be guilty of a felony, and fined under this title or imprisoned
not more than 5 years, or both.
``(b) In determining the amount or scope of any penalty or
assessment, the court shall take into account--
``(1) the nature of the false or fraudulent claims and the
circumstances under which they are presented;
``(2) the degree of culpability and history of prior
offenses by the convicted health care provider;
``(3) the extent to which restitution is paid; and
``(4) such other matters as justice may require.
``(c) A principal is liable for penalties and assessments under
this section for the acts of the principal's agents acting within the
scope of the agency.
``(d) For purposes of this section, the term `health care plan'
means a Federally-funded public program or private program for the
delivery of or payment for health care items or services.''.
(2) Clerical amendment.--The table of sections at the
beginning of chapter 63 of title 18, United States Code, is
amended by adding at the end the following:
``1347. Health care fraud.''.
SEC. 2322. REWARDS FOR INFORMATION LEADING TO PROSECUTION AND
CONVICTION.
Section 3059 of title 18, United States Code, is amended by adding
at the end the following new subsection:
``(c)(1) In special circumstances and in the Attorney General's
sole discretion, the Attorney General may make a payment of up to
$10,000 to a person who furnishes information unknown to the Government
relating to a possible prosecution under section 1347.
``(2) A person is not eligible for a payment under paragraph (1)
if--
``(A) the person is a current or former officer or employee
of a Federal or State government agency or instrumentality who
furnishes information discovered or gathered in the course of
government employment.
``(B) the person knowingly participated in the offense;
``(C) the information furnished by the person consists of
allegations or transactions that have been disclosed to the
public--
``(i) in a criminal, civil, or administrative
proceeding;
``(ii) in a congressional, administrative or
General Accounting Office report, hearing, audit or
investigation; or
``(iii) by the news media, unless the person is the
original source of the information; or
``(D) when, in the judgment of the Attorney General, it
appears that a person whose illegal activities are being
prosecuted or investigated could benefit from the award.
``(3) For the purposes of paragraph (2)(C)(iii), the term `original
source' means a person who has direct and independent knowledge of the
information that is furnished and has voluntarily provided the
information to the Government prior to disclosure by the news media.
``(4) Neither the failure of the Attorney General to authorize a
payment under paragraph (1) nor the amount authorized shall be subject
to judicial review.''.
SEC. 2323. BROADENING APPLICATION OF MAIL FRAUD STATUTE.
Section 1341 of title 18, United States Code, is amended--
(1) by inserting ``or deposits or causes to be deposited
any matter or thing whatever to be sent or delivered by any
private or commercial interstate carrier,'' after ``Postal
Service,''; and
(2) by inserting ``or such carrier'' after ``causes to be
delivered by mail''.
PART 4--ADVISORY OPINIONS
SEC. 2331. AUTHORIZING THE SECRETARY OF HEALTH AND HUMAN SERVICES TO
ISSUE ADVISORY OPINIONS UNDER TITLE XI.
Title XI of the Social Security Act (42 U.S.C. 1301 et seq.) is
amended by inserting after section 1128B the following new section:
``advisory opinions
``Sec. 1129. (a) Issuance of Advisory Opinions.--The Secretary
shall issue advisory opinions as provided in this section.
``(b) Matters Subject to Advisory Opinions.--The Secretary shall
issue advisory opinions as to the following matters:
``(1) What constitutes prohibited remuneration within the
meaning of section 1128B(b).
``(2) Whether an arrangement or proposed arrangement
satisfies the criteria set forth in section 1128B(b)(3) for
activities which do not result in prohibited remuneration.
``(3) Whether an arrangement or proposed arrangement
satisfies the criteria which the Secretary has established, or
shall establish by regulation for activities which do not
result in prohibited remuneration.
``(4) What constitutes an inducement to reduce or limit
services to individuals entitled to benefits under title XVIII
or title XIX within the meaning of section 1128B(b).
``(5) Whether an arrangement, activity or proposed
arrangement or proposed activity violates any other provision
of this Act.
``(c) Matters Not Subject to Advisory Opinions.--Such advisory
opinions shall not address the following matters:
``(1) Whether the fair market value shall be, or was paid
or received for any goods, services or property.
``(2) Whether an individual is a bona fide employee within
the requirements of section 3121(d)(2) of the Internal Revenue
Code of 1986.
``(d) Effect of Advisory Opinions.--
``(1) Each advisory opinion issued by the Secretary shall
be binding as to the Secretary and the party or parties
requesting the opinion.
``(2) The failure of a party to seek an advisory opinion
may not be introduced into evidence to prove that the party
intended to violate the provisions of sections 1128, 1128A, or 1128B.
``(e) Regulations.--The Secretary within 180 days of the date of
enactment, shall issue regulations establishing a system for the
issuance of advisory opinions. Such regulations shall provide for--
``(1) the procedure to be followed by a party applying for
an advisory opinion;
``(2) the procedure to be followed by the Secretary in
responding to a request for an advisory opinion;
``(3) the interval in which the Secretary shall respond;
``(4) the reasonable fee to be charged to the party
requesting an advisory opinion; and
``(5) the manner in which advisory opinions will be made
available to the public.
``(f) Interval for Issuance of Advisory Opinions.--Under no
circumstances shall the interval in which the Secretary shall respond
to a party requesting an advisory opinion exceed 30 days.''.
SEC. 2332. AUTHORIZING THE SECRETARY OF HEALTH AND HUMAN SERVICES TO
ISSUE ADVISORY OPINIONS RELATING TO PHYSICIAN OWNERSHIP
AND REFERRAL.
Section 1877 of the Social Security Act (42 U.S.C. 1395nn) is
amended by the addition of the following new subsection:
``(i) Advisory Opinions.--
``(1) In general.--The Secretary shall issue advisory
opinions on whether an arrangement or proposed arrangement will
result in a prohibited referral within the meaning of this
section.
``(2) Effect of advisory opinions.--
``(A) Each advisory opinion issued by the Secretary
shall be binding as to the Secretary and the party or
parties requesting the opinion.
``(B) The failure of a party to seek an advisory
opinion may not be introduced into evidence to prove
that the party intended to violate the provisions of
this section.
``(3) Regulations.--The Secretary within one hundred and
eighty days of the date of enactment, shall issue regulations
establishing a system for the issuance of advisory opinions.
Such regulations shall provide for--
``(A) the procedure to be followed by a party
applying for an advisory opinion;
``(B) the procedure to be followed by the Secretary
in responding to a request for an advisory opinion;
``(C) the interval in which the Secretary shall
respond;
``(D) the reasonable fee to be charged to the party
requesting an advisory opinion; and
``(E) the manner in which advisory opinions will be
made available to the public.
``(4) Interval for issuance of advisory opinions.--Under no
circumstances shall the interval in which the Secretary shall
respond to a party requesting an advisory opinion exceed thirty
days.''.
SEC. 2333. EFFECTIVE DATE.
Unless otherwise specified, the amendments made by this part shall
be effective upon the enactment of this Act.
Title II, Subtitle E
Subtitle E--Increased Medicare Beneficiary Choice; Additional Medicare
Reforms
PART 1--INCREASED MEDICARE BENEFICIARY CHOICE
SEC. 2401. REQUIREMENTS FOR HEALTH MAINTENANCE ORGANIZATIONS UNDER
MEDICARE.
(a) Use of Metropolitan Statistical Areas to Determine Adjusted
Average Per Capita Cost.--Section 1876(a)(4) of such Act (42 U.S.C.
1395mm(a)(4)) is amended by striking ``in a geographic area served by
an eligible organization or in a similar area'' and inserting ``in the
metropolitan statistical area (as defined by the Office of Management
and Budget) in which the individual resides, or in the entire portion
of the State in which the individual resides which is not located in a
metropolitan statistical area in the case of an individual who does not
reside in a metropolitan statistical area''.
(b) Determination of Model Additional Health Benefit Packages.--
Section 1876(g) of such Act (42 U.S.C. 1395mm(g)) is amended by
inserting after paragraph (3) the following new paragraph:
``(4) The Secretary shall develop the following model packages of
additional health benefits (referred to in paragraph (3)(B)) which an
eligible organization may provide (at its option) under paragraph (2):
``(A) Coverage for catastrophic illness (subject to a limit
on out-of-pocket expenditures).
``(B) Coverage for prescription drugs.
``(C) Coverage for preventive services.''.
(c) Revision of Membership Limitation.--Section 1876(f) of the
Social Security Act (42 U.S.C. 1395mm(f)) is amended--
(1) in paragraph (1), by striking ``one-half'' and
inserting ``25 percent''; and
(2) in paragraph (2)(A), by striking ``50 percent'' and
inserting ``75 percent''.
(d) Enrollment Periods for Medicare Health Maintenance
Organizations.--
(1) Uniform open enrollment period.--Section
1876(c)(3)(A)(i) of such Act (42 U.S.C. 1395mm(c)(3)(A)(i)) is
amended by striking ``must have'' and all that follows through
``and including'' and inserting the following: ``shall have
open enrollment during an annual uniform open enrollment period
established by the Secretary for all eligible organizations,
together with''.
(2) Open enrollment for certain disenrolled individuals.--
Section 1876(c)(3)(A)(ii)(I) of such Act (42 U.S.C.
1395mm(c)(3)(A)(ii)(I)) is amended by adding at the end the
following: ``Each eligible organization with a risk-sharing
contract under this section shall have an open enrollment
period for individuals residing in the organization's service
area who disenroll from another eligible organization with a
risk-sharing contract under this section on the grounds that
the individual's primary care physician is no longer a member
of the organization's provider network or for cause (in
accordance with such standards, and as demonstrated through an
appeals process that meets such requirements, as the Secretary
may establish).
(e) Effective Date.--The amendments made by this section shall
apply to contracts entered into on or after the date of the enactment
of this Act.
SEC. 2402. EXPANSION AND REVISION OF MEDICARE SELECT POLICIES.
(a) Permitting Medicare Select Policies in All States.--
(1) In general.--Subsection (c) of section 4358 of the
Omnibus Budget Reconciliation Act of 1990 (hereafter referred
to as ``OBRA-1990'') is hereby repealed.
(2) Conforming amendment.--Section 4358 of OBRA-1990 is
amended by redesignating subsection (d) as subsection (c).
(b) Requirements of Medicare Select Policies.--Section 1882(t)(1)
of the Social Security Act (42 U.S.C. 1395ss(t)(1)) is amended to read
as follows:
``(1)(A) If a medicare supplemental policy meets the 1991 NAIC
Model Regulation or 1991 Federal Regulation and otherwise complies with
the requirements of this section except that--
``(i) the benefits under such policy are restricted to
items and services furnished by certain entities (or reduced
benefits are provided when items or services are furnished by
other entities), and
``(ii) in the case of a policy described in subparagraph
(C)(i)--
``(I) the benefits under such policy are not one of
the groups or packages of benefits described in
subsection (p)(2)(A),
``(II) except for nominal copayments imposed for
services covered under part B of this title, such
benefits include at least the core group of basic
benefits described in subsection (p)(2)(B), and
``(III) an enrollee's liability under such policy
for physician's services covered under part B of this
title is limited to the nominal copayments described in
subclause (II),
the policy shall nevertheless be treated as meeting those standards if
the policy meets the requirements of subparagraph (B).
``(B) A policy meets the requirements of this subparagraph if--
``(i) full benefits are provided for items and services
furnished through a network of entities which have entered into
contracts or agreements with the issuer of the policy,
``(ii) full benefits are provided for items and services
furnished by other entities if the services are medically
necessary and immediately required because of an unforeseen
illness, injury, or condition and it is not reasonable given
the circumstances to obtain the services through the network,
``(iii) the network offers sufficient access,
``(iv) the issuer of the policy has arrangements for an
ongoing quality assurance program for items and services
furnished through the network,
``(v)(I) the issuer of the policy provides to each enrollee
at the time of enrollment an explanation of--
``(aa) the restrictions on payment under the policy
for services furnished other than by or through the
network,
``(bb) out of area coverage under the policy,
``(cc) the policy's coverage of emergency services
and urgently needed care, and
``(dd) the availability of a policy through the
entity that meets the 1991 Model NAIC Regulation or
1991 Federal Regulation without regard to this
subsection and the premium charged for such policy, and
``(II) each enrollee prior to enrollment acknowledges
receipt of the explanation provided under subclause (I), and
``(vi) the issuer of the policy makes available to
individuals, in addition to the policy described in this
subsection, any policy (otherwise offered by the issuer to
individuals in the State) that meets the 1991 Model NAIC
Regulation or 1991 Federal Regulation and other requirements of
this section without regard to this subsection.
``(C)(i) A policy described in this subparagraph--
``(I) is offered by an eligible organization (as defined in
section 1876(b)),
``(II) is not a policy or plan providing benefits pursuant
to a contract under section 1876 or an approved demonstration
project described in section 603(c) of the Social Security
Amendments of 1983, section 2355 of the Deficit Reduction Act
of 1984, or section 9412(b) of the Omnibus Budget
Reconciliation Act of 1986, and
``(III) provides benefits which, when combined with
benefits which are available under this title, are
substantially similar to benefits under policies offered to
individuals who are not entitled to benefits under this title.
``(ii) In making a determination under subclause (III) of clause
(i) as to whether certain benefits are substantially similar, there
shall not be taken into account, except in the case of preventive
services, benefits provided under policies offered to individuals who
are not entitled to benefits under this title which are in addition to
the benefits covered by this title and which are benefits an entity
must provide in order to meet the definition of an eligible
organization under section 1876(b)(1).''.
(c) Renewability of Medicare Select Policies.--Section 1882(q)(1)
of the Social Security Act (42 U.S.C. 1395ss(q)(1)) is amended--
(1) by striking ``(1) Each'' and inserting ``(1)(A) Except
as provided in subparagraph (B), each'';
(2) by redesignating subparagraphs (A) and (B) as clauses
(i) and (ii), respectively; and
(3) by adding at the end the following new subparagraph:
``(B)(i) Except as provided in clause (ii), in the case of
a policy that meets the requirements of subsection (t), an
issuer may cancel or nonrenew such policy with respect to an
individual who leaves the service area of such policy.
``(ii) If an individual described in clause (i) moves to a
geographic area where an issuer described in clause (i), or
where an affiliate of such issuer, is issuing medicare
supplemental policies, such individual must be permitted to
enroll in any medicare supplemental policy offered by such
issuer or affiliate that provides benefits comparable to or
less than the benefits provided in the policy being canceled or
nonrenewed. An individual whose coverage is canceled or
nonrenewed under this subparagraph shall, as part of the notice
of termination or nonrenewal, be notified of the right to enroll in
other medicare supplemental policies offered by the issuer or its
affiliates.
``(iii) For purposes of this subparagraph, the term
`affiliate' shall have the meaning given such term by the 1991
NAIC Model Regulation.''.
(d) Civil Money Penalty.--Section 1882(t)(2) of the Social Security
Act (42 U.S.C. 1395ss(t)(2)) is amended--
(1) by striking ``(2)'' and inserting ``(2)(A)'';
(2) by redesignating subparagraphs (A), (B), (C), and (D)
as clauses (i), (ii), (iii), and (iv), respectively;
(3) in clause (iv), as so redesignated--
(A) by striking ``paragraph (1)(E)(i)'' and
inserting ``paragraph (1)(B)(v)(I), and
(B) by striking ``paragraph (1)(E)(ii)'' and
inserting ``paragraph (1)(B)(v)(II)'';
(4) by striking ``the previous sentence'' and inserting
``this subparagraph''; and
(5) by adding at the end the following new subparagraph:
``(B) If the Secretary determines that an issuer of a policy
approved under paragraph (1) has made a misrepresentation to the
Secretary or has provided the Secretary with false information
regarding such policy, the issuer is subject to a civil money penalty
in an amount not to exceed $100,000 for each such determination. The
provisions of section 1128A (other than the first sentence of
subsection (a) and other than subsection (b)) shall apply to a civil
money penalty under this subparagraph in the same manner as such
provisions apply to a penalty or proceeding under section 1128A(a).''.
(e) Effective Dates.--
(1) NAIC standards.--If, within 6 months after the date of
the enactment of this Act, the National Association of
Insurance Commissioners (hereafter in this subsection referred
to as the ``NAIC'') makes changes in the 1991 NAIC Model
Regulation (as defined in section 1882(p)(1)(A) of the Social
Security Act) to incorporate the additional requirements
imposed by the amendments made by this section, section
1882(g)(2)(A) of such Act shall be applied in each State,
effective for policies issued to policyholders on and after the
date specified in paragraph (3), as if the reference to the
Model Regulation adopted on June 6, 1979, were a reference to
the 1991 NAIC Model Regulation (as so defined) as changed under
this paragraph (such changed Regulation referred to in this
subsection as the ``1994 NAIC Model Regulation'').
(2) Secretary standards.--If the NAIC does not make changes
in the 1991 NAIC Model Regulation (as so defined) within the 6-
month period specified in paragraph (1), the Secretary of
Health and Human Services (in this subsection as the
``Secretary'') shall promulgate a regulation and section
1882(g)(2)(A) of the Social Security Act shall be applied in
each State, effective for policies issued to policyholders on
and after the date specified in paragraph (3), as if the
reference to the Model Regulation adopted in June 6, 1979, were
a reference to the 1991 NAIC Model Regulation (as so defined)
as changed by the Secretary under this paragraph (such changed
Regulation referred to in this subsection as the ``1994 Federal
Regulation'').
(3) Date specified.--
(A) In general.--Subject to subparagraph (B), the
date specified in this paragraph for a State is the
earlier of--
(i) the date the State adopts the 1994 NAIC
Model Regulation or the 1994 Federal
Regulation; or
(ii) 1 year after the date the NAIC or the
Secretary first adopts such regulations.
(B) Additional legislative action required.--In the
case of a State which the Secretary identifies, in
consultation with the NAIC, as--
(i) requiring State legislation (other than
legislation appropriating funds) in order for
medicare supplemental policies to meet the 1994
NAIC Model Regulation or the 1994 Federal
Regulation, but
(ii) having a legislature which is not
scheduled to meet in 1995 in a legislative
session in which such legislation may be
considered,
the date specified in this paragraph is the first day
of the first calendar quarter beginning after the close
of the first legislative session of the State
legislature that begins on or after January 1, 1995.
For purposes of the previous sentence, in the case of a
State that has a 2-year legislative session, each year
of such session shall be deemed to be a separate
regular session of the State legislature.
SEC. 2403. INCLUDING NOTICE OF AVAILABLE HEALTH MAINTENANCE
ORGANIZATIONS IN ANNUAL NOTICE TO BENEFICIARIES.
Section 1804 of the Social Security Act (42 U.S.C. 1395b-2) is
amended--
(1) by striking ``and'' at the end of paragraph (2);
(2) by striking the period at the end of paragraph (3) and
inserting ``, and''; and
(3) by inserting after paragraph (3) the following new
paragraph:
``(4) with respect to the area in which the individual
receiving the notice resides, a description of the eligible
organizations under section 1833(a)(1) or section 1876 and the
carriers offering a medicare supplemental policy described in
section 1882(t)(1) which serve the area in which the individual
receiving the notice resides.''.
SEC. 2404. LEGISLATIVE PROPOSAL ON ENROLLING MEDICARE BENEFICIARIES IN
QUALIFIED HEALTH PLANS.
(a) In General.--
(1) Legislative proposal.--Not later than 1 year after the
date of the enactment of this Act, the Secretary shall develop
and submit to Congress a proposal for legislation which
provides for the enrollment of medicare beneficiaries in
private health insurance plans (including medisave coverage
described in section 1102(e)).
(2) Medicare beneficiary.--For purposes of this section,
the term ``medicare beneficiary'' means an individual who is
eligible for benefits under part A of title XVIII of the Social
Security Act and is enrolled under part B of such title.
(b) Contents of the Proposal.--A proposal for legislation submitted
under subsection (a) shall--
(1) provide for an appropriate methodology by which the
Secretary shall make payment to private health insurance plans
for the enrollment of medicare beneficiaries;
(2) provide individuals the opportunity to remain enrolled
in such a plan without an interruption in coverage upon
becoming medicare beneficiaries; and
(3) provide medicare beneficiaries with the opportunity to
enroll in a private health insurance plan.
SEC. 2405. OPTIONAL INTERIM ENROLLMENT OF MEDICARE BENEFICIARIES IN
PRIVATE HEALTH PLANS.
(a) Interim Enrollment of Medicare Beneficiaries in Qualified
Health Plans.--
(1) In general.--Notwithstanding title XVIII of the Social
Security Act, the Secretary shall provide for a monthly payment
as provided under subsection (b)(1) to a private health
insurance plan on behalf of enrolled medicare beneficiaries who
choose to enroll in such a plan.
(2) Medicare beneficiary.--For purposes of this section,
the term ``medicare beneficiary'' means an individual who is
eligible for benefits under part A of title XVIII of the Social
Security Act and is enrolled under part B of such title.
(b) Payment Specified.--
(1) Federal payment.--
(A) In general.--The amount of payment specified in
this paragraph for an individual who is enrolled in a
private health insurance plan is the lesser of--
(i) the applicable rate specified in
section 1876(a)(1)(C) of the Social Security
Act; or
(ii) the monthly premium charged the
individual for coverage under the private
health insurance plan.
(B) Source of payment.--The payment to a private
health insurance plan under this paragraph for
individuals entitled to benefits under part A and
enrolled under part B of title XVIII of the Social
Security Act shall be made from the Federal Hospital
Insurance Trust Fund and the Federal Supplementary
Medical Insurance Trust Fund, with the allocation to be
determined by the Secretary.
(2) Individual's share.--If the monthly premium for the
private plan in which the individual is enrolled is greater
than the amount specified under paragraph (1)(A)(i), the
individual shall be responsible for paying to the plan the
difference between the monthly premium charged the individual
for coverage under the plan and the amount specified in
paragraph (1)(A)(i).
(3) Budget-neutrality.--The total amount of payments made
by the Secretary under this section with respect to a
beneficiary for a year may not exceed the amount of payment
that would have been made under title XVIII of the Social
Security Act during the year if the beneficiary did not choose
to enroll in a private health insurance plan during the year.
(c) Payments Under this Section as Sole Medicare Benefits.--
Payments made under this section shall be instead of the amounts that
would otherwise be payable, pursuant to sections 1814(b) and 1833(a) of
the Social Security Act, for services furnished to medicare
beneficiaries.
(d) Inclusion in Annual Notice to Beneficiaries.--Section 1804 of
the Social Security Act (42 U.S.C. (42 U.S.C. 1395b-2), as amended by
section 2403, is amended
(1) by striking ``and'' at the end of paragraph (3);
(2) by striking the period at the end of paragraph (4) and
inserting ``, and''; and
(3) by inserting after paragraph (4) the following new
paragraph:
``(5) a description of the option provided pursuant to
section 2405 of the Affordable Health Care Now Act of 1994 for
payment to be made by the Secretary on the individual's behalf
for enrollment in a private health insurance plan.''.
PART 2--MEDICARE PART B PREMIUM; OTHER MEDICARE PAYMENT CHANGES
SEC. 2411. EXTENSION OF CURRENT RULES FOR COMPUTING MEDICARE PART B
PREMIUM.
Section 1839(e) of the Social Security Act (42 U.S.C. 1395r(e)) is
amended--
(1) in paragraph (1)(A), by striking ``January 1999'' and
inserting ``January 2005''; and
(2) in paragraph (2), by striking ``January 1998'' and
inserting ``January 2004''.
SEC. 2412. 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 individual to whom this
section applies for the taxable year, there is hereby imposed (in
addition to any other tax imposed 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 premium tax for any
month is \2/3\ 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 section 1839
of the Social Security Act (determined without regard
to subsections (b) and (f) of section 1839 of such
Act).
``(2) Phasein of tax.--If the modified adjusted gross
income of the taxpayer for any taxable years exceeds the
threshold amount by less than $50,000, the Medicare part B
premium tax for any month during such taxable year shall be an
amount which bears the same ratio to the amount determined
under paragraph (1) (without regard to this paragraph) as such
excess bears to $50,000. The preceding sentence shall not apply
to any individual whose threshold amount is zero.
``(d) Other Definitions and Special Rules.--For purposes of this
section--
``(1) Threshold amount.--The term `threshold amount'
means--
``(A) except as otherwise provided in this
paragraph, $100,000,
``(B) $125,000 in the case of a joint return, and
``(C) zero in the case of a taxpayer who--
``(i) is married at the close of the
taxable 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 individual 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 determination 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:
``Part VIII. Medicare Part B Premiums For
High-Income Individuals.''
(c) Effective Date.--The amendments made by this section shall
apply to months after December 1994 in taxable years ending after
December 31, 1994.
SEC. 2413. IMPROVED EFFICIENCY THROUGH CONSOLIDATION OF ADMINISTRATION
OF PARTS A AND B.
(a) In General.--The Secretary of Health and Human Services shall
take such steps as may be necessary to consolidate the administration
(including processing systems) of parts A and B of the medicare program
(under title XVIII of the Social Security Act) including over a 5-year
period.
(b) Combination of Intermediary and Carrier Functions.--In taking
such steps, the Secretary shall contract with a single entity that
combines the fiscal intermediary and carrier functions in each area
except where the Secretary finds that special regional or national
contracts are appropriate.
(c) Superseding Conflicting Requirements.--The provisions of
sections 1816 and 1842 of the Social Security Act (including provider
nominating provisions in such section 1816) are superseded to the
extent required to carry out this section.
SEC. 2414. EXTENSION OF MEDICARE SECONDARY PAYMENT PROVISIONS.
(a) Extension of Data Match.--
(1) Section 1862(b)(5)(C)(iii) of the Social Security Act
(42 U.S.C. 1395y(b)(5)(C)(iii)) is amended by striking ``1998''
and inserting ``2004''.
(2) Section 6103(l)(12)(F) of the Internal Revenue Code of
1986 is amended--
(A) in clause (i), by striking ``1998'' and
inserting ``2004'',
(B) in clause (ii)(I), by striking ``1997'' and
inserting ``2003'', and
(C) in clause (ii)(II), by striking ``1998'' and
inserting ``2004''.
(b) Extension of Medicare Secondary Payer to Disabled
Beneficiaries.--Section 1862(b)(1)(B)(iii) of such Act (42 U.S.C.
1395y(b)(1)(B)(iii)) is amended by striking ``1998'' and inserting
``2004''.
(c) Extension of Period for End Stage Renal Disease
Beneficiaries.--Section 1862(b)(1)(C) of such Act (42 U.S.C.
1395y(b)(1)(C)) is amended in the second sentence by striking ``1998''
and inserting ``2004''.
Title II, Subtitle F
Subtitle F--Health Care Antitrust Improvements
SEC. 2501. PROTECTION FROM ANTITRUST LAWS FOR CERTAIN COMPETITIVE AND
COLLABORATIVE ACTIVITIES.
(a) Protections Described.--An activity relating to the provision
of health care services shall receive the following protection from the
antitrust laws:
(1) If the activity is within a safe harbor designated by
the Attorney General under section 2502, the safe harbor shall
be a defense to all antitrust claims, except for claims for
injunctive relief asserted by the Attorney General or the Chair
of the Federal Trade Commission in extraordinary circumstances.
(2) If the activity is specified in and in compliance with
the terms of a certificate of review issued by the Attorney
General under section 2503 and the activity occurs while the
certificate is in effect, the certificate shall be a defense to
antitrust claims, other than claims for injunctive relief.
(b) Award of Attorney's Fees and Costs of Suit.--
(1) In general.--If any person brings an action alleging a
claim under the antitrust laws and the activity on which the
claim is based is found by the court to be protected from such
laws under subsection (a), the court shall, at the conclusion
of the action--
(A) award to a substantially prevailing claimant
the cost of suit attributable to such claim, including
a reasonable attorney's fee, or
(B) award to a substantially prevailing party
defending against such claim the cost of such suit
attributable to such claim, including reasonable
attorney's fee, if the claim, or the claimant's conduct
during litigation of the claim, was frivolous,
unreasonable, without foundation, or in bad faith.
(2) Offset in cases of bad faith.--The court may reduce an
award made pursuant to paragraph (1) in whole or in part by an
award in favor of another party for any part of the cost of
suit (including a reasonable attorney's fee) attributable to
conduct during the litigation by any prevailing party that the
court finds to be frivolous, unreasonable, without foundation,
or in bad faith.
SEC. 2502. DESIGNATION OF SAFE HARBORS.
(a) In General.--
(1) Designation by attorney general.--The Attorney General,
in consultation with the Secretary of Health and Human Services
and the Chair, shall develop and designate pursuant to
paragraph (C) safe harbors for purposes of section 2501(a)(1)
relating to--
(A) each category of activities referred to in
paragraph (2); and
(B) such other categories of activities as the
Attorney General may designate in accordance with the
process described in this section.
(2) Required categories of activities subject to safe
harbors.--The categories of activities referred to in this
paragraph are as follows:
(A) Joint purchasing of health care services.--
Providing the terms under which consumers of health
care services (patients or others acting on their
behalf) may jointly negotiate and purchase health care
services.
(B) Small hospital mergers.--Providing for small
hospitals lawfully to merge under the antitrust laws
without undue delay or review, taking into account the
special needs and circumstances of rural health care
markets.
(C) Network formation and operation.--Permitting
activities related to the startup and operation of
collaborations between State-licensed providers through
partial or full integration, including multi-provider
networks, hospital networks, physician-hospital
organizations, and other efforts to provide health care
services more efficiently.
(D) Activities of medical self-regulatory
entities.--Permitting standard setting and enforcement
activities by medical self-regulatory entities (such as
hospital boards and medical societies) to promote
health care quality, except that a safe harbor under
this paragraph may not provide protection for any
activity undertaken for financial gain or for
anticompetitive reasons.
(E) Provision of information to buyers and
consumers.--Permitting health care providers
collectively to supply non-price medical information to
buyers and consumers relating to the type, quality and
efficiency of treatment, including joint views on
procedures that should be covered by purchasers and
medical protocols, except that a safe harbor under this
subparagraph may not provide protection for any
collective refusals to deal or collective attempts at
coercion.
(F) Participation in surveys.--Providing the terms
under which health care providers may lawfully
participate in written surveys of prices of services,
reimbursements received, employee compensation, and
other relevant areas.
(G) High-technology and tertiary care joint
ventures.--Permitting activities of health care joint
ventures to purchase or use new or existing high
technology or costly equipment, or to provide advanced
tertiary care services.
(H) Market power screens.--Providing market power
screens at appropriate levels below which combinations
of health care providers are too small to pose a
realistic antitrust threat. There may be different
levels for different activities and markets, taking
into account the special needs of rural health care
markets.
(I) Joint purchasing arrangements.--Providing the
terms under which health care providers may make joint
purchases of products and services.
(J) Good faith negotiations.--Providing the terms
under which health care providers may engage in
discussions relating to legitimate collaborative
activities contemplated by the safe harbors.
(b) Process for Designation of Additional Categories of
Activities.--
(1) Solicitation of proposals.--Not later than 30 days
after the date of the enactment of this Act, the Attorney
General shall publish a notice in the Federal Register
soliciting proposals for safe harbors.
(2) Review of proposed safe harbors.--Not later than 180
days after the date of the enactment of this Act, the Attorney
General (in consultation with the Secretary and the Chair)
shall review the proposed safe harbors submitted under
paragraph (1) and include a description of the safe harbors in
the report under subsection (d).
(3) Additional safe harbors.--After submitting the report
under subsection (d), the Attorney General (in consultation
with the Secretary and the Chair) may from time to time add
additional safe harbors in accordance with the procedures
described in this subsection.
(c) Effective Date of Safe Harbors.--
(1) Publication.--Not later than 180 days after the date of
the enactment of this Act, the Attorney General shall publish
in the Federal Register for public comment the safe harbors
proposed for designation under this section. Not later than 180
days after publishing such proposed safe harbors in the Federal
Register, the Attorney General shall issue final rules
establishing such safe harbors.
(2) Effective date.--The safe harbors established under the
final rules issued under paragraph (1) shall take effect 90
days after issuance, unless disapproved by the Congress.
(d) Report on Proposed Safe Harbors.--Not later than 180 days after
the date of the enactment of this Act, the Attorney General (in
consultation with the Secretary and the Chair) shall submit a report to
Congress describing the proposals from subsections (a) and (b)(1) to be
included in the publication of safe harbors described in subsection
(c)(1) and the proposals from subsection (b)(1) that are not to be so
included, together with explanations therefor.
(e) Modification or Removal of Safe Harbors.--The Attorney General
(in consultation with the Secretary and the Chair) may modify or remove
a safe harbor following notice and comment upon a determination that
the safe harbor does not meet the criteria of subsection (f).
(f) Criteria for Safe Harbors.--In establishing safe harbors under
this section, the Attorney General shall take into account the
following:
(1) The extent to which a competitive or collaborative
activity will accomplish any of the following:
(A) An increase in access to health care services.
(B) The enhancement of the quality of health care
services.
(C) The establishment of cost efficiencies that
will be passed on to consumers, including economies of
scale and reduced transaction and administrative costs.
(D) An increase in the ability of health care
facilities to provide services in medically underserved
areas or to medically underserved populations.
(E) An improvement in the utilization of health
care resources or the reduction in the inefficient
duplication of the use of such resources.
(2) Whether the designation of an activity as a safe harbor
will result in the following outcomes:
(A) Health plans and other health care insurers,
consumers of health care services, and health care
providers will be better able to negotiate payment and
service arrangements which will reduce costs to
consumers.
(B) Taking into consideration the characteristics
of the particular purchasers and providers involved,
competition will not be unduly restricted.
(C) Equally efficient and less restrictive
alternatives do not exist to meet the criteria
described in paragraph (1).
(D) The activity will not unreasonably foreclose
competition by denying competitors a necessary element
of competition.
SEC. 2503. CERTIFICATES OF REVIEW.
(a) Establishment of Program.--In consultation with the Secretary,
the Attorney General shall (not later than 180 days after the date of
the enactment of this Act) issue certificates of review in accordance
with this section for providers of health care services and advise and
assist any person with respect to applying for such a certificate of
review.
(b) Procedures for Application for Certificate.--
(1) Submission of application.--
(A) Form; content.--To apply for a certificate of
review, a person shall submit to the Attorney General a
written application which--
(i) specifies the activities relating to
the provision of health care services which
satisfy the criteria described in section
2502(e) and which will be included in the
certificate; and
(ii) is in a form and contains any
information, including information pertaining
to the overall market in which the applicant
operates, required by rule or regulation
promulgated under section 2506.
(B) Filing fee.--The Attorney General may require a
filing fee to be submitted with the application to
cover the cost of publication and the cost of review
required by this section. The amount of the filing fee
shall be determined on a sliding scale established by
the Attorney General (based on the monetary size of the
transaction involved), except that such fee may not
exceed $5,000.
(2) Publication of notice in federal register.--Within 10
days after an application submitted under paragraph (1) is
received by the Attorney General, the Attorney General shall
publish in the Federal Register a notice that announces that an
application for a certificate of review has been submitted,
identifies each person submitting the application, and
describes the conduct for which the application is submitted.
(3) Establishment of procedures for issuance of
certificate.--In consultation with the Chair and the Secretary,
the Attorney General shall establish procedures to be used in
applying for and in determining whether to approve an
application for a certificate of review under this title. Under
such procedures the Attorney General, in consultation with the
Secretary, shall approve an application if the Attorney General
determines that the activities to be covered under the
certificate will satisfy the criteria described in section
2502(f) for safe harbors designated under such section and that
the benefits of the issuance of the certificate will outweigh
any disadvantages that may result from reduced competition. If
the Attorney General, with the concurrence of the Secretary,
determines that the requirements for a certificate are met, the
Attorney General shall issue to the applicant a certificate of
review. The certificate of review shall specify--
(i) the health care market activities to
which the certificate applies,
(ii) the person to whom the certificate of
review is issued, and
(iii) any terms and conditions the Attorney
General or the Secretary deems necessary to
assure compliance with the applicable
procedures described in paragraph (3).
(4) Timing for decision on application.--Within 90 days
after the Attorney General receives an application for a
certificate of review, the Attorney General shall determine
whether to grant or deny the certificate.
(5) Notification of decision.--The Attorney General shall
notify the applicant of the Attorney General's determination
and if the application is denied, the reasons for the denial.
(6) Fraudulent procurement.--A certificate of review shall
be void ab initio with respect to any health care market
activities for which the certificate was procured by fraud.
(c) Amendment and Revocation of Certificates.--
(1) Notification of changes.--Any applicant who receives a
certificate of review--
(A) shall promptly report to the Attorney General
any change relevant to the matters specified in the
certificate; and
(B) may submit to the Attorney General an
application to amend the certificate to reflect the
effect of the change on the conduct specified in the
certificate.
(2) Amendment to certificate.--An application for an
amendment to a certificate of review shall be treated as an
application for the issuance of a certificate. The effective
date of an amendment shall be the date on which the application
for the amendment is received by the Attorney General.
(3) Revocation.--
(A) Grounds for revocation.--In accordance with
this paragraph, the Attorney General, in consultation
with the Secretary, may revoke in whole or in part a
certificate of review issued under this section. There
shall be considered as grounds for the revocation of a
certificate the fact that--
(i) after the expiration of the 2-year
period beginning on the date a person's
certificate is issued, the activities of the
person have not substantially accomplished the
purposes for the issuance of the certificate;
(ii) the person has failed to comply with
any of the terms or conditions imposed under
the certificate by the Attorney General or the
Secretary under subsection (b)(4); or
(iii) the activities covered under the
certificate no longer satisfy the criteria set
forth in section 2502(f).
(B) Request for compliance information.--If the
Attorney General or the Secretary has reason to believe
that any of the grounds for revocation of a certificate
of review described in subparagraph (A) may apply to a
person holding the certificate, the Attorney General
shall request such information from such person as the
Attorney General or the Secretary deems necessary to
resolve the matter of compliance. Failure to comply
with such request shall be grounds for revocation of
the certificate under this paragraph.
(C) Procedures for revocation.--If the Attorney
General or the Secretary determines that any of the
grounds for revocation of a certificate of review
described in subparagraph (A) apply to a person holding
the certificate, or that such person has failed to
comply with a request made under subparagraph (B), the
Attorney General shall give written notice of the
determination to such person. The notice shall include
a statement of the circumstances underlying, and the
reasons in support of, the determination. In the 60-day
period beginning 30 days after the notice is given, the
Attorney General shall revoke the certificate or modify
it as the Attorney General or the Secretary deems
necessary to cause the certificate to apply only to
activities that meet the criteria set forth in section
2502(f).
(D) Investigation authority.--For purposes of
carrying out this paragraph, the Attorney General may
conduct investigations in the same manner as the
Attorney General conducts investigations under section
3 of the Antitrust Civil Process Act, except that no
civil investigative demand may be issued to a person to
whom a certificate of review is issued if such person
is the target of such investigation.
(d) Review of Determinations.--
(1) Availability of review for certain actions.--If the
Attorney General denies, in whole or in part, an application
for a certificate of review or for an amendment to a
certificate, or revokes or modifies a certificate pursuant to
paragraph (3), the applicant or certificate holder (as the case
may be) may, within 30 days of the denial or revocation, bring
an action in the United States District Court for the District
of Columbia to set aside the determination on the ground that
such determination is clearly erroneous.
(2) No other review permitted.--Except as provided in
paragraph (1), no action by the Attorney General, the Chair, or
the Secretary pursuant to this subtitle shall be subject to
judicial review.
(3) Effect of rejected application.--If the Attorney
General denies, in whole or in part, an application for a
certificate of review or for an amendment to a certificate, or
revokes or amends a certificate, neither the negative
determination nor the statement of reasons therefore shall be
admissible in evidence, in any administrative or judicial
proceeding, concerning any claim under the antitrust laws.
(e) Publication of Decisions.--The Attorney General shall publish a
notice in the Federal Register on a timely basis of each decision made
with respect to an application for a certificate of review under this
section or the amendment or revocation of such a certificate, in a
manner that protects the confidentiality of any proprietary information
relating to the application.
(f) Annual Reports.--Every person to whom a certificate of review
is issued shall submit to the Attorney General an annual report, in
such form and at such time as the Attorney General may require, that
contains any necessary updates to the information required under
subsection (b) and a description of the activities of the holder under
the certificate during the preceding year.
(g) Restrictions on Disclosure of Information.--
(1) Waiver of disclosure requirements under administrative
procedure act.--Information submitted by any person in
connection with the issuance, amendment, or revocation of a
certificate of review shall be exempt from disclosure under
section 552 of title 5, United States Code.
(2) Restrictions on disclosure of commercial or financial
information.--
(A) In general.--Except as provided in subparagraph
(B), no officer or employee of the United States shall
disclose commercial or financial information submitted
in connection with the issuance, amendment, or
revocation of a certificate of review if the
information is privileged or confidential or if
disclosure of the information would cause harm to the person who
submitted the information.
(B) Exceptions.--Subparagraph (A) shall not apply
with respect to information disclosed--
(i) upon a request made by the Congress or
any committee of the Congress,
(ii) in a judicial or administrative
proceeding, subject to appropriate protective
orders,
(iii) with the consent of the person who
submitted the information,
(iv) in the course of making a
determination with respect to the issuance,
amendment, or revocation of a certificate of
review, if the Attorney General deems
disclosure of the information to be necessary
in connection with making the determination,
(v) in accordance with any requirement
imposed by a statute of the United States, or
(vi) in accordance with any rule or
regulation promulgated under subsection (i)
permitting the disclosure of the information to
an agency of the United States or of a State on
the condition that the agency will disclose the
information only under the circumstances
specified in clauses (i) through (v).
(3) Prohibition against use of information to support or
answer claims under antitrust laws.--Any information disclosed
in an application for a certificate of review under this
section shall only be admissible into evidence in a judicial or
administrative proceeding for the sole purpose of establishing
whether a person is entitled to the protections provided by
such a certificate.
SEC. 2504. NOTIFICATIONS PROVIDING REDUCTION IN CERTAIN PENALTIES UNDER
ANTITRUST LAW FOR HEALTH CARE JOINT VENTURES.
(a) Notifications Described.--
(1) Submission of notification by venture.--Any party to a
health care joint venture, acting on such venture's behalf,
may, not later than 90 days after entering into a written
agreement to form such venture or not later than 90 days after
the date of the enactment of this Act, whichever is later, file
with the Attorney General a written notification disclosing--
(A) the identities of the parties to such venture,
(B) the nature and objectives of such venture, and
(C) such additional information as the Attorney
General may require by regulation.
(2) Filing fee.--The Attorney General may require a filing
fee to be submitted with the notification to cover the cost of
publication and the cost of administering this section, except
that the amount of such fee shall not exceed $250.
(3) Submission of additional information.--
(A) Request of attorney general.--At any time after
receiving a notification filed under paragraph (1), the
Attorney General may require the submission of
additional information or documentary material relevant
to the proposed health care joint venture.
(B) Parties to venture.--Any party to a health care
joint venture may submit such additional information on
the venture's behalf as may be appropriate to ensure
that the venture will receive the protections provided
under subsection (b).
(C) Required submission of information on changes
to venture.--A health care joint venture for which a
notification is in effect under this section shall
submit information on any change in the membership of
the venture not later than 90 days after such change
occurs.
(4) Publication of notification.--
(A) Information made publicly available.--Not later
than 30 days after receiving a notification with
respect to a venture under paragraph (1), the Attorney
General shall publish in the Federal Register a notice
with respect to the venture that identifies the parties
to the venture and generally describes the purpose and
planned activity of the venture. Prior to its
publication, the contents of the notice shall be made
available to the parties to the venture.
(B) Restriction on disclosure of other
information.--All information and documentary material
submitted pursuant to this section and all information
obtained by the Attorney General in the course of any
investigation or case with respect to a potential violation of the
antitrust laws by the health care joint venture (other than information
and material described in subparagraph (A)) shall be exempt from
disclosure under section 552 of title 5, United States Code, and shall
not be made publicly available by any agency of the United States to
which such section applies except in a judicial proceeding in which
such information and material is subject to any protective order.
(5) Withdrawal of notification.--Any person who files a
notification pursuant to this section may withdraw such
notification before a publication by the Attorney General
pursuant to paragraph (4).
(6) No judicial review permitted.--Any action taken or not
taken by the Attorney General with respect to notifications
filed pursuant to this subsection shall not be subject to
judicial review.
(b) Protections for Ventures Subject to Notification.--
(1) In general.--
(A) Protections described.--Except as provided in
subsection (c), the provisions of paragraphs (2), (3),
(4), and (5) shall apply with respect to any action
under the antitrust laws challenging conduct within the
scope of a notification which is in effect pursuant to
subsection (a)(1).
(B) Timing of protections.--The protections
described in this subsection shall apply to the venture
that is the subject of a notification under subsection
(a)(1) as of the earlier of--
(i) the date of the publication in the
Federal Register of the notice published with
respect to the notification; or
(ii) if such notice is not published during
the period required under subsection (a)(4),
the expiration of the 30-day period that begins
on the date the Attorney General receives any
necessary information required to be submitted
under subsection (a)(1) or any additional
information required by the Attorney General
under subsection (a)(3)(A).
(2) Applicability of rule of reason standard.--In any
action under the antitrust laws, the conduct of any person
which is within the scope of a notification filed under
subsection (a) shall not be deemed illegal per se, but shall be
judged on the basis of its reasonableness, taking into account
all relevant factors affecting competition, including, but not
limited to, effects on competition in relevant markets.
(3) Limitation on recovery to actual damages and
interest.--Notwithstanding section 4 of the Clayton Act, any
person who is entitled to recovery under the antitrust laws for
conduct that is within the scope of a notification filed under
subsection (a) shall recover the actual damages sustained by
such person and interest calculated at the rate specified in
section 1961 of title 28, United States Code, for the period
beginning on the earliest date for which injury can be
established and ending on the date of judgment, unless the
court finds that the award of all or part of such interest is
unjust under the circumstances.
(4) Award of attorney's fees and costs of suit.--
(A) In general.--In any action under the antitrust
laws brought against a health care joint venture for
conduct that is within the scope of a notification
filed under subsection (a), the court shall, at the
conclusion of the action--
(i) award to a substantially prevailing
claimant the cost of suit attributable to such
claim, including a reasonable attorney's fee,
or
(ii) award to a substantially prevailing
party defending against such claim the cost of
such suit attributable to such claim, including
a reasonable attorney's fee, if the claim, or
the claimant's conduct during litigation of the
claim, was frivolous, unreasonable, without
foundation, or in bad faith.
(B) Offset in cases of bad faith.--The court may
reduce an award made pursuant to subparagraph (A) in
whole or in part by an award in favor of another party
for any part of the cost of suit (including a
reasonable attorney's fee) attributable to conduct
during the litigation by any prevailing party that the
court finds to be frivolous, unreasonable, without
foundation, or in bad faith.
(5) Restrictions on admissibility of information.--
(A) In general.--Any information disclosed in a
notification submitted under subsection (a)(1) and the
fact of the publication of a notification by the
Attorney General under subsection (a)(4) shall only be
admissible into evidence in a judicial or
administrative proceeding for the sole purpose of
establishing whether a party to a health care joint
venture is entitled to the protections described in
this subsection.
(B) Actions of attorney general.--No action taken
by the Attorney General pursuant to this section shall
be admissible into evidence in any judicial or
administrative proceeding for the purpose of supporting
or answering any claim under the antitrust laws.
(c) Exception for Certain Activities.--
(1) Activities described.--The protections described in
subsection (b) shall not apply to conduct which constitutes
price-fixing, bid-rigging, or market allocation, unless such
conduct is related to procompetitive aspects of a health care
joint venture (as determined in accordance with the process
described in paragraph (2)).
(2) Process.--If conduct of a health care joint venture
which is subject to a notification under subsection (a)(1) is
challenged for price-fixing, bid-rigging, or market allocation,
any party to the joint venture shall be entitled to show the
procompetitive aspects of such conduct. The protections
described in subsection (b) shall not apply to the conduct if
the party is unable to show that the conduct is not mere price-
fixing, bid-rigging, or market allocation.
SEC. 2505. REVIEW AND REPORTS ON SAFE HARBORS, CERTIFICATES OF REVIEW,
AND NOTIFICATIONS.
(a) In General.--The Attorney General, in consultation with the
Secretary and the Chair, shall periodically review the safe harbors
designated under section 2502, the certificates of review issued under
section 2503, and notification received under section 2504, and--
(1) with respect to the safe harbors, issue modifications
to such safe harbors in such manner as the Attorney General
considers appropriate in accordance with the requirements of
section 2502, which modifications shall take effect 90 days
after issuance, unless disapproved by the Congress; and
(2) with respect to the certificates of review and
notifications, submit a report to Congress on the issuance of
such certificates and receipt of notifications, including a
description of the effect of such certificates and
notifications on increasing access to high quality health care
services at reduced costs.
(b) Recommendations for Legislation.--The Attorney General shall
include in the reports submitted under subsection (a)(2) any
recommendations of the Attorney General for legislation to improve the
programs for the issuance of certificates of review and receipt of
notifications established under this subtitle.
SEC. 2506. RULES, REGULATIONS, AND GUIDELINES.
(a) Safe Harbors, Certificates, and Notifications.--The Attorney
General, in consultation with the Secretary and the Chair, shall
promulgate such rules, regulations, and guidelines as are necessary to
carry out sections 2502, 2503, and 2504.
(b) Guidance for Providers.--
(1) In general.--To promote greater certainty regarding the
application of the antitrust laws to activities in the health
care market, the Attorney General, in consultation with the
Secretary and the Chair, shall (not later than 1 year after the
date of the enactment of this Act), taking into account the
criteria used to designate safe harbors under section 2502 and
grant certificates of review under section 2503, publish
guidelines--
(A) to define or provide assistance in determining
relevant geographic and product markets for health care
services and providers of health care services;
(B) to further collaborative activities which may
be helpful to enhance services in underserved and
geographically disadvantaged areas such as rural
markets and inner cities;
(C) to assist collaboration between providers (such
as hospital networks, physician-hospital organizations,
and other groups of providers) which will help provide
health care services more efficiently;
(D) to further activities by which public health
clinics (including community health centers and migrant
health centers under title III of the Public Health
Service Act) may participate in networks and other
collaborative activities in order to enhance services
in underserved areas;
(E) to assist providers of health care services in
analyzing whether the activities of such providers may
be subject to a safe harbor under section 2502;
(F) to provide clarification for activities in the
general subject matter areas described in the safe
harbors in section 2502, but which fall outside the
safe harbors; and
(G) to describe specific types of activities which
would meet the requirements for issuance of a
certificate of review under section 2503, and
summarizing the factual and legal bases on which the
activities would meet the requirements.
(2) Periodic update.--The Attorney General shall
periodically update the guidelines published under paragraph
(1) as the Attorney General considers appropriate.
(3) Waiver of administrative procedure act.--Section 553 of
title 5, United States Code, shall not apply to the issuance of
guidelines under paragraph (1).
SEC. 2507. ESTABLISHMENT OF HHS OFFICE OF HEALTH CARE COMPETITION
POLICY.
(a) In General.--There is established within the Department of
Health and Human Services an Office to be known as the Office of Health
Care Competition Policy (hereafter in this section referred to as the
``Office''). The Office shall be headed by a director, who shall be
appointed by the Secretary.
(b) Duties.--The Office shall coordinate the responsibilities of
the Secretary under this subtitle and otherwise assist the Secretary in
developing policies relating to the competitive and collaborative
activities of providers of health care services.
SEC. 2508. DEFINITIONS.
In this subtitle:
(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 applies to unfair methods of competition; and
(B) includes any State law similar to the laws
referred to in subparagraph (A).
(2) The term ``Chair'' means the Chair of the Federal Trade
Commission.
(3) The term ``health benefit plan'' means any hospital or
medical expense incurred policy or certificate, hospital or
medical service plan contract, or health maintenance subscriber
contract, or a multiple employer welfare arrangement or
employee benefit plan (as defined under the Employee Retirement
Income Security Act of 1974) which provides benefits with
respect to health care services.
(4) The term ``health care joint venture'' means a joint
venture of 2 or more persons formed for the purpose of
providing health care services, including attempts to enter
into or perform a contract or agreement to provide such
services.
(5) The term ``health care services'' means any services
for which payment may be made under a health benefit plan,
including services related to the delivery or administration of
such services.
(6) The term ``medical self-regulatory entity'' means a
medical society or association, a specialty board, a recognized
accrediting agency, or a hospital medical staff, and includes
the members, officers, employees, consultants, and volunteers
or committees of such an entity.
(7) The term ``person'' includes a State or unit of local
government.
(8) 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.
(9) The term ``Secretary'' means the Secretary of Health
and Human Services.
(10) The term ``specialty group'' means a medical specialty
or subspecialty in which a provider of health care services may
be licensed to practice by a State (as determined by the
Secretary in consultation with the certification boards for
such specialties and subspecialties).
(11) The term ``standard setting and enforcement
activities'' means--
(A) accreditation of health care practitioners,
health care providers, medical education institutions,
or medical education programs,
(B) technology assessment and risk management
activities,
(C) the development and implementation of practice
guidelines or practice parameters, or
(D) official peer review proceedings undertaken by
a hospital medical staff (or committee thereof) or a
medical society or association for purposes of
evaluating the professional conduct or quality of
health care provided by a medical professional.
Title II, Subtitle G
Subtitle G--Encouraging Enforcement Activities of Medical Self-
Regulatory Entities
PART 1--APPLICATION OF THE CLAYTON ACT TO MEDICAL SELF-REGULATORY
ENTITIES
SEC. 2601. ANTITRUST EXEMPTION FOR MEDICAL SELF-REGULATORY ENTITIES.
(a) In General.--(1) Except as provided in paragraph (2), no
damages, interest on damages, cost of suit, or attorney's fee may be
recovered under section 4, 4A, or 4C of the Clayton Act (15 U.S.C. 15,
15a, 15c), or under any State law similar to such section, from any
medical self-regulatory entity (including its members, officers,
employees, consultants, and volunteers or committees thereof) as a
result of engaging in standard setting or enforcement activities that
are--
(A) designed to promote the quality of health care provided
to patients, and
(B) not conducted for purposes of financial gain.
(2) Paragraph (1) shall not prohibit the recovery of actual
damages, interest on damages, the cost of suit, or a reasonable
attorney's fee under section 4 or 4A of the Clayton Act (15 U.S.C. 15,
15a), or under any State law similar to such section, by a State or the
United States from a medical self-regulatory entity (including its
members, officers, employees, consultants, and volunteers or committees
thereof) for injury sustained as a result of engaging in the conduct
described in such paragraph.
(b) Fees.--In any action under section 4, 4C, or 16 of the Clayton
Act (15 U.S.C. 15, 15c, 26), or under a similar State law, brought
against any medical self-regulatory entity (including its members,
officers, employees, consultants, and volunteers or committees thereof)
as a result of engaging in conduct described in subsection (a)(1), the
court shall award the cost of suit, including a reasonable attorney's
fee, to a substantially prevailing defendant.
SEC. 2602. DEFINITIONS.
For purposes of this subtitle:
(1) The term ``medical self-regulatory entity'' means a
medical society or association, a specialty board, a recognized
accrediting agency, or a hospital medical staff.
(2) The term ``standard setting and enforcement
activities'' means--
(A) accreditation of health care practitioners,
health care providers, medical education institutions,
or medical education programs,
(B) technology assessment and risk management
activities,
(C) the development and implementation of practice
guidelines or practice parameters, or
(D) official peer review proceedings undertaken by
a hospital medical staff (or committee thereof) or a
medical society or association for purposes of
evaluating the quality of health care provided by a
medical professional.
PART 2--CONSULTATION BY FEDERAL AGENCIES
SEC. 2611. CONSULTATION WITH MEDICAL SELF-REGULATORY ENTITIES
RESPECTING MEDICAL PROFESSIONAL GUIDELINES AND STANDARDS.
Any Federal agency engaged in the establishment of medical
professional standards shall consult with appropriate medical societies
or associations, specialty boards, or recognized accrediting agencies,
if available, in carrying out medical professional standard setting and
guidelines or standards relating to the practice of medicine.
Subtitle H--Reform of Clinical Laboratory Requirements for Simple Tests
Title II, Subtitle H
SEC. 2701. ELIMINATING CLIA REQUIREMENT FOR CERTIFICATE OF WAIVER FOR
SIMPLE LABORATORY EXAMINATIONS AND PROCEDURES.
(a) In General.--Section 353 of the Public Health Service Act (42
U.S.C. 263a) is amended--
(1) in subsection (b), by inserting before the period at
the end the following: ``or unless the laboratory is exempt
from the certificate requirement under subsection (d)(2)'';
(2) by amending paragraph (2) of subsection (d) to read as
follows:
``(2) Exemption from certificate requirement for
laboratories performing only simple examinations and
procedures.--A laboratory which performs only laboratory
examinations and procedures described in paragraph (3) is not
required to have in effect a certificate under this section.'';
(3) by striking paragraph (4) of subsection (d); and
(4) in subsection (m)(1), by striking ``, except that the
Secretary'' and all that follows and inserting a period.
(b) Effective Date.--The amendments made by this section shall take
effect on the first day of the first month beginning after the date of
the enactment of this Act.
SEC. 2702. AMENDMENT RELATED TO SIMPLE LABORATORY EXAMINATIONS.
Section 353(d) of the Public Health Service Act (42 U.S.C. 263) is
amended by striking paragraph (3) and inserting the following:
``(3) Examinations and procedures.--The examinations and
procedures identified in paragraph (2) are simple laboratory
examinations and procedures which have an insignificant risk of
an erroneous result and include those which--
``(A) have been approved by the Food and Drug
Administration for home use,
``(B) employ methodologies that are so simple and
accurate as to render the likelihood of erroneous
results negligible,
``(C) the Secretary has determined pose no
reasonable risk of serious harm to the patient if
performed incorrectly, or
``(D)(i) are performed by or under the direction or
supervision of or in collaboration with a doctor of
medicine or osteopathy licensed to practice medicine or
osteopathy in the State in which the laboratory is
located, or by an individual qualified to direct,
supervise, or perform examinations and procedures under
State laws or such standards as the Secretary may
establish; and
``(ii) the patient is available for clinical
observation; and
``(iii) prompt results are needed to evaluate,
diagnose, and treat the patient or to avoid additional
burdens on the patient that could result from not
performing the test.
``(4) Definition.--As used in this section, the term
`simple laboratory examinations and procedures' includes
dipstick tests for total and allergen-specific IgE; microscopic
examination of nasal smears (for cells and bacteria); mono spot
tests; testing for theophylline using the Accu-Level method;
microscopic urinalysis; vaginal wet mount; KOH prep, scabies
prep; rapid strep antigen; nonautomated qualitative and
quantitative semen analysis; pin worm; prostate smears;
synovial fluid analysis for inflammation and infection; post
coital test; fern test; occult blood; Gram stain; qualitative
drug screen; pulse oximetry; hemoglobin (by hand-held
hemoglobinometer); ASO, CRP, RF, and mono screen; sickle cell
screen; white blood cell count by manual chamber count;
peripheral blood smears; sputum eosinophil; urine culture
colony; urine sensitivities; microscopic examination of hair
morphology; molluscum smear; fungal cultures, including
dermatophyte test medium; Tzank smear; Darkfield examination;
agglutination pregnancy test; urethral gram stains, and
centrifigal hematology, including white blood cell count,
hematocrit, differential, and platelet count.''.
SEC. 2703. AMENDMENT RELATED TO STUDY.
(a) Study.--The Secretary of Health and Human Services, acting
through the Centers for Disease Control and Prevention, shall use
existing appropriations to conduct the study required by section 4 of
the Clinical Laboratory Improvement Amendments of 1988 (42 U.S.C. 263a
note). The Secretary shall report the results of such study to the
Committee on Ways and Means and the Committee on Energy and Commerce of
the House of Representatives and the Committee on Finance and the
Committee on Labor and Human Resources of the Senate not later than May
1, 1996.
(b) Sunset.--If the results of the study described in subsection
(a) are not reported to the committees of Congress by May 1, 1996,
section 353 of the Public Health Service Act shall not be in effect
after May 1, 1996.
SEC. 2704. AMENDMENTS RELATED TO THE CLINICAL LABORATORY IMPROVEMENT
ADVISORY COMMITTEE.
The Secretary of Health and Human Services shall revise the
membership of the Clinical Laboratory Improvement Advisory Committee
established by the Secretary in regulations to implement section 353 of
the Public Health Service Act (subpart T of part 493 of title 42 Code
of Federal Regulations) to contain, in the membership which does not
include ex-officio members or officers or employees of the Federal
Government, a number of practicing physicians which is proportionate to
the number of physician laboratories regulated under such section 353.
For purposes of this section, the term ``practicing physician'' means a
licensed doctor of medicine or osteopathy who spends at least 80
percent of the physician's professional time in direct patient care and
who directs an in-office clinical laboratory for the physician's
patients.
Subtitle I--Miscellaneous Provisions
Title II, Subtitle I
SEC. 2801. 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, established 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 entitled to an annuity,
under a retirement system established by or under Federal law,
by virtue of--
(A) such individual's service with, and separation
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
(5) the term ``Office'' means the Office of Personnel
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 employees, 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 agency.
(2) Regulations.--The Office shall prescribe such
regulations as may be necessary to carry out this section. The
regulations shall be designed to ensure 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 applicable effective date under paragraph
(1), on behalf 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 who become
employed by the agency after such effective
date, after such individuals have become
annuitants of the agency (including 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 payable
under subparagraph (A), each agency shall also
be responsible for paying any amounts for which
it would have been responsible, with respect to
the 20-year period described in subclause (I),
in connection with any individuals who are
annuitants or employees of the agency as of the
applicable effective date under paragraph (1).
(ii) Any amounts payable under this subparagraph
for periods preceding the applicable effective date
under paragraph (1) shall be payable in equal
installments over the 20-year period beginning on such
effective date.
(c) FASB Standards.--Regulations under subsection (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.
SEC. 2802. INELIGIBILITY OF ALIENS FOR SSI AND MEDICAID.
(a) In General.--Notwithstanding any other provision of law and
except as provided in subsections (b) and (c), no alien shall be
eligible for any program referred to in subsection (d).
(b) Exceptions.--
(1) Refugee exception.--Subsection (a) shall not apply to
an alien admitted to the United States as a refugee under
section 207 of the Immigration and Nationality Act until 6
years after the date of such alien's arrival into the United
States.
(2) Aged exception.--Subsection (a) shall not apply to an
alien who--
(A) has been lawfully admitted to the United States
for permanent residence;
(B) is over 75 years of age; and
(C) has resided in the United States for at least 5
years.
(3) Current resident exception.--Subsection (a) shall not
apply to the eligibility of an alien for a program referred to
in subsection (d) until 1 year after the date of the enactment
of this Act if, on such date of enactment, the alien is
residing in the United States and is eligible for the program.
(c) Programs For Which Aliens May Be Eligible.--The limitation
under subsection (a) shall not apply to medical assistance with respect
to emergency services (as defined for purposes of section 1916(a)(2)(D)
of the Social Security Act).
(d) Programs For Which Aliens Are Ineligible.--The programs
referred to in this subsection are the following:
(1) The program of medical assistance under title XIX of
the Social Security Act, except emergency services as provided
in subsection (c).
(2) The supplemental security income program under title
XVI of the Social Security Act.
(e) Notification of Aliens.--Any Federal agency that administers a
program referred to in subsection (d) shall, directly or through the
States, notify each alien receiving benefits under the program whose
eligibility for the program is or will be terminated by reason of this
section.
SEC. 2803. LIMITATION ON SSI BENEFITS FOR DRUG AND ALCOHOL ADDICTS.
(a) In General.--
(1) Limitation described.--Section 1614(a) of the Social
Security Act (42 U.S.C. 1382c(a)) is amended by adding at the
end the following:
``(5)(A) The Secretary shall identify all recipients of benefits
under this title by reason of disability whose disability is a result
of addiction to illegal drugs.
``(B) The Secretary shall periodically, on a random basis, test
each recipient identified under subparagraph (A) to determine whether
the recipient is using illegal drugs.
``(C)(i) Notwithstanding any other provision of this title, any
individual who is determined under subparagraph (B) to be using illegal
drugs, or who refuses to submit to testing as provided for under
subparagraph (B), shall not be eligible for benefits under this title
for a period of at least 1 year.
``(ii) The period of ineligibility under clause (i) shall terminate
(after the last day of such 1-year period) if the individual has 2
tests (at least 2 months apart and not paid for through Federal funds)
which establish that the recipient is not using illegal drugs.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to quarters beginning after the expiration of the
6-month period that begins on the date of the enactment of this
Act.
(b) Representative Payee Reforms.--
(1) Authority of government agencies to become paid
representative payees.--Section 1631(a)(2)(D)(ii) of such Act
(42 U.S.C. 1383(a)(2)(D)(ii)) is amended by adding at the end
the following: ``The term `qualified organization' also
includes any government agency that meets the requirements of
items (aa) and (bb) of subclause (II).''.
(2) Maximum fee payable to representative payees.--Section
1631(a)(2)(D)(i) of such Act (42 U.S.C. 1383(a)(2)(D)(i)) is
amended by striking ``the lesser of--'' and all that follows
and inserting ``10 percent of the monthly benefit involved.''.
Title III
TITLE III--LONG-TERM CARE
table of contents of title
Subtitle A--Tax Treatment of Long-term Care Insurance
Sec. 3001. Treatment of long-term care insurance or plans.
Sec. 3002. Exclusion for benefits provided under long-term care
insurance; inclusion of employer-provided
coverage.
Sec. 3003. Qualified long-term services treated as medical care.
Sec. 3004. Effective date.
Subtitle B--Establishment of Federal Standards for Long-term Care
Insurance
Sec. 3101. Establishment of Federal standards for long-term care
insurance.
``TITLE XXVII--LONG-TERM CARE INSURANCE STANDARDS
``Part A--Promulgation of Standards and Model Benefits
``Sec. 2701. Standards.
``Part B--Establishment and Implementation of Long-Term Care Insurance
Policy Standards
``Sec. 2711. Implementation of policy standards.
``Sec. 2712. Regulation of sales practices.
``Sec. 2713. Additional responsibilities for carriers.
``Sec. 2714. Renewability standards for issuance, and basis for
cancellation of policies.
``Sec. 2715. Benefit standards.
``Sec. 2716. Nonforfeiture.
``Sec. 2717. Limit of period of contestability and right to
return.
``Sec. 2718. Civil money penalty.
``Part C--Long-Term Care Insurance Policies, Definition and
Endorsements
``Sec. 2721. Long-term care insurance policy defined.
``Sec. 2722. Code of conduct with respect to endorsements.
``Part D--Miscellaneous Provisions
``Sec. 2731. Funding for long-term care insurance information,
counseling, and assistance.
``Sec. 2732. Definitions.
Subtitle C--Protection of Assets Under Medicaid Through Use of
Qualified Long-term Care Insurance
Sec. 3201. Protection of assets through use of qualified long-term care
insurance.
Subtitle D--Studies
Sec. 3301. Feasibility of encouraging health care providers to donate
services to homebound patients.
Sec. 3302. Feasibility of tax credit for heads of households who care
for elderly family members in their homes.
Sec. 3303. Case management of current long-term care benefits.
Subtitle E--Volunteer Service Credit Demonstration Projects
Sec. 3401. Amendment to the Older Americans Act of 1965.
Subtitle A--Tax Treatment of Long-term Care Insurance
Title III, Subtitle A
SEC. 3001. TREATMENT OF LONG-TERM CARE INSURANCE OR PLANS.
(a) General Rule.--Subpart E of part I of subchapter L of chapter 1
of the Internal Revenue Code of 1986 is amended by inserting after
section 818 the following new section:
``SEC. 818A. TREATMENT OF LONG-TERM CARE INSURANCE OR PLANS.
``(a) General Rule.--For purposes of this part, a long-term care
insurance contract shall be treated as an accident or health insurance
contract.
``(b) Long-Term Care Insurance Contract.--
``(1) In general.--For purposes of this part, the term
`long-term care insurance contract' means any insurance
contract issued if--
``(A) the only insurance protection provided under
such contract is coverage of qualified long-term care
services and benefits incidental to such coverage,
``(B) the maximum benefit under the policy for
expenses incurred for any day does not exceed $200,
``(C) such contract does not cover expenses
incurred for services or items to the extent that such
expenses are reimbursable under title XVIII of the
Social Security Act or would be so reimbursable but for
the application of a deductible or coinsurance amount,
``(D) such contract is guaranteed renewable,
``(E) such contract does not have any cash
surrender value, and
``(F) all refunds of premiums, and all policyholder
dividends or similar amounts, under such contract are
to be applied as a reduction in future premiums or to
increase future benefits.
``(2) Special rules.--
``(A) Per diem, etc. payments permitted.--A
contract shall not fail to be treated as described in
paragraph (1)(A) by reason of payments being made on a
per diem or other periodic basis without regard to the
expenses incurred during the period to which the
payments relate.
``(B) Contract may cover medicare reimbursable
expenses where medicare is secondary payor.--Paragraph
(1)(C) shall not apply to expenses which are
reimbursable under title XVIII of the Social Security
Act only as a secondary payor.
``(C) Refunds of premiums.--Paragraph (1)(F) shall
not apply to any refund of premiums on surrender or
cancellation of the contract.
``(c) Qualified Long-Term Care Services.--For purposes of this
section--
``(1) In general.--The term `qualified long-term care
services' means necessary diagnostic, preventive, therapeutic,
and rehabilitative services, and maintenance or personal care
services, which--
``(A) are required by a chronically ill individual
in a qualified facility, and
``(B) are provided pursuant to a plan of care
prescribed by a licensed health care practitioner.
``(2) Chronically ill individual.--
``(A) In general.--The term `chronically ill
individual' means any individual who has been certified
by a licensed health care practitioner as--
``(i)(I) being unable to perform (without
substantial assistance from another individual)
at least 2 activities of daily living (as
defined in subparagraph (B)) for a period of at
least 90 days due to a loss of functional
capacity, or
``(II) having a level of disability similar
(as determined by the Secretary in consultation
with the Secretary of Health and Human
Services) to the level of disability described
in subclause (I), or
``(ii) having a similar level of disability
due to cognitive impairment.
``(B) Activities of daily living.--For purposes of
subparagraph (A), each of the following is an activity
of daily living:
``(i) Mobility.--The process of walking or
wheeling on a level surface which may include
the use of an assistive device such as a cane,
walker, wheelchair, or brace.
``(ii) Dressing.--The overall complex
behavior of getting clothes from closets and
drawers and then getting dressed.
``(iii) Toileting.--The act of going to the
toilet room for bowel and bladder function,
transferring on and off the toilet, cleaning
after elimination, and arranging clothes or the
ability to voluntarily control bowel and
bladder function, or in the event of
incontinence, the ability to maintain a
reasonable level of personal hygiene.
``(iv) Transfer.--The process of getting in
and out of bed or in and out of a chair or
wheelchair.
``(v) Eating.--The process of getting food
from a plate or its equivalent into the mouth.
``(3) Qualified facility.--The term `qualified facility'
means--
``(A) a nursing, rehabilitative, hospice, or adult
day care facility (including a hospital, retirement
home, nursing home, skilled nursing facility,
intermediate care facility, or similar institution)--
``(i) which is licensed under State law, or
``(ii) which is a certified facility for
purposes of title XVIII or XIX of the Social
Security Act, or
``(B) an individual's home if a licensed health
care practitioner certifies that without home care the
individual would have to be cared for in a facility
described in subparagraph (A).
``(4) Maintenance or personal care services.--The term
`maintenance or personal care services' means any care the
primary purpose of which is to provide needed assistance with
any of the activities of daily living described in paragraph
(2)(B).
``(5) Licensed health care practitioner.--The term
`licensed health care practitioner' means any physician (as
defined in section 1861(r) of the Social Security Act) and any
registered professional nurse, licensed social worker, or other
individual who meets such requirements as may be prescribed by
the Secretary.
``(d) Continuation Coverage Excise Tax Not To Apply.--This section
shall not apply in determining whether section 4980B (relating to
failure to satisfy continuation coverage requirements of group health
plans) applies.
``(e) Inflation Adjustment of $200 Benefit Limit.--
``(1) In general.--In the case of a calendar year after
1994, the $200 amount contained in subsection (b)(1)(B) shall
be increased for such calendar year by the medical care cost
adjustment for such calendar year. If any increase determined
under the preceding sentence is not a multiple of $10, such
increase shall be rounded to the nearest multiple of $10.
``(2) Medical care cost adjustment.--For purposes of
paragraph (1), the medical care cost adjustment for any
calendar year is the percentage (if any) by which--
``(A) the medical care component of the Consumer
Price Index (as defined in section 1(f)(5)) for August
of the preceding calendar year, exceeds
``(B) such component for August of 1993.''
(b) Reserves.--Clause (iii) of section 807(d)(3)(A) is amended by
inserting ``(other than a long-term care insurance contract within the
meaning of section 818A)'' after ``contract''.
(c) Clerical Amendment.--The table of sections for such subpart E
is amended by inserting after the item relating to section 818 the
following new item:
``Sec. 818A. Treatment of long-term care
insurance or plans.''
SEC. 3002. EXCLUSION FOR BENEFITS PROVIDED UNDER LONG-TERM CARE
INSURANCE; INCLUSION OF EMPLOYER-PROVIDED COVERAGE.
(a) In General.--Subsection (a) of section 104 of the Internal
Revenue Code of 1986 (relating to compensation for injuries or
sickness) is amended by striking ``and'' at the end of paragraph (4),
by striking the period at the end of paragraph (5) and inserting ``,
and'', and by inserting after paragraph (4) the following new
paragraph:
``(6) benefits under a long-term care insurance contract
(as defined in section 818A(b)).''
(b) Inclusion of Employer-Provided Coverage.--Section 106 of such
Code (relating to contributions by employer to accident and health
plans) is amended by adding at the end thereof the following sentence:
``The preceding sentence shall not apply to any plan providing coverage
for long-term care services.''
SEC. 3003. QUALIFIED LONG-TERM SERVICES TREATED AS MEDICAL CARE.
(a) General Rule.--Paragraph (1) of section 213(d) of the Internal
Revenue Code of 1986 (defining medical care) is amended by striking
``or'' at the end of subparagraph (B), by redesignating subparagraph
(C) as subparagraph (D), and by inserting after subparagraph (B) the
following new subparagraph:
``(C) for qualified long-term care services (as
defined in section 818A(c)), or''.
(b) Deduction for Long-Term Care Expenses for Parent or
Grandparent.--Section 213 of such Code (relating to deduction for
medical expenses) is amended by adding at the end the following new
subsection:
``(g) Special Rule for Certain Long-Term Care Expenses.--For
purposes of subsection (a), the term `dependent' shall include any
parent or grandparent of the taxpayer for whom the taxpayer has
expenses for long-term care services described in section 818A(c), but
only to the extent of such expenses.''
(c) Technical Amendments.--
(1) Subparagraph (D) of section 213(d)(1) of such Code (as
redesignated by subsection (a)) is amended by striking
``subparagraphs (A) and (B)'' and inserting ``subparagraphs
(A), (B), and (C)''.
(2)(A) Paragraph (1) of section 213(d) of such Code is
amended by adding at the end thereof the following new flush
sentence:
``In the case of a long-term care insurance contract (as
defined in section 818A), only eligible long-term care premiums
(as defined in paragraph (10)) shall be taken into account
under subparagraph (D).''
(B) Subsection (d) of section 213 is amended by adding at
the end the following new paragraph:
``(10) Eligible Long-Term Care Premiums.--
``(A) In general.--For purposes of this section,
the term `eligible long-term care premiums' means the
amount paid during a taxable year for any long-term
care insurance contract (as defined in section 818A)
covering an individual, to the extent such amount does
not exceed the limitation determined under the
following table:
``In the case of an individual
with an attained age before the
The limitation
close of the taxable year of:
is:
40 or less........................... $200
More than 40 but not more than 50.... 375
More than 50 but not more than 60.... 750
More than 60 but not more than 70.... 1,600
More than 70......................... 2,000.
``(B) Indexing.--
``(i) In general.--In the case of any
taxable year beginning in a calendar year after
1993, each dollar amount contained in paragraph
(1) shall be increased by the medical care cost
adjustment of such amount for such calendar
year. If any increase determined under the
preceding sentence is not a multiple of $10,
such increase shall be rounded to the nearest
multiple of $10.
``(ii) Medical care cost adjustment.--For
purposes of clause (i), the medical care cost
adjustment for any calendar year is the
percentage (if any) by which--
``(I) the medical care component of
the Consumer Price Index (as defined in
section 1(f)(5)) for August of the
preceding calendar year, exceeds
``(II) such component for August of
1991.''
(3) Paragraph (6) of section 213(d) of such Code is
amended--
(A) by striking ``subparagraphs (A) and (B)'' and
inserting ``subparagraphs (A), (B), and (C)'', and
(B) by striking ``paragraph (1)(C)'' in
subparagraph (A) and inserting ``paragraph (1)(D)''.
(4) Paragraph (7) of section 213(d) of such Code is amended
by striking ``subparagraphs (A) and (B)'' and inserting
``subparagraphs (A), (B), and (C)''.
SEC. 3004. EFFECTIVE DATE.
The amendments made by this subtitle shall apply to taxable years
beginning after December 31, 1994.
Subtitle B--Establishment of Federal Standards for Long-term Care
Insurance
Title III, Subtitle B
SEC. 3101. ESTABLISHMENT OF FEDERAL STANDARDS FOR LONG-TERM CARE
INSURANCE.
(a) In General.--The Public Health Service Act is amended--
(1) by redesignating title XXVII (42 U.S.C. 300cc et seq.)
as title XXVIII; and
(2) by inserting after title XXVI the following new title:
``TITLE XXVII--LONG-TERM CARE INSURANCE STANDARDS
``Part A--Promulgation of Standards and Model Benefits
``SEC. 2701. STANDARDS.
``(a) Application of Standards.--
``(1) NAIC.--The Secretary shall request that the National
Association of Insurance Commissioners (hereinafter in this
title referred to as the `NAIC')--
``(A) develop specific standards that incorporate
the requirements of this title; and
``(B) report to the Secretary on such standards,
by not later than 12 months after enactment of this title. If
the NAIC develops such model standards that incorporate the
requirements of this title within such period and the Secretary
finds that such standards implement the requirements of this
title, such standards shall be the standards applied under this
title.
``(2) Default.--If the NAIC does not promulgate the model
standards under paragraph (1) by the deadline established in
that paragraph, the Secretary shall promulgate, within 12
months after such deadline, a regulation that provides
standards that incorporate the requirements of this title and
such standards shall apply as provided for in this title.
``(3) Relation to state law.--Nothing in this title shall
be construed as preventing a State from applying standards that
provide greater protection to policyholders of long-term care
insurance policies than the standards promulgated under this
title, except that such State standards may not be inconsistent
or in conflict with any of the requirements of this title.
``(b) Deadline for Application of Standards.--
``(1) In general.--Subject to paragraph (2), the date
specified in this subsection for a State is--
``(A) the date the State adopts the standards
established under subsection (a)(1); or
``(B) the date that is 1 year after the first day
of the first regular legislative session that begins
after the date such standards are first established
under subsection (a)(2);
whichever is earlier.
``(2) State requiring legislation.--In the case of a State
which the Secretary identifies, in consultation with the NAIC,
as--
``(A) requiring State legislation (other than
legislation appropriating funds) in order for the
standards established under subsection (a) to be
applied; but
``(B) having a legislature which is not scheduled
to meet within 1 year following the beginning of the
next regular legislative session in which such
legislation may be considered;
the date specified in this subsection is the first day of the
first calendar quarter beginning after the close of the first
legislative session of the State legislature that begins on or
after January 1, 1994. For purposes of the previous sentence,
in the case of a State that has a 2-year legislative session,
each year of such session shall be deemed to be a separate
regular session of the State legislature.
``(c) Items Included in Standards.--The standards promulgated under
subsection (a) shall include--
``(1) minimum Federal standards for long-term care
insurance consistent with the provisions of this title;
``(2) standards for the enhanced protection of consumers
with long-term care insurance;
``(3) procedures for the modification of the standards
established under paragraph (1) in a manner consistent with
future laws to expand existing Federal or State long-term care
benefits or establish a comprehensive Federal or State long-
term care benefit program; and
``(4) other activities determined appropriate by Congress.
``(d) Consultation.--In establishing standards and models of
benefits under this section, the Secretary shall provide for and
consult with an advisory committee to be chosen by the Secretary, and
composed of--
``(1) three individuals who are representatives of
carriers;
``(2) three individuals who are representatives of consumer
groups;
``(3) three representatives who are representatives of
providers of long-term care services;
``(4) three other individuals who are not representatives
of carriers or of providers of long-term care services and who
have expertise in the delivery and financing of such services;
and
``(5) the Secretary of Veterans Affairs.
``(e) Duties.--The advisory committee established under subsection
(d) shall--
``(1) recommend the appropriate inflationary index to be
used with respect to the inflation protection benefit portion
of the standards;
``(2) recommend the uniform needs assessment mechanism to
be used in determining the eligibility of individuals for
benefits under a policy;
``(3) recommend appropriate standards for benefits under
section 2715(c); and
``(4) perform such other activities as determined
appropriate by the Secretary.
``(f) Administrative Provisions.--The following provisions of
section 1886(e)(6) of the Social Security Act shall apply to the
advisory committee chosen under subsection (d) in the same manner as
such provisions apply under such section:
``(1) Subparagraph (C) (relating to staffing and
administration).
``(2) Subparagraph (D) (relating to compensation of
members).
``(3) Subparagraph (F) (relating to access to information).
``(4) Subparagraph (G) (relating to use of funds).
``(5) Subparagraph (H) (relating to periodic GAO audits).
``(6) Subparagraph (J) (relating to requests for
appropriations).
``Part B--Establishment and Implementation of Long-Term Care Insurance
Policy Standards
``SEC. 2711. IMPLEMENTATION OF POLICY STANDARDS.
``(a) In General.--
``(1) Regulatory program.--No long-term care policy (as
defined in section (2721)) may be issued, sold, or offered for
sale as a long-term care insurance policy in a State on or
after the date specified in section 2701(b) unless--
``(A) the Secretary determines that the State has
established a regulatory program that--
``(i) provides for the application and
enforcement of the standards established under
section 2701(a); and
``(ii) complies with the requirements of
subsection (b);
by the date specified in section 2701(b), and the
policy has been approved by the State commissioner or
superintendent of insurance under such program; or
``(B) if the State has not established such a
program, or if the State's regulatory program has been
decertified, the policy has been certified by the
Secretary (in accordance with such procedures as the
Secretary may establish) as meeting the standards
established under section 2701(a) by the date specified
in section 2701(b).
For purposes of this subsection, the advertising or soliciting
with respect to a policy, directly or indirectly, shall be
deemed the offering for sale of the policy.
``(2) Review of state regulatory programs.--The Secretary
periodically shall review regulatory programs described in
paragraph (1)(A) to determine if they continue to provide for
the application and enforcement of the standards and procedures
established under section 2701(a) and (b). If the Secretary
determines that a State regulatory program no longer meets such
standards and requirements, before making a final
determination, the Secretary shall provide the State an
opportunity to adopt such a plan of correction as would permit
the program to continue to meet such standards and
requirements. If the Secretary makes a final determination that
the State regulatory program, after such an opportunity, fails
to meet such standards and requirements, the Secretary shall
assume responsibility under paragraph (1)(B) with respect to
certifying policies in the State and shall exercise full
authority under section 2701 for carriers, agents, or
associations or its subsidiary in the State plans in the State.
``(b) Additional Requirements for Approval of State Regulatory
Programs.--For purposes of subsection (a)(1)(A)(ii), the requirements
of this subsection for a State regulatory program are as follows:
``(1) Enforcement.--The enforcement under the program--
``(A) shall be designed in a manner so as to secure
compliance with the standards within 30 days after the
date of a finding of noncompliance with such standards;
and
``(B) shall provide for notice in the annual report
required under paragraph (5) to the Secretary of cases
where such compliance is not secured within such 30-day
period.
``(2) Process.--The enforcement process under each State
regulatory program shall provide for--
``(A) procedures for individuals and entities to
file written, signed complaints respecting alleged
violations of the standards;
``(B) responding on a timely basis to such
complaints;
``(C) the investigation of--
``(i) those complaints which have a
reasonable probability of validity, and
``(ii) such other alleged violations of the
standards as the program finds appropriate; and
``(D) the imposition of appropriate sanctions
(which include, in appropriate cases, the imposition of
a civil money penalty as provided for in section 2718)
in the case of a carrier, agent, or association or its
subsidiary determined to have violated the standards.
``(3) Consumer access to compliance information.--
``(A) In general.--A State regulatory program must
provide for consumer access to complaints filed with
the State commissioner or superintendent of insurance
with respect to long-term care insurance policies.
``(B) Confidentiality.--The access provided under
subparagraph (A) shall be limited to the extent
required to protect the confidentiality of the identity
of individual policyholders.
``(4) Process for approval of premiums.--
``(A) In general.--Each State regulatory program
shall--
``(i) provide for a process for approving
or disapproving proposed premium increases or
decreases with respect to long-term care
insurance policies; and
``(ii) establish a policy for receipt and
consideration of public comments before
approving such a premium increase or decrease.
``(B) Conditions for approval.--No premium increase
shall be approved (or deemed approved) under
subparagraph (A) unless the proposed increase is
accompanied by an actuarial memorandum which--
``(i) includes a description of the
assumptions that justify the increase;
``(ii) contains such information as may be
required under the Standards; and
``(iii) is made available to the public.
``(C) Application.--Except as provided in
subparagraph (D), this paragraph shall not apply to a
group long-term care insurance policy issued to a group
described in section 4(E)(1) of the NAIC Long Term Care
Insurance Model Act (effective January 1991), except
that such group policy shall, pursuant to guidelines
developed by the NAIC, provide notice to policyholders
and certificate holders of any premium change under
such group policy.
``(D) Exception.--Subparagraph (C) shall not apply
to--
``(i) group conversion policies;
``(ii) the group continuation feature of a
group policy if the insurer separately rates
employee and continuation coverages; and
``(iii) group policies where the function
of the employer is limited solely to collecting
premiums (through payroll deductions or dues
checkoff) and remitting them to the insurer.
``(E) Construction.--Nothing in this paragraph
shall be construed as preventing the NAIC from
promulgating standards, or a State from enacting and
enforcing laws, with respect to premium rates or loss
ratios for all, including group, long-term care
insurance policies.
``(5) Annual reports.--Each State regulatory program shall
provide for annual reports to be submitted to the Secretary on
the implementation and enforcement of the standards in the
State, including information concerning violations in excess of
30 days.
``(6) Access to other information.--The State regulatory
program must provide for consumer access to actuarial memoranda
provided under paragraph (4).
``(7) Default.--In the case of a State without a regulatory
program approved under subsection (a), the Secretary shall
provide for the enforcement activities described in subsection
(c).
``(c) Secretarial Enforcement Authority.--
``(1) In general.--The Secretary shall exercise authority
under this section in the case of a State that does not have a
regulatory program approved under this section.
``(2) Complaints and investigations.--The Secretary shall
establish procedures--
``(A) for individuals and entities to file written,
signed complaints respecting alleged violations of the
requirements of this title;
``(B) for responding on a timely basis to such
complaints; and
``(C) for the investigation of--
``(i) those complaints that have a
reasonable probability of validity; and
``(ii) such other alleged violations of the
requirements of this title as the Secretary
determines to be appropriate.
In conducting investigations under this subsection, agents of
the Secretary shall have reasonable access necessary to enable
such agents to examine evidence of any carrier, agent, or
association or its subsidiary being investigated.
``(3) Hearings.--
``(A) In general.--Prior to imposing an order
described in paragraph (4) against a carrier, agent, or
association or its subsidiary under this section for a
violation of the requirements of this title, the
Secretary shall provide the carrier, agent, association
or subsidiary with notice and, upon request made within
a reasonable time (of not less than 30 days, as
established by the Secretary by regulation) of the date
of the notice, a hearing respecting the violation.
``(B) Conduct of hearing.--Any hearing requested
under subparagraph (A) shall be conducted before an
administrative law judge. If no hearing is so
requested, the Secretary's imposition of the order
shall constitute a final and unappealable order.
``(C) Authority in hearings.--In conducting
hearings under this paragraph--
``(i) agents of the Secretary and
administrative law judges shall have reasonable
access necessary to enable such agents and
judges to examine evidence of any carrier,
agent, or association or its subsidiary being
investigated; and
``(ii) administrative law judges, may, if
necessary, compel by subpoena the attendance of
witnesses and the production of evidence at any
designated place or hearing.
In case of contumacy or refusal to obey a subpoena
lawfully issued under this subparagraph and upon
application of the Secretary, an appropriate district
court of the United States may issue an order requiring
compliance with such subpoena and any failure to obey
such order may be punished by such court as a contempt
thereof.
``(D) Issuance of orders.--If an administrative law
judge determines in a hearing under this paragraph,
upon the preponderance of the evidence received, that a
carrier, agent, or association or its subsidiary named
in the complaint has violated the requirements of this
title, the administrative law judge shall state the
findings of fact and issue and cause to be served on
such carrier, agent, association, or subsidiary an
order described in paragraph (4).
``(4) Cease and desist order with civil money penalty.--
``(A) In general.--Subject to the provisions of
subparagraphs (B) through (F), an order under this
paragraph--
``(i) shall require the agent, association
or its subsidiary, or a carrier--
``(I) to cease and desist from such
violations; and
``(II) to pay a civil penalty in an
amount not to exceed $15,000 in the
case of each agent, and not to exceed
$25,000 for each association or its
subsidiary or a carrier for each such
violation; and
``(ii) may require the agent, association
or its subsidiary, or a carrier to take such
other remedial action as is appropriate.
``(B) Corrections within 30 days.--No order shall
be imposed under this paragraph by reason of any
violation if the carrier, agent, or association or its
subsidiary establishes to the satisfaction of the
Secretary that--
``(i) such violation was due to reasonable
cause and was not intentional and was not due
to willful neglect; and
``(ii) such violation is corrected within
the 30-day period beginning on the earliest
date the carrier, agent, association, or
subsidiary knew, or exercising reasonable
diligence could have known, that such a
violation was occurring.
``(C) Waiver by secretary.--In the case of a
violation under this title that is due to reasonable
cause and not to willful neglect, the Secretary may
waive part or all of the civil money penalty imposed
under subparagraph (A)(i)(II) to the extent that
payment of such penalty would be grossly excessive
relative to the violation involved and to the need for
deterrence of violations.
``(D) Administrative appellate review.--The
decision and order of an administrative law judge under
this paragraph shall become the final agency decision
and order of the Secretary unless, within 30 days, the
Secretary modifies or vacates the decision and order,
in which case the decision and order of the Secretary
shall become a final order under this paragraph.
``(E) Judicial review.--A carrier, agent, or
association or its subsidiary or any other individual
adversely affected by a final order issued under this
paragraph may, within 45 days after the date the final
order is issued, file a petition in the Court of
Appeals for the appropriate circuit for review of the
order.
``(F) Enforcement of orders.--If a carrier, agent,
or association or its subsidiary fails to comply with a
final order issued under this paragraph against the
carrier, agent, association or subsidiary after
opportunity for judicial review under subparagraph (E),
the Secretary shall file a suit to seek compliance with
the order in any appropriate district court of the
United States. In any such suit, the validity and
appropriateness of the final order shall not be subject
to review.
``(d) Demonstration Grant Program.--
``(1) In general.--The Secretary may award grants to States
for the establishment of demonstration programs to improve the
enforcement within such States of long-term care insurance
standards applicable under this title.
``(2) Application.--To be eligible to receive a grant under
paragraph (1), a State shall prepare and submit to the
Secretary an application at such time, in such manner, and
containing such information as the Secretary may require,
including a description of the program for which the State
intends to use the amounts provided under the grant.
``(3) Minimum amount of grants.--The amount of a grant
awarded under this subsection shall not be less than $100,000.
``(4) Evaluation.--A State that receives a grant under this
subsection shall comply with such evaluation procedures as the
Secretary shall by regulation establish. The Secretary shall
utilize such evaluations to conduct an overall evaluation of
the results of the demonstration programs established under
this section.
``(5) Authorization of appropriations.--There are
authorized to be appropriated to carry out this subsection,
$5,000,000 for each of the fiscal years 1996 through 2000.
``SEC. 2712. REGULATION OF SALES PRACTICES.
``(a) Duty of Good Faith and Fair Dealing.--
``(1) In general.--Each agent (as defined in section 2733)
or association that is selling or offering for sale a long-term
care insurance policy has the duty of good faith and fair
dealing to the purchaser or potential purchaser of such a
policy.
``(2) Prohibited practices.--An agent or association is
considered to have violated paragraph (1) if the agent or
association engages in any of the following practices:
``(A) Twisting.--
``(i) In general.--Knowingly making any
misleading representation (including the
inaccurate completion of medical histories) or
incomplete or fraudulent comparison of any
long-term care insurance policy or insurers for
the purpose of inducing, or tending to induce,
any person to retain or effect a change with
respect to a long-term care insurance policy.
``(ii) Policy replacement form.--With
respect to any person who elects to replace or
effect a change in a long-term care insurance
policy, the individual that is selling such
policy shall ensure that such person completes
a policy replacement form developed by the
NAIC. A copy of such form shall be provided to
such person and additional copies shall be
delivered by the selling individual to the old
policy issuer and the new issuer and kept on
file for inspection by the State regulatory
agency.
``(B) High pressure tactics.--Employing any method
of marketing having the effect of, or intending to,
induce the purchase of long-term care insurance policy
through force, fright, threat or undue pressure,
whether explicit or implicit.
``(C) Cold lead advertising.--Making use directly
or indirectly of any method of marketing which fails to
disclose in a conspicuous manner that a purpose of the
method of marketing is solicitation of insurance and
that contact will be made by an insurance agent or
insurance company.
``(D) Others.--Engaging in such other practices
determined inappropriate under guidelines issued by the
NAIC.
``(b) Financial Standards.--The NAIC shall develop recommended
financial minimum standards (including both income and asset criteria)
for the purpose of advising individuals considering the purchase of a
long-term care insurance policy.
``(c) Prohibition of Sale or Issuance to Medicaid Beneficiaries.--
An agent, an association, or a carrier may not knowingly sell or issue
a long-term care insurance policy to an individual who is eligible for
medical assistance under title XIX of the Social Security Act.
``(d) Prohibition of Sale or Issuance of Duplicate Service Benefit
Policies.--An agent, association or its subsidiary, or a carrier may
not sell or issue a service-benefit long-term care insurance policy to
an individual--
``(1) knowing that the policy provides for coverage that
duplicates coverage already provided in another service-benefit
long-term care insurance policy held by such individual (unless
the policy is intended to replace such other policy); or
``(2) for the benefit of an individual unless the
individual (or a representative of the individual) provides a
written statement to the effect that the coverage--
``(A) does not duplicate other coverage in effect
under a service-benefit long-term care insurance
policy; or
``(B) will replace another service-benefit long-
term care insurance policy.
In this subsection, the term `service-benefit long-term care insurance
policy' means a long-term care insurance policy which provides for
benefits based on the type and amount of services furnished.
``(e) Prohibition Based on Eligibility for Other Benefits.--A
carrier may not sell or issue a long-term care insurance policy that
reduces, limits or coordinates the benefits provided under the policy
on the basis that the policyholder has or is eligible for other long-
term care insurance coverage or benefits.
``(f) Provision of Outline of Coverage.--No agent, association or
its subsidiary, or carrier may sell or offer for a sale a long-term
care insurance policy (or for a certificate under a group long-term
care insurance policy) without providing to the purchaser or potential
purchaser (or representative) an outline of coverage that complies with
the standards established under section 2701(a).
``(g) Penalties.--Any agent who sells, offers for sale, or issues a
long-term care insurance policy in violation of this section may be
imprisoned not more than 5 years, or fined in accordance with title 18,
United States Code, and, in addition, is subject to a civil money
penalty of not to exceed $15,000 for each such violation. Any
association or its subsidiary or carrier that sells, offers for sale,
or issues a long-term care insurance policy in violation of this
section may be fined in accordance with title 18, United States Code,
and in addition, is subject to a civil money penalty of not to exceed
$25,000 for each violation.
``(h) Agent Training and Certification Requirements.--The NAIC,
shall establish requirements for long-term care insurance agent
training and certification that--
``(1) specify requirements for training insurance agents
who desire to sell or offer for sale long-term care insurance
policies; and
``(2) specify procedures for certifying agents who have
completed such training and who are as qualified to sell or
offer for sale long-term care insurance policies.
``SEC. 2713. ADDITIONAL RESPONSIBILITIES FOR CARRIERS.
``(a) Refund of Premiums.--If an application for a long-term care
insurance policy (or for a certificate under a group long-term care
insurance policy) is denied or an applicant returns a policy or
certificate within 30 days of the date of its issuance pursuant to
subsection 2717, the carrier shall refund directly to the applicant, or
in the case of an employer to whomever remits the premium, and not by
delivery by the agent, not later than 30 days after the date of the
denial or return, any premiums paid with respect to such a policy (or
certificate).
``(b) Mailing of Policy.--If an application for a long-term care
insurance policy (or for a certificate under a group long-term care
insurance policy) is approved, the carrier shall provide the applicant,
or in the case of a group plan the employer, the policy (or
certificate) of insurance not later than 30 days after the date of the
approval.
``(c) Information on Denials of Claims.--If a claim under a long-
term care insurance policy is denied, the carrier shall, within 30 days
of the date of a written request by the policyholder or certificate
holder (or representative)--
``(1) provide a written explanation of the reasons for the
denial; and
``(2) make available all medical and patient records
directly relating to such denial.
Except as provided in subsection (e) of section 2715, no claim under
such a policy may be denied on the basis of a failure to disclose a
condition at the time of issuance of the policy if the application for
the policy failed to request information respecting the condition.
``(d) Reporting of Information.--A carrier that issues one or more
long-term care insurance policies shall periodically (not less often
than annually) report, in a form and in a manner determined by the
NAIC, to the Commissioner, superintendent or director of insurance of
each State in which the policy is delivered, and shall make available
to the Secretary, upon request, information in a form and manner
determined by the NAIC concerning--
``(1) the long-term care insurance policies of the carrier
that are in force;
``(2) the most recent premiums for such policies and the
premiums imposed for such policies since their initial
issuance;
``(3) the lapse rate, replacement rate, and rescission
rates by policy;
``(4) the names of that 10 percent of its agents that--
``(A) have the greatest lapse and replacement rate;
and
``(B) have produced at least $50,000 of long-term
care insurance sales in the previous year; and
``(5) the claims denied (expressed as a number and as a
percentage of claims submitted) by policy.
Information required under this subsection shall be reported in a
format specified in the standards established under section 2701(a).
For purposes of paragraph (3), there shall be included (but reported
separately) data concerning lapses due to the death of the
policyholder. For purposes of paragraph (4), there shall not be
included as a claim any claim that is denied solely because of the
failure to meet a deductible, waiting period, or exclusionary period.
``(e) Standards on Compensation for Sale of Policies.--
``(1) In general.--A carrier that issues one or more long-
term care insurance policies may provide a commission or other
compensation to an agent or other representative for the sale
of such a policy only if the first year commission or other
first year compensation to be paid does not exceed 200 percent
of the commission or other compensation paid for selling or
servicing the policy in the second year, or if the first year
commission or other compensation to be paid does not exceed 50
percent of the premium paid on the first year policy, until the
NAIC promulgates mandatory standards concerning compensation
for the sale of such policies.
``(2) Subsequent years.--The commission or other
compensation provided for the sale of long-term care insurance
policies in years subsequent to the first year of the policy
shall be the same as that provided in the second subsequent
year and shall be provided for no fewer than 5 subsequent
years.
``(3) Limitation.--No carrier shall provide compensation to
its agents for the sale of a long-term care insurance policy
and no agent shall receive compensation greater than the renewal
compensation payable by the replacing carrier on renewal policies if an
existing policy is replaced.
``(4) Compensation defined.--As used in this subsection,
the term `compensation' includes pecuniary or nonpecuniary
remuneration of any kind relating to the sale or renewal of the
policy, including but not limited to deferred compensation,
bonuses, gifts, prizes, awards, and finders fees.
``SEC. 2714. RENEWABILITY STANDARDS FOR ISSUANCE, AND BASIS FOR
CANCELLATION OF POLICIES.
``(a) In General.--No long-term care insurance policy may be
canceled or nonrenewed for any reason other than nonpayment of premium,
material misrepresentation or fraud.
``(b) Continuation and Conversion Rights for Group Policies.--
``(1) In general.--Each group long-term care insurance
policy shall provide covered individuals with a basis for
continuation or conversion in accordance with this subsection.
``(2) Basis for continuation.--For purposes of paragraph
(1), a policy provides a basis for continuation of coverage if
the policy maintains coverage under the existing group policy
when such coverage would otherwise terminate and which is
subject only to the continued timely payment of premium when
due. A group policy which restricts provision of benefits and
services to or contains incentives to use certain providers or
facility, may provide continuation benefits which are
substantially equivalent to the benefits of the existing group
policy.
``(3) Basis for conversion.--For purposes of paragraph (1),
a policy provides a basis for conversion of coverage if the
policy entitles each individual--
``(A) whose coverage under the group policy would
otherwise be terminated for any reason; and
``(B) who has been continuously insured under the
policy (or group policy which was replaced) for at
least 6 months before the date of the termination;
to issuance of a policy providing benefits identical to,
substantially equivalent to, or in excess of, those of the
policy being terminated, without evidence of insurability.
``(4) Treatment of substantial equivalence.--In determining
under this subsection whether benefits are substantially
equivalent, consideration should be given to the difference
between managed care and non-managed care plans.
``(5) Group replacement of policies.--If a group long-term
care insurance policy is replaced by another long-term care
insurance policy purchased by the same policyholder, the
succeeding issuer shall offer coverage to all persons covered
under the old group policy on its date of termination. Coverage
under the new group policy shall not result in any exclusion
for preexisting conditions that would have been covered under
the group policy being replaced.
``(c) Standards for Issuance.--
``(1) In general.--
``(A) Guarantee.--An agent, association or carrier
that sells or issues long-term care insurance policies
shall guarantee that such policies shall be sold or
issued to an individual, or eligible individual in the
case of a group plan, if such individual meets the
minimum medical underwriting requirements of such
policy.
``(B) Premium for converted policy.--If a group
policy from which conversion is made is a replacement
for a previous group policy, the premium for the
converted policy shall be calculated on the basis of
the insured's age at the inception of coverage under
the group policy from which conversion is made. Where
the group policy from which conversion is made replaced
previous group coverage, the premium for the converted
policy shall be calculated on the basis of the
insured's age at inception of coverage under the group
policy replaced.
``(2) Upgrade for current policies.--The NAIC shall
establish standards, including those providing guidance on
medical underwriting and age rating, with respect to the access
of individuals to policies offering upgraded benefits.
``(d) Effect of Incapacitation.--
``(1) In general.--
``(A) Prohibition.--Except as provided in paragraph
(2), a long-term care insurance policy in effect as of
the effective date of the standards established under
section 2701(a) may not be canceled for nonpayment if
the policy holder is determined by a long-term care
provider, physician or other health care provider,
independent of the issuer of the policy, to be
cognitively or mentally incapacitated so as to not make
payments in a timely manner.
``(B) Reinstatement.--A long-term care policy shall
include a provision that provides for the reinstatement
of such coverage, in the event of lapse, if the insurer
is provided with proof of cognitive or mental
incapacitation. Such reinstatement option shall remain
available for a period of not less than 5 months after
termination and shall allow for the collection of past
due premium.
``(2) Permitted cancellation.--A long-term care insurance
policy may be canceled under paragraph (1) for nonpayment if--
``(A) the period of such nonpayment is in excess of
30 days; and
``(B) notice of intent to cancel is provided to the
policyholder or designated representative of the policy
holder not less than 30 days prior to such
cancellation, except that notice may not be provided
until the expiration of 30 days after a premium is due
and unpaid.
Notice under this paragraph shall be deemed to have been given
as of 5 days after the mailing date.
``SEC. 2715. BENEFIT STANDARDS.
``(a) Use of Standard Definitions and Terminology, Uniform Format,
and Standard Benefits.--Each long-term care insurance policy shall,
with respect to services, providers or facilities, pursuant to
standards established under section 2701(a)--
``(1) use uniform language and definitions, except that
such language and definitions may take into account the
differences between States with respect to definitions and
terminology used for long-term care services and providers;
``(2) use a uniform format for presenting the outline of
coverage under such a policy; and
``(3) provide coverage for at least one standard benefits
package (of those developed by the NAIC) that shall include the
limitations on the amount of payments per day and the lengths
of covered stays for nursing facility and home health care
services;
as prescribed under guidelines issued by the NAIC and periodically
updated.
``(b) Disclosure.--
``(1) Outline of coverage.--
``(A) Requirement.--Each carrier that sells or
offers for sale a long-term care insurance policy shall
provide an outline of coverage under such policy that
meets the applicable standards established pursuant to
section 2701(a), complies with the requirements of
subparagraph (B), and is in a uniform format as
prescribed in guidelines issued by the NAIC and
periodically updated.
``(B) Contents.--The outline of coverage for each
long-term care insurance policy shall include at least
the following:
``(i) A description of the principal
benefits and coverage under the policy.
``(ii) A statement of the principal
exclusions, reductions, and limitations
contained in the policy.
``(iii) A statement of the terms under
which the policy (or certificate) may be
continued in force or discontinued, the terms
for continuation or conversion, and any
reservation in the policy of a right to change
premiums.
``(iv) A statement, in bold face type on
the face of the document in language that is
understandable to an average individual, that
the outline of coverage is a summary only, not
a contract of insurance, and that the policy
(or master policy) contains the contractual
provisions that govern, except that such
summary shall substantially and accurately
reflect the contents of the policy or the
master policy.
``(v) A description of the terms, specified
in section 2717, under which a policy or
certificate may be returned and premium
refunded.
``(vi) Information on national average
costs for nursing facility and home health care
and information (in graphic form) on the
relationship of the value of the benefits
provided under the policy to such national
average costs and State average costs, where
available.
``(vii) A statement of the percentage limit
on annual premium increases that is provided
under the policy pursuant to this section.
``(2) Certificates.--A certificate issued pursuant to a
group long-term care insurance policy shall include--
``(A) a description of the principal benefits and
coverage provided in the policy;
``(B) a statement of the principal exclusions,
reductions, and limitations contained in the policy;
and
``(C) a statement that the group master policy
determines governing contractual provisions.
``(3) Long-term care as part of life insurance.--In the
case of a long-term care insurance policy issued as a part of,
or a rider on, a life insurance policy, at the time of policy
delivery there shall be provided a policy summary that
includes--
``(A) an explanation of how the long-term care
benefits interact with other components of the policy
(including deductions from death benefits);
``(B) an illustration of the amount of benefits,
the length of benefit, and the guaranteed lifetime
benefits (if any) for each covered person; and
``(C) any exclusions, reductions, and limitations
on benefits of long-term care.
``(4) Additional information.--The NAIC shall develop
recommendations with respect to informing consumers of the
long-term economic viability of carriers issuing long-term care
insurance policies.
``(c) Limiting Conditions on Benefits; Minimum Benefits.--
``(1) In general.--A long-term care insurance policy may
not condition or limit eligibility--
``(A) for benefits for a type of services to the
need for or receipt of any other services;
``(B) for any benefit on the medical necessity for
such benefit;
``(C) for benefits furnished by licensed or
certified providers in compliance with conditions which
are in addition to those required for licensure or
certification under State law, except that if no State
licensure or certification laws exists, in compliance
with qualifications developed by the NAIC; or
``(D) for residential care (if covered under the
policy) only--
``(i) to care provided in facilities which
provide a higher level of care; or
``(ii) to care provided in facilities which
provide for 24-hour or other nursing care not
required in order to be licensed by the State.
``(2) Home health care or community-based services.--If a
long-term care insurance policy provides benefits for the
payment of specified home health care or community-based
services, the policy--
``(A) may not limit such benefits to services
provided by registered nurses or licensed practical
nurses;
``(B) may not require benefits for such services to
be provided by a nurse or therapist that can be
provided by a home health aide or licensed or certified
home care worker, except that if no State licensure or
certification laws exist, in compliance with
qualifications developed by the NAIC;
``(C) may not limit such benefits to services
provided by agencies or providers certified under title
XVIII of the Social Security Act; and
``(D) must provide, at a minimum, benefits for
personal care services (including home health aide and
home care worker services as defined by the NAIC) home
health services, adult day care, and respite care in an
individual's home or in another setting in the
community, or any of these benefits on a respite care
basis.
``(3) Nursing facility services.--If a long-term care
insurance policy provides benefits for the payment of specified
nursing facility services, the policy must provide such
benefits with respect to all nursing facilities (as defined in
section 1919(a) of the Social Security Act or until such time
as subsequently provided for by the NAIC in establishing
uniform language and definitions under section 2715(a)(1)) in
the State.
``(4) Per diem policies.--
``(A) Definition.--For purposes of this title, the
term `per diem long-term care insurance policy' means a
long-term care insurance policy (or certificate under a
group long-term care insurance policy) that provides
for benefit payments on a periodic basis due to
cognitive impairment or loss of functional capacity
without regard to the expenses incurred or services
rendered during the period to which the payments
relate.
``(B) Limitation.--No per diem long-term care
insurance policy (or certificate) may condition or
otherwise exclude benefit payments based on the receipt
of any type of nursing facility, home health care or
community-based services.
``(d) Prohibition of Discrimination.--A long-term care insurance
policy may not treat benefits under the policy in the case of an
individual with Alzheimer's disease, with any related progressive
degenerative dementia of an organic origin, with any organic or
inorganic mental illness, or with mental retardation or any other
cognitive or mental impairment differently from an individual having
another medical condition for which benefits may be made available.
``(e) Limitation on Use of Preexisting Condition Limits.--
``(1) Initial issuance.--
``(A) In general.--Subject to subparagraph (B), a
long-term care insurance policy may not exclude or
condition benefits based on a medical condition for
which the policyholder received treatment or was
otherwise diagnosed before the issuance of the policy.
``(B) 6-month limit.--
``(i) In general.--No long-term care
insurance policy or certificate issued under
this title shall utilize a definition of
`preexisting condition' that is more
restrictive than the following: The term
`preexisting condition' means a condition for
which medical advice or treatment was
recommended by, or received from a provider of
health care services, within 6 months preceding
the effective date of coverage of an insured
individual.
``(ii) Prohibition on exclusion of
coverage.--No long-term care insurance policy
or certificate may exclude coverage for a loss
or confinement that is the result of a
preexisting condition unless such loss or
confinement begins within 6 months following
the effective date of the coverage of the
insured individual.
``(2) Replacement policies.--If a long-term care insurance
policy replaces another long-term care insurance policy, the
issuer of the replacing policy shall waive any time periods
applicable to preexisting conditions, waiting period,
elimination periods and probationary periods in the new policy
for similar benefits to the extent such time was spent under
the original policy.
``(f) Eligibility for Benefits.--
``(1) Long-term care policies.--Each long-term care
insurance policy shall--
``(A) describe the level of benefits available
under the policy; and
``(B) specify in clear, understandable terms, the
level (or levels) of physical, cognitive, or mental
impairment required in order to receive benefits under
the policy.
``(2) Functional assessment.--In order to submit a claim
under any long-term care insurance policy, each claimant shall
have a professional functional assessment of his or her
physical, cognitive, and mental abilities. Such initial
assessment shall be conducted by an individual or entity,
meeting the qualifications established by the NAIC to assure
the professional competence and credibility of such individual
or entity and that such individual meets any applicable State
licensure and certification requirements. The individual or
entity conducting such assessment may not control, or be
controlled by, the issuer of the policy. For purposes of this
paragraph and paragraph (4), the term `control' means the
direct or indirect possession of the power to direct the
management and policies of a person. Control is presumed to
exist, if any person directly or indirectly, owns, controls,
holds with the power to vote, or holds proxies representing 10
percent of the voting securities of another person.
``(3) Claims review.--Except as provided in paragraph (4),
each long-term care insurance policy shall be subject to final
claims review by the carrier pursuant to the terms of the long-
term care insurance policy.
``(4) Appeals process.--
``(A) In general.--Each long-term care insurance
policy shall provide for a timely and independent
appeals process, meeting standards established by the
NAIC, for individuals who dispute the results of the
claims review, conducted under paragraph (3), of the
claimant's functional assessment, conducted under
paragraph (2).
``(B) Independent assessment.--An appeals process
under this paragraph shall include, at the request of
the claimant, an independent assessment of the
claimant's physical, cognitive or mental abilities.
``(C) Conduct.--An independent assessment under
subparagraph (B) shall be conducted by an individual or
entity meeting the qualifications established by the
NAIC to assure the professional competence and
credibility of such individual or entity and any
applicable State licensure and certification
requirements and may not be conducted--
``(i) by an individual who has a direct or
indirect significant or controlling interest
in, or direct affiliation or relationship with,
the issuer of the policy;
``(ii) by an entity that provides services
to the policyholder or certificateholder for
which benefits are available under the long-
term care insurance policy; or
``(iii) by an individual or entity in
control of, or controlled by, the issuer of the
policy.
``(5) Standard assessments.--Not later than 2 years after
the date of enactment of this title, the advisory committee
established under section 2701(d) shall recommend uniform needs
assessment mechanisms for the determination of eligibility for
benefits under such assessments.
``(g) Inflation Protection.--
``(1) Option to purchase.--A carrier may not offer a long-
term care insurance policy unless the carrier also offers to
the proposed policyholder, including each group policyholder,
the option to purchase a policy that provides for increases in
benefit levels, with benefit maximums or reasonable durations
that are meaningful, to account for reasonably anticipated
increases in the costs of long-term care services covered by
the policy. A carrier may not offer to a policyholder an
inflation protection feature that is less favorable to the
policyholder than one of the following:
``(A) With respect to policies that provide for
automatic periodic increases in benefits, the policy
provides for an annual increase in benefits in a manner
so that such increases are computed annually at a rate
of not less than 5 percent.
``(B) With respect to policies that provide for
periodic opportunities to elect an increase in
benefits, the policy guarantees that the insured
individual will have the right to periodically increase
the benefit levels under the policy without providing
evidence of insurability or health status so long as
the option for the previous period was not declined.
The amount of any such additional benefit may not be
less than the difference between--
``(i) the existing policy benefit; and
``(ii) such existing benefit compounded
annually at a rate of at least 5 percent for
the period beginning on the date on which the
existing benefit is purchased and extending
until the year in which the offer of increase
is made.
``(C) With respect to service benefit policies, the
policy covers a specified percentage of the actual or
reasonable charges and does not include a maximum
specified indemnity amount or limit.
``(2) Exception.--The requirements of paragraph (1) shall
not apply to life insurance policies or riders containing
accelerated long-term care benefits.
``(3) Required information.--Carriers shall include the
following information in or together with the outline of
coverage provided under this title:
``(A) A graphic comparison of the benefit levels of
a policy that increases benefits over the policy period
with a policy that does not increase benefits. Such
comparison shall show benefit levels over not less than
a 20-year period.
``(B) Any expected premium increases or additional
premiums required to pay for any automatic or optional
benefit increases, whether the individual who purchases
the policy obtains the inflation protection initially
or whether such individual delays purchasing such
protection until a future time.
``(4) Continuation of protection.--Inflation protection
benefit increases under this subsection under a policy that
contains such protection shall continue without regard to an
insured's age, claim status or claim history, or the length of
time the individual has been insured under the policy.
``(5) Constant premium.--An offer of inflation protection
under this subsection that provides for automatic benefit
increases shall include an offer of a premium that the carrier
expects to remain constant. Such offer shall disclose in a
conspicuous manner that the premium may change in the future
unless the premium is guaranteed to remain constant.
``(6) Rejection.--Inflation protection under this
subsection shall be included in a long-term care insurance
policy unless a carrier obtains a written rejection of such
protection signed by the policyholder.
``SEC. 2716. NONFORFEITURE.
``(a) In General.--Each long-term care insurance policy (or
certificate) shall provide that if the policy lapses after the policy
has been in effect for a minimum period (specified under the standards
under section 2701(a)), the policy will provide, without payment of any
additional premiums, nonforfeiture benefits as determined appropriate
by the NAIC.
``(b) Establishment of Standards.--The standards under section
2701(a) shall provide that the percentage or amount of benefits under
subsection (a) must increase based upon the policyholder's equity in
the policy.
``SEC. 2717. LIMIT OF PERIOD OF CONTESTABILITY AND RIGHT TO RETURN.
``(a) Contestability.--A carrier may not cancel or renew a long-
term care insurance policy or deny a claim under the policy based on
fraud or material misrepresentation relating to the issuance of the
policy unless notice of such fraud or material misrepresentation is
provided within a time period to be determined by the NAIC.
``(b) Right to Return.--Each applicant for a long-term care
insurance policy shall have the right to return the policy (or
certificates) within 30 days of the date of its delivery (and to have
the premium refunded) if, after examination of the policy or
certificate, the applicant is not satisfied for any reason.
``SEC. 2718. CIVIL MONEY PENALTY.
``(a) Carrier.--Any carrier, association or its subsidiary that
sells or offers for sale a long-term care insurance policy and that--
``(1) fails to make a refund in accordance with section
2713(a);
``(2) fails to transmit a policy in accordance with section
2713(b);
``(3) fails to provide, make available, or report
information in accordance with subsections (c) or (d) of
section 2713;
``(4) provides a commission or compensation in violation of
section 2713(e);
``(5) fails to provide an outline of coverage in violation
of section 2715(b)(1); or
``(6) issues a policy without obtaining certain information
in violation of section 2715(f);
is subject to a civil money penalty of not to exceed $25,000 for each
such violation.
``(b) Agents.--Any agent that sells or offers for sale a long-term
care insurance policy and that--
``(1) fails to make a refund in accordance with section
2713(a);
``(2) fails to transmit a policy in accordance with section
2713(b);
``(3) fails to provide, make available, or report
information in accordance with subsections (c) or (d) of
section 2713;
``(4) fails to provide an outline of coverage in violation
of section 2715(b)(1); or
``(5) issues a policy without obtaining certain information
in violation of section 2715(f);
is subject to a civil money penalty of not to exceed $15,000 for each
such violation.
``Part C--Long-Term Care Insurance Policies, Definition and
Endorsements
``SEC. 2721. LONG-TERM CARE INSURANCE POLICY DEFINED.
``(a) In General.--As used in this section, the term `long-term
care insurance policy' means any insurance policy, rider or certificate
advertised, marketed, offered or designed to provide coverage for not
less than 12 consecutive months for each covered person on an expense
incurred, indemnity prepaid or other basis, for one or more necessary
diagnostic, preventive, therapeutic, rehabilitative, maintenance or
personal care services, provided in a setting other than an acute care
unit of a hospital. Such term includes--
``(1) group and individual annuities and life insurance
policies, riders or certificates that provide directly, or that
supplement long-term care insurance; and
``(2) a policy, rider or certificates that provides for
payment of benefits based on cognitive impairment or the loss
of functional capacity.
``(b) Issuance.--Long-term care insurance policies may be issued
by--
``(1) carriers;
``(2) fraternal benefit societies;
``(3) nonprofit health, hospital, and medical service
corporations;
``(4) prepaid health plans;
``(5) health maintenance organizations; or
``(6) any similar organization to the extent they are
otherwise authorized to issue life or health insurance.
``(c) Policies Excluded.--The term `long-term care insurance
policy' shall not include any insurance policy, rider or certificate
that is offered primarily to provide basic Medicare supplement
coverage, basic hospital expense coverage, basic medical-surgical
expense coverage, hospital confinement indemnity coverage, major
medical expense coverage, disability income or related asset-protection
coverage, accident only coverage, specified disease or specified
accident coverage, or limited benefit health coverage. With respect to
life insurance, such term shall not include life insurance policies,
riders or certificates that accelerate the death benefit specifically
for one or more of the qualifying events of terminal illness, medical
conditions requiring extraordinary medical intervention, or permanent
institutional confinement, and that provide the option of a lump-sum
payment for those benefits and in which neither the benefits nor the
eligibility for the benefits is conditioned upon the receipt of long-
term care.
``(d) Applications.--Notwithstanding any other provision of this
title, this title shall apply to any product advertised, marketed or
offered as a long-term insurance policy, rider or certificate.
``SEC. 2722. CODE OF CONDUCT WITH RESPECT TO ENDORSEMENTS.
``Not later than 1 year after the date of enactment of this title
the NAIC shall issue guidelines that shall apply to organizations and
associations, other than employers and labor organizations that do not
accept compensation, and their subsidiaries that provide endorsements
of long-term care insurance policies, or that permit such policies to
be offered for sale through the organization or association. Such
guidelines shall include at minimum the following:
``(1) In endorsing or selling long-term care insurance
policies, the primary responsibility of an organization or
association shall be to educate their members concerning such
policies and assist such members in making informed decisions.
Such organizations and associations may not function primarily
as sales agents for insurance companies.
``(2) Organizations and associations shall provide
objective information regarding long-term care insurance
policies sold or endorsed by such organizations and
associations to ensure that members of such organizations and
associations have a balanced and complete understanding of both
the strengths and weaknesses of the policies that are being
endorsed or sold.
``(3) Organizations and associations selling or endorsing
long-term care insurance policies shall disclose in marketing
literature provided to their members concerning such policies
the manner in which such policies and the insurance company
issuing such policies were selected. If the organization or
association and the insurance company have
interlocking directorates, the organization or association shall
disclose such fact to their members.
``(4) Organizations and associations selling or endorsing
long-term care insurance policies shall disclose in marketing
literature provided to their members concerning such policies
the nature and amount of the compensation arrangements
(including all fees, commissions, administrative fees and other
forms of financial support that the organization or association
receives) from the endorsement or sale of the policy to its
members.
``(5) The Boards of Directors of organizations and
associations selling or endorsing long-term care insurance
policies, if such organizations and associations have a Board
of Directors, shall review and approve such insurance policies,
the compensation arrangements and the marketing materials used
to promote sales of such policies.
``Part D--Miscellaneous Provisions
``SEC. 2731. FUNDING FOR LONG-TERM CARE INSURANCE INFORMATION,
COUNSELING, AND ASSISTANCE.
``(a) In General.--The Secretary, acting through the Public Health
Service, may award grants to States, and national organizations with
demonstrated experience in long-term care insurance, for the
establishment of programs to provide information, counseling, and
assistance relating to the procurement of adequate and appropriate
long-term care insurance.
``(b) Application.--To be eligible to receive a grant under
subsection (a), a State or national organization shall prepare and
submit to the Secretary an application at such time, in such manner,
and containing such information as the Secretary may require, including
a description of the program for which the State or organization
intends to use the amounts provided under the grant.
``(c) Authorization of Appropriations.--
``(1) In general.--There are authorized to be appropriated
for grants to States under subsection (a), $10,000,000 for each
of the fiscal years 1996 through 1998.
``(2) National organizations.--There are authorized to be
appropriated for grants to national organizations under
subsection (a), $1,000,000 for each of the fiscal years 1996
through 1998.
``SEC. 2732. DEFINITIONS.
``As used in this title:
``(1) Agent.--The term `agent' means--
``(A) prior to 2 years after the date of enactment
of this Act, an individual who sells or offers for sale
a long-term care insurance policy subject to the
requirements of this title and is licensed or required
to be licensed under State law for such purpose; and
``(B) after the date referred to in subparagraph
(A), an individual who meets the training and
certification requirements established under section
2712(f).
``(2) Association.--The term `association' includes the
association and its subsidiaries.
``(3) Carrier.--The term `carrier' means any person that
offers a health benefit plan, whether through insurance or
otherwise, including a licensed insurance company, a prepaid
hospital or medical service plan, a health maintenance
organization, a self-insured carrier, a reinsurance carrier,
and a multiple employer welfare arrangement (a combination of
employers associated for the purpose of providing health
benefit plan coverage for their employees).''.
(b) Conforming Amendments.--
(1) Sections 2701 through 2714 of the Public Health Service
Act (42 U.S.C. 300cc through 300cc-15) are redesignated as
sections 2801 through 2814, respectively.
(2) Sections 465(f) and 497 of such Act (42 U.S.C. 286(f)
and 289(f)) are amended by striking ``2701'' each place that
such appears and inserting ``2801''.
Title III, Subtitle C
Subtitle C--Protection of Assets Under Medicaid Through Use of
Qualified Long-term Care Insurance
SEC. 3201. PROTECTION OF ASSETS THROUGH USE OF QUALIFIED LONG-TERM CARE
INSURANCE.
(a) In General.--Title XIX of the Social Security Act, as amended
by sections 1601(a) and 1701(a), is amended--
(1) by redesignating section 1933 as section 1934; and
(2) by inserting after section 1932 the following new
section:
``special rules for asset disregard in the case of qualified long-term
care insurance contracts
``Sec. 1933. (a) In General.--Each State plan under this title may
provide, subject to subsection (d), that in determining the eligibility
of an individual for medical assistance under the plan with respect to
such services there shall be disregarded some or all of the
individual's assets which are attributable (as determined under
subsection (c)(2)) to coverage under a qualified long-term care
insurance contract (as defined in subsection (b)).
``(b) Qualified Long-Term Care Insurance Contract Defined.--In this
section, the term `qualified long-term care insurance contract' means,
with respect to a State, a long-term care insurance contract (as
defined in section 818A(b) of the Internal Revenue Code of 1986)
which--
``(1) provides such protection against the costs of
receiving long-term care services as the State may require by
law;
``(2) provides that benefits under the contract shall be
paid without regard to eligibility for medical assistance under
this title; and
``(3) meets such other requirements (such as requirements
relating to premiums, disclosure, minimum benefits, rights of
conversion, and standards for claims processing) as the State
may determine to be appropriate.
``(c) Other Definitions.--In this section:
``(1) Long-term care services.--The term `long-term care
services' means nursing facility services, home health care
services, and home and community-based services, and includes
such other similar items and services described in section
1905(a) as a State may specify.
``(2) Attribution rules.--An individual's assets are
considered to be `attributable' to a qualified long-term care
insurance contract to the extent specified under the State
plan. Such a plan shall provide for at least one of the
following:
``(A) All assets are considered attributable if the
insurance contract provides coverage for at least a
specified period of coverage (of not less than 3 years
and of not more than 6 years) for long-term care
services.
``(B) An amount of assets, up to the dollar
limitation on benefits for long-term care services
under the contract, is considered attributable to the
contract.
``(d) Limitation.--In no case shall this section result in (1) the
total Federal payments to the State for the quarter under this title
(including payments attributable to this section), exceeding (2) the
total Federal payments that the Secretary estimates would have been
paid under this title to the State for the quarter if the State did not
provide for the determination of eligibility in accordance with
subsection (a).''.
(b) Conforming Amendment.--Section 1902(a)(17)(A) of such Act (42
U.S.C. 1396a(a)(17)(A)) is amended by inserting ``and section 1932''
after ``objectives of this title''.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply (except as provided under paragraph (2)) to payments to
States under title XIX of the Social Security Act for calendar
quarters beginning on or after one year after the date of the
enactment of this Act, without regard to whether regulations to
implement such amendment are promulgated by such date.
(2) Delay permitted if state legislation required.--In the
case of a State plan for medical assistance under title XIX of
the Social Security Act which the Secretary of Health and Human
Services determines requires State legislation (other than
legislation authorizing or appropriating funds) in order for
the plan to meet the additional requirements imposed by the
amendments made by this section, the State plan shall not be
regarded as failing to comply with the requirements of such
title solely on the basis of its failure to meet these
additional requirements before the first day of the first calendar
quarter beginning after the close of the first regular session of the
State legislature that begins after the date of the enactment of this
Act. For purposes of the previous sentence, in the case of a State that
has a 2-year legislative session, each year of such session shall be
deemed to be a separate regular session of the State legislature.
Title III, Subtitle D
Subtitle D--Studies
SEC. 3301. FEASIBILITY OF ENCOURAGING HEALTH CARE PROVIDERS TO DONATE
SERVICES TO HOMEBOUND PATIENTS.
The Comptroller General of the United States shall conduct a study
on the feasibility of encouraging health care providers to donate their
services to homebound patients. Such study shall include an examination
of the effects of qualifying such services as a charitable
contribution.
SEC. 3302. FEASIBILITY OF TAX CREDIT FOR HEADS OF HOUSEHOLDS WHO CARE
FOR ELDERLY FAMILY MEMBERS IN THEIR HOMES.
The Comptroller General of the United States shall conduct a study
on the feasibility of providing heads of households who care for
elderly family members in their homes with a tax credit. Such study
shall estimate the cost of such a tax credit which would apply to
expenses incurred in the custodial care of such an elderly family
member to the extent such expenses exceed 5 percent of adjusted gross
income.
SEC. 3303. CASE MANAGEMENT OF CURRENT LONG-TERM CARE BENEFITS.
(a) In General.--The Secretary of Health and Human Services shall
conduct a study of the feasibility of encouraging or requiring the use
of a single designated public or nonprofit agency (such as an area
agency on aging) to coordinate, through case management, the provision
of long-term care benefits under current Federal, State, and local
programs in a geographic area.
(b) Report.--The Secretary shall submit to Congress a report on the
study conducted under subsection (a) by not later than 1 year after the
date of the enactment of this Act. Such report shall include such
recommendations regarding changes in legislation to encourage or
require the use (described in subsection (a)) of an agency to
coordinate long-term care benefits as may be appropriate.
Subtitle E--Volunteer Service Credit Demonstration Projects
Title III, Subtitle E
SEC. 3401. AMENDMENT TO THE OLDER AMERICANS ACT OF 1965.
(a) In General.--Part B of title IV of the Older Americans Act of
1965 (42 U.S.C. 3034-3035r) is amended by adding at the end the
following:
``SEC. 429K. VOLUNTEER SERVICE CREDIT DEMONSTRATION PROJECTS.
``(a) Requirements.--The Commissioner shall--
``(1) establish and operate (directly, or through the State
agency on aging or one or more area agencies on aging) a
volunteer service credit demonstration project in all or part
of each State;
``(2) establish criteria for selecting individuals to whom
volunteer services will be provided under volunteer service
credit demonstration projects operated under paragraph (1);
``(3) recruit and train (directly or through State agencies
on aging or area agencies on aging) individuals who volunteer
to provide services through such projects;
``(4) establish a minimum standard for each service to be
provided by volunteers through such projects;
``(5) monitor services provided by volunteers through such
projects to ensure that standards established under paragraph
(4) are met; and
``(6) maintain (directly or through State agencies on aging
or area agencies on aging) with respect to each individual who
provides services through a volunteer service credit
demonstration project operated under paragraph (1) a separately
identifiable account showing the number of hours such
individual provided such services.
``(b) Definition.--For purposes of subsection (a), the term
`volunteer service credit demonstration project' means a demonstration
project through which homemaker services, respite care for families,
adult day care, and educational, transportation, and home-delivery
services are provided by--
``(1) volunteer older individuals for the benefit of older
individuals or low-income children; or
``(2) volunteer individuals of any age for the benefit of
older individuals;
in return for the receipt of similar services under any such
demonstration project (that is established under this section) at a
time at which such volunteers are older individuals in need of such
services.''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect October 1, 1995.
<all>
HR 5300 IH----2
HR 5300 IH----3
HR 5300 IH----4
HR 5300 IH----5
HR 5300 IH----6
HR 5300 IH----7
HR 5300 IH----8
HR 5300 IH----9
HR 5300 IH----10
HR 5300 IH----11
HR 5300 IH----12
HR 5300 IH----13
HR 5300 IH----14
HR 5300 IH----15
HR 5300 IH----16
HR 5300 IH----17
HR 5300 IH----18
HR 5300 IH----19
HR 5300 IH----20
HR 5300 IH----21
HR 5300 IH----22
HR 5300 IH----23
HR 5300 IH----24
HR 5300 IH----25
HR 5300 IH----26
HR 5300 IH----27
HR 5300 IH----28
HR 5300 IH----29
HR 5300 IH----30
HR 5300 IH----31
HR 5300 IH----32
HR 5300 IH----33
HR 5300 IH----34
HR 5300 IH----35
HR 5300 IH----36
HR 5300 IH----37
HR 5300 IH----38
HR 5300 IH----39
HR 5300 IH----40
HR 5300 IH----41
HR 5300 IH----42