Text: H.R.5325 — 102nd Congress (1991-1992)All Information (Except Text)

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HR 5325 SC
102d CONGRESS
 2d Session
 H. R. 5325
To improve access to health insurance and contain health care costs, and
for other purposes.
IN THE HOUSE OF REPRESENTATIVES
June 4, 1992
Mr. MICHEL (for himself, Mr. GINGRICH, Mr. LEWIS of California, Mr. EDWARDS of
Oklahoma, Mr. HUNTER, Mr. MCCOLLUM,  Mr. WEBER, Mr. VANDER JAGT, Mr. ARCHER,
Mr. GRADISON, Mr. MCDADE, Mr. MCMILLAN of North Carolina, Mr. SOLOMON,
Mr. BILIRAKIS, Mr. BLILEY, Mr. CHANDLER, Mr. GOSS, Mr. GRANDY, Mr. GUNDERSON,
Mr. HASTERT, Mr. HOBSON, Mrs. JOHNSON of Connecticut, Mr. KASICH, Mr. LENT,
Mr. MCGRATH, Mr. ROBERTS, Mr. WALKER, Mr. BAKER, Mr. BALLENGER, Mrs. BENTLEY,
Mr. BROOMFIELD, Mr. BUNNING, Mr. CAMP, Mr. CLINGER, Mr. DOOLITTLE, Mr. EWING,
Mr. FRANKS of Connecticut, Mr. GALLEGLY, Mr. GEKAS, Mr. GILCHREST, Mr. GILLMOR,
Mr. GILMAN, Mr. HAMMERSCHMIDT, Mr. HEFLEY, Mr. HENRY, Mr. HOLLOWAY,
Mr. HOPKINS, Mr. HOUGHTON, Mr. INHOFE, Mr. JOHNSON of Texas, Mr. KOLBE,
Mr. LAGOMARSINO, Mr. LEWIS of Florida, Mr. LOWERY of California, Mr. MCCRERY,
Mr. MARLENEE, Mrs. MEYERS of Kansas, Mr. MILLER of Ohio, Mr. MYERS of Indiana,
Mr. OXLEY, Mr. PETRI, Mr. PURSELL, Mr. RAMSTAD, Mr. RHODES, Mr. RIGGS,
Mr. RITTER, Mr. ROTH, Mr. SANTORUM, Mr. SCHULZE, Mr. SENSENBRENNER, Mr. SHAW,
Mr. SKEEN, Ms. SNOWE, Mr. SPENCE, Mr. SUNDQUIST, Mr. TAYLOR of North Carolina,
Mr. THOMAS of Wyoming, Mr. UPTON, Mrs. VUCANOVICH, Mr. WOLF, Mr. WYLIE,
and Mr. ZELIFF) introduced the following bill; which was referred jointly
to the Committees on Energy and Commerce, Ways and Means, the Judiciary,
and Education and Labor
October 1, 1992
Additional sponsors: Mr. KYL, Mr. GOODLING, Mr. BOEHLERT, Mr. BOEHNER,
Mr. COUGHLIN, Mr. MCEWEN, Mr. BARRETT, Mr. HERGER, Mr. PAXON, Mr. SMITH
of Oregon, Mr. IRELAND, Mr. NUSSLE, Mr. CUNNINGHAM, Mr. YOUNG of Alaska,
and Mr. Rohrabacher
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 `Action Now Health Care
  Reform Act of 1992'.
  (b) TABLE OF CONTENTS- The table of contents of this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I--IMPROVED ACCESS TO AFFORDABLE HEALTH CARE COVERAGE
Subtitle A--Increased Affordability and Availability for Employees
Sec. 101. Establishment and enforcement of standards for health benefit plans.
Sec. 102. Preemption of State benefit mandates for small employer health
benefit plans that meet consumer protection standards.
Sec. 103. Requirement for small employer carrier offering of MedAccess plans.
Sec. 104. Limitation on pre-existing condition clauses; assurance of continuity
of coverage.
Sec. 105. Limits on premiums and miscellaneous consumer protections.
Sec. 106. Requirements relating to renewability generally.
Sec. 107. Limitation on annual premium increases.
Sec. 108. Establishment of reinsurance or allocation of risk mechanisms for
high risk individuals.
Sec. 109. Registration of all health benefit plans.
Sec. 110. Office of Private Health Care Coverage; annual reports on evaluation
of health care coverage reform.
Sec. 111. Research and demonstration projects; development of a health risk
pooling model.
Sec. 112. General definitions.
Subtitle B--Improved Small Employer Purchasing Power of Affordable Health
Insurance
Sec. 121. Preemption from insurance mandates for qualified small employer
purchasing groups.
Subtitle C--Health Deduction Fairness
Sec. 131. Permanent extension and increase in health insurance tax deduction
for self-employed.
Subtitle D--Improved Access to Community Health Services
Part 1--Increased Authorization for Community and Migrant Health Centers
Sec. 141. Grant program to promote primary health care services for underserved
populations.
Part 2--Reduction in Medical Malpractice Liability for Community Health Centers
Sec. 151. Liability protections for certain health care professionals.
Sec. 152. Hospital admitting privileges for certain health care providers.
Sec. 153. Payment of judgments.
Sec. 154. Effective date.
Part 3--Grants for Projects for Coordinating Delivery of Services
Sec. 161. Projects for coordinating delivery of outpatient primary health
services.
Subtitle E--Improved Access to Rural Health Services
Part 1--Rural Emergency Medical Services Amendments
Sec. 171. Office of Emergency Medical Services.
Sec. 172. State offices of emergency medical services.
Sec. 173. Programs for rural areas.
Sec. 174. Funding.
Sec. 175. Conforming amendments.
Sec. 176. Effective date.
Part 2--Air Transport for Rural Victims of Medical Emergencies
Sec. 181. Grants to States regarding aircraft for transporting rural victims
of medical emergencies.
Part 3--Extension of Special Treatment Rules for Medicare-dependent, Small
Rural Hospitals
Sec. 191. Extension of special treatment rules for medicare-dependent,
small rural hospitals.
TITLE II--HEALTH CARE COST CONTAINMENT AND QUALITY ENHANCEMENT
Subtitle A--Medical Malpractice Liability Reform
Part 1--General Provisions
Sec. 201. Federal reform of medical malpractice liability actions.
Sec. 202. Definitions.
Sec. 203. Effective date.
Part 2--Uniform Standards for Medical Malpractice Liability Actions
Sec. 211. Statute of limitations.
Sec. 212. Requirement for initial resolution of action through alternative
dispute resolution.
Sec. 213. Relation to alternative dispute resolution of Federal agencies.
Sec. 214. Mandatory pre-trial settlement conference.
Sec. 215. Calculation and payment of damages.
Sec. 216. Treatment of attorney's fees and other costs.
Sec. 217. Joint and several liability.
Sec. 218. Uniform standard for determining negligence.
Sec. 219. Application of medical practice guidelines in malpractice liability
actions.
Sec. 220. Special provision for certain obstetric services.
Sec. 221. Preemption.
Part 3--Requirements for State Alternative Dispute Resolution Systems (ADR)
Sec. 231. Basic requirements for ADR.
Sec. 232. Certification of State systems.
Sec. 233. Reports on implementation and effectiveness of alternative dispute
resolution systems.
Part 4--Other Requirements and Programs
Sec. 241. Facilitating development and use of medical practice guidelines.
Sec. 242. Permitting State professional societies to participate in
disciplinary activities.
Sec. 243. Requirements for risk management programs.
Sec. 244. Grants for medical safety promotion.
Sec. 245. Study of barriers to voluntary service by physicians.
Subtitle B--Administrative Cost Savings
Part 1--Standardization of Claims Processing
Sec. 251. Adoption of data elements, uniform claims, and uniform electronic
transmission standards.
Sec. 252. Application of standards.
Sec. 253. Periodic review and revision of standards.
Sec. 254. Health benefit plan defined.
Part 2--Electronic Medical Data Standards
Sec. 261. Medical data standards for hospitals and other providers.
Sec. 262. Application of electronic data standards to certain hospitals.
Sec. 263. Electronic transmission to Federal agencies.
Sec. 264. Limitation on data requirements where standards in effect.
Sec. 265. Advisory commission.
Part 3--Development and Distribution of Comparative Value Information
Sec. 271. State comparative value information programs for health care
purchasing.
Sec. 272. Federal implementation.
Sec. 273. Comparative value information concerning Federal programs.
Sec. 274. Development of model systems.
Part 4--Additional Standards and Requirements; Research and Demonstrations
Sec. 281. Standards relating to use of medicare and medicaid magnetized
health benefit cards; secondary payor data bank.
Sec. 282. Preemption of State quill pen laws.
Sec. 283. Use of standard identification numbers.
Sec. 284. Coordination of benefit standards.
Sec. 285. Research and demonstrations.
Subtitle C--Medical Savings Accounts (Medisave)
Sec. 291. Medical savings accounts.
Subtitle D--Medicaid Program Flexibility
Sec. 301. Modification of Federal requirements to allow States more flexibility
in contracting for coordinated care services under medicaid.
Sec. 302. Period of certain waivers.
Sec. 303. Authorizing waiver of nursing home reform requirements.
Subtitle E--Limitations on Physician Self-Referrals
Sec. 311. Extension of physician self-referral limitations to all payors.
Sec. 312. Extension of physician self-referral limitations to certain
additional services.
Sec. 313. Changes in exceptions.
Sec. 314. Study and report on changes in costs.
Sec. 315. Effective date.
Subtitle F--Removing Restrictions on Managed Care
Sec. 321. Removing restrictions on managed care.
Subtitle G--Medicare Payment Changes
Sec. 331. Revisions to methodology for determining updates to medicare
hospital payments.
Sec. 332. Reduction in medicare payment for clinical diagnostic laboratory
tests.
Subtitle H--Modification of the Operation of the Antitrust Laws to Hospitals
Sec. 341. Purpose.
Sec. 342. Exemptions from the operation of the antitrust laws.
Sec. 343. Reports.
Sec. 344. Definitions.
Subtitle I--Encouraging Enforcement Activities of Medical Self-Regulatory
Entities
Sec. 351. Antitrust exemption for medical self-regulatory entities.
Sec. 352. Consultation with medical self-regulatory entities respecting
medical professional standards.
Sec. 353. Definitions.
TITLE I--IMPROVED ACCESS TO AFFORDABLE HEALTH CARE COVERAGE
Subtitle A--Increased Affordability and Availability for Employees
SEC. 101. ESTABLISHMENT AND ENFORCEMENT OF STANDARDS FOR HEALTH BENEFIT PLANS.
  (a) ESTABLISHMENT OF GENERAL STANDARDS-
  (1) ROLE OF NAIC- The Secretary of Health and Human Services shall request
  the National Association of Insurance Commissioners (in this subtitle
  referred to as 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) MEDACCESS STANDARDS- (i) The requirement, under section 103(a), that
  small employer carriers make available MedAccess plans.
  (ii) The uniform benefit levels to be included in MedAccess basic and
  standard plans under section 103(b).
  (iii) The requirements of guaranteed availability of MedAccess plans to
  small employers under section 103(c).
  (B) CONSUMER PROTECTION STANDARDS- (i) The requirements of section 104
  (relating to limitations on treatment of pre-existing conditions and
  assurance of continuity of coverage).
  (ii) The requirements of section 105 (relating to limits on premiums and
  miscellaneous consumer protections).
  (iii) The requirements of section 106 (relating to renewability generally).
  (iv) The requirement of section 107 (relating to limitation on annual
  premium increases).
If the NAIC develops regulations specifying such standards within such
period, the Secretary shall review the standards to determine if they meet
the requirements. 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.
  (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 DATES-
  (A) MEDACCESS STANDARDS- The MedAccess standards (as defined in section
  112(8)) shall apply to carriers in a State on or after the date the
  standards are implemented in the State under subsection (b).
  (B) CONSUMER PROTECTION STANDARDS- For employer health benefit plans other
  than MedAccess plans, the consumer protection standards (as defined in
  section 112(2)) shall apply to plans offered or renewed on or after 4 years
  after the date such standards are implemented in the State under subsection
  (b).
  (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 MedAccess standards with respect to small
  employer carriers, and small employer health benefit plans 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 carriers and health benefit plans offered to small employers
  to meet the MedAccess standards established under subsection (a), but
  (II) having a legislature which is not scheduled to meet in 1994 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, 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.
  (2) APPLICATION OF CONSUMER PROTECTION STANDARDS TO NON-MEDACCESS EMPLOYER
  HEALTH BENEFIT PLANS- Each State shall submit to the Secretary, by not later
  than 4 years after the date consumer protection standards are established
  under subsection (a), a report on steps the State is taking to implement
  and enforce the consumer protection standards with respect to all employer
  health benefit plans (other than MedAccess plans) which are subject to
  regulation by the State and which are offered or renewed not later than
  4 years after the date the standards were established.
  (3) FEDERAL ROLE-
  (A) SECRETARIAL AUTHORITY-
  (i) IN GENERAL- If the Secretary determines that a State has failed
  to submit a report by the deadline specified under paragraph (1) or
  (2) or finds that the State has not implemented and provided adequate
  enforcement of the MedAccess standards or consumer protection standards
  under the respective 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 the respective 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 the applicable standards in the
  State as the Secretary determines to be appropriate. Such implementation
  and enforcement shall take effect with respect to carriers, and health
  benefit plans 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 103(d), would
  be more consistent with the small employer group health coverage market
  in the State than the guaranteed availability provisions of section 103(c).
  (ii) NON-STATE REGULATED ENTITIES- In the case of carriers that are
  not subject to State regulation, the Secretary shall be responsible for
  implementation and enforcement of standards under this subtitle.
  (B) ENFORCEMENT THROUGH EXCISE TAX-
  (i) 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 TO COMPLY WITH EMPLOYER HEALTH BENEFIT PLAN STANDARDS.
  `(a) IMPOSITION OF TAX-
  `(1) IN GENERAL- There is hereby imposed a tax on the failure of a carrier
  or an employer health benefit plan to comply with the applicable standards
  established under section 101(a) of the Action Now Health Care Reform Act
  of 1992.
  `(2) EXCEPTION- Paragraph (1) shall not apply to a failure by a small
  employer carrier or plan 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 a carrier or of such a plan.
  `(b) AMOUNT OF TAX-
  `(1)  IN GENERAL- Subject to paragraph (2), the tax imposed by subsection
  (a) shall be an amount not to exceed 25 percent of the amounts received
  by the carrier or under the plan for coverage during the period such
  failure persists.
  `(2) LIMITATION IN CASE OF INDIVIDUAL FAILURES- In the case of a failure
  that only relates to specified individuals or employers (and not to the
  plan generally), the amount of the tax imposed by subsection (a) shall
  not exceed the aggregate of $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.
  `(c) LIABILITY FOR TAX- The tax imposed by this section shall be paid by
  the carrier.
  `(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 earliest
  date the carrier 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 `carrier',
  `employer health benefit plan', and `small employer carrier' have the
  respective meanings given such terms in section 112 of the Action Now
  Health Care Reform Act of 1992.'
  (ii) 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 to comply with employer health plan standards.'.
  (iii) EFFECTIVE DATE- The amendments made by this subparagraph shall apply
  to plan years beginning after December 31, 1992.
SEC. 102. PREEMPTION OF STATE BENEFIT MANDATES FOR SMALL EMPLOYER HEALTH
BENEFIT PLANS THAT MEET CONSUMER PROTECTION STANDARDS.
  (a) FINDING- Congress finds that health benefit plans offered with respect
  to small employers affect interstate commerce.
  (b) PREEMPTION- In the case of a MedAccess plan or other small employer
  health benefit plan that meets the consumer protection standards, no
  provision of State law shall apply that requires the offering, as part of
  the health benefit plan with respect to such an employer, of any services,
  category of care, or services of any class or type of provider.
SEC. 103. REQUIREMENT FOR SMALL EMPLOYER CARRIER OFFERING OF MEDACCESS PLANS.
  (a) IN GENERAL-
  (1) IN GENERAL- Each carrier that makes available in a State any small
  employer health benefit plan shall make available to each small employer
  in the State--
  (A) a MedAccess basic plan, and
  (B) a MedAccess standard plan.
  (2) EXCEPTION IF ALTERNATE PLAN IN A STATE- Paragraph (1) shall not apply
  to a carrier in a State if the State is providing access to each small
  employer in the State to a MedAccess basic plan and to a MedAccess standard
  plan under a risk allocation mechanism described in subsection (d).
  (b) MEDACCESS PLAN DEFINED- In this subtitle:
  (1) IN GENERAL- The term `MedAccess plan' means a health benefits plan
  (whether a managed-care plan, indemnity plan, or other plan) that--
  (A) subject to paragraph (3)--
  (i) is designed to provide benefits typical of the benefits offered in
  the small employer health coverage market, or
  (ii)(I) is designed to provide only benefits for essential preventive and
  medical services and (II) has an average actuarial value (in the overall
  small employer group market for the same type of coverage) which does not
  exceed 60 percent of the average actuarial value of the benefits described
  in clause (i) for such type of coverage;
  (B) meets the applicable requirements of subsection (c) (relating to
  guaranteed issue); and
  (C) meets the consumer protection standards.
  (2) MEDACCESS BASIC AND STANDARD PLANS- The terms `MedAccess basic plan' and
  `MedAccess standard plan' mean a MedAccess plan that provides for benefit
  levels described in clause (i) or clause (ii), respectively, of paragraph
  (1)(A).
  (3) SPECIAL RULES FOR HEALTH MAINTENANCE ORGANIZATIONS- With respect to
  a carrier that--
  (A) is a Federally qualified health maintenance organization (as defined
  in section 1301(a) of the Public Health Service Act), the benefits required
  under paragraphs (1)(A) or (2)(A) shall be modified to the extent required
  to be consistent with the requirements for the plans of such an organization
  under title XIII of such Act, or
  (B) is not such an organization but is recognized under State law as a
  health maintenance organization, the benefits required under paragraph
  (1)(A) shall be modified to the extent required to be consistent with the
  requirements for the plans of such an organization under State law.
  (4) REVIEW OF BENEFIT STANDARDS- The NAIC is requested to periodically
  review the standards for benefits described in paragraph (1)(A). The NAIC
  is requested to submit to the Secretary and the Congress its recommendations
  on changes that should be made in such standards.
  (c) GUARANTEED AVAILABILITY OF MEDACCESS PLANS- Subject to subsection (d)--
  (1) IN GENERAL- Subject to paragraph (2), each MedAccess plan in a State--
  (A) must accept every small employer in the State that applies for coverage
  under the plan; and
  (B) must accept for enrollment every eligible individual (as defined in
  paragraph (4)) who applies for enrollment on a timely basis (consistent
  with paragraph (3)) 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 a
  plan offered by a health maintenance organization, the plan shall--
  (A) limit the employers that may apply for coverage to those with eligible
  individuals residing in the service area of the plan,
  (B) limit the individuals who may be enrolled under the plan to those who
  reside in the service area of the plan, and
  (C) within the service area of the plan, deny coverage to such employers
  if the plan 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, and
  (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.
  (3) CLARIFICATION OF TIMELY ENROLLMENT-
  (A) GENERAL INITIAL ENROLLMENT REQUIREMENT- Except as provided in this
  paragraph, a MedAccess plan may consider enrollment of an eligible individual
  not to be timely if the eligible employee or dependent fails to enroll in
  the plan during an initial enrollment period, if such period is at least
  30 days long.
  (B) ENROLLMENT DUE TO LOSS OF PREVIOUS EMPLOYER COVERAGE- Enrollment in
  a MedAccess plan is considered to be timely in the case of an eligible
  individual who--
  (i) was covered under another employer health benefit plan at the time of
  the individual's initial enrollment period,
  (ii) stated at the time of initial enrollment period that coverage under
  another employer health benefit plan was the reason for declining enrollment,
  (iii) lost coverage under another employer health benefit plan (as a result
  of the termination of the other plan's coverage, termination or reduction
  of employment, or other reason), and
  (iv) requests enrollment within 30 days after termination of coverage
  under another employer health benefit plan.
  (C) REQUIREMENT APPLIES DURING OPEN ENROLLMENT PERIODS- Each MedAccess plan
  shall provide for at least one period (of not less than 30 days) each year
  during which enrollment under the plan shall be considered to be timely.
  (D) EXCEPTION FOR COURT ORDERS- Enrollment of 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 health benefit 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 child (including an adopted 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 a plan makes family coverage available and enrollment is
  made under the plan 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).
  (4) ELIGIBLE INDIVIDUAL DEFINED- In this subsection, the term `eligible
  individual' means, with respect to a small employer--
  (A) an individual who is a full-time employee of the employer, and
  (B) if family coverage is offered, the employee's spouse and the employee's
  dependents who are under 19 years of age or who are full-time students
  and under 25 years of age.
  (d) STATE OPTION OF GUARANTEED AVAILABILITY THROUGH ALLOCATION OF RISK
  (RATHER THAN THROUGH GUARANTEED ISSUE)- The requirement of subsection (c)
  shall not apply in a State if the State has provided (in accordance with
  standards established under this subtitle) a mechanism under which--
  (1) each carrier offering a health benefit plan 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 carriers, and
  (2) the carriers to which such high-risk small employer groups or individuals
  are so assigned complies with the requirement of subsection (c).
SEC. 104. LIMITATION ON PRE-EXISTING CONDITION CLAUSES; ASSURANCE OF CONTINUITY
OF COVERAGE.
  (a) LIMITATIONS ON TREATMENT OF PRE-EXISTING CONDITIONS- A carrier may
  not impose (or require an employer to impose through a waiting period for
  coverage under a health benefit policy or similar requirement) a limitation
  or exclusion of benefits under an employer health benefit plan relating to
  treatment of a condition based on the fact that the condition pre-existed
  the effectiveness of the policy if--
  (1) the condition relates to a condition that was not diagnosed or treated
  within 3 months before the date of coverage under the plan;
  (2) the limitation or exclusion extends over more than 6 months after the
  date of coverage under the plan;
  (3) the limitation or exclusion applies to an individual who, as of the
  date of birth, was covered under the plan; or
  (4) the limitation or exclusion relates to pregnancy.
In the case of an individual who is eligible for coverage under an employer
health benefit plan but for a waiting period imposed by the employer, in
applying paragraphs (1) and (2), the individual shall be treated as have
been covered under the plan as of the earliest date of the beginning of the
waiting period.
  (b) ASSURANCE OF CONTINUITY OF COVERAGE THROUGH PREVIOUS SATISFACTION OF
  PRE-EXISTING CONDITION REQUIREMENT-
  (1) IN GENERAL- Each carrier shall waive any period applicable to a
  pre-existing condition for similar benefits with respect to an individual
  to the extent that the individual was covered for the condition under any
  health benefit plan (as defined in paragraph (3)) that was in effect before
  the date of the enrollment under the carrier's plan.
  (2) CONTINUOUS COVERAGE REQUIRED-
  (A) IN GENERAL- Paragraph (1) shall no longer apply if there is a continuous
  period of more than 60 days (or, in the case of an individual described
  in subparagraph (C), 6 months) on which the individual was not covered
  under a health benefit plan.
  (B) TREATMENT OF WAITING PERIODS- In applying subparagraph (A), any waiting
  period imposed by an employer before an employee is eligible to be covered
  under a policy shall be treated as a period in which the employee was
  covered under a health benefit plan.
  (C) JOB TERMINATION- An individual is described in this subparagraph if the
  individual loses coverage under an employer health plan due to termination
  of employment.
  (3) EXCLUSION OF CASH-ONLY AND DREAD DISEASE POLICIES- In this subsection,
  the term `health benefit plan' does not include any insurance which is
  offered primarily to provide--
  (A) coverage for a specified disease or illness, or
  (B) hospital or fixed indemnity policy, unless the Secretary (or in the case
  of a plan in a State, the State) determines that such a policy provides
  sufficiently comprehensive coverage of a benefit so that it should be
  treated as a health benefit plan under this subsection.
SEC. 105. LIMITS ON PREMIUMS AND MISCELLANEOUS CONSUMER PROTECTIONS.
  (a) LIMITS ON PREMIUMS-
  (1) LIMIT ON VARIATION OF INDEX RATES BETWEEN CLASSES OF BUSINESS-
  (A) IN GENERAL- As a standard under section 101(a)(1)(B)(ii), the index
  rate for a rating period for any class of business of a small employer
  carrier may not exceed by more than 20 percent the index rate for any
  other class of business.
  (B) EXCEPTIONS- The limitation of subparagraph (A) shall not apply to a
  class of business if--
  (i) the class is one for which the carrier does not reject, and never has
  rejected, small employers included within the definition of employers
  eligible for the class of business or otherwise eligible employees and
  dependents who enroll on a timely basis, based upon their claim experience
  or health status,
  (ii) the carrier does not involuntarily transfer, and never has involuntarily
  transferred, a health benefit plan into or out of the class of business, and
  (iii) the class of business is currently available for purchase.
  (2) LIMIT ON VARIATION OF PREMIUM RATES WITHIN A CLASS OF BUSINESS- For a
  class of business of a small employer carrier, as a standard under section
  101(a)(1)(B)(ii), the premium rates charged during a rating period to small
  employers with similar demographic or other objective characteristics (not
  relating to claims experience, health status, or duration of coverage)
  for the same or similar coverage, or the rates which could be charged to
  such employers under the rating system for that class of business, shall
  not vary from the index rate by more than 25 percent of the index rate.
  (3) OBJECTIVE BASIS FOR DIFFERENCES IN PREMIUMS FOR STANDARD AND BASIC
  MEDACCESS PLANS- The difference between the index rate for the MedAccess
  basic plan and the index rate for the MedAccess standard plan shall be
  reasonable and shall reflect the difference in plan design and shall not
  take into account differences due to the nature of the groups assumed to
  select particular health plans.
  (4) LIMIT ON TRANSFER OF EMPLOYERS AMONG CLASSES OF BUSINESS- As a
  standard under section 101(a)(1)(B)(ii), a small employer carrier may not
  involuntarily transfer a small employer into or out of a class of business. A
  small employer carrier may not offer to transfer a small employer into
  or out of a class of business unless such offer is made to transfer all
  small employers in the class of business without regard to demographic
  characteristics, claim experience, health status, or duration since issue.
  (5) DEFINITIONS- In this subsection:
  (A) BASE PREMIUM RATE- The term `base premium rate' means, for each class of
  business for each rating period, the lowest premium rate charged or which
  could have been charged under a rating system for that class of business
  by the small employer carrier to small employers with similar demographic
  or other objective characteristics (not relating to claims experience,
  health status, or duration of coverage) for health benefit plans with the
  same or similar coverage.
  (B) CLASS OF BUSINESS- The term `class of business' means, with respect
  to a carrier, all (or a distinct group of) small employers as shown on
  the records of the carrier.
  (C) RULES FOR ESTABLISHING CLASSES OF BUSINESS- For purposes of subparagraph
  (B)--
  (i) a carrier may establish, subject to clause (ii), a distinct group
  of small employers on the basis that the applicable health benefit plans
  either--
  (I) are marketed and sold through individuals and organizations which are
  not participating in the marketing or sale of other distinct groups of
  small employers for the carrier,
  (II) have been acquired from another carrier as a distinct group, or
  (III) are provided through an association that has a membership of not
  less than 100 small employers and that has been formed for purposes other
  than obtaining health coverage;
  (ii) a carrier may not establish more than 2 groupings under each class
  of business based on the carrier's use of managed-care techniques if the
  techniques are expected to produce substantial variation in health care
  costs; and
  (iii) notwithstanding clauses (i) and (ii), a State commissioner of
  Insurance of a State, upon application and if authorized under State law,
  may approve additional distinct groups upon a finding that such approval
  would enhance the efficiency and fairness of the small employer marketplace.
  (D) INDEX RATE- The term `index rate' means, with respect to a class of
  business, the arithmetic average of the applicable base premium rate and
  the corresponding highest premium rate for the class.
  (E) DEMOGRAPHIC CHARACTERISTICS- Except as otherwise permitted under
  the standard under section 101(b)(1)(B)(ii), the term `demographic
  characteristics' means age, gender, industry, geographic area, family
  composition, and group size.
  (b) FULL DISCLOSURE OF RATING PRACTICES- At the time a carrier offers a
  health benefit plan to a small employer, the carrier shall fully disclose
  to the employer rating practices for small employer health benefit plans,
  including rating practices for different industries, populations, and
  benefit designs.
  (c) ACTUARIAL CERTIFICATION- Each carrier 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 carrier
  and methods used by the carrier in establishing premium rates for applicable
  small employer health benefit plans--
  (1) the carrier is in compliance with the applicable provisions of this
  section, and
  (2) the rating methods are actuarially sound.
Each carrier shall retain a copy of such statement for examination at its
principal place of business.
  (d) REGISTRATION AND REPORTING- Each carrier that issues any small employer
  health benefit plan 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 a plan.
  (e) USE OF MINIMUM PARTICIPATION REQUIREMENT- A carrier may condition
  issuance, or renewal, of a health benefit plan to a small employer on the
  enrollment of a minimum number (or percentage) of its full-time employees,
  only in accordance with standards established to carry out this section. Such
  standards shall require that any such conditions be imposed uniformly on
  employers of the same size.
SEC. 106. REQUIREMENTS RELATING TO RENEWABILITY GENERALLY.
  (a) IN GENERAL- A carrier may not cancel an employer health benefit plan
  or deny renewal of coverage under such a plan other than--
  (1) for nonpayment of premiums,
  (2) for fraud or other misrepresentation by the insured,
  (3) for noncompliance with plan provisions,
  (4) for failure to maintain (in accordance with standards established
  under section 105(e)) the number of enrollees under the plan at the number
  (or percentage) required under the plan,
  (5) for misuse of a provider network provision, or
  (6) because the carrier is ceasing to provide any employer health benefit
  plan in a State, or, in the case of a health maintenance organization,
  in a geographic area.
  (b) LIMITATION ON MARKET REENTRY- If a carrier terminates the offering of
  employer health benefit plans in an area, the carrier may not offer such a
  health benefit plan to any employer in the area until 5 years have elapsed
  since the date of the termination.
SEC. 107. LIMITATION ON ANNUAL PREMIUM INCREASES.
  A carrier may not provide for an increase in the premium charged a small
  employer for a small employer health benefit plan in a percentage that
  exceeds the percentage change in the premium charged under the plan for
  a newly covered employer within the same class of business rate plus 15
  percentage points.
SEC. 108. ESTABLISHMENT OF REINSURANCE OR ALLOCATION OF RISK MECHANISMS FOR
HIGH RISK INDIVIDUALS.
  (a) ESTABLISHMENT OF STANDARDS-
  (1) ROLE OF NAIC- The Secretary of Health and Human Services 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 individuals and small employers who are enrolled under a small employer
  health benefit plan that meets the consumer protection standards and for
  whom a carrier is at risk of incurring high costs under the plan. 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.
  (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 fund 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
  101(b)(1)(B). In order to assure the financial solvency of the mechanism,
  the State may, notwithstanding any provision of law to the contrary,
  impose charges on any entity (including a self-insured entity) providing
  employee-related health benefits, so long as such charges do not discriminate
  with respect to entities that would (but for this provision) not be subject
  to such charges.
  (2) FEDERAL ROLE-
  (A) IN GENERAL- If the Secretary determines that a State has failed to
  establish a reinsurance or allocation of risk mechanism in accordance
  with paragraph (1), the Secretary shall establish such a reinsurance or
  allocation of risk mechanism meeting the requirements of this paragraph.
  (B) CARRIER ELECTION- In a reinsurance or allocation of risk mechanism
  established by the Secretary under this paragraph, a carrier issuing a
  small employer health benefit plan that meets the consumer protection
  standards may elect to secure reinsurance or allocation of risk for costs
  of the carrier with respect to the plan. Such an election must be made at
  the beginning of the year involved, and shall remain in effect for a period
  of 3 years, and is subject to extension for additional periods of 3 years.
  (C) REINSURANCE MECHANISM- Unless the Secretary determines under subparagraph
  (D) that an allocation of risk mechanism is the appropriate mechanism to
  use in a State under this paragraph, the Secretary shall establish for
  use under this section for each State an appropriate reinsurance mechanism.
  (D) 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 small employer health benefit plans offered or a
  relatively small number of uninsurable small employers or individuals), an
  allocation of risk mechanism would be a better mechanism than a reinsurance
  mechanism, the Secretary shall establish for use under this section for a
  State an allocation of risk mechanism under which uninsurable individuals
  and small employers would be equitably assigned among small employer health
  benefit plans.
  (E) FINANCING DEFICIT FOR REINSURANCE MECHANISMS-
  (i) IN GENERAL- Chapter 43 of the Internal Revenue Code of 1986 (relating
  to qualified pension plans, etc.) is amended by adding at the end thereof
  the following new section:
`SEC. 4980D. ADDITIONAL TAX TO FUND REINSURANCE IN STATES UNDER FEDERAL
REINSURANCE.
  `(a) IMPOSITION OF TAX- There is hereby imposed a tax on the providing of any
  health benefit plan which covers any employee in a Federal reinsurance State.
  `(b) AMOUNT OF TAX-
  `(1) IN GENERAL- The tax imposed by subsection (a) shall be equal to the
  applicable percentage of the amount received by the carrier for providing
  such plan in such Federal reinsurance State.
  `(2) APPLICABLE PERCENTAGE- For purposes of paragraph (1), the term
  `applicable percentage' means, with respect to any State for any period,
  the lowest percentage estimated by the Secretary as generating sufficient
  revenues to carry out section 108(b)(2) of the Action Now Health Care
  Reform Act of 1992 in such State for such period.
  `(c) LIABILITY FOR TAX- The tax imposed by this section shall be paid by
  the carrier.
  `(d) DEFINITIONS- For purposes of this section--
  `(1) CARRIER- The term `carrier' has the meaning given such term in section
  112(2) of the Action Now Health Care Reform Act of 1992.
  `(2) FEDERAL REINSURANCE STATE- The term `Federal reinsurance State' means
  any State with respect to which a determination is in effect under section
  108(b)(2) of the Action Now Health Care Reform Act of 1992 and for which
  the Secretary of Health and Human Services has established a reinsurance
  mechanism under subparagraph (C) of such section for the State.'
  (ii) CLERICAL AMENDMENT- The table of sections for chapter 43 of such Code
  is amended by adding at the end thereof the following new item:
`Sec. 4980D. Additional tax to fund reinsurance in States under Federal
reinsurance.'
  (c) CONSTRUCTION- Nothing in this section shall be construed to prohibit
  reinsurance or allocation of risk arrangements, whether on a State or
  regional basis, not required under this section.
SEC. 109. REGISTRATION OF ALL HEALTH BENEFIT PLANS.
  (a) IN GENERAL- Notwithstanding any other provision of law, each State
  commissioner of insurance may, under State law, require each employer
  health benefit plan (including a self-insured plan)--
  (1) to be registered with such official, if the plan is not otherwise
  required to be registered or licensed with the official under section
  105(d), and
  (2) to provide the official with such information on the plan as may be
  necessary to carry out section 108.
Insofar as the Secretary is exercising authority under section 108(b)(2),
the Secretary may impose the requirement under the previous sentence in the
same manner as a State commissioner of insurance may impose the requirement.
  (b) PROVISION OF LIST TO SECRETARY- By not later than the deadline specified
  in section 101(b)(1)(B), each State shall provide the Secretary with a
  list of all employer health benefit plans registered in the State under
  subsection (a).
SEC. 110. OFFICE OF PRIVATE HEALTH CARE COVERAGE; ANNUAL REPORTS ON EVALUATION
OF HEALTH CARE COVERAGE REFORM.
  (a) IN GENERAL- In order to carry out the responsibilities of the Secretary
  under this subtitle, the Secretary shall establish an Office of Private
  Health Care Coverage, to be headed by a Director appointed by the Secretary.
  (b) ANNUAL REPORT-
  (1) IN GENERAL- The Director shall submit to Congress an annual report on
  the implementation of this subtitle.
  (2) INFORMATION TO BE INCLUDED- Each annual report shall include information
  concerning at least the following:
  (A) Implementation and enforcement of the applicable MedAccess standards
  and consumer protection standards under this subtitle by the States and
  by the Secretary.
  (B) An evaluation of the impact of the reforms under this subtitle on
  the availability of affordable health coverage for small employers that
  purchase group health coverage and for their employees, and, in particular,
  the impact of--
  (i) guaranteed availability of health coverage,
  (ii) limitations of restrictions from coverage of preexisting conditions,
  (iii) requirement for continuity of coverage,
  (iv) risk-management mechanisms for health coverage,
  (v) limits on premium variations,
  (vi) limits on annual premium increases, and
  (vii) 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.
  (C) An assessment of the implications of the reforms on adverse selection
  among small employer health benefit plans and the distribution of risk
  among small employer health benefit plans.
  (c) ADVISORY COMMITTEE- The Secretary shall provide for appointment of
  an advisory committee to advise the Director concerning activities of
  the Office under this subtitle. Membership on the committee shall consist
  of 17 individuals and shall include individuals from the general public,
  small and large business, labor, insurance and other health benefit plans,
  and health care providers, and shall include experts in the fields of the
  actuarial science, health economics, and health services research. The
  Secretary may include, as additional, ex officio members of the committee,
  such representatives of government agencies as the Secretary deems
  appropriate. The chairperson of the committee shall not be a health care
  provider or receive any direct or indirect compensation from an insurer,
  health benefit plan, or a health care provider.
SEC. 111. RESEARCH AND DEMONSTRATION PROJECTS; DEVELOPMENT OF A HEALTH RISK
POOLING MODEL.
  (a) RESEARCH AND DEMONSTRATIONS- The Director 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 health care coverage market and other topics described in
  section 110(b), and
  (2) to conduct demonstration projects relating to such topics.
  (b) DEVELOPMENT OF METHODS OF MEASURING RELATIVE HEALTH RISK-
  (1) IN GENERAL- The Director shall develop methods for measuring, in terms
  of the expected costs of providing benefits under small employer health
  benefit 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 health benefit 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 Director shall develop a model, based on the methods
  of measuring risks under subsection (b), for equitably distributing health
  risks among carriers in the small employer health care coverage market.
  (2) REDISTRIBUTION OF RISK- Under such model, carriers with below average
  health risks would be required to contribute to a common fund for payment
  to carriers 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 eligible individuals and small employers.
  (d) CONSULTATION- The methods and model under this section shall be developed
  in consultation with the NAIC and the advisory committee established under
  section 110(c).
  (e) REPORT- By not later than January 1, 1995, the Director 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 Director shall include in the report such recommendations
  respecting the application of the model to small employer carriers (and,
  in particular, to MedAccess plans) under this subtitle as the Director
  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 1993
  through 1997.
SEC. 112. GENERAL DEFINITIONS.
  In this subtitle:
  (1) The term `carrier' means any entity which provides health insurance or
  health benefits in a State, and includes a licensed insurance company, a
  prepaid hospital or medical service plan, a health maintenance organization,
  the plan sponsor of a multiple employer welfare arrangement or an employee
  benefit plan (as defined under the Employee Retirement Income Security Act
  of 1974), or any other entity providing a plan of health insurance subject
  to State insurance regulation, but such term does not include for purposes
  of section 103 an entity that provides health insurance or health benefits
  under a multiple employer welfare arrangement.
  (2) The term `consumer protection standards' means the standards established
  under section 101(a) to carry out the requirements of the following sections:
  (A) Section 104 (relating to limitation on pre-existing condition clauses;
  assurance of continuity of coverage).
  (B) Section 106 (relating to renewability generally).
  (C) With respect only to small employer health benefit plans--
  (i) section 105 (relating to limits on premiums and other requirements
  for initial writing of plans), and
  (ii) section 107 (relating to limits on annual premium increases).
  (3) The term `Director' means the Director of the Office of Private Health
  Care Coverage established under section 110(a).
  (4)(A) Subject to subparagraph (B), the term `employer health benefit plan'
  means a health benefit plan (including an employee welfare benefit plan,
  as defined in section 3(1) of the Employee Retirement Income Security Act
  of 1974) which is offered to employees through an employer and for which
  the employer provides for any contribution to such plan or any premium
  for such plan are deducted by the employer from compensation to the employee.
  (B) A State may provide (for a plan in a State) that the term `employer
  health benefit plan' does not include an association plan (as defined
  in subparagraph (C)) for purposes of some or all of the provisions of
  this subtitle.
  (C) For purposes of subparagraph (B), the term `association plan' means
  a health benefit plan offered by an organization to its members if the
  organization was formed other than for purposes of purchasing insurance.
  (5) The term `full-time employee' means, with respect to an employer,
  an individual who normally is employed for at least 30 hours per week by
  the employer.
  (6) 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, but does not include--
  (A) coverage only for accident, dental, vision, disability income, or
  long-term care insurance, or any combination thereof,
  (B) medicare supplemental health insurance,
  (C) coverage issued as a supplement to liability insurance,
  (D) worker's compensation or similar insurance, or
  (E) automobile medical-payment insurance,
or any combination thereof.
  (7) The term `health maintenance organization' includes, as defined in
  standards established under section 101, a carrier that meets specified
  standards and that offers to provide health services on a prepaid, at-risk
  basis primarily through a defined set of providers.
  (8) The term `MedAccess standards' means the standards established under
  section 101(a)(1)(A) relating to the requirements of section 103, and
  includes the consumer protection standards insofar as such standards apply
  to MedAccess plans.
  (9) The term `Secretary' means the Secretary of Health and Human Services.
  (10) The term `small employer' means an entity actively engaged in business
  which, on at least 50 percent of its working days during the preceding year,
  employed at least 2, but fewer than 36, full-time employees. 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.
  (11) The term `small employer carrier' means a carrier with respect to
  the issuance of a small employer health benefit plan.
  (12) The term `small employer health benefit plan' means an employer health
  benefit plan which provides coverage to one or more full-time employees
  of a small employer.
  (13) The term `State' means the 50 States, the District of Columbia,
  Puerto Rico, the Virgin Islands, Guam, and American Samoa.
  (14) The term `State commissioner of insurance' includes a State
  superintendent of insurance.
Subtitle B--Improved Small Employer Purchasing Power of Affordable Health
Insurance
SEC. 121. PREEMPTION FROM INSURANCE MANDATES FOR QUALIFIED SMALL EMPLOYER
PURCHASING GROUPS.
  (a) QUALIFIED SMALL EMPLOYER PURCHASING GROUP DEFINED- For purposes of this
  section, an association is a qualified small employer purchasing group if--
  (1) the association submits an application to the Secretary of Health
  and Human Services at such time and in such form as the Secretary may
  require; and
  (2) on the basis of information contained in the application and any other
  information the Secretary may require, the Secretary determines that--
  (A) the association is administered solely under the authority and control
  of its member employers,
  (B) the association's membership consists solely of employers with not
  more than 100 employees (except that an employer member of the group may
  retain its membership in the group if, after the Secretary determines that
  the association meets the requirements of this paragraph, the number of
  employees of the employer member increases to more than 100),
  (C) with respect to each State in which its members are located, the
  association consists of not fewer than 100 employers, and
  (D) at the time the association submits its application, the health
  benefit plans with respect to the employer members of the association are
  in compliance with applicable State laws relating to health benefit plans.
  (b) PREEMPTION FROM INSURANCE MANDATES-
  (1) FINDING- Congress finds that employer purchasing groups organized
  for the purpose of obtaining health insurance for employer members affect
  interstate commerce.
  (2) PREEMPTION OF STATE MANDATES- In the case of a qualified small employer
  purchasing group described in subsection (a), no provision of State law
  shall apply that requires the offering, as part of the health benefit
  plan with respect to an employer member of such a group, of any services,
  category of care, or services of any class or type of provider.
  (3) PREEMPTION OF PROVISIONS PROHIBITING EMPLOYER GROUPS FROM PURCHASING
  HEALTH INSURANCE- In the case of a qualified small employer purchasing
  group described in subsection (a), no provision of State or local law
  shall apply that prohibits a group of employers from purchasing health
  insurance with respect to member employers of the group or their employees.
  (c) EFFECTIVE DATE- This section shall take effect 60 days after the date
  of the enactment of this Act.
Subtitle C--Health Deduction Fairness
SEC. 131. PERMANENT EXTENSION AND INCREASE IN HEALTH INSURANCE TAX DEDUCTION
FOR SELF-EMPLOYED.
  (a) INCREASE IN DEDUCTION- Paragraph (1) of section 162(l) of the Internal
  Revenue Code of 1986 (relating to special rules for health insurance costs
  of self-employed individuals) is amended by striking `25 percent of'.
  (b) PERMANENT DEDUCTION- Subsection (l) of section 162 of such Code is
  amended by striking paragraph (6).
  (c) EFFECTIVE DATE- The amendments made by this section shall apply to
  taxable years beginning after December 31, 1992.
Subtitle D--Improved Access to Community Health Services
Part 1--Increased Authorization for Community and Migrant Health Centers
SEC. 141. GRANT PROGRAM TO PROMOTE PRIMARY HEALTH CARE SERVICES FOR UNDERSERVED
POPULATIONS.
  (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 1993, $100,000,000,
  (2) in fiscal year 1994, $200,000,000,
  (3) in fiscal year 1995, $300,000,000,
  (4) in fiscal year 1996, $400,000,000, and
  (5) in fiscal year 1997, $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).
  (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--Reduction in Medical Malpractice Liability for Community Health Centers
SEC. 151. LIABILITY PROTECTIONS FOR CERTAIN HEALTH CARE PROFESSIONALS.
  (a) IN GENERAL- Section 224 of the Public Health Service Act (42 U.S.C. 233)
  is amended by adding at the end the following new subsection:
  `(g)(1) For purposes of this section, a public or nonprofit private
  entity receiving Federal funds under section 329, 330, or 340, and any
  officer, employee, or contractor of such an entity who is a physician or
  other licensed health care practitioner shall, while performing functions
  pursuant to any of such sections, be deemed to be an employee of the Public
  Health Service.
  `(2) If, with respect to an entity or person deemed to be an employee for
  purposes of paragraph (1), a cause of action is instituted against the
  United States pursuant to this section, any claim of the entity or person
  for benefits under an insurance policy with respect to medical malpractice
  relating to such cause of action shall be subrogated to the United States.
  `(3) This subsection shall apply with respect to a cause of action only
  if the claim accrues on or after the effective date of this subsection.'.
  (b) REQUIREMENT OF APPROPRIATE POLICIES AND PROCEDURES REGARDING HEALTH
  CARE PROFESSIONALS-
  (1) IN GENERAL- Section 224 of the Public Health Service Act, as amended
  by subsection (a) of this section, is further amended by adding at the
  end the following new subsection:
  `(h) The Secretary may not make a grant to an entity under section 329,
  330, or 340 unless the entity--
  `(1) has implemented appropriate policies and procedures to assure against
  malpractice in all health or health-related functions performed by the
  entity;
  `(2) has reviewed and verified the professional credentials, references,
  claims history, fitness, professional review organization findings,
  and license status of its physicians and other licensed health care
  practitioners, and, where necessary, has obtained the permission from
  these individuals to gain access to this information; and
  `(3) has no history of claims having been filed against it pursuant to this
  section, or, if such a history exists, has fully cooperated with the Attorney
  General in defending against any such claims and either has taken, or will
  take, such corrective steps to assure against such claims in the future.'.
  (2) EFFECTIVE DATE- The amendment made by paragraph (1) shall take effect
  on October 1, 1992, or on the date of the enactment of this Act, whichever
  occurs later.
  (c) AUTHORIZATION FOR THE ATTORNEY GENERAL TO EXCLUDE CERTAIN HEALTH CARE
  PROFESSIONALS FROM COVERAGE- Section 224 of the Public Health Service Act,
  as amended by subsections (a) and (b) of this section, is further amended
  by adding at the end the following new subsection:
  `(i)(1) Notwithstanding subsection (g)(1), the Attorney General,
  in consultation with the Secretary, may determine, after notice and
  opportunity for a hearing, that an individual physician or other licensed
  health care practitioner who is an officer, employee, or contractor of
  an entity described in subsection (g)(1) shall not be deemed to be an
  employee of the Public Health Service for purposes of this section, if
  treating such individual as such an employee would expose the Government
  to an unreasonably high degree of risk of loss because such individual--
  `(A) does not comply with the policies and procedures to assure against
  malpractice that the entity has implemented pursuant to subsection (h)(1);
  `(B) has a history of claims filed against him or her pursuant to this
  section that is outside the norm for a Public Health Service physician or
  other licensed health care practitioner;
  `(C) refused to reasonably cooperate with the Attorney General in defending
  against any such claim;
  `(D) provided false information relevant to the individual's performance of
  his or her duties to the Secretary, the Attorney General, or an applicant
  for or recipient of funds under section 329, 330, or 340; or
  `(E) was the subject of disciplinary action taken by a State medical
  licensing authority or a State or national professional society.
  `(2) A final determination by the Attorney General under this subsection
  that an individual physician or other licensed health care professional
  shall not be deemed to be an employee of the Public Health Service shall be
  effective upon receipt by the entity employing such individual of notice
  of such determination, and shall apply only to claims accruing after the
  date such notice is received.'.
SEC. 152. HOSPITAL ADMITTING PRIVILEGES FOR CERTAIN HEALTH CARE PROVIDERS.
  Section 224 of the Public Health Service Act, as amended by section 151
  of this Act, is further amended by adding at the end the following new
  subsection:
  `(j) In the case of a health care provider who is an officer, employee,
  or contractor of an entity described in subsection (g)(1), section 335(e)
  shall apply with respect to the provider to the same extent and in the
  same manner as such section applies to any member of the National Health
  Service Corps.'.
SEC. 153. PAYMENT OF JUDGMENTS.
  Section 224 of the Public Health Service Act, as amended by sections 151
  and 152, is further amended by adding at the end the following:
  `(k)(1)(A) The Attorney General, in consultation with the Secretary,
  shall estimate, by the beginning of each fiscal year, the amount of all
  claims which are expected to arise under this section from the acts or
  omissions, during that fiscal year, of entities described in subsection
  (g)(1) and of officers, employees, or contractors of such entities.
  `(B) In making an estimate under subparagraph (A), the Attorney General
  shall review--
  `(i) all claims for damage for personal injury, including death, resulting
  from the performance of medical, surgical, dental, or related functions
  by entities described in subsection (g)(1) or by officers, employees, or
  contractors of such entities who are deemed to be employees of the Public
  Health Service under subsection (g)(1) that, during the preceding 5-year
  period, are filed under this section or, with respect to years occurring
  before this subsection takes effect, are filed against persons other than
  the United States, and
  `(ii) the amounts paid during that 5-year period on all claims described
  in clause (i), regardless of when such claims were filed.
  `(2) The Secretary shall withhold, from the total amount appropriated for
  a fiscal year for grants under sections 329, 330, and 340 to the entities
  described in subsection (g)(1), an amount equal to the amount estimated
  under paragraph (1) for that fiscal year.
  `(3) The amount withheld under paragraph (2) shall be transferred to
  the account in the Treasury made available for payments under section
  1304 of title 31, United States Code, and shall be used to pay judgments
  against the United States pursuant to this section arising from the acts
  or omissions of entities described in subsection (g)(1) and of officers,
  employees, or contractors of such entities.'.
SEC. 154. EFFECTIVE DATE.
  Except as provided in section 151(b)(2), the amendments made by this part
  shall take effect on the date of the enactment of this Act.
Part 3--Grants for Projects for Coordinating Delivery of Services
SEC. 161. 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 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 1993,
  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 1994 through 1997.'.
Subtitle E--Improved Access to Rural Health Services
Part 1--Rural Emergency Medical Services Amendments
SEC. 171. 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. OFFICE OF EMERGENCY MEDICAL SERVICES.
  `(a) ESTABLISHMENT- 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 (3);
  `(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. 172. 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 1232 as section 1251;
  (B) by redesignating sections 1231 and 1233 as sections 1241 and 1242,
  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. 173. PROGRAMS FOR RURAL AREAS.
  (a) IN GENERAL- Title XII of the Public Health Service Act, as amended by
  section 172 of this Act, 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. 174. FUNDING.
  Title XII of the Public Health Service Act, as amended by the preceding
  provisions of this part, is amended--
  (1) by adding at the end the following new part:
`Part C--Funding';
  (2) by transferring section 1251 to part C (as so added); and
  (3) 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 1993, and such sums as may be necessary for
  each of the fiscal years 1994 and 1995.
  `(2) STATE OFFICES- For the purpose of carrying out section 1202,  there
  are authorized to be appropriated $3,000,000 for fiscal year 1993, and
  such sums as may be necessary for each of the fiscal years 1994 and 1995.
  `(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 1993, and such sums as may be necessary for each of the
  fiscal years 1994 and 1995.
  `(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 1993, and such sums as may be necessary for each of the fiscal
  years 1994 and 1995.
  `(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. 175. CONFORMING AMENDMENTS.
  Title XII of the Public Health Service Act, as amended by the preceding
  provisions of this part, 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 `1242'; 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 `1242'; 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 `1251(a)'; and
  (C) in subsection (c)(2)--
  (i) by striking `1232(b)(3)' and inserting `1251(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 1241--
  (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 1242--
  (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 1251(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. 176. EFFECTIVE DATE.
  The amendments made by this part shall take effect October 1, 1992, or
  upon the date of the enactment of this Act, whichever occurs later.
Part 2--Air Transport for Rural Victims of Medical Emergencies
SEC. 181. GRANTS TO STATES REGARDING AIRCRAFT FOR TRANSPORTING RURAL VICTIMS
OF MEDICAL EMERGENCIES.
  Title XII of the Public Health Service Act (42 U.S.C. 300d et seq.), as
  amended by part 1, is amended by adding at the end thereof the following
  new part:
`Part D--Miscellaneous Grant Programs and Requirements
`SEC. 1261. 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) demonstrates 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 1993, and
  such sums as may be necessary for each of the fiscal years 1994 and 1995.'.
Part 3--Extension of Special Treatment Rules for Medicare-Dependent, Small
Rural Hospitals
SEC. 191. EXTENSION OF SPECIAL TREATMENT RULES FOR MEDICARE-DEPENDENT,
SMALL RURAL HOSPITALS.
  (a) IN GENERAL-
  (1) DETERMINATION OF PAYMENT AMOUNT- Section 1886(b)(3)(D) of the Social
  Security Act (42 U.S.C. 1395ww(b)(3)(D)) is amended by striking `March 31,
  1993,' and inserting `March 31, 1994,'.
  (2) ELIGIBILITY FOR DESIGNATION- Section 1886(d)(5)(G)(i) of such Act
  (42 U.S.C. 1395ww(d)(5)(G)(i)) is amended by striking `March 31, 1993,'
  and inserting `March 31, 1994,'.
  (b) EFFECTIVE DATE- The amendments made by subsection (a) shall take effect
  as if included in the enactment of section 6003(f) of the Omnibus Budget
  Reconciliation Act of 1989.
TITLE II--HEALTH CARE COST CONTAINMENT AND QUALITY ENHANCEMENT
Subtitle A--Medical Malpractice Liability Reform
Part 1--General Provisions
SEC. 201. FEDERAL REFORM OF MEDICAL MALPRACTICE LIABILITY ACTIONS.
  (a) CONGRESSIONAL FINDINGS-
  (1) EFFECT ON INTERSTATE COMMERCE- Congress finds that the health care and
  insurance industries are industries affecting interstate commerce and the
  medical malpractice litigation systems existing throughout the United States
  affect interstate commerce by contributing to the high cost of health care
  and premiums for malpractice insurance purchased by health care providers.
  (2) EFFECT ON FEDERAL SPENDING- Congress finds that the medical malpractice
  litigation systems existing throughout the United States have a significant
  effect on the amount, distribution, and use of Federal funds because of--
  (A) the large number of individuals who receive health care benefits under
  programs operated or financed by the Federal Government;
  (B) the large number of individuals who benefit because of the exclusion
  from Federal taxes of the amounts spent by their employers to provide them
  with health insurance benefits;
  (C) the large number of health care providers and health care professionals
  who provide items or services for which the Federal Government makes
  payments; and
  (D) the large number of such providers and professionals who have received
  direct or indirect financial assistance from the Federal Government because
  of their status as such professionals or providers.
  (b) 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--
  (1) 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 action; or
  (2) a claim or action in which the plaintiff's sole allegation is an
  allegation of an injury arising from the use of a medical product.
  (c) PREEMPTION OF STATE LAW- Subject to section 221, this subtitle supersedes
  State law only to the extent that State law differs from any provision of
  law established by or under this subtitle. Any issue that is not governed
  by any provision of law established by or under this subtitle shall be
  governed by otherwise applicable State or Federal law.
  (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 sections 1331 or 1337 of title 28,
  United States Code.
SEC. 202. DEFINITIONS.
  As used in this subtitle:
  (1) ALTERNATIVE DISPUTE RESOLUTION SYSTEM; ADR- The term `alternative
  dispute resolution system' or `ADR' means a system established by a State
  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, or, in the case of an individual who is
  deceased, incompetent, or a minor, the person on whose behalf such a claim
  is alleged.
  (3) ECONOMIC DAMAGES- The term `economic damages' means damages paid to
  compensate an individual for losses for hospital and other medical expenses,
  lost wages, lost employment, and other pecuniary losses.
  (4) HEALTH CARE PROFESSIONAL- The term `health care professional' means
  any individual who provides health care services in a State and who is
  required by State law or regulation to be licensed or certified by the
  State to provide such services in the State.
  (5) 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 State law or regulation to
  be licensed or certified by the State to engage in the delivery of such
  services in the State.
  (6) INJURY- The term `injury' means any illness, disease, or other harm
  that is the subject of a medical malpractice liability action or claim.
  (7) MEDICAL MALPRACTICE LIABILITY ACTION- The term `medical malpractice
  liability action' means a civil action (other than an action in which the
  plaintiff's sole allegation is an allegation of an intentional tort) brought
  in a State or Federal court against a health care provider or health care
  professional (regardless of the theory of liability on which the action is
  based) in which the plaintiff alleges a medical malpractice liability claim.
  (8) 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.
  (9) MEDICAL PRODUCT- The term `medical product' means a device (as defined
  in section 201(h) of the Federal Food, Drug, and Cosmetic Act) or a drug (as
  defined in section 201(g)(1) of the Federal Food, Drug, and Cosmetic Act).
  (10) NONECONOMIC DAMAGES- The term `noneconomic damages' means damages
  paid to compensate an individual for losses 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.
  (11) SECRETARY- The term `Secretary' means the Secretary of Health and
  Human Services.
  (12) 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. 203. EFFECTIVE DATE.
  (a) IN GENERAL- Except as provided in subsection (b) and sections 219,
  242, and 243, 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--Uniform Standards For Medical Malpractice Liability Actions
SEC. 211. STATUTE OF LIMITATIONS.
  (a) IN GENERAL- No medical malpractice liability claim may be brought
  after the expiration of the 2-year period that begins on the date the
  alleged injury that is the subject of the action should reasonably have
  been discovered, but in no event after the expiration of the 4-year period
  that begins on the date the alleged injury occurred.
  (b) EXCEPTION FOR MINORS- In the case of an alleged injury suffered by a
  minor who has not attained 6 years of age, no medical malpractice liability
  claim may be brought after the expiration of the 2-year period that begins
  on the date the alleged injury that is the subject of the action should
  reasonably have been discovered, but in no event after the date on which
  the minor attains 10 years of age.
SEC. 212. REQUIREMENT FOR INITIAL RESOLUTION OF ACTION THROUGH ALTERNATIVE
DISPUTE RESOLUTION.
  (a) IN GENERAL- No medical malpractice liability action may be brought
  in any State court unless the medical malpractice liability claim that is
  the subject of the action has been initially resolved under an alternative
  dispute resolution system certified by the Secretary under section 232(b).
  (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 determines
  the amount of damages assessed against the defendant.
  (c) PROCEDURES FOR FILING ACTIONS-
  (1) DEADLINE- No medical malpractice liability action may be brought
  unless the action is filed in a court of competent jurisdiction not later
  than 90 days after an opinion resolving the medical malpractice liability
  claim that is the subject of the action is issued under the applicable
  alternative dispute resolution system.
  (2) COURT OF COMPETENT JURISDICTION- For purposes of paragraph (1), 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) STATUS OF 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.
  (e) TREATMENT OF ADR DECISION-
  (1) REQUIREMENTS FOR GOING FORWARD WITH ACTION- In order to bring a medical
  malpractice liability action to contest the decision made under the previous
  alternative dispute resolution system with respect to a medical malpractice
  liability claim, the party contesting the decision must--
  (A) show that--
  (i) the decision 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 decision was based on an error of law; or
  (B) present new evidence before the trier of fact that was not available
  for presentation under the ADR system.
  (2) BURDEN OF PROOF- In any medical malpractice liability action, the
  trier of fact shall uphold the decision made under the previous alternative
  dispute resolution system with respect to the claim that is the subject of
  the action unless the party contesting the decision proves by a preponderance
  of the evidence that the decision was incorrect.
SEC. 213. RELATION TO ALTERNATIVE DISPUTE RESOLUTION OF FEDERAL AGENCIES.
  (a) MANDATORY APPLICATION OF FEDERAL ADR IN MALPRACTICE CLAIMS AGAINST UNITED
  STATES- Section 2672 of title 28, United States Code, is amended by striking
  the period at the end of the first paragraph and inserting the following:
  `, except that each Federal agency shall use arbitration or such alternative
  means of dispute resolution to settle any tort claim against the United
  States consisting of a medical malpractice liability claim (as defined in
  section 202(8) of the Action Now Health Care Reform Act of 1992).'.
  (b) TRANSMITTAL OF INFORMATION OF MALPRACTICE CLAIMS RESOLVED UNDER FEDERAL
  ADR- Section 584 of title 5, United States Code, as added by section 4(b)
  of the Administrative Dispute Resolution Act (Public Law 101-552), is
  amended by adding at the end the following new subsection:
  `(k) Each agency shall transmit on a regular basis to the Administrator
  for Health Care Policy and Research information on issues in controversy
  consisting of medical malpractice liability claims (as defined in section
  202(8) of the Action Now Health Care Reform Act of 1992) that are resolved
  under the agency's dispute resolution proceeding under this subchapter, in
  a manner that assures that the identity of the parties to such proceedings
  shall not be revealed.'.
SEC. 214. MANDATORY PRE-TRIAL SETTLEMENT CONFERENCE.
  (a) IN GENERAL- Before the beginning of the trial phase of any medical
  malpractice liability action, the parties shall attend a conference called
  by the court for purposes of determining whether grounds exist upon which
  the parties may negotiate a settlement for the action.
  (b) REQUIRING PARTIES TO SUBMIT SETTLEMENT OFFERS- At the conference called
  pursuant to subsection (a), each party to a medical malpractice liability
  action shall present an offer of settlement for the action.
SEC. 215. CALCULATION AND PAYMENT OF DAMAGES.
  (a) LIMITATION ON NONECONOMIC DAMAGES- The total amount of noneconomic
  damages that may be awarded to a plaintiff and the members of the plaintiff'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) LIMITATION ON AMOUNT- The total amount of punitive damages that may be
  imposed under a medical malpractice liability action may not exceed twice
  the total of the damages awarded to the plaintiff and the members of the
  plaintiff's family.
  (2) PAYMENTS TO STATE FOR MEDICAL QUALITY ASSURANCE ACTIVITIES-
  (A) IN GENERAL- Any punitive damages imposed under a medical malpractice
  liability action shall be paid to the State in which the action is brought.
  (B) ACTIVITIES DESCRIBED- A State shall use amount 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- If more than $100,000 in damages
  for expenses to be incurred in the future is awarded to the plaintiff in
  a medical malpractice liability action, the defendant shall provide for
  payment for such damages on a periodic basis determined appropriate by
  the court (based upon projections of when such expenses are likely to be
  incurred), unless the court determines that it is not in the plaintiff's
  best interests to receive payments for such damages on such a periodic basis.
  (d) MANDATORY OFFSETS FOR DAMAGES PAID BY A COLLATERAL SOURCE-
  (1) IN GENERAL- The total amount of damages received by a plaintiff in a
  medical malpractice liability action shall be reduced (in accordance with
  paragraph (2)) by any other payment that has been or will be made to the
  individual to compensate the plaintiff for the injury that was the subject
  of the action, including payment under--
  (A) Federal or State disability or sickness programs;
  (B) Federal, State, or private health insurance programs;
  (C) private disability insurance programs;
  (D) employer wage continuation programs; and
  (E) any other source of payment intended to compensate the plaintiff for
  such injury.
  (2) AMOUNT OF REDUCTION- The amount by which an award of damages to a
  plaintiff 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 the plaintiff to compensate the plaintiff
  for the injury that was the subject of the action; minus
  (B) the amount paid by the plaintiff (or by the spouse, parent, or legal
  guardian of the plaintiff) to secure the payments described in subparagraph
  (A).
SEC. 216. TREATMENT OF ATTORNEY'S FEES AND OTHER COSTS.
  (a) LIMITATION ON ATTORNEY'S FEES- If the plaintiff in a medical malpractice
  liability action has entered into an agreement with the plaintiff's attorney
  to pay the attorney's fees on a contingency basis, the attorney's fees
  for the action may not exceed--
  (1) 25 percent of the first $150,000 of any award or settlement paid to
  the plaintiff; or
  (2) 15 percent of any additional amounts paid to the plaintiff.
  (b) AWARDING ATTORNEY'S FEES AND OTHER COSTS TO WINNING PARTY-
  (1) IN GENERAL- If the court in a medical malpractice liability action
  upholds a ruling of the alternative dispute resolution system with respect
  to whether or not a health care professional or health care provider
  committed malpractice or with respect to the amount of damages awarded,
  the court shall require the party that contested the ruling 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 that is the subject of
  the action under the alternative dispute resolution system).
  (2) PERMITTING COURT TO WAIVE OR MODIFY IMPOSITION OF COSTS- A court may
  issue a written order waiving or modifying the application of paragraph
  (1) to a party if the court finds that the application of such paragraph to
  the party would constitute an undue hardship, or if the medical malpractice
  liability action raised a novel issue of law. The order shall specify the
  grounds for the court's decision to waive or modify the application of
  such paragraph.
SEC. 217. JOINT AND SEVERAL LIABILITY.
  The liability of each defendant in a medical malpractice liability action
  shall be several only and shall not be joint, and each defendant shall be
  liable only for the amount of damages allocated to the defendant in direct
  proportion to the defendant's percentage of responsibility (as determined
  by the trier of fact).
SEC. 218. UNIFORM STANDARD FOR DETERMINING NEGLIGENCE.
  Except as provided in subsection (b), 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. 219. APPLICATION OF MEDICAL PRACTICE GUIDELINES IN MALPRACTICE LIABILITY
ACTIONS.
  (a) USE OF GUIDELINES AS AFFIRMATIVE DEFENSE- In any medical malpractice
  liability action, it shall be a complete defense to any allegation that
  the defendant was negligent that, in the provision of (or the failure to
  provide) the services that are the subject of the action, the defendant
  followed the appropriate practice guideline.
  (b) RESTRICTION ON GUIDELINES CONSIDERED APPROPRIATE-
  (1) GUIDELINES SANCTIONED BY SECRETARY- For purposes of subsection (a),
  a practice guideline may not be considered appropriate with respect to
  actions brought during a year unless the Secretary has sanctioned the
  use of the guideline for purposes of an affirmative defense to medical
  malpractice liability actions brought during the year in accordance with
  paragraph (2) or (3).
  (2) PROCESS FOR SANCTIONING GUIDELINES- Not less frequently than October
  1 of each year (beginning with 1993), the Secretary, shall review the
  practice guidelines and standards developed by the Administrator for Health
  Care Policy and Research pursuant to section 1142 of the Social Security
  Act, and shall sanction those guidelines which the Secretary considers
  appropriate for purposes of an affirmative defense to medical malpractice
  liability actions brought during the next calendar year as appropriate
  practice guidelines for purposes of subsection (a).
  (3) USE OF STATE GUIDELINES- Upon the application of a State, the Secretary
  may sanction practice guidelines selected by the State for purposes of an
  affirmative defense to medical malpractice liability actions brought in
  the State as appropriate practice guidelines for purposes of subsection
  (a) if the guidelines meet such requirements as the Secretary may impose.
  (c) PROHIBITING APPLICATION OF FAILURE TO FOLLOW GUIDELINES AS PRIMA FACIE
  EVIDENCE OF NEGLIGENCE- No plaintiff in a medical malpractice liability
  action may be deemed to have presented prima facie evidence that a defendant
  was negligent solely by showing that the defendant failed to follow the
  appropriate practice guideline.
SEC. 220. SPECIAL PROVISION FOR CERTAIN OBSTETRIC SERVICES.
  (a) IMPOSITION OF HIGHER STANDARD OF PROOF-
  (1) IN GENERAL- In the case of a medical malpractice liability action
  relating to services provided during labor or the delivery of a baby,
  if the defendant health care professional did not previously treat the
  plaintiff for the pregnancy, the trier of fact may not find that the
  defendant committed malpractice and may not assess damages against the
  defendant unless the malpractice is proven by clear and convincing evidence.
  (2) APPLICABILITY TO GROUP PRACTICES OR AGREEMENTS AMONG PROVIDERS- For
  purposes of paragraph (1), 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 professional.
  (b) CLEAR AND CONVINCING EVIDENCE DEFINED- In subsection (a), 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.
  (c) EFFECTIVE DATE- This section shall apply 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.
SEC. 221. PREEMPTION.
  (a) IN GENERAL- This part supersedes any State law only to the extent that
  State law--
  (1) permits the recovery of a greater amount of damages by a plaintiff;
  (2) permits the collection of a greater amount of attorneys' fees by a
  plaintiff's attorney;
  (3) establishes a longer period during which a medical malpractice liability
  claim may be initiated; or
  (4) establishes a stricter standard for determining whether a defendant
  was negligent or for determining the liability of defendants described in
  section 220(a) in actions described in such section.
  (b) EFFECT ON SOVEREIGN IMMUNITY AND CHOICE OF LAW OR VENUE- Nothing in
  subsection (a) 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.
Part 3--Requirements For State Alternative Dispute Resolution Systems (ADR)
SEC. 231. BASIC REQUIREMENTS FOR ADR.
  (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 State courts;
  (2) requires that a written opinion resolving the dispute be issued that
  contains findings of fact relating to the dispute;
  (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 a medical malpractice liability 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's alternative dispute resolution system in the
  same manner as such provisions apply with respect to medical malpractice
  liability actions brought in the State.
SEC. 232. CERTIFICATION OF STATE SYSTEMS.
  (a) IN GENERAL- Not later than October 1 of each year (beginning with
  1993), 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.
  (b) BASIS FOR CERTIFICATION- The Secretary shall certify a State's
  alternative dispute resolution system under this subsection if the Secretary
  determines under subsection (a) that the system meets the requirements of
  section 231.
SEC. 233. 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 Congress a report
  describing and evaluating State alternative dispute resolution systems
  operated pursuant to this part.
  (b) CONTENTS OF REPORT- The Secretary shall include in the report prepared
  and submitted under subsection (a)--
  (1) information on--
  (A) the effect of such systems on the cost of health care within the 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 such 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 Requirements and Programs
SEC. 241. FACILITATING DEVELOPMENT AND USE OF MEDICAL PRACTICE GUIDELINES.
  (a) INCREASE IN AUTHORIZATION OF APPROPRIATIONS- Section 1142(i)(1) of
  the Social Security Act (42 U.S.C. 1320b-12(i)(1)) is amended by striking
  subparagraphs (D) and (E) and inserting the following:
  `(D) $158,000,000 for fiscal year 1993 (of which $10,000,000 shall be used
  for sanctioning practice guidelines for purposes of an affirmative defense
  in medical malpractice liability actions);
  `(E) $200,000,000 for fiscal year 1994 (of which $20,000,000 shall be used
  for sanctioning practice guidelines for purposes of an affirmative defense
  in medical malpractice liability actions); and
  `(F) $20,000,000 for fiscal year 1995, to be used for sanctioning practice
  guidelines for purposes of an affirmative defense in medical malpractice
  liability actions.'.
  (b) CONSIDERATION OF MALPRACTICE LIABILITY DATA IN DEVELOPING AND UPDATING
  GUIDELINES- Section 1142(c)(5) of such Act (42 U.S.C. 1320b-12(c)(5)) is
  amended by striking `claims data' and all that follows through `patients'
  and inserting the following: `claims data, data on clinical and functional
  status of patients, and data on medical malpractice liability actions'.
  (c) DEVELOPMENT OF REPORTING FORMS FOR STATE ADR SYSTEMS- The Secretary,
  in consulation with the Administrator for Health Care Policy and Research,
  shall devleop a standard reporting form to be used by State alternative
  dispute resolution systems in transmitting information to the Administrator
  pursuant to section 231(a)(6) on disputes resolved under such systems.
  (d) STUDY OF EFFECT OF GUIDELINES ON MEDICAL MALPRACTICE-
  (1) STUDY- The Secretary shall conduct a study of the effect of the use of
  the medical practice guidelines developed by the Administrator for Health
  Care Policy and Research on the incidence of and the costs associated with
  medical malpractice.
  (2) REPORTS- (A) Not later than 1 year after the date of the enactment
  of this Act, the Secretary shall submit an interim report to Congress
  describing the availability and use of medical practice guidelines and
  the aggregate costs associated with medical malpractice.
  (B) Not later than 5 years after the date of the enactment of this Act,
  the Secretary shall submit a report to Congress on the study conducted
  under paragraph (1), together with recommendations regarding expanding
  the use of medical practice guidelines for determining the liability of
  health care professionals and health care providers for medical malpractice.
SEC. 242. 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. 243. 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. 244. 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 an institution described in section
  701(4) 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.
SEC. 245. STUDY OF BARRIERS TO VOLUNTARY SERVICE BY PHYSICIANS.
  (a) STUDY- The Secretary shall conduct a study to determine the factors
  preventing or discouraging physicians (whether practicing or retired) from
  volunteering 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 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.
Subtitle B--Administrative Cost Savings
Part 1--Standardization of Claims Processing
SEC. 251. ADOPTION OF DATA ELEMENTS, UNIFORM CLAIMS, AND UNIFORM ELECTRONIC
TRANSMISSION STANDARDS.
  (a) IN GENERAL- The Secretary of Health and Human Services (in this subtitle
  referred to as the `Secretary') shall adopt standards relating to each of
  the following:
  (1) Data elements for use in paper and electronic claims processing
  under health benefit plans, as well as for use in utilization review and
  management of care (including data fields, formats, and medical nomenclature,
  and including plan benefit and insurance information).
  (2) Uniform claims forms (including uniform procedure and billing codes
  for uses with such forms and including information on other health benefit
  plans that may be liable for benefits).
  (3) Uniform electronic transmission of the data elements (for purposes of
  billing and utilization review).
Standards under paragraph (3) relating to electronic transmission of data
elements for claims for services shall supersede (to the extent specified
in such standards) the standards adopted under paragraph (2) relating to
the submission of paper claims for such services.
  (b) USE OF TASK FORCES- In adopting standards under this section--
  (1) the Secretary shall take into account the recommendations of current
  taskforces, including at least the Workgroup on Electronic Data Interchange,
  National Uniform Billing Committee, the Uniform Claim Task Force, and the
  Computer-based Patient Record Institute;
  (2) the Secretary shall consult with the National Association of Insurance
  Commissioners (and, with respect to standards under subsection (a)(3),
  the American National Standards Institute); and
  (3) the Secretary shall, to the maximum extent practicable, seek to make
  the standards consistent with any uniform clinical data sets which have
  been adopted and are widely recognized.
  (c) DEADLINES FOR PROMULGATION- The Secretary shall promulgate the
  standards under--
  (1) subsection (a)(1) relating to claims processing data, by not later
  than 12 months after the date of the enactment of this Act;
  (2) subsection (a)(2) (relating to uniform claims forms) by not later than
  12 months after the date of the enactment of this Act; and
  (3)(A) subsection (a)(3) relating to transmission of information concerning
  hospital and physicians services, by not later than 24 months after the
  date of the enactment of this Act, and
  (B) subsection (a)(3) relating to transmission of information on other
  services, by such later date as the Secretary may determine it to be
  feasible.
  (d) REPORT TO CONGRESS- Not later than 3 years after the date of the
  enactment of this Act, the Secretary shall report to Congress recommendations
  regarding restructuring the medicare peer review quality assurance program
  given the availability of hospital data in electronic form.
SEC. 252. APPLICATION OF STANDARDS.
  (a) IN GENERAL- If the Secretary determines, at the end of the 2-year
  period beginning on the date that standards are adopted under section 251
  with respect to classes of services, that a significant number of claims
  for benefits for such services under health benefit plans are not being
  submitted in accordance with such standards, the Secretary may require,
  after notice in the Federal Register of not less than 6 months, that all
  providers of such services must submit claims to health benefit plans in
  accordance with such standards. The Secretary may waive the application of
  such a requirement in such cases as the Secretary finds that the imposition
  of the requirement would not be economically practicable.
  (b) SIGNIFICANT NUMBER- The Secretary shall make an affirmative determination
  described in subsection (a) for a class of services only if the Secretary
  finds that there would be a significant, measurable additional gain in
  efficiencies in the health care system that would be obtained by imposing
  the requirement described in such paragraph with respect to such services.
  (c) APPLICATION OF REQUIREMENT-
  (1) IN GENERAL- If the Secretary imposes the requirement under subsection
  (a)--
 (A) in the case of a requirement that imposes the standards relating to
 electronic transmission of claims for a class of services, each health
 care provider that furnishes such services for which benefits are payable
 under a health benefit plan shall transmit electronically and directly to
 the plan on behalf of the beneficiary involved a claim for such services
 in accordance with such standards;
  (B) any health benefit plan may reject any claim subject to the standards
  adopted under section 251 but which is not submitted in accordance with
  such standards;
  (C) it is unlawful for a health benefit plan (i) to reject any such claim
  on the basis of the form in which it is submitted if it is submitted in
  accordance with such standards or (ii) to require, for the purpose of
  utilization review or as a condition of providing benefits under the plan,
  a provider to transmit medical data elements that are inconsistent with
  the standards established under section 251(a)(1); and
  (D) the Secretary may impose a civil money penalty on any provider that
  knowingly and repeatedly submits claims in violation of such standards or
  on any health benefit plan (other than a health benefit plan described in
  paragraph (2)) that knowingly and repeatedly rejects claims in violation
  of subparagraph (B), in an amount not to exceed $100 for each such claim.
The provisions of section 1128A of the Social Security Act (other than the
first sentence of subsection (a) and other than subsection (b)) shall apply
to a civil money penalty under subparagraph (D) in the same manner as such
provisions apply to a penalty or proceeding under section 1128A(a) of such Act.
  (2) PLANS SUBJECT TO EFFECTIVE STATE REGULATION- A plan described in this
  paragraph is a health benefit plan--
  (A) that is subject to regulation by a State, and
  (B) with respect to which the Secretary finds that--
  (i) the State provides for application of the standards established under
  section 251, and
  (ii) the State regulatory program provides for the appropriate and effective
  enforcement of such standards.
  (d) TREATMENT OF REJECTIONS- If a plan rejects a claim pursuant to subsection
  (c)(1), the plan shall permit the person submitting the claim a reasonable
  opportunity to resubmit the claim on a form or in an electronic manner that
  meets the requirements for acceptance of the claim under such subsection.
SEC. 253. PERIODIC REVIEW AND REVISION OF STANDARDS.
  (a) IN GENERAL- The Secretary shall--
  (1) provide for the ongoing receipt and review of comments and suggestions
  for changes in the standards adopted and promulgated under section 251;
  (2) establish a schedule for the periodic review of such standards; and
  (3) based upon such comments, suggestions, and review, revise such standards
  and promulgate such revisions.
  (b) APPLICATION OF REVISED STANDARDS- If the Secretary under subsection
  (a) revises the standards described in 251, then, in the case of any claim
  for benefits submitted under a health benefit plan more than the minimum
  period (of not less than 6 months specified by the Secretary) after the date
  the revision is promulgated under subsection (a)(3), such standards shall
  apply under section 252 instead of the standards previously promulgated.
SEC. 254. HEALTH BENEFIT PLAN DEFINED.
  In this subtitle, the term `health benefit plan' has the meaning given
  such term in section 112(6) and includes--
  (1) the medicare program (under title XVIII of the Social Security Act), and
  (2) a State medicaid plan (approved under title XIX of such Act).
Part 2--Electronic Medical Data Standards
SEC. 261. MEDICAL DATA STANDARDS FOR HOSPITALS AND OTHER PROVIDERS.
  (a) Promulgation of Hospital Data Standards-
  (1) IN GENERAL- Between July 1, 1994, and January 1, 1995, the Secretary
  shall promulgate standards described in subsection (b) for hospitals
  concerning electronic medical data.
  (2) REVISION- The Secretary may from time to time revise the standards
  promulgated under this subsection.
  (b) CONTENTS OF DATA STANDARDS- The standards promulgated under subsection
  (a) shall include at least the following:
  (1) A definition of a standard set of data elements for use by utilization
  and quality control peer review organizations.
  (2) A definition of the set of comprehensive data elements, which set
  shall include for hospitals the standard set of data elements defined
  under paragraph (1).
  (3) Standards for an electronic patient care information system with data
  obtained at the point of care, including standards to protect against the
  unauthorized use and disclosure of information.
  (4) A specification of, and manner of presentation of, the individual data
  elements of the sets and system under this subsection.
  (5) Standards concerning the transmission of electronic medical data.
  (6) Standards relating to confidentiality of patient-specific information.
The standards under this section shall be consistent with standards for data
elements established under section 251.
  (c) Optional Data Standards for Other Providers-
  (1) IN GENERAL- The Secretary may promulgate standards described in
  paragraph (2) concerning electronic medical data for providers that are
  not hospitals. The Secretary may from time to time revise the standards
  promulgated under this subsection.
  (2) CONTENTS OF DATA STANDARDS- The standards promulgated under paragraph (1)
  for non-hospital providers may include standards comparable to the standards
  described in paragraphs (2), (4), and (5) of subsection (b) for hospitals.
  (d) CONSULTATION- In promulgating and revising standards under this section,
  the Secretary shall--
  (1) consult with the American National Standards Institute, hospitals,
  with the advisory commission established under section 265, and with other
  affected providers, health benefit plans, and other interested parties, and
  (2) take into consideration, in developing standards under subsection
  (b)(1), the data set used by the utilization and quality control peer
  review program under part B of title XI of the Social Security Act.
SEC. 262. APPLICATION OF ELECTRONIC DATA STANDARDS TO CERTAIN HOSPITALS.
  (a) MEDICARE REQUIREMENT FOR SHARING OF HOSPITAL INFORMATION- As of January
  1, 1996, subject to paragraph (2), each hospital, as a requirement of
  each participation agreement under section 1866 of the Social Security
  Act, shall--
  (1) maintain clinical data included in the set of comprehensive data
  elements under section 261(b)(2) in electronic form on all inpatients,
  (2) upon request of the Secretary or of a utilization and quality control
  peer review organization (with which the Secretary has entered into a
  contract under part B of title XI of such Act), transmit electronically
  the data set, and
  (3) upon request of the Secretary, or of a fiscal intermediary or carrier,
  transmit electronically any data (with respect to a claim) from such
  data set,
in accordance with the standards promulgated under section 261(a).
  (b) WAIVER AUTHORITY- Until January 1, 2000:
  (1) The Secretary may waive the application of the requirements of subsection
  (a) for a hospital that is a small rural hospital, for such period as the
  hospital demonstrates compliance with such requirements would constitute
  an undue financial hardship.
  (2) The Secretary may waive the application of the requirements of subsection
  (a) for a hospital that is in the process of developing a system to provide
  the required data set and executes agreements with its fiscal intermediary
  and its utilization and quality control peer review organization that the
  hospital will meet the requirements of subsection (a) by a specified date
  (not later than January 1, 2000).
  (3) The Secretary may waive the application of the requirement of subsection
  (a)(1) for a hospital that agrees to obtain from its records the data
  elements that are needed to meet the requirements of paragraphs (2) and
  (3) of subsection (a) and agrees to subject its data transfer process to
  a quality assurance program specified by the Secretary.
  (c) APPLICATION TO HOSPITALS OF THE DEPARTMENT OF VETERANS AFFAIRS-
  (1) IN GENERAL- The Secretary of Veterans Affairs shall provide that each
  hospital of the Department of Veterans Affairs shall comply with the
  requirements of subsection (a) in the same manner as such requirements
  would apply to the hospital if it were participating in the medicare program.
  (2) WAIVER- Such Secretary may waive the application of such requirements
  to a hospital in the same manner as the Secretary of Health and Human
  Services may waive under subsection (b) the application of the requirements
  of subsection (a).
SEC. 263. ELECTRONIC TRANSMISSION TO FEDERAL AGENCIES.
  (a) IN GENERAL- Effective January 1, 2000, if a provider is required
  under a Federal program to transmit a data element that is subject to a
  presentation or transmission standard (as defined in subsection (b)), the
  head of the Federal agency responsible for such program (if not otherwise
  authorized) is authorized to require the provider to present and transmit
  the data element electronically in accordance with such a standard.
  (b) PRESENTATION OR TRANSMISSION STANDARD DEFINED- In subsection (a), the
  term `presentation or transmission standard' means a standard, promulgated
  under subsection (b) or (c) of section 261, described in paragraph (4) or
  (5) of section 261(b).
SEC. 264. LIMITATION ON DATA REQUIREMENTS WHERE STANDARDS IN EFFECT.
  (a) IN GENERAL- If standards with respect to data elements are promulgated
  under section 261 with respect to a class of provider, a health benefit plan
  may not require, for the purpose of utilization review or as a condition
  of providing benefits under the plan, that a provider in the class--
  (1) provide any data element not in the set of comprehensive data elements
  specified under such standards, or
  (2) transmit or present any such data element in a manner inconsistent
  with the applicable standards for such transmission or presentation.
  (b) Compliance-
  (1) IN GENERAL- The Secretary may impose a civil money penalty on any health
  benefit plan (other than a health benefit plan described in paragraph (2))
  that fails to comply with subsection (a) in an amount not to exceed $100 for
  each such failure. The provisions of section 1128A of the Social Security Act
  (other than the first sentence of subsection (a) and other than subsection
  (b)) shall apply to a civil money penalty under this paragraph in the same
  manner as such provisions apply to a penalty or proceeding under section
  1128A(a) of such Act.
  (2) PLANS SUBJECT TO EFFECTIVE STATE REGULATION- A plan described in this
  paragraph is a health benefit plan that is subject to regulation by a State,
  if the Secretary finds that--
  (A) the State provides for application of the requirement of subsection
  (a), and
  (B) the State regulatory program provides for the appropriate and effective
  enforcement of such requirement with respect to such plans.
SEC. 265. ADVISORY COMMISSION.
  (a) IN GENERAL- The Secretary shall establish an advisory commission
  including hospital executives, hospital data base managers, physicians,
  health services researchers, and technical experts in collection and use
  of data and operation of data systems. Such commission shall include,
  as ex officio members, a representative of the Director of the National
  Institutes of Health, the Administrator for Health Care Policy and Research,
  the Secretary of Veterans' Affairs, and the Director of the Centers for
  Disease Control.
  (b) FUNCTIONS- The advisory commission shall monitor and advise the
  Secretary concerning--
  (1) the standards established under this part, and
  (2) operational concerns about the implementation of such standards under
  this part.
  (c) STAFF- From the amounts appropriated under subsection (d), the Secretary
  shall provide sufficient staff to assist the advisory commission in its
  activities under this section.
  (d) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated
  $2,000,000 for each of fiscal years 1993 through 1997 to carry out this
  section.
Part 3--Development and Distribution of Comparative Value Information
SEC. 271. STATE COMPARATIVE VALUE INFORMATION PROGRAMS FOR HEALTH CARE
PURCHASING.
  (a) PURPOSE- In order to assure the availability of comparative value
  information to purchasers of health care in each State, the Secretary shall
  determine whether each State is developing and implementing a health care
  value information program that meets the criteria and schedule set forth
  in subsection (b).
  (b) CRITERIA AND SCHEDULE FOR STATE PROGRAMS- The criteria and schedule
  for a State health care value information program in this subsection shall
  be specified by the Secretary as follows:
  (1) The State begins promptly after enactment of this Act to develop
  (directly or through contractual or other arrangements with one or more
  States, coalitions of health insurance purchasers, other entities, or any
  combination of such arrangements) information systems regarding comparative
  health values.
  (2) The information contained in such systems covers at least the average
  prices of common health care services (as defined in subsection (d)) and
  health insurance plans, and, where available, measures of the variability
  of these prices within a State or other market areas.
  (3) The information described in paragraph (2) is made available within
  the State beginning not later than one year after the date of the enactment
  of this Act, and is revised as frequently as reasonably necessary, but at
  intervals of no greater than one year.
  (4) Not later than 6 years after the date of the enactment of this Act  the
  State has developed information systems that provide comparative costs,
  quality, and outcomes data with respect to health insurance plans and
  hospitals and made the information broadly available within the relevant
  market areas.
Nothing in this section shall preclude a State from providing additional
information, such as information on prices and benefits of different health
benefit plans, available.
  (c) GRANTS TO STATES FOR THE DEVELOPMENT OF STATE PROGRAMS-
  (1) GRANT AUTHORITY- The Secretary may make grants to each State to
  enable such State to plan the development of its health care value
  information program and, if necessary, to initiate the implementation of
  such program. Each State seeking such a grant shall submit an application
  therefore, containing such information as the Secretary finds necessary
  to assure that the State is likely to develop and implement a program in
  accordance with the criteria and schedule in subsection (b).
  (2) OFFSET AUTHORITY- If, at any time within the 3-year period following
  the receipt by a State of a grant under this subsection, the Secretary is
  required by section 272 to implement a health care information program in
  the State, the Secretary may recover the amount of the grant under this
  subsection by offset against any other amount payable to the State under
  the Social Security Act. The amount of the offset shall be made available
  (from the appropriation account with respect to which the offset was taken)
  to the Secretary to carry out such section.
  (3) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated
  such sums as are necessary to make grants under this subsection, to remain
  available until expended.
  (d) COMMON HEALTH CARE SERVICES DEFINED- In this section, the term `common
  health care services' includes such procedures as the Secretary may specify
  and any additional health care services which a State may wish to include
  in its comparative value information program.
  (e) STATE DEFINED- In this subtitle, the term `State' includes the District
  of Columbia, Puerto Rico, the Virgin Islands, Guam, and American Samoa.
SEC. 272. FEDERAL IMPLEMENTATION.
  (a) IN GENERAL- If the Secretary finds, at any time, that a State has failed
  to develop or to continue to implement a health care value information
  program in accordance with the criteria and schedule in section 271(b),
  the Secretary shall take the actions necessary, directly or through grants
  or contract, to implement a comparable program in the State.
  (b) FEES- Fees may be charged by the Secretary for the information materials
  provided pursuant to a program under this section. Any amounts so collected
  shall be deposited in the appropriation account from which the Secretary's
  costs of providing such materials were met, and shall remain available
  for such purposes until expended.
SEC. 273. COMPARATIVE VALUE INFORMATION CONCERNING FEDERAL PROGRAMS.
  (a) DEVELOPMENT- The head of each Federal agency with responsibility for
  the provision of health insurance or of health care services to individuals
  shall promptly develop health care value information relating to each
  program that such head administers and covering the same types of data
  that a State program meeting the criteria of section 271(b) would provide.
  (b) DISSEMINATION OF INFORMATION- Such information shall be made generally
  available to States and to providers and consumers of health care services.
SEC. 274. DEVELOPMENT OF MODEL SYSTEMS.
  (a) IN GENERAL- The Secretary shall, directly or through grant or contract,
  develop model systems to facilitate--
  (1) the gathering of data on health care cost, quality, and outcome
  described in section 271(b)(4), and
  (2) analyzing such data in a manner that will permit the valid comparison
  of such data among providers and among health plans.
  (b) EXPERIMENTATION- The Secretary shall support experimentation with
  different approaches to achieve the objectives of subsection (a) in the
  most cost effective manner (relative to the accuracy and timeliness of the
  data secured) and shall evaluate the various methods to determine their
  relative success.
  (c) STANDARDS- When the Secretary considers it appropriate, the Secretary may
  establish standards for the collection and reporting of data on health care
  cost, quality and outcomes in order to facilitate analysis and comparisons
  among States and nationally.
  (d) REPORT- By not later than 3 years after the date of the enactment of
  this Act, the Secretary shall report to the Congress and the States on
  the models developed, and experiments conducted, under this section.
  (e) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated
  such sums as are necessary for each fiscal year beginning with fiscal
  year 1993 to enable the Secretary to carry out this section, including
  evaluation of the different approaches tested under subsection (b) and
  their relative cost effectiveness.
Part 4--Additional Standards and Requirements; Research and Demonstrations
SEC. 281. STANDARDS RELATING TO USE OF MEDICARE AND MEDICAID MAGNETIZED
HEALTH BENEFIT CARDS; SECONDARY PAYOR DATA BANK.
  (a) MAGNETIZED IDENTIFICATION CARDS UNDER MEDICARE PROGRAM- The Secretary
  shall adopt standards relating to the design and use of magnetized medicare
  identification cards in order to assist health care providers providing
  medicare covered services to individuals--
  (1) in determining whether individuals are eligible for benefits under
  the medicare program, and
  (2) in billing the medicare program for such services provided to eligible
  individuals.
Such cards shall be designed to be compatible with machines currently employed
to transmit information on credit cards. Such cards also shall be designed to
be able to be used with respect to the provision of benefits under medicare
supplemental policies.
  (b) ADOPTION UNDER MEDICAID PLANS-
  (1) IN GENERAL- The Secretary shall take such steps as may be necessary
  to encourage and assist States to design and use magnetized medicaid
  identification cards that meet such standards, for use under their
  medicaid plans.
  (2) LIMITATION ON MMIS FUNDS- In applying section 1903(a)(3) of the
  Social Security Act, the Secretary may determine that Federal financial
  participation is not available under that section to a State which has
  provided for a magnetized card system that is inconsistent with the
  standards adopted under subsection (a).
  (c) MEDICARE AND MEDICAID SECONDARY PAYOR DATA BANK- The Secretary shall
  establish a medicare and medicaid information system which is designed to
  provide information on those group health plans and other health benefit
  plans that are primary payors to the medicare program and medicaid program
  under section 1862(b) or section 1905(a)(25) of the Social Security Act.
  (d) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated,
  in equal proportions from the Federal Hospital Insurance Trust Fund and
  from the Federal Supplementary Medical Insurance Trust Fund, a total of
  $25,000,000 to carry out subsections (a) and (c), including the issuance
  of magnetized cards to medicare beneficiaries.
SEC. 282. PREEMPTION OF STATE QUILL PEN LAWS.
  (a) IN GENERAL- Effective January 1, 1994, no effect shall be given to any
  provision of State law that requires medical or health insurance records
  (including billing information) to be maintained in written, rather than
  electronic, form.
  (b) SECRETARIAL AUTHORITY- The Secretary of Health and Human Services
  may issue regulations to carry out subsection (a). Such regulations may
  provide for such exceptions to subsection (a) as the Secretary determines
  to be necessary to prevent fraud and abuse, with respect to controlled
  substances, and in such other cases as the Secretary deems appropriate.
SEC. 283. USE OF STANDARD IDENTIFICATION NUMBERS.
  (a) IN GENERAL- Effective January 1, 1994, each health benefit plan shall--
  (1) for each of its beneficiaries that has a social security account
  number, use that number as the personal identifier for claims processing
  and related purposes, and
  (2) for each provider that has a unique identifier for purposes of title
  XVIII of the Social Security Act and that furnishes health care items
  or services to a beneficiary under the plan, use that identifier as the
  identifier of that provider for claims processing and related purposes.
  (b) Compliance-
  (1) IN GENERAL- The Secretary may impose a civil money penalty on any
  health benefit plan (other than a health benefit plan described in paragraph
  (2)) that fails to comply with standards established under subsection (a)
  in an amount not to exceed $100 for each such failure. The provisions of
  section 1128A of the Social Security Act (other than the first sentence
  of subsection (a) and other than subsection (b)) shall apply to a civil
  money penalty under this paragraph in the same manner as such provisions
  apply to a penalty or proceeding under section 1128A(a) of such Act.
  (2) PLANS SUBJECT TO EFFECTIVE STATE REGULATION- A plan described in this
  paragraph is a health benefit plan that is subject to regulation by a State,
  if the Secretary finds that--
  (A) the State provides for application of the requirement of subsection
  (a), and
  (B) the State regulatory program provides for the appropriate and effective
  enforcement of such requirement with respect to such plans.
SEC. 284. COORDINATION OF BENEFIT STANDARDS.
  (a) REVIEW OF COORDINATION OF BENEFIT PROBLEMS- Between July 1, 1994, and
  January 1, 1995, the Secretary shall determine whether problems relating to--
  (1) the rules for determining the liability of health benefit plans when
  benefits are payable under two or more such plans, or
  (2) the availability of information among such health benefit plans when
  benefits are so payable,
cause significant administrative costs.
  (b) CONTINGENT PROMULGATION OF STANDARDS-
  (1) IN GENERAL- If the Secretary determines that such problems do cause
  significant administrative costs that could be significantly reduced
  through the implementation of standards, the Secretary shall promulgate
  standards concerning--
  (A) the liability of health benefit plans when benefits are payable under
  two or more such plans, and
  (B) the transfer among health benefit plans of appropriate information
  (which may include standards for the use of unique identifiers, and for
  the listing of all individuals covered under a health benefit plan) in
  determining liability in cases when benefits are payable under two or more
  such plans.
  (2) EFFECTIVE DATE- The standards promulgated under paragraph (1) shall
  become effective on a date specified by the Secretary, which date shall
  be not earlier than one year after the date of promulgation of the standards.
  (c) COMPLIANCE-
  (1) IN GENERAL- The Secretary may impose a civil money penalty on any
  health benefit plan (other than a health benefit plan described in paragraph
  (2)) that fails to comply with standards promulgated under subsection (b)
  in an amount not to exceed $100 for each such failure. The provisions of
  section 1128A of the Social Security Act (other than the first sentence
  of subsection (a) and other than subsection (b)) shall apply to a civil
  money penalty under this paragraph in the same manner as such provisions
  apply to a penalty or proceeding under section 1128A(a) of such Act.
  (2) PLANS SUBJECT TO EFFECTIVE STATE REGULATION- A plan described in this
  paragraph is a health benefit plan that is subject to regulation by a State,
  if the Secretary finds that--
  (A) the State provides for application of the standards established under
  subsection (b), and
  (B) the State regulatory program provides for the appropriate and effective
  enforcement of such standards with respect to such plans.
  (d) REVISION OF STANDARDS- If the Secretary establishes standards under
  subsection (b), the Secretary may revise such standards from time to time
  and such revised standards shall be applied under subsection (c) on or
  after such date (not earlier than 6 months after the date the revision is
  promulgated) as the Secretary shall specify.
SEC. 285. RESEARCH AND DEMONSTRATIONS.
  (a) DEMONSTRATIONS AND RESEARCH ON MONITORING AND IMPROVING PATIENT CARE-
  (1) The Secretary shall provide grants to qualified entities to demonstrate
  (and conduct research concerning) the application of comprehensive
  information systems--
  (A) in continuously monitoring patient care, and
  (B) in improving patient care.
  (2) To make grants under this subsection, there are authorized to be
  appropriated from the Federal Hospital Insurance Trust Fund $10,000,000
  for each fiscal year (beginning with fiscal year 1994 and ending with
  fiscal year 1998).
  (b) Communication Links-
  (1) The Secretary may make grants to at least two, but not more than five,
  community organizations, or coalitions of health care providers, health
  benefit plans, and purchasers, to establish and document the efficacy
  of communication links between the information systems of health benefit
  plans and of health care providers.
  (2) To make grants under this subsection, there are authorized to be
  appropriated such sums as may be necessary for fiscal year 1993, to remain
  available until expended.
  (c) Regional or Community Based Clinical Information Systems-
  (1) The Secretary may make grants to at least two, but not more than five,
  public or private non-profit entities for the development of regional or
  community-based clinical information systems.
  (2) To make grants under this subsection, there are authorized to be
  appropriated such sums as may be necessary for fiscal year 1993, to remain
  available until expended.
  (d) AMBULATORY CARE DATA SETS-
  (1) The Secretary may make grants to public or private nonprofit entities
  to develop and test, for electronic medical data generated by physicians
  and other entities (other than hospitals) that provide health care services--
  (A) the definition of a comprehensive set of data elements, and
  (B) the specification of, and manner of presentation of, the individual
  data elements of the set under subparagraph (A).
  (2) To make grants under this subsection, there are authorized to be
  appropriated such sums as may be necessary for fiscal year 1993, to remain
  available until expended.
Subtitle C--Medical Savings Accounts (Medisave)
SEC. 291. MEDICAL SAVINGS ACCOUNTS.
  (a) IN GENERAL- Part III of subchapter B of chapter 1 of the Internal Revenue
  Code of 1986 (relating to items specifically excluded from gross income)
  is amended by redesignating section 136 as section 137 and by inserting
  after section 135 the following new section:
`SEC. 136. MEDICAL SAVINGS ACCOUNTS.
  `(a) EXCLUSION- Gross income of an employee shall not include any amount
  contributed during the taxable year by the employer to a medical savings
  account of such employee pursuant to a qualified medical savings account
  plan.
  `(b) LIMITATION- The amount contributed by an employer which may be excluded
  under subsection (a) by any employee for any taxable year shall not exceed
  the excess (if any) of--
  `(1) the applicable limit for such taxable year with respect to such
  employer, over
  `(2) the employer health plan contributions (if any) by such employer with
  respect to such employee for such taxable year.
  `(c) APPLICABLE LIMIT- For purposes of this section--
  `(1) EMPLOYERS MAKING HEALTH PLAN CONTRIBUTIONS FOR PRIOR PERIOD-
  `(A) IN GENERAL- In the case of an employer to whom this paragraph applies,
  the applicable limit for any taxable year is the lesser of--
  `(i) the adjusted base year employer health plan contributions with respect
  to the employee, or
  `(ii) the amount equal to the 70th percentile of the per employee health plan
  expenditures (for the calendar year in which such taxable year begins) for
  the type of coverage applicable to such employee estimated by the Secretary
  of Health and Human Services based on a broad, representative survey.
  `(B) EMPLOYERS TO WHOM PARAGRAPH APPLIES- This paragraph shall apply to
  an employer if--
  `(i) for a period of consecutive calendar years (but not less than 3)
  during each of which--
  `(I) the employer made employer health plan contributions for any employee
  for coverage throughout the calendar year, and
  `(II) no employee of the employer participated in any medical savings
  account plan of the employer, and
  `(ii) there has not been a period of 3 consecutive calendar years after
  the close such period during each of which the requirements both subclauses
  (I) and (II) of clause (i) were not met.
  `(C) ADJUSTED BASE YEAR EMPLOYER HEALTH PLAN CONTRIBUTIONS- For purposes of
  subparagraph (A), the adjusted base year employer health plan contributions
  with respect to an employee are, with respect to the taxable year, the
  sum of--
  `(i) the employer health plan contributions with respect to such employee
  for the base year, plus
  `(ii) the product of such amount and the cost-of-living adjustment for the
  calendar year in which such taxable year begins, determined under section
  1(f)(3) by substituting the calendar year in which the base year begins
  for the calendar year specified in section 1(f)(3)(B) (and, in the case
  of a taxable year which is not a calendar year, by substituting the last
  day of the 8th month of such taxable year for `August 31').
  `(D) BASE YEAR- For purposes of this section, the term `base year' means
  the last calendar year of the period described in subparagraph (B)(i) (or,
  if later, the last calendar year ending before the date of the enactment
  of this section).
  `(2) OTHER EMPLOYERS- In the case of an employer to whom paragraph (1)
  does not apply--
  `(A) IN GENERAL- Except as provided in subparagraph (B), the applicable limit
  is the amount described in paragraph (1)(A)(ii), determined by substituting
  `50th percentile' for `70th percentile'.
  `(B) EMPLOYEES OF NEW EMPLOYERS, ETC. INELIGIBLE FOR 3 YEARS- The applicable
  limit shall be zero for any taxable year before the later of--
  `(i) the 4th calendar year beginning after the date of the enactment of
  this section, or
  `(ii) the 4th calendar year of the earliest 4-year period throughout which
  the employer is actively engaged in a trade or business.
  `(d) QUALIFIED MEDICAL SAVINGS ACCOUNT PLAN-
  `(1) IN GENERAL- For purposes of this section, a qualified medical savings
  account plan is a separate written plan of the employer for the exclusive
  benefit of his employees and their beneficiaries to provide contributions
  to medical savings accounts of such employees, but only if such plan meets
  the requirements of paragraphs (2) through (5).
  `(2) ELIGIBILITY-
  `(A) IN GENERAL- A plan meets the requirements of this paragraph only if--
  `(i) all employees who participate in the plan are also participants in
  a health insurance plan maintained by the employer, and
  `(ii) if an employer offers a health plan not involving medical savings
  accounts, all employees who are eligible to participate in such plan are also
  eligible to participate in a health plan involving medical savings accounts.
  `(B) COLLECTIVE BARGAINING UNITS- The requirements of this paragraph shall
  be applied separately to--
  `(i) employees covered by an agreement which the Secretary of Labor finds
  to be a collective bargaining agreement between employee representatives
  and one or more employers, and
  `(ii) other employees.
  `(3) ALTERNATIVES MUST HAVE SAME ACTUARIAL VALUE- If an employer offers more
  than 1 health plan, a plan of such employer meets the requirements of this
  paragraph only if the value of the employer-provided coverage (including
  contributions to medical savings accounts) under all such plans is the
  same for all employees electing the same type of coverage under such plans.
  `(4) NOTIFICATION OF EMPLOYEES- A plan meets the requirements of this
  paragraph if reasonable notification of the availability and terms of the
  plan is provided to eligible employees.
  `(5) NO FUNDING REQUIRED- A plan referred to in paragraph (1) is not
  required to be funded.
  `(e) EMPLOYER HEALTH PLAN CONTRIBUTIONS- For purposes of this section--
  `(1) BASE YEAR-
  `(A) IN GENERAL- The term `employer health plan contributions' means, with
  respect to any employee for the base year, the average cost per employee
  of employer-provided health plan coverage (including coverage provided
  under a cafeteria plan (as defined in section 125)).
  `(B) SPECIAL RULE FOR SMALL EMPLOYERS- If fewer than 100 individuals were
  covered under group healths provided by the employer at any time during the
  base year, subparagraph (A) shall be applied by substituting for the amount
  described therein such amount as is determined by the Secretary of Health and
  Human Services to reflect actuarially determined values of costs of similar
  employer health plans for employers who employ fewer than 100 individuals.
  `(2) CURRENT YEAR- The term `employer health plan contributions' means,
  with respect to an employee for the taxable year for which the determination
  under subsection (a) is being made, the sum of--
  `(A) the average cost per employee of employer-provided health plan coverage
  (other than coverage provided under a cafeteria plan (as defined in section
  125)) for such year under each health plan for such employer's employees,
  their spouses, and dependents (as defined in section 152), plus
  `(B) the cost of employer-provided health plan coverage for such employee
  for such year provided under a cafeteria plan (within the meaning of
  section 125).
  `(3) SEPARATE DETERMINATIONS FOR CATEGORIES OF EMPLOYEES AND SEPARATE
  LINES OF BUSINESS- Employer health plan contributions shall be separately
  determined (both for the base year and the current taxable year) on the
  basis of:
  `(A) Types of coverage.
  `(B) Averages for employees described in each of the following clauses:
  `(i) Reasonable classifications of employees based on normal work hours
  per week.
  `(ii) Retired employees.
  `(iii) Former employees, other than retired employees.
  `(iv) Employees covered by an agreement which the Secretary of Labor finds
  to be a collective bargaining agreement between employee representatives and
  one or more employers, if there is evidence that medical savings account
  benefits were the subject of good faith bargaining between such employee
  representatives and such employer or employers. Employees described in
  this clause shall be treated as not described in any other clause of
  this subparagraph.
  `(C) Employees in separate lines of business (within the meaning of
  section 414(r)).
  `(4) DETERMINATION OF AVERAGES- The per employee averages referred to in
  paragraphs (1) and (2) shall be determined by taking into account only
  employees participating in the health plan or cafeteria plan, as the case
  may be.
  `(5) PREDECESSORS- An employer shall be treated as making the health plan
  contributions made by any predecessor of such employer (determined under
  rules similar to the rules applicable under section 414(a)).
  `(f) OTHER DEFINITIONS- For purposes of this section--
  `(1) EMPLOYER- The term `employer' includes persons treated as an employer
  under section 401(c)(4).
  `(2) EMPLOYEE- The term `employee' includes--
  `(A) an individual who is an employee within the meaning of section
  401(c)(1), and
  `(B) former employees.
  `(3) TYPE OF COVERAGE- The types of coverage are--
  `(A) self-only coverage, and
  `(B) coverage other than self-only coverage.
  `(4) HEALTH INSURANCE PLAN- The term `health insurance plan' means any
  contract or arrangement under which an insurer bears all or part of the
  cost or risk of providing health care items and services, including a
  hospital or medical expense incurred policy or certificate, hospital or
  medical service plan contract, or health maintenance subscriber contract
  (including any self-insured health insurance plan), but does not include--
  `(A) coverage only for accident, dental, vision, disability, or long term
  care, medicare supplemental health insurance, or any combination thereof,
  `(B) coverage issued as a supplement to liability insurance,
  `(C) workers' compensation or similar insurance, or
  `(D) automobile medical-payment insurance.
  `(g) DEFINITIONS AND SPECIAL RULES RELATING TO MEDICAL SAVINGS ACCOUNTS-
  For purposes of this section--
  `(1) MEDICAL SAVINGS ACCOUNT- 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 individual for whose benefit
  the trust is established, but only if the written governing instrument
  creating the trust meets the following requirements:
  `(A) No contribution will be accepted unless it is in cash and unless it
  is made by an employer of such individual pursuant to a qualified medical
  savings account plan of such employer.
  `(B) 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.
  `(C) No part of the trust assets will be invested in life insurance
  contracts.
  `(D) The assets of the trust will not be commingled with other property
  except in a common trust fund or common investment fund.
  `(2) MEDICAL EXPENSES- The term `medical expenses' means amounts paid or
  incurred by the individual for whose benefit the account was established
  for medical care (as defined in section 213), or long-term care, of 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.
  `(3) 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).
  `(h) 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--
  `(A) such amount is used exclusively to pay the medical expenses of such
  individual, or
  `(B) such amount is treated as a payment or distribution of amounts which
  are, or have been, includible in the gross income of the individual under
  subsection (i).
  `(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 excludable 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) ORDERING RULE-
  `(A) DISTRIBUTIONS FOR MEDICAL EXPENSES- Any payment or distribution from
  a medical savings account which is used exclusively to pay the medical
  expenses of the individual for whose benefit such account was established
  shall be treated as first attributable to untaxed amounts and then to
  previously taxed amounts.
  `(B) DISTRIBUTIONS NOT FOR MEDICAL EXPENSES- Any payment or distribution
  from a medical savings account which is not used exclusively to pay the
  medical expenses of the individual for whose benefit such account was
  established shall be treated as first attributable to previously taxed
  amounts and then to untaxed amounts.
  `(C) DEFINITIONS- For purposes of this paragraph--
  `(i) the term `previously taxed amount' means any amount which is or was
  includible under subsection (i) in the gross income of the individual for
  whose benefit such account was established, and
  `(ii) the term `untaxed amount' means any amount which is not a previously
  taxed amount.
  `(i) TAX TREATMENT OF ACCOUNTS-
  `(1) ACCOUNT TAXED AS GRANTOR TRUST- The individual for whose benefit
  a medical savings account is established shall be treated for purposes
  of this title as the owner thereof and shall be subject to tax thereon
  in accordance with subpart E of part I of subchapter J of this chapter
  (relating to grantors and others treated as substantial owners).
  `(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 (h)
  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.
  `(j) 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 (g).
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.
  `(k) 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) EXCLUSION APPLIES FOR EMPLOYMENT TAX PURPOSES-
  (1) SOCIAL SECURITY TAXES-
  (A) Paragraph (20) of section 3121(a) of such Code is amended by striking
  `or 132' and inserting `132, or 136'.
  (B) Paragraph (17) of section 209(a) of the Social Security Act is amended
  by striking `or 132' and inserting `132, or 136'.
  (2) RAILROAD RETIREMENT TAX- Paragraph (5) of section 3231(e) of such Code
  is amended by striking `or 132' and inserting `132, or 136'.
  (3) UNEMPLOYMENT TAX- Paragraph (16) of section 3306(b) of such Code is
  amended by striking `or 132' and inserting `132, or 136'.
  (4) WITHHOLDING TAX- Paragraph (19) of section 3401(a) of such Code is
  amended by striking `or 132' and inserting `, 132, or 136'.
  (c) 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 136(g)),',
  (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 136(g)), 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 136 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 136(h)(2)
  applies shall be treated as an amount not contributed.'
  (d) 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 136(g))
  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 136(h)(2)(A) to such account.', and
  (2) by inserting `or a medical savings account described in section 136(g)'
  in subsection (e)(1) after `described in section 408(a)'.
  (e) 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 136(k) 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.'
  (f) MEDICAL SAVINGS ACCOUNT CONTRIBUTIONS NOT SUBJECT TO WELFARE BENEFIT
  FUND RULES- Paragraph (2) of section 419(e) of such Code (defining welfare
  benefit) is amended by striking `or' at the end of subparagraph (B), by
  striking the period at the end of subparagraph (C) and inserting `, or',
  and by adding at the end thereof the following new subparagraph:
  `(D) section 136 applies.'
  (g) CLERICAL AMENDMENTS-
  (1) The table of sections for part III of subchapter B of chapter 1 of
  such Code is amended by striking the last item and inserting the following:
`Sec. 136. Medical savings accounts.
`Sec. 137. Cross references to other Acts.'
  (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.
  (h) EFFECTIVE DATE- The amendments made by this section shall apply to
  taxable years beginning after December 31, 1992.
Subtitle D--Medicaid Program Flexibility
SEC. 301. 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)
  and section 1124;
  `(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 DISENROLLMENT 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)(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,'.
  (3) 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'.
  (4) Section 1902(a) of such Act (42 U.S.C. 1396a(a)) is amended--
  (A) by striking `and' at the end of paragraph (54);
  (B) in the paragraph (55) inserted by section 4602(a)(3) of Public Law
  101-508, by striking the period at the end and inserting a semicolon;
  (C) by redesignating the paragraph (55) inserted by section 4604(b)(3)
  of Public Law 101-508 as paragraph (56), by transferring and inserting
  it after the paragraph (55) inserted by section 4602(a)(3) of such Act,
  and by striking the period at the end and inserting a semicolon;
  (D) by placing paragraphs (57) and (58), inserted by section 4751(a)(1)(C)
  of Public Law 101-508, immediately after paragraph (56), as redesignated
  by paragraph (3);
  (E) in the paragraph (58) inserted by section 4751(a)(1)(C) of Public Law
  101-508, by striking the period at the end and inserting a semicolon;
  (F) by redesignating the paragraph (58) inserted by section 4752(c)(1)(C)
  of Public Law 101-508 as paragraph (59), by transferring and inserting it
  after the paragraph (58) inserted by section 4751(a)(1)(C) of such Act,
  and by striking the period at the end and inserting `; and'; and
  (G) by inserting after such paragraph (59) the following new paragraph:
  `(60) at State option, provide for a primary care case management program
  in accordance with section 1903(m)(7).'.
  (5) 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'.
  (6) 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.
  (7) Section 1903(k) of such Act (42 U.S.C. 1396b(k)) is amended by striking
  `health maintenance organization' and inserting `risk contracting entity'.
  (8) 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.
  (9) 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'.
  (10) 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'.
  (11) 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)'.
  (12) 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.
  (13) 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'.
  (14) 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)'.
  (15) 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'.
  (16) Section 1927(j)(1) of such Act (42 U.S.C. 1396s(j)(1)) is amended
  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, 1993.
SEC. 302. 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. 303. AUTHORIZING WAIVER OF NURSING HOME REFORM REQUIREMENTS.
  The Secretary of Health and Human Services may waive specified requirements
  of subsections (b) through (e) of section 1919 of the Social Security Act
  with respect to nursing facilities located in a State if the State provides
  assurances satisfactory to the Secretary (including, if appropriate,
  the implementation of an alternative State program) that the waiver of
  such requirements will not adversely affect the quality of life of the
  residents in such facilities.
Subtitle E--Limitations on Physician Self-Referrals
SEC. 311. EXTENSION OF PHYSICIAN SELF-REFERRAL LIMITATIONS TO ALL PAYORS.
  Section 1877 of the Social Security Act (42 U.S.C. 1395nn) is amended--
  (1) in subsection (a)--
  (A) in paragraph (1)(A), by striking `for which payment otherwise may be
  made under this title' and inserting `for which a charge is imposed', and
  (B) in paragraph (1)(B), by striking `under this title';
  (2) by amending paragraph (1) of subsection (g) to read as follows:
  `(1) DENIAL OF PAYMENT- No payment may be made under this title, under
  another Federal health care program, or under a State health care program
  (as defined in section 1128(h)) for a designated health service for which
  a claim is presented in violation of subsection (a)(1)(B). No individual,
  third party payor, or other entity is liable for payment for designated
  health services for which a claim is presented in violation of such
  subsection.'; and
  (3) in subsection (g)(3), by striking `for which payment may not be made
  under paragraph (1)' and inserting `for which such a claim may not be
  presented under subsection (a)(1)'.
SEC. 312. EXTENSION OF PHYSICIAN SELF-REFERRAL LIMITATIONS TO CERTAIN
ADDITIONAL SERVICES.
  (a) IN GENERAL- Section 1877 of the Social Security Act is further amended--
  (1) by striking `clinical laboratory services' and `CLINICAL LABORATORY
  SERVICES' and inserting `designated health services' and `DESIGNATED HEALTH
  SERVICES', respectively, each place either appears in subsections (a)(1),
  (b)(2)(A)(ii)(I), (b)(4), (d)(1), (d)(2), and (d)(3), and
  (2) by adding at the end the following new subsection:
  `(i) DESIGNATED HEALTH SERVICES DEFINED- In this section, the term
  `designated health services' means--
  `(1) clinical laboratory services,
  `(2) physical therapy services,
  `(3) radiology and diagnostic imaging services,
  `(4) radiation therapy services, and
  `(5) the furnishing of durable medical equipment.'.
  (b) CONFORMING AMENDMENTS- Section 1877 of such Act is further amended--
  (1) in subsection (d)(2), by striking `laboratory' and inserting `entity',
  (2) in subsection (g)(1), by striking `clinical laboratory service' and
  inserting `designated health service', and
  (3) in subsection (h)(7)(B), by striking `clinical laboratory service'
  and inserting `designated health service', and
SEC. 313. CHANGES IN EXCEPTIONS.
  (a) HEALTH MAINTENANCE ORGANIZATIONS AND MANAGED CARE PLANS- Paragraph (3)
  of section 1877(b) of the Social Security Act is amended to read as follows:
  `(3) HEALTH MAINTENANCE ORGANIZATIONS AND MANAGED CARE PLANS-
  `(A) HEALTH MAINTENANCE ORGANIZATIONS- In the case of services furnished
  by a health maintenance organization to an individual enrolled with the
  health maintenance organization, including services furnished by--
  `(i) an eligible organization (as defined in section 1876(b));
  `(ii) an organization described in section 1833(a)(1)(A);
  `(iii) an organization receiving payments on a prepaid basis under a
  demonstration project under section 402(a) of the Social Security Amendments
  of 1967 or under section 222(a) of the Social Security Amendments of
  1972; and
  `(iv) any other entity designated by the Secretary as a health maintenance
  organization for purposes of this subparagraph.
  `(B) CERTAIN MANAGED CARE PLANS- In the case of services furnished by a
  managed care plan (as defined by the Secretary) to an individual enrolled
  under the plan if--
  `(i) the plan selectively contracts with physicians and with providers of
  designated health services; and
  `(ii) under the plan physicians bear a significant financial risk for the
  cost of designated health services furnished upon referral.'.
  (b) EXCEPTION FOR SHARED FACILITY SERVICES- Section 1877 of such Act
  is amended--
  (1) in subsection (b), by redesignating paragraphs (3), (4), and (5)
  as paragraphs (4), (6), and (7), respectively, and by inserting after
  paragraph (2) the following new paragraph:
  `(3) SHARED FACILITY SERVICES-
  `(A) IN GENERAL- In the case of shared facility services of a shared
  facility--
  `(i) that are furnished--
  `(I) personally by the referring physician who is a shared facility physician
  or personally by an individual supervised by such a physician or by another
  shared facility physician and employed under the shared facility arrangement,
  `(II) by a shared facility in a building in which the referring physician
  furnishes physician's services unrelated to the furnishing of shared
  facility services, and
  `(III) to a patient of a shared facility physician;
  `(ii) that are billed by the referring physician or by an entity that is
  wholly owned by such physician; and
  `(iii) with respect to the referral for which the disclosure requirements
  of subparagraph (B) are met.
  `(B) CONFLICT OF INTEREST DISCLOSURE REQUIREMENTS- A shared facility meets
  the disclosure requirements of this subparagraph, with respect to a referral
  of an individual for the furnishing of shared facility services, if at the
  time of the referral (and before the provision of shared facility services
  under the referral) and in a form and manner specified by the Secretary--
  `(i) the individual (I) is given information on the financial relationship
  between the referring physician and the shared facility, and (II) is
  informed that a list of alternative providers (if any) that are available
  to provide such services will be given upon request,
  `(ii) the individual is given, upon request, a list of alternative providers
  (if any) that are available to provide such services, and
  `(iii) the individual is informed that (I) the individual has the option
  to use any of the alternative providers and (II) the referring physician
  will not treat the individual differently if an alternative provider is
  selected to provide the designated health services.
  `(C) CONSTRUCTION- Nothing in subparagraph (B) shall be construed to limit
  the information that a shared facility or shared facility physician may
  provide to an individual.'; and
  (2) in subsection (h), by adding at the end the following new paragraph:
  `(8) SHARED FACILITY RELATED DEFINITIONS-
  `(A) SHARED FACILITY SERVICES- The term `shared facility services' means,
  with respect to a shared facility, a type of designated health services
  which is furnished by the facility to patients of shared facility physicians.
  `(B) SHARED FACILITY- The term `shared facility' means an entity that
  furnishes shared facility services under a shared facility arrangement.
  `(C) 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.
  `(D) SHARED FACILITY ARRANGEMENT- The term `shared facility arrangement'
  means, with respect to the provision of a type of designated health services
  by a shared facility 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) which makes one or more of the shared facility physicians responsible
  for the provision of shared facility services by the facility,
  `(iii) 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
  `(iv) which, in the case of a corporation, is wholly owned and controlled
  by shared facility physicians.'.
  (c) EXCEPTION FOR VALUABLE COMMUNITY SERVICES- Section 1877(b) of such
  Act is further amended by inserting after paragraph (4), as redesignated
  by subsection (b)(1), the following new paragraph:
  `(5) VALUABLE COMMUNITY SERVICES-
  `(A) IN GENERAL- In the case of services furnished by an entity to
  individuals in a community if the Secretary determines that--
  `(i) individuals in the community will be deprived of adequate health care
  services without an exception under this paragraph for the entity and the
  services, and
  `(ii) the requirements of subparagraph (B) are met.
  `(B) REQUIREMENTS- The requirements of this subparagraph for an exception
  under subparagraph (A), for the furnishing of designated health services
  by an entity, are as follows:
  `(i) EQUAL INVESTMENT OPPORTUNITY- (I) Individuals who are not referring
  physicians must be given a bona fide opportunity to invest in the entity
  on the same terms that are offered to referring physicians.
  `(II) The terms on which investment interests are offered to physicians
  must not be related to the past or expected volume of referrals or other
  business from the physicians.
  `(III) The return on investment for interested investors must be tied to
  the investor's equity in the entity and not be related to the volume of
  referrals attributable to the investor.
  `(IV) There is no requirement that any interested or other investor make
  referrals to the entity or otherwise generate business as a condition for
  remaining an investor.
  `(V) The entity must not loan funds or guarantee a loan for interested
  investors or physicians in a position to refer to the entity.
  `(VI) The entity must not market or furnish its items or services to
  interested investors differently from other investors.
  `(ii) PROHIBITION OF NONCOMPETITION CLAUSES- Investment contracts must not
  include a `noncompetition clause' that prevents physicians or interested
  investors from investing in other entities furnishing such services.
  `(iii) DISCLOSURE REQUIREMENTS- (I) The disclosure requirements of paragraph
  (3)(B) must be met.
  `(II) The financial relationship with the referring physician must be
  disclosed, when required, to any third-party payor.
  `(iv) INTERNAL UTILIZATION REVIEW- There must be in operation an internal
  utilization review program to ensure that physicians who are interested
  investors do not exploit their patients in any way through inappropriate
  utilization or otherwise.
  `(C) REVIEW- In the case of any exception provided an entity under this
  paragraph, the Secretary shall periodically review the entity to determine
  if the requirements of subparagraph (B) continue to be met.
  `(D) TERMINATION OF EXCEPTION- The Secretary shall, after notice and
  opportunity for a hearing, terminate an exception granted an entity under
  this paragraph if the Secretary determines that--
  `(i) there was a misrepresentation of material fact in the application
  for the exception; or
  `(ii) the entity has failed to comply substantially with the requirements
  of subparagraph (B).
  `(E) COMMUNITY DEFINED- In this paragraph, the term `community' means--
  `(i) part or all of a metropolitan statistical area (or equivalent area), or
  `(ii) a county (or equivalent area) outside such a metropolitan statistical
  area (or equivalent area).'.
  (d) EXCEPTION FOR HOSPITALS- Subparagraph (A) of subsection (d)(3) of such
  section is amended to read as follows:
  `(A) at the time the services are furnished, the hospital has a participation
  agreement in effect under section 1866, and'.
  (e) ADVISORY OPINIONS AND WRITTEN DETERMINATIONS OF EXCEPTIONS- Section
  1877 of such Act, as amended by section 312(a)(2), is amended by adding
  at the end the following new subsection:
  `(j) ADVISORY OPINIONS AND WRITTEN `SAFE HARBOR' EXCEPTION PROCESS-
  `(1) ADVISORY OPINIONS- The Secretary shall provide a process for the
  issuance, upon request, of written advisory opinions on whether--
  `(A) an entity or services are excepted from the application of subsection
  (a) under subsection (b), (c), (d), or (e), and
  `(B) a payment practice with respect to such an entity is a payment practice
  specified by the Secretary in regulations promulgated pursuant to section
  14(a) of the Medicare and Medicaid Patient and Program Protection Act
  of 1987.
  `(2) APPROVAL OF EXCEPTION- If the Secretary determines that--
  `(A) an entity or services meets the requirements (under this section and
  regulations issued thereunder) for such an exception, and
  `(B) a payment practice with respect to the entity or services is a payment
  practice specified by the Secretary in regulations promulgated pursuant to
  section 14(a) of the Medicare and Medicaid Patient and Program Protection
  Act of 1987,
upon request, the Secretary shall issue a written statement of approval of
such exception or written determination with respect to such payment practice,
respectively. Such a written determination with respect to a payment practice
shall constitute a determination that an exception described in section
1001.952 of title 42, Code of Federal Regulations applies.'.
SEC. 314. STUDY AND REPORT ON CHANGES IN COSTS.
  The Secretary of Health and Human Services shall conduct a study in order
  to estimate the changes in aggregate costs for designated health services,
  under the medicare program and other health plans, which will result from
  the implementation of the amendments made by this subtitle. 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.
SEC. 315. EFFECTIVE DATE.
  (a) IN GENERAL- Subject to subsection (b), the amendments made by
  this subtitle shall apply with respect to a referral by a physician for
  designated health services (as described in section 1877(i) of the Social
  Security Act) made on or after the first day of the first month beginning
  6 months after the date of the enactment of this Act.
  (b) TIME-LIMITED EXCEPTION FOR CURRENT FINANCIAL RELATIONSHIPS-
  (1) IN GENERAL- Subject to paragraph (3), the amendments made by this
  subtitle shall not apply in the case of a patient referral with respect
  to which a prohibited financial relationship (described in paragraph (3))
  existed as of the date of the enactment of this Act if, at the time of the
  referral (and before the receipt of services under the referral), the patient
  is provided information on the prohibited financial relationship. Such
  information shall be disclosed in the same manner information must be
  disclosed under section 1877(b)(3)(B) of the Social Security Act (as
  amended by this subtitle). If such information is not so provided, the
  referral shall be subject to such amendments (as provided in subsection (a)).
  (2) PROHIBITED FINANCIAL RELATIONSHIP- A prohibited financial relationship
  described in this paragraph is a financial relationship described in
  subsection (a)(2) of section 1877 of the Social Security Act for which an
  exception described in subsection (b), (c), (d), or (e) of such section
  (as amended by this subtitle) does not apply.
  (3) TIME LIMIT- Paragraph (1) shall only apply to referrals made before
  the first day of the first month beginning 4 years after the date of the
  enactment of this Act.
Subtitle F--Removing Restrictions on Managed Care
SEC. 321. REMOVING RESTRICTIONS ON MANAGED CARE.
  (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 carrier 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 health benefit plan 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, or
  (E) imposes liability for delays in performing such review.
Nothing in subparagraph (B) shall be construed as prohibiting a State from
(i) requiring that utilization review be conducted by a licensed health care
professional or (ii) requiring that any appeal from such a review be made by
a licensed physician or by a licensed physician in any particular specialty
or with any board certified specialty of the same medical specialty as the
provider whose services are being reviewed.
  (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.
Subtitle G--Medicare Payment Changes
SEC. 331. REVISIONS TO METHODOLOGY FOR DETERMINING UPDATES TO MEDICARE
HOSPITAL PAYMENTS.
  (a) UPDATES FOR PPS HOSPITALS ON CALENDAR YEAR BASIS-
  (1) IN GENERAL- Section 1886(b)(3)(B)(i) of the Social Security Act (42
  U.S.C. 1395ww(b)(3)(B)(i)) is amended--
  (A) in the matter preceding subclause (i), by striking `fiscal year'
  and inserting `particular time period';
  (B) in subparagraph (VII), by striking `1992,' and inserting `1992 and
  the first 3 months of fiscal year 1993'; and
  (C) in subparagraphs (VIII) through (X), by striking `fiscal year' each
  place it appears and inserting `calendar year'.
  (2) UPDATES TO STANDARDIZED AMOUNTS- Section 1886(d)(3)(A) of such Act
  (42 U.S.C. 1395ww(d)(3)(A)) is amended--
  (A) in clause (ii)--
  (i) by striking `1987,' and all that follows through `the Secretary' and
  inserting the following: `1987, a 15-month period beginning October 1,
  1991, and a calendar year beginning January 1, 1993, and ending on or
  before December 31, 1994, the Secretary', and
  (ii) by striking `fiscal year' the second and third place it appears and
  inserting `fiscal year, particular time period, or calendar year';
  (B) in clause (iii), by striking `the fiscal year beginning on October 1,
  1994,' and inserting `calendar year 1995,'; and
  (C) in clause (iv)--
  (i) by striking `a fiscal year beginning on or after October 1, 1995,'
  and inserting `a calendar year beginning on or after January 1, 1996,', and
  (ii) by striking `fiscal year' each place it appears and inserting
  `calendar year'.
  (3) CONFORMING AMENDMENTS- Section 1886(b)(3)(B)(iii) of such Act (42
  U.S.C. 1395ww(b)(3)(B)(iii)) is amended--
  (A) by striking `fiscal year' the first place it appears and inserting
  `particular time period',
  (B) by striking `period or fiscal year' the first place it appears and
  inserting `cost reporting period or particular time period', and
  (C) by striking `for the period or fiscal year' and inserting `for the
  cost reporting period or fiscal year ending in the particular time period'.
  (b) REDUCTION IN UPDATES FOR NON-PPS HOSPITALS- Section 1886(b)(3)(B)(ii)
  of such Act (42 U.S.C. 1395ww(b)(3)(B)(ii)) is amended--
  (1) by redesignating subclause (IV) and subclause (VI); and
  (2) by inserting after subclause (III) the following:
  `(IV) fiscal years 1989, 1990, 1991, and 1992, the market basket percentage
  increase,
  `(V) fiscal year 1993, 75 percent of the market basket percentage increase,
  and'.
SEC. 332. REDUCTION IN MEDICARE PAYMENT FOR CLINICAL DIAGNOSTIC LABORATORY
TESTS.
  (a) LOWERING CAP ON PAYMENT AMOUNT- Section 1833(h)(4)(B) of the Social
  Security Act (42 U.S.C. 1395l(h)(4)(B)) is amended--
  (1) by striking `and' at the end of clause (iii);
  (2) in clause (iv), by inserting `and before October 1, 1992,' after `1990,';
  (3) by striking the period at the end of clause (iv) and inserting `,
  and'; and
  (4) by adding at the end the following:
  `(v) after September 30, 1992, is equal to 80 percent of the median of all
  the fee schedules established for that test for that laboratory setting
  under paragraph (1).'.
  (b) REPEAL OF ANNUAL UPDATE IN PAYMENTS FOR CLINICAL DIAGNOSTIC LABORATORY
  TESTS- Section 1833(h)(2)(A)(ii) of such Act (42 U.S.C. 1395l(h)(2)(A)(ii))
  is amended--
  (1) by striking `and' at the end of subclause (II);
  (2) in subclause (III), by striking `, 1992, and 1993 shall be 2 percent'
  and inserting `and 1992 shall be 2 percent, and'; and
  (3) by adding at the end the following:
  `(IV) no annual adjustment in the fee schedules shall be made under clause
  (i) for 1993 or any subsequent year.'.
Subtitle H--Modification of the Operation of the Antitrust Laws to Hospitals
SEC. 341. PURPOSE.
  The purpose of this subtitle is to encourage cooperation among hospitals
  in order to contain costs and achieve a more efficient health care delivery
  system through the elimination of unnecessary duplication and proliferation
  of expensive medical services or expensive high technology equipment.
SEC. 342. EXEMPTIONS FROM THE OPERATION OF THE ANTITRUST LAWS.
  (a) GENERAL EXEMPTION- It shall not be unlawful under the antitrust laws
  for 2 or more hospitals to engage in conduct solely for the purpose of
  negotiating a proposed agreement, to be submitted under subsection (b),
  to share expensive medical services or expensive high technology equipment.
  (b) SPECIFIC EXEMPTIONS-
  (1) AUTHORITY TO GRANT WAIVER- The Secretary of Health and Human Services
  shall issue waivers in accordance with paragraph (4) to exempt from the
  operation of the antitrust laws conduct engaged in by hospitals to carry
  out agreements contained in applications approved under paragraph (3).
  (2) ELIGIBILITY- To be eligible to receive a waiver under paragraph (1),
  2 or more hospitals shall submit to the Secretary an application that
  contains (in accordance with guidelines established by the Secretary)--
  (A) a proposed agreement that only--
  (i) provides that such hospitals shall share the expensive medical services
  or expensive high technology equipment identified in such agreement,
  (ii) specifies the period of time during which such agreement shall be
  in effect,
  (iii) describes the particular medical services or high technology equipment
  to be shared under such agreement, and
  (iv) contains such other terms and conditions as the Secretary may reasonably
  require, and
  (B) such information and assurances as the Secretary may reasonably require.
  (3) APPROVAL- For purposes of determining whether to approve an application
  submitted under paragraph (2), the Secretary shall consider whether--
  (A) the proposed agreement contained in such application satisfies the
  guidelines issued under paragraph (6), and
  (B) implementation of such agreement will result in--
  (i) enhancement of the quality of hospital care or hospital-related care,
  (ii) the preservation of hospital services in geographical proximity to
  the communities traditionally served by the applicants,
  (iii) improvement in the cost-effectiveness of high-technology services
  provided by the applicants,
  (iv) improvement in the efficient utilization of hospital resources and
  capital equipment,
  (v) the provision of services that would not otherwise be available, or
  (vi) the avoidance of duplication of hospital resources.
  (4) ISSUANCE AND EFFECT OF WAIVER- If--
  (A) the Secretary approves under paragraph (3) an application submitted
  under paragraph (2), and
  (B) the applicants enter into the proposed agreement contained in such
  application, modified as the Secretary may require as a condition for
  approval,
then the Secretary shall issue a waiver with respect to the agreement
entered into. Except as provided in paragraph (5), such waiver shall exempt
the applicants from the operation of the antitrust laws for conduct the
applicants engage in during the period specified in such waiver and solely
to carry out the agreement with respect to which such waiver is issued.
  (5) REVOCATION OF WAIVER- (A) If the Secretary determines that a hospital
  with respect to which a waiver is in effect under paragraph (4) is not
  carrying out, or has not carried out, fully the terms of the agreement
  with respect to which a waiver is issued under paragraph (4), the Secretary
  may revoke such waiver.
  (B) If the Secretary revokes such waiver--
  (i) the Secretary shall specify the period during which such hospital did
  not carry out fully the terms of such agreement, and
  (ii) such waiver shall have no legal effect with respect to such period.
  (6) ISSUANCE OF GUIDELINES- Not later than 6 months after the date of the
  enactment of this Act, the Secretary shall establish the guidelines for
  applications under paragraph (2).
SEC. 343. REPORTS.
  (a) REPORTS TO THE SECRETARY- Each hospital with respect to which a waiver
  is issued under section 342(b)(4) shall submit to the Secretary--
  (1) during the period such waiver is in effect, an annual report at such
  time, in such form, and containing such information as the Secretary may
  require, including a detailed description of the implementation of the
  agreement to which such waiver applies, and
  (2) such other information as the Secretary may require for purposes of
  determining compliance with section 342.
  (b) REPORT TO COMMITTEES OF THE CONGRESS-
  (1) CHAIRMEN OF COMMITTEES- Not later than 7 years after the date of the
  enactment of this Act, the Secretary shall submit the report described in
  paragraph (2) to--
  (A) the chairman of the Committee on the Judiciary of the House of
  Representatives,
  (B) the chairman of the Committee on Ways and Means of the House of
  Representatives,
  (C) the chairman of the Committee on Energy and Commerce of the House
  of Representatives,
  (D) the chairman of the Committee on the Judiciary of the Senate,
  (E) the chairman of the Committee on Finance of the Senate, and
  (F) the chairman of the Committee on Labor and Human Resources of the Senate.
  (2) CONTENTS OF REPORT- The report required by paragraph (1) shall contain
  a description of the nature of the agreements with respect to which the
  Secretary issued waivers under section 342(b)(4) and of the results of
  implementing such agreements, including an assessment of whether such
  agreements caused--
  (A) a reduction in health care costs,
  (B) an increase in access to medical services, and
  (C) improvement in the quality of health care.
Such report shall also contain the recommendations of the Secretary with
respect to other arrangements to facilitate cooperative activities to achieve
the results specified in subparagraphs (A), (B), and (C).
SEC. 344. DEFINITIONS.
  For purposes of this subtitle:
  (1) The term `antitrust laws' 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--
  (A) 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) any State law similar to the antitrust laws.
  (2) The term `high technology equipment' includes drugs, devices, equipment,
  and medical and surgical procedures utilized in medical care, and the
  organizational and support systems within which such care is provided, that--
  (A) have high capital costs or extremely high annual operating costs, and
  (B) use technologies with respect to which there is a reasonable expectation
  that shared ownership will avoid a significant degree of the potential
  excess capacity of service in the geographical area to be served.
  (3) The term `medical services' includes services that--
  (A) either have high capital costs or extremely high annual operating
  costs, and
  (B) with respect to which there is a reasonable expectation that shared
  ownership will avoid a significant degree of the potential excess capacity
  of such services in the geographical area to be served,
and may include mobile services.
  (4) The term `hospital' means a hospital that--
  (A) has entered into, and has in effect, a participation agreement under
  section 1866(a) of the Social Security Act, or
  (B) which has in effect a participation agreement under title XIX of such
  Act with the State in which the hospital is located.
  (5) The term `Secretary' means the Secretary of Health and Human Services.
Subtitle I--Encouraging Enforcement Activities of Medical Self-Regulatory
Entities
SEC. 351. ANTITRUST EXEMPTION FOR MEDICAL SELF-REGULATORY ENTITIES.
  No damages, interest on damages, costs, or attorney's fees 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) as a result of engaging in standard setting
  or enforcement activities designed to promote the quality of health care
  provided to patients.
SEC. 352. CONSULTATION WITH MEDICAL SELF-REGULATORY ENTITIES RESPECTING
MEDICAL PROFESSIONAL STANDARDS.
  Any Federal agency engaged in the establishment of medical professional
  standards shall consult with and use appropriate medical self-regulatory
  entities, if available, in carrying out standard setting and related
  regulatory activities.
SEC. 353. 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, a
  hospital medical staff, or other entity designed to ensure the provision
  of high quality medical care.
  (2) The term `standard setting and enforcement activities designed to
  promote the quality of health care provided to patients' means peer review,
  accreditation of medical education and hospitals, technology assessment, risk
  management, or the development and implementation of practice guidelines,
  practice parameters, or ethical codes.