Text: H.R.3600 — 103rd Congress (1993-1994)All Information (Except Text)

There is one version of the bill.

Text available as:

  • TXT
  • PDF (PDF provides a complete and accurate display of this text.) Tip?

Shown Here:
Introduced in House (02/04/1994)

 
[Congressional Bills 103th Congress]
[From the U.S. Government Printing Office]
[H.R. 3600 Introduced in House (IH)]

103d CONGRESS
  1st Session
                                H. R. 3600

 To ensure individual and family security through health care coverage 
   for all Americans in a manner that contains the rate of growth in 
health care costs and promotes responsible health insurance practices, 
to promote choice in health care, and to ensure and protect the health 
                         care of all Americans.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           November 20, 1993

   Mr. Gephardt (for himself, Mr. Bonior, Mr. Hoyer, Mr. Fazio, Mrs. 
   Kennelly, Mr. Lewis of Georgia, Mr. Richardson, Mr. Dingell, Mr. 
    Rostenkowski, Mr. Ford of Michigan, Mr. Waxman, Mrs. Collins of 
 Illinois, Mr. Stark, Mr. Williams, Mr. Clay, Mr. Brooks, Mr. Moakley, 
  Mr. Abercrombie, Mr. Ackerman, Mr. Andrews of Maine, Mr. Barrett of 
  Wisconsin, Mr. Berman, Mr. Bilbray, Mr. Blackwell, Mr. Borski, Mr. 
Brown of California, Ms. Brown of Florida, Mr. Cardin, Mr. Clyburn, Mr. 
Coyne, Mr. de Lugo, Ms. DeLauro, Mr. Deutsch, Mr. Dicks, Mr. Dixon, Mr. 
 Durbin, Mr. Edwards of California, Mr. Engel, Ms. English of Arizona, 
Ms. Eshoo, Mr. Faleomavaega, Mr. Filner, Mr. Flake, Mr. Foglietta, Mr. 
 Frank of Massachusetts, Mr. Gejdenson, Mr. Gibbons, Mr. Hastings, Mr. 
Hilliard, Mr. Hinchey, Ms. Eddie Bernice Johnson of Texas, Mr. Johnston 
 of Florida, Mr. Kanjorski, Mr. Kreidler, Mr. LaFalce, Mr. Lantos, Mr. 
Levin, Ms. Long, Mr. Martinez, Mr. Matsui, Ms. McKinney, Mrs. Meek, Mr. 
Minge, Mrs. Mink, Mr. Murphy, Mr. Murtha, Ms. Norton, Mr. Oberstar, Mr. 
 Obey, Mr. Owens, Mr. Pastor, Mr. Payne of New Jersey, Mr. Rahall, Mr. 
   Rangel, Mr. Reynolds, Mr. Romero-Barcelo, Mr. Rush, Mr. Sabo, Mr. 
     Sawyer, Mr. Scott, Mr. Serrano, Ms. Shepherd, Mr. Skaggs, Ms. 
 Slaughter, Mr. Smith of Iowa, Mr. Stokes, Mr. Strickland, Mr. Studds, 
 Mr. Swift, Mr. Synar, Mr. Thornton, Mrs. Thurman, Mr. Traficant, Mr. 
Underwood, Mrs. Unsoeld, Mr. Vento, Mr. Watt, Mr. Wheat, Mr. Wise, and 
Mr. Yates) introduced the following bill; which was referred jointly to 
  the Committee on Energy and Commerce, to the Committee on Ways and 
Means, and to the Committee on Education and Labor for consideration of 
 such provisions in titles I, III, VI, VIII, X, and XI as fall within 
 its jurisdiction pursuant to clause 1(g) of rule X; and concurrently, 
for a period ending not later than two weeks after all three committees 
 of joint referral report to the House (or a later time if the Speaker 
so designates), to the Committee on Armed Services for consideration of 
subtitle A of title VIII and such provisions of title I as fall within 
its jurisdiction pursuant to clause 1(c) of rule X, to the Committee on 
  Veterans' Affairs for consideration of subtitle B of title VIII and 
such provisions of title I as fall within its jurisdiction pursuant to 
   clause 1(u) of rule X, to the Committee on Post Office and Civil 
    Service for consideration of subtitle C of title VIII and such 
   provisions of title I as fall within its jurisdiction pursuant to 
   clause 1(o) of rule X, to the Committee on Natural Resources for 
consideration of subtitle D of title VIII and such provisions of title 
I as fall within its jurisdiction pursuant to clause 1(n) of rule X, to 
the Committee on the Judiciary for consideration of subtitles C through 
F of title V and such other provisions as fall within its jurisdiction 
   pursuant to clause 1(l) of rule X, to the Committee on Rules for 
consideration of sections 1432(d), 6006(f), and 9102(e)(5), and to the 
 Committee on Government Operations for consideration of subtitle B of 
                        title V and section 5401

                            February 4, 1994

        Additional sponsors: Mr. Carr of Michigan and Mr. Swett

_______________________________________________________________________

                                 A BILL


 
 To ensure individual and family security through health care coverage 
   for all Americans in a manner that contains the rate of growth in 
health care costs and promotes responsible health insurance practices, 
to promote choice in health care, and to ensure and protect the health 
                         care of all Americans.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

                                                                  Table

SECTION 1. SHORT TITLE; TABLE OF TITLES AND SUBTITLES.

    (a) Short Title.--This Act may be cited as the ``Health Security 
Act''.
    (b) Table of Titles and Subtitles in Act.--The following are the 
titles and subtitles contained in this Act:

                                                                   Page
                     TITLE I--HEALTH CARE SECURITY

Subtitle A--Universal Coverage and Individual Responsibility          8
Subtitle B--Benefits........................................         32
Subtitle C--State Responsibilities..........................         95
Subtitle D--Health Alliances................................        118
Subtitle E--Health Plans....................................        224
Subtitle F--Federal Responsibilities........................        256
Subtitle G--Employer Responsiblities........................        303
Subtitle J--General Definitions; Miscellaneous Provisions...        323
                         TITLE II--NEW BENEFITS

Subtitle A--Medicare Outpatient Prescription Drug Benefit...        343
Subtitle B--Long-Term Care..................................        389
                  TITLE III--PUBLIC HEALTH INITIATIVES

Subtitle A--Workforce Priorities Under Federal Payments.....        504
Subtitle B--Academic Health Centers.........................        548
Subtitle C--Health Research Initiatives.....................        560
Subtitle D--Core Functions of Public Health Programs;               564
                            National Initiatives Regarding 
                            Preventive Health.
Subtitle E--Health Services for Medically Underserved               578
                            Populations.
Subtitle F--Mental Health; Substance Abuse..................        615
Subtitle G--Comprehensive School Health Education; School-          627
                            Related Health Services.
Subtitle H--Public Health Service Initiative................        667
Subtitle I--Coordination With COBRA Continuation Coverage...        668
                    TITLE IV--MEDICARE AND MEDICAID

Subtitle A--Medicare and the Alliance System................        674
Subtitle B--Savings in Medicare Program.....................        752
Subtitle C--Medicaid........................................        807
Subtitle D--Increase in SSI Personal Needs Allowance........        832
                TITLE V--QUALITY AND CONSUMER PROTECTION

Subtitle A--Quality Management and Improvement..............        835
Subtitle B--Information Systems, Privacy, and Administrative        859
                            Simplification.
Subtitle C--Remedies and Enforcement........................        887
Subtitle D--Medical Malpractice.............................        933
Subtitle E--Fraud and Abuse.................................        948
Subtitle F--McCarran-Ferguson Reform........................        979
   TITLE VI--PREMIUM CAPS; PREMIUM-BASED FINANCING; AND PLAN PAYMENTS

Subtitle A--Premium Caps....................................        984
Subtitle B--Premium-Related Financing.......................       1025
Subtitle C--Payments to Regional Alliance Health Plans......       1086
                     TITLE VII--REVENUE PROVISIONS

Subtitle A--Financing Provisions............................       1094
Subtitle B--Tax Treatment of Employer-Provided Health Care..       1133
Subtitle C--Employment Status Provisions....................       1143
Subtitle D--Tax Treatment of Funding of Retiree Health             1153
                            Benefits.
Subtitle E--Coordination With COBRA Continuing Care                1157
                            Provisions.
Subtitle F--Tax Treatment of Organizations Providing Health        1159
                            Care Services and Related 
                            Organizations.
Subtitle G--Tax Treatment of Long-term Care Insurance and          1171
                            Services.
Subtitle H--Tax Incentives for Health Services Providers....       1192
Subtitle I--Miscellaneous Provisions........................       1199
     TITLE VIII--HEALTH AND HEALTH-RELATED PROGRAMS OF THE FEDERAL 
                               GOVERNMENT

Subtitle A--Military Health Care Reform.....................       1207
Subtitle B--Department of Veterans Affairs..................       1218
Subtitle C--Federal Employees Health Benefits Program.......       1233
Subtitle D--Indian Health Service...........................       1249
Subtitle E--Amendments to the Employee Retirement Income           1262
                            Security Act of 1974.
Subtitle F--Special Fund for WIC Program....................       1274
     TITLE IX--AGGREGATE GOVERNMENT PAYMENTS TO REGIONAL ALLIANCES

Subtitle A--Aggregate State Payments........................       1277
Subtitle B--Aggregate Federal Alliance Payments.............       1296
Subtitle C--Borrowing Authority to Cover Cash-Flow                 1308
                            Shortfalls.
 TITLE X--COORDINATION OF MEDICAL PORTION OF WORKERS COMPENSATION AND 
                          AUTOMOBILE INSURANCE

Subtitle A--Workers Compensation Insurance..................       1314
Subtitle B--Automobile Insurance............................       1326
Subtitle C--Commission on Integration of Health Benefits....       1331
Subtitle D--Federal Employees' Compensation Act.............       1333
Subtitle E--Davis-Bacon Act and Service Contract Act........       1333
Subtitle F--Effective Dates.................................       1334
                TITLE XI--TRANSITIONAL INSURANCE REFORM

                                                               Findings

SEC. 2. FINDINGS.

    The Congress finds as follows:
            (1) Under the current health care system in the United 
        States--
                    (A) individuals risk losing their health care 
                coverage when they move, when they lose or change jobs, 
                when they become seriously ill, or when the coverage 
                becomes unaffordable;
                    (B) continued escalation of health care costs 
                threatens the economy of the United States, undermines 
                the international competitiveness of the Nation, and 
                strains Federal, State, and local budgets;
                    (C) an excessive burden of forms, paperwork, and 
                bureaucratic procedures confuses consumers and 
                overwhelms health care providers;
                    (D) fraud and abuse sap the strength of the health 
                care system; and
                    (E) health care is a critical part of the economy 
                of the United States and interstate commerce, consumes 
                a significant percentage of public and private 
                spending, and affects all industries and individuals in 
                the United States.
            (2) Under any reform of the health care system--
                    (A) health insurance and high quality health care 
                should be secure, uninterrupted, and affordable for all 
                individuals in the United States;
                    (B) comprehensive health care benefits that meet 
                the full range of health needs, including primary, 
                preventive, and specialized care, should be available 
                to all individuals in the United States;
                    (C) the current high quality of health care in the 
                United States should be maintained;
                    (D) individuals in the United States should be 
                afforded a meaningful opportunity to choose among a 
                range of health plans, health care providers, and 
                treatments;
                    (E) regulatory and administrative burdens should be 
                reduced;
                    (F) the rapidly escalating costs of health care 
                should be contained without sacrificing high quality or 
                impeding technological improvements;
                    (G) competition in the health care industry should 
                ensure that health plans and health care providers are 
                efficient and charge reasonable prices;
                    (H) a partnership between the Federal Government 
                and each State should allow the State and its local 
                communities to design an effective, high-quality system 
                of care that serves the residents of the State;
                    (I) all individuals should have a responsibility to 
                pay their fair share of the costs of health care 
                coverage;
                    (J) a health care system should build on the 
                strength of the employment-based coverage arrangements 
                that now exist in the United States;
                    (K) the penalties for fraud and abuse should be 
                swift and severe; and
                    (L) an individual's medical information should 
                remain confidential and should be protected from 
                unauthorized disclosure and use.

                                                               Purposes

SEC. 3. PURPOSES.

    The purposes of this Act are as follows:
            (1) To guarantee comprehensive and secure health care 
        coverage.
            (2) To simplify the health care system for consumers and 
        health care professionals.
            (3) To control the cost of health care for employers, 
        employees, and others who pay for health care coverage.
            (4) To promote individual choice among health plans and 
        health care providers.
            (5) To ensure high quality health care.
            (6) To encourage all individuals to take responsibility for 
        their health care coverage.

                     TITLE I--HEALTH CARE SECURITY

                       table of contents of title

                                                                   Page
      Subtitle A--Universal Coverage and Individual Responsibility

                       Part 1--Universal Coverage

Sec. 1001. Entitlement to health benefits...................         14
Sec. 1002. Individual responsibilities......................         15
Sec. 1003. Protection of consumer choice....................         15
Sec. 1004. Applicable health plan providing coverage........         16
Sec. 1005. Treatment of other nonimmigrants.................         17
Sec. 1006. Effective date of entitlement....................         18
            Part 2--Treatment of Families and Special Rules

Sec. 1011. General rule of enrollment of family in same              21
                            health plan.
Sec. 1012. Treatment of certain families....................         25
Sec. 1013. Multiple employment situations...................         30
Sec. 1014. Treatment of residents of States with statewide           32
                            single-payer systems.
                          Subtitle B--Benefits

                 Part 1--Comprehensive Benefit Package

Sec. 1101. Provision of comprehensive benefits by plans.....         32
           Part 2--Description of Items and Services Covered

Sec. 1111. Hospital services................................         34
Sec. 1112. Services of health professionals.................         36
Sec. 1113. Emergency and ambulatory medical and surgical             38
                            services.
Sec. 1114. Clinical preventive services.....................         38
Sec. 1115. Mental illness and substance abuse services......         46
Sec. 1116. Family planning services and services for                 63
                            pregnant women.
Sec. 1117. Hospice care.....................................         63
Sec. 1118. Home health care.................................         64
Sec. 1119. Extended care services...........................         64
Sec. 1120. Ambulance services...............................         66
Sec. 1121. Outpatient laboratory, radiology, and diagnostic          67
                            services.
Sec. 1122. Outpatient prescription drugs and biologicals....         67
Sec. 1123. Outpatient rehabilitation services...............         69
Sec. 1124. Durable medical equipment and prosthetic and              70
                            orthotic devices.
Sec. 1125. Vision care......................................         71
Sec. 1126. Dental care......................................         71
Sec. 1127. Health education classes.........................         73
Sec. 1128. Investigational treatments.......................         74
                          Part 3--Cost Sharing

Sec. 1131. Cost sharing.....................................         76
Sec. 1132. Lower cost sharing...............................         80
Sec. 1133. Higher cost sharing..............................         82
Sec. 1134. Combination cost sharing.........................         85
Sec. 1135. Table of copayments and coinsurance..............         86
Sec. 1136. Indexing dollar amounts relating to cost sharing.         89
                           Part 4--Exclusions

Sec. 1141. Exclusions.......................................         90
               Part 5--Role of the National Health Board

Sec. 1151. Definition of benefits...........................         92
Sec. 1152. Acceleration of expanded benefits................         92
Sec. 1153. Authority with respect to clinical preventive             93
                            services.
Sec. 1154. Establishment of standards regarding medical              94
                            necessity.
    Part 6--Additional Provisions Relating to Health Care Providers

Sec. 1161. Override of restrictive State practice laws......         95
Sec. 1162. Provision of items or services contrary to                95
                            religious belief or moral 
                            conviction.
                   Subtitle C--State Responsibilities

Sec. 1200. Participating State..............................         95
                 Part 1--General State Responsibilities

Sec. 1201. General State responsibilities...................         97
Sec. 1202. State responsibilities with respect to alliances.         98
Sec. 1203. State responsibilities relating to health plans..        101
Sec. 1204. Financial solvency; fiscal oversight; guaranty           106
                            fund.
Sec. 1205. Restrictions on funding of additional benefits...        108
          Part 2--Requirements for State Single-payer Systems

Sec. 1221. Single-payer system described....................        109
Sec. 1222. General requirements for single-payer systems....        109
Sec. 1223. Special rules for States operating statewide             114
                            single-payer system.
Sec. 1224. Special rules for alliance-specific single-payer         117
                            systems.
                      Subtitle D--Health Alliances

Sec. 1300. Health alliance defined..........................        118
       Part 1--Establsubpart a--regional alliancesrate Alliances
Sec. 1301. Regional alliance defined........................        118
Sec. 1302. Board of directors...............................        119
Sec. 1303. Provider asubpart b--corporate alliancesliances..        120
Sec. 1311. Corporate alliance defined; individuals eligible         121
                            for coverage through corporate 
                            alliances; additional 
                            definitions.
Sec. 1312. Timing of elections..............................        127
Sec. 1313. Termination of alliance election.................        129
 Part 2--General Responsibilities and Authorities of Regional Alliances

Sec. 1321. Contracts with health plans......................        131
Sec. 1322. Offering choice of health plans for enrollment;          132
                            establishment of fee-for-service 
                            schedule.
Sec. 1323. Enrollment rules and procedures..................        138
Sec. 1324. Issuance of health security cards................        148
Sec. 1325. Consumer information and marketing...............        148
Sec. 1326. Ombudsman........................................        150
Sec. 1327. Data collection; quality.........................        150
Sec. 1328. Additional duties................................        150
Sec. 1329. Additional authorities for regional alliances to         151
                            address needs in areas with 
                            inadequate health services; 
                            prohibition of insurance role.
Sec. 1330. Prohibition against self-dealing and conflicts of        152
                            interest.
Part 3--Authorities and Responsibilities of Regional Alliances Relating 
                 to Fsubpart a--collection of fundsions
Sec. 1341. Information and negotiation and acceptance of            153
                            bids.
Sec. 1342. Calculation and publication of general family            156
                            share and general employer 
                            premium amounts.
Sec. 1343. Determination of family share for families.......        158
Sec. 1344. Notice of family payments due....................        163
Sec. 1345. Collections......................................        168
Sec. 1346. Coordination amsubpart b--paymentsces............        171
Sec. 1351. Payment to regional alliance health plans........        174
Sec. 1352. Alliance administrative allowance percentage.....        178
Sec. 1353. Payments subpart c--financial managementcademic          179
                            health centers and graduate 
                            medical education.
Sec. 1subpart d--reductions in cost sharing; income determinations  180
Sec. 1371. Reduction in cost sharing for low-income families        183
Sec. 1372. Application process for cost sharing reductions..        186
Sec. 1373. Application for premium discounts and reduction          191
                            in liabilities to alliances.
Sec. 1374. General provisions relating to application               193
                            process.
Sec. 1375. End-of-year reconciliation for premium discount          196
                            and repayment reduction with 
                            actual income.
    Part 4--Responsibilities and Authorities of Corporate Alliances

Sec. 1381. Contracts with health plans......................        199
Sec. 1382. Offering choice of health plans for enrollment...        200
Sec. 1383. Enrollment; issuance of health security card.....        201
Sec. 1384. Community-rated premiums within premium areas....        203
Sec. 1385. Assistance for low-wage families.................        205
Sec. 1386. Consumer information and marketing; data                 206
                            collection and quality; 
                            additional duties.
Sec. 1387. Plan and information requirements................        206
Sec. 1388. Management of funds; relations with employees....        207
Sec. 1389. Cost control.....................................        207
Sec. 1390. Payments by corporate alliance employers to              208
                            corporate alliances.
Sec. 1391. Coordination of payments.........................        208
Sec. 1392. Applicability of ERISA enforcement mechanisms for        209
                            enforcement of certain 
                            requirements.
Sec. 1393. Applicability of certain ERISA protections to            209
                            enrolled individuals.
Sec. 1394. Disclosure and reserve requirements..............        210
Sec. 1395. Trusteeship by the Secretary of insolvent                211
                            corporate alliance health plans.
Sec. 1396. Guaranteed benefits under trusteeship of the             216
                            Secretary.
Sec. 1397. Imposition and collection of periodic assessments        220
                            on self-insured corporate 
                            alliance plans.
Sec. 1398. Payments to Federal government by multiemployer          224
                            corporate alliances for academic 
                            health centers and graduate 
                            medical education.
                        Subtitle E--Health Plans

Sec. 1400. Health plan defined..............................        224
     Part 1--Requirements Relating to Comprehensive Benefit Package

Sec. 1401. Application of requirements......................        226
Sec. 1402. Requirements relating to enrollment and coverage.        226
Sec. 1403. Community rating.................................        231
Sec. 1404. Marketing of health plans; information...........        231
Sec. 1405. Grievance procedure..............................        233
Sec. 1406. Health plan arrangements with providers..........        234
Sec. 1407. Preemption of certain State laws relating to             237
                            health plans.
Sec. 1408. Financial solvency...............................        239
Sec. 1409. Requirement for offering cost sharing policy.....        239
Sec. 1410. Quality assurance................................        239
Sec. 1411. Provider verification............................        239
Sec. 1412. Consumer disclosures of utilization management           240
                            protocols.
Sec. 1413. Confidentiality, data management, and reporting..        240
Sec. 1414. Participation in reinsurance system..............        241
        Part 2--Requirements Relating to Supplemental Insurance

Sec. 1421. Imposition of requirements on supplemental               241
                            insurance.
Sec. 1422. Standards for supplemental health benefit                243
                            policies.
Sec. 1423. Standards for cost sharing policies..............        246
     Part 3--Requirements Relating to Essential Community Providers

Sec. 1431. Health plan requirement..........................        249
Sec. 1432. Sunset of requirement............................        252
 Part 4--Requirements Relating to Workers' Compensation and Automobile 
                       Medical Liability Coverage

Sec. 1441. Reference to requirements relating to workers            256
                            compensation services.
Sec. 1442. Reference to requirements relating to automobile         256
                            medical liability services.
                  Subtitle F--Federal Responsibilities

           subpart a--establishment of national health board
Sec. 1501. Creation of National Health Board; membership....        256
Sec. 1502. Qualifications of board members..................        258
Sec. 1503. General duties and responsibilities..............        259
Sec. 1504. Annual report....................................        262
Sec. 1505. Powers...........................................        263
Ssubpart b--responsibilities relating to review and approval of state 4
                                systems
Sec. 1511. Federal review and action on State systems.......        264
Sec. 1512. Failure of participating States to meet                  270
                            conditions for compliance.
Sec. 1513. Reduction in payments for health programs by             272
                            Secretary of Health and Human 
                            Services.
Sec. 1514. Review of Federal determinations.................        273
Sec. 151subpart c--responsibilities in absence of state systems     273
Sec. 1521. Application of subpart...........................        275
Sec. 1522. Federal assumption of responsibilities in non-           275
                            participating States.
Sec. 1523. Imposition of surcharge on premiums under                277
                            federally-operated system.
Sec.subpart d--establishment of class factors for charging premiums 278
Ssubpart e--risk adjustment and reinsurance methodology for payment of 
                                 plans
Sec. 1541. Development of a risk adjustment and reinsurance         279
                            methodology.
Sec. 1542. Incentives to enroll disadvantaged groups........        285
Sec. 1543. Advisory committee...............................        285
Sec. 1544. Research and demonstrations......................        286
Sec. 1545subpart f--responsibilities for financial requirements     286
Sec. 1551. Capital standards for regional alliance health           286
                            plan.
Sec. 1552. Standard for guaranty funds......................        287
  Part 2--Responsisubpart a--general responsibilitiesd Human Services
Sec. 1571. General responsibilities of Secretary of Health          289
                            and Human Services.
Sec. 15subpart b--certification of essential community providers    290
Sec. 1581. Certification....................................        293
Sec. 1582. Categories of providers automatically certified..        293
Sec. 1583. Standards for additional providers...............        296
Sec. 1584. Certification process; review; termination of            297
                            certifications.
Sec. 1585. Notification of health alliances and                     299
                            participating States.
        Part 3--Specific Responsibilities of Secretary of Labor

Sec. 1591. Responsibilities of Secretary of Labor...........        300
                 Subtitle G--Employer Responsibilities
Sec. 1601. Payment requirement..............................        303
Sec. 1602. Requirement for information reporting............        303
Sec. 1603. Requirements relating to new employees...........        314
Sec. 1604. Auditing of records..............................        315
Sec. 1605. Prohibition of certain employer discrimination...        316
Sec. 1606. Prohibition on self-funding of cost sharing              316
                            benefits by regional alliance 
                            employers.
Sec. 1607. Equal voluntary contribution requirement.........        317
Sec. 1608. Employer retiree obligation......................        321
Sec. 1609. Enforcement......................................        323
       Subtitle J--General Definitions; Miscellaneous Provisions
                      Part 1--General Definitions
Sec. 1901. Definitions relating to employment and income....        323
Sec. 1902. Other general definitions........................        331
                  Subtitle B--Miscellaneous Provisions

Sec. 1911. Use of interim, final regulations................        341
Sec. 1912. Social Security Act references...................        341

                                                    Title I, Subtitle A

                     TITLE I--HEALTH CARE SECURITY

      Subtitle A--Universal Coverage and Individual Responsibility

                       PART 1--UNIVERSAL COVERAGE

SEC. 1001. ENTITLEMENT TO HEALTH BENEFITS.

    (a) In General.--In accordance with this part, each eligible 
individual is entitled to the comprehensive benefit package under 
subtitle B through the applicable health plan in which the individual 
is enrolled consistent with this title.
    (b) Health Security Card.--Each eligible individual is entitled to 
a health security card to be issued by the alliance or other entity 
that offers the applicable health plan in which the individual is 
enrolled.
    (c) Eligible Individual Defined.--In this Act, the term ``eligible 
individual'' means an individual who is residing in the United States 
and who is--
            (1) a citizen or national of the United States;
            (2) an alien permanently residing in the United States 
        under color of law (as defined in section 1902(1)); or
            (3) a long-term nonimmigrant (as defined in section 
        1902(19)).
    (d) Treatment of Medicare-Eligible Individuals.--Subject to section 
1012(a), a medicare-eligible individual is entitled to health benefits 
under the medicare program instead of the entitlement under subsection 
(a).
    (e) Treatment of Prisoners.--A prisoner (as defined in section 
1902(26)) is entitled to health care services provided by the authority 
responsible for the prisoner instead of the entitlement under 
subsection (a).

SEC. 1002. INDIVIDUAL RESPONSIBILITIES.

    (a) In General.--In accordance with this Act, each eligible 
individual (other than a medicare-eligible individual)--
            (1) must enroll in an applicable health plan for the 
        individual, and
            (2) must pay any premium required, consistent with this 
        Act, with respect to such enrollment.
    (b) Limitation on Disenrollment.--No eligible individual shall be 
disenrolled from an applicable health plan until the individual--
            (1) is enrolled under another applicable health plan, or
            (2) becomes a medicare-eligible individual.

SEC. 1003. PROTECTION OF CONSUMER CHOICE.

    Nothing in this Act shall be construed as prohibiting the 
following:
            (1) An individual from purchasing any health care services.
            (2) An individual from purchasing supplemental insurance 
        (offered consistent with this Act) to cover health care 
        services not included within the comprehensive benefit package.
            (3) An individual who is not an eligible individual from 
        purchasing health insurance (other than through a regional 
        alliance).
            (4) Employers from providing coverage for benefits in 
        addition to the comprehensive benefit package (subject to part 
        2 of subtitle E).

SEC. 1004. APPLICABLE HEALTH PLAN PROVIDING COVERAGE.

    (a) Specification of Applicable Health Plan.--Except as otherwise 
provided:
            (1) General rule: regional alliance health plans.--The 
        applicable health plan for a family is a regional alliance 
        health plan for the alliance area in which the family resides.
            (2) Corporate alliance health plans.--In the case of a 
        family member that is eligible to enroll in a corporate 
        alliance health plan under section 1311(c), the applicable 
        health plan for the family is such a corporate alliance health 
        plan.
    (b) Choice of Plans for Certain Groups.--
            (1) Military personnel and families.--For military 
        personnel and families who elect a Uniformed Services Health 
        Plan of the Department of Defense under section 1073a(d) of 
        title 10, United States Code, as inserted by section 8001(a) of 
        this Act, that plan shall be the applicable health plan.
            (2) Veterans.--For veterans and families who elect to 
        enroll in a veterans health plan under section 1801 of title 
        38, United States Code, as inserted by section 8101(a) of this 
        Act, that plan shall be the applicable health plan.
            (3) Indians.--For those individuals who are eligible to 
        enroll, and who elect to enroll, in a health program of the 
        Indian Health Service under section 8302(b) or 8306(b), that 
        program shall be the applicable health plan.

SEC. 1005. TREATMENT OF OTHER NONIMMIGRANTS.

    (a) Undocumented Aliens Ineligible for Benefits.--An undocumented 
alien is not eligible to obtain the comprehensive benefit package 
through enrollment in a health plan pursuant to this Act.
    (b) Diplomats and Other Foreign Government Officials.--Subject to 
conditions established by the National Health Board in consultation 
with the Secretary of State, a nonimmigrant under subparagraph (A) or 
(G) of section 101(a)(15) of the Immigration and Nationality Act may 
obtain the comprehensive benefit package through enrollment in the 
regional alliance health plan for the alliance area in which the 
nonimmigrant resides.
    (c) Reciprocal Treatment of Other Nonimmigrants.--With respect to 
those classes of individuals who are lawful nonimmigrants but who are 
not long-term nonimmigrants (as defined in section 1902(19)) or 
described in subsection (b), such individuals may obtain such benefits 
through enrollment with regional alliance health plans only in 
accordance with such reciprocal agreements between the United States 
and foreign states as may be entered into.

SEC. 1006. EFFECTIVE DATE OF ENTITLEMENT.

    (a) Regional Alliance Eligible Individuals.--
            (1) In general.--In the case of regional alliance eligible 
        individuals residing in a State, the entitlement under this 
        part (and requirements under section 1002) shall not take 
        effect until the State becomes a participating State (as 
        defined in section 1200).
            (2) Transitional rule for corporate alliances.--
                    (A) In general.--In the case of a State that 
                becomes a participating State before the general 
                effective date (as defined in subsection (c)) and for 
                periods before such date, under rules established by 
                the Board, an individual who is covered under a plan 
                (described in subparagraph (C)) based on the individual 
                (or the individual's spouse) being a qualifying 
                employee of a qualifying employer, the individual shall 
                not be treated under this Act as a regional alliance 
                eligible individual.
                    (B) Qualifying employer defined.--In subparagraph 
                (A), the term ``qualifying employer'' means an employer 
                that--
                            (i) is described in section 1311(b)(1)(A), 
                        or is participating in a multiemployer plan 
                        described in section 1311(b)(1)(B) or plan 
                        described in section 1311(b)(1)(C), and
                            (ii) provides such notice to the regional 
                        alliance involved as the Board specifies.
                    (C) Benefits plan described.--A plan described in 
                this subparagraph is an employee benefit plan that--
                            (i) provides (through insurance or 
                        otherwise) the comprehensive benefit package, 
                        and
                            (ii) provides an employer contribution of 
                        at least 80 percent of the premium (or premium 
                        equivalent) for coverage.
    (b) Corporate Alliance Eligible Individuals.--
            (1) In general.--In the case of corporate alliance eligible 
        individuals, the entitlement under this part shall not take 
        effect until the general effective date.
            (2) Transition.--For purposes of this Act and before the 
        general effective date, in the case of an eligible individual 
        who resides in a participating State, the individual is deemed 
        a regional alliance eligible individual until the individual 
        becomes a corporate alliance eligible individual, unless 
        subsection (a)(2)(A) applies to the individual.
    (c) General Effective Date Defined.--In this Act, the term 
``general effective date'' means January 1, 1998.

            PART 2--TREATMENT OF FAMILIES AND SPECIAL RULES

SEC. 1011. GENERAL RULE OF ENROLLMENT OF FAMILY IN SAME HEALTH PLAN.

    (a) In General.--Except as provided in this part or otherwise, all 
members of the same family (as defined in subsection (b)) shall be 
enrolled in the same applicable health plan.
    (b) Family Defined.--In this Act, unless otherwise provided, the 
term ``family''--
            (1) means, with respect to an eligible individual who is 
        not a child (as defined in subsection (c)), the individual; and
            (2) includes the following persons (if any):
                    (A) The individual's spouse if the spouse is an 
                eligible individual.
                    (B) The individual's children (and, if applicable, 
                the children of the individual's spouse) if they are 
                eligible individuals.
    (c) Classes of Family Enrollment; Terminology.--
            (1) In general.--In this Act, each of the following is a 
        separate class of family enrollment:
                    (A) Coverage only of an individual (referred to in 
                this Act as the ``individual'' enrollment or class of 
                enrollment).
                    (B) Coverage of a married couple without children 
                (referred to in this Act as the ``couple-only'' 
                enrollment or class of enrollment).
                    (C) Coverage of an unmarried individual and one or 
                more children (referred to in this Act as the ``single 
                parent'' enrollment or class of enrollment).
                    (D) Coverage of a married couple and one or more 
                children (referred to in this Act as the ``dual 
                parent'' enrollment or class of enrollment).
            (2) References to family and couple classes of 
        enrollment.--In this Act:
                    (A) Family.--The terms ``family enrollment'' and 
                ``family class of enrollment'', refer to enrollment in 
                a class of enrollment described in subparagraph (B), 
                (C), or (D) of paragraph (1).
                    (B) Couple.--The term ``couple class of 
                enrollment'' refers to enrollment in a class of 
                enrollment described in subparagraph (B) or (D) of 
                paragraph (1).
    (d) Spouse; Married; Couple.--
            (1) In general.--In this Act, the terms ``spouse'' and 
        ``married'' mean, with respect to a person, another individual 
        who is the spouse of the person or married to the person, as 
        determined under applicable State law.
            (2) Couple.--The term ``couple'' means an individual and 
        the individual's spouse.
    (e) Child Defined.--
            (1) In general.--In this Act, except as otherwise provided, 
        the term ``child'' means an eligible individual who (consistent 
        with paragraph (3))--
                    (A) is under 18 years of age (or under 24 years of 
                age in the case of a full-time student), and
                    (B) is a dependent of an eligible individual.
            (2) Application of state law.--Subject to paragraph (3), 
        determinations of whether a person is the child of another 
        person shall be made in accordance with applicable State law.
            (3) National rules.--The National Health Board may 
        establish such national rules respecting individuals who will 
        be treated as children under this Act as the Board determines 
        to be necessary. Such rules shall be consistent with the 
        following principles:
                    (A) Step and foster child.--A child includes a step 
                child or foster child who is an eligible individual 
                living with an adult in a regular parent-child 
                relationship.
                    (B) Disabled child.--A child includes an unmarried 
                dependent eligible individual regardless of age who is 
                incapable of self-support because of mental or physical 
                disability which existed before age 21.
                    (C) Certain 3-generation families.--A child 
                includes the grandchild of an individual, if the parent 
                of the grandchild is a child and the parent and 
                grandchild are living with the grandparent.
                    (D) Treatment of emancipated minors and married 
                individuals.--An emancipated minor or married 
                individual shall not be treated as a child.
                    (E) Children placed for adoption.--A child includes 
                a child who is placed for adoption with an eligible 
                individual.
    (f) Additional Rules.--The Board shall provide for such additional 
exceptions and special rules, including rules relating to--
            (1) families in which members are not residing in the same 
        area or in which children are not residing with their parents,
            (2) the treatment of eligible individuals who are under 19 
        years of age and who are not a dependent of an eligible 
        individual,
            (3) changes in family composition occurring during a year, 
        and
            (4) treatment of children of parents who are separated or 
        divorced,
as the Board finds appropriate.

SEC. 1012. TREATMENT OF CERTAIN FAMILIES.

    (a) Treatment of Medicare-Eligible Individuals Who are Qualifying 
Employees or Spouses of Qualifying Employees.--
            (1) In general.--Except as specifically provided, in the 
        case of an individual who is an individual described in 
        paragraph (2) with respect to 2 consecutive months in a year 
        (and it is anticipated would be in the following month and in 
        such following month would be a medicare-eligible individual 
        but for this paragraph), the individual shall not be treated as 
        a medicare-eligible individual under this Act during such 
        following month and the remainder of the year.
            (2) Individual described.--An individual described in this 
        paragraph with respect to a month is an individual who is a 
        qualifying employee or the spouse or family member of a 
        qualifying employee in the month.
    (b) Separate Treatment for Certain Groups of Individuals.--In the 
case of a family that includes one or more individuals in a group 
described in subsection (c)--
            (1) all the individuals in each such group within the 
        family shall be treated collectively as a separate family, and
            (2) all the individuals not described in any such group 
        shall be treated collectively as a separate family.
    (c) Groups of Individuals Described.--Each of the following is a 
group of individuals described in this subsection:
            (1) AFDC recipients (as defined in section 1902(3)).
            (2) Disabled SSI recipients (as defined in section 
        1902(13)) .
            (3) SSI recipients (as defined in section 1902(33)) who are 
        not disabled SSI recipients.
            (4) Electing veterans (as defined in subsection (d)(1)).
            (5) Active duty military personnel (as defined in 
        subsection (d)(2)).
            (6) Electing Indians (as defined in subsection (d)(3)).
            (7) Prisoners (as defined in section 1902(26)).
    (d) Special Rules.--In this Act:
            (1) Electing veterans.--
                    (A) Defined.--Subject to subparagraph (B), the term 
                ``electing veteran'' means a veteran who makes an 
                election to enroll with a health plan of the Department 
                of Veterans Affairs under chapter 18 of title 38, 
                United States Code, as added by section 8101(a)(1).
                    (B) Family exception.--Subparagraph (A) shall not 
                apply with respect to coverage under a health plan 
                referred to in such subparagraph if, for the area in 
                which the electing veteran resides, such health plan 
                offers coverage to family members of an electing 
                veteran and the veteran elects family enrollment under 
                such plan (instead of individual enrollment).
            (2) Active duty military personnel.--
                    (A) In general.--Subject to subparagraph (B), the 
                term ``active duty military personnel'' means an 
                individual on active duty in the Uniformed Services of 
                the United States.
                    (B) Exception.--If an individual described in 
                subparagraph (A) elects family coverage under section 
                1073a(e)(2)(A) of title 10, United States Code (as 
                added by section 8001(a)), then paragraph (5) of 
                subsection (c) shall not apply with respect to such 
                coverage.
            (3) Electing indians.--
                    (A) In general.--Subject to subparagraph (B), the 
                term ``electing Indian'' means an eligible individual 
                who makes an election under section 8302(b) of this 
                Act.
                    (B) Family election for all individuals eligible to 
                elect.--No such election shall be made with respect to 
                an individual in a family (as defined without regard to 
                this section) unless such election is made for all 
                eligible individuals (described in section 8302(a)) who 
                are family members of the family.
            (4) Multiple choice.--Eligible individuals who are 
        permitted to elect coverage under more than one health plan or 
        program referred to in this subsection may elect which of such 
        plans or programs will be the applicable health plan under this 
        Act.
    (e) Qualifying Students.--
            (1) In general.--In the case of a qualifying student 
        (described in paragraph (2)), the student may elect to enroll 
        in a regional alliance health plan offered by the regional 
        alliance for the area in which the school is located.
            (2) Qualifying student.--In paragraph (1), the term 
        ``qualifying student'' means an individual who--
                    (A) but for this subsection would receive coverage 
                under a health plan as a child of another person, and
                    (B) is a full-time student at a school in an 
                alliance area that is different from the alliance area 
                (or, in the case of a corporate alliance, such coverage 
                area as the Board may specify) providing the coverage 
                described in subparagraph (A).
          (3) Payment rules.--
                    (A) Continued treatment as family.--Except as 
                provided in subparagraph (B), nothing in this 
                subsection shall be construed as affecting the payment 
                liabilities between families and health alliances or 
                between health alliances and health plans.
                    (B) Transfer payment.--In the case of an election 
                under paragraph (1), for transfer payments see section 
                1346(e).
    (f) Spouses Living in Different Alliance Areas.--The Board shall 
provide for such special rules in applying this Act in the case of a 
couple in which the spouses reside in different alliance areas as the 
Board finds appropriate.

SEC. 1013. MULTIPLE EMPLOYMENT SITUATIONS.

    (a) Multiple Employment of an Individual.--In the case of an 
individual who--
            (1)(A) is not married or (B) is married and whose spouse is 
        not a qualifying employee (as defined in section 1901(b)(1)),
            (2) is not a child, and
            (3) who is a qualifying employee both of a regional 
        alliance employer and of a corporate alliance employer (or of 2 
        corporate alliance employers),
the individual may elect the applicable health plan to be either a 
regional alliance health plan (for the alliance area in which the 
individual resides) or a corporate alliance health plan (for an 
employer employing the individual).
    (b) Multiple Employment Within a Family.--
            (1) Married couple with employment with a regional alliance 
        employer and with a corporate alliance employer.--In the case 
        of a married individual--
                    (A) who is a qualifying employee of a regional 
                alliance employer and whose spouse is a qualifying 
                employee of a corporate alliance employer, or
                    (B) who is a qualifying employee of a corporate 
                alliance employer and whose spouse is a qualifying 
                employee of a regional alliance employer,
        the individual and the individual's spouse may elect the 
        applicable health plan to be either a regional alliance health 
        plan (for the alliance area in which the couple resides) or a 
        corporate alliance health plan (for an employer employing the 
        individual or the spouse).
            (2) Married couple with different corporate alliance 
        employers.--In the case of a married individual--
                    (A) who is a qualifying employee of a corporate 
                alliance employer, and
                    (B) whose spouse is a qualifying employee of a 
                different corporate alliance employer,
        the individual and the individual's spouse may elect the 
        applicable health plan to be a corporate alliance health plan 
        for an employer employing either the individual or the spouse.

SEC. 1014. TREATMENT OF RESIDENTS OF STATES WITH STATEWIDE SINGLE-PAYER 
              SYSTEMS.

    (a) Universal Coverage.--Notwithstanding the previous provisions of 
this title, except as provided in part 2 of subtitle C, in the case of 
an individual who resides in a State that has a Statewide single-payer 
system under section 1223, universal coverage shall be provided 
consistent with section 1222(3).
    (b) Individual Responsibilities.--In the case of an individual who 
resides in a single-payer State, the responsibilities of such 
individual under such system shall supersede the obligations of the 
individual under section 1002.

                                                    Title I, Subtitle B

                          Subtitle B--Benefits

                 PART 1--COMPREHENSIVE BENEFIT PACKAGE

SEC. 1101. PROVISION OF COMPREHENSIVE BENEFITS BY PLANS.

    (a) In General.--The comprehensive benefit package shall consist of 
the following items and services (as described in part 2), subject to 
the cost sharing requirements described in part 3, the exclusions 
described in part 4, and the duties and authority of the National 
Health Board described in part 5:
            (1) Hospital services (described in section 1111).
            (2) Services of health professionals (described in section 
        1112).
            (3) Emergency and ambulatory medical and surgical services 
        (described in section 1113).
            (4) Clinical preventive services (described in section 
        1114).
            (5) Mental illness and substance abuse services (described 
        in section 1115).
            (6) Family planning services and services for pregnant 
        women (described in section 1116).
            (7) Hospice care (described in section 1117).
            (8) Home health care (described in section 1118).
            (9) Extended care services (described in section 1119).
            (10) Ambulance services (described in section 1120).
            (11) Outpatient laboratory, radiology, and diagnostic 
        services (described in section 1121).
            (12) Outpatient prescription drugs and biologicals 
        (described in section 1122).
            (13) Outpatient rehabilitation services (described in 
        section 1123).
            (14) Durable medical equipment and prosthetic and orthotic 
        devices (described in section 1124).
            (15) Vision care (described in section 1125).
            (16) Dental care (described in section 1126).
            (17) Health education classes (described in section 1127).
            (18) Investigational treatments (described in section 
        1128).
    (b) No Other Limitations or Cost Sharing.--The items and services 
in the comprehensive benefit package shall not be subject to any 
duration or scope limitation or any deductible, copayment, or 
coinsurance amount that is not required or authorized under this Act.
    (c) Health Plan.--Unless otherwise provided in this subtitle, for 
purposes of this subtitle, the term ``health plan'' has the meaning 
given such term in section 1400.

           PART 2--DESCRIPTION OF ITEMS AND SERVICES COVERED

SEC. 1111. HOSPITAL SERVICES.

    (a) Coverage.--The hospital services described in this section are 
the following items and services:
            (1) Inpatient hospital services.
            (2) Outpatient hospital services.
            (3) 24-hour a day hospital emergency services.
    (b) Limitation.--The hospital services described in this section do 
not include hospital services provided for the treatment of a mental or 
substance abuse disorder (which are subject to section 1115), except 
for medical detoxification as required for the management of medical 
conditions associated with withdrawal from alcohol or drugs (which is 
not covered under such section).
    (c) Definitions.--For purposes of this subtitle:
            (1) Hospital.--The term ``hospital'' has the meaning given 
        such term in section 1861(e) of the Social Security Act, except 
        that such term shall include--
                    (A) in the case of an item or service provided to 
                an individual whose applicable health plan is specified 
                pursuant to section 1004(b)(1), a facility of the 
                uniformed services under title 10, United States Code, 
                that is primarily engaged in providing services to 
                inpatients that are equivalent to the services provided 
                by a hospital defined in such section 1861(e);
                    (B) in the case of an item or service provided to 
                an individual whose applicable health plan is specified 
                pursuant to section 1004(b)(2), a facility operated by 
                the Department of Veterans Affairs that is primarily 
                engaged in providing services to inpatients that are 
                equivalent to the services provided by a hospital 
                defined in such section 1861(e); and
                    (C) in the case of an item or service provided to 
                an individual whose applicable health plan is specified 
                pursuant to section 1004(b)(3), a facility operated by 
                the Indian Health Service that is primarily engaged in 
                providing services to inpatients that are equivalent to 
                the services provided by a hospital defined in such 
                section 1861(e).
            (2) Inpatient hospital services.--The term ``inpatient 
        hospital services'' means items and services described in 
        paragraphs (1) through (3) of section 1861(b) of the Social 
        Security Act when provided to an inpatient of a hospital. The 
        National Health Board shall specify those health professional 
        services described in section 1112 that shall be treated as 
        inpatient hospital services when provided to an inpatient of a 
        hospital.

SEC. 1112. SERVICES OF HEALTH PROFESSIONALS.

    (a) Coverage.--The items and services described in this section 
are--
            (1) inpatient and outpatient health professional services, 
        including consultations, that are provided in--
                    (A) a home, office, or other ambulatory care 
                setting; or
                    (B) an institutional setting; and
            (2) services and supplies (including drugs and biologicals 
        which cannot be self-administered) furnished as an incident to 
        such health professional services, of kinds which are commonly 
        furnished in the office of a health professional and are 
        commonly either rendered without charge or included in the bill 
        of such professional.
    (b) Limitation.--The items and services described in this section 
do not include items or services that are described in any other 
section of this part. An item or service that is described in section 
1114 but is not provided consistent with a periodicity schedule for 
such item or service specified in such section or under section 1153 
may be covered under this section if the item or service otherwise 
meets the requirements of this section.
    (c) Definitions.--Unless otherwise provided in this Act, for 
purposes of this Act:
            (1) Health professional.--The term ``health professional'' 
        means an individual who provides health professional services.
            (2) Health professional services.--The term ``health 
        professional services'' means professional services that--
                    (A) are lawfully provided by a physician; or
                    (B) would be described in subparagraph (A) if 
                provided by a physician, but are provided by another 
                person who is legally authorized to provide such 
                services in the State in which the services are 
                provided.

SEC. 1113. EMERGENCY AND AMBULATORY MEDICAL AND SURGICAL SERVICES.

    The emergency and ambulatory medical and surgical services 
described in this section are the following items and services provided 
by a health facility that is not a hospital and that is legally 
authorized to provide the services in the State in which they are 
provided:
            (1) 24-hour a day emergency services.
            (2) Ambulatory medical and surgical services.

SEC. 1114. CLINICAL PREVENTIVE SERVICES.

    (a) Coverage.--The clinical preventive services described in this 
section are--
            (1) an item or service for high risk populations (as 
        defined by the National Health Board) that is specified and 
        defined by the Board under section 1153, but only when the item 
        or service is provided consistent with any periodicity schedule 
        for the item or service promulgated by the Board;
            (2) except as modified by the National Health Board under 
        section 1153, an age-appropriate immunization, test, or 
        clinician visit specified in one of subsections (b) through (h) 
        that is provided consistent with any periodicity schedule for 
        the item or service specified in the applicable subsection or 
        by the National Health Board under section 1153; and
            (3) an immunization, test, or clinician visit that is 
        provided to an individual during an age range other than the 
        age range for such immunization, test, or clinician visit that 
        is specified in one of subsections (b) through (h), but only 
        when provided consistent with any requirements for such 
        immunizations, tests, and clinician visits established by the 
        National Health Board under section 1153.
    (b) Individuals Under 3.--For an individual under 3 years of age:
            (1) Immunizations.--The immunizations specified in this 
        subsection are age-appropriate immunizations for the following 
        illnesses:
                    (A) Diphtheria.
                    (B) Tetanus.
                    (C) Pertussis.
                    (D) Polio.
                    (E) Haemophilus influenzae type B.
                    (F) Measles.
                    (G) Mumps.
                    (H) Rubella.
                    (I) Hepatitis B.
            (2) Tests.--The tests specified in this subsection are as 
        follows:
                    (A) 1 hematocrit.
                    (B) 2 blood tests to screen for blood lead levels 
                for individuals who are at risk for lead exposure.
            (3) Clinician visits.--The clinician visits specified in 
        this subsection are 1 clinician visit for an individual who is 
        newborn and 7 other clinician visits.
    (c) Individuals Age 3 to 5.--For an individual at least 3 years of 
age, but less than 6 years of age:
            (1) Immunizations.--The immunizations specified in this 
        subsection are age-appropriate immunizations for the following 
        illnesses:
                    (A) Diphtheria.
                    (B) Tetanus.
                    (C) Pertussis.
                    (D) Polio.
                    (E) Measles.
                    (F) Mumps.
                    (G) Rubella.
            (2) Tests.--The tests specified in this subsection are 1 
        urinalysis.
            (3) Clinician visits.--The clinician visits specified in 
        this subsection are 3 clinician visits.
    (d) Individuals Age 6 to 12.--For an individual at least 6 years of 
age, but less than 13 years of age, the clinician visits specified in 
this subsection are 3 clinician visits.
    (e) Individuals Age 13 to 19.--For an individual at least 13 years 
of age, but less than 20 years of age:
            (1) Immunizations.--The immunizations specified in this 
        subsection are age-appropriate immunizations for the following 
        illnesses:
                    (A) Tetanus.
                    (B) Diphtheria.
            (2) Tests.--The tests specified in this subsection are as 
        follows:
                    (A) Papanicolaou smears and pelvic exams, for 
                females who have reached childbearing age and are at 
                risk for cervical cancer, every 3 years, but--
                            (i) annually until 3 consecutive negative 
                        smears have been obtained, if medically 
                        necessary; and
                            (ii) annually for females who are at risk 
                        for fertility related infectious illnesses.
                    (B) Annual screening for chlamydia and gonorrhea 
                for females who have reached childbearing age and are 
                at risk for fertility related infectious illnesses.
            (3) Clinician visits.--The clinician visits specified in 
        this subsection are 3 clinician visits.
    (f) Individuals Age 20 to 39.--For an individual at least 20 years 
of age, but less than 40 years of age:
            (1) Immunizations.--The immunizations specified in this 
        subsection are booster immunizations against tetanus and 
        diphtheria every 10 years.
            (2) Tests.--The tests specified in this subsection are as 
        follows:
                    (A) Papanicolaou smears and pelvic exams for 
                females every 3 years, but--
                            (i) annually if an abnormal smear has been 
                        obtained, until 3 consecutive negative smears 
                        have been obtained; and
                            (ii) annually for females who are at risk 
                        for fertility related infectious illnesses.
                    (B) Annual screening for chlamydia and gonorrhea 
                for females who are at risk for fertility related 
                infectious illnesses.
                    (C) Cholesterol every 5 years.
            (3) Clinician visits.--The clinician visits specified in 
        this subsection are 1 clinician visit every 3 years.
    (g) Individuals Age 40 to 49.--For an individual at least 40 years 
of age, but less than 50 years of age:
            (1) Immunizations.--The immunizations specified in this 
        subsection are booster immunizations against tetanus and 
        diphtheria every 10 years.
            (2) Tests.--The tests specified in this subsection are as 
        follows:
                    (A) Papanicolaou smears and pelvic exams for 
                females every 2 years, but--
                            (i) annually if an abnormal smear has been 
                        obtained, until 3 consecutive negative smears 
                        have been obtained; and
                            (ii) annually for females who are at risk 
                        for fertility related infectious illnesses.
                    (B) Annual screening for chlamydia and gonorrhea 
                for females who are at risk for fertility related 
                infectious illnesses.
                    (C) Cholesterol every 5 years.
            (3) Clinician visits.--The clinician visits specified in 
        this subsection are 1 clinician visit every 2 years.
    (h) Individuals Age 50 to 65.--For an individual at least 50 years 
of age, but less than 65 years of age:
            (1) Immunizations.--The immunizations specified in this 
        subsection are booster immunizations against tetanus and 
        diphtheria every 10 years.
            (2) Tests.--The tests specified in this subsection are as 
        follows:
                    (A) Papanicolaou smears and pelvic exams for 
                females every 2 years.
                    (B) Mammograms for females every 2 years.
                    (C) Cholesterol every 5 years.
            (3) Clinician visits.--The clinician visits specified in 
        this subsection are 1 clinician visit every 2 years.
    (i) Individuals Age 65 or Older.--For an individual at least 65 
years of age who is enrolled under a health plan:
            (1) Immunizations.--The immunizations specified in this 
        subsection are as follows:
                    (A) Booster immunizations against tetanus and 
                diphtheria every 10 years.
                    (B) Age-appropriate immunizations for the following 
                illnesses:
                            (i) Influenza.
                            (ii) Pneumococcal invasive disease.
            (2) Tests.--The tests specified in this subsection are as 
        follows:
                    (A) Papanicolaou smears and pelvic exams for 
                females who are at risk for cervical cancer every 2 
                years.
                    (B) Mammograms for females every 2 years.
                    (C) Cholesterol every 5 years.
            (3) Clinician visits.--The clinician visits specified in 
        this subsection are 1 clinician visit every year.
    (j) Clinician Visit.--For purposes of this section, the term 
``clinician visit'' includes the following health professional services 
(as defined in section 1112(c)):
            (1) A complete medical history.
            (2) An appropriate physical examination.
            (3) Risk assessment.
            (4) Targeted health advice and counseling, including 
        nutrition counseling.
            (5) The administration of age-appropriate immunizations and 
        tests specified in subsections (b) through (h).
    (k) Immunizations and Tests Not Administered During Clinician 
Visit.--Notwithstanding subsection (i)(5), the clinical preventive 
services described in this section include an immunization or test 
described in this section that is administered to an individual 
consistent with any periodicity schedule for the immunization or test 
during the age range specified for the immunization or test, and any 
administration fee for such immunization or test, even if the 
immunization or test is not administered during a clinician visit.

SEC. 1115. MENTAL ILLNESS AND SUBSTANCE ABUSE SERVICES.

    (a) Coverage.--The mental illness and substance abuse services that 
are described in this section are the following items and services for 
eligible individuals, as defined in section 1001(c), who satisfy the 
eligibility requirements in subsection (b):
            (1) Inpatient and residential mental illness and substance 
        abuse treatment (described in subsection (c)).
            (2) Intensive nonresidential mental illness and substance 
        abuse treatment (described in subsection (d)).
            (3) Outpatient mental illness and substance abuse treatment 
        (described in subsection (e)), including case management, 
        screening and assessment, crisis services, and collateral 
        services.
    (b) Eligibility.--The eligibility requirements referred to in 
subsection (a) are as follows:
            (1) Inpatient, residential, nonresidential, and outpatient 
        treatment.--An eligible individual is eligible to receive 
        coverage for inpatient and residential mental illness and 
        substance abuse treatment, intensive nonresidential mental 
        illness and substance abuse treatment, or outpatient mental 
        illness and substance abuse treatment (except case management 
        and collateral services) if the individual--
                    (A) has, or has had during the 1-year period 
                preceding the date of such treatment, a diagnosable 
                mental disorder or a diagnosable substance abuse 
                disorder; and
                    (B) is experiencing, or is at significant risk of 
                experiencing, functional impairment in family, work, 
                school, or community activities.
        For purposes of this paragraph, an individual who has a 
        diagnosable mental disorder or a diagnosable substance abuse 
        disorder, is receiving treatment for such disorder, but does 
        not satisfy the functional impairment criterion in subparagraph 
        (B) shall be treated as satisfying such criterion if the 
        individual would satisfy such criterion without such treatment.
            (2) Case management.--An eligible individual is eligible to 
        receive coverage for case management if--
                    (A) a health professional designated by the health 
                plan in which the individual is enrolled determines 
                that the individual should receive such services; and
                    (B) the individual is eligible to receive coverage 
                for, and is receiving, outpatient mental illness and 
                substance abuse treatment with respect to a diagnosable 
                mental disorder or a diagnosable substance abuse 
                disorder.
            (3) Screening and assessment and crisis services.--All 
        eligible individuals enrolled under a health plan are eligible 
        to receive coverage for outpatient mental illness and substance 
        abuse treatment consisting of screening and assessment and 
        crisis services.
            (4) Collateral services.--An eligible individual is 
        eligible to receive coverage for outpatient mental illness and 
        substance abuse treatment consisting of collateral services if 
        the individual is a family member (described in section 
        1011(b)) of an individual who is receiving inpatient and 
        residential mental illness and substance abuse treatment, 
        intensive nonresidential mental illness and substance abuse 
        treatment, or outpatient mental illness and substance abuse 
        treatment.
    (c) Inpatient and Residential Treatment.--
            (1) Definition.--For purposes of this subtitle, the term 
        ``inpatient and residential mental illness and substance abuse 
        treatment'' means the items and services described in 
        paragraphs (1) through (3) of section 1861(b) of the Social 
        Security Act when provided with respect to a diagnosable mental 
        disorder or a diagnosable substance abuse disorder to--
                    (A) an inpatient of a hospital, psychiatric 
                hospital, residential treatment center, residential 
                detoxification center, crisis residential program, or 
                mental illness residential treatment program; or
                    (B) a resident of a therapeutic family or group 
                treatment home or community residential treatment and 
                recovery center for substance abuse.
        The National Health Board shall specify those health 
        professional services described in section 1112 that shall be 
        treated as inpatient and residential mental illness and 
        substance abuse treatment when provided to such an inpatient or 
        resident.
            (2) Limitations.--Coverage for inpatient and residential 
        mental illness and substance abuse treatment is subject to the 
        following limitations:
                    (A) Residential mental illness treatment.--Such 
                treatment, when provided with respect to a diagnosable 
                mental disorder in a setting that is not a hospital or 
                a psychiatric hospital, is covered only to avert the 
                need for, or as an alternative to, treatment in a 
                hospital or a psychiatric hospital, as determined by a 
                health professional designated by the health plan in 
                which the individual receiving such treatment is 
                enrolled.
                    (B) Residential substance abuse treatment.--Such 
                treatment, when provided with respect to a diagnosable 
                substance abuse disorder in a setting that is not a 
                hospital or a psychiatric hospital, is covered only if 
                a health professional designated by the health plan in 
                which the individual receiving such treatment is 
                enrolled determines (based on criteria that the plan 
                may choose to employ) that the individual should 
                receive such treatment.
                    (C) Least restrictive setting.--Such treatment is 
                covered only when--
                            (i) provided to an individual in the least 
                        restrictive inpatient or residential setting 
                        that is effective and appropriate for the 
                        individual; and
                            (ii) less restrictive intensive 
                        nonresidential or outpatient treatment would be 
                        ineffective or inappropriate.
                    (D) Annual limit.--Prior to January 1, 2001, such 
                treatment is subject to an aggregate annual limit of 30 
                days. A maximum of 30 additional days of such treatment 
                shall be covered for an individual if a health 
                professional designated by the health plan in which the 
                individual is enrolled determines in advance that--
                            (i) the individual poses a threat to his or 
                        her own life or the life of another individual; 
                        or
                            (ii) the medical condition of the 
                        individual requires inpatient treatment in a 
                        hospital or a psychiatric hospital in order to 
                        initiate, change, or adjust pharmacological or 
                        somatic therapy.
                    (E) Inpatient hospital treatment for substance 
                abuse.--Such treatment, when provided in a hospital or 
                a psychiatric hospital with respect to a diagnosable 
                substance abuse disorder, is covered under this section 
                only for detoxification requiring the management of 
                psychiatric conditions associated with withdrawal from 
                alcohol or drugs. The items and services described in 
                this section do not include medical detoxification as 
                required for the management of medical conditions 
                associated with withdrawal from alcohol or drugs (which 
                is covered under section 1111).
    (d) Intensive Nonresidential Treatment.--
            (1) Definition.--For purposes of this subtitle, the term 
        ``intensive nonresidential mental illness and substance abuse 
        treatment'' means diagnostic or therapeutic items or services 
        provided with respect to a diagnosable mental disorder or a 
        diagnosable substance abuse disorder to an individual--
                    (A) participating in a partial hospitalization 
                program, a day treatment program, a psychiatric 
                rehabilitation program, or an ambulatory detoxification 
                program; or
                    (B) receiving home-based mental illness services or 
                behavioral aide mental illness services.
        The National Health Board shall specify those health 
        professional services described in section 1112 that shall be 
        treated as intensive nonresidential mental illness and 
        substance abuse treatment when provided to such an individual.
            (2) Limitations.--Coverage for intensive nonresidential 
        mental illness and substance abuse treatment is subject to the 
        following limitations:
                    (A) Discretion of plan.--An individual shall 
                receive coverage for such treatment if a health 
                professional designated by the health plan in which the 
                individual is enrolled determines (based on criteria 
                that the plan may choose to employ) that the individual 
                should receive such treatment.
                    (B) Treatment purposes.--Such treatment is covered 
                only when provided--
                            (i) to avert the need for, or as an 
                        alternative to, treatment in residential or 
                        inpatient settings;
                            (ii) to facilitate the earlier discharge of 
                        an individual receiving inpatient or 
                        residential care;
                            (iii) to restore the functioning of an 
                        individual with a diagnosable mental disorder 
                        or a diagnosable substance abuse disorder; or
                            (iv) to assist such an individual to 
                        develop the skills and gain access to the 
                        support services the individual needs to 
                        achieve the maximum level of functioning of the 
                        individual within the community.
                    (C) Annual limit.--
                            (i) In general.--Prior to January 1, 2001, 
                        the number of covered days of inpatient and 
                        residential mental illness and substance abuse 
                        treatment that are available to an individual 
                        under the 30-day limit described in the first 
                        sentence of subsection (c)(2)(D) shall be 
                        reduced by 1 day for each 2 covered days of 
                        intensive nonresidential mental illness and 
                        substance abuse treatment that are provided to 
                        the individual, until such number is reduced to 
                        zero.
                            (ii) Additional days.--After the number of 
                        covered days referred to in clause (i) has been 
                        reduced to zero with respect to an individual, 
                        the individual shall receive coverage for a 
                        maximum of 60 days of intensive nonresidential 
                        mental illness and substance abuse treatment if 
                        a health professional designated by the health 
                        plan in which the individual is enrolled 
                        determines that the individual should receive 
                        such treatment.
                    (D) Detoxification.--Intensive nonresidential 
                mental illness and substance abuse treatment consisting 
                of detoxification is covered only if it is provided in 
                the context of a treatment program.
                    (E) Out-of-pocket maximum.--Prior to January 1, 
                2001, expenses for intensive nonresidential mental 
                illness and substance abuse treatment that an 
                individual incurs prior to satisfying a deductible 
                applicable to such treatment, and copayments and 
                coinsurance paid by or on behalf of the individual for 
                such treatment, may not be applied toward any annual 
                out-of-pocket limit on cost sharing under any cost 
                sharing schedule described in part 3 of this subtitle 
                if such treatment is provided--
                            (i) with respect to a diagnosable substance 
                        abuse disorder; or
                            (ii) pursuant to subparagraph (C)(ii).
    (e) Outpatient Treatment.--
            (1) Definition.--For purposes of this subtitle, the term 
        ``outpatient mental illness and substance abuse treatment'' 
        means the following services provided with respect to a 
        diagnosable mental disorder or a diagnosable substance abuse 
        disorder in an outpatient setting:
                    (A) Screening and assessment.
                    (B) Diagnosis.
                    (C) Medical management.
                    (D) Substance abuse counseling and relapse 
                prevention.
                    (E) Crisis services.
                    (F) Somatic treatment services.
                    (G) Psychotherapy.
                    (H) Case management.
                    (I) Collateral services.
            (2) Limitations.--Coverage for outpatient mental illness 
        and substance abuse treatment is subject to the following 
        limitations:
                    (A) Health professional services.--Such treatment 
                is covered only when it constitutes health professional 
                services (as defined in section 1112(c)(2)).
                    (B) Discretion of plan.--An individual shall 
                receive coverage for outpatient mental illness and 
                substance abuse treatment consisting of substance abuse 
                counseling and relapse prevention if a health 
                professional designated by the health plan in which the 
                individual is enrolled determines (based on criteria 
                that the plan may choose to employ) that the individual 
                should receive such treatment. This subparagraph does 
                not apply to group therapy covered pursuant to 
                subparagraph (C)(ii)(II).
                    (C) Annual limits.--
                            (i) Psychotherapy and collateral 
                        services.--Prior to January 1, 2001, 
                        psychotherapy and collateral services are 
                        subject to an aggregate annual limit of 30 
                        visits per individual. Additional visits may be 
                        covered, at the discretion of the health plan 
                        in which the individual receiving treatment is 
                        enrolled, to prevent hospitalization or to 
                        facilitate earlier hospital release, for which 
                        the number of covered days of inpatient and 
                        residential mental illness and substance abuse 
                        treatment that are available to an individual 
                        under the 30-day limit described in the first 
                        sentence of subsection (c)(2)(D) shall be 
                        reduced by 1 day for each 4 visits. After such 
                        number has been reduced to zero, no additional 
                        visits under the preceding sentence may be 
                        covered.
                            (ii) Substance abuse counseling and relapse 
                        prevention.--
                                    (I) In general.--Except as provided 
                                in subclause (II), the number of 
                                covered days of inpatient and 
                                residential mental illness and 
                                substance abuse treatment that are 
                                available to an individual under the 
                                30-day limit described in the first 
                                sentence of subsection (c)(2)(D) shall 
                                be reduced by 1 day for each 4 visits 
                                for substance abuse counseling and 
                                relapse prevention that are covered for 
                                the individual under subparagraph (B). 
                                After such number has been reduced to 
                                zero, no visits for substance abuse 
                                counseling and relapse prevention may 
                                be covered, except as provided in 
                                subclause (II).
                                    (II) Group therapy.--Prior to 
                                January 1, 2001, substance abuse 
                                counseling and relapse prevention 
                                consisting of group therapy is subject 
                                to a separate aggregate annual limit of 
                                30 visits, if such therapy occurs 
                                within 12 months after the individual 
                                has received, with respect to a 
                                diagnosable substance abuse disorder, 
                                inpatient and residential mental 
                                illness and substance abuse treatment 
                                or intensive nonresidential mental 
                                illness and substance abuse treatment. 
                                The provisions of clause (i) and 
                                subclause (I) do not apply to therapy 
                                that is described in the preceding 
                                sentence.
                    (D) Detoxification.--Outpatient mental illness and 
                substance abuse treatment consisting of detoxification 
                is covered only if it is provided in the context of a 
                treatment program.
                    (E) Out-of-pocket maximum.--Prior to January 1, 
                2001, expenses for outpatient mental illness and 
                substance abuse treatment that an individual incurs 
                prior to satisfying a deductible applicable to such 
                treatment, and copayments and coinsurance paid by or on 
                behalf of the individual for such treatment, may not be 
                applied toward any annual out-of-pocket limit on cost 
                sharing under any cost sharing schedule described in 
                part 3 of this subtitle.
    (f) Other Definitions.--For purposes of this subtitle:
            (1) Case management.--The term ``case management'' means 
        services that assist individuals in gaining access to needed 
        medical, social, educational, and other services.
            (2) Diagnosable mental disorder and diagnosable substance 
        abuse disorder.--The terms ``diagnosable mental disorder'' and 
        ``diagnosable substance abuse disorder'' mean a disorder that--
                    (A) is listed in the Diagnostic and Statistical 
                Manual of Mental Disorders, Third Edition, Revised or a 
                revised version of such manual (except V Codes for 
                Conditions Not Attributable to a Mental Disorder That 
                Are a Focus of Attention or Treatment);
                    (B) is the equivalent of a disorder described in 
                subparagraph (A), but is listed in the International 
                Classification of Diseases, 9th Revision, Clinical 
                Modification, Third Edition or a revised version of 
                such text; or
                    (C) is listed in any authoritative text specifying 
                diagnostic criteria for mental disorders or substance 
                abuse disorders that is identified by the National 
                Health Board.
            (3) Psychiatric hospital.--The term ``psychiatric 
        hospital'' has the meaning given such term in section 1861(f) 
        of the Social Security Act, except that such term shall 
        include--
                    (A) in the case of an item or service provided to 
                an individual whose applicable health plan is specified 
                pursuant to section 1004(b)(1), a facility of the 
                uniformed services under title 10, United States Code, 
                that is engaged in providing services to inpatients 
                that are equivalent to the services provided by a 
                psychiatric hospital;
                    (B) in the case of an item or service provided to 
                an individual whose applicable health plan is specified 
                pursuant to section 1004(b)(2), a facility operated by 
                the Department of Veterans Affairs that is engaged in 
                providing services to inpatients that are equivalent to 
                the services provided by a psychiatric hospital; and
                    (C) in the case of an item or service provided to 
                an individual whose applicable health plan is specified 
                pursuant to section 1004(b)(3), a facility operated by 
                the Indian Health Service that is engaged in providing 
                services to inpatients that are equivalent to the 
                services provided by a psychiatric hospital.

SEC. 1116. FAMILY PLANNING SERVICES AND SERVICES FOR PREGNANT WOMEN.

    The services described in this section are the following items and 
services:
            (1) Voluntary family planning services.
            (2) Contraceptive devices that--
                    (A) may only be dispensed upon prescription; and
                    (B) are subject to approval by the Secretary of 
                Health and Human Services under the Federal Food, Drug, 
                and Cosmetic Act.
            (3) Services for pregnant women.

SEC. 1117. HOSPICE CARE.

    The hospice care described in this section is the items and 
services described in paragraph (1) of section 1861(dd) of the Social 
Security Act, as defined in paragraphs (2), (3), and (4)(A) of such 
section (with the exception of paragraph (2)(A)(iii)), except that all 
references to the Secretary of Health and Human Services in such 
paragraphs shall be treated as references to the National Health Board.

SEC. 1118. HOME HEALTH CARE.

    (a) Coverage.--The home health care described in this section is--
            (1) the items and services described in section 1861(m) of 
        the Social Security Act; and
            (2) home infusion drug therapy services described in 
        section 1861(ll) of the Social Security Act (as inserted by 
        section 2005).
    (b) Limitations.--Coverage for home health care is subject to the 
following limitations:
            (1) Inpatient treatment alternative.--Such care is covered 
        only as an alternative to inpatient treatment in a hospital, 
        skilled nursing facility, or rehabilitation facility after an 
        illness or injury.
            (2) Reevaluation.--At the end of each 60-day period of home 
        health care, the need for continued care shall be reevaluated 
        by the person who is primarily responsible for providing the 
        home health care. Additional periods of care are covered only 
        if such person determines that the requirement in paragraph (1) 
        is satisfied.

SEC. 1119. EXTENDED CARE SERVICES.

    (a) Coverage.--The extended care services described in this section 
are the items and services described in section 1861(h) of the Social 
Security Act when provided to an inpatient of a skilled nursing 
facility or a rehabilitation facility.
    (b) Limitations.--Coverage for extended care services is subject to 
the following limitations:
            (1) Hospital alternative.--Such services are covered only 
        as an alternative to inpatient treatment in a hospital after an 
        illness or injury.
            (2) Annual limit.--Such services are subject to an 
        aggregate annual limit of 100 days.
    (c) Definitions.--For purposes of this subtitle:
            (1) Rehabilitation facility.--The term ``rehabilitation 
        facility'' means an institution (or a distinct part of an 
        institution) which is established and operated for the purpose 
        of providing diagnostic, therapeutic, and rehabilitation 
        services to individuals for rehabilitation from illness or 
        injury.
            (2) Skilled nursing facility.--The term ``skilled nursing 
        facility'' means an institution (or a distinct part of an 
        institution) which is primarily engaged in providing to 
        residents--
                    (A) skilled nursing care and related services for 
                residents who require medical or nursing care; or
                    (B) rehabilitation services to residents for 
                rehabilitation from illness or injury.

SEC. 1120. AMBULANCE SERVICES.

    (a) Coverage.--The ambulance services described in this section are 
the following items and services:
            (1) Ground transportation by ambulance.
            (2) Air transportation by an aircraft equipped for 
        transporting an injured or sick individual.
            (3) Water transportation by a vessel equipped for 
        transporting an injured or sick individual.
    (b) Limitations.--Coverage for ambulance services is subject to the 
following limitations:
            (1) Medical indication.--Ambulance services are covered 
        only in cases in which the use of an ambulance is indicated by 
        the medical condition of the individual concerned.
            (2) Air transport.--Air transportation is covered only in 
        cases in which there is no other method of transportation or 
        where the use of another method of transportation is contra-
        indicated by the medical condition of the individual concerned.
            (3) Water transport.--Water transportation is covered only 
        in cases in which there is no other method of transportation or 
        where the use of another method of transportation is contra-
        indicated by the medical condition of the individual concerned.

SEC. 1121. OUTPATIENT LABORATORY, RADIOLOGY, AND DIAGNOSTIC SERVICES.

    The items and services described in this section are laboratory, 
radiology, and diagnostic services provided upon prescription to 
individuals who are not inpatients of a hospital, hospice, skilled 
nursing facility, or rehabilitation facility.

SEC. 1122. OUTPATIENT PRESCRIPTION DRUGS AND BIOLOGICALS.

    (a) Coverage.--The items described in this section are the 
following:
            (1) Covered outpatient drugs described in section 1861(t) 
        of the Social Security Act (as amended by section 2001(b))--
                    (A) except that, for purposes of this section, a 
                medically accepted indication with respect to the use 
                of a covered outpatient drug includes any use which has 
                been approved by the Food and Drug Administration for 
                the drug, and includes another use of the drug if--
                            (i) the drug has been approved by the Food 
                        and Drug Administration; and
                            (ii) such use is supported by one or more 
                        citations which are included (or approved for 
                        inclusion) in one or more of the following 
                        compendia: the American Hospital Formulary 
                        Service-Drug Information, the American Medical 
                        Association Drug Evaluations, the United States 
                        Pharmacopoeia-Drug Information, and other 
                        authoritative compendia as identified by the 
                        Secretary, unless the Secretary has determined 
                        that the use is not medically appropriate or 
                        the use is identified as not indicated in one 
                        or more such compendia; or
                            (iii) such use is medically accepted based 
                        on supportive clinical evidence in peer 
                        reviewed medical literature appearing in 
                        publications which have been identified for 
                        purposes of this clause by the Secretary; and
                    (B) notwithstanding any exclusion from coverage 
                that may be made with respect to such a drug under 
                title XVIII of such Act pursuant to section 1862(a)(18) 
                of such Act.
            (2) Blood clotting factors when provided on an outpatient 
        basis.
    (b) Revision of Compendia List.--The Secretary may revise the list 
of compendia in subsection (a)(1)(A)(ii) designated as appropriate for 
identifying medically accepted indications for drugs.
    (c) Blood Clotting Factors.--For purposes of this subtitle, the 
term ``blood clotting factors'' has the meaning given such term in 
section 1861(s)(2)(I) of the Social Security Act.

SEC. 1123. OUTPATIENT REHABILITATION SERVICES.

    (a) Coverage.--The outpatient rehabilitation services described in 
this section are--
            (1) outpatient occupational therapy;
            (2) outpatient physical therapy; and
            (3) outpatient speech pathology services for the purpose of 
        attaining or restoring speech.
    (b) Limitations.--Coverage for outpatient rehabilitation services 
is subject to the following limitations:
            (1) Restoration of capacity or minimization of 
        limitations.--Such services include only items or services used 
        to restore functional capacity or minimize limitations on 
        physical and cognitive functions as a result of an illness or 
        injury.
            (2) Reevaluation.--At the end of each 60-day period of 
        outpatient rehabilitation services, the need for continued 
        services shall be reevaluated by the person who is primarily 
        responsible for providing the services. Additional periods of 
        services are covered only if such person determines that 
        functioning is improving.

SEC. 1124. DURABLE MEDICAL EQUIPMENT AND PROSTHETIC AND ORTHOTIC 
              DEVICES.

    (a) Coverage.--The items and services described in this section 
are--
            (1) durable medical equipment, including accessories and 
        supplies necessary for repair, function, and maintenance of 
        such equipment;
            (2) prosthetic devices (other than dental devices) which 
        replace all or part of the function of an internal body organ 
        (including colostomy bags and supplies directly related to 
        colostomy care), including replacement of such devices;
            (3) accessories and supplies which are used directly with a 
        prosthetic device to achieve the therapeutic benefits of the 
        prosthesis or to assure the proper functioning of the device;
            (4) leg, arm, back, and neck braces;
            (5) artificial legs, arms, and eyes, including replacements 
        if required because of a change in the patient's physical 
        condition; and
            (6) fitting and training for use of the items described in 
        paragraphs (1) through (5).
    (b) Limitation.--An item or service described in this section is 
covered only if it improves functional ability or prevents further 
deterioration in function.
    (c) Durable Medical Equipment.--For purposes of this subtitle, the 
term ``durable medical equipment'' has the meaning given such term in 
section 1861(n) of the Social Security Act.

SEC. 1125. VISION CARE.

    (a) Coverage.--The vision care described in this section is 
diagnosis and treatment for defects in vision.
    (b) Limitation.--Eyeglasses and contact lenses are covered only for 
individuals less than 18 years of age.

SEC. 1126. DENTAL CARE.

    (a) Coverage.--The dental care described in this section is the 
following:
            (1) Emergency dental treatment, including simple 
        extractions, for acute infections, bleeding, and injuries to 
        natural teeth and oral structures for conditions requiring 
        immediate attention to prevent risks to life or significant 
        medical complications, as specified by the National Health 
        Board.
            (2) Prevention and diagnosis of dental disease, including 
        oral dental examinations, radiographs, dental sealants, 
        fluoride application, and dental prophylaxis.
            (3) Treatment of dental disease, including routine 
        fillings, prosthetics for genetic defects, periodontal 
        maintenance, and endodontic services.
            (4) Space maintenance procedures to prevent orthodontic 
        complications.
            (5) Interceptive orthodontic treatment to prevent severe 
        malocclusion.
    (b) Limitations.--Coverage for dental care is subject to the 
following limitations:
            (1) Prevention and diagnosis.--Prior to January 1, 2001, 
        the items and services described in subsection (a)(2) are 
        covered only for individuals less than 18 years of age. On or 
        after such date, such items and services are covered for all 
        eligible individuals enrolled under a health plan, except that 
        dental sealants are not covered for individuals 18 years of age 
        or older.
            (2) Treatment of dental disease.--Prior to January 1, 2001, 
        the items and services described in subsection (a)(3) are 
        covered only for individuals less than 18 years of age. On or 
        after such date, such items and services are covered for all 
        eligible individuals enrolled under a health plan, except that 
        endodontic services are not covered for individuals 18 years of 
        age or older.
            (3) Space maintenance.--The items and services described in 
        subsection (a)(4) are covered only for individuals at least 3 
        years of age, but less than 13 years of age and--
                    (A) are limited to posterior teeth;
                    (B) involve maintenance of a space or spaces for 
                permanent posterior teeth that would otherwise be 
                prevented from normal eruption if the space were not 
                maintained; and
                    (C) do not include a space maintainer that is 
                placed within 6 months of the expected eruption of the 
                permanent posterior tooth concerned.
            (4) Interceptive orthodontic treatment.--Prior to January 
        1, 2001, the items and services described in subsection (a)(5) 
        are not covered. On or after such date, such items and services 
        are covered only for individuals at least 6 years of age, but 
        less than 12 years of age.

SEC. 1127. HEALTH EDUCATION CLASSES.

    (a) Coverage.--Subject to subsection (b), the items and services 
described in this section are health education and training classes to 
encourage the reduction of behavioral risk factors and to promote 
healthy activities. Such education and training classes may include 
smoking cessation, nutrition counseling, stress management, support 
groups, and physical training classes.
    (b) Discretion of Plan.--A health plan may offer education and 
training classes at its discretion.
    (c) Construction.--This section shall not be construed to include 
or limit education or training that is provided in the course of the 
delivery of health professional services (as defined in section 
1112(c)).

SEC. 1128. INVESTIGATIONAL TREATMENTS.

    (a) Coverage.--Subject to subsection (b), the items and services 
described in this subsection are qualifying investigational treatments 
that are administered for a life-threatening disease, disorder, or 
other health condition (as defined by the National Health Board).
    (b) Discretion of Plan.--A health plan may cover an investigational 
treatment described in subsection (a) at its discretion.
    (c) Routine Care During Investigational Treatments.--The 
comprehensive benefit package includes an item or service described in 
any other section of this part, subject to the limitations and cost 
sharing requirements applicable to the item or service, when the item 
or service is provided to an individual in the course of an 
investigational treatment, if--
            (1) the treatment is a qualifying investigational 
        treatment; and
            (2) the item or service would have been provided to the 
        individual even if the individual were not receiving the 
        investigational treatment.
    (d) Definitions.--For purposes of this subtitle:
            (1) Qualifying investigational treatment.--The term 
        ``qualifying investigational treatment'' means a treatment--
                    (A) the effectiveness of which has not been 
                determined; and
                    (B) that is under clinical investigation as part of 
                an approved research trial.
            (2) Approved research trial.--The term ``approved research 
        trial'' means--
                    (A) a research trial approved by the Secretary of 
                Health and Human Services, the Director of the National 
                Institutes of Health, the Commissioner of the Food and 
                Drug Administration, the Secretary of Veterans Affairs, 
                the Secretary of Defense, or a qualified 
                nongovernmental research entity as defined in 
                guidelines of the National Institutes of Health; or
                    (B) a peer-reviewed and approved research program, 
                as defined by the Secretary of Health and Human 
                Services, conducted for the primary purpose of 
                determining whether or not a treatment is safe, 
                efficacious, or having any other characteristic of a 
                treatment which must be demonstrated in order for the 
                treatment to be medically necessary or appropriate.

                          PART 3--COST SHARING

SEC. 1131. COST SHARING.

    (a) In General.--Each health plan shall offer to individuals 
enrolled under the plan one, but not more than one, of the following 
cost sharing schedules, which schedule shall be offered to all such 
enrollees:
            (1) Lower cost sharing (described in section 1132).
            (2) Higher cost sharing (described in section 1133).
            (3) Combination cost sharing (described in section 1134).
    (b) Cost Sharing for Low-Income Families.--For provisions relating 
to reducing cost sharing for certain low-income families, see section 
1371.
    (c) Deductibles, Cost Sharing, and Out-of-Pocket Limits on Cost 
Sharing.--
            (1) Application on an annual basis.--The deductibles and 
        out-of-pocket limits on cost sharing for a year under the 
        schedules referred to in subsection (a) shall be applied based 
        upon expenses incurred for items and services furnished in the 
        year.
            (2) Individual and family general deductibles.--
                    (A) Individual.--Subject to subparagraph (B), with 
                respect to an individual enrolled under a health plan 
                (regardless of the class of enrollment), any individual 
                general deductible in the cost sharing schedule offered 
                by the plan represents the amount of countable expenses 
                (as defined in subparagraph (C)) that the individual 
                may be required to incur in a year before the plan 
                incurs liability for expenses for such items and 
                services furnished to the individual.
                    (B) Family.--In the case of an individual enrolled 
                under a health plan under a family class of enrollment 
                (as defined in section 1011(c)(2)(A)), the individual 
                general deductible under subparagraph (A) shall not 
                apply to countable expenses incurred by any member of 
                the individual's family in a year at such time as the 
                family has incurred, in the aggregate, countable 
                expenses in the amount of the family general deductible 
                for the year.
                    (C) Countable expense.--In this paragraph, the term 
                ``countable expense'' means, with respect to an 
                individual for a year, an expense for an item or 
                service covered by the comprehensive benefit package 
                that is subject to the general deductible and for 
                which, but for such deductible and any other cost 
                sharing under this subtitle, a health plan is liable 
                for payment. The amount of countable expenses for an 
                individual for a year under this paragraph shall not 
                exceed the individual general deductible for the year.
            (3) Coinsurance and copayments.--After a general or 
        separate deductible that applies to an item or service covered 
        by the comprehensive benefit package has been satisfied for a 
        year, subject to paragraph (4), coinsurance and copayments are 
        amounts (expressed as a percentage of an amount otherwise 
        payable or as a dollar amount, respectively) that an individual 
        may be required to pay with respect to the item or service.
            (4) Individual and family limits on cost sharing.--
                    (A) Individual.--Subject to subparagraph (B), with 
                respect to an individual enrolled under a health plan 
                (regardless of the class of enrollment), the individual 
                out-of-pocket limit on cost sharing in the cost sharing 
                schedule offered by the plan represents the amount of 
                expenses that the individual may be required to incur 
                under the plan in a year because of a general 
                deductible, separate deductibles, copayments, and 
                coinsurance before the plan may no longer impose any 
                cost sharing with respect to items or services covered 
                by the comprehensive benefit package that are provided 
                to the individual, except as provided in subsections 
                (d)(2)(E) and (e)(2)(E) of section 1115.
                    (B) Family.--In the case of an individual enrolled 
                under a health plan under a family class of enrollment 
                (as defined in section 1011(c)(2)(A)), the family out-
                of-pocket limit on cost sharing in the cost sharing 
                schedule offered by the plan represents the amount of 
                expenses that members of the individual's family, in 
                the aggregate, may be required to incur under the plan 
                in a year because of a general deductible, separate 
                deductibles, copayments, and coinsurance before the 
                plan may no longer impose any cost sharing with respect 
                to items or services covered by the comprehensive 
                benefit package that are provided to any member of the 
                individual's family, except as provided in subsections 
                (d)(2)(E) and (e)(2)(E) of section 1115.

SEC. 1132. LOWER COST SHARING.

    (a) In General.--The lower cost sharing schedule referred to in 
section 1131 that is offered by a health plan--
            (1) may not include a deductible;
            (2) shall have--
                    (A) an annual individual out-of-pocket limit on 
                cost sharing of $1500; and
                    (B) an annual family out-of-pocket limit on cost 
                sharing of $3000;
            (3) except as provided in paragraph (4)--
                    (A) shall prohibit payment of any coinsurance; and
                    (B) subject to section 1152, shall require payment 
                of the copayment for an item or service (if any) that 
                is specified for the item or service in the table under 
                section 1135; and
            (4) shall require payment of coinsurance for an out-of-
        network item or service (as defined in section 1402(f)) in an 
        amount that is a percentage (determined under subsection (b)) 
        of the applicable payment rate for the item or service 
        established under section 1322(c), but only if the item or 
        service is subject to coinsurance under the higher cost sharing 
        schedule described in section 1133.
    (b) Out-of-Network Coinsurance Percentage.--
            (1) In general.--The National Health Board shall determine 
        a percentage referred to in subsection (a)(4). The percentage--
                    (A) may not be less than 20 percent; and
                    (B) shall be the same with respect to all out-of-
                network items and services that are subject to 
                coinsurance, except as provided in paragraph (2).
            (2) Exception.--The National Health Board may provide for a 
        percentage that is greater than a percentage determined under 
        paragraph (1) in the case of an out-of-network item or service 
        for which, under the higher cost sharing schedule described in 
        section 1133, the coinsurance is greater than 20 percent of the 
        applicable payment rate.

SEC. 1133. HIGHER COST SHARING.

    (a) In General.--The higher cost sharing schedule referred to in 
section 1131 that is offered by a health plan--
            (1) shall have an annual individual general deductible of 
        $200 and an annual family general deductible of $400 that apply 
        with respect to expenses incurred for all items and services in 
        the comprehensive benefit package except--
                    (A) an item or service with respect to which a 
                separate individual deductible applies under paragraph 
                (2), (3), or (4); or
                    (B) an item or service described in paragraph (5), 
                (6), or (7) with respect to which a deductible does not 
                apply;
            (2) shall require an individual to incur expenses during 
        each episode of inpatient and residential mental illness and 
        substance abuse treatment (described in section 1115(c)) equal 
        to the cost of one day of such treatment before the plan 
        provides benefits for such treatment to the individual;
            (3) shall require an individual to incur expenses during 
        each episode of intensive nonresidential mental illness and 
        substance abuse treatment (described in section 1115(d)) equal 
        to the cost of one day of such treatment before the plan 
        provides benefits for such treatment to the individual;
            (4) shall require an individual to incur expenses in a year 
        for outpatient prescription drugs and biologicals (described in 
        section 1122) equal to $250 before the plan provides benefits 
        for such items to the individual;
            (5) shall require an individual to incur expenses in a year 
        for dental care described in section 1126, except the items and 
        services for prevention and diagnosis of dental disease 
        described in section 1126(a)(2), equal to $50 before the plan 
        provides benefits for such care to the individual;
            (6) may not require any deductible for clinical preventive 
        services (described in section 1114);
            (7) may not require any deductible for clinician visits and 
        associated services related to prenatal care or 1 post-partum 
        visit under section 1116;
            (8) may not require any deductible for the items and 
        services for prevention and diagnosis of dental disease 
        described in section 1126(a)(2);
            (9) shall have--
                    (A) an annual individual out-of-pocket limit on 
                cost sharing of $1500; and
                    (B) an annual family out-of-pocket limit on cost 
                sharing of $3000;
            (10) shall prohibit payment of any copayment; and
            (11) subject to section 1152, shall require payment of the 
        coinsurance for an item or service (if any) that is specified 
        for the item or service in the table under section 1135.
    (b) Episodes of Treatment.--
            (1) Inpatient and residential treatment.--For purposes of 
        subsection (a)(2), an episode of inpatient and residential 
        mental illness and substance abuse treatment shall be 
        considered to begin on the date an individual is admitted to a 
        facility for such treatment and to end on the date the 
        individual is discharged from the facility.
            (2) Intensive nonresidential treatment.--For purposes of 
        subsection (a)(3), an episode of intensive nonresidential 
        mental illness and substance abuse treatment--
                    (A) shall be considered to begin on the date an 
                individual begins participating in a program described 
                in section 1115(d)(1)(A) and to end on the date the 
                individual ceases such participation; or
                    (B) shall be considered to begin on the date an 
                individual begins receiving home-based or behavioral 
                aide services described in section 1115(d)(1)(B) and to 
                end on the date the individual ceases to receive such 
                services.

SEC. 1134. COMBINATION COST SHARING.

    (a) In General.--The combination cost sharing schedule referred to 
in section 1131 that is offered by a health plan--
            (1) shall have--
                    (A) an annual individual out-of-pocket limit on 
                cost sharing of $1500; and
                    (B) an annual family out-of-pocket limit on cost 
                sharing of $3000; and
            (2) otherwise shall require different cost sharing for in-
        network items and services than for out-of-network items and 
        services.
    (b) In-Network Items and Services.--With respect to an in-network 
item or service (as defined in section 1402(f)(1)), the combination 
cost sharing schedule that is offered by a health plan--
            (1) may not apply a deductible;
            (2) shall prohibit payment of any coinsurance; and
            (3) shall require payment of a copayment in accordance with 
        the lower cost sharing schedule described in section 1132.
    (c) Out-of-Network Items and Services.--With respect to an out-of-
network item or service (as defined in section 1402(f)(2)), the 
combination cost sharing schedule that is offered by a health plan--
            (1) shall require an individual and a family to incur 
        expenses before the plan provides benefits for the item or 
        service in accordance with the deductibles under the higher 
        cost sharing schedule described in section 1133;
            (2) shall prohibit payment of any copayment; and
            (3) shall require payment of coinsurance in accordance with 
        such schedule.

SEC. 1135. TABLE OF COPAYMENTS AND COINSURANCE.

    (a) In General.--The following table specifies, for different items 
and services, the copayments and coinsurance referred to in sections 
1132 and 1133:
  


                                Copayments and Coinsurance for Items and Services                               
----------------------------------------------------------------------------------------------------------------
             Benefit               Section     Lower Cost Sharing Schedule        Higher Cost Sharing Schedule  
----------------------------------------------------------------------------------------------------------------
Inpatient hospital services......     1111  No copayment                       20 percent of applicable payment 
                                                                                rate                            
----------------------------------------------------------------------------------------------------------------
Outpatient hospital services.....     1111  $10 per visit                      20 percent of applicable payment 
                                                                                rate                            
----------------------------------------------------------------------------------------------------------------
Hospital emergency room services.     1111  $25 per visit (unless patient has  20 percent of applicable payment 
                                             an emergency medical condition     rate                            
                                             as defined in section 1867(e)(1)                                   
                                             of the Social Security Act)                                        
----------------------------------------------------------------------------------------------------------------
Services of health professionals.     1112  $10 per visit                      20 percent of applicable payment 
                                                                                rate                            
----------------------------------------------------------------------------------------------------------------
Emergency services other than               $25 per visit (unless patient has  20 percent of applicable payment 
 hospital emergency room services     1113   an emergency medical condition     rate                            
                                             as defined in section 1867(e)(1)                                   
                                             of the Social Security Act)                                        
----------------------------------------------------------------------------------------------------------------
Ambulatory medical and surgical             $10 per visit                      20 percent of applicable payment 
 services........................     1113                                      rate                            
----------------------------------------------------------------------------------------------------------------
Clinical preventive services.....     1114  No copayment                       No coinsurance                   
----------------------------------------------------------------------------------------------------------------
Inpatient and residential mental            No copayment                       20 percent of applicable payment 
 illness and substance abuse                                                    rate                            
 treatment.......................     1115                                                                      
----------------------------------------------------------------------------------------------------------------
Intensive nonresidential mental             No copayment                       20 percent of applicable payment 
 illness and substance abuse                                                    rate                            
 treatment (except treatment                                                                                    
 provided pursuant to section                                                                                   
 1115(d)(2)(C)(ii))..............     1115                                                                      
----------------------------------------------------------------------------------------------------------------
Intensive nonresidential mental             $25 per visit                      50 percent of applicable payment 
 illness and substance abuse                                                    rate                            
 treatment provided pursuant to                                                                                 
 section 1115(d)(2)(C)(ii).......     1115                                                                      
----------------------------------------------------------------------------------------------------------------
Outpatient mental illness and               $10 per visit                      20 percent of applicable payment 
 substance abuse treatment                                                      rate                            
 (except psychotherapy,                                                                                         
 collateral services, and case                                                                                  
 management).....................     1115                                                                      
----------------------------------------------------------------------------------------------------------------
Outpatient psychotherapy and                $25 per visit until January 1,     50 percent of applicable payment 
 collateral services.............     1115   2001, and $10 per visit            rate until January 1, 2001, and 
                                             thereafter                         20 percent thereafter           
----------------------------------------------------------------------------------------------------------------
Case management..................     1115  No copayment                       No coinsurance                   
----------------------------------------------------------------------------------------------------------------
Family planning and services for            $10 per visit                      20 percent of applicable payment 
 pregnant women (except clinician                                               rate                            
 visits and associated services                                                                                 
 related to prenatal care and 1                                                                                 
 post-partum visit)..............     1116                                                                      
----------------------------------------------------------------------------------------------------------------
Clinician visits and associated             No copayment                       No coinsurance                   
 services related to prenatal                                                                                   
 care and 1 post-partum visit....     1116                                                                      
----------------------------------------------------------------------------------------------------------------
Hospice care.....................     1117  No copayment                       20 percent of applicable payment 
                                                                                rate                            
----------------------------------------------------------------------------------------------------------------
Home health care.................     1118  No copayment                       20 percent of applicable payment 
                                                                                rate                            
----------------------------------------------------------------------------------------------------------------
Extended care services...........     1119  No copayment                       20 percent of applicable payment 
                                                                                rate                            
----------------------------------------------------------------------------------------------------------------
Ambulance services...............     1120  No copayment                       20 percent of applicable payment 
                                                                                rate                            
----------------------------------------------------------------------------------------------------------------
Outpatient laboratory, radiology,           No copayment                       20 percent of applicable payment 
 and diagnostic services.........     1121                                      rate                            
----------------------------------------------------------------------------------------------------------------
Outpatient prescription drugs and           $5 per prescription                20 percent of applicable payment 
 biologicals.....................     1122                                      rate                            
----------------------------------------------------------------------------------------------------------------
Outpatient rehabilitation                   $10 per visit                      20 percent of applicable payment 
 services........................     1123                                      rate                            
----------------------------------------------------------------------------------------------------------------
Durable medical equipment and               No copayment                       20 percent of applicable payment 
 prosthetic and orthotic devices.     1124                                      rate                            
----------------------------------------------------------------------------------------------------------------
Vision care......................     1125  $10 per visit (No additional       20 percent of applicable payment 
                                             charge for 1 set of necessary      rate                            
                                             eyeglasses for an individual                                       
                                             less than 18 years of age)                                         
----------------------------------------------------------------------------------------------------------------
Dental care (except space                   $10 per visit                      20 percent of applicable payment 
 maintenance procedures and                                                     rate                            
 interceptive orthodontic                                                                                       
 treatment)......................     1126                                                                      
----------------------------------------------------------------------------------------------------------------
Space maintenance procedures and            $20 per visit                      40 percent of applicable payment 
 interceptive orthodontic                                                       rate                            
 treatment.......................     1126                                                                      
----------------------------------------------------------------------------------------------------------------
Health education classes.........     1127  All cost sharing rules determined  All cost sharing rules determined
                                             by plans                           by plans                        
----------------------------------------------------------------------------------------------------------------
Investigational treatment for               All cost sharing rules determined  All cost sharing rules determined
 life-threatening condition......     1128   by plans                           by plans                        
----------------------------------------------------------------------------------------------------------------

    (b) Applicable Payment Rate.--For purposes of this section, the 
term ``applicable payment rate'', when used with respect to an item or 
service, means the applicable payment rate for the item or service 
established under section 1322(c).

SEC. 1136. INDEXING DOLLAR AMOUNTS RELATING TO COST SHARING.

    (a) In General.--Any deductible, copayment, out-of-pocket limit on 
cost sharing, or other amount expressed in dollars in this subtitle for 
items or services provided in a year after 1994 shall be such amount 
increased by the percentage specified in subsection (b) for the year.
    (b) Percentage.--The percentage specified in this subsection for a 
year is equal to the product of the factors described in subsection (d) 
for the year and for each previous year after 1994, minus 1.
    (c) Rounding.--Any increase (or decrease) under subsection (a) 
shall be rounded, in the case of an amount specified in this subtitle 
of--
            (1) $200 or less, to the nearest multiple of $1,
            (2) more than $200, but less than $500, to the nearest 
        multiple of $5, or
            (3) $500 or more, to the nearest multiple of $10.
    (d) Factor.--
            (1) In general.--The factor described in this subsection 
        for a year is 1 plus the general health care inflation factor 
        (as specified in section 6001(a)(3) and determined under 
        paragraph (2)) for the year.
            (2) Determination.--In computing such factor for a year, 
        the percentage increase in the CPI for a year (referred to in 
        section 6001(b)) shall be determined based upon the percentage 
        increase in the average of the CPI for the 12-month period 
        ending with August 31 of the previous year over such average 
        for the preceding 12-month period.

                           PART 4--EXCLUSIONS

SEC. 1141. EXCLUSIONS.

    (a) Medical Necessity.--The comprehensive benefit package does not 
include--
            (1) an item or service that is not medically necessary or 
        appropriate; or
            (2) an item or service that the National Health Board may 
        determine is not medically necessary or appropriate in a 
        regulation promulgated under section 1154.
    (b) Additional Exclusions.--The comprehensive benefit package does 
not include the following items and services:
            (1) Custodial care, except in the case of hospice care 
        under section 1117.
            (2) Surgery and other procedures performed solely for 
        cosmetic purposes and hospital or other services incident 
        thereto, unless--
                    (A) required to correct a congenital anomaly; or
                    (B) required to restore or correct a part of the 
                body that has been altered as a result of--
                            (i) accidental injury;
                            (ii) disease; or
                            (iii) surgery that is otherwise covered 
                        under this subtitle.
            (3) Hearing aids.
            (4) Eyeglasses and contact lenses for individuals at least 
        18 years of age.
            (5) In vitro fertilization services.
            (6) Sex change surgery and related services.
            (7) Private duty nursing.
            (8) Personal comfort items, except in the case of hospice 
        care under section 1117.
            (9) Any dental procedures involving orthodontic care, 
        inlays, gold or platinum fillings, bridges, crowns, pin/post 
        retention, dental implants, surgical periodontal procedures, or 
        the preparation of the mouth for the fitting or continued use 
        of dentures, except as specifically described in section 1126.

               PART 5--ROLE OF THE NATIONAL HEALTH BOARD

SEC. 1151. DEFINITION OF BENEFITS.

    (a) In General.--The National Health Board may promulgate such 
regulations or establish such guidelines as may be necessary to assure 
uniformity in the application of the comprehensive benefit package 
across all health plans.
    (b) Flexibility in Delivery.--The regulations or guidelines under 
subsection (a) shall permit a health plan to deliver covered items and 
services to individuals enrolled under the plan using the providers and 
methods that the plan determines to be appropriate.

SEC. 1152. ACCELERATION OF EXPANDED BENEFITS.

    (a) In General.--Subject to subsection (b), at any time prior to 
January 1, 2001, the National Health Board, in its discretion, may by 
regulation expand the comprehensive benefit package by--
            (1) adding any item or service that is added to the package 
        as of January 1, 2001; and
            (2) requiring that a cost sharing schedule described in 
        part 3 of this subtitle reflect (wholly or in part) any of the 
        cost sharing requirements that apply to the schedule as of 
        January 1, 2001.
No such expansion shall be effective except as of January 1 of a year.
    (b) Condition.--The Board may not expand the benefit package under 
subsection (a) which is to become effective with respect to a year, by 
adding any item or service or altering any cost sharing schedule, 
unless the Board estimates that the additional increase in per capita 
health care expenditures resulting from the addition or alteration, for 
each regional alliance for the year, will not cause any regional 
alliance to exceed its per capita target (as determined under section 
6003).

SEC. 1153. AUTHORITY WITH RESPECT TO CLINICAL PREVENTIVE SERVICES.

    (a) In General.--With respect to clinical preventive services 
described in section 1114, the National Health Board--
            (1) shall specify and define specific items and services as 
        clinical preventive services for high risk populations and 
        shall establish and update a periodicity schedule for such 
        items and services;
            (2) shall update the periodicity schedules for the age-
        appropriate immunizations, tests, and clinician visits 
        specified in subsections (b) through (h) of such section;
            (3) shall establish rules with respect to coverage for an 
        immunization, test, or clinician visit that is not provided to 
        an individual during the age range for such immunization, test, 
        or clinician visit that is specified in one of subsections (b) 
        through (h) of such section; and
            (4) may otherwise modify the items and services described 
        in such section, taking into account age and other risk 
        factors, but may not modify the cost sharing for any such item 
        or service.
    (b) Consultation.--In performing the functions described in 
subsection (a), the National Health Board shall consult with experts in 
clinical preventive services.

SEC. 1154. ESTABLISHMENT OF STANDARDS REGARDING MEDICAL NECESSITY.

    The National Health Board may promulgate such regulations as may be 
necessary to carry out section 1141(a)(2) (relating to the exclusion of 
certain services that are not medically necessary or appropriate).

    PART 6--ADDITIONAL PROVISIONS RELATING TO HEALTH CARE PROVIDERS

SEC. 1161. OVERRIDE OF RESTRICTIVE STATE PRACTICE LAWS.

    No State may, through licensure or otherwise, restrict the practice 
of any class of health professionals beyond what is justified by the 
skills and training of such professionals.

SEC. 1162. PROVISION OF ITEMS OR SERVICES CONTRARY TO RELIGIOUS BELIEF 
              OR MORAL CONVICTION.

    A health professional or a health facility may not be required to 
provide an item or service in the comprehensive benefit package if the 
professional or facility objects to doing so on the basis of a 
religious belief or moral conviction.

                                                    Title I, Subtitle C

                   Subtitle C--State Responsibilities

SEC. 1200. PARTICIPATING STATE.

    (a) In General.--For purposes of the approval of a State health 
care system by the Board under section 1511, a State is a 
``participating State'' if the State meets the applicable requirements 
of this subtitle.
    (b) Submission of System Document.--
            (1) In general.--In order to be approved as a participating 
        State under section 1511, a State shall submit to the National 
        Health Board a document (in a form and manner specified by the 
        Board) that describes the State health care system that the 
        State is establishing (or has established).
            (2) Deadline.--If a State is not a participating State with 
        a State health care system in operation by January 1, 1998, the 
        provisions of subpart C of part 1 of subtitle F (relating to 
        responsibilities in absence of State systems) shall take 
        effect.
            (3) Submission of information subsequent to approval.--A 
        State approved as a participating State under section 1511 
        shall submit to the Board an annual update to the State health 
        care system not later than February 15 of each year following 
        the first year for which the State is a participating State. 
        The update shall contain--
                    (A) such information as the Board may require to 
                determine that the system shall meet the applicable 
                requirements of this Act for the succeeding year; and
                    (B) such information as the Board may require to 
                determine that the State operated the system during the 
                previous year in accordance with the Board's approval 
                of the system for such previous year.

                 PART 1--GENERAL STATE RESPONSIBILITIES

SEC. 1201. GENERAL STATE RESPONSIBILITIES.

    The responsibilities for a participating State are as follows:
            (1) Regional alliances.--Establishing one or more regional 
        alliances (in accordance with section 1202).
            (2) Health plans.--Certifying health plans (in accordance 
        with section 1203).
            (3) Financial solvency of plans.--Assuring the financial 
        solvency of health plans (in accordance with section 1204).
            (4) Administration.--Designating an agency or official 
        charged with coordinating the State responsibilities under this 
        Act.
            (5) Workers compensation and automobile insurance.--
        Conforming State laws to meet the requirements of subtitles A 
        and B of title X (relating to medical benefits under workers 
        compensation and automobile insurance).
            (6) Other responsibilities.--Carrying out other 
        responsibilities of participating States specified under this 
        Act.

SEC. 1202. STATE RESPONSIBILITIES WITH RESPECT TO ALLIANCES.

    (a) Establishment of Alliances.--
            (1) In general.--A participating State shall--
                    (A) establish and maintain one or more regional 
                alliances in accordance with this section and subtitle 
                D, and ensure that such alliances meet the requirements 
                of this Act; and
                    (B) designate alliance areas in accordance with 
                subsection (b).
            (2) Deadline.--A State may not be a participating State for 
        a year unless the State has established such alliances by March 
        1 of the previous year.
    (b) Alliance Areas.--
            (1) In general.--In accordance with this subsection, each 
        State shall designate a geographic area assigned to each 
        regional alliance. Each such area is referred to in this Act as 
        an ``alliance area''.
            (2) Population required.--
                    (A) In general.--Each alliance area shall encompass 
                a population large enough to ensure that the alliance 
                has adequate market share to negotiate effectively with 
                health plans providing the comprehensive benefit 
                package to eligible individuals who reside in the area.
                    (B) Treatment of consolidated metropolitan 
                statistical areas.--An alliance area that includes a 
                Consolidated Metropolitan Statistical Area within a 
                State is presumed to meet the requirement of 
                subparagraph (A).
            (3) Single alliance in each area.--No geographic area may 
        be assigned to more than one regional alliance.
            (4) Boundaries.--In establishing boundaries for alliance 
        areas, the State may not discriminate on the basis of or 
        otherwise take into account race, age, language, religion, 
        national origin, socio-economic status, disability, or 
        perceived health status.
            (5) Treatment of metropolitan areas.--The entire portion of 
        a metropolitan statistical area located in a State shall be 
        included in the same alliance area.
            (6) No portions of State permitted to be outside alliance 
        area.--Each portion of the State shall be assigned to a 
        regional alliance under this subsection.
    (c) State Coordination of Regional Alliances.--One or more States 
may allow or require two or more regional alliances to coordinate their 
operations, whether such alliances are in the same or different States. 
Such coordination may include adoption of joint operating rules, 
contracting with health plans, enforcement activities, and 
establishment of fee schedules for health providers.
    (d) Assistance in Collection of Amounts Owed to Alliances.--Each 
State shall assure that the amounts owed to regional alliances in the 
State are collected and paid to such alliances.
    (e) Assistance in Eligibility Verifications.--
            (1) In general.--Each State shall assure that the 
        determinations of eligibility for cost sharing assistance (and 
        premium discounts and cost sharing reductions for families) are 
        made by regional alliances in the State on the basis of the 
        best information available to the alliances and the State.
            (2) Provision of information.--Each State shall use the 
        information available to the State under section 
        6103(l)(7)(D)(x) of the Internal Revenue Code of 1986 to assist 
        regional alliances in verifying such eligibility status.
    (f) Special Requirements for Alliances With Single-Payer System.--
If the State operates an alliance-specific single-payer system (as 
described in part 2), the State shall assure that the regional alliance 
in which the system is operated meets the requirements for such an 
alliance described in section 1224(b).
    (g) Payment of Shortfalls for Certain Administrative Errors.--Each 
participating State is financially responsible, under section 
9201(c)(2), for administrative errors described in section 9201(e)(2).

SEC. 1203. STATE RESPONSIBILITIES RELATING TO HEALTH PLANS.

    (a) Criteria for Certification.--
            (1) In general.--For purposes of this section, a 
        participating State shall establish and publish the criteria 
        that are used in the certification of health plans under this 
        section.
            (2) Requirements.--Such criteria shall be established with 
        respect to--
                    (A) the quality of the plan,
                    (B) the financial stability of the plan,
                    (C) the plan's capacity to deliver the 
                comprehensive benefit package in the designated service 
                area,
                    (D) other applicable requirements for health plans 
                under parts 1, 3, and 4 of subtitle E, and
                    (E) other requirements imposed by the State 
                consistent with this part.
    (b) Certification of Health Plans.--A participating State shall 
certify each plan as a regional alliance health plan that it determines 
meets the criteria for certification established and published under 
subsection (a).
    (c) Monitoring.--A participating State shall monitor the 
performance of each State-certified regional alliance health plan to 
ensure that it continues to meet the criteria for certification.
    (d) Limitations on Authority.--A participating State may not--
            (1) discriminate against a plan based on the domicile of 
        the entity offering of the plan; and
            (2) regulate premium rates charged by health plans, except 
        as may be required under title VI (relating to the enforcement 
        of cost containment rules for plans in the State) or as may be 
        necessary to ensure that plans meet financial solvency 
        requirements under section 1408.
    (e) Assuring Adequate Access to a Choice of Health Plans.--
            (1) General access.--
                    (A) In general.--Each participating State shall 
                ensure that--
                            (i) each regional alliance eligible family 
                        has adequate access to enroll in a choice of 
                        regional alliance health plans providing 
                        services in the area in which the individual 
                        resides, including (to the maximum extent 
                        practicable) adequate access to a plan whose 
                        premium is at or below the weighted average 
                        premium for plans in the regional alliance, and
                            (ii) each such family that is eligible for 
                        a premium discount under section 6104(b) is 
                        provided a discount in accordance with such 
                        section (including an increase in such discount 
                        described in section 6104(b)(2)).
                    (B) Authority.--In order to carry out its 
                responsibility under subparagraph (A), a participating 
                State may require, as a condition of entering into a 
                contract with a regional alliance under section 1321, 
                that one or more certified regional alliance health 
                plans cover all (or selected portions) of the alliance 
                area.
            (2) Access to plans using centers of excellence.--Each 
        participating State may require, as a condition of entering 
        into a contract with a regional alliance under section 1321, 
        that one or more certified health plans provide access (through 
        reimbursement, contracts, or otherwise) of enrolled individuals 
        to services of centers of excellence (as designated by the 
        State in accordance with rules promulgated by the Secretary).
            (3) Use of incentives to enroll and serve disadvantaged 
        groups.--A State may provide--
                    (A) for an adjustment to the risk-adjustment 
                methodology under section 1541(b) and other financial 
                incentives to regional alliance health plans to ensure 
                that such plans enroll individuals who are members of 
                disadvantaged groups, and
                    (B) for appropriate extra services, such as 
                outreach to encourage enrollment and transportation and 
                interpreting services to ensure access to care, for 
                certain population groups that face barriers to access 
                because of geographic location, income levels, or 
                racial or cultural differences.
    (f) Coordination of Workers' Compensation Services and Automobile 
Insurance.--Each participating State shall comply with the 
responsibilities regarding workers' compensation and automobile 
insurance specified in subtitles A and B of title X.
    (g) Implementation of Mandatory Reinsurance System.--If the risk 
adjustment and reinsurance methodology developed under section 1541 
includes a mandatory reinsurance system, each participating State shall 
establish a reinsurance program consistent with such methodology and 
any additional standards established by the Board.
    (h) Requirements for Plans Offering Supplemental Insurance.--
Notwithstanding any other provision of this Act a State may not certify 
a regional alliance health plan under this section if--
            (1) the plan (or any entity with which the plan is 
        affiliated under such rules as the Board may establish) offers 
        a supplemental health benefit policy (as defined in section 
        1421(b)(1)) that fails to meet the applicable requirements for 
        such a policy under part 2 of subtitle E (without regard to the 
        State in which the policy is offered); or
            (2) the plan offers a cost sharing policy (as defined in 
        section 1421(b)(2)) that fails to meet the applicable 
        requirements for such a policy under part 2 of subtitle E.

SEC. 1204. FINANCIAL SOLVENCY; FISCAL OVERSIGHT; GUARANTY FUND.

    (a) Capital Standards.--A participating State shall establish 
capital standards for health plans that meet minimum Federal 
requirements established by the National Health Board under sections 
1503(i) and 1551(a).
    (b) Reporting and Auditing Requirements.--Each participating State 
shall define financial reporting and auditing requirements and 
requirements for fund reserves adequate to monitor the financial status 
of plans.
    (c) Guaranty Fund.--
            (1) Establishment.--Each participating State shall ensure 
        that there is a guaranty fund that meets the requirements 
        established by the Board under sections 1503(i) and 1552, in 
        order to provide financial protection to health care providers 
        and others in the case of a failure of a regional alliance 
        health plan.
            (2) Assessments to provide funds.--In the case of a failure 
        of one or more regional alliance health plans, the State may 
        require each regional alliance health plan within the State to 
        pay an assessment to the State in an amount not to exceed 2 
        percent of the premiums of such plans paid by or on behalf of 
        regional alliance eligible individuals during a year for so 
        long as necessary to generate sufficient revenue to cover any 
        outstanding claims against the failed plan.
    (d) Procedures in Event of Plan Failure.--
            (1) In general.--A participating State shall assure that, 
        in the event of the failure of a regional alliance health plan 
        in the State, eligible individuals enrolled in the plan will be 
        assured continuity of coverage for the comprehensive benefit 
        package.
            (2) Designation of state agency.--A participating State 
        shall designate an agency of State government that supervises 
        or assumes control of the operation of a regional alliance 
        health plan in the case of the failure of the plan.
            (3) Protections for health care providers and enrollees.--
        Each participating State shall assure that in the case of a 
        plan failure--
                    (A) the guaranty fund shall pay health care 
                providers for items and services covered under the 
                comprehensive benefit package for enrollees of the plan 
                for which the plan is otherwise obligated to make 
                payment;
                    (B) after making all payments required to be made 
                to providers under subparagraph (A), the guaranty fund 
                shall make payments for the operational, 
                administrative, and other costs and debts of the plan 
                (in accordance with requirements imposed by the State 
                based on rules promulgated by the Board);
                    (C) such health care providers have no legal right 
                to seek payment from eligible individuals enrolled in 
                the plan for any such covered items or services (other 
                than the enrollees' obligations under cost sharing 
                arrangements); and
                    (D) health care providers are required to continue 
                caring for such eligible individuals until such 
                individuals are enrolled in a new health plan.
            (4) Plan failure.--For purposes of this section, the 
        failure of a health plan means the current or imminent 
        inability of the plan to pay claims.

SEC. 1205. RESTRICTIONS ON FUNDING OF ADDITIONAL BENEFITS.

    If a participating State provides benefits (either directly or 
through regional alliance health plans or otherwise) in addition to 
those covered under the comprehensive benefit package, the State may 
not provide for payment for such benefits through funds provided under 
this Act.

          PART 2--REQUIREMENTS FOR STATE SINGLE-PAYER SYSTEMS

SEC. 1221. SINGLE-PAYER SYSTEM DESCRIBED.

    The Board shall approve the application of a State to operate a 
single-payer system if the Board finds that the system--
            (1) meets the requirements of section 1222;
            (2)(A) meets the requirements for a Statewide single-payer 
        system under section 1223, in the case of a system offered 
        throughout a State; or
            (B) meets the requirements for an alliance-specific single-
        payer system under section 1224, in the case of a system 
        offered in a single alliance of a State.

SEC. 1222. GENERAL REQUIREMENTS FOR SINGLE-PAYER SYSTEMS.

    Each single-payer system shall meet the following requirements:
            (1) Establishment by state.--The system is established 
        under State law, and State law provides for mechanisms to 
        enforce the requirements of the system.
            (2) Operation by state.--The system is operated by the 
        State or a designated agency of the State.
            (3) Enrollment of eligible individuals.--
                    (A) Mandatory enrollment of all regional alliance 
                individuals.--The system provides for the enrollment of 
                all eligible individuals residing in the State (or, in 
                the case of an alliance-specific single-payer system, 
                in the alliance area) for whom the applicable health 
                plan would otherwise be a regional alliance health 
                plan.
                    (B) Optional enrollment of medicare-eligible 
                individuals.--At the option of the State, the system 
                may provide for the enrollment of medicare-individuals 
                residing in the State (or, in the case of an alliance-
                specific single-payer system, in the alliance area) if 
                the Secretary of Health and Human Services has approved 
                an application submitted by the State under section 
                1893 of the Social Security Act (as added by section 
                4001(a)) for the integration of medicare beneficiaries 
                into plans of the State. Nothing in this subparagraph 
                shall be construed as requiring that a State have a 
                single-payer system in order to provide for such 
                integration.
                    (C) Optional enrollment of corporate alliance 
                individuals in statewide plans.--At the option of the 
                State, a Statewide single-payer system may provide for 
                the enrollment of individuals residing in the State who 
                are otherwise eligible to enroll in a corporate 
                alliance health plan under section 1311.
                    (D) Options included in state system document.--A 
                State may not exercise any of the options described in 
                subparagraphs (A) or (B) for a year unless the State 
                included a description of the option in the submission 
                of its system document to the Board for the year under 
                section 1200(b).
                    (E) Exclusion of certain individuals.--A single-
                payer system may not require the enrollment of electing 
                veterans, active duty military personnel, and electing 
                Indians (as defined in 1012(d)).
            (4) Direct payment to providers.--
                    (A) In general.--With respect to providers who 
                furnish items and services included in the 
                comprehensive benefit package to individuals enrolled 
                in the system, the State shall make payments directly 
                to such providers and assume (subject to subparagraph 
                (B)) all financial risk associated with making such 
                payments.
                    (B) Capitated payments permitted.--Nothing in 
                subparagraph (A) shall be construed to prohibit 
                providers furnishing items and services under the 
                system from receiving payments from the plan on a 
                capitated, at-risk basis based on prospectively 
                determined rates.
            (5) Provision of comprehensive benefit package.--
                    (A) In general.--The system shall provide for 
                coverage of the comprehensive benefit package, 
                including the cost sharing provided under the package 
                (subject to subparagraph (B)), to all individuals 
                enrolled in the system.
                    (B) Imposition of reduced cost sharing.--The system 
                may decrease the cost sharing otherwise provided in the 
                comprehensive benefit package with respect to any class 
                of individuals enrolled in the system or any class of 
                services included in the package, so long as the system 
                does not increase the cost sharing otherwise imposed 
                with respect to any other class of individuals or 
                services.
            (6) Cost containment.--The system shall provide for 
        mechanisms to ensure, in a manner satisfactory to the Board, 
        that--
                    (A) per capita expenditures for items and services 
                in the comprehensive benefit package under the system 
                for a year (beginning with the first year) do not 
                exceed an amount equivalent to the regional alliance 
                per capita premium target that is determined under 
                section 6003 (based on the State being a single 
                regional alliance) for the year;
                    (B) the per capita expenditures described in 
                subparagraph (A) are computed and effectively 
                monitored; and
                    (C) automatic, mandatory, nondiscretionary 
                reductions in payments to health care providers will be 
                imposed to the extent required to assure that such per 
                capita expenditures do not exceed the applicable target 
                referred to in subparagraph (A).
            (7) Requirements generally applicable to health plans.--The 
        system shall meet the requirements applicable to a health plan 
        under section 1400(a), except that--
                    (A) the system does not have the authority provided 
                to health plans under section 1402(a)(2) (relating to 
                permissible limitations on the enrollment of eligible 
                individuals on the basis of limits on the plan's 
                capacity);
                    (B) the system is not required to meet the 
                requirements of section 1404(a) (relating to 
                restrictions on the marketing of plan materials); and
                    (C) the system is not required to meet the 
                requirements of section 1408 (relating to plan 
                solvency).

SEC. 1223. SPECIAL RULES FOR STATES OPERATING STATEWIDE SINGLE-PAYER 
              SYSTEM.

    (a) In General.--In the case of a State operating a Statewide 
single-payer system--
            (1) the State shall operate the system throughout the State 
        through a single alliance;
            (2) except as provided in subsection (b), the State shall 
        meet the requirements for participating States under part 1; 
        and
            (3) the State shall assume the functions described in 
        subsection (c) that are otherwise required to be performed by 
        regional alliances in participating States that do not operate 
        a Statewide single-payer system.
    (b) Exceptions to Certain Requirements for Participating States.--
In the case of a State operating a Statewide single-payer system, the 
State is not required to meet the following requirements otherwise 
applicable to participating States under part 1:
            (1) Establishment of alliances.--The requirements of 
        section 1202 (relating to the establishment of alliances).
            (2) Health plans.--The requirements of section 1203 
        (relating to health plans), other than the requirement of 
        subsection (f) of such section (relating to coordination of 
        workers' compensation services and automobile liability 
        insurance).
            (3) Financial solvency.--The requirements of section 1204 
        (relating to the financial solvency of health plans in the 
        State).
    (c) Assumption by State of Certain Requirements Applicable to 
Regional Alliances.--A State operating a Statewide single-payer system 
shall be subject to the following requirements otherwise applicable to 
regional alliances in other participating States:
            (1) Enrollment; issuance of health security cards.--The 
        requirements of subsections (a) and (c) of section 1323 and 
        section 1324 shall apply to the State, eligible individuals 
        residing in the State, and the single-payer system operated by 
        the State in the same manner as such requirements apply to a 
        regional alliance, alliance eligible individuals, and regional 
        alliance health plans.
            (2) Reductions in cost sharing for low-income 
        individuals.--The requirement of section 1371 shall apply to 
        the State in the same manner as such requirement applies to a 
        regional alliance.
            (3) Data collection; quality.--The requirements of section 
        1327 shall apply to the State and the single-payer system 
        operated by the State in the same manner as such requirement 
        applies to a regional alliance and health plans offered through 
        a regional alliance.
            (4) Anti-discrimination; coordination.--The requirements of 
        section 1328 shall apply to the State in the same manner as 
        such requirements apply with respect to a regional alliance.
    (d) Financing.--
            (1) In general.--A State operating a Statewide single-payer 
        system shall provide for the financing of the system using, at 
        least in part, a payroll-based financing system that requires 
        employers to pay at least the amount that the employers would 
        be required to pay if the employers were subject to the 
        requirements of subtitle B of title VI.
            (2) Use of financing methods.--Such a State may use, 
        consistent with paragraph (1), any other method of financing.
    (e) Single-Payer State Defined.--In this Act, the term ``single-
payer State'' means a State with a Statewide single-payer system in 
effect that has been approved by the Board in accordance with this 
part.

SEC. 1224. SPECIAL RULES FOR ALLIANCE-SPECIFIC SINGLE-PAYER SYSTEMS.

    (a) In General.--In the case of a State operating an alliance-
specific single-payer system--
            (1) the State shall meet the requirements for participating 
        States under part 1; and
            (2) the regional alliance in which the system is operated 
        shall meet the requirements of subsection (b).
    (b) Requirements for Alliance in Which System Operates.--A regional 
alliance in which an alliance-specific single payer system is operated 
shall meet the requirements applicable to regional alliances under 
subtitle D, except that the alliance is not required to meet the 
following requirements of such subtitle:
            (1) Contracts with health plans.--The requirements of 
        section 1321 (relating to contracts with health plans).
            (2) Choice of health plans offered.--The requirements of 
        subsections (a) or (b) of section 1322 (relating to offering a 
        choice of health plans to eligible enrollees).
            (3) Establishment of ombudsman office.--The requirements of 
        section 1326(a) (relating to the establishment of an office of 
        ombudsman).
            (4) Addressing needs of areas with inadequate health 
        services.--The regional alliance does not have any of the 
        authorities described in subsections (a) and (b) of section 
        1329 (relating to adjusting payments to plans and encouraging 
        the establishment of new plans).

                                                    Title I, Subtitle D

                      Subtitle D--Health Alliances

SEC. 1300. HEALTH ALLIANCE DEFINED.

    In this Act, the term ``health alliance'' means a regional alliance 
(as defined in section 1301) and a corporate alliance (as defined in 
section 1311).

       PART 1--ESTABLISHMENT OF REGIONAL AND CORPORATE ALLIANCES

                     Subpart A--Regional Alliances

SEC. 1301. REGIONAL ALLIANCE DEFINED.

    In this Act, the term ``regional alliance'' means a non-profit 
organization, an independent state agency, or an agency of the State 
which--
            (1) meets the applicable organizational requirements of 
        this subpart, and
            (2) is carrying out activities consistent with part 2.

SEC. 1302. BOARD OF DIRECTORS.

    (a) In General.--A regional alliance must be governed by a Board of 
Directors appointed consistent with the provisions of this subpart. All 
powers vested in a regional alliance under this Act shall be vested in 
the Board of Directors.
    (b) Membership.--
            (1) In general.--Such a Board of Directors shall consist 
        of--
                    (A) members who represent employers whose employees 
                purchase health coverage through the alliance, 
                including self-employed individuals who purchase such 
                coverage; and
                    (B) members who represent individuals who purchase 
                such coverage, including employees who purchase such 
                coverage.
            (2) Equal representation of employers and consumers.--The 
        number of members of the Board described under subparagraph (A) 
        of paragraph (1) shall be the same as the number of members 
        described in subparagraph (B) of such paragraph.
    (c) No Conflict of Interest Permitted.--An individual may not serve 
as a member of the Board of Directors if the individual is one of the 
following (or an immediate family member of one of the following):
            (1) A health care provider.
            (2) An individual who is an employee or member of the Board 
        of Directors of, has a substantial ownership in, or derives 
        substantial income from, a health care provider, health plan, 
        pharmaceutical company, or a supplier of medical equipment, 
        devices, or services.
            (3) A person who derives substantial income from the 
        provision of health care.
            (4)(A) A member or employee of an association, law firm, or 
        other institution or organization that represents the interests 
        of one or more health care providers, health plans or others 
        involved in the health care field, or (B) an individual who 
        practices as a professional in an area involving health care.

SEC. 1303. PROVIDER ADVISORY BOARDS FOR REGIONAL ALLIANCES.

    Each regional alliance must establish a provider advisory board 
consisting of representatives of health care providers and 
professionals who provide covered services through health plans offered 
by the alliance.

                     Subpart B--Corporate Alliances

SEC. 1311. CORPORATE ALLIANCE DEFINED; INDIVIDUALS ELIGIBLE FOR 
              COVERAGE THROUGH CORPORATE ALLIANCES; ADDITIONAL 
              DEFINITIONS.

    (a) Corporate Alliance Defined.--In this Act, the term ``corporate 
alliance'' means an eligible sponsor (as defined in subsection (b)) 
if--
            (1) the sponsor elects, in a form and manner specified by 
        the Secretary of Labor consistent with this subpart, to be 
        treated as a corporate alliance under this title and such 
        election has not been terminated under section 1313; and
            (2) the sponsor has filed with the Secretary of Labor a 
        document describing how the sponsor shall carry out activities 
        as such an alliance consistent with part 4.
    (b) Eligible Sponsors.--
            (1) In general.--In this subpart, each of the following is 
        an eligible sponsor:
                    (A) Large employer.--An employer that--
                            (i) is a large employer (as defined in 
                        subsection (e)(2)) as of the date of an 
                        election under subsection (a)(1), and
                            (ii) is not an excluded employer described 
                        in paragraph (2).
                    (B) Plan sponsor of a multiemployer plan.--A plan 
                sponsor described in section 3(16)(B)(iii) of Employee 
                Retirement Income Security Act of 1974, but only with 
                respect to a group health plan that is a multiemployer 
                plan (as defined in subsection (e)(3)) maintained by 
                the sponsor and only if--
                            (i) such plan offered health benefits as of 
                        September 1, 1993, and
                            (ii) as of both September 1, 1993, and 
                        January 1, 1996, such plan has more than 5,000 
                        active participants in the United States, or 
                        the plan is maintained by one or more 
                        affiliates of the same labor organization, or 
                        one or more affiliates of labor organizations 
                        representing employees in the same industry, 
                        covering more than 5,000 employees.
                    (C) Rural electric cooperative and rural telephone 
                cooperative association.--A rural electric cooperative 
                or a rural telephone cooperative association, but only 
                with respect to a group health plan that is maintained 
                by such cooperative or association (or members of such 
                cooperative or association) and only if such plan--
                            (i) offered health benefits as of September 
                        1, 1993, and
                            (ii) as of both September 1, 1993, and 
                        January 1, 1996, has more than 5,000 full-time 
                        employees in the United States entitled to 
                        health benefits under the plan.
            (2) Excluded employers.--For purposes of paragraph (1)(A), 
        any of the following are excluded employers described in this 
        paragraph:
                    (A) An employer whose primary business is employee 
                leasing.
                    (B) The Federal government (other than the United 
                States Postal Service).
                    (C) A State government, a unit of local government, 
                and an agency or instrumentality of government, 
                including any special purpose unit of government.
    (c) Individuals Eligible To Enroll in Corporate Alliance Health 
Plans.--For purposes of part 1 of subtitle A, subject to subsection 
(d)--
            (1) Full-time employees of large employers.--Each eligible 
        individual who is a full-time employee (as defined in section 
        1901(b)(2)(C)) of a large employer that has an election in 
        effect as a corporate alliance is eligible to enroll in a 
        corporate alliance health plan offered by such corporate 
        alliance.
            (2) Multiemployer alliances.--
                    (A) Participants.--Each participant and beneficiary 
                (as defined in subparagraph (B)) under a multiemployer 
                plan, with respect to which an eligible sponsor of the 
                plan described in subsection (b)(1)(B) has an election 
                in effect as a corporate alliance, is eligible to 
                enroll in a corporate alliance health plan offered by 
                such corporate alliance.
                    (B) Participant and beneficiary defined.--In 
                subparagraph (A), the terms ``participant'' and 
                ``beneficiary'' have the meaning given such terms in 
                section 3 of the Employee Retirement Income Security 
                Act of 1974.
            (3) Full-time employees of rural cooperative alliances.--
        Each full-time employee of a member of a rural electric 
        cooperative or rural telephone cooperative association which 
        has an election in effect as a corporate alliance (and each 
        full-time employee of such a cooperative or association) is 
        eligible to enroll in a corporate alliance health plan offered 
        by such corporate alliance.
            (4) Ineligible to enroll in regional alliance health 
        plan.--Except as provided in section 1013, a corporate alliance 
        eligible individual is not eligible to enroll under a regional 
        alliance health plan.
    (d) Exclusion of Certain Individuals.--In accordance with rules of 
the Board, the following individuals shall not be treated as corporate 
alliance eligible individuals:
            (1) AFDC recipients.
            (2) SSI recipients.
            (3) Individuals who are described in section 1004(b) 
        (relating to veterans, military personnel, and Indians) and who 
        elect an applicable health plan described in such section.
            (4) Employees who are seasonal or temporary workers (as 
        defined by the Board), other than such workers who are treated 
        as corporate alliance eligible individuals pursuant to a 
        collective bargaining agreement (as defined by the Secretary of 
        Labor).
    (e) Definitions Relating to Corporate Alliances.--In this subtitle, 
except as otherwise provided:
            (1) Group health plan.--The term ``group health plan'' 
        means an employee welfare benefit plan (as defined in section 
        3(1) of the Employee Retirement Income Security Act of 1974) 
        providing medical care (as defined in section 213(d) of the 
        Internal Revenue Code of 1986) to participants or beneficiaries 
        (as defined in section 3 of the Employee Retirement Income 
        Security Act of 1974) directly or through insurance, 
        reimbursement, or otherwise.
            (2) Large employer.--The term ``large employer'' means an 
        employer that has more than 5,000 full-time employees in the 
        United States. Such term includes the United States Postal 
        Service.
            (3) Multiemployer plan.--The term ``multiemployer plan'' 
        has the meaning given such term in section 3(37) of the 
        Employee Retirement Income Security Act of 1974, and includes 
        any plan that is treated as such a plan under title I of such 
        Act.
            (4) Rural electric cooperative.--The term ``rural electric 
        cooperative'' has the meaning given such term in section 
        3(40)(A)(iv) of the Employee Retirement Income Security Act of 
        1974.
            (5) Rural telephone cooperative associations.--The term 
        ``rural telephone cooperative association'' has the meaning 
        given such term in section 3(40)(A)(v) of the Employee 
        Retirement Income Security Act of 1974.

SEC. 1312. TIMING OF ELECTIONS.

    (a) For Large Employers.--
            (1) Current large employers.--
                    (A) In general.--In the case of an employer that is 
                an eligible sponsor described in section 1311(b)(1)(A) 
                as of the most recent January 1 prior to the general 
                effective date, the sponsor's election to be a 
                corporate alliance under such section must be made and 
                filed with the Secretary of Labor not later than the 
                date specified in subparagraph (B).
                    (B) Deadline for notice.--The date specified in 
                this subparagraph is January 1 of the second year 
                preceding the general effective date or, in the case of 
                a State that elects to become a participating State 
                before the general effective date, not later than one 
                month later than the date specified for States under 
                section 1202(a)(2).
            (2) New large employers.--In the case of an employer that 
        is not an eligible sponsor described in section 1311(b)(1)(A) 
        as of the most recent January 1 prior to the general effective 
        date, but first becomes such a sponsor as of a subsequent date, 
        the election to be a corporate alliance under such section must 
        be made and filed with the Secretary of Labor not later than 
        March 1 of the year following the year in which the employer 
        first becomes such a sponsor.
            (3) Application of option.--The Secretary of Labor shall 
        promulgate rules regarding how the option described in section 
        1311(c)(1)(B) will be applied to the determination of whether 
        an employer is a large employer before an election is made 
        under section 1311.
    (b) For Multiemployer Plans and Rural Cooperatives.--In the case of 
an eligible sponsor described in section 1311(b)(1) (B) or (C), the 
sponsor's election to be a corporate alliance under such section must 
be made and filed with the Secretary of Labor not later than March 1, 
1996.
    (c) Effective Date of Election.--An election made under subsection 
(a) or (b) shall be effective for coverage provided under health plans 
on and after January 1 of the year following the year in which the 
election is made.
    (d) One-time Election.--If an eligible sponsor fails to make the 
election on a timely manner under subsection (a) or (b), the sponsor 
may not make such election at any other time.

SEC. 1313. TERMINATION OF ALLIANCE ELECTION.

    (a) Termination for Insufficient Number of Full-Time Employees or 
Participants.--If a corporate alliance reports under section 1387(c), 
that there were fewer than 4,800 full-time employees (or, active 
participants, in the case of one or more plans offered by a corporate 
alliance which is an eligible sponsor described in section 
1311(b)(1)(B)) who are enrolled in a health plan through the alliance, 
the election under this part with respect to the alliance shall 
terminate.
    (b) Termination for Failure to Meet Requirements.--
            (1) In general.--If the Secretary of Labor finds that a 
        corporate alliance has failed substantially to meet the 
        applicable requirements of this subtitle, the Secretary shall 
        terminate the election under this part with respect to the 
        alliance
            (2) Excess increase in premium equivalent.--If the 
        Secretary of Labor finds that the alliance is in violation of 
        the requirements of section 6022 (relating to prohibition 
        against excess increase in premium expenditures), the Secretary 
        shall terminate the alliance in accordance with such section.
    (c) Elective Termination.--A corporate alliance may terminate an 
election under this part by filing with the National Health Board and 
the Secretary of Labor a notice of intent to terminate.
    (d) Effective Date of Termination.--In the case of a termination of 
an election under this section, in accordance with rules established by 
the Secretary of Labor--
            (1) subject to section 6022(a)(1), the termination shall 
        take effect as of the effective date of enrollments in regional 
        alliance health plans made during the next open enrollment 
        period (as provided in section 1323(d)), and
            (2) the enrollment of eligible individuals in corporate 
        alliance health plans of the corporate alliance shall be 
        terminated as of such date and such individuals shall be 
        enrolled in other applicable health plans effective on such 
        date.
    (e) Notice to Board.--If an election with respect to a corporate 
alliance is terminated pursuant to subsection (a) or subsection (b), 
the Secretary of Labor shall notify the National Health Board of the 
termination of the election.

 PART 2--GENERAL RESPONSIBILITIES AND AUTHORITIES OF REGIONAL ALLIANCES

SEC. 1321. CONTRACTS WITH HEALTH PLANS.

    (a) Contracts with Plans.--
            (1) In general.--In order to assure the availability of the 
        comprehensive benefit package to eligible individuals residing 
        in the alliance area in a cost-effective manner, except as 
        provided in this section, each regional alliance shall 
        negotiate with any willing State-certified health plan to enter 
        into a contract with the alliance for the enrollment under the 
        plan of eligible individuals in the alliance area. Subject to 
        paragraph (2), a regional alliance shall not enter into any 
        such contract with a health plan that is not a State-certified 
        health plan.
            (2) Treatment of certain plans.--Each regional alliance 
        shall enter into a contract under this section with any 
        veterans health plan of the Department of Veterans Affairs and 
        with a Uniformed Services Health Plan of the Department of 
        Defense, that offers the comprehensive benefit package to 
        eligible individuals residing in the alliance area if the 
        appropriate official requests to enter into such a contract.
    (b) General Conditions for Denial of Contract by a Regional 
Alliance.--A regional alliance is not required under this section to 
offer a contract with a health plan if--
            (1) the alliance finds that the proposed bid exceeds 120 
        percent of the regional alliance per capita prremium target (as 
        determined under section 6003); or
            (2) the plan has failed to comply with requirements under 
        prior contracts with the alliance, including failing to offer 
        coverage for all the services in the comprehensive benefit 
        package in the entire service area of the plan.

SEC. 1322. OFFERING CHOICE OF HEALTH PLANS FOR ENROLLMENT; 
              ESTABLISHMENT OF FEE-FOR-SERVICE SCHEDULE.

    (a) In General.--Each regional alliance must provide to each 
eligible enrollee (as defined in section 1902(14)) with respect to the 
alliance a choice of health plans among the plans which have contracts 
in effect with the alliance under section 1321 (in the case of a 
regional alliance) or section 1341 (in the case of a corporate 
alliance).
    (b) Offering of Plans by Regional Alliances.--
            (1) In general.--Each regional alliance shall include among 
        its health plan offerings at least one fee-for-service plan (as 
        defined in paragraph (2)).
            (2) Fee-for-service plan defined.--
                    (A) In general.--For purposes of this Act, the term 
                ``fee-for-service plan'' means a health plan that--
                            (i) provides coverage for all items and 
                        services included in the comprehensive benefit 
                        package that are furnished by any lawful health 
                        care provider of the enrollee's choice, subject 
                        to reasonable restrictions (described in 
                        subparagraph (B)), and
                            (ii) makes payment to such a provider 
                        without regard to whether or not there is a 
                        contractual arrangement between the plan and 
                        the provider.
                    (B) Reasonable restrictions described.--The 
                reasonable restrictions on coverage permitted under a 
                fee-for-service plan (as specified by the National 
                Health Board) are as follows:
                            (i) Utilization review.
                            (ii) Prior approval for specified services.
                            (iii) Exclusion of providers on the basis 
                        of poor quality of care, based on evidence 
                        obtainable by the plan.
                Clause (ii) shall not be construed as permitting a plan 
                to require prior approval for non-primary health care 
                services through a gatekeeper or other process.
    (c) Establishment of Fee-for-Service Schedule.--
            (1) In general.--Except in the case of regional alliances 
        of a State that has established a Statewide fee schedule under 
        paragraph (3), each regional alliance shall establish a fee 
        schedule setting forth the payment rates applicable to services 
        furnished during a year to individuals enrolled in fee-for-
        service plans (or to services furnished under the fee-for-
        service component of any regional alliance health plan) for use 
        by regional alliance health plans under section 1406(c) and 
        corporate alliance health plans providing services subject to 
        the schedule in the regional alliance area.
            (2) Negotiation with providers.--The fee schedule under 
        paragraph (1) shall be established after negotiations with 
        providers, and (subject to paragraphs (5) and (6)) providers 
        may collectively negotiate the fee schedule with the regional 
        alliance.
            (3) Use of statewide schedule.--At the option of a State, 
        the State may establish its own statewide fee schedule which 
        shall apply to all fee-for-service plans offered by regional 
        alliances and corporate alliances in the State instead of 
        alliance-specific schedules established under paragraph (1).
            (4) Annual revision.--A regional alliance or State (as the 
        case may be) shall annually update the payment rates provided 
        under the fee schedule established pursuant to paragraph (1) or 
        paragraph (3).
            (5) Activities treated as State action or efforts intended 
        to influence government action.--The establishment of a fee 
        schedule under this subsection by a regional alliance of a 
        State shall be considered to be pursuant to a clearly 
        articulated and affirmatively expressed State policy to 
        displace competition and to be actively supervised by the 
        State, and conduct by providers respecting the establishment of 
        the fee schedule, including collective negotiations by 
        providers with the regional alliance (or the State) pursuant to 
        paragraph (2), shall be considered as efforts intended to 
        influence governmental action.
            (6) No boycott permitted.--Nothing in this subsection shall 
        be construed to permit providers to threaten or engage in any 
        boycott.
            (7) Negotiations defined.--In this subsection, 
        ``negotiations'' are the process by which providers 
        collectively and jointly meet, confer, consult, discuss, share 
        information, among and between themselves in order to agree on 
        information to be provided, presentations to be made, and other 
        such activities with respect to regional alliances (or States) 
        relating to the establishment of the fee schedule (but not 
        including any activity that constitutes engaging in or 
        threatening to engage in a boycott), as well as any and all 
        collective and joint meetings, discussions, presentations, 
        conferences, and consultations between or among providers and 
        any regional alliance (or State) for the purpose of 
        establishing the fee schedule described in this subsection.
    (d) Prospective Budgeting of Fee-for-Service.--
            (1) In general.--The fee schedule established by a regional 
        alliance or a State under subsection (c) may be based on 
        prospective budgeting described in paragraph (2).
            (2) Prospective budgeting described.--Under prospective 
        budgeting--
                    (A) the regional alliance or State (as the case may 
                be) shall negotiate with health providers annually to 
                develop a budget for the designated fee-for-service 
                plan;
                    (B) the negotiated budget shall establish spending 
                targets for each sector of health expenditures made by 
                the plan; and
                    (C) if the regional alliance or State (as the case 
                may be) determines that the utilization of services 
                under the plan is at a level that will result in 
                expenditures under the plan exceeding the negotiated 
                budget, the plan shall reduce the amount of payments 
                otherwise made to providers (through a withhold or 
                delay in payments or adjustments) in such a manner and 
                by such amounts as necessary to assure that 
                expenditures will not exceed the budget.
            (3) Use of prospective budgeting exclusive.--If a regional 
        alliance or State establishes the fee schedule for fee-for-
        service plans on the basis of prospective budgeting under this 
        subsection, payment for all services provided by fee-for-
        service plans in the alliance or State shall be determined on 
        such basis.

SEC. 1323. ENROLLMENT RULES AND PROCEDURES.

    (a) In General.--Each regional alliance shall assure that each 
regional alliance eligible individual who resides in the alliance area 
is enrolled in a regional alliance health plan and shall establish and 
maintain methods and procedures, consistent with this section, 
sufficient to assure such enrollment. Such methods and procedures shall 
assure the enrollment of alliance eligible individuals at the time they 
first become eligible enrollees in the alliance area, including 
individuals at the time of birth, at the time they move into the 
alliance area, and at the time of reaching the age of individual 
eligibility as an eligible enrollee (and not merely as a family 
member). Each regional alliance shall establish procedures, consistent 
with subtitle A, for the selection of a single health plan in which all 
members of a family are enrolled.
    (b) Point of Service Enrollment Mechanism.--
            (1) In general.--Each regional alliance shall establish a 
        point-of-service enrollment mechanism (meeting the requirements 
        of this subsection) for enrolling eligible individuals who are 
        not enrolled in a health plan of the alliance when the 
        individual seeks health services.
            (2) Requirements of mechanism.--Under such a mechanism, if 
        an eligible individual seeks to receive services (included in 
        the comprehensive benefit package) from a provider in an 
        alliance area and does not present evidence of enrollment under 
        any applicable health plan, or if the provider has no evidence 
        of the individual's enrollment under any such plan, the 
        following rules shall apply:
                    (A) Notice to alliance.--Consistent with part 2 of 
                subtitle B of title V, the provider--
                            (i) shall provide the regional alliance 
                        with information relating to the identity of 
                        the eligible individual, and
                            (ii) may request payment from the regional 
                        alliance for the furnishing of such services.
                    (B) Initial determination of eligibility and 
                enrollment status.--The regional alliance shall 
                determine--
                            (i) if the individual is an alliance 
                        eligible individual for the alliance, and
                            (ii) if the individual is enrolled under an 
                        applicable health plan (including a corporate 
                        alliance health plan).
                    (C) Treatment of alliance eligible individuals.--If 
                the regional alliance determines that the individual is 
                an alliance eligible individual with respect to the 
                alliance and--
                            (i) is enrolled under a regional alliance 
                        health plan of the alliance, the alliance shall 
                        forward the claim to the health plan involved 
                        and shall notify the provider (and the 
                        individual) of the fact of such enrollment and 
                        the forwarding of such claim (and the plan 
                        shall make payment to the provider for the 
                        services furnished to the individual as 
                        described in paragraph (3)(C));
                            (ii) is not enrolled under a regional 
                        alliance health plan of the alliance but is 
                        required to be so enrolled in a specific health 
                        plan as a family member under section 1011, the 
                        alliance shall record the individual's 
                        enrollment under such specific plan, shall 
                        forward the claim to such plan, and shall 
                        notify the provider (and the individual) of the 
                        fact of such enrollment and the forwarding of 
                        such claim (and the plan shall make payment to 
                        the provider for the services furnished to the 
                        individual as described in paragraph (3)(C)); 
                        or
                            (iii) is not enrolled under such a plan and 
                        is not described in clause (ii), the point-of-
                        service enrollment procedures described in 
                        paragraph (3) shall apply.
                    (D) Treatment of individuals enrolled under health 
                plans of other alliances.--If the regional alliance 
                determines that the individual is not an alliance 
                eligible individual with respect to the alliance but 
                the individual is enrolled--
                            (i) under a regional alliance health plan 
                        of another alliance, the alliance shall forward 
                        the claim to the other regional alliance and 
                        shall notify the provider (and the individual) 
                        of the fact of such enrollment and the 
                        forwarding of such claim (and the plan shall 
                        make payment to the provider for the services 
                        furnished to the individual as described in 
                        paragraph (3)(C)); or
                            (ii) under a corporate alliance health 
                        plan, the alliance shall forward the claim to 
                        the corporate alliance involved and shall 
                        notify the provider (and the individual) of the 
                        fact of such enrollment and the forwarding of 
                        such claim (and the plan shall make payment to 
                        the provider for the services furnished to the 
                        individual as described in section 
                        1383(b)(2)(B)).
                    (E) Treatment of other alliance eligible 
                individuals not enrolled in health plan.--If the 
                regional alliance determines that the individual is not 
                an alliance eligible individual with respect to the 
                alliance and the individual is an alliance eligible 
                individual with respect to another health alliance but 
                is not enrolled in a health plan of such alliance, the 
                regional alliance shall forward the claim to the other 
                alliance involved and shall notify the provider (and 
                the individual) of the forwarding of such claim and the 
                requirement for prompt enrollment of the individual 
                under an applicable health plan of such alliance 
                pursuant to the procedures described in paragraph (3) 
                (in the case of a regional alliance) or in section 
                1383(b) (in the case of a corporate alliance).
                    (F) Treatment of all other individuals.--The 
                National Board shall promulgate rules regarding the 
                responsibilities of regional alliances relating to 
                individuals whose applicable health plan is not an 
                alliance plan and other individuals the alliance is 
                unable to identify as eligible individuals.
            (3) Point-of-service enrollment procedures described.--The 
        point-of-service enrollment procedures under this paragraph are 
        as follows:
                    (A) Not later than 10 days after the date an 
                alliance is notified of the receipt of services by an 
                unenrolled eligible individual, the alliance provides 
                the individual with materials describing health plans 
                offered through the alliance.
                    (B) The individual shall be provided a period of 30 
                days in which to enroll in a health plan of the 
                individual's choice. If the individual fails to so 
                enroll during such period, the alliance shall enroll 
                the individual in a health plan of the alliance 
                selected on a random basis.
                    (C) Using the fee-for-service schedule adopted by 
                the alliance under section 1322(c), the health plan in 
                which the individual is enrolled under this 
                subparagraph shall reimburse the provider who provided 
                the services referred to in subparagraph (A) to the 
                same extent as if the individual had been enrolled 
                under the plan at the time of provision of the 
                services.
    (c) Enrollment of New Residents.--
            (1) In general.--Each regional alliance shall establish 
        procedures for enrolling regional alliance eligible individuals 
        who move into the alliance area.
            (2) Long-term residents.--Such procedures shall assure that 
        regional alliance eligible individuals who intend to reside in 
        the alliance area for longer than 6 months shall register with 
        the regional alliance for the area and shall enroll in a 
        regional alliance health plan offered by the alliance.
            (3) Short-term residents.--Such procedures shall permit 
        eligible individuals who intend to reside in the alliance area 
        for more than 3 months but less than 6 months to choose among 
        the following options:
                    (A) To continue coverage through the health plan in 
                which such individual is previously enrolled, in which 
                case coverage for care in the area of temporary 
                residence may be limited to emergency services and 
                urgent care.
                    (B) To register with the regional alliance and 
                enroll in a regional alliance health plan offered by 
                the alliance.
                    (C) To change enrollment in the previous alliance 
                area to enrollment in a health plan of such alliance 
                that provides for coverage on a fee-for-service basis 
                of services provided outside the area of that alliance.
    (d) Changes in Enrollment.--
            (1) Annual open enrollment period to change plan 
        enrollment.--Each regional alliance shall hold an annual open 
        enrollment period during which each eligible enrollee in the 
        alliance has the opportunity to choose among health plans 
        offered through the alliance, according to rules to be 
        promulgated by the National Health Board.
            (2) Disenrollment for cause.--In addition to the annual 
        open enrollment period held under paragraph (1), each regional 
        alliance shall establish procedures under which alliance 
        eligible individuals enrolled in a plan may disenroll from the 
        plan for good cause at any time during a year and enroll in 
        another plan of the alliance. Such procedures shall be 
        implemented in a manner that ensures continuity of coverage for 
        the comprehensive benefit package for such individuals during 
        the year.
    (e) Enrollment of Family Members.--Each regional alliance shall 
provide for the enrollment of all family members in the same plan, 
consistent with part 2 of subtitle A.
    (f) Oversubscription of Plans.--
            (1) In general.--Each regional alliance shall establish a 
        method for establishing enrollment priorities in the case of a 
        health plan that does not have sufficient capacity to enroll 
        all eligible individuals seeking enrollment.
            (2) Preference for current members.--Such method shall 
        provide that in the case of such an oversubscribed plan--
                    (A) individuals already enrolled in the plan are 
                given priority in continuing enrollment in the plan, 
                and
                    (B) other individuals who seek enrollment during an 
                applicable enrollment period are permitted to enroll in 
                accordance with a random selection method, up to the 
                enrollment capacity of the plan.
    (g) Termination of Enrollment.--
            (1) In general.--Each regional alliance shall establish 
        special enrollment procedures to permit alliance eligible 
        individuals to change the plan in which they are enrolled in 
        the case of the termination of coverage under a plan, in a 
        manner that ensures the individuals' continuation of coverage 
        for the comprehensive benefit package.
            (2) Failure of a corporate alliance.--Each regional 
        alliance shall establish special enrollment procedures to 
        permit individuals, who become alliance eligible individuals as 
        a result of the failure of a corporate alliance, to enroll 
        promptly in regional alliance health plans in a manner that 
        ensures the individuals' continuation of coverage for the 
        comprehensive benefit package.
    (h) Limitation on Offering of Coverage to Ineligible Individuals.--
A regional alliance may not knowingly offer coverage under a regional 
alliance health plan or other health insurance or health benefits to an 
individual who is not an eligible individual. Nothing in this section 
shall be construed as affecting the ability of a regional alliance 
health plan or other health plan to offer coverage to such individuals 
without any financial payment or participation by a regional alliance.
    (i) Enforcement of Enrollment Requirement.--In the case of a 
regional alliance eligible individual who fails to enroll in an 
applicable health plan as required under section 1002(a)--
            (1) the applicable regional alliance shall enroll the 
        individual in a regional alliance health plan (selected by the 
        alliance consistent with this Act and with any rules 
        established by the Board), and
            (2) such alliance shall require the payment of twice the 
        amount of the family share of premiums that would have been 
        payable under subtitle B of title VI if the individual had 
        enrolled on a timely basis in the plan, unless the individual 
        has established to the satisfaction of the alliance good cause 
        for the failure to enroll on a timely basis.

SEC. 1324. ISSUANCE OF HEALTH SECURITY CARDS.

    A regional alliance is responsible for the issuance of health 
security cards to regional alliance eligible individuals under section 
1001(b).

SEC. 1325. CONSUMER INFORMATION AND MARKETING.

    (a) Consumer Information.--
            (1) In general.--Before each open enrollment period, each 
        regional alliance shall make available to eligible enrollees 
        information, in an easily understood and useful form, that 
        allows such enrollees (and other alliance eligible individuals) 
        to make valid comparisons among health plans offered by the 
        alliance.
            (2) Information to be included.--Such information must 
        include, in the same format for each plan, such information as 
        the National Health Board shall require, including at least the 
        following:
                    (A) The cost of the plan, including premiums and 
                average out-of-pocket expenses.
                    (B) The characteristics and availability of health 
                care professionals and institutions participating in 
                the plan.
                    (C) Any restrictions on access to providers and 
                services under the plan.
                    (D) A summary of the annual quality performance 
                report, established pursuant to section 5005(c)(1), 
                which contains measures of quality presented in a 
                standard format.
    (b) Marketing.--Each regional alliance shall, consistent with 
section 1404, review and approve or disapprove the distribution of any 
materials used to market health plans offered through the alliance.

SEC. 1326. OMBUDSMAN.

    (a) Establishment.--Each regional alliance must establish and 
maintain an office of an ombudsman to assist consumers in dealing with 
problems that arise with health plans and the alliance.
    (b) Optional Financing Through Voluntary Contribution.--At the 
option of the State in which a regional alliance is located, the 
alliance--
            (1) shall permit alliance eligible individuals to designate 
        that one dollar of the premium paid for enrollment in the 
        individual's regional alliance health plan for the operation of 
        the office of the alliance's ombudsman; and
            (2) shall apply any such amounts towards the establishment 
        and operation of such office.

SEC. 1327. DATA COLLECTION; QUALITY.

    Each regional alliance shall comply with requirements of subtitles 
A and B of title V (relating to quality, information systems, and 
privacy), and shall take appropriate steps to ensure that health plans 
offered through the alliance comply with such requirements.

SEC. 1328. ADDITIONAL DUTIES.

    (a) Anti-Discrimination.--In carrying out its activities under this 
part, a regional alliance may not discriminate against health plans on 
the basis of race, sex, national origin, religion, mix of health 
professionals, location of the plan's headquarters, or (except as 
specifically provided in this part) organizational arrangement.
    (b) Coordination of Enrollment Activities.--Each regional alliance 
shall coordinate, in a manner specified by the National Health Board, 
with other health alliances its activities, including enrollment and 
disenrollment activities, in a manner that ensures continuous, 
nonduplicative coverage of alliance eligible individuals in health 
plans and that minimizes administrative procedures and paperwork.

SEC. 1329. ADDITIONAL AUTHORITIES FOR REGIONAL ALLIANCES TO ADDRESS 
              NEEDS IN AREAS WITH INADEQUATE HEALTH SERVICES; 
              PROHIBITION OF INSURANCE ROLE.

    (a) Payment Adjustment.--In order to ensure that plans are 
available to all eligible individuals residing in all portions of the 
alliance area, a regional alliance may adjust payments to plans or use 
other financial incentives to encourage health plans to expand into 
areas that have inadequate health services.
    (b) Encouraging New Plans.--Subject to subsection (c), in order to 
encourage the establishment of a new health plan in an area that has 
inadequate health services, an alliance may--
            (1) organize health providers to create such a plan in such 
        an area a new health plan targeted at such an area,
            (2) provide assistance with setting up and administering 
        such a plan, and
            (3) arrange favorable financing for such a plan.
    (c) Prohibition of Regional Alliances Bearing Risk.--A regional 
alliance may not bear insurance risk.

SEC. 1330. PROHIBITION AGAINST SELF-DEALING AND CONFLICTS OF INTEREST.

    (a) Promulgation of Standards.--The Board shall promulgate 
standards of conduct in accordance with subsection (b) for any 
administrator, officer, trustee, fiduciary, custodian, counsel, agent, 
or employee of any regional alliance.
    (b) Requirements for Standards.--The standards of conduct referred 
to in subsection (a) shall set forth--
            (1) the types of investment interests, ownership interests, 
        affiliations or other employment that would be improper for an 
        individual described in subsection (a) to hold during the time 
        of the individual's service or employment with an alliance; and
            (2) the circumstances that will constitute impermissible 
        conflicts of interest or self-dealing by such employees in 
        performing their official duties and functions for any regional 
        alliance.
    (c) Civil Monetary Penalty.--Any individual who engages in an 
activity that the individual knows or has reason to know is in 
violation of the regulations and standards promulgated by the Board 
pursuant to subsections (a) and (b) shall be subject, in addition to 
any other penalties that may be prescribed by law, to a civil money 
penalty of not more than $10,000 for each such violation. The 
provisions of section 1128A of the Social Security Act (other than 
subsections (a) and (b)) shall apply to civil money penalties under 
this subsection in the same manner as they apply to a penalty or 
proceeding under section 1128A(a) of such Act.

PART 3--AUTHORITIES AND RESPONSIBILITIES OF REGIONAL ALLIANCES RELATING 
                 TO FINANCING AND INCOME DETERMINATIONS

                     Subpart A--Collection of Funds

SEC. 1341. INFORMATION AND NEGOTIATION AND ACCEPTANCE OF BIDS.

    (a) Information Provided to Plans Before Soliciting Bids.--
            (1) In general.--Each regional alliance shall make 
        available, by April 1 of each year, to each plan that indicates 
        an interest in submitting a premium bid under section 6004 in 
        the year, information (including information described in 
        paragraph (2)) that the Board specifies as being necessary to 
        enable a plan to estimate, based upon an accepted bid, the 
        amounts payable to such a plan under section 1351.
            (2) Information to be included.--Such information shall 
        include the following:
                    (A) The demographic and other characteristics of 
                regional alliance eligible individuals for the regional 
                alliance.
                    (B) The uniform per capita conversion factor for 
                the regional alliance (established under subsection 
                (b)).
                    (C) The premium class factors (established by the 
                Board under section 1531).
                    (D) The regional alliance inflation factor 
                (determined under section 6001(a)).
                    (E) The risk-adjustment factors and reinsurance 
                methodology and payment amounts (published under 
                subsection (c)) to be used by the regional alliance in 
                computing blended plan per capita rates (in accordance 
                with section 6201).
                    (F) The plan bid proportion, the AFDC proportion, 
                the SSI proportion, the AFDC per capita premium amount, 
                and the SSI per capita premium amount, for the year, as 
                computed under subtitle D of title VI.
                    (G) The alliance administrative allowance 
                percentage, computed under section 1352(b).
    (b) Determination of Uniform Per Capita Conversion Factor.--Each 
regional alliance shall specify, not later than April 1 of each year 
(beginning with the year before the first year) a uniform per capita 
conversion factor to be used under section 6102(a)(2) in converting the 
accepted bid for each plan for the year into the premium for an 
individual enrollment for such plan for the year. SSI or AFDC 
recipients shall not be included for purposes of computing the 
conversion factor.
    (c) Determination of Risk-Adjustment Factors and Reinsurance 
Payment Amounts.--Each regional alliance shall compute and publish the 
risk-adjustment factors and reinsurance payment amounts to be used by 
the regional alliance in computing blended plan per capita rates under 
section 6201.
    (d) Solicitation of Bids.--Each regional alliance shall solicit and 
negotiate, consistent with section 6004, with each regional alliance 
health plan a bid for the payment rate on a per capita basis for the 
comprehensive benefit package for all alliance eligible individuals in 
the alliance area.

SEC. 1342. CALCULATION AND PUBLICATION OF GENERAL FAMILY SHARE AND 
              GENERAL EMPLOYER PREMIUM AMOUNTS.

    (a) Calculation of Components in General Family Share and General 
Employer Premiums.--
            (1) Family share.--Each regional alliance shall compute the 
        following components of the general family share of premiums 
        (as defined in subsection (b)(1)(B)):
                    (A) Plan premiums.--For each plan offered, the 
                premium for the plan for each class of family 
                enrollment (including the amount of any family 
                collection shortfall).
                    (B) Alliance credit.--The alliance credit amount 
                for each class of family enrollment, under section 
                6103.
                    (C) Excess premium credit.--The amount of any 
                excess premium credit provided under section 6105 for 
                each class of family enrollment.
                    (D) Corporate alliance opt-in credit.--The amount 
                of any corporate alliance opt-in credit provided under 
                section 6106 for each class of family enrollment.
            (2) Employer premiums.--Each regional alliance shall 
        compute the following components of the general employer 
        premium payment amount (as defined in subsection (b)(2)(B)):
                    (A) Base employer monthly premium per worker.--The 
                base employer monthly premium determined under section 
                6122 for each class of family enrollment.
                    (B) Employer collection shortfall add-on.--The 
                employer collection shortfall add-on computed under 
                section 6125(b).
    (b) Publication.--
            (1) Family share.--
                    (A) In general.--Each regional alliance shall 
                publish, before the open enrollment period in each 
                year, the general family share of the premium (as 
                defined in subparagraph (B)) for each class of family 
                enrollment for each regional alliance health plan to be 
                offered by the alliance in the following year.
                    (B) General family share of premium defined.--In 
                this subpart, the term ``general family share of 
                premium'' means the family share of premium under 
                section 6101 computed without regard to section 6104 
                and without regard to section 6101(b)(2)(C)(v).
            (2) Employer premium.--
                    (A) In general.--Each regional alliance shall 
                publish, in December before each year (beginning with 
                December before the first year) the general employer 
                premium payment amount (as defined in subparagraph (B)) 
                for each class of family enrollment for the following 
                year.
                    (B) General employer premium payment amount 
                defined.--In this subpart, the term ``general employer 
                premium payment amount'' means the employer premium 
                payment under section 6121 computed, as an amount per 
                full-time equivalent worker, without regard to sections 
                6124 through 6126.

SEC. 1343. DETERMINATION OF FAMILY SHARE FOR FAMILIES.

    (a) Amount of Family Share.--The amount charged by a regional 
alliance to a family for a class of family enrollment (specified under 
section 1011(c)) under a regional alliance health plan is equal to the 
family share of premium established under section 6101(a) for the 
family. Based upon the information described in this section, each 
regional alliance shall determine the amount required to be paid under 
section 6101 and under section 6111 for each year for families 
enrolling in regional alliance health plans.
    (b) Family Share Amount.--The amount required to be paid under 
section 6101, with respect to each family, takes into account--
            (1) the general family share of premium (as defined in 
        section 1342(b)(1)(B)) for the class of enrollment involved;
            (2) any income-related discount provided under section 
        6104(a)(1) for the family; and
            (3) whether or not the family is an SSI or AFDC family.
    (c) Alliance Credit Repayment Amount.--The amount of the alliance 
credit repayment amount under section 6111, with respect to each 
family, takes into account the following:
            (1) The number of months of enrollment, and class of 
        enrollment, in regional alliance health plans, used in 
        determining the amount of the alliance credit under section 
        6103 for the family.
            (2) Reductions in liability under section 6111(b) based on 
        employer premium payments based on net earnings from self-
        employment for the family.
            (3) Reductions in liability under section 6112 based on 
        months of employment for the family.
            (4) Limitations in liability under section 6113 on the 
        basis of the adjusted family income for the family.
            (5) The elimination of liability in the case of certain 
        retirees and qualified spouses and children under section 6114.
            (6) The elimination of liability in the case of certain 
        working medicare beneficiaries under section 6115.
    (d) Access to Necessary Information to Make Determination.--
Information required for an alliance to make the determination under 
subsection (a) shall be based on information obtained or maintained by 
the alliance in the conduct of its business, including the following:
            (1) Information required for income-related determinations 
        shall be obtained under subpart B.
            (2) Information on SSI and AFDC recipients under subsection 
        (e).
            (3) Information submitted on a monthly and annual basis by 
        employers under section 1602.
            (4) Information submitted by self-employed individuals on 
        net earnings from self-employment under section 1602(d).
            (5) Applications for premium reductions under section 6114.
            (6) Information concerning medicare-eligible individuals 
        under subsection (f).
            (7) Any income-related discount provided under section 
        6104(a)(1) for the family.
            (8) Whether or not the family is an SSI or AFDC family.
    (e) Information Concerning Cash Assistance Status.--Each 
participating State and the Secretary shall make available (in a time 
and manner specified by the Secretary) to each regional alliance such 
information as may be necessary to determine and verify whether an 
individual is an AFDC or SSI recipient for a month in a year.
    (f) Information Concerning Medicare-Eligible Individuals.--
            (1) Information to regional alliances.--The Secretary shall 
        make available to regional alliances (through regional 
        information centers or otherwise) information necessary to 
        determine--
                    (A) whether an individual is a medicare-eligible 
                individual,
                    (B) the eligibility of individuals for the special 
                treatment under section 6115,
                    (C) if medicare-eligible individuals are described 
                in section 1012(a), and
                    (D) the amounts of payments owed the alliance under 
                section 1894 of the Social Security Act, added by 
                section 4003.
            (2) Information to secretary.--Each regional alliance shall 
        make available to the Secretary (through the national 
        information system under section 5101 or otherwise) information 
        relating to the enrollment of individuals who would be 
        medicare-eligible individuals but for section 1012(a).
    (g) Alliance Accounting System.--
            (1) In general.--Each regional alliance shall establish an 
        accounting system that meets standards established by the 
        Secretary.
            (2) Specifics.--Such system shall collect information, on a 
        timely basis for each individual enrolled (and, to the extent 
        required by the Secretary, identified and required to be 
        enrolled) in a regional alliance health plan regarding--
                    (A) the applicable premium for such enrollment,
                    (B) family members covered under such enrollment,
                    (C) the premium payments made by (or on behalf of) 
                the individual for such enrollment,
                    (D) employer premium payments made respecting the 
                employment of the individual and other employer 
                contributions made respecting such enrollment, and
                    (E) any government contributions made with respect 
                to such enrollment (including contributions for 
                electing veterans and active duty military personnel).
            (3) End-of-year reporting.--Such system shall provide for a 
        report, at the end of each year, regarding the total premiums 
        imposed, and total amounts collected, for individuals enrolled 
        under regional health alliance plans, in such manner as 
        identifies net amounts that may be owed to the regional 
        alliance.

SEC. 1344. NOTICE OF FAMILY PAYMENTS DUE.

    (a) Family Statements.--
            (1) Notice of no amount owed.--If the regional alliance 
        determines under section 1343 that a family has paid any family 
        share required under section 6101 and is not required to repay 
        any amount under section 6111 for a year, the alliance shall 
        provide notice of such determination to the family. Such notice 
        shall include a prominent statement that the family is not 
        required to make any additional payment and is not required to 
        file any additional information with the regional alliance.
            (2) Notice of amount owed.--
                    (A) In general.--If the regional alliance 
                determines that a family has not paid the entire family 
                share required under section 6101 or is required to 
                repay an amount under section 6111 for a year, the 
                alliance shall provide to the family a notice of such 
                determination.
                    (B) Information on amount due.--Such notice shall 
                include detailed information regarding the amount owed, 
                the basis for the computation (including the amount of 
                any reductions that have been made in the family's 
                liability under subtitle B of title VI), and the date 
                the amount is due and the manner in which such amount 
                is payable.
                    (C) Information on discounts and reductions 
                available.--Such notice shall include--
                            (i) information regarding the discounts and 
                        reductions available (under sections 6104, 
                        6112, 6113, 6114, and 6115) to reduce or 
                        eliminate any liability, and
                            (ii) a worksheet which may be used to 
                        calculate reductions in liability based on 
                        income under sections 6104 and 6113.
            (3) Inclusion of income reconciliation form for families 
        provided premium discounts.--
                    (A) In general.--A notice under this subsection 
                shall include, in the case of a family that has been 
                provided a premium discount under section 6104 (or 
                section 6113) for the previous year, an income 
                reconciliation statement (for use under section 1375) 
                to be completed and returned to the regional alliance 
                (along with any additional amounts owed) by the 
                deadline specified in subsection (b). Such form shall 
                require the submission of such information as the 
                Secretary specifies to establish or verify eligibility 
                for such premium discount.
                    (B) Other families.--Any family which has not been 
                provided such a discount but may be eligible for such a 
                discount may submit such an income reconciliation 
                statement and, if eligible, receive a rebate of the 
                amount of excess family share paid for the previous 
                year.
                    (C) Additional information.--The alliance shall 
                permit a family to provide additional information 
                relating to the amount of such reductions or the income 
                of the family (insofar as it may relate to a premium 
                discount or reduction in liability under section 6104 
                or 6113).
            (4) Timing of notice.--Notices under this subsection shall 
        be mailed to each family at least 45 days before the deadline 
        specified in subsection (b).
    (b) Deadline for Payment.--The deadline specified in this 
subsection for amounts owed for a year is such date as the Secretary 
may specify, taking into account the dates when the information 
specified in section 1343 becomes available to compute the amounts owed 
and to file income reconciliation statements under section 1375. 
Amounts not paid by such deadline are subject to interest and penalty.
    (c) Change in Regional Alliance.--In the case of a family that 
during a year changes the regional alliance through which the family 
obtains coverage under a regional alliance health plan, the Secretary 
shall establish rules which provide that the regional alliance in which 
the family last obtained such coverage in a year--
            (1) is responsible for recovering amounts due under this 
        subpart for the year (whether or not attributable to periods of 
        coverage obtained through that alliance);
            (2) shall obtain such information, through the health 
        information system implemented under section 5101, as the 
        alliance may require in order to compute the amount of any 
        liability owed under this subpart (taking into account any 
        reduction in such amount under this section), and
            (3) shall provide for the payment to other regional 
        alliances of such amounts collected as may be attributable to 
        amounts owed for periods of coverage obtained through such 
        alliances.
    (d) No Loss of Coverage.--In no case shall the failure to pay 
amounts owed under this subsection result in an individual's or 
family's loss of coverage under this Act.
    (e) Dispute Resolution.--Each regional alliance shall establish a 
fair hearing mechanism for the resolution of disputes concerning 
amounts owed the alliance under this subpart.

SEC. 1345. COLLECTIONS.

    (a) In General.--Each regional alliance is responsible for the 
collection of all amounts owed the alliance (whether by individuals, 
employers, or others and whether on the basis of premiums owed, 
incorrect amounts of discounts or premium, cost sharing, or other 
reductions made, or otherwise). No amounts are payable by the Federal 
Government under this Act (including section 9102) with respect to the 
failure to collect any such amounts. Each regional alliance shall use 
credit and collection procedures, including the imposition of interest 
charges and late fees for failure to make timely payment, as may be 
necessary to collect amounts owed to the alliance. States assist 
regional alliances in such collection process under section 1202(d).
    (b) Collection of Family Share.--
            (1) Withholding.--
                    (A) in general.--In the case of a family that 
                includes a qualifying employee of an employer, the 
                employer shall deduct from the wages of the qualifying 
                employee (in a manner consistent with any rules of the 
                Secretary of Labor) the amount of the family share of 
                the premium for the plan in which the family is 
                enrolled.
                    (B) Multiple employment.--In the case of a family 
                that includes more than one qualifying employee, the 
                family shall choose the employer to which subparagraph 
                (A) will apply.
                    (C) Payment.--Amounts withheld under this paragraph 
                shall be maintained in a manner consistent with 
                standards established by the Secretary of Labor and 
                paid to the regional alliance involved in a manner 
                consistent with the payment of employer premiums under 
                subsection (c).
                    (D) Satisfaction of liability.--An amount deducted 
                from wages of a qualifying employee by an employer is 
                deemed to have been paid by the employee and to have 
                satisfied the employee's obligation under subsection 
                (a) to the extent of such amount.
            (2) Other methods.--In the case of a family that does not 
        include a qualifying employee, the regional alliance shall 
        require payment to be made prospectively. Such payment may be 
        required to be made not less frequently than monthly. The 
        Secretary may issue regulations in order to assure the timely 
        and accurate collection of the family share due.
    (c) Timing and Method of Payment of Employer Premiums.--
            (1) Frequency of payment.--Payment of employer premiums 
        under section 6121 for a month shall be made not less 
        frequently than monthly (or quarterly in the case of such 
        payments made by virtue of section 6126). The Secretary of 
        Labor may establish a method under which employers that pay 
        wages on a weekly or biweekly basis are permitted to make such 
        employer payments on such a weekly or biweekly basis.
            (2) Electronic transfer.--A regional alliance may require 
        those employers that have the capacity to make payments by 
        electronic transfer to make payments under this subsection by 
        electronic transfer.
    (d) Assistance.--
            (1) Employer collections.--The Secretary of Labor shall 
        provide regional alliances with such technical and other 
        assistance as may promote the efficient collection of all 
        amounts owed such alliances under this Act by employers. Such 
        assistance may include the assessment of civil monetary 
        penalties, not to exceed $5,000 or three times the amount of 
        the liability owed, whichever is greater, in the case of 
        repeated failure to pay (as specified in rules of the Secretary 
        of Labor).
            (2) Family collections.--Except as provided in paragraph 
        (1), the Secretary shall provide regional alliances with such 
        technical and other assistance as may promote the efficient 
        collection of other amounts owed such alliances under this Act. 
        Such assistance may include the assessment of civil monetary 
        penalties, not to exceed $5,000 or three times the amount of 
        the liability owed, whichever is greater, in the case of 
        repeated failure to pay (as specified in rules of the 
        Secretary).
    (e) Receipt of Miscellaneous Amounts.--For payments to regional 
alliances by--
            (1) States, see subtitle A of title IX, and
            (2) the Federal Government, see subtitle B of such title 
        and section 1894 of the Social Security Act (as added by 
        section 4003).

SEC. 1346. COORDINATION AMONG REGIONAL ALLIANCES.

    (a) In General.--The regional alliance which offers the regional 
alliance health plan in which a family is enrolled in December of each 
year (in this section referred to as the ``final alliance'') is 
responsible for the collection of any amounts owed by the family under 
this subpart, without regard to whether the family resided in the 
alliance area during the entire year.
    (b) Provision of Information in the Case of Change of Residence.--
In the case of a family that moves from one alliance area to another 
alliance area during a year, each regional alliance (other than the 
final alliance) is responsible for providing to the final alliance 
(through the national information system under section 5101 or 
otherwise) such information as the final alliance may require in order 
to determine the liability (and reductions in liability under section 
6112) attributable to alliance credits provided by such regional 
alliance.
    (c) Distribution of Proceeds.--In accordance with rules established 
by the Secretary, in consultation with the Secretary of Labor, the 
final alliance shall provide for the distribution of amounts collected 
under this subpart with respect to families in a year in an equitable 
manner among the regional alliances that provided health plan coverage 
to the families in the year.
    (d) Expediting Process.--In order to reduce paperwork and promote 
efficiency in the collection of amounts owed regional alliances under 
this subpart, the Secretary may require or permit regional alliances to 
share such information (through the national information system under 
section 5101 or otherwise) as the Secretary determines to be cost-
effective, subject to such confidentiality restrictions as may 
otherwise apply.
    (e) Students.--In the case of a qualifying student who makes an 
election described in section 1012(e)(1) (relating to certain full-time 
students who are covered under the plan of a parent but enrolled in a 
health plan offered by a different regional alliance from the one in 
which the parent is enrolled), the regional alliance that offered the 
plan to the parent shall provide for transfers of an appropriate 
portion of the premium (determined in accordance with procedures 
specified by the Board) to the other regional alliance in order to 
compensate that alliance for the provision of such coverage.
    (f) Payments of Certain Amounts to Corporate Alliances.--In the 
case of a married couple in which one spouse is a qualifying employee 
of a regional alliance employer and the other spouse is a qualifying 
employee of a corporate alliance employer, if the couple is enrolled 
with a corporate alliance health plan the regional alliance (which 
receives employer premium payments from such regional alliance employer 
with respect to such employee) shall pay to the corporate alliance the 
amounts so paid (or would be payable by the employer if section 6123 
did not apply).

                          Subpart B--Payments

SEC. 1351. PAYMENT TO REGIONAL ALLIANCE HEALTH PLANS.

    (a) Computation of Blended Plan Per Capita Payment Amount.--For 
purposes of making payments to plans under this section, each regional 
alliance shall compute, under section 6201(a), a blended plan per 
capita payment amount for each regional alliance health plan for 
enrollment in the alliance for a year.
    (b) Amount of Payment to Plans.--
            (1) In general.--Subject to subsection (e) and section 
        6121(b)(5)(B), each regional alliance shall provide for payment 
        to each regional alliance health plan, in which an alliance 
        eligible individual is enrolled, an amount equal to the net 
        blended rate (described in paragraph (2)) adjusted (consistent 
        with subsection (c)) to take into account the relative 
        actuarial risk associated with the coverage with respect to the 
        individual.
            (2) Net blended rate.--The net blended rate described in 
        this paragraph is the blended plan per capita payment amount 
        (determined under section 6201(a)), reduced by--
                    (A) such amount multiplied by the sum of--
                            (i) the administrative allowance percentage 
                        for the regional alliance, computed by the 
                        alliance under section 1352(b), and
                            (ii) 1.5 percentage points; and
                    (B) any plan payment reduction imposed under 
                section 6011 for the plan for the year.
    (c) Application of Risk Adjustment and Reinsurance Methodology.--
Each regional alliance shall use the risk adjustment methodology 
developed under section 1541 in making payments to regional alliance 
health plans under this section, except as provided in section 1542.
    (d) Application of Portion of Set Aside.--Amounts attributable to 
subsection (b)(2)(A)(ii) are paid to the Federal Government (for 
academic health centers and graduate medical education) under section 
1353.
    (e) Treatment of Veterans, Military, and Indian Health Plans and 
Programs.--
            (1) Veterans health plan.--In applying this subtitle (and 
        title VI) in the case of a regional alliance health plan that 
        is a veterans health plan of the Department of Veterans 
        Affairs, the following rules apply:
                    (A) For purposes of applying subtitle A of title 
                VI, families enrolled under the plan shall not be taken 
                into account.
                    (B) The provisions of subtitle A of title VI shall 
                not apply to the plan, other than such provisions as 
                require the plan to submit a per capita amount for each 
                regional alliance area on a timely basis, which amount 
                shall be treated as the final accepted bid of the plan 
                for the area for purposes of subtitle B of such title 
                and this subtitle. This amount shall not be subject to 
                negotiation and not subject to reduction under section 
                6011.
                    (C) For purposes of computing the blended plan per 
                capita payment amount under section 6201(a), the AFDC 
                and SSI proportions (under section 6202(a)) are deemed 
                to be 0 percent.
            (2) Uniformed services health plan.--In applying this 
        subtitle (and title VI) in the case of a regional alliance 
        health plan that is a Uniformed Services Health Plan of the 
        Department of Defense, the following rules apply:
                    (A) For purposes of applying subtitle A of title 
                VI, families enrolled under the plan shall not be taken 
                into account.
                    (B) The provisions of subtitle A of title VI shall 
                not apply to the plan, other than such provisions as 
                require the plan to submit a per capita amount on a 
                timely basis, which amount shall be treated as the 
                final accepted bid of the plan for the area involved 
                for purposes of subtitle B of such title and this 
                subtitle. This amount shall not be subject to 
                negotiation and not subject to reduction under section 
                6011. The Board, in consultation with the Secretary of 
                Defense, shall establish rules relating to the area (or 
                areas) in which such a bid shall apply.
                    (C) For purposes of computing the blended plan per 
                capita payment amount under section 6201(a), the AFDC 
                and SSI proportions (under section 6202(a)) are deemed 
                to be 0 percent.
            (3) Indian health programs.--In applying this subtitle (and 
        title VI) in the case of a health program of the Indian Health 
        Service, the following rules apply:
                    (A) Except as provided in this paragraph, the plan 
                shall not be considered or treated to be a regional 
                alliance health plan and for purposes of applying title 
                VI, families enrolled under the program shall not be 
                taken into account.
                    (B) In accordance with rules established by the 
                Secretary, regional alliances shall act as agents for 
                the collection of employer premium payments (including 
                payments of corporate alliance employers) required 
                under subtitle B of title VI with respect to qualifying 
                employees who are enrolled under a health program of 
                the Indian Health Service. The Secretary shall permit 
                such alliances to retain a nominal fee to compensate 
                them for such collection activities. In applying this 
                subparagraph, the family share of premium for such 
                employees is deemed to be zero for electing Indians (as 
                defined in section 1012(d)(3)) and for other employees 
                is the amount of the premium established under section 
                8306(b)(4)(A), employees are deemed to be residing in 
                the area of residence (or area of employment), as 
                specified under rules of the Secretary, and the class 
                of enrollment shall be such class (or classes) as 
                specified under rules of the Secretary.

SEC. 1352. ALLIANCE ADMINISTRATIVE ALLOWANCE PERCENTAGE.

    (a) Specification by Alliance.--Before obtaining bids under section 
6004 from health plans for a year, each regional alliance shall 
establish the administrative allowance for the operation of the 
regional alliance in the year.
    (b) Administrative Allowance Percentage.--Subject to subsection 
(c), the regional alliance shall compute an administrative allowance 
percentage for each year equal to--
            (1) the administrative allowance determined under 
        subsection (a) for the year, divided by
            (2) the total of the amounts payable to regional alliance 
        health plans under subpart A (as estimated by the alliance and 
        determined without regard to section 1345(d)).
    (c) Limitation to 2\1/2\ percent.--In no case shall an 
administrative allowance percentage exceed 2.5 percent.

SEC. 1353. PAYMENTS TO THE FEDERAL GOVERNMENT FOR ACADEMIC HEALTH 
              CENTERS AND GRADUATE MEDICAL EDUCATION.

    Each regional alliance shall make payment to the Secretary of an 
amount equal to the reduction in payments by the alliance to regional 
alliance health plans attributable to section 1351(b)(2)(A)(ii).

                    Subpart C--Financial Management

SEC. 1361. MANAGEMENT OF FINANCES AND RECORDS.

    (a) In General.--Each regional alliance shall comply with standards 
established under section 1571(b) (relating to the management of 
finances, maintenance of records, accounting practices, auditing 
procedures, and financial reporting) and under section 1591(d) 
(relating to employer payments).
    (b) Specific Provisions.--In accordance with such standards--
            (1) Financial statements.--
                    (A) In general.--Each regional alliance shall 
                publish periodic audited financial statements.
                    (B) Annual financial audit.--
                            (i) In general.--Each regional alliance 
                        shall have an annual financial audit conducted 
                        by an independent auditor in accordance with 
                        generally accepted auditing standards.
                            (ii) Publication.--A report on each such 
                        audit shall be made available to the public at 
                        nominal cost.
                            (iii) Required actions for deficiencies.--
                        If the report from such an audit does not bear 
                        an unqualified opinion, the alliance shall take 
                        such steps on a timely basis as may be 
                        necessary to correct any material deficiency 
                        identified in the report.
                    (C) Eligibility error rates.--Each regional 
                alliance shall make eligibility determinations for 
                premium discounts, liability reductions, and cost 
                sharing reductions under sections 6104 and 6123, 
                section 6113, and section 1371, respectively, in a 
                manner that maintains the error rates below an 
                applicable maximum permissible error rate specified by 
                the Secretary (or the Secretary of Labor with respect 
                to section 6123). In specifying such a rate, the 
                Secretary shall take into account maximum permissible 
                error rates recognized by the Federal Government under 
                comparable State-administered programs.
            (2) Safeguarding of funds.--Each regional alliance shall 
        safeguard family, employer, State, and Federal government 
        payments to the alliance in accordance with fiduciary standards 
        and shall hold such payments in financial institutions and 
        instruments that meet standards recognized or established by 
        the Secretary, in consultation with the Secretaries of Labor 
        and the Treasury and taking into account current Federal laws 
        and regulations relating to fiduciary responsibilities and 
        financial management of public funds.
            (3) Contingencies.--Each regional alliance shall provide 
        that any surplus of funds resulting from an estimation 
        discrepancy described in section 9201(e)(1), up to a reasonable 
        amount specified by the Secretary, shall be held in a 
        contingency fund established by the alliance and used to fund 
        any future shortfalls resulting from such a discrepancy.
            (4) Auditing of employer payments.--
                    (A) In general.--Each regional alliance is 
                responsible for auditing the records of regional 
                alliance employers to assure that employer payments 
                (including the payment of amounts withheld) were made 
                in the appropriate amount as provided under subpart A 
                of part 2 of subtitle B of title VI.
                    (B) Employers with employees residing in different 
                alliance areas.--In the case of a regional alliance 
                employer which has employees who reside in more than 
                one alliance area, the Secretary of Labor, in 
                consultation with the Secretary, shall establish a 
                process for the coordination of regional alliance 
                auditing activities among the regional alliances 
                involved.
                    (C) Appeal.--In the case of an audit conducted by a 
                regional alliance on an employer under this paragraph, 
                an employer or other regional alliance that is 
                aggrieved by the determination in the audit is entitled 
                to review of such audit by the Secretary of Labor in a 
                manner to be provided by such Secretary.

      Subpart D--Reductions in Cost Sharing; Income Determinations

SEC. 1371. REDUCTION IN COST SHARING FOR LOW-INCOME FAMILIES.

    (a) Reduction.--
            (1) In general.--Subject to subsection (b), in the case of 
        a family that is enrolled in a regional alliance health plan 
        and that is either (A) an AFDC or SSI family or (B) is 
        determined under this subpart to have family adjusted income 
        below 150 percent of the applicable poverty level, the family 
        is entitled to a reduction in cost sharing in accordance with 
        this section.
            (2) Timing of reduction.--The reduction in cost sharing 
        shall only apply to items and services furnished after the date 
        the application for such reduction is approved under section 
        1372(c) and before the date of termination of the reduction 
        under this subpart, or, in the case of an AFDC or SSI family, 
        during the period in which the family is such a family.
            (3) Information to providers and plans.--Each regional 
        alliance shall provide, through electronic means and otherwise, 
        health care providers and regional alliance health plans with 
        access to such information as may be necessary in order to 
        provide for the cost sharing reductions under this section.
    (b) Limitation.--No reduction in cost sharing under subsection 
(c)(1) shall be available for families residing in an alliance area if 
the regional alliance for the area determines that there are sufficient 
low-cost plans (as defined in section 6104(b)(3)) that are lower or 
combination cost sharing plans available in the alliance area to enroll 
AFDC and SSI families and families with family adjusted income below 
150 percent of the applicable poverty level.
    (c) Amount of Cost Sharing Reduction.--
            (1) In general.--Subject to paragraph (2), the reduction in 
        cost sharing under this section shall be such reduction as will 
        reduce cost sharing to the level of a lower or combination cost 
        sharing plan.
            (2) Special treatment of certain afdc and ssi families.--In 
        the case of an AFDC or SSI family enrolled in a lower or 
        combination cost sharing plan or receiving a reduction in cost 
        sharing under paragraph (1), the amount of copayment applied 
        with respect to an item or service (other than with respect to 
        hospital emergency room services for which there is no 
        emergency medical condition, as defined in section 1867(e)(1) 
        of the Social Security Act) shall be an amount equal to 20 
        percent of the copayment amount otherwise applicable under 
        sections 1135 and 1136, rounded to the nearest dollar.
    (d) Administration.--
            (1) In general.--In the case of an approved family (as 
        defined in section 1372(b)(3)) enrolled in a regional alliance 
        health plan, the regional alliance shall pay the plan for cost 
        sharing reductions (other than cost sharing reductions under 
        subsection (c)(2)) provided under this section and included in 
        payments made by the plan to its providers.
            (2) Estimated payments, subject to reconciliation.--Such 
        payment shall be made initially on the basis of reasonable 
        estimates of cost sharing reductions incurred by such a plan 
        with respect to approved families and shall be reconciled not 
        less often than quarterly based on actual claims for items and 
        services provided.
    (e) No Cost Sharing for Indians and Certain Veterans and Military 
Personnel.--The provisions of section 6104(a)(3) shall apply to cost 
sharing reductions under this section in the same manner as such 
provisions apply to premium discounts under section 6104.

SEC. 1372. APPLICATION PROCESS FOR COST SHARING REDUCTIONS.

    (a) Application.--
            (1) In general.--A regional alliance eligible family may 
        apply for a determination of the family adjusted income of the 
        family, for the purpose of establishing eligibility for cost 
        sharing reductions under section 1371.
            (2) Form.--An application under this section shall include 
        such information as may be determined by the regional alliance 
        (consistent with rules developed by the Secretary) and shall 
        include at least information about the family's employment 
        status and income.
    (b) Timing.--
            (1) In general.--An application under this section may be 
        filed at such times as the Secretary may provide, including 
        during any open enrollment period, at the time of a move, or 
        after a change in life circumstances (such as unemployment or 
        divorce) affecting class of enrollment or amount of family 
        share or repayment amount.
            (2) Consideration.--Each regional alliance shall approve or 
        disapprove an application under this section, and notify the 
        applicant of such decision, within such period (specified by 
        the Secretary) after the date of the filing of the application.
            (3) Approved family defined.--In this section and section 
        1371, the term ``approved family'' means a family for which an 
        application under this section is approved, until the date of 
        termination of such approval under this section.
    (c) Approval of Application.--
            (1) In general.--A regional alliance shall approve an 
        application of a family under this section filed in a month if 
        the application demonstrates that the family adjusted income of 
        the family (as defined in subsection (d) and determined under 
        paragraph (2)) is (or is expected to be) less than 150 percent 
        of the applicable poverty level.
            (2) Use of current income.--In making the determination 
        under paragraph (1), a regional alliance shall take into 
        account the income for the previous 3-month period and current 
        wages from employment (if any), consistent with rules specified 
        by the Secretary.
    (d) Family Adjusted Income.--
            (1) In general.--Except as provided in paragraph (4), in 
        this Act the term ``family adjusted income'' means, with 
        respect to a family, the sum of the adjusted incomes (as 
        defined in paragraph (2)) for all members of the family 
        (determined without regard to section 1012).
            (2) Adjusted income.--In paragraph (1), the term ``adjusted 
        income'' means, with respect to an individual, adjusted gross 
        income (as defined in section 62(a) of the Internal Revenue 
        Code of 1986)--
                    (A) determined without regard to sections 135, 
                162(l), 911, 931, and 933 of such Code, and
                    (B) increased by the amount of interest received or 
                accrued by the individual which is exempt from tax.
            (3) Presence of additional dependents.--At the option of an 
        individual, a family may include (and not be required to 
        separate out) the income of other individuals who are claimed 
        as dependents of the family for income tax purposes, but such 
        individuals shall not be counted as part of the family for 
        purposes of determining the size of the family.
    (e) Requirement for Periodic Confirmation and Verification and 
Notices.--
            (1) Confirmation and verification requirement.--The 
        continued eligibility of a family for cost sharing reductions 
        under this section is conditioned upon the family's eligibility 
        being--
                    (A) confirmed periodically by the regional 
                alliance, and
                    (B) verified (through the filing of a new 
                application under this section) by the regional 
                alliance at the time income reconciliation statements 
                are required to be filed under section 1375.
            (2) Rules.--The Secretary shall issue rules related to the 
        manner in which alliances confirm and verify eligibility under 
        this section.
            (3) Notices of changes in income and employment status.--
                    (A) In general.--Each approved family shall 
                promptly notify the regional alliance of any material 
                increase (as defined by the Secretary) in the family 
                adjusted income.
                    (B) Response.--If a regional alliance receives 
                notice under subparagraph (A) (or from an employer 
                under section 1602(b)(3)(A)(i)) or otherwise receives 
                information indicating a potential significant change 
                in the family's employment status or increase in 
                adjusted family income, the regional alliance shall 
                promptly take steps necessary to reconfirm the family's 
                eligibility.
    (f) Termination of Cost Sharing Reduction.--The regional alliance 
shall, after notice to the family, terminate the reduction of cost 
sharing under this subpart for an approved family if the family fails 
to provide for confirmation or verification or notice required under 
subsection (c) on a timely basis or the alliance otherwise determines 
that the family is no longer eligible for such reduction. The previous 
sentence shall not prevent the family from subsequently reapplying for 
cost sharing reduction under this section.
    (g) Treatment of AFDC and SSI Recipients.--
            (1) No application required.--AFDC and SSI families are not 
        required to make an application under this section.
            (2) Notice requirement.--Each State (and the Secretary) 
        shall notify each regional alliance, in a manner specified by 
        the Secretary, of the identity (and period of eligibility under 
        the AFDC or SSI programs) of each AFDC and SSI recipient, 
        unless such a recipient elects (in a manner specified by the 
        Secretary) not to accept the reduction of cost sharing under 
        this section.

SEC. 1373. APPLICATION FOR PREMIUM DISCOUNTS AND REDUCTION IN 
              LIABILITIES TO ALLIANCES.

    (a) In General.--Any regional alliance eligible family may apply 
for a determination of the family adjusted income of the family, for 
the purpose of establishing eligibility for a premium discount under 
section 6104 or a reduction in liability under section 6113.
    (b) Timing.--Such an application may be filed at such times as an 
application for a cost sharing reduction may be filed under section 
1372(b) and also may be filed after the end of the year to obtain a 
rebate for excess premium payments made during a year.
    (c) Approval of Application.--
            (1) In general.--A regional alliance shall approve an 
        application of a family under this section filed in a month--
                    (A) for a premium discount under section 6104, if 
                the application demonstrates that family adjusted 
                income of the family (as determined under paragraph 
                (2)) is (or is expected to be) less than 150 percent of 
                the applicable poverty level, or
                    (B) for a reduction in liability under section 
                6113, if the application demonstrates that the wage-
                adjusted income (as defined in subsection 6113(d)) of 
                the family (as determined under paragraph (2)) is (or 
                is expected to be) less than 250 percent of the 
                applicable poverty level.
            (2) Use of current income.--In making the determination 
        under paragraph (1), a regional alliance shall take into 
        account the income for the previous 3-month period and current 
        wages from employment (if any) and the statement of estimated 
        income for the year (filed under section 1374(c)), consistent 
        with rules specified by the Secretary.
    (d) Requirement for Periodic Confirmation and Verification and 
Notices.--The provisions of subsection (e) of section 1372 shall apply 
under this section in the same manner as it applies under such section, 
except that any reference to family adjusted income is deemed a 
reference to wage-adjusted income.

SEC. 1374. GENERAL PROVISIONS RELATING TO APPLICATION PROCESS.

    (a) Distribution of Applications.--Each regional alliance shall 
distribute applications under this subpart directly to consumers and 
through employers, banks, and designated public agencies.
    (b) To Whom Application Made.--Applications under this subpart 
shall be filed, by person or mail, with a regional alliance or an 
agency designated by the State for this purpose. The application may be 
submitted with an application to enroll with a health plan under this 
subtitle or separately.
    (c) Income Statement.--Each application shall include a declaration 
of estimated annual income for the year involved.
    (d) Form and Contents.--An application for a discount or reduction 
under this subpart shall be in a form and manner specified by the 
Secretary and shall require the provision of information necessary to 
make the determinations required under this subpart.
    (e) Frequency of Applications.--
            (1) In general.--An application under this subpart may be 
        filed at any time during the year (including, in the case of 
        section 1373, during the reconciliation process).
            (2) Correction of income.--Nothing in paragraph (1) shall 
        be construed as preventing an individual or family from, at any 
        time, submitting an application to reduce the amount of premium 
        discount or reduction of liability under this subpart based 
        upon an increase in income from that stated in the previous 
        application.
    (f) Timing of Reductions and Discounts.--
            (1) In general.--Subject to reconciliation under section 
        1375, premium discounts and cost sharing reductions under this 
        subpart shall be applied to premium payments required (and for 
        expenses incurred) after the date of approval of the 
        application under this subpart.
            (2) AFDC and ssi recipients.--In the case of an AFDC or SSI 
        family, in applying paragraph (1), the date of approval of 
        benefits under the AFDC or SSI program shall be considered the 
        date of approval of an application under this subpart.
    (g) Verification.--The Secretary shall provide for verification, on 
a sample basis or other basis, of the information supplied in 
applications under this part. This verification shall be separate from 
the reconciliation provided under section 1375.
    (h) Help in Completing Applications.--Each regional alliance shall 
assist individuals in the filing of applications and income 
reconciliation statements under this subpart.
    (i) Penalties for Inaccurate Information.--
            (1) Interest for understatements.--Each individual who 
        knowingly understates income reported in an application to a 
        regional alliance under this subpart or otherwise makes a 
        material misrepresentation of information in such an 
        application shall be liable to the alliance for excess payments 
        made based on such understatement or misrepresentation, and for 
        interest on such excess payments at a rate specified by the 
        Secretary.
            (2) Penalties for misrepresentation.--In addition to the 
        liability established under paragraph (1), each individual who 
        knowingly misrepresents material information in an application 
        under this subpart to a regional alliance shall be liable to 
        the State in which the alliance is located for $2,000 or, if 
        greater, three times the excess payments made based on such 
        misrepresentation. The State shall provide for the transfer of 
        a significant portion of such amount to the regional alliance 
        involved.

SEC. 1375. END-OF-YEAR RECONCILIATION FOR PREMIUM DISCOUNT AND 
              REPAYMENT REDUCTION WITH ACTUAL INCOME.

    (a) In General.--In the case of a family whose application for a 
premium discount or reduction of liability for a year has been approved 
before the end of the year under this subpart, the family shall, 
subject to subsection (c) and by the deadline specified in section 
1344(b) file with the regional alliance an income reconciliation 
statement to verify the family's adjusted income or wage-adjusted 
income, as the case may be, for the previous year. Such a statement 
shall contain such information as the Secretary may specify. Each 
regional alliance shall coordinate the submission of such statements 
with the notice and payment of family payments due under section 1344.
    (b) Reconciliation of Premium Discount and Liability Assistance 
Based on Actual Income.--Based on and using the income reported in the 
reconciliation statement filed under subsection (a) with respect to a 
family, the regional alliance shall compute the amount of premium 
discount or reduction in liability that should have been provided under 
section 6104 or section 6113 with respect for the family for the year 
involved. If the amount of such discount or liability reduction 
computed is--
            (1) greater than the amount that has been provided, the 
        family is liable to the regional alliance to pay (directly or 
        through an increase in future family share of premiums or other 
        payments) a total amount equal to the amount of the excess 
        payment, or
            (2) less than the amount that has been provided, the 
        regional alliance shall pay to the family (directly or through 
        a reduction in future family share of premiums or other 
        payments) a total amount equal to the amount of the deficit.
    (c) No Reconciliation for AFDC and SSI Families; No Reconciliation 
for Cost Sharing Reductions.--No reconciliation statement is required 
under this section--
            (1) with respect to cost sharing reductions provided under 
        section 1372, or
            (2) for a family that only claims a premium discount or 
        liability reduction under this subpart on the basis of being an 
        AFDC or SSI family.
    (d) Disqualification for Failure to File.--In the case of any 
family that is required to file a statement under this section in a 
year and that fails to file such a statement by the deadline specified, 
members of the family shall not be eligible for premium reductions 
under section 6104 or reductions in liability under section 6113 until 
such statement is filed. A regional alliance, using rules established 
by the Secretary, shall waive the application of this subsection if the 
family establishes, to the satisfaction of the alliance under such 
rules, good cause for the failure to file the statement on a timely 
basis.
    (e) Penalties for False Information.--Any individual that provides 
false information in a statement under subsection (a) is subject to the 
same liabilities as are provided under section 1374(h) for a 
misrepresentation of material fact described in such section.
    (f) Notice of Requirement.--Each regional alliance (directly or in 
coordination with other regional alliances) shall provide for written 
notice, at the end of each year, of the requirement of this section to 
each family which had received premium discount or reduction in 
liability under this subpart in any month during the preceding year and 
to which such requirement applies.
    (g) Transmittal of Information; Verification.--
            (1) In general.--Each participating State shall transmit 
        annually to the Secretary such information relating to the 
        income of families for the previous year as the Secretary may 
        require to verify such income under this subpart.
            (2) Verification.--Each participating State may use such 
        information as it has available to it to assist regional 
        alliances in verifying income of families with applications 
        filed under this subpart. The Secretary of the Treasury may, 
        consistent with section 6103 of the Internal Revenue Code of 
        1986, permit return information to be disclosed and used by a 
        participating State in verifying such income but only in 
        accordance with such section and only if the information is not 
        directly disclosed to a regional alliance.
    (h) Construction.--Nothing in this section shall be construed as 
authorizing reconciliation of any cost sharing reduction provided under 
this subpart.

    PART 4--RESPONSIBILITIES AND AUTHORITIES OF CORPORATE ALLIANCES

SEC. 1381. CONTRACTS WITH HEALTH PLANS.

    (a) Contracts with Plans.--Subject to section 1382, each corporate 
alliance may--
            (1) offer to individuals eligible to enroll under section 
        1311(c) coverage under an appropriate self-insured health plan 
        (as defined in section 1400(b)), or
            (2) negotiate with a State-certified health plan to enter 
        into a contract with the plan for the enrollment of such 
        individuals under the plan,
or do both.
    (b) Terms of Contracts with State-Certified Health Plans.--
Contracts under this section between a corporate alliance and a State-
certified health plan may contain such provisions (not inconsistent 
with the requirements of this title) as the alliance and plan may 
provide, except that in no case does such contract remove the 
obligation of the sponsor of the corporate alliance to provide for 
health benefits to corporate alliance eligible individuals consistent 
with this part.

SEC. 1382. OFFERING CHOICE OF HEALTH PLANS FOR ENROLLMENT.

    (a) In General.--Each corporate alliance must provide to each 
eligible enrollee with respect to the alliance a choice of health plans 
among the plans which have contracts with the alliance under section 
1381.
    (b) Offering of Plans by Alliances.--A corporate alliance shall 
include among its health plan offerings for any eligible enrollee at 
least 3 health plans to enrollees, of which the alliance must offer--
            (1) at least one fee-for-service plan (as defined in 
        section 1322(b)(2)); and
            (2) at least two health plans that are not fee-for-service 
        plans.

SEC. 1383. ENROLLMENT; ISSUANCE OF HEALTH SECURITY CARD.

    (a) In General.--
            (1) Enrollment of alliance eligible individuals.--Each 
        corporate alliance shall assure that each alliance eligible 
        individual with respect to the alliance is enrolled in a 
        corporate alliance health plan offered by the alliance, and 
        shall establish and maintain methods and procedures consistent 
        with this section sufficient to assure such enrollment. Such 
        methods and procedures shall assure the enrollment of such 
        individuals at the time they first become alliance eligible 
        individuals with respect to the alliance.
            (2) Issuance of health security cards.--A corporate 
        alliance is responsible for the issuance of health security 
        cards to corporate alliance eligible individuals under section 
        1001(b).
    (b) Response to Point-of-Service Notices.--If a corporate alliance 
is notified under section 1323(b)(2) regarding an individual who has 
received services and appears to be a corporate alliance eligible 
individual--
            (1) the alliance shall promptly ascertain the individual's 
        eligibility as a corporate alliance eligible individual; and
            (2) if the alliance determines that the individual is a 
        corporate alliance eligible individual--
                    (A) the alliance shall promptly provide for the 
                enrollment of the individual in a health plan offered 
                by the alliance (and notify the Secretary of Labor of 
                such enrollment), and
                    (B) the alliance shall forward the claim for 
                payment for the services to the health plan in which 
                the individual is so enrolled and the plan shall make 
                payment to the provider for such claim (in a manner 
                consistent with requirements of the Secretary of 
                Labor).
    (c) Annual Open Enrollment; Enrollment of Family Members; 
Oversubscription of Plans.--The provisions of subsections (d) through 
(f) of section 1323 shall apply to a corporate alliance in the same 
manner as such provisions apply to a regional alliance.
    (d) Termination.--
            (1) In general.--The provisions of section 1323(g)(1) shall 
        apply to a corporate alliance in the same manner as such 
        provisions apply to a regional alliance.
            (2) Failure to pay premiums.--If a corporate alliance fails 
        to make premium payments to a health plan, the plan, after 
        reasonable written notice to the alliance and the Secretary of 
        Labor, may terminate coverage (and any contract with the 
        alliance under this part). If such coverage is terminated the 
        corporate alliance is responsible for the prompt enrollment of 
        alliance eligible individuals whose coverage is terminated in 
        another corporate alliance health plan.
    (e) Corporate Alliance Transition.--Each corporate alliance must 
provide coverage--
            (1) as of the first day of any month in which an individual 
        first becomes a corporate alliance eligible individual, and
            (2) through the end of the month in the case of a corporate 
        alliance eligible individual who loses such eligibility during 
        the month.

SEC. 1384. COMMUNITY-RATED PREMIUMS WITHIN PREMIUM AREAS.

    (a) Application of Community-Rated Premiums.--The premiums charged 
by a corporate alliance for enrollment in a corporate alliance health 
plan (not taking into account any employer premium payment required 
under section 6131) shall vary only by class of family enrollment 
(specified in section 1011(c)) and by premium area.
    (b) Designation of Premium Areas.--
            (1) Designation.--Each corporate alliance shall designate 
        premium areas to be used for the imposition of premiums (and 
        calculation of employer premium payments) under this Act.
            (2) Conditions.--The boundaries of such areas shall 
        reasonably reflect labor market areas or health care delivery 
        areas and shall be consistent with rules the Secretary of Labor 
        establishes (consistent with paragraph (3)) so that within such 
        areas there are not substantial differences in average per 
        capita health care expenditures.
            (3) Anti-redlining.--The provisions of paragraphs (4) and 
        (5) of section 1202(b) (relating to redlining and metropolitan 
        statistical areas) shall apply to the establishment of premium 
        areas in the same manner as they apply to the establishment of 
        the boundaries of regional alliance areas.
    (c) Applications of Classes of Enrollment.--
            (1) In general.--The premiums shall be applied under this 
        section based on class of family enrollment and shall vary 
        based on such class in accordance with factors specified by the 
        corporate alliance.
            (2) Basis for factors.--Such factors shall be the same in 
        each premium area and shall take into account such appropriate 
        considerations (including the considerations the Board takes 
        into account in the establishment of premium class factors 
        under section 1531 and the costs of regional alliance health 
        plans providing the comprehensive benefit package for families 
        enrolled in the different classes) as the alliance considers 
        appropriate, consistent with rules the Secretary of Labor 
        establishes.
    (d) Special Treatment of Multiemployer Alliances.--The Secretary of 
Labor shall provide for such exceptions to the requirements of this 
section in the case of a corporate alliance with a sponsor described in 
section 1311(b)(1)(B) as may be appropriate to reflect the unique and 
historical relationship between the employers and employees under such 
alliances.

SEC. 1385. ASSISTANCE FOR LOW-WAGE FAMILIES.

    Each corporate alliance shall make an additional contribution 
towards the enrollment in health plans of the alliance by certain low-
wage families in accordance with section 6131(b)(2).

SEC. 1386. CONSUMER INFORMATION AND MARKETING; DATA COLLECTION AND 
              QUALITY; ADDITIONAL DUTIES.

    The provisions of sections 1325(a), 1327, and 1328 shall apply to a 
corporate alliance in the same manner as such provisions apply to a 
regional alliance.

SEC. 1387. PLAN AND INFORMATION REQUIREMENTS.

    (a) In General.--A corporate alliance shall provide a written 
submission to the Secretary of Labor (in such form as the Secretary may 
require) detailing how the corporate alliance will carry out its 
activities under this part.
    (b) Annual Information.--A corporate alliance shall provide to the 
Secretary of Labor each year, in such form and manner as the Secretary 
may require, such information as the Secretary may require in order to 
monitor the compliance of the alliance with the requirements of this 
part.
    (c) Annual Notice of Employees or Participants.--
            (1) Corporate alliance.--Each corporate alliance shall 
        submit to the Secretary of Labor, by not later than March 1 of 
        each year, information on the number of full-time employees or 
        participants obtaining coverage through the alliance as of 
        January 1 of that year.
            (2) Employers that become large employers.--Each employer 
        that is not a corporate alliance but employs 5,000 full-time 
        employees as of January 1 of a year, shall submit to the 
        Secretary of Labor, by not later than March 1 of the year, 
        information on the number of such employees.

SEC. 1388. MANAGEMENT OF FUNDS; RELATIONS WITH EMPLOYEES.

    (a) Management of Funds.--The management of funds by a corporate 
alliance shall be subject to the applicable fiduciary requirements of 
part 4 of subtitle B of title I of the Employee Retirement Income 
Security Act of 1974, together with the applicable enforcement 
provisions of part 5 of subtitle B of title I of such Act.
    (b) Management of Finances and Records; Accounting System.--Each 
corporate alliance shall comply with standards relating to the 
management of finances and records and accounting systems as the 
Secretary of Labor shall specify.

SEC. 1389. COST CONTROL.

    Each corporate alliance shall control covered expenditures in a 
manner that meets the requirements of part 2 of subtitle A of title VI.

SEC. 1390. PAYMENTS BY CORPORATE ALLIANCE EMPLOYERS TO CORPORATE 
              ALLIANCES.

    (a) Large Employer Alliances.--In the case of a corporate alliance 
with a sponsor described in section 1311(b)(1)(A), the sponsor shall 
provide for the funding of benefits, through insurance or otherwise, 
consistent with section 6131, the applicable solvency requirements of 
sections 1394, 1395, and 1396, and any rules established by the 
Secretary of Labor.
    (b) Other Alliances.--In the case of a corporate alliance with a 
sponsor described in subparagraph (B) or (C) of section 1311(b)(1), a 
corporate alliance employer shall make payment of the employer premiums 
required under section 6131 under rules established by the corporate 
alliance, which rules shall be consistent with rules established by the 
Secretary of Labor.

SEC. 1391. COORDINATION OF PAYMENTS.

    (a) Payments of Certain Amounts to Regional Alliances.--In the case 
of a married couple in which one spouse is a qualifying employee of a 
regional alliance employer and the other spouse is a qualifying 
employee of a corporate alliance employer, if the couple is enrolled 
with a regional alliance health plan, the corporate alliance (which 
receives employer premium payments from such corporate alliance 
employer with respect to such employee) shall pay to the regional 
alliance the amounts so paid.
    (b) Payments of Certain Amounts to Corporate Alliances.--In the 
case of a married couple in which one spouse is a qualifying employee 
of a corporate alliance employer and the other spouse is a qualifying 
employee of another corporate alliance employer, the corporate alliance 
of the corporate alliance health plan in which the couple is not 
enrolled shall pay to the corporate alliance of the plan in which the 
couple is enrolled any employer premium payments received from such 
corporate alliance employer with respect to such employee.

SEC. 1392. APPLICABILITY OF ERISA ENFORCEMENT MECHANISMS FOR 
              ENFORCEMENT OF CERTAIN REQUIREMENTS.

    The provisions of sections 502 (relating to civil enforcement) and 
504 (relating to investigative authority) of the Employee Retirement 
Income Security Act of 1974 shall apply to enforcement by the Secretary 
of Labor of this part in the same manner and to same extent as such 
provisions apply to enforcement of title I of such Act.

SEC. 1393. APPLICABILITY OF CERTAIN ERISA PROTECTIONS TO ENROLLED 
              INDIVIDUALS.

    The provisions of sections 510 (relating to interference with 
rights protected under Act) and 511 (relating to coercive interference) 
of the Employee Retirement Income Security Act of 1974 shall apply, in 
relation to the provisions of this Act, with respect to individuals 
enrolled under corporate alliance health plans in the same manner and 
to the same extent as such provisions apply, in relation to the 
provisions of the Employee Retirement Income Security Act of 1974, with 
respect to participants and beneficiaries under employee welfare 
benefit plans covered by title I of such Act.

SEC. 1394. DISCLOSURE AND RESERVE REQUIREMENTS.

    (a) In General.--The Secretary of Labor shall ensure that each 
corporate alliance health plan which is a self-insured plan maintains 
plan assets in trust as provided in section 403 of the Employee 
Retirement Income Security Act of 1974--
            (1) without any exemption under section 403(b)(4) of such 
        Act, and
            (2) in amounts which the Secretary determines are 
        sufficient to provide at any time for payment to health care 
        providers of all outstanding balances owed by the plan at such 
        time.
The requirements of the preceding sentence may be met through letters 
of credit, bonds, or other appropriate security to the extent provided 
in regulations of the Secretary.
    (b) Disclosure.--Each self-insured corporate alliance health plan 
shall notify the Secretary at such time as the financial reserve 
requirements of this section are not being met. The Secretary may 
assess a civil money penalty of not more than $100,000 against any 
corporate alliance for any failure to provide such notification in such 
form and manner and within such time periods as the Secretary may 
prescribe by regulation.

SEC. 1395. TRUSTEESHIP BY THE SECRETARY OF INSOLVENT CORPORATE ALLIANCE 
              HEALTH PLANS.

    (a) Appointment of Secretary as Trustee for Insolvent Plans.--
Whenever the Secretary of Labor determines that a corporate alliance 
health plan which is a self-insured plan will be unable to provide 
benefits when due or is otherwise in a financially hazardous condition 
as defined in regulations of the Secretary, the Secretary shall, upon 
notice to the plan, apply to the appropriate United States district 
court for appointment of the Secretary as trustee to administer the 
plan for the duration of the insolvency. The plan may appear as a party 
and other interested persons may intervene in the proceedings at the 
discretion of the court. The court shall appoint the Secretary trustee 
if the court determines that the trusteeship is necessary to protect 
the interests of the enrolled individuals or health care providers or 
to avoid any unreasonable deterioration of the financial condition of 
the plan or any unreasonable increase in the liability of the Corporate 
Alliance Health Plan Insolvency Fund. The trusteeship of the Secretary 
shall continue until the conditions described in the first sentence of 
this subsection are remedied or the plan is terminated.
    (b) Powers as Trustee.--The Secretary of Labor, upon appointment as 
trustee under subsection (a), shall have the power--
            (1) to do any act authorized by the plan, this Act, or 
        other applicable provisions of law to be done by the plan 
        administrator or any trustee of the plan,
            (2) to require the transfer of all (or any part) of the 
        assets and records of the plan to the Secretary as trustee,
            (3) to invest any assets of the plan which the Secretary 
        holds in accordance with the provisions of the plan, 
        regulations of the Secretary, and applicable provisions of law,
            (4) to do such other acts as the Secretary deems necessary 
        to continue operation of the plan without increasing the 
        potential liability of the Corporate Alliance Health Plan 
        Insolvency Fund, if such acts may be done under the provisions 
        of the plan,
            (5) to require the corporate alliance, the plan 
        administrator, any contributing employer, and any employee 
        organization representing covered individuals to furnish any 
        information with respect to the plan which the Secretary as 
        trustee may reasonably need in order to administer the plan,
            (6) to collect for the plan any amounts due the plan and to 
        recover reasonable expenses of the trusteeship,
            (7) to commence, prosecute, or defend on behalf of the plan 
        any suit or proceeding involving the plan,
            (8) to issue, publish, or file such notices, statements, 
        and reports as may be required under regulations of the 
        Secretary or by any order of the court,
            (9) to terminate the plan and liquidate the plan assets in 
        accordance with applicable provisions of this Act and other 
        provisions of law, to restore the plan to the responsibility of 
        the corporate alliance, or to continue the trusteeship,
            (10) to provide for the enrollment of individuals covered 
        under the plan in an appropriate regional alliance health plan, 
        and
            (11) to do such other acts as may be necessary to comply 
        with this Act or any order of the court and to protect the 
        interests of enrolled individuals and health care providers.
    (c) Notice of Appointment.--As soon as practicable after the 
Secretary's appointment as trustee, the Secretary shall give notice of 
such appointment to--
            (1) the plan administrator,
            (2) each enrolled individual,
            (3) each employer who may be liable for contributions to 
        the plan, and
            (4) each employee organization which, for purposes of 
        collective bargaining, represents enrolled individuals.
    (d) Additional Duties.--Except to the extent inconsistent with the 
provisions of this Act or part 4 of subtitle B of title I of the 
Employee Retirement Income Security Act of 1974, or as may be otherwise 
ordered by the court, the Secretary of Labor, upon appointment as 
trustee under this section, shall be subject to the same duties as 
those of a trustee under section 704 of title 11, United States Code, 
and shall have the duties of a fiduciary for purposes of such part 4.
    (e) Other Proceedings.--An application by the Secretary of Labor 
under this subsection may be filed notwithstanding the pendency in the 
same or any other court of any bankruptcy, mortgage foreclosure, or 
equity receivership proceeding, or any proceeding to reorganize, 
conserve, or liquidate such plan or its property, or any proceeding to 
enforce a lien against property of the plan.
    (f) Jurisdiction of Court.--
            (1) In general.--Upon the filing of an application for the 
        appointment as trustee or the issuance of a decree under this 
        subsection, the court to which the application is made shall 
        have exclusive jurisdiction of the plan involved and its 
        property wherever located with the powers, to the extent 
        consistent with the purposes of this subsection, of a court of 
        the United States having jurisdiction over cases under chapter 
        11 of title 11, United States Code. Pending an adjudication 
        under this section such court shall stay, and upon appointment 
        by it of the Secretary of Labor as trustee, such court shall 
        continue the stay of, any pending mortgage foreclosure, equity 
        receivership, or other proceeding to reorganize, conserve, or 
        liquidate the plan, the sponsoring alliance, or property of 
        such plan or alliance, and any other suit against any receiver, 
        conservator, or trustee of the plan, the sponsoring alliance, 
        or property of the plan or alliance. Pending such adjudication 
        and upon the appointment by it of the Secretary as trustee, the 
        court may stay any proceeding to enforce a lien against 
        property of the plan or the sponsoring alliance or any other 
        suit against the plan or the alliance.
            (2) Venue.--An action under this subsection may be brought 
        in the judicial district where the plan administrator resides 
        or does business or where any asset of the plan is situated. A 
        district court in which such action is brought may issue 
        process with respect to such action in any other judicial 
        district.
    (g) Personnel.--In accordance with regulations of the Secretary of 
Labor, the Secretary shall appoint, retain, and compensate accountants, 
actuaries, and other professional service personnel as may be necessary 
in connection with the Secretary's service as trustee under this 
section.

SEC. 1396. GUARANTEED BENEFITS UNDER TRUSTEESHIP OF THE SECRETARY.

    (a) In General.--Subject to subsection (b), the Secretary of Labor 
shall guarantee the payment of all benefits under a corporate alliance 
health plan which is a self-insured plan while such plan is under the 
Secretary's trusteeship under section 1395.
    (b) Limitations.--Any increase in the amount of benefits under the 
plan resulting from a plan amendment which was made, or became 
effective, whichever is later, within 180 days (or such other 
reasonable time as may be prescribed in regulations of the Secretary of 
Labor) before the date of the Secretary's appointment as trustee of the 
plan shall be disregarded for purposes of determining the guarantee 
under this section.
    (c) Corporate Alliance Health Plan Insolvency Fund.--
            (1) Establishment.--The Secretary of Labor shall establish 
        a Corporate Alliance Health Plan Insolvency Fund (hereinafter 
        in this part referred to as the ``Fund'') from which the 
        Secretary shall authorize payment of all guaranteed benefits 
        under this section.
            (2) Receipts and disbursements.--
                    (A) Receipts.--The Fund shall be credited with--
                            (i) funds borrowed under paragraph (3),
                            (ii) assessments collected under section 
                        1397, and
                            (iii) earnings on investment of the Fund.
                    (B) Disbursements.--The Fund shall be available--
                            (i) for making such payments as the 
                        Secretary of Labor determines are necessary to 
                        pay benefits guaranteed under this section,
                            (ii) to repay the Secretary of the Treasury 
                        such sums as may be borrowed (together with 
                        interest thereon) under paragraph (3), and
                            (iii) to pay the operational and 
                        administrative expenses of the Fund.
            (3) Borrowing authority.--At the direction of the Secretary 
        of Labor, the Fund may, to the extent necessary to carry out 
        the purposes of paragraph (1), issue to the Secretary of the 
        Treasury notes or other obligations, in such forms and 
        denominations, bearing such maturities, and subject to such 
        terms and conditions as may be prescribed by the Secretary of 
        the Treasury. The total balance of the Fund obligations 
        outstanding at any time shall not exceed $500,000,000. Such 
        notes or other obligations shall bear interest at a rate 
        determined by the Secretary of the Treasury, taking into 
        consideration the current average market yield on outstanding 
        marketable obligations of the United States of comparable 
        maturities during the month preceding the issuance of such 
        notes or other obligations by the Fund. The Secretary of the 
        Treasury shall purchase any notes or other obligations issued 
        by the Fund under this paragraph, and for that purpose the 
        Secretary of the Treasury may use as a public debt transaction 
        the proceeds from the sale of any securities issued under 
        chapter 31 of title 31, United States Code and the purposes for 
        which securities may be issued under such chapter are extended 
        to include any purchase of such notes and obligations. The 
        Secretary of the Treasury may at any time sell any of the notes 
        or other obligations acquired by such Secretary under this 
        paragraph. All redemptions, purchases, and sales by the 
        Secretary of the Treasury of such notes or other obligations 
        shall be treated as public debt transactions of the United 
        States.
            (4) Investment authority.--Whenever the Secretary of Labor 
        determines that the moneys of the Fund are in excess of current 
        needs, such Secretary may request the investment of such 
        amounts as such Secretary determines advisable by the Secretary 
        of the Treasury in obligations issued or guaranteed by the 
        United States, but, until all borrowings under paragraph (3) 
        have been repaid, the obligations in which such excess moneys 
        are invested may not yield a rate of return in excess of the 
        rate of interest payable on such borrowings.

SEC. 1397. IMPOSITION AND COLLECTION OF PERIODIC ASSESSMENTS ON SELF-
              INSURED CORPORATE ALLIANCE PLANS.

    (a) Imposition of Assessments.--Upon a determination that 
additional receipts to the Fund are necessary in order to enable the 
Fund to repay amounts borrowed by the Fund under section 1396(c)(3) 
while maintaining a balance sufficient to ensure the solvency of the 
Fund, the Secretary of Labor may impose assessments under this section. 
The Secretary shall prescribe from time to time such schedules of 
assessment rates and bases for the application of such rates as may be 
necessary to provide for such repayments.
    (b) Uniformity of Assessments.--The assessment rates so prescribed 
by the Secretary for any period shall be uniform for all plans, except 
that the Secretary may vary the amount of such assessments by category, 
or waive the application of such assessments by category, taking into 
account differences in the financial solvency of, and financial 
reserves maintained by, plans in each category.
    (c) Limitation on Amount of Assessment.--The total amount assessed 
against a corporate alliance health plan under this section during a 
year may not exceed 2 percent of the total premiums paid to the plan 
with respect to corporate alliance eligible individuals enrolled with 
the plan during the year.
    (d) Payment of Assessments.--
            (1) Obligation to pay.--The designated payor of each plan 
        shall pay the assessments imposed by the Secretary of Labor 
        under this section with respect to that plan when they are due. 
        Assessments under this section are payable at the time, and on 
        an estimated, advance, or other basis, as determined by the 
        Secretary. Assessments shall continue to accrue until the 
        plan's assets are distributed pursuant to a termination 
        procedure or the Secretary is appointed to serve as trustee of 
        the plan under section 1395.
            (2) Late payment charges and interest.--
                    (A) Late payment charges.--If any assessment is not 
                paid when it is due, the Secretary of Labor may assess 
                a late payment charge of not more than 100 percent of 
                the assessment payment which was not timely paid.
                    (B) Waivers.--Subparagraph (A) shall not apply to 
                any assessment payment made within 60 days after the 
                date on which payment is due, if before such date, the 
                designated payor obtains a waiver from the Secretary of 
                Labor based upon a showing of substantial hardship 
                arising from the timely payment of the assessment. The 
                Secretary may grant a waiver under this subparagraph 
                upon application made by the designated payor, but the 
                Secretary may not grant a waiver if it appears that the 
                designated payor will be unable to pay the assessment 
                within 60 days after the date on which it is due.
                    (C) Interest.--If any assessment is not paid by the 
                last date prescribed for a payment, interest on the 
                amount of such assessment at the rate imposed under 
                section 6601(a) of the Internal Revenue Code of 1986 
                shall be paid for the period from such last date to the 
                date paid.
    (e) Civil Action upon Nonpayment.--If any designated payor fails to 
pay an assessment when due, the Secretary of Labor may bring a civil 
action in any district court of the United States within the 
jurisdiction of which the plan assets are located, the plan is 
administered, or in which a defendant resides or is found, for the 
recovery of the amount of the unpaid assessment, any late payment 
charge, and interest, and process may be served in any other district. 
The district courts of the United States shall have jurisdiction over 
actions brought under this subsection by the Secretary without regard 
to the amount in controversy.
    (f) Guarantee Held Harmless.--The Secretary of Labor shall not 
cease to guarantee benefits on account of the failure of a designated 
payor to pay any assessment when due.
    (g) Designated Payor Defined.--
            (1) In general.--For purposes of this section, the term 
        ``designated payor'' means--
                    (A) the employer or plan administrator in any case 
                in which the eligible sponsor of the corporate alliance 
                health plan is described in subparagraph (A) of section 
                1311(b)(1); and
                    (B) the contributing employers or the plan 
                administrator in any case in which the eligible sponsor 
                of the corporate alliance is described in subparagraph 
                (B) or (C) of section 1311(b)(1).
            (2) Controlled groups.--If an employer is a member of a 
        controlled group, each member of such group shall be jointly 
        and severally liable for any assessments required to be paid by 
        such employer. For purposes of the preceding sentence, the term 
        ``controlled group'' means any group treated as a single 
        employer under subsection (b), (c), (m), or (o) of section 414 
        of the Internal Revenue Code of 1986.

SEC. 1398. PAYMENTS TO FEDERAL GOVERNMENT BY MULTIEMPLOYER CORPORATE 
              ALLIANCES FOR ACADEMIC HEALTH CENTERS AND GRADUATE 
              MEDICAL EDUCATION.

    (a) In General.--A corporate alliance with an eligible sponsor 
described in section 1311(b)(1)(B) shall make payment to the Secretary 
of an amount equivalent to the amount (as estimated based on rules 
established by the Secretary and based on the annual per capita 
expenditure equivalent calculated under section 6021) that would have 
been payable by the alliance under section 1353 if the alliance were a 
regional alliance.
    (b) Reference to Exemption from Assessment.--For provision 
exempting certain corporate alliance employers participating in an 
alliance described in subsection (a) from an assessment under section 
3461 of the Internal Revenue Code of 1986, as added by section 7121 of 
this Act, see section 3461(c)(1) of such Code.

                                                    Title I, Subtitle E

                        Subtitle E--Health Plans

SEC. 1400. HEALTH PLAN DEFINED.

    (a) In General.--In this Act, the term ``health plan'' means a plan 
that provides the comprehensive benefit package and meets the 
requirements of parts 1, 3, and 4 applicable to health plans.
    (b) Appropriate Self-Insured Health Plan.--In this Act, the term 
``appropriate self-insured health plan'' means a group health plan (as 
defined in section 3(42) of the Employee Retirement Income Security Act 
of 1974) which is a self-insured health plan and with respect to which 
the applicable requirements of title I of the Employee Retirement 
Income Security Act of 1974 are met.
    (c) State-Certified Health Plan.--In this Act, the term ``State-
certified health plan'' means a health plan that has been certified by 
a State under section 1203(a) (or, in the case in which the Board is 
exercising certification authority under section 1522(b), that has been 
certified by the Board).
    (d) Applicable Regulatory Authority Defined.--In this subtitle, the 
term ``applicable regulatory authority'' means--
            (1) with respect to a self-insured health plan, the 
        Secretary of Labor, or
            (2) with respect to a State-certified health plan, the 
        State authority responsible for certification of the plan.

     PART 1--REQUIREMENTS RELATING TO COMPREHENSIVE BENEFIT PACKAGE

SEC. 1401. APPLICATION OF REQUIREMENTS.

    No plan shall be treated under this Act as a health plan--
            (1) unless the plan is a self-insured plan or a State-
        certified plan; or
            (2) on and after the effective date of a finding by the 
        applicable regulatory authority that the plan has failed to 
        comply with such applicable requirements.

SEC. 1402. REQUIREMENTS RELATING TO ENROLLMENT AND COVERAGE.

    (a) No Underwriting.--
            (1) In general.--Subject to paragraph (2), each health plan 
        offered by a regional alliance or a corporate alliance must 
        accept for enrollment every alliance eligible individual who 
        seeks such enrollment. No plan may engage in any practice that 
        has the effect of attracting or limiting enrollees on the basis 
        of personal characteristics, such as health status, anticipated 
        need for health care, age, occupation, or affiliation with any 
        person or entity.
            (2) Capacity limitations.--With the approval of the 
        applicable regulatory authority, a health plan may limit 
        enrollment because of the plan's capacity to deliver services 
        or to maintain financial stability. If such a limitation is 
        imposed, the limitation may not be imposed on a basis referred 
        to in paragraph (1).
    (b) No Limits on Coverage; No Pre-Existing Condition Limits.--A 
health plan may not--
            (1) terminate, restrict, or limit coverage for the 
        comprehensive benefit package in any portion of the plan's 
        service area for any reason, including nonpayment of premiums;
            (2) cancel coverage for any alliance eligible individual 
        until that individual is enrolled in another applicable health 
        plan;
            (3) exclude coverage of an alliance eligible individual 
        because of existing medical conditions;
            (4) impose waiting periods before coverage begins; or
            (5) impose a rider that serves to exclude coverage of 
        particular eligible individuals.
    (c) Antidiscrimination.--
            (1) In general.--No health plan may discriminate, or engage 
        (directly or through contractual arrangements) in any activity, 
        including the selection of a service area, that has the effect 
        of discriminating, against an individual on the basis of race, 
        national origin, sex, language, socio-economic status, age, 
        disability, health status, or anticipated need for health 
        services.
            (2) Selection of providers for plan network.--In selecting 
        among providers of health services for membership in a provider 
        network, or in establishing the terms and conditions of such 
        membership, a health plan may not engage in any practice that 
        has the effect of discriminating against a provider--
                    (A) based on the race, national origin, sex, 
                language, age, or disability of the provider; or
                    (B) based on the socio-economic status, disability, 
                health status, or anticipated need for health services 
                of a patient of the provider.
            (3) Business necessity.--Except in the case of intentional 
        discrimination, it shall not be a violation of this subsection, 
        or of any regulation issued under this subsection, for any 
        person to take any action otherwise prohibited under this 
        subsection, if the action is required by business necessity.
            (4) Regulations.--Not later than 1 year after the date of 
        the enactment of this Act, the Secretary of Health and Human 
        Services shall issue regulations to carry out this subsection.
    (d) Requirements for Plans Offering Lower Cost Sharing.--Each 
health plan that offers enrollees the lower cost sharing schedule 
referred to in section 1131--
            (1) shall apply such schedule to all items and services in 
        the comprehensive benefit package;
            (2) shall offer enrollees the opportunity to obtain 
        coverage for out-of-network items and services (as described in 
        subsection (f)(2)); and
            (3) notwithstanding section 1403, in the case of an 
        enrollee who obtains coverage for such items and services, may 
        charge an alternative premium to take into account such 
        coverage.
    (e) Treatment of Cost Sharing.--Each health plan, in providing 
benefits in the comprehensive benefit package--
            (1) shall include in its payments to providers, such 
        additional reimbursement as may be necessary to reflect cost 
        sharing reductions to which individuals are entitled under 
        section 1371, and
            (2) shall maintain such claims or encounter records as may 
        be necessary to audit the amount of such additional 
        reimbursements and the individuals for which such reimbursement 
        is provided.
    (f) In-Network and Out-of-Network Items and Services Defined.--
            (1) In-network items and services.--For purposes of this 
        Act, the term ``in-network'', when used with respect to items 
        or services described in this subtitle, means items or services 
        provided to an individual enrolled under a health plan by a 
        health care provider who is a member of a provider network of 
        the plan (as defined in paragraph (3)).
            (2) Out-of-network items and services.--For purposes of 
        this Act, the term ``out-of network'', when used with respect 
        to items or services described in this subtitle, means items or 
        services provided to an individual enrolled under a health plan 
        by a health care provider who is not a member of a provider 
        network of the plan (as defined in paragraph (3)).
            (3) Provider network defined.--A ``provider network'' 
        means, with respect to a health plan, providers who have 
        entered into an agreement with the plan under which such 
        providers are obligated to provide items and services in the 
        comprehensive benefit package to individuals enrolled in the 
        plan, or have an agreement to provide services on a fee-for-
        service basis.
    (g) Relation to Detention.--A health plan is not required to 
provide any reimbursement to any detention facility for services 
performed in that facility for detainees in the facility.

SEC. 1403. COMMUNITY RATING.

    (a) Regional Alliance Health Plans.--Each regional alliance health 
plan may not vary the premium imposed with respect to residents of an 
alliance area, except as may be required under section 6102(a) with 
respect to different types of individual and family coverage under the 
plan.
    (b) Corporate Alliance Health Plans.--Each corporate alliance 
health plan may not vary the premium imposed with respect to 
individuals enrolled in the plan, except as may be required under 
section 1384 with respect to different types of individual and family 
coverage under the plan.

SEC. 1404. MARKETING OF HEALTH PLANS; INFORMATION.

    (a) Regional Alliance Marketing Restrictions.--
            (1) In general.--The contract entered into between a 
        regional alliance and a regional alliance health plan shall 
        prohibit the distribution by the health plan of marketing 
        materials within the regional alliance that contain false or 
        materially misleading information and shall provide for prior 
        approval by the regional alliance of any marketing materials to 
        be distributed by the plan.
            (2) Entire market.--A health plan offered by a regional 
        alliance may not distribute marketing materials to an area 
        smaller than the entire area served by the plan.
            (3) Prohibition of tie-ins.--A regional alliance health 
        plan, and any agency of such a plan, may not seek to influence 
        an individual's choice of plans in conjunction with the sale of 
        any other insurance.
    (b) Information Available.--
            (1) In general.--Each regional alliance health plan must 
        provide to the regional alliance and make available to alliance 
        eligible individuals and health care professionals complete and 
        timely information concerning the following:
                    (A) Costs.
                    (B) The identity, locations, qualifications, and 
                availability of participating providers.
                    (C) Procedures used to control utilization of 
                services and expenditures.
                    (D) Procedures for assuring and improving the 
                quality of care.
                    (E) Rights and responsibilities of enrollees.
                    (F) Information on the number of plan members who 
                disenroll from the plan.
            (2) Prohibition against certification of plans providing 
        inaccurate information.--No regional alliance health plan may 
        be a State-certified health plan under this title if the State 
        determines that the plan submitted materially inaccurate 
        information under paragraph (1).
    (c) Advance Directives.--Each self-insured health plan and each 
State-certified health plan shall meet the requirement of section 
1866(f) of the Social Security Act (relating to maintaining written 
policies and procedures respecting advance directives) in the same 
manner as such requirement relates to organizations with contracts 
under section 1876 of such Act.

SEC. 1405. GRIEVANCE PROCEDURE.

    (a) In General.--Each health plan must establish a grievance 
procedure for enrollees to use in pursuing complaints. Such procedure 
shall be consistent with subtitle C of title V.
    (b) Additional Remedies.--If the grievance procedure fails to 
resolve an enrollee's complaint--
            (1) in the case of an enrollee of a regional alliance 
        health plan, the enrollee has the option of seeking assistance 
        from the office of the ombudsman for the regional alliance 
        established under section 1326(a), and
            (2) the enrollee may pursue additional legal remedies, 
        including those provided under subtitle C of title V.

SEC. 1406. HEALTH PLAN ARRANGEMENTS WITH PROVIDERS.

    (a) Requirement.--Each health plan must enter into such agreements 
with health care providers or have such other arrangements as may be 
necessary to assure the provision of all services covered by the 
comprehensive benefit package to eligible individuals enrolled with the 
plan.
    (b) Emergency and Urgent Care Services.--
            (1) In general.--Each health plan must cover emergency and 
        urgent care services provided to enrollees, without regard to 
        whether or not the provider furnishing such services has a 
        contractual (or other) arrangement with the plan to provide 
        items or services to enrollees of the plan and in the case of 
        emergency services without regard to prior authorization.
            (2) Payment amounts.--In the case of emergency and urgent 
        care provided to an enrollee outside of a health plan's service 
        area, the payment amounts of the plan shall be based on the fee 
        for service rate schedule established by the regional alliance 
        for the alliance area where the services were provided.
    (c) Application of Fee Schedule.--
            (1) In general.--Subject to paragraph (2), each regional 
        alliance health plan or corporate alliance health plan that 
        provides for payment for services on a fee-for-service basis 
        shall make such payment in the amounts provided under the fee 
        schedule established by the regional alliance under section 
        1322(c) (or, in the case of a plan offered in a State that has 
        established a Statewide fee schedule under section 1322(c)(3), 
        under such Statewide fee schedule).
            (2) Reduction for providers voluntarily reducing charges.--
        If a provider under a health plan voluntarily agrees to reduce 
        the amount charged to an individual enrolled under the plan, 
        the plan shall reduce the amount otherwise determined under the 
        fee schedule applicable under paragraph (1) by the proportion 
        of the reduction in such amount charged.
            (3) Reduction for noncomplying plan.--Each regional 
        alliance health plan that is a noncomplying plan shall provide 
        for reductions in payments under the fee schedule to providers 
        that are not participating providers in accordance with section 
        6012(b).
    (d) Prohibition Against Balance Billing; Requirement of Direct 
Billing.--
            (1) Prohibition of balance billing.--A provider may not 
        charge or collect from an enrollee a fee in excess of the 
        applicable payment amount under the applicable fee schedule 
        under subsection (c), and the health plan and its enrollees are 
        not legally responsible for payment of any amount in excess of 
        such applicable payment amount for items and services covered 
        under the comprehensive benefits package.
            (2) Direct billing.--A provider may not charge or collect 
        from an enrollee amounts that are payable by the health plan 
        (including any cost sharing reduction assistance payable by the 
        plan) and shall submit charges to such plan in accordance with 
        any applicable requirements of part 1 of subtitle B of title V 
        (relating to health information systems).
            (3) Coverage under agreements with plans.--The agreements 
        or other arrangements entered into under subsection (a) between 
        a health plan and the health care providers providing the 
        comprehensive benefit package to individuals enrolled with the 
        plan shall prohibit a provider from engaging in balance billing 
        described in paragraph (1).
    (e) Imposition of Participating Provider Assessment in Case of a 
Noncomplying Plan.--Each regional alliance health plan shall provide 
that if the plan is a noncomplying plan for a year under section 6012, 
payments to participating providers shall be reduced by the applicable 
network reduction percentage under such section.

SEC. 1407. PREEMPTION OF CERTAIN STATE LAWS RELATING TO HEALTH PLANS.

    (a) Laws Restricting Plans Other Than Fee-for-Service Plans.--
Except as may otherwise be provided in this section, no State law shall 
apply to any services provided under a health plan that is not a fee-
for-service plan (or a fee-for-service component of a plan) if such law 
has the effect of prohibiting or otherwise restricting plans from--
            (1) except as provided in section 1203, limiting the number 
        and type of health care providers who participate in the plan;
            (2) requiring enrollees to obtain health services (other 
        than emergency services) from participating providers or from 
        providers authorized by the plan;
            (3) requiring enrollees to obtain a referral for treatment 
        by a specialized physician or health institution;
            (4) establishing different payment rates for participating 
        providers and providers outside the plan;
            (5) creating incentives to encourage the use of 
        participating providers; or
            (6) requiring the use of single-source suppliers for 
        pharmacy, medical equipment, and other health products and 
        services.
    (b) Preemption of State Corporate Practice Acts.--Any State law 
related to the corporate practice of medicine and to provider ownership 
of health plans or other providers shall not apply to arrangements 
between health plans that are not fee-for-service plans and their 
participating providers.
    (c) Participating Provider Defined.--In this title, a 
``participating provider'' means, with respect to a health plan, a 
provider of health care services who is a member of a provider network 
of the plan (as described in section 1402(f)(3)).

SEC. 1408. FINANCIAL SOLVENCY.

    Each regional alliance health plan must--
            (1) meet or exceed minimum capital requirements established 
        by States under section 1204(a);
            (2) in the case of a plan operating in a State, must 
        participate in the guaranty fund established by the State under 
        section 1204(c); and
            (3) meet such other requirements relating to fiscal 
        soundness as the State may establish (subject to the 
        establishment of any alternative standards by the Board).

SEC. 1409. REQUIREMENT FOR OFFERING COST SHARING POLICY.

    Each regional alliance health plan shall offer a cost sharing 
policy (as defined in section 1421(b)(2)) to each eligible family 
enrolled under the plan.

SEC. 1410. QUALITY ASSURANCE.

    Each health plan shall comply with such quality assurance 
requirements as are imposed under subtitle A of title V with respect to 
such a plan.

SEC. 1411. PROVIDER VERIFICATION.

    Each health plan shall--
            (1) verify the credentials of practitioners and facilities;
            (2) ensure that all providers participating in the plan 
        meet applicable State licensing and certification standards;
            (3) oversee the quality and performance of participating 
        providers, consistent with section 1410; and
            (4) investigate and resolve consumer complaints against 
        participating providers.

SEC. 1412. CONSUMER DISCLOSURES OF UTILIZATION MANAGEMENT PROTOCOLS.

    Each health plan shall disclose to enrollees (and prospective 
enrollees) the protocols used by the plan for controlling utilization 
and costs.

SEC. 1413. CONFIDENTIALITY, DATA MANAGEMENT, AND REPORTING.

    (a) In General.--Each health plan shall comply with the 
confidentiality, data management, and reporting requirements imposed 
under subtitle B of title V.
    (b) Treatment of Electronic Information.--
            (1) Accuracy and reliability.--Each health plan shall take 
        such measures as may be necessary to ensure that health care 
        information in electronic form that the plan, or a member of a 
        provider network of the plan, collects for or transmits to the 
        Board under subtitle B of title V is accurate and reliable.
            (2) Privacy and security.--Each health plan shall take such 
        measures as may be necessary to ensure that health care 
        information described in paragraph (1) is not distributed to 
        any individual or entity in violation of a standard promulgated 
        by the Board under part 2 of subtitle B of title V.

SEC. 1414. PARTICIPATION IN REINSURANCE SYSTEM.

    Each regional alliance health plan of a State that has established 
a reinsurance system under section 1203(g) shall participate in the 
system in the manner specified by the State.

        PART 2--REQUIREMENTS RELATING TO SUPPLEMENTAL INSURANCE

SEC. 1421. IMPOSITION OF REQUIREMENTS ON SUPPLEMENTAL INSURANCE.

    (a) In General.--An entity may offer a supplemental insurance 
policy but only if--
            (1) in the case of a supplemental health benefit policy (as 
        defined in subsection (b)(1)), the entity and the policy meet 
        the requirements of section 1422; and
            (2) in the case of a cost sharing policy (as defined in 
        subsection (b)(2)), the entity and the policy meet the 
        requirements of section 1423.
    (b) Policies Defined.--
            (1) Supplemental health benefit policy.--
                    (A) In general.--In this part, the term 
                ``supplemental health benefit policy'' means a health 
                insurance policy or health benefit plan offered to an 
                alliance eligible individual which provides--
                            (i) coverage for services and items not 
                        included in the comprehensive benefit package, 
                        or
                            (ii) coverage for items and services 
                        included in such package but not covered 
                        because of a limitation in amount, duration, or 
                        scope provided under this title,
                or both.
                    (B) Exclusions.--Such term does not include the 
                following:
                            (i) A cost sharing policy (as defined in 
                        paragraph (2)).
                            (ii) A long-term care insurance policy (as 
                        defined in section 2304(10)).
                            (iii) Insurance that limits benefits with 
                        respect to specific diseases (or conditions).
                            (iv) Hospital or nursing home indemnity 
                        insurance.
                            (v) A medicare supplemental policy (as 
                        defined in section 1882(g) of the Social 
                        Security Act).
                            (vi) Insurance with respect to accidents.
            (2) Cost sharing policy.--In this part, the term ``cost 
        sharing policy'' means a health insurance policy or health 
        benefit plan offered to an alliance eligible individual which 
        provides coverage for deductibles, coinsurance, and copayments 
        imposed as part of the comprehensive benefit package under 
        subtitle B, whether imposed under a higher cost sharing plan or 
        with respect to out-of-network providers.

SEC. 1422. STANDARDS FOR SUPPLEMENTAL HEALTH BENEFIT POLICIES.

    (a) Prohibiting Duplication of Coverage.--
            (1) In general.--No health plan, insurer, or any other 
        person may offer--
                    (A) to any eligible individual a supplemental 
                health benefit policy that duplicates any coverage 
                provided in the comprehensive benefit package; or
                    (B) to any medicare-eligible individual a 
                supplemental health benefit policy that duplicates any 
                coverage provided under the medicare program.
            (2) Exception for medicare-eligible individuals.--For 
        purposes of this subsection, for the period in which an 
        individual is a medicare-eligible individual and also is an 
        alliance eligible individual (and is enrolled under a regional 
        alliance or corporate alliance health plan), paragraph (1)(A) 
        (and not paragraph (1)(B)) shall apply.
    (b) No Limitation on Individuals Offered Policy.--
            (1) In general.--Except as provided in paragraph (2), each 
        entity offering a supplemental health benefit policy must 
        accept for enrollment every individual who seeks such 
        enrollment, subject to capacity and financial limits.
            (2) Exception for certain offerors.--Paragraph (1) shall 
        not apply to any supplemental health benefit policy offered to 
        an individual only on the basis of--
                    (A) the individual's employment (in the case of a 
                policy offered by the individual's employer); or
                    (B) the individual's membership or enrollment in a 
                fraternal, religious, professional, educational, or 
                other similar organization.
    (c) Restrictions on Marketing Abuses.--Not later than January 1, 
1996, the Board shall develop (in consultation with the States) minimum 
standards that prohibit marketing practices by entities offering 
supplemental health benefit policies that involve:
            (1) Providing monetary incentives for or tying or otherwise 
        conditioning the sale of the policy to enrollment in a regional 
        alliance health plan of the entity.
            (2) Using or disclosing to any party information about the 
        health status or claims experience of participants in a 
        regional alliance health plan for the purpose of marketing such 
        a policy.
    (d) Civil Monetary Penalty.--An entity that knowingly and willfully 
violates any provision of this section with respect to the offering of 
a supplemental health benefit policy to any individual shall be subject 
to a civil monetary penalty (not to exceed $10,000) for each such 
violation. The provisions of section 1128A of the Social Security Act 
(other than subsections (a) and (b)) shall apply to civil money 
penalties under this subsection in the same manner as they apply to a 
penalty or proceeding under section 1128A(a) of such Act.

SEC. 1423. STANDARDS FOR COST SHARING POLICIES.

    (a) Rules for Offering of Policies.--Subject to subsection (f), a 
cost sharing policy may be offered to an individual only if--
            (1) the policy is offered by the regional alliance health 
        plan in which the individual is enrolled;
            (2) the regional alliance health plan offers the policy to 
        all individuals enrolled in the plan;
            (3) the plan offers each such individual a choice of a 
        policy that provides standard coverage and a policy that 
        provides maximum coverage (in accordance with standards 
        established by the Board); and
            (4) the policy is offered only during the annual open 
        enrollment period for regional alliance health plans (described 
        in section 1323(d)(1)).
    (b) Prohibition of Coverage of Copayments.--Each cost sharing 
policy may not provide any benefits relating to any copayments 
established under the table of copayments and coinsurance under section 
1135.
    (c) Equivalent Coverage for All Services.--Each cost sharing policy 
must provide coverage for items and services in the comprehensive 
benefit package to the same extent as the policy provides coverage for 
all items and services in the package.
    (d) Requirements for Pricing.--
            (1) In general.--The price of any cost sharing policy 
        shall--
                    (A) be the same for each individual to whom the 
                policy is offered;
                    (B) take into account any expected increase in 
                utilization resulting from the purchase of the policy 
                by individuals enrolled in the regional alliance health 
                plan; and
                    (C) not result in a loss-ratio of less than 90 
                percent.
            (2) Loss-ratio defined.--In paragraph (1)(C), a ``loss-
        ratio'' is the ratio of the premium returned to the consumer in 
        payout relative to the total premium collected.
    (e) Loss of State Certification for Regional Alliance Health Plans 
Failing to Meet Standards.--A State may not certify a regional alliance 
health plan that offers a cost sharing policy unless the plan and the 
policy meet the standards described in this section.
    (f) Special Rules for FEHBP Supplemental Plans.--Subsection (a) 
shall not apply to an FEHBP supplemental plan described in section 
8203(f)(1), but only if the plan meets the following requirements:
            (1) The plan must be offered to all individuals to whom 
        such a plan is required to be offered under section 8203.
            (2) The plan must offer each such individual a choice of a 
        policy that provides standard coverage and a policy that 
        provides maximum coverage (in accordance with standards 
        established by the Board under subsection (a)(3)).
            (3) The plan is offered only during the annual open 
        enrollment period for regional alliance health plans (described 
        in section 1323(d)(1)).
            (4)(A) The price of the plan shall include an amount, 
        established in accordance with rules established by the Board 
        in consultation with the Office of Personnel Management, that 
        takes into account any expected increase in utilization of the 
        items and services in the comprehensive benefit package 
        resulting from the purchase of the plan by individuals enrolled 
        in a regional alliance health plan.
            (B) The plan provides for payment, in a manner specified by 
        the Board in the case of an individual enrolled in the plan and 
        in a regional alliance health plan, to the regional alliance 
        health plan of an amount equivalent to the additional amount 
        described in subparagraph (A).

     PART 3--REQUIREMENTS RELATING TO ESSENTIAL COMMUNITY PROVIDERS

SEC. 1431. HEALTH PLAN REQUIREMENT.

    (a) In General.--Subject to section 1432, each health plan shall, 
with respect to each electing essential community provider (as defined 
in subsection (d), other than a provider of school health services) 
located within the plan's service area, either--
            (1) enter into a written provider participation agreement 
        (described in subsection (b)) with the provider, or
            (2) enter into a written agreement under which the plan 
        shall make payment to the provider in accordance with 
        subsection (c).
    (b) Participation Agreement.--A participation agreement between a 
health plan and an electing essential community provider under this 
subsection shall provide that the health plan agrees to treat the 
provider in accordance with terms and conditions at least as favorable 
as those that are applicable to other providers participating in the 
health plan with respect to each of the following:
            (1) The scope of services for which payment is made by the 
        plan to the provider.
            (2) The rate of payment for covered care and services.
            (3) The availability of financial incentives to 
        participating providers.
            (4) Limitations on financial risk provided to other 
        participating providers.
            (5) Assignment of enrollees to participating providers.
            (6) Access by the provider's patients to providers in 
        medical specialties or subspecialties participating in the 
        plan.
    (c) Payments for Providers Without Participation Agreements.--
            (1) In general.--Payment in accordance with this subsection 
        is payment based, as elected by the electing essential 
        community provider, either--
                    (A) on the fee schedule developed by the applicable 
                regional alliance (or the State) under section 1322(c), 
                or
                    (B) on payment methodologies and rates used under 
                the applicable Medicare payment methodology and rates 
                (or the most closely applicable methodology under such 
                program as the Secretary of Health and Human Services 
                specifies in regulations).
            (2) No application of gate-keeper limitations.--Payment in 
        accordance with this subsection may be subject to utilization 
        review, but may not be subject to otherwise applicable gate-
        keeper requirements under the plan.
    (d) Election.--
            (1) In general.--In this part, the term ``electing 
        essential community provider'' means, with respect to a health 
        plan, an essential community provider that elects this subpart 
        to apply to the health plan.
            (2) Form of election.--An election under this subsection 
        shall be made in a form and manner specified by the Secretary, 
        and shall include notice to the health plan involved. Such an 
        election may be made annually with respect to a health plan, 
        except that the plan and provider may agree to make such an 
        election on a more frequent basis.
    (e) Special Rule for Providers of School Health Services.--A health 
plan shall pay, to each provider of school health services located in 
the plan's service area an amount determined by the Secretary for such 
services furnished to enrollees of the plan.

SEC. 1432. SUNSET OF REQUIREMENT.

    (a) In General.--Subject to subsection (d), the requirement of 
section 1431 shall only apply to health plans offered by a health 
alliance during the 5-year period beginning with the first year in 
which any health plan is offered by the alliance.
    (b) Studies.--In order to prepare recommendations under subsection 
(c), the Secretary shall conduct studies regarding essential community 
providers, including studies that assess--
            (1) the definition of essential community provider,
            (2) the sufficiency of the funding levels for providers, 
        for both covered and uncovered benefits under this Act,
            (3) the effects of contracting requirements relating to 
        such providers on such providers, health plans, and enrollees,
            (4) the impact of the payment rules for such providers, and
            (5) the impact of national health reform on such providers.
    (c) Recommendations to Congress.--The Secretary shall submit to 
Congress, by not later than March 1, 2001, specific recommendations 
respecting whether, and to what extent, section 1431 should continue to 
apply to some or all essential community providers. Such 
recommendations may include a description of the particular types of 
such providers and circumstances under which such section should 
continue to apply.
    (d) Congressional Consideration.--
            (1) In general.--Recommendations submitted under subsection 
        (c) shall apply under this part (and may supersede the 
        provisions of subsection (a)) unless a joint resolution 
        (described in paragraph (2)) disapproving such recommendations 
        is enacted, in accordance with the provisions of paragraph (3), 
        before the end of the 60-day period beginning on the date on 
        which such recommendations were submitted. For purposes of 
        applying the preceding sentence and paragraphs (2) and (3), the 
        days on which either House of Congress is not in session 
        because of an adjournment of more than three days to a day 
        certain shall be excluded in the computation of a period.
            (2) Joint resolution of disapproval.--A joint resolution 
        described in this paragraph means only a joint resolution which 
        is introduced within the 10-day period beginning on the date on 
        which the Secretary submits recommendations under subsection 
        (c) and--
                    (A) which does not have a preamble;
                    (B) the matter after the resolving clause of which 
                is as follows: ``That Congress disapproves the 
                recommendations of the Secretary of Health and Human 
                Services concerning the continued application of 
                certain essential community provider requirements under 
                section 1431 of the Health Security Act, as submitted 
                by the Secretary on ______________.'', the blank space 
                being filled in with the appropriate date; and
                    (C) the title of which is as follows: ``Joint 
                resolution disapproving recommendations of the 
                Secretary of Health and Human Services concerning the 
                continued application of certain essential community 
                provider requirements under section 1431 of the Health 
                Security Act, as submitted by the Secretary on 
                ______________.'', the blank space being filled in with 
                the appropriate date.
            (3) Procedures for consideration of resolution of 
        disapproval.--Subject to paragraph (4), the provisions of 
        section 2908 (other than subsection (a)) of the Defense Base 
        Closure and Realignment Act of 1990 shall apply to the 
        consideration of a joint resolution described in paragraph (2) 
        in the same manner as such provisions apply to a joint 
        resolution described in section 2908(a) of such Act.
            (4) Special rules.--For purposes of applying paragraph (3) 
        with respect to such provisions--
                    (A) any reference to the Committee on Armed 
                Services of the House of Representatives shall be 
                deemed a reference to an appropriate Committee of the 
                House of Representatives (specified by the Speaker of 
                the House of Representatives at the time of submission 
                of recommendations under subsection (c)) and any 
                reference to the Committee on Armed Services of the 
                Senate shall be deemed a reference to an appropriate 
                Committee of the Senate (specified by the Majority 
                Leader of the Senate at the time of submission of 
                recommendations under subsection (c)); and
                    (B) any reference to the date on which the 
                President transmits a report shall be deemed a 
                reference to the date on which the Secretary submits 
                recommendations under subsection (c).

 PART 4--REQUIREMENTS RELATING TO WORKERS' COMPENSATION AND AUTOMOBILE 
                       MEDICAL LIABILITY COVERAGE

SEC. 1441. REFERENCE TO REQUIREMENTS RELATING TO WORKERS COMPENSATION 
              SERVICES.

    Each health plan shall meet the applicable requirements of part 2 
of subtitle A of title X (relating to provision of workers compensation 
services to enrollees).

SEC. 1442. REFERENCE TO REQUIREMENTS RELATING TO AUTOMOBILE MEDICAL 
              LIABILITY SERVICES.

    Each health plan shall meet the applicable requirements of part 2 
of subtitle B of title X (relating to provision of automobile medical 
liability services to enrollees).

                                                    Title I, Subtitle F

                  Subtitle F--Federal Responsibilities

                     PART 1--NATIONAL HEALTH BOARD

           Subpart A--Establishment of National Health Board

SEC. 1501. CREATION OF NATIONAL HEALTH BOARD; MEMBERSHIP.

    (a) In General.--There is hereby created in the Executive Branch a 
National Health Board.
    (b) Composition.--The Board is composed of 7 members appointed by 
the President, by and with the advice and consent of the Senate.
    (c) Chair.--The President shall designate one of the members as 
chair. The chair serves a term concurrent with that of the President. 
The chair may serve a maximum of 3 terms. The chair shall serve as the 
chief executive officer of the Board.
    (d) Terms.--
            (1) In general.--Except as provided in paragraphs (2) and 
        (4), the term of each member of the Board, except the chair, is 
        4 years and begins when the term of the predecessor of that 
        member ends.
            (2) Initial terms.--The initial terms of the members of the 
        Board (other than the chair) first taking office after the date 
        of the enactment of this Act, shall expire as designated by the 
        President, two at the end of one year, two at the end of two 
        years, and two at the end of three years.
            (3) Reappointment.--A member (other than the chair) may be 
        reappointed for one additional term.
            (4) Continuation in office.--Upon the expiration of a term 
        of office, a member shall continue to serve until a successor 
        is appointed and qualified.
    (e) Vacancies.--
            (1) In general.--Whenever a vacancy shall occur, other than 
        by expiration of term, a successor shall be appointed by the 
        President, by and with the consent of the Senate, to fill such 
        vacancy, and is appointed for the remainder of the term of the 
        predecessor.
            (2) No impairment of function.--A vacancy in the membership 
        of the Board does not impair the authority of the remaining 
        members to exercise all of the powers of the Board.
            (3) Acting chair.--The Board may designate a Member to act 
        as chair during any period in which there is no chair 
        designated by the President.
    (f) Meetings; Quorum.--
            (1) Meetings.--At meetings of the Board the chair shall 
        preside, and in the absence of the chair, the Board shall elect 
        a member to act as chair pro tempore.
            (2) Quorum.--Four members of the Board shall constitute a 
        quorum thereof.

SEC. 1502. QUALIFICATIONS OF BOARD MEMBERS.

    (a) Citizenship.--Each member of the Board shall be a citizen of 
the United States.
    (b) Basis of Selection.--Board members will be selected on the 
basis of their experience and expertise in relevant subjects, including 
the practice of medicine, nursing, or other clinical practices, health 
care financing and delivery, state health systems, consumer protection, 
business, law, and delivery of care to vulnerable populations.
    (c) Exclusive Employment.--During the term of appointment, Board 
members shall serve as employees of the Federal Government and shall 
hold no other employment.
    (d) Prohibition of Conflict of Interest.--A member of the Board may 
not have a pecuniary interest in or hold an official relation to any 
health care plan, health care provider, insurance company, 
pharmaceutical company, medical equipment company, or other affected 
industry. Before entering upon the duties as a member of the Board, the 
member shall certify under oath compliance with this requirement.
    (e) Post-Employment Restrictions.--After leaving the Board, former 
members are subject to post-employment restrictions applicable to 
comparable Federal employees.
    (f) Compensation of Board Members.--Each member of the Board (other 
than the chair) shall receive an annual salary at the annual rate 
payable from time to time for level IV of the Executive Schedule. The 
chair of the Board, during the period of service as chair, shall 
receive an annual salary at the annual rate payable from time to time 
for level III of the Executive Schedule.

SEC. 1503. GENERAL DUTIES AND RESPONSIBILITIES.

    (a) Comprehensive Benefit Package.--
            (1) Interpretation.--The Board shall interpret the 
        comprehensive benefit package, adjust the delivery of 
        preventive services under section 1153, and take such steps as 
        may be necessary to assure that the comprehensive benefit 
        package is available on a uniform national basis to all 
        eligible individuals.
            (2) Recommendations.--The Board may recommend to the 
        President and the Congress appropriate revisions to such 
        package. Such recommendations may reflect changes in 
        technology, health care needs, health care costs, and methods 
        of service delivery.
    (b) Administration of Cost Containment Provisions.--The Board shall 
oversee the cost containment requirements of subtitle A of title VI and 
certify compliance with such requirements.
    (c) Coverage and Families.--The Board shall develop and implement 
standards relating to the eligibility of individuals for coverage in 
applicable health plans under subtitle A of title I and may provide 
such additional exceptions and special rules relating to the treatment 
of family members under section 1012 as the Board finds appropriate.
    (d) Quality Management and Improvement.--The Board shall establish 
and have ultimate responsibility for a performance-based system of 
quality management and improvement as required by section 5001.
    (e) Information Standards.--The Board shall develop and implement 
standards to establish national health information system to measure 
quality as required by section 5101.
    (f) Participating State Requirements.--Consistent with the 
provisions of subtitle C, the Board shall--
            (1) establish requirements for participating States,
            (2) monitor State compliance with those requirements,
            (3) provide technical assistance, and
in a manner that ensures access to the comprehensive benefit package 
for all eligible individuals.
    (g) Development of Premium Class Factors.--The Board shall 
establish premium class factors under subpart D of this part.
    (h) Development of Risk-Adjustment Methodology.--The Board shall 
develop a methodology for the risk-adjustment of premium payments to 
regional alliance health plans in accordance with subpart E of this 
part.
    (i) Financial Requirements.--The Board shall establish minimum 
capital requirements and requirements for guaranty funds under subpart 
F of this part.
    (j) Standards for Health Plan Grievance Procedures.--The Board 
shall establish standards for health plan grievance procedures that are 
used by enrollees in pursuing complaints.

SEC. 1504. ANNUAL REPORT.

    (a) In General.--The Board shall prepare and send to the President 
and Congress an annual report addressing the overall implementation of 
the new health care system.
    (b) Matters To Be Included.--The Board shall include in each annual 
report under this section the following:
            (1) Information on Federal and State implementation.
            (2) Data related to quality improvement.
            (3) Recommendations or changes in the administration, 
        regulation and laws related to health care and coverage.
            (4) A full account of all actions taken during the previous 
        year.

SEC. 1505. POWERS.

    (a) Staff; Contract Authority.--The Board shall have authority, 
subject to the provisions of the civil-service laws and chapter 51 and 
subchapter III of chapter 53 of title 5, United States Code, to appoint 
such officers and employees as are necessary to carry out its 
functions. To the extent provided in advance in appropriations Acts, 
the Board may contract with any person (including an agency of the 
Federal Government) for studies and analysis as required to execute its 
functions. Any employee of the Executive Branch may be detailed to the 
Board to assist the Board in carrying out its duties.
    (b) Establishment of Advisory Committees.--The Board may establish 
advisory committees.
    (c) Access to Information.--The Board may secure directly from any 
department or agency of the United States information necessary to 
enable it to carry out its functions, to the extent such information is 
otherwise available to a department or agency of the United States. 
Upon request of the chair, the head of that department or agency shall 
furnish that information to the Board.
    (d) Delegation of Authority.--Except as otherwise provided in this 
Act, the Board may delegate any function to such officers and employees 
as the Board may designate and may authorize such successive 
redelegations of such functions with the Board as the Board deems to be 
necessary or appropriate. No delegation of functions by the Board shall 
relieve the Board of responsibility for the administration of such 
functions.
    (e) Rulemaking.--The National Health Board is authorized to 
establish such rules as may be necessary to carry out this Act.

SEC. 1506. FUNDING.

    (a) Authorization of Appropriations.--There are authorized to be 
appropriated to the Board such sums as may be necessary for fiscal 
years 1994, 1995, 1996, 1997, and 1998.
    (b) Submission of Budget.--Under the procedures of chapter 11 of 
title 31, United States Code, the budget for the Board for a fiscal 
year shall be reviewed by the Director of the Office of Management and 
Budget and submitted to the Congress as part of the President's 
submission of the Budget of the United States for the fiscal year.

 Subpart B--Responsibilities Relating to Review and Approval of State 
                                Systems

SEC. 1511. FEDERAL REVIEW AND ACTION ON STATE SYSTEMS.

    (a) Approval of State Systems by National Board.--
            (1) In general.--The National Health Board shall approve a 
        State health care system for which a document is submitted 
        under section 1200(b) unless the Board finds that the system 
        (as set forth in the document) does not (or will not) provide 
        for the State meeting the responsibilities for participating 
        States under this Act.
            (2) Regulations.--The Board shall issue regulations, not 
        later than July 1, 1995, prescribing the requirements for State 
        health care systems under parts 2 and 3 of subtitle C, except 
        that in the case of a document submitted under section 1200(b) 
        before the date of issuance of such regulations, the Board 
        shall take action on such document notwithstanding the fact 
        that such regulations have not been issued.
            (3) No approval permitted for years prior to 1996.--The 
        Board may not approve a State health care system under this 
        subpart for any year prior to 1996.
    (b) Review of Completeness of Documents.--
            (1) In general.--If a State submits a document under 
        subsection (a)(1), the Board shall notify the State, not later 
        than 7 working days after the date of submission, whether or 
        not the document is complete and provides the Board with 
        sufficient information to approve or disapprove the document.
            (2) Additional information on incomplete document.--If the 
        Board notifies a State that the State's document is not 
        complete, the State shall be provided such additional period 
        (not to exceed 45 days) as the Board may by regulation 
        establish in which to submit such additional information as the 
        Board may require. Not later than 7 working days after the 
        State submits the additional information, the Board shall 
        notify the State respecting the completeness of the document.
    (c) Action on Completed Documents.--
            (1) In general.--The Board shall make a determination (and 
        notify the State) on whether the State's document provides for 
        implementation of a State system that meets the applicable 
        requirements of subtitle C--
                    (A) in the case of a State that did not require the 
                additional period described in subsection (b)(2) to 
                file a complete document, not later than 90 days after 
                notifying a State under subsection (b) that the State's 
                document is complete, or
                    (B) in the case of a State that required the 
                additional period described in subsection (b)(2) to 
                file a complete document, not later than 90 days after 
                notifying a State under subsection (b) that the State's 
                document is complete.
            (2) Plans deemed approved.--If the Board does not meet the 
        applicable deadline for making a determination and providing 
        notice under paragraph (1) with respect to a State's document, 
        the Board shall be deemed to have approved the State's document 
        for purposes of this Act.
    (d) Opportunity to Respond to Rejected Document.--
            (1) In general.--If (within the applicable deadline under 
        subsection (c)(1)) the Board notifies a State that its document 
        does not provide for implementation of a State system that 
        meets the applicable requirements of subtitle C, the Board 
        shall provide the State with a period of 30 days in which to 
        submit such additional information and assurances as the Board 
        may require.
            (2) Deadline for response.--Not later than 30 days after 
        receiving such additional information and assurances, the Board 
        shall make a determination (and notify the State) on whether 
        the State's document provides for implementation of a State 
        system that meets the applicable requirements of subtitle C.
            (3) Plan deemed approved.--If the Board does not meet the 
        deadline established under paragraph (2) with respect to a 
        State, the Board shall be deemed to have approved the State's 
        document for purposes of this Act.
    (e) Approval of Previously Terminated States.--If the Board has 
approved a State system under this part for a year but subsequently 
terminated the approval of the system under section 1512(b)(2), the 
Board shall approve the system for a succeeding year if the State--
            (1) demonstrates to the satisfaction of the Board that the 
        failure that formed the basis for the termination no longer 
        exists, and
            (2) provides reasonable assurances that the types of 
        actions (or inactions) which formed the basis for such 
        termination will not recur.
    (f) Revisions to State System.--
            (1) Submission.--A State may revise a system approved for a 
        year under this section, except that such revision shall not 
        take effect unless the State has submitted to the Board a 
        document describing such revision and the Board has approved 
        such revision.
            (2) Actions on amendments.--Not later than 60 days after a 
        document is submitted under paragraph (1), the Board shall make 
        a determination (and notify the State) on whether the 
        implementation of the State system, as proposed to be revised, 
        meets the applicable requirements of subtitle C. If the Board 
        fails to meet the requirement of the preceding sentence, the 
        Board shall be deemed to have approved the implementation of 
        the State system as proposed to be revised.
            (3) Rejection of amendments.--Subsection (d) shall apply to 
        an amendment submitted under this subsection in the same manner 
        as it applies to a completed document submitted under 
        subsection (b).
    (g) Notification of Non-Participating States.--If a State fails to 
submit a document for a State system by the deadline referred to in 
section 1200, or such a document is not approved under subsection (c), 
the Board shall immediately notify the Secretary of Health and Human 
Services of the State's failure for purposes of applying subpart C in 
that State.

SEC. 1512. FAILURE OF PARTICIPATING STATES TO MEET CONDITIONS FOR 
              COMPLIANCE.

    (a) In General.--In the case of a participating State, if the Board 
determines that the operation of the State system under subtitle C 
fails to meet the applicable requirements of this Act, sanctions shall 
apply against the State in accordance with subsection (b).
    (b) Type of Sanction Applicable.--The sanctions applicable under 
this part are as follows:
            (1) If the Board determines that the State's failure does 
        not substantially jeopardize the ability of eligible 
        individuals in the State to obtain coverage for the 
        comprehensive benefit package--
                    (A) the Board may order a regional alliance in the 
                State to comply with applicable requirements of this 
                Act and take such additional measures to assure 
                compliance with such requirements as the Board may 
                impose, if the Board determines that the State's 
                failure relates to a requirement applicable to a 
                regional alliance in the State, or
                    (B) if the Board does not take the action described 
                in subparagraph (A) (or if the Board takes the action 
                and determines that the action has not remedied the 
                violation that led to the imposition of the sanction), 
                the Board shall notify the Secretary of Health and 
                Human Services, who shall reduce payments with respect 
                to the State in accordance with section 1513.
            (2) If the Board determines that the failure substantially 
        jeopardizes the ability of eligible individuals in the State to 
        obtain coverage for the comprehensive benefit package--
                    (A) the Board shall terminate its approval of the 
                State system; and
                    (B) the Board shall notify the Secretary of Health 
                and Human Services, who shall assume the 
                responsibilities described in section 1522.
    (c) Termination of Sanction.--
            (1) Compliance by State.--A State against which a sanction 
        is imposed may submit information at any time to the Board to 
        demonstrate that the failure that led to the imposition of the 
        sanction has been corrected.
            (2) Termination of sanction.--If the Board determines that 
        the failure that led to the imposition of a sanction has been 
        corrected--
                    (A) in the case of the sanction described in 
                subsection (b)(1)(A), the Board shall notify the 
                regional alliance against which the sanction is 
                imposed; or
                    (B) in the case of any other sanction described in 
                subsection (b), the Board shall notify the Secretary of 
                Health and Human Services.
    (d) Protection of Access to Benefits.--The Board and the Secretary 
of Health and Human Services shall exercise authority to take actions 
under this section with respect to a State only in a manner that 
assures the continuous coverage of eligible individuals under regional 
alliance health plans.

SEC. 1513. REDUCTION IN PAYMENTS FOR HEALTH PROGRAMS BY SECRETARY OF 
              HEALTH AND HUMAN SERVICES.

    (a) In General.--Upon receiving notice from the Board under section 
1512(b)(1)(B), the Secretary of Health and Human Services shall reduce 
the amount of any of the payments described in subsection (b) that 
would otherwise be made to individuals and entities in the State by 
such amount as the Secretary determines to be appropriate.
    (b) Payments Described.--The payments described in this subsection 
are as follows:
            (1) Payments to academic health centers in the State under 
        subtitle B of title III.
            (2) Payments to individuals and entities in the State for 
        health research activities under section 301 and title IV of 
        the Public Health Service Act.
            (3) Payments to hospitals in the State under part 4 of 
        subtitle E of title III (relating to payments to hospitals 
        serving vulnerable populations)

SEC. 1514. REVIEW OF FEDERAL DETERMINATIONS.

    Any State or alliance affected by a determination by the Board 
under this subpart may appeal such determination in accordance with 
section 5231.

SEC. 1515. FEDERAL SUPPORT FOR STATE IMPLEMENTATION.

    (a) Planning Grants.--
            (1) In general.--Not later than 90 days after the date of 
        the enactment of this Act, the Secretary shall make available 
        to each State a planning grant to assist a State in the 
        development of a health care system to become a participating 
        State under subtitle C.
            (2) Formula.--The Secretary shall establish a formula for 
        the distribution of funds made available under this subsection.
            (3) Authorization of appropriations.--There are authorized 
        to be appropriated $50,000,000 in each of fiscal years 1995 and 
        1996 for grants under this subsection.
    (b) Grants for Start-up Support.--
            (1) In general.--The Secretary shall make available to 
        States, upon their enacting enabling legislation to become 
        participating States, grants to assist in the establishment of 
        regional alliances.
            (2) Formula.--The Secretary shall establish a formula for 
        the distribution of funds made available under this subsection.
            (3) State matching funds required.--Funds are payable to a 
        State under this subsection only if the State provides 
        assurances, satisfactory to the Secretary, that amounts of 
        State funds (at least equal to the amount made available under 
        this subsection) are expended for the purposes described in 
        paragraph (1).
            (4) Authorization of appropriations.--There are authorized 
        to be appropriated $313,000,000 for fiscal year 1996, 
        $625,000,000 for fiscal year 1997, and $313,000,000 for fiscal 
        year 1998 for grants under this subsection.

        Subpart C--Responsibilities in Absence of State Systems

SEC. 1521. APPLICATION OF SUBPART.

    (a) Initial Application.--This subpart shall apply with respect to 
a State as of January 1, 1998, unless--
            (1) the State submits a document for a State system under 
        section 1511(a)(1) by July 1, 1997, and
            (2) the Board determines under section 1511 that such 
        system meets the requirements of part 1 of subtitle C.
    (b) Termination of Approval of System of Participating State.--In 
the case of a participating State for which the Board terminates 
approval of the State system under section 1512(b)(2), this subpart 
shall apply with respect to the State as of such date as is appropriate 
to assure the continuity of coverage for the comprehensive benefit 
package for eligible individuals in the State.

SEC. 1522. FEDERAL ASSUMPTION OF RESPONSIBILITIES IN NON-PARTICIPATING 
              STATES.

    (a) Notice.--When the Board determines that this subpart will apply 
to a State for a calendar year, the Board shall notify the Secretary of 
Health and Human Services.
    (b) Establishment of Regional Alliance System.--Upon receiving 
notice under subsection (a), the Secretary shall take such steps, 
including the establishment of regional alliances, and compliance with 
other requirements applicable to participating States under subtitle C, 
as are necessary to ensure that the comprehensive benefit package is 
provided to eligible individuals in the State during the year.
    (c) Requirements for Alliances.--Subject to section 1523, any 
regional alliance established by the Secretary pursuant to this section 
must meet all the requirements applicable under subtitle D to a 
regional alliance established and operated by a participating State, 
and the Secretary shall have the authority to fulfill all the functions 
of such an alliance.
    (d) Establishment of Guaranty Fund.--
            (1) Establishment.--The Secretary must ensure that there is 
        a guaranty fund that meets the requirements established by the 
        Board under section 1552, in order to provide financial 
        protection to health care providers and others in the case of a 
        failure of a regional alliance health plan under a regional 
        alliance established and operated by the Secretary under this 
        section.
            (2) Assessments to provide guaranty funds.--In the case of 
        a failure of one or more regional alliance health plans under a 
        regional alliance established and operated by the Secretary 
        under this section, the Secretary may require each regional 
        alliance health plan under the alliance to pay an assessment to 
        the Secretary in an amount not to exceed 2 percent of the 
        premiums of such plans paid by or on behalf of regional 
        alliance eligible individuals during a year for so long as 
        necessary to generate sufficient revenue to cover any 
        outstanding claims against the failed plan.

SEC. 1523. IMPOSITION OF SURCHARGE ON PREMIUMS UNDER FEDERALLY-OPERATED 
              SYSTEM.

    (a) In General.--If this subpart applies to a State for a calendar 
year, the premiums charged under the regional alliance established and 
operated by the Secretary in the State shall be equal to premiums that 
would otherwise be charged under a regional alliance established and 
operated by the State, increased by 15 percent. Such 15 percent 
increase shall be used to reimburse the Secretary for any 
administrative or other expenses incurred as a result of establishing 
and operating the system.
    (b) Treatment of Surcharge as Part of Premium.--For purposes of 
determining the compliance of a State for which this subpart applies in 
a year with the requirements for budgeting under subtitle A of title VI 
for the year, the 15 percent increase described in subsection (a) shall 
be treated as part of the premium for payment to a regional alliance.

SEC. 1524. RETURN TO STATE OPERATION.

    (a) Application Process.--After the establishment and operation of 
an alliance system by the Secretary in a State under section 1522, the 
State may at any time apply to the Board for the approval of a State 
system in accordance with the procedures described in section 1511.
    (b) Timing.--If the Board approves the system of a State for which 
the Secretary has operated an alliance system during a year, the 
Secretary shall terminate the operation of the system, and the State 
shall establish and operate its approved system, as of January 1 of the 
first year beginning after the Board approves the State system. The 
termination of the Secretary's system and the operation of the State's 
system shall be conducted in a manner that assures the continuous 
coverage of eligible individuals in the State under regional alliance 
health plans.

    Subpart D--Establishment of Class Factors for Charging Premiums

SEC. 1531. PREMIUM CLASS FACTORS.

    (a) In General.--For each class of family enrollment (as specified 
in section 1011(c)), for purposes of title VI, the Board shall 
establish a premium class factor that reflects, subject to subsection 
(b), the relative actuarial value of the comprehensive benefit package 
of the class of family enrollment compared to such value of such 
package for individual enrollment.
    (b) Conditions.--In establishing such factors, the factor for the 
class of individual enrollment shall be 1 and the factor for the 
couple-only class of family enrollment shall be 2.

 Subpart E--Risk Adjustment and Reinsurance Methodology for Payment of 
                                 Plans

SEC. 1541. DEVELOPMENT OF A RISK ADJUSTMENT AND REINSURANCE 
              METHODOLOGY.

    (a) Development.--
            (1) Initial development.--Not later than April 1, 1995, the 
        Board shall develop a risk adjustment and reinsurance 
        methodology in accordance with this subpart.
            (2) Improvements.--The Board shall make such improvements 
        in such methodology as may be appropriate to achieve the 
        purposes described in subsection (b)(1).
    (b) Methodology.--
            (1) Purposes.--Such methodology shall provide for the 
        adjustment of payments to regional alliance health plans for 
        the purposes of--
                    (A) assuring that payments to such plans reflect 
                the expected relative utilization and expenditures for 
                such services by each plan's enrollees compared to the 
                average utilization and expenditures for regional 
                alliance eligible individuals, and
                    (B) protecting health plans that enroll a 
                disproportionate share of regional alliance eligible 
                individuals with respect to whom expected utilization 
                of health care services (included in the comprehensive 
                benefit package) and expected health care expenditures 
                for such services are greater than the average level of 
                such utilization and expenditures for regional alliance 
                eligible individuals.
            (2) Factors to be considered.--In developing such 
        methodology, the Board shall take into account the following 
        factors:
                    (A) Demographic characteristics.
                    (B) Health status.
                    (C) Geographic area of residence.
                    (D) Socio-economic status.
                    (E) Subject to paragraph (5), (i) the proportion of 
                enrollees who are SSI recipients and (ii) the 
                proportion of enrollees who are AFDC recipients.
                    (F) Any other factors determined by the Board to be 
                material to the purposes described in paragraph (1).
            (3) Zero sum.--The methodology shall assure that the total 
        payments to health plans by the regional alliance after 
        application of the methodology are the same as the amount of 
        payments that would have been made without application of the 
        methodology.
            (4) Prospective adjustment of payments.--The methodology, 
        to the extent possible and except in the case of a mandatory 
        reinsurance system described in subsection (c), shall be 
        applied in a manner that provides for the prospective 
        adjustment of payments to health plans.
            (5) Treatment of ssi/afdc adjustment.--The Board is not 
        required to apply the factor described in clause (i) or (ii) of 
        paragraph (2)(E) if the Board determines that the application 
        of the other risk adjustment factors described in paragraph (2) 
        is sufficient to adjust premiums to take into account the 
        enrollment in plans of AFDC recipients and SSI recipients.
            (6) Special consideration for mental illness.--In 
        developing the methodology under this section, the Board shall 
        give consideration to the unique problems of adjusting payments 
        to health plans with respect to individuals with mental 
        illness.
            (7) Special consideration for veterans, military, and 
        indian health plans.--In developing the methodology under this 
        section, the Board shall give consideration to the special 
        enrollment and funding provisions relating to plans described 
        in section 1004(b).
            (8) Adjustment to account for use of estimates.--Subject to 
        section 1361(b)(3) (relating to establishment of regional 
        alliance reserve funds), if the total payments made by a 
        regional alliance to all regional alliance health plans in a 
        year under section 1351(b) exceeds, or is less than, the total 
        of such payments estimated by the alliance in the application 
        of the methodology under this subsection, because of a 
        difference between--
                    (A) the alliance's estimate of the distribution of 
                enrolled families in different risk categories (assumed 
                in the application of risk factors under this 
                subsection in making payments to regional alliance 
                health plans), and
                    (B) the actual distribution of such enrolled 
                families in such categories,
        the methodology under this subsection shall provide for an 
        adjustment in the application of such methodology in the second 
        succeeding year in a manner that would reduce, or increase, 
        respectively, by the amount of such excess (or deficit) the 
        total of such payments made by the alliance to all such plans.
    (c) Mandatory Reinsurance.--
            (1) In general.--The methodology developed under this 
        section may include a system of mandatory reinsurance, but may 
        not include a system of voluntary reinsurance.
            (2) Requirement in certain cases.--If the Board determines 
        that an adequate system of prospective adjustment of payments 
        to health plans to account for the health status of individuals 
        enrolled by regional alliance health plans cannot be developed 
        (and ready for implementation) by the date specified in 
        subsection (a)(1), the Board shall include a mandatory 
        reinsurance system as a component of the methodology. The Board 
        may thereafter reduce or eliminate such a system at such time 
        as the Board determines that an adequate prospective payment 
        adjustment for health status has been developed and is ready 
        for implementation.
            (3) Reinsurance system.--The Board, in developing the 
        methodology for a mandatory reinsurance system under this 
        subsection, shall--
                    (A) provide for health plans to make payments to 
                state-established reinsurance programs for the purpose 
                of reinsuring part or all of the health care expenses 
                for items and services included in the comprehensive 
                benefit package for specified classes of high-cost 
                enrollees or specified high-cost treatments or 
                diagnoses; and
                    (B) specify the manner of creation, structure, and 
                operation of the system in each State, including--
                            (i) the manner (which may be prospective or 
                        retrospective) in which health plans make 
                        payments to the system, and
                            (ii) the type and level of reinsurance 
                        coverage provided by the system.
    (d) Confidentiality of Information.--The methodology shall be 
developed in a manner consistent with privacy standards promulgated 
under section 5120(a). In developing such standards, the Board shall 
take into account any potential need of alliances for certain 
individually identifiable health information in order to carry out 
risk-adjustment and reinsurance activities under this Act, but only to 
the minimum extent necessary to carry out such activities and with 
protections provided to minimize the identification of the individuals 
to whom the information relates.

SEC. 1542. INCENTIVES TO ENROLL DISADVANTAGED GROUPS.

    The Board shall establish standards under which States may provide 
(under section 1203(e)(3)) for an adjustment in the risk-adjustment 
methodology developed under section 1541 in order to provide a 
financial incentive for regional alliance health plans to enroll 
individuals who are members of disadvantaged groups.

SEC. 1543. ADVISORY COMMITTEE.

    (a) In General.--The Board shall establish an advisory committee to 
provide technical advice and recommendations regarding the development 
and modification of the risk adjustment and reinsurance methodology 
developed under this subpart.
    (b) Composition.--Such advisory committee shall consist of 15 
individuals and shall include individuals who are representative of 
health plans, regional alliances, consumers, experts, employers, and 
health providers.

SEC. 1544. RESEARCH AND DEMONSTRATIONS.

    The Secretary shall conduct and support research and demonstration 
projects to develop and improve, on a continuing basis, the risk 
adjustment and reinsurance methodology under this subpart.

SEC. 1545. TECHNICAL ASSISTANCE TO STATES AND ALLIANCES.

    The Board shall provide technical assistance to States and regional 
alliances in implementing the methodology developed under this subpart.

         Subpart F--Responsibilities for Financial Requirements

SEC. 1551. CAPITAL STANDARDS FOR REGIONAL ALLIANCE HEALTH PLAN.

    (a) In General.--The Board shall establish, in consultation with 
the States, minimum capital requirements for regional alliance health 
plans, for purposes of section 1204(a).
    (b) $500,000 Minimum.--Subject to subsection (c), under such 
requirements there shall be not less than $500,000 of capital 
maintained for each plan offered in each alliance area, regardless of 
whether or not the same sponsor offered more than one of such plans.
    (c) Additional Capital Requirements.--The Board may require 
additional capital for factors likely to affect the financial stability 
of health plans, including the following:
            (1) Projected plan enrollment and number of providers 
        participating in the plan.
            (2) Market share and strength of competition.
            (3) Extent and nature of risk-sharing with participating 
        providers and the financial stability of risk-sharing 
        providers.
            (4) Prior performance of the plan, risk history, and 
        liquidity of assets.
    (d) Development of Standards by NAIC.--The Board may request the 
National Association of Insurance Commissioners to develop model 
standards for the additional capital requirements described in 
subsection (c) and to present such standards to the Board not later 
than July 1, 1995. The Board may accept such standards as the standards 
to be applied under subsection (c) or modify the standards in any 
manner it finds appropriate.

SEC. 1552. STANDARD FOR GUARANTY FUNDS.

    (a) In General.--In consultation with the States, the Board shall 
establish standards for guaranty funds established by States under 
section 1204(c).
    (b) Guaranty Fund Standards.--The standards established under 
subsection (a) for a guaranty fund shall include the following:
            (1) Each fund must have a method to generate sufficient 
        resources to pay health providers and others in the case of a 
        failure of a health plan (as described in section 1204(d)(4)) 
        in order to meet obligations with respect to--
                    (A) services rendered by the health plan for the 
                comprehensive benefit package, including any 
                supplemental coverage for cost sharing provided by the 
                health plan, and
                    (B) services rendered prior to health plan 
                insolvency and services to patients after the 
                insolvency but prior to their enrollment in other 
                health plans.
            (2) The fund is liable for all claims against the plan by 
        health care providers with respect to their provision of items 
        and services covered under the comprehensive benefit package to 
        enrollees of the failed plan. Such claims, in full, shall take 
        priority over all other claims. The fund also is liable, to the 
        extent and in the manner provided in accordance with rules 
        established by the Board, for other claims, including other 
        claims of such providers and the claims of contractors, 
        employees, governments, or any other claimants.
            (3) The fund stands as a creditor for any payments owed the 
        plan to the extent of the payments made by the fund for 
        obligations of the plan.
            (4) The fund has authority to borrow against future 
        assessments (payable under section 1204(c)(2)) in order to meet 
        the obligations of failed plans participating in the fund.

  PART 2--RESPONSIBILITIES OF DEPARTMENT OF HEALTH AND HUMAN SERVICES

                  Subpart A--General Responsibilities

SEC. 1571. GENERAL RESPONSIBILITIES OF SECRETARY OF HEALTH AND HUMAN 
              SERVICES.

    (a) In General.--Except as otherwise specifically provided under 
this Act (or with respect to administration of provisions in the 
Internal Revenue Code of 1986 or in the Employee Retirement Income 
Security Act of 1974), the Secretary of Health and Human Services shall 
administer and implement all of the provisions of this Act, except 
those duties delegated to the National Health Board, any other 
executive agency, or to any State.
    (b) Financial Management Standards.--The Secretary, in consultation 
with the Secretaries of Labor and the Treasury, shall establish, for 
purposes of section 1361, standards relating to the management of 
finances, maintenance of records, accounting practices, auditing 
procedures, and financial reporting for health alliances. Such 
standards shall take into account current Federal laws and regulations 
relating to fiduciary responsibilities and financial management of 
funds.
    (c) Auditing Regional Alliance Performance.--The Secretary shall 
perform periodic financial and other audits of regional alliances to 
assure that such alliances are carrying out their responsibilities 
under this Act consistent with this Act. Such audits shall include 
audits of alliance performance in the areas of--
            (1) assuring enrollment of all regional alliance eligible 
        individuals in health plans,
            (2) management of premium and cost sharing discounts and 
        reductions provided; and
            (3) financial management of the alliance, including 
        allocation of collection shortfalls.

SEC. 1572. ADVISORY COUNCIL ON BREAKTHROUGH DRUGS.

    (a) In General.--The Secretary shall appoint an Advisory Council on 
Breakthrough Drugs (in this section referred to as the ``Council'') 
that will examine the reasonableness of launch prices of new drugs that 
represent a breakthrough or significant advance over existing 
therapies.
    (b) Duties.--(1) At the request of the Secretary, or a member of 
the Council, the Council shall make a determination regarding the 
reasonableness of launch prices of a breakthrough drug. Such a 
determination shall be based on--
            (A) prices of other drugs in the same therapeutic class;
            (B) cost information supplied by the manufacturer;
            (C) prices of the drug in countries specified in section 
        802(b)(4)(A) of the Federal Food, Drug, and Cosmetic Act;
            (D) projected prescription volume, economies of scale, 
        product stability, special manufacturing requirements and 
        research costs;
            (E) cost effectiveness relative to the cost of alternative 
        course of treatment options, including non-pharmacological 
        medical interventions; and
            (F) improvements in quality of life offered by the new 
        product, including ability to return to work, ability to 
        perform activities of daily living, freedom from attached 
        medical devices, and other appropriate measurements of quality 
        of life improvements.
    (2) The Secretary shall review the determinations of the Council 
and publish the results of such review along with the Council's 
determination (including minority opinions) as a notice in the Federal 
Register.
    (c) Membership.--The Council shall consist of a chair and 12 other 
persons, appointed without regard to the provisions of title 5, United 
States Code, governing appointments in the competitive service. The 
Council shall include a representative from the pharmaceutical 
industry, consumer organizations, physician organizations, the hospital 
industry, and the managed care industry. Other individuals appointed by 
the Secretary shall be recognized experts in the fields of health care 
economics, pharmacology, pharmacy, and prescription drug reimbursement. 
Only one member of the Council may have direct or indirect financial 
ties to the pharmaceutical industry.
    (d) Term of Appointments.--Appointments shall be for a term of 3 
years, except that the Secretary may provide initially for such shorter 
terms as will ensure that the terms of not more than 5 members expire 
in any one year.
    (e) Compensation.--Members of the Council shall be entitled to 
receive reimbursement of expenses and per diem in lieu of subsistence 
in the same manner as other members of advisory councils appointed by 
the Secretary are provided such reimbursements under the Social 
Security Act.
    (f) No Termination.--Notwithstanding the provisions of the Federal 
Advisory Committee Act, the Council shall continue in existence until 
otherwise specified in law.

       Subpart B--Certification of Essential Community Providers

SEC. 1581. CERTIFICATION.

    (a) In General.--For purposes of this Act, the Secretary shall 
certify as an ``essential community provider'' any health care provider 
or organization that--
            (1) is within any of the categories of providers and 
        organizations specified in section 1582(a), or
            (2) meets the standards for certification under section 
        1583(a).
    (b) Timely Establishment of Process.--The Secretary shall take such 
actions as may be necessary to permit health care providers and 
organizations to be certified as essential community providers in a 
State before the beginning of the first year for the State.

SEC. 1582. CATEGORIES OF PROVIDERS AUTOMATICALLY CERTIFIED.

    (a) In General.--The categories of providers and organizations 
specified in this subsection are as follows:
            (1) Migrant health centers.--A recipient or subrecipient of 
        a grant under section 329 of the Public Health Service Act.
            (2) Community health centers.--A recipient or subrecipient 
        of a grant under section 330 of the Public Health Service Act.
            (3) Homeless program providers.--A recipient or 
        subrecipient of a grant under section 340 of the Public Health 
        Service Act.
            (4) Public housing providers.--A recipient or subrecipient 
        of a grant under section 340A of the Public Health Service Act.
            (5) Family planning clinics.--A recipient or subrecipient 
        of a grant under title X of the Public Health Service Act.
            (6) Indian health programs.--A service unit of the Indian 
        Health Service, a tribal organization, or an urban Indian 
        program, as defined in the Indian Health Care Improvement Act.
            (7) AIDS providers under ryan white act.--A public or 
        private nonprofit health care provider that is a recipient or 
        subrecipient of a grant under title XXVI of the Public Health 
        Service Act.
            (8) Maternal and child health providers.--A public or 
        private nonprofit entity that provides prenatal care, pediatric 
        care, or ambulatory services to children, including children 
        with special health care needs, and that receives funding for 
        such care or services under title V of the Social Security Act.
            (9) Federally qualified health center; rural health 
        clinic.--A Federally-qualified health center or a rural health 
        clinic (as such terms are defined in section 1861(aa) of the 
        Social Security Act).
            (10) Provider of school health services.--A provider of 
        school health services that receives funding for such services 
        under subtitle G of title III.
            (11) Community practice network.--A qualified community 
        practice network receiving development funds under subtitle E 
        of title III.
    (b) Subrecipient Defined.--In this subpart, the term 
``subrecipient'' means, with respect to a recipient of a grant under a 
particular authority, an entity that--
            (1) is receiving funding from such a grant under a contract 
        with the principal recipient of such a grant, and
            (2) meets the requirements established to be a recipient of 
        such a grant.
    (c) Health Professional Defined.--In this subpart, the term 
``health professional'' means a physician, nurse, nurse practitioner, 
certified nurse midwife, physician assistant, psychologist, dentist, 
pharmacist, and other health care professional recognized by the 
Secretary.

SEC. 1583. STANDARDS FOR ADDITIONAL PROVIDERS.

    (a) Standards.--The Secretary shall publish standards for the 
certification of additional categories of health care providers and 
organizations as essential community providers, including the 
categories described in subsection (b). Such a health care provider or 
organization shall not be certified unless the Secretary determines, 
under such standards, that health plans operating in the area served by 
the applicant would not otherwise be able to assure adequate access to 
items and services included in the comprehensive benefit package if 
such a provider was not so certified.
    (b) Categories To Be Included.--The categories described in this 
subsection are as follows:
            (1) Health professionals.--Health professionals--
                    (A) located in an area designated as a health 
                professional shortage area (under section 332 of the 
                Public Health Service Act), or
                    (B) providing a substantial amount of health 
                services (as determined in accordance with standards 
                established by the Secretary) to a medically 
                underserved population (as designated under section 330 
                of such Act).
            (2) Institutional providers.--Public and private nonprofit 
        hospitals and other institutional health care providers located 
        in such an area or providing health services to such a 
        population.
            (3) Other providers.--Other public and private nonprofit 
        agencies and organizations that--
                    (A) are located in such an area or providing health 
                services to such a population, and
                    (B) provide health care and services essential to 
                residents of such an area or such populations.

SEC. 1584. CERTIFICATION PROCESS; REVIEW; TERMINATION OF 
              CERTIFICATIONS.

    (a) Certification Process.--
            (1) Publication of procedures.--The Secretary shall 
        publish, not later than 6 months after the date of the 
        enactment of this Act, the procedures to be used by health care 
        professionals, providers, agencies, and organizations seeking 
        certification under this subpart, including the form and manner 
        in which an application for such certification is to be made.
            (2) Timely determination.--The Secretary shall make a 
        determination upon such an application not later than 60 days 
        (or 15 days in the case of a certification for an entity 
        described in section 1582) after the date the complete 
        application has been submitted. The determination on an 
        application for certification of an entity described in section 
        1582 shall only involve the verification that the entity is an 
        entity described in such section.
    (b) Review of Certifications.--The Secretary shall periodically 
review whether professionals, providers, agencies, and organizations 
certified under this subpart continue to meet the requirements for such 
certification.
    (c) Termination or Denial of Certification.--
            (1) Preliminary finding.--If the Secretary preliminarily 
        finds that an entity seeking certification under this section 
        does not meet the requirements for such certification or such 
        an entity certified under this subpart fails to continue to 
        meet the requirements for such certification, the Secretary 
        shall notify the entity of such preliminary finding and permit 
        the entity an opportunity, under subtitle C of title V, to 
        rebut such findings.
            (2) Final determination.--If, after such opportunity, the 
        Secretary continues to find that such an entity continues to 
        fail to meet such requirements, the Secretary shall terminate 
        the certification and shall notify the entity, regional 
        alliances, and corporate alliances of such termination and the 
        effective date of the termination.

SEC. 1585. NOTIFICATION OF HEALTH ALLIANCES AND PARTICIPATING STATES.

    (a) In General.--Not less often than annually the Secretary shall 
notify each participating State and each health alliance of essential 
community providers that have been certified under this subpart.
    (b) Contents.--Such notice shall include sufficient information to 
permit each health alliance to notify health plans of the identify of 
each entity certified as an essential community provider, including--
            (1) the location of the provider within each plan's service 
        area,
            (2) the health services furnished by the provider, and
            (3) other information necessary for health plans to carry 
        out part 3 of subtitle E.

        PART 3--SPECIFIC RESPONSIBILITIES OF SECRETARY OF LABOR.

SEC. 1591. RESPONSIBILITIES OF SECRETARY OF LABOR.

    (a) In General.--The Secretary of Labor is responsible--
            (1) under subtitle G, for the enforcement of requirements 
        applicable to employers under regional alliances (including 
        requirements relating to payment of premiums) and the 
        administration of corporate alliances;
            (2) under subtitle D, with respect to elections by eligible 
        sponsors to become corporate alliances and the termination of 
        such elections;
            (3) under section 1395, for the temporary assumption of the 
        operation of self-insured corporate alliance health plans that 
        are insolvent;
            (4) under section 1396, for the establishment and 
        administration of Corporate Alliance Health Plan Insolvency 
        Fund;
            (5) for carrying out any other responsibilities assigned to 
        the Secretary under this Act; and
            (6) for administering title I of the Employee Retirement 
        Income Security Act of 1974 as it relates to group health plans 
        maintained by corporate alliances.
    (b) Agreements with States.--The Secretary of Labor may enter into 
agreements with States in order to enforce responsibilities of 
employers and corporate alliances, and requirements of corporate 
alliance health plans, under subtitle B of title I of the Employee 
Retirement Income Security Act of 1974.
    (c) Consultation with Board.--In carrying out activities under this 
Act with respect to corporate alliances, corporate alliance health 
plans, and employers, the Secretary of Labor shall consult with the 
National Health Board.
    (d) Employer-Related Requirements.--
            (1) In general.--The Secretary of Labor, in consultation 
        with the Secretary, shall be responsible for assuring that 
        employers--
                    (A) make payments of any employer premiums (and 
                withhold and make payment of the family share of 
                premiums with respect to qualifying employees) as 
                required under this Act, including auditing of regional 
                alliance collection activities with respect to such 
                payments,
                    (B) submit timely reports as required under this 
                Act, and
                    (C) otherwise comply with requirements imposed on 
                employers under this Act.
            (2) Audit and similar authorities.--The Secretary of 
        Labor--
                    (A) may carry out such audits (directly or through 
                contract) and such investigations of employers and 
                health alliances,
                    (B) may exercise such authorities under section 504 
                of Employee Retirement Income Security Act of 1974 (in 
                relation to activities under this Act),
                    (C) may, with the permission of the Board, provide 
                (through contract or otherwise) for such collection 
                activities (in relation to amounts owed to regional 
                alliances and for the benefit of such alliances), and
                    (D) may impose such civil penalties under section 
                1345(d)(1),
        as may be necessary to carry out such Secretary's 
        responsibilities under this section.
    (e) Authority.--The Secretary of Labor is authorized to issue such 
regulations as may be necessary to carry out section 1607 and 
responsibilities of the Secretary under this Act (including under title 
XI).

                                                    Title I, Subtitle G

                 Subtitle G--Employer Responsibilities

SEC. 1601. PAYMENT REQUIREMENT.

    (a) In General.--Each employer shall provide for payments required 
under section 6121 or 6131 in accordance with the applicable provisions 
of this Act.
    (b) Employers in Single-Payer States.--In the case of an employer 
with respect to employees who reside in a single-payer State, the 
responsibilities of such employer under such system shall supersede the 
obligations of the employer under subsection (a), except as the Board 
may provide.
    (c) Employers Participating in Regional Alliances Through 
Multiemployer Plans.--In the case of an employer participating in a 
multiemployer plan, which plan elects to serve as a regional alliance 
employer on behalf of its participating employers, the employer's 
payment obligation under section 6121 shall be deemed satisfied if the 
employer pays to the multiemployer plan at least the premium payment 
amount specified in section 6121(b) and the plan has assumed legal 
obligations of such an employer under such section.

SEC. 1602. REQUIREMENT FOR INFORMATION REPORTING.

    (a) Reporting of End-of-Year Information to Qualifying Employees.--
            (1) In general.--Each employer shall provide to each 
        individual who was a qualifying employee of the employer during 
        any month in the previous year information described in 
        paragraph (2) with respect to the employee.
            (2) Information to be supplied.--The information described 
        in this paragraph, with respect to a qualifying employee, is 
        the following (as specified by the Secretary):
                    (A) Regional alliance information.--With respect to 
                each regional alliance through which the individual 
                obtained health coverage:
                            (i) The total number of months of full-time 
                        equivalent employment (as determined under 
                        section 1901(b)(2)) for each class of 
                        enrollment.
                            (ii) The amount of wages attributable to 
                        qualified employment and the amount of covered 
                        wages (as defined in paragraph (4)).
                            (iii) The total amount deducted from wages 
                        and paid for the family share of the premium.
                            (iv) Such other information as the 
                        Secretary of Labor may specify.
                    (B) Corporate alliance information.--With respect 
                to a qualifying employee who obtains coverage through a 
                corporate alliance health plan:
                            (i) The total number of months of full-time 
                        equivalent employees (as determined under 
                        section 1901(b)(2)) for each class of 
                        enrollment.
                            (ii) Such other information as the 
                        Secretary of Labor may specify.
            (3) Alliance specific information.--In the case of a 
        qualifying employee with respect to whom an employer made 
        employer premium payments during the year to more than one 
        regional alliance, the information under this subsection shall 
        be reported separately with respect to each such alliance.
            (4) Covered wages defined.--In this section, the term 
        ``covered wages'' means wages paid an employee of an employer 
        during a month in which the employee was a qualifying employee 
        of the employer.
    (b) Reporting of Information for Use of Regional Alliances.--
            (1) In general.--Each employer (including corporate 
        alliance employers) shall provide under subsection (f) on 
        behalf of each regional alliance information described in 
        paragraph (2) on an annual basis, information described in 
        paragraph (3) on a monthly basis, and information described in 
        paragraph (4) on a one-time basis, with respect to the 
        employment of qualifying employees in each year, month, or 
        other time, respectively.
            (2) Information to be supplied on an annual basis.--The 
        information described in this paragraph, with respect to an 
        employer, is the following (as specified by the Secretary of 
        Labor):
                    (A) Regional alliance information.--With respect to 
                each regional alliance to which employer premium 
                payments were payable in the year:
                            (i) For each qualifying employee in the 
                        year--
                                    (I) The total number of months of 
                                full-time equivalent employment (as 
                                determined under section 1901(b)(2)) 
                                for the employee for each class of 
                                enrollment.
                                    (II) The total amount deducted from 
                                wages and paid for the family share of 
                                the premium of the qualifying employee.
                            (ii) The total employer premium payment 
                        made under section 6121 for the year with 
                        respect to the employment of all qualifying 
                        employees residing in the alliance area and, in 
                        the case of an employer that has obtained (or 
                        seeks to obtain) a premium discount under 
                        section 6123, the total employer premium 
                        payment that would have been owed for such 
                        employment for the year but for such section.
                            (iii) The number of full-time equivalent 
                        employees (determined under section 1901(b)(2)) 
                        for each class of family enrollment in the year 
                        (and for each month in the year in the case of 
                        an employer that has obtained or is seeking a 
                        premium discount under section 6123).
                            (iv) In the case of an employer to which 
                        section 6124 applies in a year, such additional 
                        information as the Secretary of Labor may 
                        require for purposes of that section.
                            (v) The amounts paid (and payable) pursuant 
                        to section 6125.
                            (vi) The amount of covered wages for each 
                        qualifying employee.
            (3) Information on a monthly basis.--
                    (A) In general.--The information described in this 
                paragraph for a month for an employer is such 
                information as the Secretary of Labor may specify 
                regarding--
                            (i) the identity of each eligible 
                        individual who changed qualifying employee 
                        status with respect to the employer in the 
                        month; and
                            (ii) in the case of such an individual 
                        described in subparagraph (B)(i)--
                                    (I) the regional alliance for the 
                                alliance area in which the individual 
                                resides, and
                                    (II) the individual's class of 
                                family enrollment.
                    (B) Changes in qualifying employee status 
                described.--For purposes of subparagraph (A), an 
                individual is considered to have changed qualifying 
                employee status in a month if the individual either (i) 
                is a qualifying employee of the employer in the month 
                and was not a qualifying employee of the employer in 
                the previous month, or (ii) is not a qualifying 
                employee of the employer in the month but was a 
                qualifying employee of the employer in the previous 
                month.
            (4) Initial information.--Each employer, at such time 
        before the first year in which qualifying employees of the 
        employer are enrolled in regional alliance health plans as the 
        Board may specify, shall provide for the reporting of such 
        information relating to employment of eligible individuals as 
        the Board may specify.
    (c) Reconciliation of Employer Premium Payments.--
            (1) Provision of information.--Each employer (whether or 
        not the employer claimed (or claims) an employer premium 
        discount under section 6123 for a year) that is liable for 
        employer premium payments to a regional alliance for any month 
        in a year shall provide the alliance with such information as 
        the alliance may require (consistent with rules of the 
        Secretary of Labor) to determine the appropriate amount of 
        employer premium payments that should have been made for all 
        months in the year (taking into account any employer premium 
        discount under section 6123 for the employer).
            (2) Deadline.--Such information shall be provided not later 
        than the beginning of February of the following year with the 
        payment to be made for that month.
            (3) Reconciliation.--
                    (A) Continuing employers.--Based on such 
                information, the employer shall adjust the amount of 
                employer premium payment made in the month in which the 
                information is provided to reflect the amount by which 
                the payments in the previous year were greater or less 
                than the amount of payments that should have been made.
                    (B) Discontinuing employers.--In the case of a 
                person that ceases to be an employer in a year, such 
                adjustment shall be made in the form of a payment to, 
                or from, the alliance involved.
            (4) Special treatment of self-employed individuals.--Except 
        as the Secretary of Labor may provide, individuals who are 
        employers only by virtue of the operation of section 6126 shall 
        have employer premium payments attributable to such section 
        reconciled (in the manner previously described in this 
        subsection) under the process for the collection of the family 
        share of premiums under section 1344 rather than under this 
        subsection.
    (d) Special Rules for Self-Employed.--
            (1) In general.--In the case of an individual who is 
        treated as an employer under section 6126, the individual shall 
        provide, under subsection (f) on behalf of each regional 
        alliance, information described in paragraph (2) with respect 
        to net earnings from self-employment income of the individual 
        in each year.
            (2) Information to be supplied.--The information described 
        in this paragraph, with respect to an individual, is such 
        information as may be necessary to compute the amount payable 
        under section 6131 by virtue of section 6126.
    (e) Form.--Information shall be provided under this section in such 
electronic or other form as the Secretary specifies. Such 
specifications shall be done in a manner that, to the maximum extent 
practicable, simplifies administration for small employers.
    (f) Information Clearinghouse Functions.--
            (1) Designation.--The Board shall provide for the use of 
        the regional centers (which are part of the electronic data 
        network under section 5103) to perform information 
        clearinghouse functions under this section with respect to 
        employers and regional and corporate alliances.
            (2) Functions.--The functions referred to in paragraph (1) 
        shall include--
                    (A) receipt of information submitted by employers 
                under subsection (b) on an annual (or one-time) basis,
                    (B) from the information received, transmittal of 
                information required to regional alliances, and
                    (C) such other functions as the Board specifies.
    (g) Deadline.--Information required to be provided by an employer 
for a year under this section--
            (1) to a qualifying employee shall be provided not later 
        than the date the employer is required under law to provide for 
        statements under section 6051 of the Internal Revenue Code of 
        1986 for that year, or
            (2) to a health alliance (through a regional center) shall 
        be provided not later than the date by which information is 
        required to be filed with the Secretary pursuant to agreements 
        under section 232 of the Social Security Act for that year.
    (h) Notice to Certain Individuals Who Are Not Employees.--
            (1) In general.--A person that carries on a trade or 
        business shall notify in writing each individual described in 
        paragraph (2) that the person is not obligated to make any 
        employer health care premium payment (under section 6121) in 
        relation to the services performed by the individual for the 
        person.
            (2) Individual described.--An individual described in this 
        paragraph, with respect to a person, is an individual who 
        normally performs services for the person in the person's trade 
        or business for more than 40 hours per month but who is not an 
        employee of the person (within the meaning of section 1901(a)).
            (3) Timing; effective date.--Such notice shall be provided 
        within a reasonable time after the individual begins performing 
        services for the person, except that in no event is such a 
        notice required to be provided with respect to services 
        performed before January 1, 1998.
            (4) Exceptions.--The Secretary shall issue regulations 
        providing exceptions to the notice requirement of paragraph (1) 
        with respect to individuals performing services on an 
        irregular, incidental, or casual basis.
            (5) Model notice.--The Secretary shall publish a model 
        notice that is easily understood by the average reader and that 
        persons may use to satisfy the requirements of paragraph (1).

SEC. 1603. REQUIREMENTS RELATING TO NEW EMPLOYEES.

    (a) Completion of Enrollment Information Form.--At the time an 
individual is hired as a qualifying employee of a regional alliance 
employer, the employer shall obtain from the individual the following 
information (pursuant to rules established by the Secretary of Labor):
            (1) The identity of the individual.
            (2) The individual's alliance area of residence and whether 
        the individual has moved from another alliance area.
            (3) The class of family enrollment applicable to the 
        individual.
            (4) The health plan (and health alliance) in which the 
        individual is enrolled at that time.
            (5) If the individual has moved from another alliance area, 
        whether the individual intends to enroll in a regional alliance 
        health plan.
    (b) Transmittal of Information to Alliance.--
            (1) In general.--Each employer shall transmit the 
        information obtained under subsection (a) to the regional 
        alliance for the alliance area in which the qualifying employee 
        resides (or will reside at the time of initial employment).
            (2) Deadline.--Such information shall be transmitted within 
        30 days of the date of hiring of the employee.
            (3) Form.--Information under this section may be forwarded 
        in electronic form to a regional alliance.
    (c) Provision of Enrollment Form and Information.--In the case of 
an individual described in subsection (a)(5), the employer shall 
provide the individual, at the time of hiring, with--
            (1) such information regarding the choice of, and 
        enrollment in, regional alliance health plans, and
            (2) such enrollment form,
as the regional alliance provides to the employer.

SEC. 1604. AUDITING OF RECORDS.

    Each regional alliance employer shall maintain such records, and 
provide the regional alliance for the area in which the employer 
maintains the principal place of employment (as specified by the 
Secretary of Labor) with access to such records, as may be necessary to 
verify and audit the information reported under this subtitle.

SEC. 1605. PROHIBITION OF CERTAIN EMPLOYER DISCRIMINATION.

    No employer may discriminate with respect to an employee on the 
basis of the family status of the employee or on the basis of the class 
of family enrollment selected with respect to the employee.

SEC. 1606. PROHIBITION ON SELF-FUNDING OF COST SHARING BENEFITS BY 
              REGIONAL ALLIANCE EMPLOYERS.

    (a) Prohibition.--A regional alliance employer (and a corporate 
alliance employer with respect to employees who are regional alliance 
eligible individuals) may provide benefits to employees that consist of 
the benefits included in a cost sharing policy (as defined in section 
1421(b)(2)) only through a contribution toward the purchase of a cost 
sharing policy which is funded primarily through insurance.
    (b) Individual and Employer Responsibilities.--In the case of an 
individual who resides in a single-payer State and an employer with 
respect to employees who reside in such a State, the responsibilities 
of such individual and employer under such system shall supersede the 
obligations of the individual and employer under this subtitle.

SEC. 1607. EQUAL VOLUNTARY CONTRIBUTION REQUIREMENT.

    (a) In General.--
            (1) Equal voluntary employer premium payment requirement.--
                    (A) Regional alliance health plans.--If an employer 
                makes available a voluntary employer premium payment 
                (as defined in subsection (d)) on behalf of a full-time 
                employee (as defined in section 1901(b)(2)(C)) who is 
                enrolled in a regional alliance health plan of a 
                regional alliance in a class of family enrollment, the 
                employer shall make available such a voluntary employer 
                premium payment in the same dollar amount to all 
                qualifying employees (as defined in section 1901(b)(1)) 
                of the employer who are enrolled in any regional 
                alliance health plan of the same alliance in the same 
                class of family enrollment.
                    (B) Corporate alliance health plans.--If a 
                corporate alliance employer makes available a voluntary 
                employer premium payment on behalf of a full-time 
                employee who is enrolled in a corporate alliance health 
                plan of a corporate alliance in a class of family 
                enrollment in a premium area (designated under section 
                1384(b)), the employer shall make available such a 
                voluntary employer premium payment in the same dollar 
                amount to all qualifying employees of the employer 
                enrolled in any corporate alliance health plan of the 
                same alliance in the same class of family enrollment in 
                the same premium area.
                    (C) Treatment of part-time employees.--In applying 
                subparagraphs (A) and (B) in the case of a qualifying 
                employee employed on a part-time basis (within the 
                meaning of section 1901(b)(2)(A)(ii)), the dollar 
                amount shall be equal to the full-time employment ratio 
                (as defined in section 1901(b)(2)(B)) multiplied by the 
                dollar amount otherwise required.
            (2) Limit on voluntary employer premium payments.--
                    (A) Regional alliance health plans.--An employer 
                may not make available a voluntary employer premium 
                payment on behalf of an employee (enrolled in a 
                regional alliance health plan of a regional alliance in 
                a class of family enrollment) in an amount that exceeds 
                the maximum amount that could be payable as the family 
                share of premium (described in section 6101(b)(2)) for 
                the most expensive regional alliance health plan of the 
                same alliance for the same class of family enrollment.
                    (B) Corporate alliance health plans.--An employer 
                may not make available a voluntary employer premium 
                payment on behalf of an employee (enrolled in a 
                corporate alliance health plan of a corporate alliance 
                in a class of family enrollment in a premium area, 
                designated under section 1384) in an amount that 
                exceeds the maximum amount that could be payable as the 
                family share of premium (described in section 
                6101(b)(3)) for the most expensive corporate alliance 
                health plan of the same alliance for the same class of 
                family enrollment in the same premium area.
                    (C) Exclusion of plans without material 
                enrollment.--Subparagraphs (A) and (B) shall not take 
                into account any health plan that does not have 
                material enrollment (as determined in accordance with 
                regulations of the Secretary of Labor).
            (3) Nondiscrimination among plans selected.--An employer 
        may not discriminate in the wages or compensation paid, or 
        other terms or conditions of employment, with respect to an 
        employee based on the health plan (or premium of such a plan) 
        in which the employee is enrolled.
    (b) Rebate Required in Certain Cases.--
            (1) In general.--Subject to subsection (c), if--
                    (A) an employer makes available a voluntary 
                employer premium payment on behalf of an employee, and
                    (B)(i) the sum of the amount of the applicable 
                alliance credit (under section 6103) and the voluntary 
                employer premium payment, exceeds (ii) the premium for 
                the plan selected,
        the employer must rebate to the employee an amount equal to the 
        excess described in subparagraph (B).
            (2) Rebates.--
                    (A) In general.--Any rebate provided under 
                paragraph (1) shall be treated, for purposes of the 
                Internal Revenue Code of 1986, as wages described in 
                section 3121(a) of such Act.
                    (B) Treatment of multiple full-time employment in a 
                family.--In the case of--
                            (i) an individual who is an employee of 
                        more than one employer, or
                            (ii) a couple for which both spouses are 
                        employees,
                if more than one employer provides for voluntary 
                employer premium payments, the individual or couple may 
                elect to have paragraph (1) applied with respect to all 
                employment.
    (c) Exception for Collective Bargaining Agreement.--Subsections (a) 
and (b) (other than subsection (a)(2)) shall not apply with respect to 
voluntary employer premium payments made pursuant to a bona fide 
collective bargaining agreement.
    (d) Voluntary Employer Premium Payment.--In this section, the term 
``voluntary employer premium payment'' means any payment designed to be 
used exclusively (or primarily) towards the cost of the family share of 
premiums for a health plan. Such term does not include any employer 
premiums required to be paid under part 3 of subtitle B of title VI.

SEC. 1608. EMPLOYER RETIREE OBLIGATION.

    (a) In General.--If an employer was providing, as of October 1, 
1993, a threshold payment (specified in subsection (c)) for a person 
who was a qualifying retired beneficiary (as defined in subsection (b)) 
as of such date, the employer shall pay, to or on behalf of that 
beneficiary for each month beginning with January 1998, an amount that 
is not less than the amount specified in subsection (d), but only if 
and for so long as the person remains a qualifying retired beneficiary.
    (b) Qualifying Retired Beneficiary.--In this section, the term 
``qualifying retired beneficiary'' means a person who is an eligible 
retiree or qualified spouse or child (as such terms are defined in 
subsections (b) and (c) of section 6114).
    (c) Threshold Payment.--The term ``threshold payment'' means, for 
an employer with respect to a health benefit plan providing coverage to 
a qualifying retired beneficiary, a payment--
            (1) for coverage of any item or service described in 
        section 1101, and
            (2) the amount of which is at least 20 percent of the 
        amount of the premium (or premium equivalent) for such coverage 
        with respect to the beneficiary (and dependents).
    (d) Amount.--The amount specified in this subsection is 20 percent 
of the weighted average premium for the regional alliance in which the 
beneficiary resides and for the applicable class of family enrollment.
    (e) Nature of Obligation.--The requirement of this section shall be 
in addition to any other requirement imposed on an employer under this 
Act or otherwise.
    (f) Protection of Collective Bargaining Rights.--Nothing in this 
Act (including this section) shall be construed as affecting collective 
bargaining rights or rights under collective bargaining agreements.

SEC. 1609. ENFORCEMENT.

    In the case of a person that violates a requirement of this 
subtitle, the Secretary of Labor may impose a civil money penalty, in 
an amount not to exceed $10,000, for each violation with respect to 
each individual.

       Subtitle J--General Definitions; Miscellaneous Provisions

                      PART 1--GENERAL DEFINITIONS

SEC. 1901. DEFINITIONS RELATING TO EMPLOYMENT AND INCOME.

    (a) In General.--Except as otherwise specifically provided, in this 
Act the following definitions and rules apply:
            (1) Employer, employee, employment, and wages defined.--
        Except as provided in this section--
                    (A) the terms ``wages'' and ``employment'' have the 
                meanings given such terms under section 3121 of the 
                Internal Revenue Code of 1986,
                    (B) the term ``employee'' has the meaning given 
                such term under section 3121 of such Code, subject to 
                the provisions of chapter 25 of such Code, and
                    (C) the term ``employer'' has the same meaning as 
                the term ``employer'' as used in such section 3121.
            (2) Exceptions.--For purposes of paragraph (1)--
                    (A) Employment.--
                            (i) Employment included.--Paragraphs (1), 
                        (2), (5), (7) (other than clauses (i) through 
                        (iv) of subparagraph (C) and clauses (i) 
                        through (v) of subparagraph (F)), (8), (9), 
                        (10), (11), (13), (15), (18), and (19) of 
                        section 3121(b) of the Internal Revenue Code of 
                        1986 shall not apply.
                            (ii) Exclusion of inmates as employees.--
                        Employment shall not include services performed 
                        in a penal institution by an inmate thereof or 
                        in a hospital or other health care institution 
                        by a patient thereof.
                    (B) Wages.--
                            (i) In general.--Paragraph (1) of section 
                        3121(a) of the Internal Revenue Code of 1986 
                        shall not apply.
                            (ii) Tips not included.--The term ``wages'' 
                        does not include cash tips.
                    (C) Exclusion of employees outside the united 
                states.--The term ``employee'' does not include an 
                individual who does not reside in the United States.
                    (D) Exclusion of foreign employment.--The term 
                ``employee'' does not include an individual--
                            (i) with respect to service, if the 
                        individual is not a citizen or resident of the 
                        United States and the service is performed 
                        outside the United States, or
                            (ii) with respect to service, if the 
                        individual is a citizen or resident of the 
                        United States and the service is performed 
                        outside the United States for an employer other 
                        than an American employer (as defined in 
                        section 3121(h) of the Internal Revenue Code of 
                        1986).
            (3) Aggregation rules for employers.--For purposes of this 
        Act--
                    (A) all employers treated as a single employer 
                under subsection (a) or (b) of section 52 of the 
                Internal Revenue Code of 1986 shall be treated as a 
                single employer, and
                    (B) under regulations of the Secretary of Labor, 
                all employees of organizations which are under common 
                control with one or more organizations which are exempt 
                from income tax under subtitle A of the Internal 
                Revenue Code of 1986 shall be treated as employed by a 
                single employer.
        The regulations prescribed under subparagraph (B) shall be 
        based on principles similar to the principles which apply to 
        taxable organizations under subparagraph (A).
            (4) Employer premium.--The term ``employer premium'' refers 
        to the premium established and imposed under part 2 of subtitle 
        B of title VI.
    (b) Qualifying Employee; Full-Time Employment.--
            (1) Qualifying employee.--
                    (A) In general.--In this Act, the term ``qualifying 
                employee'' means, with respect to an employer for a 
                month, an employee (other than a covered child, as 
                defined in subparagraph (C)) who is employed by the 
                employer for at least 40 hours (as determined under 
                paragraph (3)) in the month.
                    (B) No special treatment of medicare beneficiaries, 
                ssi recipients, afdc recipients, and others.--
                Subparagraph (A) shall apply regardless of whether or 
                not the employee is a medicare-eligible individual, an 
                SSI recipient, an AFDC recipient, an individual 
                described in section 1004(b), an eligible individual or 
                is authorized to be so employed.
                    (C) Covered child defined.--In subparagraph (A), 
                the term ``covered child'' means an eligible individual 
                who is a child and is enrolled under a health plan as a 
                family member described in section 1011(b)(2)(B).
            (2) Full-time equivalent employees; part-time employees.--
                    (A) In general.--For purposes of this Act, a 
                qualifying employee who is employed by an employer--
                            (i) for at least 120 hours in a month, is 
                        counted as 1 full-time equivalent employee for 
                        the month and shall be deemed to be employed on 
                        a full-time basis, or
                            (ii) for at least 40 hours, but less than 
                        120 hours, in a month, is counted as a fraction 
                        of a full-time equivalent employee in the month 
                        equal to the full-time employment ratio (as 
                        defined in subparagraph (B)) for the employee 
                        and shall be deemed to be employed on a part-
                        time basis.
                    (B) Full-time employment ratio defined.--For 
                purposes of this Act, the term ``full-time employment 
                ratio'' means, with respect to a qualifying employee of 
                an employer in a month, the lesser of 1 or the ratio 
                of--
                            (i) the number of hours of employment such 
                        employee is employed by such employer for the 
                        month (as determined under paragraph (3)), to
                            (ii) 120 hours.
                    (C) Full-time employee.--For purposes of this Act, 
                the term ``full-time employee'' means, with respect to 
                an employer, an employee who is employed on a full-time 
                basis (as specified in subparagraph (A)) by the 
                employer.
                    (D) Consideration of industry practice.--As 
                provided under rules established by the Board, an 
                employee who is not described in subparagraph (C) shall 
                be considered to be employed on a full-time basis by an 
                employer (and to be a full-time employee of an 
                employer) for a month (or for all months in a 12-month 
                period) if the employee is employed by that employer on 
                a continuing basis that, taking into account the 
                structure or nature of the employment in the industry, 
                represents full time employment.
            (3) Hours of employment.--
                    (A) In general.--For purposes of this Act, the 
                Board shall specify the method for computing hours of 
                employment for employees of an employer consistent with 
                this paragraph. The Board shall take into account rules 
                used for purposes of applying the Fair Labor Standards 
                Act.
                    (B) Hourly wage earners.--In the case of an 
                individual who receives compensation (in the form of 
                hourly wages or compensation) for the performance of 
                services, the individual is considered to be 
                ``employed'' by an employer for an hour if compensation 
                is payable with respect to that hour of employment, 
                without regard to whether or not the employee is 
                actually performing services during such hours.
            (4) Treatment of salaried employees and employees paid on 
        contingent or bonus arrangements.--In the case of an employee 
        who receives compensation on a salaried basis or on the basis 
        of a commission (or other contingent or bonus basis), rather 
        than an hourly wage, the Board shall establish rules for the 
        conversion of the compensation to hours of employment, taking 
        into account the minimum monthly compensation levels for 
        workers employed on a full-time basis under the Fair Labor 
        Standards Act and other factors the Board considers relevant.
    (c) Definitions Relating to Self-Employment.--In this Act:
            (1) Net earnings from self-employment.--The term ``net 
        earnings from self-employment'' has the meaning given such term 
        under section 1402(a) of the Internal Revenue Code of 1986.
            (2) Self-employed individual.--The term ``self-employed 
        individual'' means, for a year, an individual who has net 
        earnings from self-employment for the year.

SEC. 1902. OTHER GENERAL DEFINITIONS.

    Except as otherwise specifically provided, in this Act the 
following definitions apply:
            (1) Alien permanently residing in the united states under 
        color of law.--The term ``alien permanently residing in the 
        United States under color of law'' means an alien lawfully 
        admitted for permanent residence (within the meaning of section 
        101(a)(20) of the Immigration and Nationality Act), and 
        includes any of the following:
                    (A) An alien who is admitted as a refugee under 
                section 207 of the Immigration and Nationality Act.
                    (B) An alien who is granted asylum under section 
                208 of such Act.
                    (C) An alien whose deportation is withheld under 
                section 243(h) of such Act.
                    (D) An alien who is admitted for temporary 
                residence under section 210, 210A, or 245A of such Act.
                    (E) An alien who has been paroled into the United 
                States under section 212(d)(5) of such Act for an 
                indefinite period or who has been granted extended 
                voluntary departure as a member of a nationality group.
                    (F) An alien who is the spouse or unmarried child 
                under 21 years of age of a citizen of the United 
                States, or the parent of such a citizen if the citizen 
                is over 21 years of age, and with respect to whom an 
                application for adjustment to lawful permanent 
                residence is pending.
                    (G) An alien within such other classification of 
                permanent resident aliens as the National Health Board 
                may establish by regulation.
            (2) AFDC family.--The term ``AFDC family'' means a family 
        composed entirely of one or more AFDC recipients.
            (3) AFDC recipient.--The term ``AFDC recipient'' means, for 
        a month, an individual who is receiving aid or assistance under 
        any plan of the State approved under title I, X, XIV, or XVI, 
        or part A or part E of title IV, of the Social Security Act for 
        the month.
            (4) Alliance area.--The term ``alliance area'' means the 
        area served by a regional alliance and specified under section 
        1202(b).
            (5) Alliance eligible individual.--The term ``alliance 
        eligible individual'' means, with respect to a health alliance, 
        an eligible individual with respect to whom the applicable 
        health plan is a health plan offered by or through such 
        alliance and does not include a prisoner.
            (6) Applicable health plan.--The term ``applicable health 
        plan'' means, with respect to an eligible individual, the 
        health plan specified pursuant to section 1004 and part 2 of 
        subtitle A.
            (7) Combination cost sharing plan.--The term ``combination 
        cost sharing plan'' means a health plan that provides 
        combination cost sharing schedule (consistent with section 
        1134).
            (8) Comprehensive benefit package.--The term 
        ``comprehensive benefit package'' means the package of health 
        benefits provided under subtitle B.
            (9) Consumer price index; cpi.--The terms ``consumer price 
        index'' and ``CPI'' mean the Consumer Price Index for all urban 
        consumers (U.S. city average), as published by the Bureau of 
        Labor Statistics.
            (10) Corporate alliance eligible individual.--The term 
        ``corporate alliance eligible individual'' means, with respect 
        to a corporate alliance, an eligible individual with respect to 
        whom the corporate alliance is the applicable health plan.
            (11) Corporate alliance employer.--The term ``corporate 
        alliance employer'' means, with respect to a corporate 
        alliance, an employer of an individual who is a participant in 
        a corporate alliance health plan of that alliance.
            (12) Corporate alliance health plan.--The term ``corporate 
        alliance health plan'' means a health plan offered by a 
        corporate alliance.
            (13) Disabled ssi recipient.--The term ``disabled SSI 
        recipient'' means an individual who--
                    (A) is an SSI recipient, and
                    (B) has been determined to be disabled for purposes 
                of the supplemental security income program (under 
                title XVI of the Social Security Act).
            (14) Eligible enrollee.--The term ``eligible enrollee'' 
        means, with respect to a health plan offered by a health 
        alliance, an alliance eligible individual, but does not include 
        such an individual if the individual is enrolled under such a 
        plan as the family member of another alliance eligible 
        individual.
            (15) Essential community provider.--The term ``essential 
        community provider'' means an entity certified as such a 
        provider under subpart B of part 2 of subtitle F.
            (16) Fee-for-service plan.--The term ``fee-for-service 
        plan'' means a health plan described in section 1322(b)(2)(A).
            (17) First year.--The term ``first year'' means, with 
        respect to--
                    (A) a State that is a participating State in a year 
                before 1998, the year in which the State first is a 
                participating State, or
                    (B) any other State, 1998.
            (18) Higher cost sharing plan.--The term ``higher cost 
        sharing plan'' means a health plan that provides a higher cost 
        sharing schedule (consistent with section 1133).
            (19) Long-term nonimmigrant.--The term ``long-term 
        nonimmigrant'' means a nonimmigrant described in subparagraph 
        (E), (H), (I), (J), (K), (L), (M), (N), (O), (Q), or (R) of 
        section 101(a)(15) of the Immigration and Nationality Act or an 
        alien within such other classification of nonimmigrant as the 
        National Health Board may establish by regulation.
            (20) Lower cost sharing plan.--The term ``lower cost 
        sharing plan'' means a health plan that provides a lower cost 
        sharing schedule (consistent with section 1132).
            (21) Medicare program.--The term ``medicare program'' means 
        the health insurance program under title XVIII of the Social 
        Security Act.
            (22) Medicare-eligible individual.--The term ``medicare-
        eligible individual'' means, subject to section 1012(a), an 
        individual who is entitled to benefits under part A of the 
        medicare program.
            (23) Move.--The term ``move'' means, respect to an 
        individual, a change of residence of the individual from one 
        alliance area to another alliance area.
            (24) National health board; board.--The terms ``National 
        Health Board'' and ``Board'' mean the National Health Board 
        created under section 1501.
            (25) Poverty level.--
                    (A) In general.--The term ``applicable poverty 
                level'' means, for a family for a year, the official 
                poverty line (as defined by the Office of Management 
                and Budget, and revised annually in accordance with 
                section 673(2) of the Omnibus Budget Reconciliation Act 
                of 1981) applicable to a family of the size involved 
                (as determined under subparagraph (B)) for 1994 
                adjusted by the percentage increase or decrease 
                described in subparagraph (C) for the year involved.
                    (B) Family size.--In applying the applicable 
                poverty level to--
                            (i) an individual enrollment, the family 
                        size is deemed to be one person;
                            (ii) a couple-only enrollment, the family 
                        size is deemed to be two persons;
                            (iii) a single parent enrollment, the 
                        family size is deemed to be three persons; or
                            (iv) a dual parent enrollment, the family 
                        size is deemed to be four persons.
                    (C) Percentage adjustment.--The percentage increase 
                or decrease described in this subparagraph for a year 
                is the percentage increase or decrease by which the 
                average CPI for the 12-month-period ending with August 
                31 of the preceding year exceeds such average for the 
                12-month period ending with August 31, 1993.
                    (D) Rounding.--Any adjustment made under 
                subparagraph (A) for a year shall be rounded to the 
                nearest multiple of $100.
            (26) Prisoner.--The term ``prisoner'' means, as specified 
        by the Board, an eligible individual during a period of 
        imprisonment under Federal, State, or local authority after 
        conviction as an adult.
            (27) Regional alliance eligible individual.--The term 
        ``regional alliance eligible individual'' means an eligible 
        individual with respect to whom a regional alliance health plan 
        is an applicable health plan.
            (28) Regional alliance employer.--The term ``regional 
        alliance employer'' means, with respect to an employee, an 
        employer that is not a corporate alliance employer with respect 
        to such employee.
            (29) Regional alliance health plan.--The term ``regional 
        alliance health plan'' means a health plan offered by a 
        regional alliance.
            (30) Reside.--
                    (A) An individual is considered to reside in the 
                location in which the individual maintains a primary 
                residence (as established under rules of the National 
                Health Board).
                    (B) Under such rules and subject to section 
                1323(c), in the case of an individual who maintains 
                more than one residence, the primary residence of the 
                individual shall be determined taking into account the 
                proportion of time spent at each residence.
                    (C) In the case of a couple only one spouse of 
                which is a qualifying employee, except as the Board may 
                provide, the residence of the employee shall be the 
                residence of the couple.
            (31) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (32) SSI family.--The term ``SSI family'' means a family 
        composed entirely of one or more SSI recipients.
            (33) SSI recipient.--The term ``SSI recipient'' means, for 
        a month, an individual--
                    (A) with respect to whom supplemental security 
                income benefits are being paid under title XVI of the 
                Social Security Act for the month,
                    (B) who is receiving a supplementary payment under 
                section 1616 of such Act or under section 212 of Public 
                Law 93-66 for the month, or
                    (C) who is receiving monthly benefits under section 
                1619(a) of the Social Security Act (whether or not 
                pursuant to section 1616(c)(3) of such Act) for the 
                month.
            (34) State.--The term ``State'' includes the District of 
        Columbia, Puerto Rico, the Virgin Islands, Guam, American 
        Samoa, and the Northern Mariana Islands.
            (35) State medicaid plan.--The term ``State medicaid plan'' 
        means a plan of medical assistance of a State approved under 
        title XIX of the Social Security Act.
            (36) Undocumented alien.--The term ``undocumented alien'' 
        means an alien who is not a long-term nonimmigrant, a diplomat, 
        or described in section 1005(c).
            (37) United States.--The term ``United States'' means the 
        50 States, the District of Columbia, Puerto Rico, the Virgin 
        Islands, Guam, American Samoa, and Northern Mariana Islands.

                  Subtitle B--Miscellaneous Provisions

SEC. 1911. USE OF INTERIM, FINAL REGULATIONS.

    In order to permit the timely implementation of the provisions of 
this Act, the National Health Board, the Secretary of Health and Human 
Services, the Secretary of Labor are each authorized to issue 
regulations under this Act on an interim basis that become final on the 
date of publication, subject to change based on subsequent public 
comment.

SEC. 1912. SOCIAL SECURITY ACT REFERENCES.

    Except as may otherwise be provided, any reference in this title, 
or in title V or VI, to a provision of the Social Security Act shall be 
to that provision of the Social Security Act as in effect on the date 
of the enactment of this Act.

                                                               Title II

                         TITLE II--NEW BENEFITS

                       table of contents of title

                                                                   Page
       Subtitle A--Medicare Outpatient Prescription Drug Benefit

Sec. 2001. Coverage of outpatient prescription drugs........        343
Sec. 2002. Payment rules and related requirements for               349
                            covered outpatient drugs.
Sec. 2003. Medicare rebates for covered outpatient drugs....        365
Sec. 2004. Extension of 25 percent rule for portion of              379
                            premium attributable to covered 
                            outpatient drugs.
Sec. 2005. Coverage of home infusion drug therapy services..        380
Sec. 2006. Conforming amendments to medicaid program........        387
Sec. 2007. Effective date...................................        389
                       Subtitle B--Long-Term Care

   Part 1--State Programs for Home and Community-based Services for 
                     Individuals With Disabilities

Sec. 2101. State programs for home and community-based              389
                            services for individuals with 
                            disabilities.
Sec. 2102. State plans......................................        390
Sec. 2103. Individuals with disabilities defined............        398
Sec. 2104. Home and community-based services covered under          402
                            State plan.
Sec. 2105. Cost sharing.....................................        408
Sec. 2106. Quality assurance and safeguards.................        409
Sec. 2107. Advisory groups..................................        410
Sec. 2108. Payments to States...............................        412
Sec. 2109. Total Federal budget; allotments to States.......        415
               Part 2--Medicaid Nursing Home Improvements

Sec. 2201. Reference to amendments..........................        425
                Part subpart a--general provisionsurance
Sec. 2301. Federal regulations; prior application or certain        426
                            requirements.
Sec. 2302. National Long-Term Care Insurance Advisory               430
                            Council.
Sec. 2303. Relation to State law............................        438
Sec. 2304. Desubpart b--federal standards and requirements..        438
Sec. 2321. Requirements to facilitate understanding and             443
                            comparison of benefits.
Sec. 2322. Requirements relating to coverage................        449
Sec. 2323. Requirements relating to premiums................        454
Sec. 2324. Requirements relating to sales practices.........        455
Sec. 2325. Continuation, renewal, replacement, conversion,          461
                            and cancellation of policies.
Sec. 2326. Requirements rsubpart c--enforcementbenefits.....        470
Sec. 2342. State programs for enforcement of standards......        474
Sec. 2342. Authorization of appropriations for State                480
                            programs.
Sec. 2343. Allotments to States.............................        481
Sec. 2344. Payments to States...............................        481
Sec. 2345. Federal oversight of State enforcement...........        482
Sec. 2346. Effect subpart d--consumer education grantsogram.        483
Sec. 2361. Grants for consumer education....................        485
     Part 4--Tax Treatment of Long-term Care Insurance and Services

Sec. 2401. Reference to tax provisions......................        488
   Part 5--Tax Incentives for Individuals With Disabilities Who Work

Sec. 2501. Reference to tax provision.......................        489
                  Part 6--Demonstration and Evaluation

Sec. 2601. Demonstration on acute and long-term care                489
                            integration.
Sec. 2602. Performance review of the long-term care programs        497
                                             Title II, Subtitle A

       Subtitle A--Medicare Outpatient Prescription Drug Benefit

SEC. 2001. COVERAGE OF OUTPATIENT PRESCRIPTION DRUGS.

    (a) Covered Outpatient Drugs as Medical and Other Health 
Services.--Section 1861(s)(2)(J) of the Social Security Act (42 U.S.C. 
1395x(s)(2)(J)) is amended to read as follows:
            ``(J) covered outpatient drugs;''.
    (b) Definition of Covered Outpatient Drug.--Section 1861(t) of such 
Act (42 U.S.C. 1395x(t)), as amended by section 13553(b) of the Omnibus 
Budget Reconciliation Act of 1993 (hereafter in this subtitle referred 
to as ``OBRA-1993''), is amended--
            (1) in the heading, by adding at the end the following: ``; 
        Covered Outpatient Drugs'';
            (2) in paragraph (1), by striking ``paragraph (2)'' and 
        inserting ``the succeeding paragraphs of this subsection''; and
            (3) by striking paragraph (2) and inserting the following:
    ``(2) Except as otherwise provided in paragraph (3), the term 
`covered outpatient drug' means any of the following products used for 
a medically accepted indication (as described in paragraph (4)):
            ``(A) A drug which may be dispensed only upon prescription 
        and--
                    ``(i) which is approved for safety and 
                effectiveness as a prescription drug under section 505 
                or 507 of the Federal Food, Drug, and Cosmetic Act or 
                which is approved under section 505(j) of such Act;
                    ``(ii)(I) which was commercially used or sold in 
                the United States before the date of the enactment of 
                the Drug Amendments of 1962 or which is identical, 
                similar, or related (within the meaning of section 
                310.6(b)(1) of title 21 of the Code of Federal 
                Regulations) to such a drug, and (II) which has not 
                been the subject of a final determination by the 
                Secretary that it is a `new drug' (within the meaning 
                of section 201(p) of the Federal Food, Drug, and 
                Cosmetic Act) or an action brought by the Secretary 
                under section 301, 302(a), or 304(a) of such Act to 
                enforce section 502(f) or 505(a) of such Act; or
                    ``(iii)(I) which is described in section 107(c)(3) 
                of the Drug Amendments of 1962 and for which the 
                Secretary has determined there is a compelling 
                justification for its medical need, or is identical, 
                similar, or related (within the meaning of section 
                310.6(b)(1) of title 21 of the Code of Federal 
                Regulations) to such a drug, and (II) for which the 
                Secretary has not issued a notice of an opportunity for 
                a hearing under section 505(e) of the Federal Food, 
                Drug, and Cosmetic Act on a proposed order of the 
                Secretary to withdraw approval of an application for 
                such drug under such section because the Secretary has 
                determined that the drug is less than effective for all 
                conditions of use prescribed, recommended, or suggested 
                in the labeling.
            ``(B) A biological product which--
                    ``(i) may only be dispensed upon prescription,
                    ``(ii) is licensed under section 351 of the Public 
                Health Service Act, and
                    ``(iii) is produced at an establishment licensed 
                under such section to produce such product.
            ``(C) Insulin certified under section 506 of the Federal 
        Food, Drug, and Cosmetic Act.
    ``(3) The term `covered outpatient drug' does not include any 
product--
            ``(A) which is administered through infusion in a home 
        setting unless the product is a covered home infusion drug (as 
        defined in paragraph (5));
            ``(B) when furnished as part of, or as incident to, any 
        other item or service for which payment may be made under this 
        title; or
            ``(C) which is listed under paragraph (2) of section 
        1927(d) (other than subparagraph (I) or (J) of such 
        subparagraph) as a drug which may be excluded from coverage 
        under a State plan under title XIX and which the Secretary 
        elects to exclude from coverage under part B.
    ``(4) For purposes of paragraph (2), the term `medically accepted 
indication', with respect to the use of an outpatient drug, includes 
any use which has been approved by the Food and Drug Administration for 
the drug, and includes another use of the drug if--
            ``(A) the drug has been approved by the Food and Drug 
        Administration; and
            ``(B)(i) such use is supported by one or more citations 
        which are included (or approved for inclusion) in one or more 
        of the following compendia: the American Hospital Formulary 
        Service-Drug Information, the American Medical Association Drug 
        Evaluations, the United States Pharmacopoeia-Drug Information, 
        and other authoritative compendia as identified by the 
        Secretary, unless the Secretary has determined that the use is 
        not medically appropriate or the use is identified as not 
        indicated in one or more such compendia, or
            ``(ii) the carrier involved determines, based upon guidance 
        provided by the Secretary to carriers for determining accepted 
        uses of drugs, that such use is medically accepted based on 
        supportive clinical evidence in peer reviewed medical 
        literature appearing in publications which have been identified 
        for purposes of this clause by the Secretary.
The Secretary may revise the list of compendia in subparagraph (B)(i) 
designated as appropriate for identifying medically accepted 
indications for drugs.
    ``(5)(A) For purposes of paragraph (3), the term `covered home 
infusion drug' means a covered outpatient drug or an enteral or 
parenteral nutrient dispensed to an individual that--
            ``(i) is administered intravenously, subcutaneously, 
        epidurally, or through other means determined by the Secretary, 
        using an access device that is inserted in to the body and an 
        infusion device to control the rate of flow of the drug,
            ``(ii) is administered in the individual's home (including 
        an institution used as the individual's home, other than a 
        hospital under subsection (e) or a skilled nursing facility 
        that meets the requirements of section 1819(a)), and
            ``(iii)(I) is an antibiotic drug and the Secretary has not 
        determined, for the specific drug or the indication to which 
        the drug is applied, that the drug cannot generally be 
        administered safely and effectively in a home setting, or
            ``(II) is not an antibiotic drug and the Secretary has 
        determined, for the specific drug or the indication to which 
        the drug is applied, that the drug can generally be 
        administered safely and effectively in a home setting.
    ``(B) Not later than January 1, 1996, (and periodically 
thereafter), the Secretary shall publish a list of the drugs, and 
indications for such drugs, that are covered home infusion drugs, with 
respect to which home infusion drug therapy may be provided under this 
title.''.
    (c) Other Conforming Amendments.--(1) Section 1861 of such Act (42 
U.S.C. 1395x) is amended--
            (A) in subsection (s)(2), as amended by section 13553 of 
        OBRA-1993--
                    (i) by striking subparagraphs (O) and (Q),
                    (ii) by adding ``and'' at the end of subparagraph 
                (N),
                    (iii) by striking ``; and'' at the end of 
                subparagraph (P) and inserting a period, and
                    (iv) by redesignating subparagraph (P) as 
                subparagraph (O); and
            (B) by striking the subsection (jj) added by section 
        4156(a)(2) of the Omnibus Budget Reconciliation Act of 1990.
    (2) Section 1881(b)(1)(C) of such Act (42 U.S.C. 1395rr(b)(1)(C)), 
as amended by section 13566(a) of OBRA-1993, is amended by striking 
``section 1861(s)(2)(P)'' and inserting ``section 1861(s)(2)(O)''.

SEC. 2002. PAYMENT RULES AND RELATED REQUIREMENTS FOR COVERED 
              OUTPATIENT DRUGS.

    (a) In General.--Section 1834 of the Social Security Act (42 U.S.C. 
1395m) is amended by inserting after subsection (c) the following new 
subsection:
    ``(d) Payment for and Certain Requirements Concerning Covered 
Outpatient Drugs.--
            ``(1) Deductible.--
                    ``(A) In general.--Payment shall be made under 
                paragraph (2) only for expenses incurred by an 
                individual for a covered outpatient drug during a 
                calendar year after the individual has incurred 
                expenses in the year for such drugs (during a period in 
                which the individual is entitled to benefits under this 
                part) equal to the deductible amount for that year.
                    ``(B) Deductible amount.--
                            ``(i) For purposes of subparagraph (A), the 
                        deductible amount is--
                                    ``(I) for 1996, $250, and
                                    ``(II) for any succeeding year, the 
                                amount (rounded to the nearest dollar) 
                                that the Secretary estimates will 
                                ensure that the percentage of the 
                                average number of individuals covered 
                                under this part (other than individuals 
                                enrolled with an eligible organization 
                                under section 1876 or an organization 
                                described in section 1833(a)(1)(A)) 
                                during the year who will incur expenses 
                                for covered outpatient drugs equal to 
                                or greater than such amount will be the 
                                same as the percentage for the previous 
                                year.
                            ``(ii) The Secretary shall promulgate the 
                        deductible amount for 1997 and each succeeding 
                        year during September of the previous year.
                    ``(C) Special rule for determination of expenses 
                incurred.--In determining the amount of expenses 
                incurred by an individual for covered outpatient drugs 
                during a year for purposes of subparagraph (A), there 
                shall not be included any expenses incurred with 
                respect to a drug to the extent such expenses exceed 
                the payment basis for such drug under paragraph (3).
            ``(2) Payment amount.--
                    ``(A) In general.--Subject to the deductible 
                established under paragraph (1), the amount payable 
                under this part for a covered outpatient drug furnished 
                to an individual during a calendar year shall be equal 
                to--
                            ``(i) 80 percent of the payment basis 
                        described in paragraph (3), in the case of an 
                        individual who has not incurred expenses for 
                        covered outpatient drugs during the year 
                        (including the deductible imposed under 
                        paragraph (1)) in excess of the out-of-pocket 
                        limit for the year under subparagraph (B); and
                            ``(ii) 100 percent of the payment basis 
                        described in paragraph (3), in the case of any 
                        other individual.
                    ``(B) Out-of-pocket limit described.--
                            ``(i) For purposes of subparagraph (A), the 
                        out-of-pocket limit for a year is equal to--
                                    ``(I) for 1996, $1000, and
                                    ``(II) for any succeeding year, the 
                                amount (rounded to the nearest dollar) 
                                that the Secretary estimates will 
                                ensure that the percentage of the 
                                average number of individuals covered 
                                under this part (other than individuals 
                                enrolled with an eligible organization 
                                under section 1876 or an organization 
                                described in section 1833(a)(1)(A)) 
                                during the year who will incur expenses 
                                for covered outpatient drugs equal to 
                                or greater than such amount will be the 
                                same as the percentage for the previous 
                                year.
                            ``(ii) The Secretary shall promulgate the 
                        out-of-pocket limit for 1997 and each 
                        succeeding year during September of the 
                        previous year.
                    ``(C) Special rule for determination of expenses 
                incurred.--In determining the amount of expenses 
                incurred by an individual for covered outpatient drugs 
                during a year for purposes of subparagraph (A), there 
                shall not be included any expenses incurred with 
                respect to a drug to the extent such expenses exceed 
                the payment basis for such drug under paragraph (3).
            ``(3) Payment basis.--For purposes of paragraph (2), the 
        payment basis is the lesser of--
                    ``(A) the actual charge for a covered outpatient 
                drug, or
                    ``(B) the applicable payment limit established 
                under paragraph (4).
            ``(4) Payment limits.--
                    ``(A) Payment limit for single source drugs and 
                multiple source drugs with restrictive prescriptions.--
                In the case of a covered outpatient drug that is a 
                multiple source drug which has a restrictive 
                prescription, or that is single source drug, the 
                payment limit for a payment calculation period is equal 
                to--
                            ``(i) the 90th percentile of the actual 
                        charges (computed on the geographic basis 
                        specified by the Secretary) for the drug 
                        product for the second previous payment 
                        calculation period, or
                            ``(ii) the amount of the administrative 
                        allowance (established under paragraph (5)) 
                        plus the product of the number of dosage units 
                        dispensed and the per unit estimated 
                        acquisition cost for the drug product 
                        (determined under subparagraph (C)) for the 
                        period,
                whichever is less.
                    ``(B) Payment limit for multiple source drugs 
                without restrictive prescriptions.--In the case of a 
                drug that is a multiple source drug which does not have 
                a restrictive prescription, the payment limit for a 
                payment calculation period is equal to the amount of 
                the administrative allowance (established under 
                paragraph (5)) plus the product of the number of dosage 
                units dispensed and the unweighted median of the unit 
                estimated acquisition cost (determined under 
                subparagraph (C)) for the drug products for the period.
                    ``(C) Determination of unit price.--
                            ``(i) In general.--The Secretary shall 
                        determine, for the dispensing of a covered 
                        outpatient drug product in a payment 
                        calculation period, the estimated acquisition 
                        cost for the drug product. With respect to any 
                        covered outpatient drug product, such cost may 
                        not exceed 93 percent of the published average 
                        wholesale price for the drug during the period.
                            ``(ii) Compliance with request for 
                        information.--If a wholesaler or direct seller 
                        of a covered outpatient drug refuses, after 
                        being requested by the Secretary, to provide 
                        price information requested to carry out clause 
                        (i), or deliberately provides information that 
                        is false, the Secretary may impose a civil 
                        money penalty of not to exceed $10,000 for each 
                        such refusal or provision of false information. 
                        The provisions of section 1128A (other than 
                        subsections (a) and (b)) shall apply to civil 
                        money penalties under the previous sentence in 
                        the same manner as they apply to a penalty or 
                        proceeding under section 1128A(a). Information 
                        gathered pursuant to clause (i) shall not be 
                        disclosed except as the Secretary determines to 
                        be necessary to carry out the purposes of this 
                        part.
            ``(5) Administrative allowance for purposes of payment 
        limit.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the administrative allowance 
                established under this paragraph is--
                            ``(i) for 1996, $5, and
                            ``(ii) for each succeeding year, the amount 
                        for the previous year adjusted by the 
                        percentage change in the consumer price index 
                        for all urban consumers (U.S. city average) for 
                        the 12-month period ending with June of that 
                        previous year.
                    ``(B) Reduction for mail order pharmacies.--The 
                Secretary may, after consulting with representatives of 
                pharmacists, individuals enrolled under this part, and 
                of private insurers, reduce the administrative 
                allowances established under subparagraph (A) for any 
                covered outpatient drug dispensed by a mail order 
                pharmacy, based on differences between such pharmacies 
                and other pharmacies with respect to operating costs 
                and other economies.
            ``(6) Assuring appropriate prescribing and dispensing 
        practices.--
                    ``(A) In general.--The Secretary shall establish a 
                program to identify (and to educate physicians and 
                pharmacists concerning)--
                            ``(i) instances or patterns of unnecessary 
                        or inappropriate prescribing or dispensing 
                        practices for covered outpatient drugs,
                            ``(ii) instances or patterns of substandard 
                        care with respect to such drugs,
                            ``(iii) potential adverse reactions, and
                            ``(iv) appropriate use of generic products.
                    ``(B) Prior authorization.--The Secretary may 
                require advance approval for a covered outpatient drug 
                which the Secretary finds is subject to misuse or 
                inappropriate use, is not cost effective, which is a 
                multiple source drug with a restrictive prescription, 
                or is subject to negotiation under section 1850(c)(3). 
                The Secretary may also establish maximum quantities per 
                prescription and limits on the number of prescription 
                refills. The Secretary shall ensure that any advance 
                approval requirements imposed under this subparagraph 
                do not restrict the access of patients to medically 
                necessary covered outpatient drugs on a timely basis, 
                and assure prompt determinations of approval or 
                disapproval and provide a means for providers and 
                patients to appeal a decision to disapprove a drug.
                    ``(C) Drug use review.--The Secretary may provide 
                for a drug use review program with respect to covered 
                outpatient drugs dispensed to individuals eligible for 
                benefits under this part. Such program may include such 
                elements as the Secretary determines to be necessary to 
                assure that prescriptions (i) are appropriate, (ii) are 
                medically necessary, and (iii) are not likely to result 
                in adverse medical results, including any elements of 
                the State drug use review programs required under 
                section 1927(g) that the Secretary determines to be 
                appropriate.
            ``(7) Administrative improvements.--The Secretary shall 
        develop, in consultation with representatives of pharmacies and 
        of other interested persons, a standard claims form for covered 
        outpatient drugs in accordance with title V of the Health 
        Security Act.
            ``(8) Counseling requirements for pharmacies.--A pharmacy 
        may not receive any payment under this part for a covered 
        outpatient drug unless the pharmacy agrees to answer questions 
        of individuals enrolled under this part who receive a covered 
        outpatient drug from the pharmacy regarding the appropriate use 
        of the drug, potential interactions between the drug and other 
        drugs dispensed to the individual, and other matters relating 
        to the dispensing of such drugs.
            ``(9) Definitions.--In this subsection:
                    ``(A) Multiple and single source drugs.--The terms 
                `multiple source drug' and `single source drug' have 
                the meanings of those terms under section 1927(k)(7).
                    ``(B) Restrictive prescription.--A drug has a 
                `restrictive prescription' only if--
                            ``(i) in the case of a written 
                        prescription, the prescription for the drug 
                        indicates, in the handwriting of the physician 
                        or other person prescribing the drug and with 
                        an appropriate phrase (such as `brand medically 
                        necessary') recognized by the Secretary, that a 
                        particular drug product must be dispensed, or
                            ``(ii) in the case of a prescription issued 
                        by telephone--
                                    ``(I) the physician or other person 
                                prescribing the drug (through use of 
                                such an appropriate phrase) states that 
                                a particular drug product must be 
                                dispensed, and
                                    ``(II) the physician or other 
                                person submits to the pharmacy 
                                involved, within 30 days after the date 
                                of the telephone prescription, a 
                                written confirmation which is in the 
                                handwriting of the physician or other 
                                person prescribing the drug and which 
                                indicates with such appropriate phrase 
                                that the particular drug product was 
                                required to have been dispensed.
                    ``(C) Payment calculation period.--The term 
                `payment calculation period' means the 6-month period 
                beginning with January of each year and the 6-month 
                period beginning with July of each year.''.
    (b) Submission of Claims by Pharmacies.--Section 1848(g)(4) of such 
Act (42 U.S.C. 1395w-4(g)(4)) is amended--
            (1) in the heading--
                    (A) by striking ``Physician'', and
                    (B) by inserting ``by physicians and suppliers'' 
                after ``claims'',
            (2) in the matter in subparagraph (A) preceding clause 
        (i)--
                    (A) by striking ``For services furnished on or 
                after September 1, 1990, within 1 year'' and inserting 
                ``Within 1 year (90 days in the case of covered 
                outpatient drugs)'',
                    (B) by striking ``a service'' and inserting ``an 
                item or service'', and
                    (C) by inserting ``or of providing a covered 
                outpatient drug,'' after ``basis,'' and
            (3) in subparagraph (A)(i), by inserting ``item or'' before 
        ``service.
    (c) Special Rules for Carriers.--
            (1) Use of regional carriers.--Section 1842(b)(2) of such 
        Act (42 U.S.C. 1395u(b)(2)) is amended by adding at the end the 
        following:
    ``(D) With respect to activities related to covered outpatient 
drugs, the Secretary may enter into contracts with carriers under this 
section to perform the activities on a regional basis.''.
            (2) Payment on other than a cost basis.--Section 
        1842(c)(1)(A) of such Act (42 U.S.C. 1395u(c)(1)(A)) is 
        amended--
                    (A) by inserting ``(i)'' after ``(c)(1)(A)'',
                    (B) in the first sentence, by inserting ``, except 
                as otherwise provided in clause (ii),'' after ``under 
                this part, and'', and
                    (C) by adding at the end the following:
    ``(ii) To the extent that a contract under this section provides 
for activities related to covered outpatient drugs, the Secretary may 
provide for payment for those activities based on any method of payment 
determined by the Secretary to be appropriate.''.
            (3) Use of other entities for covered outpatient drugs.--
        Section 1842(f) of such Act (42 U.S.C. 1395u(f)) is amended--
                    (A) by striking ``and'' at the end of paragraph 
                (1),
                    (B) by striking the period at the end of paragraph 
                (2) and inserting ``; and'', and
                    (C) by adding at the end the following:
            ``(3) with respect to activities related to covered 
        outpatient drugs, any other private entity which the Secretary 
        determines is qualified to conduct such activities.''.
            (4) Designated carriers to process claims of railroad 
        retirees.--Section 1842(g) of such Act (42 U.S.C. 1395u(g)) is 
        amended by inserting ``(other than functions related to covered 
        outpatient drugs)'' after ``functions''.
    (d) Contracts for Automatic Data Processing Equipment.--Actions 
taken before 1996 that affect contracts related to the processing of 
claims for covered outpatient drugs (as defined in section 1861(t) of 
the Social Security Act) shall not be subject to section 111 of the 
Federal Property and Administrative Services Act of 1949, and shall not 
be subject to administrative or judicial review.
    (e) Conforming Amendments.--
            (1)(A) Section 1833(a)(1) of such Act (42 U.S.C. 
        1395l(a)(1)), as amended by section 13544(b)(2) of OBRA-1993, 
        is amended--
                    (i) by striking ``and'' at the end of clause (O), 
                and
                    (ii) by inserting before the semicolon at the end 
                the following: ``, and (Q) with respect to covered 
                outpatient drugs, the amounts paid shall be as 
                prescribed by section 1834(d)''.
            (B) Section 1833(a)(2) of such Act (42 U.S.C. 1395l(a)(2)) 
        is amended in the matter preceding subparagraph (A) by 
        inserting ``, except for covered outpatient drugs,'' after 
        ``and (I) of such section''.
            (2) Section 1833(b)(2) of such Act (42 U.S.C. 1395l(b)(2)) 
        is amended by inserting ``or with respect to covered outpatient 
        drugs'' before the comma.
            (3) The first sentence of section 1842(h)(2) of such Act 
        (42 U.S.C. 1395u(h)(2)) is amended by inserting ``(other than a 
        carrier described in subsection (f)(3))'' after ``Each 
        carrier''.
            (4) The first sentence of section 1866(a)(2)(A) of such Act 
        (42 U.S.C. 1395cc(a)(2)(A)) is amended--
                    (A) in clause (i), by inserting ``section 
                1834(d),'' after ``section 1833(b),'', and
                    (B) in clause (ii), by inserting ``, other than for 
                covered outpatient drugs,'' after ``provider)''.

SEC. 2003. MEDICARE REBATES FOR COVERED OUTPATIENT DRUGS.

    (a) In General.--Part B of title XVIII of the Social Security Act 
is amended by adding at the end the following new section:

                 ``rebates for covered outpatient drugs

    ``Sec. 1850. (a) Requirement for Rebate Agreement.--In order for 
payment to be available under this part for covered outpatient drugs of 
a manufacturer dispensed on or after January 1, 1996, the manufacturer 
must have entered into and have in effect a rebate agreement with the 
Secretary meeting the requirements of subsection (b), and an agreement 
to give equal access to discounts in accordance with subsection (e).
    ``(b) Terms, Implementation, and Enforcement of Rebate Agreement.--
            ``(1) Periodic rebates.--
                    ``(A) In general.--A rebate agreement under this 
                section shall require the manufacturer to pay to the 
                Secretary for each calendar quarter, not later than 30 
                days after the date of receipt of the information 
                described in paragraph (2) for such quarter, a rebate 
                in an amount determined under subsection (c) for all 
                covered outpatient drugs of the manufacturer described 
                in subparagraph (B).
                    ``(B) Drugs included in quarterly rebate 
                calculation.--Drugs subject to rebate with respect to a 
                calendar quarter are drugs which are dispensed by a 
                pharmacy during such quarter to individuals (other than 
                individuals enrolled with an eligible organization with 
                a contract under section 1876) eligible for benefits 
                under this part, as reported by such pharmacies to the 
                Secretary.
            ``(2) Information furnished to manufacturers.--
                    ``(A) In general.--The Secretary shall report to 
                each manufacturer, not later than 60 days after the end 
                of each calendar quarter, information on the total 
                number, for each covered outpatient drug, of units of 
                each dosage form, strength, and package size dispensed 
                under the plan during the quarter, on the basis of the 
                data reported to the Secretary described in paragraph 
                (1)(B).
                    ``(B) Audit.--The Comptroller General may audit the 
                records of the Secretary to the extent necessary to 
                determine the accuracy of reports by the Secretary 
                pursuant to subparagraph (A). Adjustments to rebates 
                shall be made to the extent determined necessary by the 
                audit to reflect actual units of drugs dispensed.
            ``(3) Provision of price information by manufacturer.--
                    ``(A) Quarterly pricing information.--Each 
                manufacturer with an agreement in effect under this 
                section shall report to the Secretary, not later than 
                30 days after the last day of each calendar quarter, on 
                the average manufacturer retail price and the average 
                manufacturer non-retail price for each dosage form and 
                strength of each covered outpatient drug for the 
                quarter.
                    ``(B) Base quarter prices.--Each manufacturer of a 
                covered outpatient drug with an agreement under this 
                section shall report to the Secretary, by not later 
                than 30 days after the effective date of such agreement 
                (or, if later, 30 days after the end of the base 
                quarter), the average manufacturer retail price, for 
                such base quarter, for each dosage form and strength of 
                each such covered drug.
                    ``(C) Verification of average manufacturer price.--
                The Secretary may inspect the records of manufacturers, 
                and survey wholesalers, pharmacies, and institutional 
                purchasers of drugs, as necessary to verify prices 
                reported under subparagraph (A).
                    ``(D) Penalties.--
                            ``(i) Civil money penalties.--The Secretary 
                        may impose a civil money penalty on a 
                        manufacturer with an agreement under this 
                        section--
                                    ``(I) for failure to provide 
                                information required under subparagraph 
                                (A) on a timely basis, in an amount up 
                                to $10,000 per day of delay;
                                    ``(II) for refusal to provide 
                                information about charges or prices 
                                requested by the Secretary for purposes 
                                of verification pursuant to 
                                subparagraph (C), in an amount up to 
                                $100,000; and
                                    ``(III) for provision, pursuant to 
                                subparagraph (A) or (B), of information 
                                that the manufacturer knows or should 
                                know is false, in an amount up to 
                                $100,000 per item of information.
                        Such civil money penalties are in addition to 
                        any other penalties prescribed by law. The 
                        provisions of section 1128A (other than 
                        subsections (a) (with respect to amounts of 
                        penalties or additional assessments) and (b)) 
                        shall apply to a civil money penalty under this 
                        subparagraph in the same manner as such 
                        provisions apply to a penalty or proceeding 
                        under section 1128A(a).
                            ``(ii) Termination of agreement.--If a 
                        manufacturer with an agreement under this 
                        section has not provided information required 
                        under subparagraph (A) or (B) within 90 days of 
                        the deadline imposed, the Secretary may suspend 
                        the agreement with respect to covered 
                        outpatient drugs dispensed after the end of 
                        such 90-day period and until the date such 
                        information is reported (but in no case shall a 
                        suspension be for less than 30 days).
            ``(4) Length of agreement.--
                    ``(A) In general.--A rebate agreement shall be 
                effective for an initial period of not less than one 
                year and shall be automatically renewed for a period of 
                not less than one year unless terminated under 
                subparagraph (B).
                    ``(B) Termination.--
                            ``(i) By the secretary.--The Secretary may 
                        provide for termination of a rebate agreement 
                        for violation of the requirements of the 
                        agreement or other good cause shown. Such 
                        termination shall not be effective earlier than 
                        60 days after the date of notice of such 
                        termination. The Secretary shall afford a 
                        manufacturer an opportunity for a hearing 
                        concerning such termination, but such hearing 
                        shall not delay the effective date of the 
                        termination.
                            ``(ii) By a manufacturer.--A manufacturer 
                        may terminate a rebate agreement under this 
                        section for any reason. Any such termination 
                        shall not be effective until the calendar 
                        quarter beginning at least 60 days after the 
                        date the manufacturer provides notice to the 
                        Secretary.
                            ``(iii) Effective date of termination.--Any 
                        termination under this subparagraph shall not 
                        affect rebates due under the agreement before 
                        the effective date of its termination.
                            ``(iv) Notice to pharmacies.--In the case 
                        of a termination under this subparagraph, the 
                        Secretary shall notify pharmacies and physician 
                        organizations not less than 30 days before the 
                        effective date of such termination.
    ``(c) Amount of Rebate.--
            ``(1) Basic rebate.--Each manufacturer shall remit a basic 
        rebate to the Secretary for each calendar quarter in an amount, 
        with respect to each dosage form and strength of a covered drug 
        (except as provided under paragraph (4)), equal to the product 
        of--
                    ``(A) the total number of units subject to rebate 
                for such quarter, as described in subsection (b)(1)(B); 
                and
                    ``(B) the greater of--
                            ``(i) the difference between the average 
                        manufacturer retail price and the average 
                        manufacturer non-retail price,
                            ``(ii) 17 percent of the average 
                        manufacturer retail price, or
                            ``(iii) the amount determined pursuant to 
                        paragraph (3).
            ``(2) Additional rebate.--Each manufacturer shall remit to 
        the Secretary, for each calendar quarter, an additional rebate 
        for each dosage form and strength of a covered drug (except as 
        provided under paragraph (4)), in an amount equal to--
                    ``(A) the total number of units subject to rebate 
                for such quarter, as described in subsection (b)(1)(B), 
                multiplied by
                    ``(B) the amount, if any, by which the average 
                manufacturer retail price for covered drugs of the 
                manufacturer exceeds the average manufacturer retail 
                price for the base quarter, increased by the percentage 
                increase in the Consumer Price Index for all urban 
                consumers (U.S. average) from the end of such base 
                quarter to the month before the beginning of such 
                calendar quarter.
            ``(3) Negotiated rebate amount for new drugs.--
                    ``(A) In general.--The Secretary may negotiate with 
                the manufacturer a per-unit rebate amount, in 
                accordance with this paragraph, for any covered 
                outpatient drug (except as provided under paragraph 
                (4)) first marketed after June 30, 1993--
                            ``(i) which is not marketed in any country 
                        specified in section 802(b)(4)(A) of the 
                        Federal Food, Drug, and Cosmetic Act and for 
                        which the Secretary believes the average 
                        manufacturer's retail price may be excessive, 
                        or
                            ``(ii) which is marketed in one or more of 
                        such countries, at prices significantly lower 
                        than the average manufacturer retail price.
                    ``(B) Maximum rebate amount for drugs marketed in 
                certain countries.--The rebate negotiated pursuant to 
                this paragraph for a drug described in subparagraph 
                (A)(ii) may be an amount up to the difference between 
                the average manufacturer retail price and any price at 
                which the drug is available to wholesalers in a country 
                specified in such section 802(b)(4)(A).
                    ``(C) Factors to be considered.--In making 
                determinations with respect to the prices of a covered 
                drug described in subparagraph (A) and in negotiating a 
                rebate amount pursuant to this paragraph, the Secretary 
                shall take into consideration, as applicable and 
                appropriate, the prices of other drugs in the same 
                therapeutic class, cost information requested by the 
                Secretary and supplied by the manufacturer or estimated 
                by the Secretary, prescription volumes, economies of 
                scale, product stability, special manufacturing 
                requirements, prices of the drug in countries specified 
                in subparagraph (A)(i) (in the case of a drug described 
                in such subparagraph), and other relevant factors.
                    ``(D) Option to exclude coverage.--If the Secretary 
                is unable to negotiate with the manufacturer an 
                acceptable rebate amount with respect to a covered 
                outpatient drug pursuant to this paragraph, the 
                Secretary may exclude such drug from coverage under 
                this part.
                    ``(E) Effective date of exclusion from coverage.--
                An exclusion of a drug from coverage pursuant to 
                subparagraph (D) shall be effective on and after--
                            ``(i) the date 6 months after the effective 
                        date of marketing approval of such drug by the 
                        Food and Drug Administration (but in no event 
                        earlier than July 1, 1996), or
                            ``(ii) the date the manufacturer terminates 
                        negotiations with the Secretary concerning the 
                        rebate amount,
                whichever is earlier.
            ``(4) No rebate required for generic drugs.--Paragraphs (1) 
        through (3) shall not apply with respect to a covered 
        outpatient drug that is not a single source drug or an 
        innovator multiple source drug (as such terms are defined in 
        section 1927(k)).
            ``(5) Deposit of rebates.--The Secretary shall deposit 
        rebates under this section in the Federal Supplementary Medical 
        Insurance Trust Fund established under section 1841.
    ``(d) Confidentiality of Information.--Notwithstanding any other 
provision of law, information disclosed by a manufacturer under this 
section is confidential and shall not be disclosed by the Secretary, 
except--
            ``(A) as the Secretary determines to be necessary to carry 
        out this section,
            ``(B) to permit the Comptroller General to review the 
        information provided, and
            ``(C) to permit the Director of the Congressional Budget 
        Office to review the information provided.
    ``(e) Agreement to Give Equal Access to Discounts.--An agreement 
under this subsection by a manufacturer of covered outpatient drugs 
shall guarantee that the manufacturer will offer, to each wholesaler or 
retailer (or other purchaser representing a group of such wholesalers 
or retailers) that purchases such drugs on substantially the same terms 
(including such terms as prompt payment, cash payment, volume purchase, 
single-site delivery, the use of formularies by purchasers, and any 
other terms effectively reducing the manufacturer's costs) as any other 
purchaser (including any institutional purchaser) the same price for 
such drugs as is offered to such other purchaser. In determining a 
manufacturer's compliance with the previous sentence, there shall not 
be taken into account terms offered to the Department of Veterans 
Affairs, the Department of Defense, or any public program.
    ``(f) Definitions.--For purposes of this section--
            ``(1) Average manufacturer retail price.--The term `average 
        manufacturer retail price' means, with respect to a covered 
        outpatient drug of a manufacturer for a calendar quarter, the 
        average price (inclusive of discounts for cash payment, prompt 
        payment, volume purchases, and rebates (other than rebates 
        under this section), but exclusive of nominal prices) paid to 
        the manufacturer for the drug in the United States for drugs 
        distributed to the retail pharmacy class of trade.
            ``(2) Average manufacturer non-retail price.--The term 
        `average manufacturer non-retail price' means, with respect to 
        a covered outpatient drug of a manufacturer for a calendar 
        quarter, the weighted average price (inclusive of discounts for 
        cash payment, prompt payment, volume purchases, and rebates 
        (other than rebates under this section), but exclusive of 
        nominal prices) paid to the manufacturer for the drug in the 
        United States by hospitals and other institutional purchasers 
        that purchase drugs for institutional use and not for resale.
            ``(3) Base quarter.--The term `base quarter' means, with 
        respect to a covered outpatient drug of a manufacturer, the 
        calendar quarter beginning April 1, 1993, or (if later) the 
        first full calendar quarter during which the drug was marketed 
        in the United States.
            ``(4) Covered drug.--The term `covered drug' includes each 
        innovator multiple source drug and single source drug, as those 
        terms are defined in section 1927(k)(7).
            ``(5) Manufacturer.--The term `manufacturer' means, with 
        respect to a covered outpatient drug--
                    ``(A) the entity whose National Drug Code number 
                (as issued pursuant to section 510(e) of the Federal 
                Food, Drug, and Cosmetic Act) appears on the labeling 
                of the drug; or
                    ``(B) if the number described in subparagraph (A) 
                does not appear on the labeling of the drug, the person 
                named as the applicant in a human drug application (in 
                the case of a new drug) or the product license 
                application (in the case of a biological product) for 
                such drug approved by the Food and Drug 
                Administration.''.
    (b) Exclusions From Coverage.--Section 1862(a) of such Act (42 
U.S.C. 1395y(a)), as amended by sections 4034(b)(4) and 4118(b), is 
amended--
            (1) by striking ``and'' at the end of paragraph (15),
            (2) by striking the period at the end of paragraph (16) and 
        inserting ``; or'', and
            (3) by inserting after paragraph (16) the following new 
        paragraph:
            ``(17) A covered outpatient drug (as described in section 
        1861(t))--
                    ``(A) furnished during a year for which the drug's 
                manufacturer does not have in effect a rebate agreement 
                with the Secretary that meets the requirements of 
                section 1850 for the year, or
                    ``(B) excluded from coverage during the year by the 
                Secretary pursuant to section 1850(c)(3)(D) (relating 
                to negotiated rebate amounts for certain new drugs).''.

SEC. 2004. EXTENSION OF 25 PERCENT RULE FOR PORTION OF PREMIUM 
              ATTRIBUTABLE TO COVERED OUTPATIENT DRUGS.

    Section 1839(e) of the Social Security Act (42 U.S.C. 1395r(e)) is 
amended by adding at the end the following:
    ``(3) Notwithstanding the provisions of subsection (a), the portion 
of the monthly premium for each individual enrolled under this part for 
each month after December 1998 that is attributable to covered 
outpatient drugs shall be an amount equal to 50 percent of the portion 
of the monthly actuarial rate for enrollees age 65 and over, as 
determined under subsection (a)(1) and applicable to such month, that 
is attributable to covered outpatient drugs.''.

SEC. 2005. COVERAGE OF HOME INFUSION DRUG THERAPY SERVICES.

    (a) In General.--Section 1832(a)(2)(A) of the Social Security Act 
(42 U.S.C. 1395k(a)(2)(A)) is amended by inserting ``and home infusion 
drug therapy services'' before the semicolon.
    (b) Home Infusion Drug Therapy Services Defined.--Section 1861 of 
such Act (42 U.S.C. 1395x) is amended--
            (1) by redesignating the subsection (jj) inserted by 
        section 4156(a)(2) of the Omnibus Budget Reconciliation Act of 
        1990 as subsection (kk); and
            (2) by inserting after such subsection the following new 
        subsection:

                 ``Home Infusion Drug Therapy Services

    ``(ll)(1) The term `home infusion drug therapy services' means the 
items and services described in paragraph (2) furnished to an 
individual who is under the care of a physician--
            ``(A) in a place of residence used as the individual's 
        home,
            ``(B) by a qualified home infusion drug therapy provider 
        (as defined in paragraph (3)) or by others under arrangements 
        with them made by that provider, and
            ``(C) under a plan established and periodically reviewed by 
        a physician.
    ``(2) The items and services described in this paragraph are such 
nursing, pharmacy, and related services (including medical supplies, 
intravenous fluids, delivery, and equipment) as are necessary to 
conduct safely and effectively a drug regimen through use of a covered 
home infusion drug (as defined in subsection (t)(5)), but do not 
include such covered home infusion drugs.
    ``(3) The term `qualified home infusion drug therapy provider' 
means any entity that the Secretary determines meets the following 
requirements:
            ``(A) The entity is capable of providing or arranging for 
        the items and services described in paragraph (2) and covered 
        home infusion drugs.
            ``(B) The entity maintains clinical records on all 
        patients.
            ``(C) The entity adheres to written protocols and policies 
        with respect to the provision of items and services.
            ``(D) The entity makes services available (as needed) seven 
        days a week on a 24-hour basis.
            ``(E) The entity coordinates all service with the patient's 
        physician.
            ``(F) The entity conducts a quality assessment and 
        assurance program, including drug regimen review and 
        coordination of patient care.
            ``(G) The entity assures that only trained personnel 
        provide covered home infusion drugs (and any other service for 
        which training is required to provide the service safely).
            ``(H) The entity assumes responsibility for the quality of 
        services provided by others under arrangements with the entity.
            ``(I) In the case of an entity in any State in which State 
        or applicable local law provides for the licensing of entities 
        of this nature, the entity (i) is licensed pursuant to such 
        law, or (ii) is approved, by the agency of such State or 
        locality responsible for licensing entities of this nature, as 
        meeting the standards established for such licensing.
            ``(J) The entity meets such other requirements as the 
        Secretary may determine are necessary to assure the safe and 
        effective provision of home infusion drug therapy services and 
        the efficient administration of the home infusion drug therapy 
        benefit.''.
    (c) Payment.--
            (1) In general.--Section 1833 of such Act (42 U.S.C. 1395l) 
        is amended--
                    (A) in subsection (a)(2)(B), by striking ``or (E)'' 
                and inserting ``(E), or (F)'',
                    (B) in subsection (a)(2)(D), by striking ``and'' at 
                the end,
                    (C) in subsection (a)(2)(E), by striking the 
                semicolon and inserting ``; and'',
                    (D) by inserting after subsection (a)(2)(E) the 
                following new subparagraph:
                    ``(F) with respect to home infusion drug therapy 
                services, the amounts described in section 1834(j);'', 
                and
                    (E) in the first sentence of subsection (b), by 
                striking ``services, (3)'' and inserting ``services and 
                home infusion drug therapy services, (3)''.
            (2) Amount described.--Section 1834 of such Act, as amended 
        by section 13544(b)(i) of OBRA-1993, is amended by adding at 
        the end the following new subsection:
    ``(j) Home Infusion Drug Therapy Services.--
            ``(1) In general.--With respect to home infusion drug 
        therapy services, payment under this part shall be made in an 
        amount equal to the lesser of the actual charges for such 
        services or the fee schedule established under paragraph (2).
            ``(2) Establishment of fee schedule.--The Secretary shall 
        establish by regulation before the beginning of 1996 and each 
        succeeding year a fee schedule for home infusion drug therapy 
        services for which payment is made under this part. A fee 
        schedule established under this subsection shall be on a per 
        diem basis.''.
            (3) Prohibition on certain referrals.--Section 1877(h)(6) 
        of such Act (42 U.S.C. 1395nn(h)(6)), as amended by section 
        13562(a) of OBRA-1993, is amended by adding at the end the 
        following:
                    ``(L) Home infusion drug therapy services.''.
    (d) Certification.--Section 1835(a)(2) of such Act (42 U.S.C. 
1395n(a)(2)) is amended--
            (1) by striking ``and'' at the end of subparagraph (E),
            (2) by striking the period at the end of subparagraph (F) 
        and inserting ``; and'', and
            (3) by inserting after subparagraph (F) the following:
                    ``(G) in the case of home infusion drug therapy 
                services, (i) such services are or were required 
                because the individual needed such services for the 
                administration of a covered home infusion drug, (ii) a 
                plan for furnishing such services has been established 
                and is reviewed periodically by a physician, and (iii) 
                such services are or were furnished while the 
                individual is or was under the care of a physician.''.
    (e) Certification of Home infusion Drug Therapy Providers; 
Intermediate Sanctions for Noncompliance.--
            (1) Treatment as provider of services.--Section 1861(u) of 
        such Act (42 U.S.C. 1395x(u)) is amended by inserting ``home 
        infusion drug therapy provider,'' after ``hospice program,''.
            (2) Consultation with state agencies and other 
        organizations.--Section 1863 of such Act (42 U.S.C. 1395z) is 
        amended by striking ``and (dd)(2)'' and inserting ``(dd)(2), 
        and (ll)(3)''.
            (3) Use of state agencies in determining compliance.--
        Section 1864(a) of such Act (42 U.S.C. 1395aa(a)) is amended--
                    (A) in the first sentence, by striking ``an agency 
                is a hospice program'' and inserting ``an agency or 
                entity is a hospice program or a home infusion drug 
                therapy provider,''; and
                    (B) in the second sentence--
                            (i) by striking ``institution or agency'' 
                        and inserting ``institution, agency, or 
                        entity'', and
                            (ii) by striking ``or hospice program'' and 
                        inserting ``hospice program, or home infusion 
                        drug therapy provider''.
            (4) Application of intermediate sanctions.--Section 1846 of 
        such Act (42 U.S.C. 1395w-2) is amended--
                    (A) in the heading, by adding ``and for qualified 
                home infusion drug therapy providers'' at the end,
                    (B) in subsection (a), by inserting ``or that a 
                qualified home infusion drug therapy provider that is 
                certified for participation under this title no longer 
                substantially meets the requirements of section 
                1861(ll)(3)'' after ``under this part'', and
                    (C) in subsection (b)(2)(A)(iv), by inserting ``or 
                home infusion drug therapy services'' after ``clinical 
                diagnostic laboratory tests''.
    (f) Use of Regional Intermediaries in Administration of Benefit.--
Section 1816 of such Act (42 U.S.C. 1395h) is amended by adding at the 
end the following new subsection:
    ``(k) With respect to carrying out functions relating to payment 
for home infusion drug therapy services and covered home infusion 
drugs, the Secretary may enter into contracts with agencies or 
organizations under this section to perform such functions on a 
regional basis.''.
    (g) Conforming Amendments Relating to Coverage of Enteral and 
Parenteral Nutrients, Supplies, and Equipment.--(1) Section 
1834(h)(4)(B) of such Act (42 U.S.C. 1395m(h)(4)(B)) is amended by 
striking ``, except that'' and all that follows through ``equipment''.
    (2) Section 1861(s)(8) of such Act (42 U.S.C. 1395x(s)(8)) is 
amended by inserting after ``dental'' the following: ``devices or 
enteral and parenteral nutrients, supplies, and equipment''.

SEC. 2006. CONFORMING AMENDMENTS TO MEDICAID PROGRAM.

    (a) In General.--
            (1) Requiring medicare rebate as condition of coverage.--
        The first sentence of section 1927(a)(1) of the Social Security 
        Act (42 U.S.C. 1396r-8(a)(1)) is amended--
                    (A) in the first sentence of paragraph (1), by 
                striking ``and paragraph (6)'' and inserting ``, 
                paragraph (6), and (for calendar quarters beginning on 
                or after January 1, 1996) paragraph (7)''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(7) Requirement relating to rebate agreements for covered 
        outpatient drugs under medicare program.--A manufacturer meets 
        the requirements of this paragraph for quarters in a year if 
        the manufacturer has in effect an agreement with the Secretary 
        under section 1850 for providing rebates for covered outpatient 
        drugs furnished to individuals under title XVIII during the 
        year.''.
            (2) Non-duplication of rebates.--Section 1927(b)(1) of such 
        Act (42 U.S.C. 1396r-8(b)(1)) is amended--
                    (A) by redesignating subparagraph (B) as 
                subparagraph (C), and
                    (B) by inserting after subparagraph (A) the 
                following new subparagraph:
                    ``(B) Non-duplication of medicare rebate.--Covered 
                drugs furnished to an individual eligible for benefits 
                under part B of title XVIII and enrolled in a State 
                plan under this title shall not be included in the 
                determination of units of covered outpatient drugs 
                subject to rebate under this section.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to quarters beginning on or after January 1, 1996.

SEC. 2007. EFFECTIVE DATE.

    Except as otherwise provided, the amendments made by this subtitle 
shall apply to items and services furnished on or after January 1, 
1996.

                                                   Title II, Subtitle B

                       Subtitle B--Long-Term Care

   PART 1--STATE PROGRAMS FOR HOME AND COMMUNITY-BASED SERVICES FOR 
                     INDIVIDUALS WITH DISABILITIES

SEC. 2101. STATE PROGRAMS FOR HOME AND COMMUNITY-BASED SERVICES FOR 
              INDIVIDUALS WITH DISABILITIES.

    (a) In General.--Each State that has a plan for the home and 
community-based services to individuals with disabilities submitted to 
and approved by the Secretary under section 2102(b) is entitled to 
payment in accordance with section 2108.
    (b) No Individual Entitlement Established.--Nothing in this part 
shall be construed to create an entitlement for individuals or a 
requirement that a State with such an approved plan expend the entire 
amount of funds to which it is entitled in any year.

SEC. 2102. STATE PLANS.

    (a) Plan Requirements.--In order to be approved under subsection 
(b), a State plan for home and community-based services for individuals 
with disabilities must meet the following requirements:
            (1) Eligibility.--
                    (A) In general.--Within the amounts provided by the 
                State (and under section 2108) for such plan, the plan 
                shall provide that services under the plan will be 
                available to individuals with disabilities (as defined 
                in section 2103(a)) in the State.
                    (B) Initial screening.--The plan shall provide a 
                process for the initial screening of individuals who 
                appear to have some reasonable likelihood of being an 
                individual with disabilities.
                    (C) Restrictions.--The plan may not limit the 
                eligibility of individuals with disabilities based on--
                            (i) income,
                            (ii) age,
                            (iii) geography,
                            (iv) nature, severity, or category of 
                        disability,
                            (v) residential setting (other than an 
                        institutional setting), or
                            (vi) other grounds specified by the 
                        Secretary.
                    (D) Maintenance of effort.--The plan must provide 
                assurances that, in the case of an individual receiving 
                medical assistance for home and community-based 
                services under the State medicaid plan as of the date 
                of the enactment of this Act, the State will continue 
                to make available (either under this plan, under the 
                State medicaid plan, or otherwise) to such individual 
                an appropriate level of assistance for home and 
                community-based services, taking into account the level 
                of assistance provided as of such date and the 
                individual's need for home and community-based 
                services.
            (2) Services.--
                    (A) Specification.--Consistent with section 2104, 
                the plan shall specify--
                            (i) the services made available under the 
                        plan,
                            (ii) the extent and manner in which such 
                        services are allocated and made available to 
                        individuals with disabilities, and
                            (iii) the manner in which services under 
                        the plan are coordinated with each other and 
                        with health and long-term care services 
                        available outside the plan for individuals with 
                        disabilities.
                    (B) Allocation.--The State plan--
                            (i) shall specify how it will allocate 
                        services under the plan, during and after the 
                        7-fiscal-year phase-in period beginning with 
                        fiscal year 1996, among covered individuals 
                        with disabilities, and
                            (ii) may not allocate such services based 
                        on the income or other financial resources of 
                        such individuals.
                    (C) Limitation on licensure or certification.--The 
                State may not subject consumer-directed providers of 
                personal assistance services to licensure, 
                certification, or other requirements which the 
                Secretary finds not to be necessary for the health and 
                safety of individuals with disabilities.
                    (D) Consumer choice.--To the extent possible, the 
                choice of an individual with disabilities (and that 
                individual's family) regarding which covered services 
                to receive and the providers who will provide such 
                services shall be followed.
                    (E) Requirement to serve low-income individuals.--
                The plan shall assure that--
                            (i) the proportion of the population of 
                        low-income individuals with disabilities in the 
                        State that represents individuals with 
                        disabilities who are provided home and 
                        community-based services either under the plan, 
                        under the State medicaid plan, or under both, 
                        is not less than
                            (ii) the proportion of the population of 
                        the State that represents individuals who are 
                        low-income individuals.
            (3) Cost sharing.--The plan shall impose cost sharing with 
        respect to covered services only in accordance with section 
        2105.
            (4) Types of providers and requirements for 
        participation.--The plan shall specify--
                    (A) the types of service providers eligible to 
                participate in the program under the plan, which shall 
                include consumer-directed providers, and
                    (B) any requirements for participation applicable 
                to each type of service provider.
            (5) Budget.--The plan shall specify how the State will 
        manage Federal and State funds available under the plan for 
        each fiscal year during the period beginning with fiscal year 
        1996 and ending with fiscal year 2003 and for each 5-fiscal-
        year periods thereafter to serve all categories of individuals 
        with disabilities and meet the requirements of this subsection. 
        If the Secretary makes an adjustment under section 
        2109(a)(5)(C) for a year, each State shall update the 
        specifications under this paragraph to reflect the impact of 
        such an adjustment.
            (6) Provider reimbursement.--
                    (A) Payment methods.--The plan shall specify the 
                payment methods to be used to reimburse providers for 
                services furnished under the plan. Such methods may 
                include retrospective reimbursement on a fee-for-
                service basis, prepayment on a capitation basis, 
                payment by cash or vouchers to individuals with 
                disabilities, or any combination of these methods. In 
                the case of the use of cash or vouchers, the plan shall 
                specify how the plan will assure compliance with 
                applicable employment tax provisions.
                    (B) Payment rates.--The plan shall specify the 
                methods and criteria to be used to set payment rates 
                for services furnished under the plan (including rates 
                for cash payments or vouchers to individuals with 
                disabilities).
                    (C) Plan payment as payment in full.--The plan 
                shall restrict payment under the plan for covered 
                services to those providers that agree to accept the 
                payment under the plan (at the rates established 
                pursuant to subparagraph (B)) and any cost sharing 
                permitted or provided for under section 2105 as payment 
                in full for services furnished under the plan.
            (7) Quality assurance and safeguards.--The State plan shall 
        provide for quality assurance and safeguards for applicants and 
        beneficiaries in accordance with section 2106.
            (8) Advisory group.--The State plan shall--
                    (A) assure the establishment and maintenance of an 
                advisory group under section 2107(b), and
                    (B) include the documentation prepared by the group 
                under section 2107(b)(4).
            (9) Administration.--
                    (A) State agency.--The plan shall designate a State 
                agency or agencies to administer (or to supervise the 
                administration of) the plan.
                    (B) Administrative expenditures.--Effective 
                beginning with fiscal year 2003, the plan shall contain 
                assurances that not more than 10 percent of 
                expenditures under the plan for all quarters in any 
                fiscal year shall be for administrative costs.
                    (C) Coordination.--The plan shall specify how the 
                plan--
                            (i) will be integrated with the State 
                        medicaid plan, titles V and XX of the Social 
                        Security Act, programs under the Older 
                        Americans Act of 1965, programs under the 
                        Developmental Disabilities Assistance and Bill 
                        of Rights Act, the Individuals with 
                        Disabilities Education Act, and any other 
                        Federal or State programs that provide services 
                        or assistance targeted to individuals with 
                        disabilities, and
                            (ii) will be coordinated with health plans.
            (10) Reports and information to secretary; audits.--The 
        plan shall provide that the State will furnish to the 
        Secretary--
                    (A) such reports, and will cooperate with such 
                audits, as the Secretary determines are needed 
                concerning the State's administration of its plan under 
                this part, including the processing of claims under the 
                plan, and
                    (B) such data and information as the Secretary may 
                require in order to carry out the Secretary's 
                responsibilities.
            (11) Use of state funds for matching.--The plan shall 
        provide assurances that Federal funds will not be used to 
        provide for the State share of expenditures under this part.
            (12) Health care worker redeployment requirement.--The plan 
        provides for compliance with the requirement of section 
        3074(a).
    (b) Approval of Plans.--The Secretary shall approve a plan 
submitted by a State if the Secretary determines that the plan--
            (1) was developed by the State after consultation with 
        individuals with disabilities and representatives of groups of 
        such individuals, and
            (2) meets the requirements of subsection (a).
The approval of such a plan shall take effect as of the first day of 
the first fiscal year beginning after the date of such approval (except 
that any approval made before January 1, 1996, shall be effective as of 
January 1, 1996). In order to budget funds allotted under this part, 
the Secretary may establish a deadline for the submission of such a 
plan before the beginning of a fiscal year as a condition of its 
approval effective with that fiscal year.
    (c) Monitoring.--The Secretary shall monitor the compliance of 
State plans with the eligibility requirements of section 2103 and may 
monitor the compliance of such plans with other requirements of this 
part.
    (d) Regulations.--The Secretary shall issue such regulations as may 
be appropriate to carry out this part on a timely basis.

SEC. 2103. INDIVIDUALS WITH DISABILITIES DEFINED.

    (a) In General.--In this part, the term ``individual with 
disabilities'' means any individual within one or more of the following 
4 categories of individuals:
            (1) Individuals requiring help with activities of daily 
        living.--An individual of any age who--
                    (A) requires hands-on or standby assistance, 
                supervision, or cueing (as defined in regulations) to 
                perform three or more activities of daily living (as 
                defined in subsection (c)), and
                    (B) is expected to require such assistance, 
                supervision, or cueing over a period of at least 100 
                days.
            (2) Individuals with severe cognitive or mental 
        impairment.--An individual of any age--
                    (A) whose score, on a standard mental status 
                protocol (or protocols) appropriate for measuring the 
                individual's particular condition specified by the 
                Secretary, indicates either severe cognitive impairment 
                or severe mental impairment, or both;
                    (B) who--
                            (i) requires hands-on or standby 
                        assistance, supervision, or cueing with one or 
                        more activities of daily living,
                            (ii) requires hands-on or standby 
                        assistance, supervision, or cueing with at 
                        least such instrumental activity (or 
                        activities) of daily living related to 
                        cognitive or mental impairment as the Secretary 
                        specifies, or
                            (iii) displays symptoms of one or more 
                        serious behavioral problems (that is on a list 
                        of such problems specified by the Secretary) 
                        which create a need for supervision to prevent 
                        harm to self or others; and
                    (C) whose is expected to meet the requirements of 
                subparagraphs (A) and (B) over a period of at least 100 
                days.
            (3) Individuals with severe or profound mental 
        retardation.--An individual of any age who has severe or 
        profound mental retardation (as determined according to a 
        protocol specified by the Secretary).
            (4) Severely disabled children.--An individual under 6 
        years of age who--
                    (A) has a severe disability or chronic medical 
                condition,
                    (B) but for receiving personal assistance services 
                or any of the services described in section 2104(d)(1), 
                would require institutionalization in a hospital, 
                nursing facility, or intermediate care facility for the 
                mentally retarded, and
                    (C) is expected to have such disability or 
                condition and require such services over a period of at 
                least 100 days.
    (b) Determination.--
            (1) In general.--The determination of whether an individual 
        is an individual with disabilities shall be made, by persons or 
        entities specified under the State plan, using a uniform 
        protocol consisting of an initial screening and assessment 
        specified by the Secretary. A State may collect additional 
        information, at the time of obtaining information to make such 
        determination, in order to provide for the assessment and plan 
        described in section 2104(b) or for other purposes. The State 
        shall establish a fair hearing process for appeals of such 
        determinations.
            (2) Periodic reassessment.--The determination that an 
        individual is an individual with disabilities shall be 
        considered to be effective under the State plan for a period of 
        not more than 12 months (or for such longer period in such 
        cases as a significant change in an individual's condition that 
        may affect such determination is unlikely). A reassessment 
        shall be made if there is a significant change in an 
        individual's condition that may affect such determination.
    (c) Activity of Daily Living Defined.--In this part, the term 
``activity of daily living'' means any of the following: eating, 
toileting, dressing, bathing, and transferring.

SEC. 2104. HOME AND COMMUNITY-BASED SERVICES COVERED UNDER STATE PLAN.

    (a) Specification.--
            (1) In general.--Subject to the succeeding provisions of 
        this section, the State plan under this part shall specify--
                    (A) the home and community-based services available 
                under the plan to individuals with disabilities (or to 
                such categories of such individuals), and
                    (B) any limits with respect to such services.
            (2) Flexibility in meeting individual needs.--The services 
        shall be specified in a manner that permits sufficient 
        flexibility for providers to meet the needs of individuals with 
        disabilities in a cost effective manner. Subject to subsection 
        (e)(1)(B), such services may be delivered in an individual's 
        home, a range of community residential arrangements, or outside 
        the home.
    (b) Requirement for Needs Assessment and Plan of Care.--
            (1) In general.--The State plan shall provide for home and 
        community-based services to an individual with disabilities 
        only if--
                    (A) a comprehensive assessment of the individual's 
                need for home and community-based services (regardless 
                of whether all needed services are available under the 
                plan) has been made,
                    (B) an individualized plan of care based on such 
                assessment is developed, and
                    (C) such services are provided consistent with such 
                plan of care.
            (2) Involvement of individuals.--The individualized plan of 
        care under paragraph (1)(B) for an individual with disabilities 
        shall--
                    (A) be developed by qualified individuals 
                (specified under the State plan),
                    (B) be developed and implemented in close 
                consultation with the individual and the individual's 
                family,
                    (C) be approved by the individual (or the 
                individual's representative), and
                    (D) be reviewed and updated not less often than 
                every 6 months.
            (3) Plan of care.--The plan of care under paragraph (1)(B) 
        shall--
                    (A) specify which services specified under the 
                individual plan will be provided under the State plan 
                under this part,
                    (B) identify (to the extent possible) how the 
                individual will be provided any services specified 
                under the plan of care and not provided under the State 
                plan, and
                    (C) specify how the provision of services to the 
                individual under the plan will be coordinated with the 
                provision of other health care services to the 
                individual.
        The State shall make reasonable efforts to identify and arrange 
        for services described in subparagraph (B). Nothing in this 
        subsection shall be construed as requiring a State (under the 
        State plan or otherwise) to provide all the services specified 
        in such a plan.
    (c) Mandatory Coverage of Personal Assistance Services.--The State 
plan shall include, in the array of services made available to each 
category of individuals with disabilities, both agency-administered and 
consumer-directed personal assistance services (as defined in 
subsection (g)).
    (d) Additional Services.--
            (1) Types of services.--Subject to subsection (e), services 
        available under a State plan under this part shall include any 
        (or all) of the following:
                    (A) Case management.
                    (B) Homemaker and chore assistance.
                    (C) Home modifications.
                    (D) Respite services.
                    (E) Assistive devices.
                    (F) Adult day services.
                    (G) Habilitation and rehabilitation.
                    (H) Supported employment.
                    (I) Home health services.
                    (J) Any other care or assistive services (approved 
                by the Secretary) that the State determines will help 
                individuals with disabilities to remain in their homes 
                and communities.
            (2) Criteria for selection of services.--The State plan 
        shall specify--
                    (A) the methods and standards used to select the 
                types, and the amount, duration, and scope, of services 
                to be covered under the plan and to be available to 
                each category of individuals with disabilities, and
                    (B) how the types, and the amount, duration, and 
                scope, of services specified meet the needs of 
                individuals within each of the 4 categories of 
                individuals with disabilities.
    (e) Exclusions and Limitations.--
            (1) In general.--A State plan may not provide for coverage 
        of--
                    (A) room and board,
                    (B) services furnished in a hospital, nursing 
                facility, intermediate care facility for the mentally 
                retarded, or other institutional setting specified by 
                the Secretary, or
                    (C) items and services to the extent coverage is 
                provided for the individual under a health plan or the 
                medicare program.
            (2) Taking into account informal care.--A State plan may 
        take into account, in determining the amount and array of 
        services made available to covered individuals with disability, 
        the availability of informal care.
    (f) Payment for Services.--A State plan may provide for the use 
of--
            (1) vouchers,
            (2) cash payments directly to individuals with 
        disabilities,
            (3) capitation payments to health plans, and
            (4) payment to providers,
to pay for covered services.
    (g) Personal Assistance Services.--
            (1) In general.--In this section, the term ``personal 
        assistance services'' means those services specified under the 
        State plan as personal assistance services and shall include at 
        least hands-on and standby assistance, supervision, and cueing 
        with activities of daily living, whether agency-administered or 
        consumer-directed (as defined in paragraph (2)).
            (2) Consumer-directed; agency-administered.--In this part:
                    (A) The term ``consumer-directed'' means, with 
                reference to personal assistance services or the 
                provider of such services, services that are provided 
                by an individual who is selected and managed (and, at 
                the individual's option, trained) by the individual 
                receiving the services.
                    (B) The term ``agency-administered'' means, with 
                respect to such services, services that are not 
                consumer-directed.

SEC. 2105. COST SHARING.

    (a) No or Nominal Cost Sharing for Poorest.--The State plan may not 
impose any cost sharing (other than nominal cost sharing) for 
individuals with income (as determined under subsection (c)) less than 
150 percent of the official poverty line (referred to in section 
1902(25)(A)) applicable to a family of the size involved (determined 
without regard to section 1902(25)(B)).
    (b) Sliding Scale for Remainder.--The State plan shall impose cost 
sharing in the form of coinsurance (based on the amount paid under the 
State plan for a service)--
            (1) at a rate of 10 percent for individuals with 
        disabilities with income not less than 150 percent, and less 
        than 200 percent, of such official poverty line (as so 
        applied);
            (2) at a rate of 20 percent for such individuals with 
        income not less than 200 percent, and less than 250 percent, of 
        such official poverty line (as so applied); and
            (3) at a rate of 25 percent for such individuals with 
        income equal to at least 250 percent of such official poverty 
        line (as so applied).
    (c) Determination of Income for Purposes of Cost Sharing.--The 
State plan shall specify the process to be used to determine the income 
of an individual with disabilities for purposes of this section. Such 
process shall be consistent with standards specified by the Secretary.

SEC. 2106. QUALITY ASSURANCE AND SAFEGUARDS.

    (a) Quality Assurance.--The State plan shall specify how the State 
will ensure and monitor the quality of services, including--
            (1) safeguarding the health and safety of individuals with 
        disabilities,
            (2) the minimum standards for agency providers and how such 
        standards will be enforced,
            (3) the minimum competency requirements for agency provider 
        employees who provide direct services under this part and how 
        the competency of such employees will be enforced,
            (4) obtaining meaningful consumer input, including consumer 
        surveys that measure the extent to which participants receive 
        the services described in the plan of care and participant 
        satisfaction with such services,
            (5) participation in quality assurance activities, and
            (6) specifying the role of the long-term care ombudsman 
        (under the Older Americans Act of 1965) and the Protection and 
        Advocacy Agency (under the Developmental Disabilities 
        Assistance and Bill of Rights Act) in assuring quality of 
        services and protecting the rights of individuals with 
        disabilities.
    (b) Safeguards.--
            (1) Confidentiality.--The State plan shall provide 
        safeguards which restrict the use or disclosure of information 
        concerning applicants and beneficiaries to purposes directly 
        connected with the administration of the plan (including 
        performance reviews under section 2602).
            (2) Safeguards against abuse.--The State plans shall 
        provide safeguards against physical, emotional, or financial 
        abuse or exploitation (specifically including appropriate 
        safeguards in cases where payment for program benefits is made 
        by cash payments or vouchers given directly to individuals with 
        disabilities).

SEC. 2107. ADVISORY GROUPS.

    (a) Federal Advisory Group.--
            (1) Establishment.--The Secretary shall establish an 
        advisory group, to advise the Secretary and States on all 
        aspects of the program under this part.
            (2) Composition.--The group shall be composed of 
        individuals with disabilities and their representatives, 
        providers, Federal and State officials, and local community 
        implementing agencies. A majority of its members shall be 
        individuals with disabilities and their representatives.
    (b) State Advisory Groups.--
            (1) In general.--Each State plan shall provide for the 
        establishment and maintenance of an advisory group to advise 
        the State on all aspects of the State plan under this part.
            (2) Composition.--Members of each advisory group shall be 
        appointed by the Governor (or other chief executive officer of 
        the State) and shall include individuals with disabilities and 
        their representatives, providers, State officials, and local 
        community implementing agencies. A majority of its members 
        shall be individuals with disabilities and their 
        representatives.
            (3) Selection of members.--Each State shall establish a 
        process whereby all residents of the State, including 
        individuals with disabilities and their representatives, shall 
        be given the opportunity to nominate members to the advisory 
        group.
            (4) Particular concerns.--Each advisory group shall--
                    (A) before the State plan is developed, advise the 
                State on guiding principles and values, policy 
                directions, and specific components of the plan,
                    (B) meet regularly with State officials involved in 
                developing the plan, during the development phase, to 
                review and comment on all aspects of the plan,
                    (C) participate in the public hearings to help 
                assure that public comments are addressed to the extent 
                practicable,
                    (D) document any differences between the group's 
                recommendations and the plan,
                    (E) document specifically the degree to which the 
                plan is consumer-directed, and
                    (F) meet regularly with officials of the designated 
                State agency (or agencies) to provide advice on all 
                aspects of implementation and evaluation of the plan.

SEC. 2108. PAYMENTS TO STATES.

    (a) In General.--Subject to section 2102(a)(9)(B) (relating to 
limitation on payment for administrative costs), the Secretary, in 
accordance with the Cash Management Improvement Act, shall authorize 
payment to each State with a plan approved under this part, for each 
quarter (beginning on or after January 1, 1996), from its allotment 
under section 2109(b), an amount equal to--
            (1) the Federal matching percentage (as defined in 
        subsection (b)) of amount demonstrated by State claims to have 
        been expended during the quarter for home and community-based 
        services under the plan for individuals with disabilities; plus
            (2) an amount equal to 90 percent of amount expended during 
        the quarter under the plan for activities (including 
        preliminary screening) relating to determination of eligibility 
        and performance of needs assessment; plus
            (3) an amount equal to 90 percent (or, beginning with 
        quarters in fiscal year 2003, 75 percent) of the amount 
        expended during the quarter for the design, development, and 
        installation of mechanical claims processing systems and for 
        information retrieval; plus
            (4) an amount equal to 50 percent of the remainder of the 
        amounts expended during the quarter as found necessary by the 
        Secretary for the proper and efficient administration of the 
        State plan.
    (b) Federal Matching Percentage.--
            (1) In general.--In subsection (a), the term ``Federal 
        matching percentage'' means, with respect to a State, the 
        reference percentage specified in paragraph (2) increased by 28 
        percentage points, except that the Federal matching percentage 
        shall in no case be less than 78 percent or more than 95 
        percent.
            (2) Reference percentage.--
                    (A) In general.--The reference percentage specified 
                in this paragraph is 100 percent less the State 
                percentage specified in subparagraph (B), except that--
                            (i) the percentage under this paragraph 
                        shall in no case be less than 50 percent or 
                        more than 83 percent, and
                            (ii) the percentage for Puerto Rico, the 
                        Virgin Islands, Guam, the Northern Mariana 
                        Islands, and American Samoa shall be 50 
                        percent.
                    (B) State percentage.--The State percentage 
                specified in this subparagraph is that percentage which 
                bears the same ratio to 45 percent as the square of the 
                per capita income of such State bears to the square of 
                the per capita income of the continental United States 
                (including Alaska) and Hawaii.
    (c) Payments on Estimates with Retrospective Adjustments.--The 
method of computing and making payments under this section shall be as 
follows:
            (1) The Secretary shall, prior to the beginning of each 
        quarter, estimate the amount to be paid to the State under 
        subsection (a) for such quarter, based on a report filed by the 
        State containing its estimate of the total sum to be expended 
        in such quarter, and such other information as the Secretary 
        may find necessary.
            (2) From the allotment available therefore, the Secretary 
        shall provide for payment of the amount so estimated, reduced 
        or increased, as the case may be, by any sum (not previously 
        adjusted under this section) by which the Secretary finds that 
        the estimate of the amount to be paid the State for any prior 
        period under this section was greater or less than the amount 
        which should have been paid.
    (d) Application of Rules Regarding Limitations on Provider-Related 
Donations and Health Care Related Taxes.--The provisions of section 
1903(w) of the Social Security Act shall apply to payments to States 
under this section in the same manner as they apply to payments to 
States under section 1903(a) of such Act .

SEC. 2109. TOTAL FEDERAL BUDGET; ALLOTMENTS TO STATES.

    (a) Total Federal Budget.--
            (1) Fiscal years 1996 through 2003.--Subject to paragraph 
        (5)(C), for purposes of this part, the total Federal budget for 
        State plans under this part for each of fiscal years 1996 
        through 2003 is the following:
                    (A) For fiscal year 1996, $4.5 billion.
                    (B) For fiscal year 1997, $7.8 billion.
                    (C) For fiscal year 1998, $11.0 billion.
                    (D) For fiscal year 1999, $14.7 billion.
                    (E) For fiscal year 2000, $18.7 billion.
                    (F) For fiscal year 2001, $26.7 billion.
                    (G) For fiscal year 2002, $35.5 billion.
                    (H) For fiscal year 2003, $38.3 billion.
            (2) Subsequent fiscal years.--For purposes of this part, 
        the total Federal budget for State plans under this part for 
        each fiscal year after fiscal year 2003 is the total Federal 
        budget under this subsection for the preceding fiscal year 
        multiplied by--
                    (A) a factor (described in paragraph (3)) 
                reflecting the change in the CPI for the fiscal year, 
                and
                    (B) a factor (described in paragraph (4)) 
                reflecting the change in the number of individuals with 
                disabilities for the fiscal year.
            (3) CPI increase factor.--For purposes of paragraph (2)(A), 
        the factor described in this paragraph for a fiscal year is the 
        ratio of--
                    (A) the annual average index of the consumer price 
                index for the preceding fiscal year, to--
                    (B) such index, as so measured, for the second 
                preceding fiscal year.
            (4) Disabled population factor.--For purposes of paragraph 
        (2)(B), the factor described in this paragraph for a fiscal 
        year is 100 percent plus (or minus) the percentage increase (or 
        decrease) change in the disabled population of the United 
        States (as determined for purposes of the most recent update 
        under subsection (b)(3)(D)).
            (5) Additional funds due to medicaid offsets.--
                    (A) In general.--Each participating State must 
                provide the Secretary with information concerning 
                offsets and reductions in the medicaid program 
                resulting from home and community-based services 
                provided disabled individuals under this part, that 
                would have been paid for such individuals under the 
                State medicaid plan but for the provision of similar 
                services under the program under this part. At the time 
                a State first submits its plan under this title and 
                before each subsequent fiscal year (through fiscal year 
                2003), the State also must provide the Secretary with 
                such budgetary information (for each fiscal year 
                through fiscal year 2003), as the Secretary determines 
                to be necessary to carry out this paragraph.
                    (B) Reports.--Each State with a program under this 
                part shall submit such reports to the Secretary as the 
                Secretary may require in order to monitor compliance 
                with subparagraph (A).
                    (C) Adjustments to federal budget.--
                            (i) In general.--For each fiscal year 
                        (beginning with fiscal year 1996 and ending 
                        with fiscal year 2003) and based on a review of 
                        information submitted under subparagraph (A), 
                        the Secretary shall determine the amount by 
                        which the total Federal budget under subsection 
                        (a) will increase. The amount of such increase 
                        for a fiscal year shall be limited to the 
                        reduction in Federal expenditures of medical 
                        assistance (as determined by Secretary) that 
                        would have been made under title XIX of the 
                        Social Security Act for home and community 
                        based services for disabled individuals but for 
                        the provision of similar services under the 
                        program under this part.
                            (ii) Annual publication.--The Secretary 
                        shall publish before the beginning of such 
                        fiscal year, the revised total Federal budget 
                        under this subsection for such fiscal year (and 
                        succeeding fiscal years before fiscal year 
                        2003).
                    (D) No duplicate payment.--No payment may be made 
                to a State under this section for any services to the 
                extent that the State received payment for such 
                services under section 1903(a) of the Social Security 
                Act.
                    (E) Construction.--Nothing in this subsection shall 
                be construed as requiring States to determine 
                eligibility for medical assistance under the State 
                medicaid plan on behalf of individuals receiving 
                assistance under this part.
    (b) Allotments to States.--
            (1) In general.--The Secretary shall allot to each State 
        for each fiscal year an amount that bears the same ratio to the 
        total Federal budget for the fiscal year (specified under 
        paragraph (1) or (2) of subsection (a)) as the State allotment 
        factor (under paragraph (2) for the State for the fiscal year) 
        bears to the sum of such factors for all States for that fiscal 
        year.
            (2) State allotment factor.--
                    (A) In general.--For each State for each fiscal 
                year, the Secretary shall compute a State allotment 
                factor equal to the sum of--
                            (i) the base allotment factor (specified in 
                        subparagraph (B)), and
                            (ii) the low income allotment factor 
                        (specified in subparagraph (C)),
                for the State for the fiscal year.
                    (B) Base allotment factor.--The base allotment 
                factor, specified in this subparagraph, for a State for 
                a fiscal year is equal to the product of the following:
                            (i) Number of individuals with 
                        disabilities.--The number of individuals with 
                        disabilities in the State (determined under 
                        paragraph (3)) for the fiscal year.
                            (ii) 80 percent of the national per capita 
                        budget.--80 percent of the national average per 
                        capita budget amount (determined under 
                        paragraph (4)) for the fiscal year.
                            (iii) Wage adjustment factor.--The wage 
                        adjustment factor (determined under paragraph 
                        (5)) for the State for the fiscal year.
                            (iv) Federal matching rate.--The Federal 
                        matching rate (determined under section 
                        2108(b)) for the fiscal year.
                    (C) Low income allotment factor.--The low income 
                allotment factor, specified in this subparagraph, for a 
                State for a fiscal year is equal to the product of the 
                following:
                            (i) Number of individuals with 
                        disabilities.--The number of individuals with 
                        disabilities in the State (determined under 
                        paragraph (3)) for the fiscal year.
                            (ii) 10 percent of the national per capita 
                        budget.--10 percent of the national average per 
                        capita budget amount (determined under 
                        paragraph (4)) for the fiscal year.
                            (iii) Wage adjustment factor.--The wage 
                        adjustment factor (determined under paragraph 
                        (5)) for the State for the fiscal year.
                            (iv) Federal matching rate.--The Federal 
                        matching rate (determined under section 
                        2108(b)) for the fiscal year.
                            (v) Low income index.--The low income index 
                        (determined under paragraph (6)) for the State 
                        for the preceding fiscal year.
            (3) Number of individuals with disabilities.--The number of 
        individuals with disabilities in a State for a fiscal year 
        shall be determined as follows:
                    (A) Base.--The Secretary shall determine the number 
                of individuals in the State by age, sex, and income 
                category, based on the 1990 decennial census, adjusted 
                (as appropriate) by the March 1994 current population 
                survey.
                    (B) Disability prevalence level by population 
                category.--The Secretary shall determine, for each such 
                age, sex, and income category, the national average 
                proportion of the population of such category that 
                represents individuals with disabilities. The Secretary 
                may conduct periodic surveys in order to determine such 
                proportions.
                    (C) Base disabled population in a state.--The 
                number of individuals with disabilities in a State in 
                1994 is equal to the sum of the products, for such each 
                age, sex, and income category, of--
                            (i) the population of individuals in the 
                        State in the category (determined under 
                        subparagraph (A)), and
                            (ii) the national average proportion for 
                        such category (determined under subparagraph 
                        (B)).
                    (D) Update.--The Secretary shall determine the 
                number of individuals with disabilities in a State in a 
                fiscal year equal to the number determined under 
                subparagraph (C) for the State increased (or decreased) 
                by the percentage increase (or decrease) in the 
                disabled population of the State as determined under 
                the current population survey from 1994 to the year 
                before the fiscal year involved.
            (4) National per capita budget amount.--The national 
        average per capita budget amount, for a fiscal year, is--
                    (A) the total Federal budget specified under 
                subsection (a) for the fiscal year; divided by
                    (B) the sum, for the fiscal year, of the numbers of 
                individuals with disabilities (determined under 
                paragraph (3)) for all the States for the fiscal year.
            (5) Wage adjustment factor.--The wage adjustment factor, 
        for a State for a fiscal year, is equal to the ratio of--
                    (A) the average hourly wages for service workers 
                (other than household or protective services) in the 
                State, to
                    (B) the national average hourly wages for service 
                workers (other than household or protective services).
        The hourly wages shall be determined under this paragraph based 
        on data from the most recent decennial census for which such 
        data are available.
            (6) Low income index.--The low income index for each State 
        for a fiscal year is the ratio, determined for the preceding 
        fiscal year, of--
                    (A) the percentage of the State's population that 
                has income below 150 percent of the poverty level, to
                    (B) the percentage of the population of the United 
                States that has income below 150 percent of the poverty 
                level.
        Such percentages shall be based on data from the most recent 
        decennial census for which such data are available, adjusted by 
        data from the most recent current population survey as 
        determined appropriate by the Secretary.
    (c) State Entitlement.--This part constitutes budget authority in 
advance of appropriations Acts, and represents the obligation of the 
Federal Government to provide for the payment to States of amounts 
described in subsection (a).

               PART 2--MEDICAID NURSING HOME IMPROVEMENTS

SEC. 2201. REFERENCE TO AMENDMENTS.

    For amendments to the medicaid program under title XIX of the 
Social Security Act to improve nursing home benefits under such 
program, see part 2 of subtitle C of title IV.

                PART 3--PRIVATE LONG-TERM CARE INSURANCE

                     Subpart A--General Provisions

SEC. 2301. FEDERAL REGULATIONS; PRIOR APPLICATION OR CERTAIN 
              REQUIREMENTS.

    (a) In General.--The Secretary, with the advice and assistance of 
the Advisory Council, as appropriate, shall promulgate regulations as 
necessary to implement the provisions of this part, in accordance with 
the timetable specified in subsection (b).
    (b) Timetable for Publication of Regulations.--
            (1) Federal register notice.--Within 120 days after the 
        date a majority of the members are first appointed to the 
        Advisory Council pursuant to section 2302, the Secretary shall 
        publish in the Federal Register a notice setting forth the 
        projected timetable for promulgation of regulations required 
        under this part. Such timetable shall indicate which 
        regulations are proposed to be published by the end of the 
        first, second, and third years after appointment of the 
        Advisory Council.
            (2) Final deadline.--All regulations required under this 
        part shall be published by the end of the third year after 
        appointment of the Advisory Council.
    (c) Provisions Effective Without Regard to Promulgation of 
Regulations.--
            (1) In general.--Notwithstanding any other provision of 
        this part, insurers shall be required, not later than 6 months 
        after the enactment of this Act, regardless of whether final 
        implementing regulations have been promulgated by the 
        Secretary, to comply with the following provisions of this 
        part:
                    (A) Section 2321(c) (standard outline of coverage);
                    (B) Section 2321(d) (reporting to State insurance 
                commissioners);
                    (C) Section 2322(b) (preexisting condition 
                exclusions);
                    (D) Section 2322(c) (limiting conditions on 
                benefits);
                    (E) Section 2322(d) (inflation protection);
                    (F) Section 2324 (sales practices);
                    (G) Section 2325 (continuation, renewal, 
                replacement, conversion, and cancellation of policies); 
                and
                    (H) Section 2326 (payment of benefits).
            (2) Interim requirements.--Before the effective date of 
        applicable regulations promulgated by the Secretary 
        implementing requirements of this part as specified below, such 
        requirements will be considered to be met--
                    (A) in the case of section 2321(c) (requiring a 
                standard outline of coverage), if the long-term care 
                insurance policy meets the requirements of section 
                6.G.(2) of the NAIC Model Act and of section 24 of the 
                NAIC Model Regulation;
                    (B) in the case of section 2321(d) (requiring 
                reporting to the State insurance commissioner), if the 
                insurer meets the requirements of section 14 of the 
                NAIC Model Regulation;
                    (C) in the case of section 2322(c)(1) (general 
                requirements concerning limiting conditions on 
                benefits), if such policy meets the requirements of 
                section 6.D. of the NAIC Model Act;
                    (D) in the case of section 2322(c)(2) (limiting 
                conditions on home health care or community-based 
                services) if such policy meets the requirements of 
                section 11 of the NAIC Model Regulations;
                    (E) in the case of section 2322(d) (concerning 
                inflation protection), if the insurer meets the 
                requirements of section 12 of the NAIC Model 
                Regulation;
                    (F) in the case of section 2324(b) (concerning 
                applications for the purchase of insurance), if the 
                insurer meets the requirements of section 10 of the 
                NAIC Model Regulation;
                    (G) in the case of section 2324(d) (concerning 
                compensation for the sale of policies), if the insurer 
                meets the requirements of the optional regulation 
                entitled ``Permitted Compensation Arrangements'' 
                included in the NAIC Model Regulation;
                    (H) in the case of section 2324(g) (concerning 
                sales through employers or membership organizations), 
                if the insurer and the membership organization meet the 
                requirements of section 21.C. of the NAIC Model 
                Regulation;
                    (I) in the case of section 2324(h) (concerning 
                interstate sales of group policies), if the insurer and 
                the policy meet the requirements of section 5 of the 
                NAIC Model Act; and
                    (J) in the case of section 2325(f) (concerning 
                continuation, renewal, replacement, and conversion of 
                policies), if the insurer and the policy meet the 
                requirements of section 7 of the NAIC Model Regulation.

SEC. 2302. NATIONAL LONG-TERM CARE INSURANCE ADVISORY COUNCIL.

    (a) Appointment.--The Secretary shall appoint an advisory board to 
be known as the National Long-Term Care Insurance Advisory Council.
    (b) Composition.--
            (1) Number and qualifications of members.--The Advisory 
        Council shall consist of 5 members, each of whom has 
        substantial expertise in matters relating to the provision and 
        regulation of long-term care insurance. At least one member 
        shall have experience as a State insurance commissioner or 
        legislator with expertise in policy development with respect 
        to, and regulation of, long-term care insurance.
            (2) Terms of Office.--
                    (A) In general.--Except as otherwise provided in 
                this subsection, members shall be appointed for terms 
                of office of 5 years.
                    (B) Initial members.--Of the initial members of the 
                Council, one shall be appointed for a term of 5 years, 
                one for 4 years, one for 3 years, one for 2 years, and 
                one for 1 year.
                    (C) Two-term limit.--No member shall be eligible to 
                serve in excess of two consecutive terms, but may 
                continue to serve until such member's successor is 
                appointed.
            (3) Vacancies.--Any member appointed to fill a vacancy 
        occurring before the expiration of the term of such member's 
        predecessor shall be appointed for the remainder of such term.
            (4) Removal.--No member may be removed during the member's 
        term of office except for just and sufficient cause.
    (c) Chairperson.--The Secretary shall appoint a Chairperson from 
among the members.
    (d) Compensation.--
            (1) In general.--Except as provided in paragraph (3), 
        members of the Advisory Council, while serving on business of 
        the Advisory Council, shall be entitled to receive compensation 
        at a rate not to exceed the daily equivalent of the rate 
        specified for level V of the Executive Schedule under section 
        5316 of title 5, United States Code.
            (2) Travel.--Except as provided in paragraph (3), members 
        of the Advisory Council, while serving on business of the 
        Advisory Council away from their homes or regular places of 
        business, may be allowed travel expenses (including per diem in 
        lieu of subsistence) as authorized by section 5703(b) of title 
        5, United States Code, for persons in the Government service 
        employed intermittently.
            (3) Restriction.--A member of the Advisory Council may not 
        be compensated under this section if the member is receiving 
        compensation or travel expenses from another source while 
        serving on business of the Advisory Council.
    (e) Meetings.--The Advisory Council shall meet not less often than 
2 times a year at the direction of the Chairperson.
    (f) Staff and Support.--
            (1) In general.--The Advisory Council shall have a salaried 
        executive director appointed by the Chairperson, and staff 
        appointed by the executive director with the approval of the 
        Chairperson.
            (2) Federal entities.--The head of each Federal department 
        and agency shall make available to the Advisory Council such 
        information and other assistance as it may require to carry out 
        its responsibilities.
    (g) General Responsibilities.--The Advisory Council shall--
            (1) provide advice, recommendations, and assistance to the 
        Secretary on matters relating to long-term care insurance as 
        specified in this part and as otherwise required by the 
        Secretary;
            (2) collect, analyze, and disseminate information relating 
        to long-term care insurance in order to increase the 
        understanding of insurers, providers, consumers, and regulatory 
        bodies of the issues relating to, and to facilitate 
        improvements in, such insurance;
            (3) develop for the Secretary's consideration proposed 
        models, standards, requirements, and procedures relating to 
        long-term care insurance, as appropriate, with respect to the 
        content and format of insurance policies, agent and insurer 
        practices concerning the sale and servicing of such policies, 
        and regulatory activities; and
            (4) monitor the development of the long-term care insurance 
        market (including policies, marketing practices, pricing, 
        eligibility and benefit preconditions, and claims payment 
        procedures) and advise the Secretary concerning the need for 
        regulatory changes.
    (h) Specific Matters for Consideration.--The Advisory Council shall 
consider, and provide views and recommendations to the Secretary 
concerning, the following matters relating to long-term care insurance:
            (1) Uniform terms, definitions, and formats.--The Advisory 
        Council shall develop and propose to the Secretary uniform 
        terminology, definitions, and formats for use in long-term care 
        insurance policies.
            (2) Standard outline of coverage.--The Advisory Council 
        shall develop and propose to the Secretary a standard format 
        for use by all insurers offering long-term care policies for 
        the outline of coverage required pursuant to section 2321(c).
            (3) Premiums.--The Advisory Council shall consider, and 
        make recommendations to the Secretary concerning--
                    (A) whether Federal standards should be established 
                governing the amounts of and rates of increase in 
                premiums in long-term care policies, and
                    (B) if so, what factors should be taken into 
                account (and whether such factors should include the 
                age of the insured, actuarial information, cost of 
                care, lapse rates, financial reserve requirements, 
                insurer solvency, and tax treatment of premiums, and 
                benefits.
            (4) Upgrades of coverage.--The Advisory Council shall 
        consider, and make recommendations to the Secretary concerning, 
        whether Federal standards are needed governing the terms and 
        conditions insurers may place on insured individuals' 
        eligibility to obtain improved coverage (including any 
        restrictions considered advisable with respect to premium 
        increases, agent commissions, medical underwriting, and age 
        rating).
            (5) Threshold conditions for payment of benefits.--The 
        Advisory Council shall--
                    (A) consider, and make recommendations to the 
                Secretary concerning, the advisability of establishing 
                standardized sets of threshold conditions (based on 
                degrees of functional or cognitive impairment or on 
                other conditions) for payment of covered benefits;
                    (B) to the extent found appropriate, recommend to 
                the Secretary specific sets of threshold conditions to 
                be used for such purpose;
                    (C) develop and propose to the Secretary, with 
                respect to assessments of insured individuals' levels 
                of need for purposes of receipt of covered benefits--
                            (i) professional qualification standards 
                        applicable to individuals making such 
                        determinations; and
                            (ii) uniform procedures and formats for use 
                        in performing and documenting such assessments.
            (6) Dispute resolution.--The Advisory Council shall 
        consider, and make recommendations to the Secretary concerning, 
        procedures that insurers and States should be required to 
        implement to afford insured individuals a reasonable 
        opportunity to dispute denial of benefits under a long-term 
        care insurance policy.
            (7) Sales and servicing of policies.--The Advisory Council 
        shall consider, and make recommendations to the Secretary 
        concerning--
                    (A) training and certification to be required of 
                agents involved in selling or servicing long-term care 
                insurance policies;
                    (B) appropriate limits on commissions or other 
                compensation paid to agents for the sale or servicing 
                of such policies;
                    (C) sales practices that should be prohibited or 
                limited with respect to such policies (including any 
                financial limits that should be applied concerning the 
                individuals to whom such policies may be sold); and
                    (D) appropriate standards and requirements with 
                respect to sales of such policies by or through 
                employers and other entities, to employees, members, or 
                affiliates of such entities.
            (8) Continuing care retirement communities.--The Advisory 
        Council shall consider, and make recommendations to the 
        Secretary concerning, the extent to which the long-term care 
        insurance aspects of continuing care retirement community 
        arrangements should be subject to regulation under this part 
        (and the Secretary, in consultation with the Secretary of the 
        Treasury, shall consider such recommendations and promulgate 
        appropriate regulations).
    (i) Activities.--In order to carry out its responsibilities under 
this part, the Advisory Council is authorized to--
            (1) consult individuals and public and private entities 
        with experience and expertise in matters relating to long-term 
        care insurance (and shall consult the National Association of 
        Insurance Commissioners);
            (2) conduct meetings and hold hearings;
            (3) conduct research (either directly or under grant or 
        contract);
            (4) collect, analyze, publish, and disseminate data and 
        information (either directly or under grant or contract); and
            (5) develop model formats and procedures for insurance 
        policies and marketing materials; and develop proposed 
        standards, rules, and procedures for regulatory programs.
    (j) Authorization of Appropriations.--There are authorized to be 
appropriated, for activities of the Advisory Council, $1,500,000 for 
fiscal year 1995, and $2,000,000 for each succeeding fiscal year.

SEC. 2303. RELATION TO STATE LAW.

    Nothing in this part shall be construed as preventing a State from 
applying standards that provide greater protection to insured 
individuals under long-term care insurance policies than the standards 
promulgated under this part, except that such State standards may not 
be inconsistent with any of the requirements of this part or of 
regulations hereunder.

SEC. 2304. DEFINITIONS.

    For purposes of this part:
            (1) Activity of daily living.--The term ``activity of daily 
        living'' means any of the following: eating, toileting, 
        dressing, bathing, and transferring.
            (2) Adult day care.--The term ``adult day care'' means a 
        program providing social and health-related services during the 
        day to six or more adults with disabilities (or such smaller 
        number as the Secretary may specify in regulations) in a 
        community group setting outside the home.
            (3) Advisory council.--The term ``Advisory Council'' means 
        the National Long-Term Care Insurance Advisory Council 
        established pursuant to section 2302.
            (4) Certificate.--The term ``certificate'' means a document 
        issued to an individual as evidence of such individual's 
        coverage under a group insurance policy.
            (5) Continuing care retirement community.--The term 
        ``continuing care retirement community'' means a residential 
        community operated by a private entity that enters into 
        contractual agreements with residents under which such entity 
        guarantees, in consideration for residents' purchase of or 
        periodic payment for membership in the community, to provide 
        for such residents' future long-term care needs.
            (6) Designated representative.--The term ``designated 
        representative'' means the person designated by an insured 
        individual (or, if such individual is incapacitated, pursuant 
        to an appropriate administrative or judicial procedure) to 
        communicate with the insurer on behalf of such individual in 
        the event of such individual's incapacitation.
            (7) Home health care.--The term ``home health care'' means 
        medical and nonmedical services including such services as 
        homemaker services, assistance with activities of daily living, 
        and respite care provided to individuals in their residences.
            (8) Insured individual.--The term ``insured individual'' 
        means, with respect to a long-term care insurance policy, any 
        individual who has coverage of benefits under such policy.
            (9) Insurer.--The term ``insurer'' means any person that 
        offers or sells an individual or group long-term care insurance 
        policy under which such person is at risk for all or part of 
        the cost of benefits under the policy, and includes any agent 
        of such person.
            (10) Long-term care insurance policy.--The term ``long-term 
        care insurance policy'' has the meaning given that term in 
        section 4 of the NAIC Model Act, except that the last sentence 
        of such section shall not apply.
            (11) NAIC model act.--The term ``NAIC Model Act'' means the 
        Long-Term Care Insurance Model Act published by the NAIC, as 
        amended through January 1993.
            (12) NAIC model regulation.--The term ``NAIC Model 
        Regulation'' means the Long-Term Care Insurance Model 
        Regulation published by the NAIC, as amended through January 
        1993.
            (13) Nursing facility.--The term ``nursing facility'' means 
        a facility licensed by the State to provide to residents--
                    (A) skilled nursing care and related services for 
                residents who require medical or nursing care;
                    (B) rehabilitation services for the rehabilitation 
                of injured, disabled, or sick individuals, or
                    (C) on a regular basis, health-related care and 
                services to individuals who because of their mental or 
                physical condition require care and services (above the 
                level of room and board) which can be made available to 
                them only through institutional facilities.
            (14) Policyholder.--The term ``policyholder'' means the 
        entity which is the holder of record of a group long-term care 
        insurance policy.
            (15) Residential care facility.--The term ``residential 
        care facility'' means a facility (including a nursing facility) 
        that--
                    (A) provides to residents medical or personal care 
                services (including at a minimum assistance with 
                activities of daily living) in a setting other than an 
                individual or single-family home, and
                    (B) does not provide services of a higher level 
                than can be provided by a nursing facility.
            (16) Respite care.--The term ``respite care'' means the 
        temporary provision of care (including assistance with 
        activities of daily living) to an individual, in the 
        individual's home or another setting in the community, for the 
        purpose of affording such individual's unpaid caregiver a 
        respite from the responsibilities of such care.
            (17) State insurance commissioner.--The term ``State 
        insurance commissioner'' means the State official bearing such 
        title, or, in the case of a jurisdiction where such title is 
        not used, the State official with primary responsibility for 
        the regulation of insurance.

             Subpart B--Federal Standards and Requirements

SEC. 2321. REQUIREMENTS TO FACILITATE UNDERSTANDING AND COMPARISON OF 
              BENEFITS.

    (a) In General.--The Secretary, after considering (where 
appropriate) recommendations of the Advisory Council, shall promulgate 
regulations designed to standardize formats and terminology used in 
long-term care insurance policies, to require insurers to provide to 
customers and beneficiaries information on the range of public and 
private long-term care coverage available, and to establish such other 
requirements as may be appropriate to promote consumer understanding 
and facilitate comparison of benefits, which shall include at a minimum 
the requirements specified in this section.
    (b) Uniform Terms, Definitions, and Formats.--Insurers shall be 
required to use, in long-term care insurance policies, uniform 
terminology, definitions of terms, and formats, in accordance with 
regulations promulgated by the Secretary, after considering 
recommendations of the Advisory Council.
    (c) Standard Outline of Coverage.--
            (1) In general.--Insurers shall be required to develop for 
        each long-term care insurance policy offered or sold, to 
        include as a part of each such policy, and to make available to 
        each potential purchaser and furnish to each insured individual 
        and policyholder, an outline of coverage under such policy 
        that--
                    (A) includes the elements specified in paragraph 
                (2),
                    (B) is in a uniform format (as prescribed by 
                Secretary on the basis of recommendations by the 
                Advisory Council),
                    (C) accurately and clearly reflects the contents of 
                the policy, and
                    (D) is updated periodically on such timetable as 
                may be required by the Secretary (or more frequently as 
                necessary to reflect significant changes in outlined 
                information).
            (2) Contents of outline.--The outline of coverage for each 
        long-term care insurance policy shall include at least the 
        following:
                    (A) Benefits.--A description of--
                            (i) the principal benefits covered, 
                        including the extent of--
                                    (I) benefits for services furnished 
                                in residential care facilities, and
                                    (II) other benefits,
                            (ii) the principal exclusions from and 
                        limitations on coverage,
                            (iii) the terms and conditions, if any, 
                        upon which the insured individual may obtain 
                        upgraded benefits, and
                            (iv) the threshold conditions for 
                        entitlement to receive benefits.
                    (B) Continuation, renewal, and conversion.--A 
                statement of the terms under which a policy may be--
                            (i) returned (and premium refunded) during 
                        an initial examination period,
                            (ii) continued in force or renewed,
                            (iii) converted to an individual policy (in 
                        the case of coverage under a group policy),
                    (C) Cancellation.--A statement of the circumstances 
                in which a policy may be terminated, and the refund or 
                nonforfeitures benefits (if any) applicable in each 
                such circumstance, including--
                            (i) death of the insured individual,
                            (ii) nonpayment of premiums,
                            (iii) election by the insured individual 
                        not to renew,
                            (iv) any other circumstance.
                    (D) Premium.--A statement of--
                            (i) the total annual premium, and the 
                        portion of such premium attributable to each 
                        covered benefit,
                            (ii) any reservation by the insurer of a 
                        right to change premiums,
                            (iii) any limit on annual premium 
                        increases,
                            (iv) any expected premium increases 
                        associated with automatic or optional benefit 
                        increases (including inflation protection), and
                            (v) any circumstances under which payment 
                        of premium is waived.
                    (E) Declaration concerning summary.--A statement, 
                in bold face type on the face of the document in 
                language understandable to the average individual, that 
                the outline of coverage is a summary only, not a 
                contract of insurance, and that the policy contains the 
                contractual provisions that govern.
                    (F) Cost/value comparison.--
                            (i) Information on average costs (and 
                        variation in such costs) for nursing facility 
                        care (and such other care as the Secretary may 
                        specify) and information on the value of 
                        benefits relative to such costs.
                            (ii) A comparison of benefits, over a 
                        period of at least 20 years, for policies with 
                        and without inflation protection.
                            (iii) A declaration as to whether the 
                        amount of benefits will increase over time, 
                        and, if so, a statement of the type and amount 
                        of, any limitations on, and any premium 
                        increases for, such benefit increases.
                    (G) Tax treatment.--A statement of the Federal 
                income tax treatment of premiums and benefits under the 
                policy, as determined by the Secretary of the Treasury.
                    (H) Other.--Such other information as the Secretary 
                may require.
    (d) Reporting to State Insurance Commissioner.--Each insurer shall 
be required to report at least annually, to the State insurance 
commissioner of each State in which any long-term care insurance policy 
of the insurer is sold, such information, in such format, as the 
Secretary may specify with respect to each such policy, including--
            (1) the standard outline of coverage required pursuant to 
        subsection (c);
            (2) lapse rates and replacement rates for such policies;
            (3) the ratio of premiums collected to benefits paid;
            (4) reserves;
            (5) written materials used in sale or promotion of such 
        policy; and
            (6) any other information the Secretary may require.
    (e) Comparison of Long-Term Care Coverage Alternatives.--Each 
insurer shall be required to furnish to each individual before a long-
term care insurance policy of the insurer is sold to the individual 
information on the conditions of eligibility for, and benefits under, 
each of the following:
            (1) Policies offered by the insurer.--The standard outline 
        of coverage, and such other information as the Secretary may 
        specify, with respect to each long-term care insurance policy 
        offered by the insurer.
            (2) Comparison to other available private insurance.--
        Information, in such format as may be required under this part, 
        on--
                    (A) benefits offered under long-term care insurance 
                policies of the insurer (and the threshold conditions 
                for receipt by an insured individual of each such 
                benefit); and
                    (B) additional benefits available under policies 
                offered by other private insurers (to the extent such 
                information is made available by the State insurance 
                commissioner).
            (3) Public programs; regional alliances.--Information 
        furnished to the insurer, pursuant to section 2342(b)(2), by 
        the State in which such individual resides, on conditions of 
        eligibility for, and long-term care benefits (or the lack of 
        such benefits) under--
                    (A) each public long-term care program administered 
                by the State,
                    (B) the Medicare programs under title XVIII of the 
                Social Security Act; and
                    (C) each regional alliance operating in the State.

SEC. 2322. REQUIREMENTS RELATING TO COVERAGE.

    (a) In General.--The Secretary, after considering (where 
appropriate) recommendations of the Advisory Council, shall promulgate 
regulations establishing requirements with respect to the terms of and 
benefits under long-term care insurance policies, which shall include 
at a minimum the requirements specified in this section.
    (b) Limitations on Preexisting Condition Exclusions.--
            (1) Initial policies.--A long-term care insurance policy 
        may not exclude or limit coverage for any service or benefit, 
        the need for which is the result of a medical condition or 
        disability because an insured individual received medical 
        treatment for, or was diagnosed as having, such condition 
        before the issuance of the policy, unless--
                    (A) the insurer, prior to issuance of the policy, 
                determines and documents (with evidence including 
                written evidence that such condition has been treated 
                or diagnosed by a qualified health care professional) 
                that the insured individual had such condition during 
                the 6-month period (or such longer period as the 
                Secretary may specify) ending on the effective date of 
                the policy; and
                    (B) the need or such service or benefit begins 
                within 6 months (or such longer period as the Secretary 
                may specify) following the effective date of the 
                policy.
            (2) Replacement policies.--Solely for purposes of the 
        requirements of paragraph (1), with respect to an insured 
        individual, the effective date of a long-term care insurance 
        policy issued to replace a previous policy, with respect to 
        benefits which are the same as or substantially equivalent to 
        benefits under such previous policy, shall be considered to be 
        the effective date of such previous policy with respect to such 
        individual.
    (c) Limiting Conditions on Benefits.--
            (1) In general.--A long-term care insurance policy may 
        not--
                    (A) condition eligibility for benefits for a type 
                of service on the need for or receipt of any other type 
                of service (such as prior hospitalization or 
                institutionalization, or a higher level of care than 
                the care for which benefits are covered);
                    (B) condition eligibility for any benefit (where 
                the need for such benefit has been established by an 
                independent assessment of impairment) on any particular 
                medical diagnosis (including any acute condition) or on 
                one of a group of diagnoses;
                    (C) condition eligibility for benefits furnished by 
                licensed or certified providers on compliance by such 
                providers with conditions not required under Federal or 
                State law; or
                    (D) condition coverage of any service on provision 
                of such service by a provider, or in a setting, 
                providing a higher level of care than that required by 
                an insured individual.
            (2) Home care or community-based services.--A long-term 
        care insurance policy that provides benefits for any home care 
        or community-based services provided in a setting other than a 
        residential care facility--
                    (A) may not limit such benefits to services 
                provided by registered nurses or licensed practical 
                nurses;
                    (B) may not limit such benefits to services 
                furnished by persons or entities participating in 
                programs under titles XVIII and XIX of the Social 
                Security Act and in part 1 of this subtitle; and
                    (C) must provide, at a minimum, benefits for 
                personal assistance with activities of daily living, 
                home health care, adult day care, and respite care.
            (3) Nursing facility services.--A long-term care insurance 
        policy that provides benefits for any nursing facility 
        services--
                    (A) must provide benefits for such services 
                provided by all types of nursing facilities licensed by 
                the State, and
                    (B) may provide benefits for care in other 
                residential facilities.
            (4) Prohibition on discrimination by diagnosis.--A long-
        term care insurance policy may not provide for treatment of--
                    (A) Alzheimer's disease or any other progressive 
                degenerative dementia of an organic origin,
                    (B) any organic or inorganic mental illness,
                    (C) mental retardation or any other cognitive or 
                mental impairment, or
                    (D) HIV infection or AIDS,
        different from the treatment of any other medical condition for 
        purposes of determining whether threshold conditions for the 
        receipt of benefits have been met, or the amount of benefits 
        under the policy.
    (d) Inflation Protection.--
            (1) Requirement to offer.--An insurer offering for sale any 
        long-term care insurance policy shall be required to afford the 
        purchaser the option to obtain coverage under such policy (upon 
        payment of increased premiums) of annual increases in benefits 
        at rates in accordance with paragraph (2).
            (2) Rate increase in benefits.--For purposes of paragraph 
        (1), the benefits under a policy for each year shall be 
        increased by a percentage of the full value of benefits under 
        the policy for the previous year, which shall be not less than 
        5 percent of such value (or such other rate of increase as may 
        be determined by the Secretary to be adequate to offset 
        increases in the costs of long-term care services for which 
        coverage is provided under the policy).
            (3) Requirement of written rejection.--Inflation protection 
        in accordance with paragraph (1) may be excluded from the 
        coverage under a policy only if the insured individual (or, if 
        different, the person responsible for payment of premiums) has 
        rejected in writing the option to obtain such coverage.

SEC. 2323. REQUIREMENTS RELATING TO PREMIUMS.

    (a) In General.--The Secretary, after considering (where 
appropriate) recommendations of the Advisory Council, shall promulgate 
regulations establishing requirements applicable to premiums for long-
term care insurance policies, which shall include at a minimum the 
requirements specified in this section.
    (b) Limitations on Rates and Increases.--The Secretary, after 
considering recommendations of the Advisory Council, may establish by 
regulation such standards and requirements as may be determined 
appropriate with respect to--
            (1) mandatory or optional State procedures for review and 
        approval of premium rates and rate increases or decreases;
            (2) limitations on the amount of initial premiums, or on 
        the rate or amount of premium increases;
            (3) the factors to be taken into consideration by an 
        insurer in proposing, and by a State in approving or 
        disapproving, premium rates and increases; and
            (4) the extent to which consumers should be entitled to 
        participate or be represented in the rate-setting process and 
        to have access to actuarial and other information relied on in 
        setting rates.

SEC. 2324. REQUIREMENTS RELATING TO SALES PRACTICES.

    (a) In General.--The Secretary, after considering (where 
appropriate) recommendations of the Advisory Council, shall promulgate 
regulations establishing requirements applicable to the sale or 
offering for sale of long-term care insurance policies, which shall 
include at a minimum the requirements specified in this section.
    (b) Applications.--Any insurer that offers any long-term care 
insurance policy (including any group policy) shall be required to meet 
such requirements with respect to the content, format, and use of 
application forms for long-term care insurance as the Secretary may 
require by regulation.
    (c) Agent Training and Certification.--An insurer may not sell or 
offer for sale a long-term care insurance policy through an agent who 
does not comply with minimum standards with respect to training and 
certification established by the Secretary after consideration of 
recommendations by the Advisory Council.
    (d) Compensation for Sale of Policies.--Compensation by an insurer 
to an agent or agents for the sale of an original long-term care 
insurance policy, or for servicing or renewing such a policy, may not 
exceed amounts (or percentage shares of premiums or other reference 
amounts) specified by the Secretary in regulations, after considering 
recommendations of the Advisory Council.
    (e) Prohibited Sales Practices.--The following practices by 
insurers shall be prohibited with respect to the sale or offer for sale 
of long-term care insurance policies:
            (1) False and misleading representations.--Making any 
        statement or representation--
                    (A) which the insurer knows or should know is false 
                or misleading (including the inaccurate, incomplete, or 
                misleading comparison of long-term care insurance 
                policies or insurers), and
                    (B) which is intended, or would be likely, to 
                induce any person to purchase, retain, terminate, 
                forfeit, permit to lapse, pledge, assign, borrow 
                against, convert, or effect a change with respect to, 
                any long-term care insurance policy.
            (2) Inaccurate completion of medical history.--Making or 
        causing to be made (by any means including failure to inquire 
        about or to record information relating to preexisting 
        conditions) statements or omissions, in records detailing the 
        medical history of an applicant for insurance, which the 
        insurer knows or should know render such records false, 
        incomplete, or misleading in any way material to such 
        applicant's eligibility for or coverage under a long-term care 
        insurance policy.
            (3) Undue pressure.--Employing force, fright, threat, or 
        other undue pressure, whether explicit or implicit, which is 
        intended, or would be likely, to induce the purchase of a long-
        term care insurance policy.
            (4) Cold lead advertising.--Using, directly or indirectly, 
        any method of contacting consumers (including any method 
        designed to induce consumers to contact the insurer or agent) 
        for the purpose of inducing the purchase of long-term care 
        insurance (regardless of whether such purpose is the sole or 
        primary purpose of the contact) without conspicuously 
        disclosing such purpose.
    (f) Prohibition on Sale of Duplicate Benefits.--An insurer or agent 
may not sell or issue to an individual a long-term care insurance 
policy that the insurer or agent knows or should know provides for 
coverage that duplicates coverage already provided in another long-term 
care insurance policy held by such individual (unless the policy is 
intended to replace such other policy).
    (g) Sales Through Employers or Membership Organizations.--
            (1) Requirements concerning such arrangements.--In any case 
        where an employer, organization, association, or other entity 
        (referred to as a ``membership entity'') endorses a long-term 
        care insurance policy to, or such policy is marketed or sold 
        through such membership entity to, employees, members, or other 
        individuals affiliated with such membership entity--
                    (A) the insurer offering such policy shall not 
                permit its marketing or sale through such entity unless 
                the requirements of this subsection are met; and
                    (B) a membership entity that receives any 
                compensation for such sale, marketing, or endorsement 
                of such policy shall be considered the agent of the 
                insurer for purposes of this part.
            (2) Disclosure and information requirements.--A membership 
        entity that endorses a long-term care insurance policy, or 
        through which such policy is sold, to individuals affiliated 
        with such entity, shall--
                    (A) disclose prominently, in a form and manner 
                designed to ensure that each such individual who 
                receives information concerning any such policy through 
                such entity is aware of and understands such 
                disclosure--
                            (i) the manner in which the insurer and 
                        policy were selected;
                            (ii) the extent (if any) to which a person 
                        independent of the insurer with expertise in 
                        long-term care insurance analyzed the 
                        advantages and disadvantages of such policy 
                        from the standpoint of such individuals 
                        (including such matters as the merits of the 
                        policy compared to other available benefit 
                        packages, and the financial stability of the 
                        insurer), and the results of any such analysis;
                            (iii) any organizational or financial ties 
                        between the entity (or a related entity) and 
                        the insurer (or a related entity); and
                            (iv) the nature of compensation 
                        arrangements (if any) and the amount of 
                        compensation (including all fees, commissions, 
                        and other forms of financial support) for the 
                        endorsement or sale of such policy; and
                    (B) make available to such individuals, either 
                directly or through referrals, appropriate counseling 
                to assist such individuals to make educated and 
                informed decisions concerning the purchase of such 
                policies.

SEC. 2325. CONTINUATION, RENEWAL, REPLACEMENT, CONVERSION, AND 
              CANCELLATION OF POLICIES.

    (a) In General.--The Secretary, after considering (where 
appropriate) recommendations of the Advisory Council, shall promulgate 
regulations establishing requirements applicable to the renewal, 
replacement, conversion, and cancellation of long-term care insurance 
policies, which shall include at a minimum the requirements specified 
in this section.
    (b) Insured's Right to Cancel During Examination Period.--Each 
individual insured (or, if different, each individual liable for 
payment of premiums) under a long-term care insurance policy shall have 
the unconditional right to return the policy within 30 days after the 
date of its issuance and delivery, and to obtain a full refund of any 
premium paid.
    (c) Insurer's Right to Cancel (or Deny Benefits) Based on Fraud or 
Nondisclosure.--An insurer shall have the right to cancel a long-term 
care insurance policy, or to refuse to pay a claim for benefits, based 
on evidence that the insured falsely represented or failed to disclose 
information material to the determination of eligibility to purchase 
such insurance, but only if--
            (1) the insurer presents written documentation, developed 
        at the time the insured applied for such insurance, of the 
        insurer's request for the information thus withheld or 
        misrepresented, and the insured individual's response to such 
        request;
            (2) the insurer presents medical records or other evidence 
        showing that the insured individual knew or should have known 
        that such response was false, incomplete, or misleading;
            (3) notice of cancellation is furnished to the insured 
        individual before the date 3 years after the effective date of 
        the policy (or such earlier date as the Secretary may specify 
        in regulations); and
            (4) the insured individual is afforded the opportunity to 
        review and refute the evidence presented by the insurer 
        pursuant to paragraphs (1) and (2).
    (d) Insurer's Right to Cancel for Nonpayment of Premiums.--
            (1) In general.--Insurers shall have the right to cancel 
        long-term care insurance policies for nonpayment of premiums, 
        subject to the provisions of this subsection and subsection (e) 
        (relating to nonforfeiture).
            (2) Notice and acknowledgement.--
                    (A) In general.--The insurer may not cancel 
                coverage of an insured individual until--
                            (i) the insurer, not earlier than the date 
                        when such payment is 30 days past due, has 
                        given written notice to the insured individual 
                        (by registered letter or the equivalent) of 
                        such intent, and
                            (ii) 30 days have elapsed since the insurer 
                        obtained written acknowledgment of receipt of 
                        such notice from the insured individual (or the 
                        designated representative, at the insured 
                        individual's option or in the case of an 
                        insured individual determined to be 
                        incapacitated in accordance with paragraph 
                        (4)).
                    (B) Additional Requirement for Group Policies.--In 
                the case of a group long-term care insurance policy, 
                the notice and acknowledgement requirements of 
                subparagraph (A) apply with respect to the policyholder 
                and to each insured individual.
            (3) Reinstatement of coverage of incapacitated 
        individuals.--In any case where the coverage of an individual 
        under a long-term care insurance policy has been canceled 
        pursuant to paragraph (2), the insurer shall be required to 
        reinstate full coverage of such individual under such policy, 
        retroactive to the effective date of cancellation, if the 
        insurer receives from such individual (or the designated 
        representative of such individual), within 5 months after such 
        date--
                    (A) evidence of a determination of such 
                individual's incapacitation in accordance with 
                paragraph (4) (whether made before or after such date), 
                and
                    (B) payment of all premiums due and past due, and 
                all charges for late payment.
            (4) Determination of incapacitation.--For purposes of this 
        subsection, the term ``determination of incapacitation'' means 
        a determination by a qualified health professional (in 
        accordance with such requirements as the Secretary may 
        specify), that an insured individual has suffered a cognitive 
        impairment or loss of functional capacity which could 
        reasonably be expected to render the individual permanently or 
        temporarily unable to deal with business or financial matters. 
        The standard used to make such determination shall not be more 
        stringent than the threshold conditions for the receipt of 
        covered benefits.
            (5) Designation of representative.--The insurer shall be 
        required--
                    (A) to require the insured individual, at the time 
                of sale or issuance of a long-term care insurance 
                policy--
                            (i) to designate a representative for 
                        purposes of communication with the insurer 
                        concerning premium payments in the event the 
                        insured individual cannot be located or is 
                        incapacitated, or
                            (ii) to complete a signed and dated 
                        statement declining to designate a 
                        representative, and
                    (B) to obtain from the insured individual, at the 
                time of each premium payment (but in no event less 
                often than once in each 12-month period) reconfirmation 
                or revision of such designation or declination.
    (e) Nonforfeiture.--
            (1) In general.--The Secretary, after consideration of 
        recommendations by the Advisory Council, shall by regulation 
        require appropriate nonforfeiture benefits with respect to each 
        long-term care insurance policy that lapses for any reason 
        (including nonpayment of premiums, cancellation, or failure to 
        renew, but excluding lapses due to death) after remaining in 
        effect beyond a specified minimum period.
            (2) Nonforfeiture benefits.--The standards established 
        under this subsection shall require that the amount or 
        percentage of nonforfeiture benefits shall increase 
        proportionally with the amount of premiums paid by a 
        policyholder.
    (f) Continuation, Renewal, Replacement, and Conversion of 
Policies.--
            (1) In general.--Insurers shall not be permitted to cancel, 
        or refuse to renew (or replace with a substantial equivalent), 
        any long-term care insurance policy for any reason other than 
        for fraud or material misrepresentation (as provided in 
        subsection (c)) or for nonpayment of premium (as provided in 
        subsection (d)).
            (2) Duration and renewal of policies.--Each long-term care 
        insurance policy shall contain a provision that clearly 
        states--
                    (A) the duration of the policy,
                    (B) the right of the insured individual (or 
                policyholder) to renewal (or to replacement with a 
                substantial equivalent),
                    (C) the date by which, and the manner in which, the 
                option to renew must be exercised, and
                    (D) any applicable restrictions or limitations 
                (which may not be inconsistent with the requirements of 
                this part).
            (3) Replacement of policies.--
                    (A) In general.--Except as provided in subparagraph 
                (B), an insurer shall not be permitted to sell any 
                long-term care insurance policy as a replacement for 
                another such policy unless coverage under such 
                replacement policy is available to an individual 
                insured for benefits covered under the previous policy 
                to the same extent as under such previous policy 
                (including every individual insured under a group 
                policy) on the date of termination of such previous 
                policy, without exclusions or limitations that did not 
                apply under such previous policy.
                    (B) Insured's option to reduce coverage.--In any 
                case where an insured individual covered under a long-
                term care insurance policy knowingly and voluntarily 
                elects to substitute for such policy a policy that 
                provides less coverage, substitute policy shall be 
                considered a replacement policy for purposes of this 
                part.
            (3) Continuation and conversion rights with respect to 
        group policies.--
                    (A) In general.--Insurers shall be required to 
                include in each group long-term care insurance policy, 
                a provision affording to each insured individual, when 
                such policy would otherwise terminate, the opportunity 
                (at the insurer's option, subject to approval of the 
                State insurance commissioner) either to continue or to 
                convert coverage under such policy in accordance with 
                this paragraph.
                    (B) Rights of related individuals.--In the case of 
                any insured individual whose eligibility for coverage 
                under a group policy is based on relationship to 
                another individual, the insurer shall be required to 
                continue such coverage upon termination of the 
                relationship due to divorce or death.
                    (C) Continuation of coverage.--A group policy shall 
                be considered to meet the requirements of this 
                paragraph with respect to rights of an insured 
                individual to continuation of coverage if coverage of 
                the same (or substantially equivalent) benefits for 
                such individual under such policy is maintained, 
                subject only to timely payment of premiums.
                    (D) Conversion of coverage.--A group policy shall 
                be considered to meet the requirements of this 
                paragraph with respect to conversion if it entitles 
                each individual who has been continuously covered under 
                the policy for at least 6 months before the date of the 
                termination to issuance of a replacement policy 
                providing benefits identical to, substantially 
                equivalent to, or in excess of, the benefits under such 
                terminated group policy--
                            (i) without requiring evidence of 
                        insurability with respect to benefits covered 
                        under such previous policy, and
                            (ii) at premium rates no higher than would 
                        apply if the insured individual had initially 
                        obtained coverage under such replacement policy 
                        on the date such insured individual initially 
                        obtained coverage under such group policy.
            (4) Treatment of substantial equivalence.--
                    (A) Under secretary's guidelines.--The Secretary, 
                after considering recommendations by the Advisory 
                Council, shall develop guidelines for comparing long-
                term care insurance policies for the purpose of 
                determining whether benefits under such policies are 
                substantially equivalent.
                    (B) Before effective date of secretary's 
                guidelines.--During the period prior to the effective 
                date of guidelines published by the Secretary under 
                this paragraph, insurers shall comply with standards 
                for determinations of substantial equivalence 
                established by State insurance commissioners.
            (5) Additional requirements.--Insurers shall comply with 
        such other requirements relating to continuation, renewal, 
        replacement, and conversion of long-term care insurance 
        policies as the Secretary may establish.

SEC. 2326. REQUIREMENTS RELATING TO PAYMENT OF BENEFITS.

    (a) In General.--The Secretary, after considering (where 
appropriate) recommendations of the Advisory Council, shall promulgate 
regulations establishing requirements with respect to claims for and 
payment of benefits under long-term care insurance policies, which 
shall include at a minimum the requirements specified in this section.
    (b) Standards Relating to Threshold Conditions for Receipt of 
Covered Benefits.--Each long-term care insurance policy shall meet the 
following requirements with respect to identification of, and 
determination of whether an insured individual meets, the threshold 
conditions for receipt of benefits covered under such policy:
            (1) Declaration of threshold conditions.--
                    (A) In general.--The policy shall specify the level 
                (or levels) of functional or cognitive mental 
                impairment (or combination of impairments) required as 
                a threshold condition of entitlement to receive 
                benefits under the policy (which threshold condition or 
                conditions shall be consistent with any regulations 
                promulgated by the Secretary pursuant to subsection 
                (B)).
                    (B) Secretarial responsibility.--The Secretary 
                (after considering the views of the Advisory Council on 
                current practices of insurers concerning, and the 
                appropriateness of standardizing, threshold conditions) 
                may promulgate such regulations as the Secretary finds 
                appropriate establishing standardized thresholds to be 
                used under such policies as preconditions for varying 
                levels of benefits.
            (2) Independent professional assessment.--The policy shall 
        provide for a procedure for determining whether the threshold 
        conditions specified under paragraph (1) have been met with 
        respect to an insured individual which--
                    (A) applies such uniform assessment standards, 
                procedures, and formats as the Secretary may specify, 
                after consideration of recommendations by the Advisory 
                Council;
                    (B) permits an initial evaluation (or, if the 
                initial evaluation was performed by a qualified 
                independent assessor selected by the insurer, a 
                reevaluation) to be made by a qualified independent 
                assessor selected by the insured individual (or 
                designated representative) as to whether the threshold 
                conditions for receipt of benefits have been met;
                    (C) permits the insurer the option to obtain a 
                reevaluation by a qualified independent assessor 
                selected and reimbursed by the insurer;
                    (D) provides that the insurer will consider that 
                the threshold conditions have been met in any case 
                where--
                            (i) the assessment under subparagraph (B) 
                        concluded that such conditions had been met, 
                        and the insurer declined the option under 
                        subparagraph (C), or
                            (ii) assessments under both subparagraphs 
                        (B) and (C) concluded that such conditions had 
                        been met; and
                    (E) provides for final resolution of the question 
                by a State agency or other impartial third party in any 
                case where assessments under subparagraphs (B) and (C) 
                reach inconsistent conclusions.
            (3) Qualified independent assessor.--For purposes of 
        paragraph (2), the term ``qualified independent assessor'' 
        means a licensed or certified professional, as appropriate, 
        who--
                    (A) meets such standards with respect to 
                professional qualifications as may be established by 
                the Secretary, after consulting with the Secretary of 
                the Treasury, and
                    (B) has no significant or controlling financial 
                interest in, is not an employee of, and does not derive 
                more than 5 percent of gross income from, the insurer 
                (or any provider of services for which benefits are 
                available under the policy and in which the insurer has 
                a significant or controlling financial interest).
    (c) Requirements Relating to Claims for Benefits.--Insurers shall 
be required--
            (1) to promptly pay or deny claims for benefits submitted 
        by (or on behalf of) insured individuals who have been 
        determined pursuant to subsection (b) to meet the threshold 
        conditions for payment of benefits;
            (2) to provide an explanation in writing of the reasons for 
        payment, partial payment, or denial of each such claim; and
            (3) to provide an administrative procedure under which an 
        insured individual may appeal the denial of any claim.

                         Subpart C--Enforcement

SEC. 2342. STATE PROGRAMS FOR ENFORCEMENT OF STANDARDS.

    (a) Requirement for State Programs Implementing Federal 
Standards.--In order for a State to be eligible for grants under this 
subpart, the State must have in effect a program (including such laws 
and procedures as may be necessary) for the regulation of long-term 
care insurance which the Secretary has determined--
            (1) includes the elements required under this subpart, and
            (2) is designed to ensure the compliance of long-term care 
        insurance policies sold in the State, and insurers offering 
        such policies and their agents, with the requirements 
        established pursuant to subpart B.
    (b) Activities Under State Program.--A State program approved under 
this subpart shall provide for the following procedures and activities:
            (1) Monitoring of insurers and policies.--Procedures for 
        ongoing monitoring of the compliance of insurers doing business 
        in the State, and of long-term care insurance policies sold in 
        the State, with requirements under this part, including at 
        least the following:
                    (A) Policy review and certification.--A program for 
                review and certification (and annual recertification) 
                of each such policy sold in the State.
                    (B) Reporting by insurers.--Requirements of annual 
                reporting by insurers selling or servicing long-term 
                care insurance policies in the State, in such form and 
                containing such information as the State may require to 
                determine whether the insurer (and policies) are in 
                compliance with requirements under this part.
                    (C) Data collection.--Procedures for collection, 
                from insurers, service providers, insured individuals, 
                and others, of information required by the State for 
                purposes of carrying out its responsibilities under 
                this part (including authority to compel compliance of 
                insurers with requests for such information).
                    (D) Marketing oversight.--Procedures for monitoring 
                (through sampling or other appropriate procedures) the 
                sales practices of insurers and agents, including 
                review of marketing literature.
                    (E) Oversight of administration of benefits.--
                Procedures for monitoring (through sampling or other 
                appropriate procedures) insurers' administration of 
                benefits, including monitoring of--
                            (i) determinations of insured individuals' 
                        eligibility to receive benefits, and
                            (ii) disposition of claims for payment.
            (2) Information to insurers.--Procedures for furnishing, to 
        insurers selling or servicing any long-term care insurance 
        policies in the State, information on conditions of eligibility 
        for, and benefits under, each public long-term care program 
        administered by the State, in order to enable them to comply 
        with the requirement under section 2321(e)(3).
            (3) Consumer complaints and dispute resolution.--
        Administrative procedures for the investigation and resolution 
        of complaints by consumers, and disputes between consumers and 
        insurers, with respect to long-term care insurance, including--
                    (A) procedures for the filing, investigation, and 
                adjudication of consumer complaints with respect to the 
                compliance of insurers and policies with requirements 
                under this part, or other requirements under State law; 
                and
                    (B) procedures for resolution of disputes between 
                insured individuals and insurers concerning eligibility 
                for, or the amount of, benefits payable under such 
                policies, and other issues with respect to the rights 
                and responsibilities of insurers and insured 
                individuals under such policies.
            (4) Technical assistance to insurers.--Provision of 
        technical assistance to insurers to help them to understand and 
        comply with the requirements of this part, and other State 
        laws, concerning long-term care insurance policies and business 
        practices.
    (c) State Enforcement Authorities.--A State program meeting the 
requirements of this subpart shall ensure that the State insurance 
commissioner (or other appropriate official or agency) has the 
following authority with respect to long-term care insurers and 
policies:
            (1) Prohibition of sale.--Authority to prohibit the sale, 
        or offering for sale, of any long-term care insurance policy 
        that fails to comply with all applicable requirements under 
        this part.
            (2) Plans of correction.--Authority, in cases where the 
        business practices of an insurer are determined not to comply 
        with requirements under this part, to require the insurer to 
        develop, submit for State approval, and implement a plan of 
        correction which must be fulfilled within the shortest period 
        possible (not to exceed a year) as a condition of continuing to 
        do business in the State.
            (3) Corrective action orders.--Authority, in cases where an 
        insurer is determined to have failed to comply with 
        requirements of this part, or with the terms of a policy, with 
        respect to a consumer or insured individual, to direct the 
        insurer (subject to appropriate due process) to eliminate such 
        noncompliance within 30 days.
            (4) Civil money penalties.--Authority to assess civil money 
        penalties, in amounts for each violative act up to the greater 
        of $10,000 or three times the amount of any commission 
        involved--
                    (A) for violations of subsections (d) (concerning 
                compensation or sale of policies), (e) (concerning 
                prohibited sales practices), and (f) (prohibition on 
                sale of duplicate benefits) of section 2324,
                    (B) for such other violative acts as the Secretary 
                may specify in regulations, and
                    (C) in such other cases as the State finds 
                appropriate.
            (5) Other authorities.--Such other authorities as the State 
        finds necessary or appropriate to enforce requirements under 
        this part.
    (d) Records, Reports, and Audits.--As a condition of approval of 
its program under this part, a State must agree to maintain such 
records, make such reports (including expenditure reports), and 
cooperate with such audits, as the Secretary finds necessary to 
determine the compliance of such State program (and insurers and 
policies regulated under such program) with the requirements of this 
part.
    (e) Secretarial Responsibilities.--
            (1) Approval of state programs.--The Secretary shall 
        approve a State program meeting the requirements of this part.
            (2) Information on medicare benefits.--The Secretary shall 
        furnish, to the official in each State with chief 
        responsibility for the regulation of long-term care insurance, 
        a description of the Medicare programs under title XVIII of the 
        Social Security Act which makes clear the unavailability of 
        long-term benefits under such programs, for distribution by 
        such State official to insurers selling long-term care 
        insurance in the State, in accordance with subsection (b)(2).

SEC. 2342. AUTHORIZATION OF APPROPRIATIONS FOR STATE PROGRAMS.

    There are authorized to be appropriated $10,000,000 for fiscal year 
1996, $10,000,000 for fiscal year 1997, $7,500,000 for fiscal year 
1998, and $5,000,000 for fiscal year 1999 and each succeeding fiscal 
year, for grants to States with programs meeting the requirements of 
this part, to remain available until expended.

SEC. 2343. ALLOTMENTS TO STATES.

    The allotment for any fiscal year to a State with a program 
approved under this part shall be an amount determined by the 
Secretary, taking into account the numbers of long-term care insurance 
policies sold, and of elderly individuals residing, in the State, and 
such other factors as the Secretary finds appropriate.

SEC. 2344. PAYMENTS TO STATES.

    (a) In General.--Each State with a program approved under this part 
shall be entitled to payment under this title for each fiscal year in 
an amount equal to its allotment for such fiscal year, for expenditure 
by such State for up to 50 percent of the cost of activities under such 
program.
    (b) State Share of Program Expenditures.--No Federal funds from any 
source may be used as any part of the non-Federal share of expenditures 
under the State program under this subpart.
    (c) Transfer and Deposit Requirements.--The Secretary shall make 
payments under this section in accordance with section 6503 of title 
31, United States Code.

SEC. 2345. FEDERAL OVERSIGHT OF STATE ENFORCEMENT.

    (a) In General.--The Secretary shall periodically review State 
regulatory programs approved under section 2341 to determine whether 
they continue to comply with the requirements of this part.
    (b) Notice of Determination of Noncompliance.--The Secretary shall 
promptly notify the State of a determination that a State program fails 
to comply with this part, specifying the requirement or requirements 
not met and the elements of the State program requiring correction.
    (c) Opportunity for Correction.--
            (1) In general.--The Secretary shall afford a State 
        notified of noncompliance pursuant to subsection (b) a 
        reasonable opportunity to eliminate such noncompliance.
            (2) Correction plans.--In a case where substantial 
        corrections are needed to eliminate noncompliance of a State 
        program, the Secretary may--
                    (A) permit the State a reasonable time after the 
                date of the notice pursuant to subsection (b) to 
                develop and obtain the Secretary's approval of a 
                correction plan, and
                    (B) permit the State a reasonable time after the 
                date of approval of such plan to eliminate the 
                noncompliance.
    (d) Withdrawal of Program Approval.--In the case of a State that 
fails to eliminate noncompliance with requirements under this part by 
the date specified by the Secretary pursuant to subsection (c), the 
Secretary shall withdraw the approval of the State program pursuant to 
section 2341(e).

SEC. 2346. EFFECT OF FAILURE TO HAVE APPROVED STATE PROGRAM.

    (a) Restriction on Sale of Long-Term Care Insurance.--
            (1) In general.--No insurer may sell or offer for sale any 
        long-term care insurance policy, on or after the date specified 
        in subsection (c), in a State that does not have in effect a 
        regulatory program approved under section 2341(e).
            (2) Application of prohibition.--For purposes of paragraph 
        (1), an insurance policy shall not be considered to be sold or 
        offered for sale in a State solely because it is sold or 
        offered to a resident of such State.
    (b) Civil Money Penalty.--
            (1) In general.--An insurer shall be subject to a civil 
        money penalty, in an amount up to the greater of $10,000 or 
        three times any commission involved, for each incident in which 
        the insurer sells, or offers to sell, an insurance policy to an 
        individual in violation of subsection (a).
            (2) Enforcement procedure.--The Secretary shall enforce the 
        provisions of this subsection in accordance with the procedures 
        provided under section 5412 of this Act.
    (c) Effective Date.--
            (1) In general.--The date specified in this subsection, for 
        purposes of subsection (a), with respect to any requirement 
        under this part, is the date one year after the date the 
        Secretary first promulgates regulations with respect to such 
        requirement.
            (2) Exception.--To the extent that a State demonstrates to 
        the Secretary that State legislation is required to meet any 
        such requirement, the State shall not be regarded as failing to 
        have in effect a program in compliance with this part solely on 
        the basis of its failure to comply with such requirement before 
        the first day of the first calendar quarter beginning after the 
        close of the first regular session of the State legislature 
        that begins after the promulgation of the regulation imposing 
        such requirement. For purposes of the preceding 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.

                  Subpart D--Consumer Education Grants

SEC. 2361. GRANTS FOR CONSUMER EDUCATION.

    (a) Grant Program Authorized.--The Secretary is authorized to make 
grants--
            (1) to States,
            (2) to regional alliances (at the option of States within 
        which such Alliances are located), and
            (3) to national organizations representing insurance 
        consumers, long-term care providers, and insurers,
for the development and implementation of long-term care information, 
counseling, and other programs.
    (b) Applications.--
            (1) In general.--Each State or organization seeking a grant 
        under this section shall submit to the Secretary an 
        application, in such format and containing such information as 
        the Secretary may require.
            (2) Goals.--Programs under this section shall be directed 
        at the goals of increasing consumers' understanding and 
        awareness of options available to them with respect to long-
        term care insurance (and alternatives, such as public long-term 
        care programs), including--
                    (A) the risk of needing long-term care;
                    (B) the costs associated with long-term care 
                services;
                    (C) the lack of long-term care coverage under the 
                Medicare program, Medicare supplemental (Medigap) 
                policies, and standard private health insurance;
                    (D) the limitations on (and conditions of 
                eligibility for) long-term care coverage under State 
                programs;
                    (E) the availability, and variations in coverage 
                and cost, of private long-term care insurance;
                    (F) features common to many private long-term care 
                insurance policies; and
                    (G) pitfalls to avoid when purchasing a long-term 
                care insurance policy.
            (3) Activities.--An application for a grant under this 
        section shall indicate the activities the State or organization 
        would carry out under such grant, which activities may 
        include--
                    (A) coordination of the activities of State 
                agencies and private entities as necessary to carry out 
                the State's program under this section;
                    (B) collection, analysis, publication, and 
                dissemination of information,
                    (C) conducting or sponsoring of consumer education, 
                outreach, and information programs,
                    (D) providing (directly or through referral) 
                counseling and consultation services to consumers to 
                assist them in choosing long-term care insurance 
                coverage appropriate to their circumstances, and
                    (E) other appropriate activities.
            (4) Priority for innovation.--In awarding grants under this 
        section, the Secretary shall give priority to applications 
        proposing to use innovative approaches to providing 
        information, counseling, and other assistance to individuals 
        who might benefit from, or are considering the purchase of, 
        long-term care insurance.
    (c) Period of Grants.--Grants under this section shall be for not 
longer than 3 years.
    (d) Evaluations and Reports.--
            (1) By grantees to the secretary.--Each recipient of a 
        grant under this section shall annually evaluate the 
        effectiveness of its program under such grant, and report its 
        conclusions to the Secretary.
            (2) By the secretary to the congress.--The Secretary shall 
        annually evaluate, and report to the Congress on, the 
        effectiveness of programs under this section, on the basis of 
        reports received under paragraph (1) and such independent 
        evaluation as the Secretary finds necessary.
    (e) Authorization of Appropriations.--There are authorized to be 
appropriated, for grants under this section--
            (1) $10,000,000 for each of fiscal years 1995 through 1997 
        for grants to States, and
            (2) $1,000,000 for each of fiscal years 1995 through 1997,
for grants to eligible organizations.

     PART 4--TAX TREATMENT OF LONG-TERM CARE INSURANCE AND SERVICES

SEC. 2401. REFERENCE TO TAX PROVISIONS.

    For amendments to the Internal Revenue Code of 1986 relating to the 
treatment of long-term care insurance and services, see subtitle G of 
title VII.

   PART 5--TAX INCENTIVES FOR INDIVIDUALS WITH DISABILITIES WHO WORK

SEC. 2501. REFERENCE TO TAX PROVISION.

    For amendment to the Internal Revenue Code of 1986 providing for a 
tax credit for cost of personal assistance services required by 
employed individuals, see section 7901.

                  PART 6--DEMONSTRATION AND EVALUATION

SEC. 2601. DEMONSTRATION ON ACUTE AND LONG-TERM CARE INTEGRATION.

    (a) Program Authorized.--The Secretary of Health and Human Services 
shall conduct a demonstration program to test the effectiveness of 
various approaches to financing and providing integrated acute and 
long-term care services described in subsection (b) for the chronically 
ill and disabled who meet eligibility criteria under subsection (c).
    (b) Services and Benefits.--
            (1) In general.--Except as provided in paragraph (2), the 
        following services and benefits shall be provided under each 
        demonstration approved under this section:
                    (A) Comprehensive benefit package.--All benefits 
                included in the comprehensive benefit package under 
                title I of this Act.
                    (B) Transitional benefits.--Specialized benefits 
                relating to the transition from acute to long-term 
                care, including--
                            (i) assessment and consultation,
                            (ii) inpatient transitional care,
                            (iii) medical rehabilitation,
                            (iv) home health care and home care,
                            (v) caregiver support, and
                            (vi) self-help technology.
                    (C) Long-term care benefits.--Long-term care 
                benefits, including--
                            (i) adult day care,
                            (ii) personal assistance services,
                            (iii) homemaker services and chore 
                        services;
                            (iv) home-delivered meals;
                            (v) respite services;
                            (vi) nursing facility services in 
                        specialized care units;
                            (vii) services in other residential 
                        settings including community supported living 
                        arrangements and assisted living facilities; 
                        and
                            (viii) assistive devices and environmental 
                        modifications.
                    (D) Habilitation services.--Specialized 
                habilitation services for participants with 
                developmental disabilities.
            (2) Variations in minimum benefits.--
                    (A) In general.--Subject to the requirement of 
                subparagraph (B), demonstrations may omit specified 
                services listed under subparagraphs (C) and (D) of 
                paragraph (1), or provide additional services, as found 
                appropriate by the Secretary in the case of a 
                particular demonstration, taking into consideration 
                factors such as--
                            (i) the needs of a specialized group of 
                        eligible beneficiaries;
                            (ii) the availability of the omitted 
                        benefits under other programs in the service 
                        area; and
                            (iii) the geographic availability of 
                        service providers.
                    (B) Breadth requirement.--In approving variant 
                demonstrations pursuant to subparagraph (A), the 
                Secretary shall ensure that demonstrations under this 
                section, taken as a group, adequately test financing 
                and delivery models covering the entire array of 
                services and benefits described in paragraph (1).
    (c) Eligibility Criteria.--The Secretary shall establish 
eligibility criteria for individuals who may receive services under 
demonstrations under this section. Under such criteria, any of the 
following may be found to be eligible populations for such 
demonstrations:
            (1) Individuals with disabilities who are entitled to 
        services and benefits under a State program under part 1 of 
        this subtitle.
            (2) Individuals who are entitled to benefits under parts A 
        and B of title XVIII of the Social Security Act.
            (3) Individuals who are entitled to medical assistance 
        under a State plan under title XIX of the Social Security Act, 
        and are also--
                    (A) individuals described in paragraph (2), or
                    (B) individuals eligible for supplemental security 
                income under title XVI of that Act.
    (d) Application.--
            (1) In general.--Each entity seeking to participate in a 
        demonstration under this section shall submit an application, 
        in such format and containing such information as the Secretary 
        may require, including the information specified in this 
        subsection.
            (2) Service delivery.--The application shall state the 
        services to be provided under the demonstration (either 
        directly by the applicant or under other arrangements approved 
        by the Secretary), which shall include services specified 
        pursuant to subsection (b) and--
                    (A) enrollment services;
                    (B) client assessment and care planning;
                    (C) simplified access to needed services;
                    (D) integrated management of acute and chronic 
                care, including measures to ensure continuity of care 
                across settings and services;
                    (E) quality assurance, grievance, and appeals 
                mechanisms; and
                    (F) such other services as the Secretary may 
                require.
            (3) Consumer protection and participation.--The applicant 
        shall provide evidence of consumer participation--
                    (A) in the planning of the demonstration (including 
                a showing of support from community agencies or 
                consumer interest groups); and
                    (B) in the conduct of the demonstration, including 
                descriptions of methods and procedures to be used--
                            (i) to make available to individuals 
                        enrolled in the demonstration information on 
                        self-help, health promotion and disability 
                        prevention practices, and enrollees' 
                        contributions to the costs of care;
                            (ii) to ensure participation by such 
                        enrollees (or their designated representatives, 
                        where appropriate) in care planning and in 
                        decisions concerning treatment;
                            (iii) to handle and resolve client 
                        grievances and appeals;
                            (iv) to take enrollee views into account in 
                        quality assurance and provider contracting 
                        procedures; and
                            (v) to evaluate enrollee satisfaction with 
                        the program.
            (4) Applicant qualifications.--Applicants for grants under 
        this section shall meet eligibility criteria established by the 
        Secretary, including requirements relating to--
                    (A) adequate financial controls to monitor 
                administrative and service costs,
                    (B) demonstrated commitment of the Board of 
                Directors or comparable governing body to the goals of 
                demonstration,
                    (C) information systems adequate to pay service 
                providers, to collect required utilization and cost 
                data, and to provide data adequate to permit evaluation 
                of program performance, and
                    (D) compliance with applicable State laws.
    (e) Payments to Participants.--An entity conducting a demonstration 
under this section shall be entitled to receive, with respect to each 
enrollee, for the period during which it is providing to such enrollee 
services under a demonstration under this section, such amounts as the 
Secretary shall provide, which amounts--
            (1) may include risk-based payments and non-risk based 
        payments by governmental programs, by third parties, or by 
        project enrollees, or any combination of such payments, and
            (2) may vary by project and by enrollee.
    (f) Number and Duration of Demonstration Projects.--
            (1) Request for applications.--The Secretary shall publish 
        a request for applications under this section not later than 
        one year after enactment of this Act.
            (2) Number and duration.--The Secretary shall authorize not 
        more than 25 demonstrations under this section, each of which 
        shall run for 7 years from the date of the award.
    (g) Evaluation and Reports.--The Secretary shall evaluate the 
demonstration projects under this section, and shall submit to the 
Congress--
            (1) an interim report, by three years after enactment, 
        describing the status of the demonstration and characteristics 
        of the approved projects; and
            (2) a final report, by one year after completion of such 
        demonstration projects, evaluating their effectiveness 
        (including cost-effectiveness), and discussing the advisability 
        of including some or all of the integrated models tested in the 
        demonstration as a benefit under the comprehensive benefit 
        package under title I of this Act, or under the programs under 
        title XVIII of the Social Security Act.
    (h) Authorization of Appropriations.--
            (1) For secretarial responsibilities.--
                    (A) In general.--There are authorized to be 
                appropriated $7,000,000 for fiscal year 1996, and 
                $4,500,000 for each of the 6 succeeding fiscal years, 
                for payment of costs of the Secretary in carrying out 
                this section (including costs for technical assistance 
                to potential service providers, and research and 
                evaluation), which amounts shall remain available until 
                expended.
                    (B) Set-aside for feasibility studies.--Of the 
                total amount authorized to be appropriated under 
                subparagraph (A), not less than $1,000,000 shall be 
                available for studies of the feasibility of systems to 
                provide integrated care for nonaged populations 
                (including physically disabled children and adults, the 
                chronically mentally ill, and individuals with 
                disabilities, and combinations of these groups).
            (2) For covered benefits.--There are authorized to be 
        appropriated $50,000,000 for the first fiscal year for which 
        grants are awarded under this section, and for each of the four 
        succeeding fiscal years, for payment of costs of benefits for 
        which no public or private program or entity is legally 
        obligated to pay.

SEC. 2602. PERFORMANCE REVIEW OF THE LONG-TERM CARE PROGRAMS.

    (a) In General.--The Secretary of Health and Human Services shall 
prepare and submit to the Congress--
            (1) an interim report, not later than the end of the 
        seventh full calendar year beginning after the date of the 
        enactment of this Act, and
            (2) a final report, not later than two years after the date 
        of the interim report,
evaluating the effectiveness of the programs established and amendments 
made by this subtitle (and including at a minimum the elements 
specified in subsection (b)).
    (b) Elements of Assessment.--The evaluations to be made, and 
included in the reports required pursuant to subsection (a), include at 
least the following:
            (1) State service delivery programs.--An evaluation of 
        States' effectiveness in meeting the needs for home and 
        community-based services (including personal assistance 
        services) of individuals with disabilities (including 
        individuals who do, and who do not, meet the eligibility 
        criteria for the service program under part 1, individuals of 
        different ages, type and degree of disability, and income 
        levels, members of minority groups, and individuals residing in 
        rural areas).
            (2) Service access.--An evaluation of the degree of (and 
        obstacles to) access of individuals with disabilities to needed 
        home and community-based services and to inpatient services.
            (3) Quality.--An evaluation of the quality of long-term 
        care services available.
            (4) Private insurance.--An evaluation of the performance of 
        the private sector in offering affordable long-term care 
        insurance that provides adequate protection against the costs 
        of long-term care, and of the effectiveness of Federal 
        standards and State enforcement, pursuant to part 3, in 
        adequately protecting long-term care insurance consumers.
            (5) Cost issues.--An evaluation of the effectiveness of 
        amendments made by this subtitle in containing the costs of 
        long-term care, and in limiting the share of such costs borne 
        by individuals with lower incomes.
            (6) Service coordination and integration.--An evaluation of 
        the effectiveness of the programs established or amended under 
        this subtitle in achieving coordination and integration of 
        long-term care services, and of such services with acute care 
        services and social services, and in ensuring provision of 
        services in the least restrictive setting possible.

                                                              Title III

                  TITLE III--PUBLIC HEALTH INITIATIVES

                       table of contents of title

                                                                   Page
        Subtitle A--Workforce Priorities Under Federal Payments

 Part 1--Institutional Costs of Graduate Medical Education; Workforce 
       subpart a--national council regarding workforce priorities
Sec. 3001subpart b--authorized positions in specialty training      504
Sec. 3011. Cooperation regarding approved physician training        506
                            programs.
Sec. 3012. Annual authorization of number of specialty              509
                            positions; requirements 
                            regarding primary health care.
Sec. 3subpart c--institutional costs of graduate medical education  513
Sec. 3031. Federal formula payments to approved physician           515
                            training programs.
Sec. 3032. Application for payments.........................        516
Sec. 3033. Availability of funds for payments; annual amount        517
                            of payments.
Sec. 3034. Additionalsubpart d--general provisions..........        522
Sec. 3041. Definitisubpart e--transitional provisions.......        526
Sec. 3051. Transitional payments to institutions............        527
 Part 2--Institutional Costs of Graduate Nursing Education; Workforce 
                               Priorities

Sec. 3061. National council; authorized graduate nurse              533
                            training positions; 
                            institutional costs.
Sec. 3062. Applicability of part 1 provisions...............        535
Sec. 3063. Funding..........................................        536
                        Part 3--Related Programs

Sec. 3071. Programs of the Secretary of Health and Human            536
                            Services.
Sec. 3072. Programs of the Secretary of Labor...............        540
Sec. 3073. National Institute for Health Care Workforce             543
                            Development.
Sec. 3074. Requirement for certain programs regarding               546
                            redeployment of health care 
                            workers.
                  Subtitle B--Academic Health Centers

                        Part 1--Formula Payments

Sec. 3101. Federal formula payments to academic health              548
                            centers.
Sec. 3102. Request for payments.............................        551
Sec. 3103. Availability of funds for payments; annual amount        552
                            of payments.
Sec. 3104. Additional funding provisions....................        554
         Part 2--Access of Patients to Academic Health Centers

Sec. 3131. Contracts for ensuring access to centers.........        558
Sec. 3132. Discretionary grants regarding access to centers.        559
                Subtitle C--Health Research Initiatives

                 Part 1--Programs for Certain Agencies

Sec. 3201. Biomedical and behavioral research on health 
                                      promotion and disease 
prevention.                                                         560
Sec. 3202. Health services research.........................        561
                      Part 2--Funding for Programs

Sec. 3211. Authorizations of appropriations.................        563
    Subtitle D--Core Functions of Public Health Programs; National 
                Initiatives Regarding Preventive Health

                            Part 1--Funding

Sec. 3301. Authorizations of appropriations.................        564
            Part 2--Core Functions of Public Health Programs

Sec. 3311. Purposes.........................................        565
Sec. 3312. Grants to States for core health functions.......        565
Sec. 3313. Submission of information........................        570
Sec. 3314. Reports..........................................        571
Sec. 3315. Application for grant............................        571
Sec. 3316. General provisions...............................        572
Sec. 3317. Allocations for certain activities...............        572
Sec. 3318. Definitions......................................        573
  Part 3--National Initiatives Regarding Health Promotion and Disease 
                               Prevention

Sec. 3331. Grants for national prevention initiatives.......        573
Sec. 3332. Priorities.......................................        575
Sec. 3333. Submission of information........................        576
Sec. 3334. Application for grant............................        577
   Subtitle E--Health Services for Medically Underserved Populations

              Part 1--Community and Migrant Health Centers

Sec. 3401. Authorizations of appropriations.................        578
Sec. 3402. Use of funds.....................................        579
             Part 2--Isubpart a--purposes; fundinglth Care
Sec. 3411. Purposes.........................................        579
subpart b--development of qualified community health plans and practice 
                                networks
Sec. 3421. Grants and contracts for development of plans and        581
                            networks.
Sec. 3422. Preferences in making awards of assistance.......        586
Sec. 3423. Certain uses of awards...........................        587
Sec. 3424. Accessibility of services........................        589
Sec. 3425. Additional agreements............................        592
Sec. 3426. Submission of certain information................        594
Sec. 3427. Reports; audits..................................        595
Sec. 3428. Application for assistance.......................        595
Ssubpart c--capital cost of development of qualified community health 6
                      plans and practice networks
Sec. 3441. Loans and loan guarantees regarding plans and            596
                            networks.
Sec. 3442. Certain requirements.............................        598
Sec. 3443. Defaults; right of recovery......................        600
Sec. 3444. Provisions regarding construction or expansion of        603
                            facilities.
Sec. 3445. Application for assistance.......................        604
Sec. 3446. Administratsubpart d--enabling services..........        605
Sec. 3461. Grants and contracts for enabling services.......        605
Sec. 3462. Authorizations of appropriations.................        608
                 Part 3--National Health Service Corps

Sec. 3471. Authorizations of appropriations.................        608
Sec. 3472. Allocation for participation of nurses in                609
                            scholarship and loan repayment 
                            programs.
      Part 4--Payments to Hospitals Serving Vulnerable Populations

Sec. 3481. Payments to hospitals............................        610
Sec. 3482. Identification of eligible hospitals.............        612
Sec. 3483. Amount of payments...............................       3483
Sec. 3484. Base year........................................        615
               Subtitle F--Mental Health; Substance Abuse

                      Part 1--Financial Assistance

Sec. 3501. Authorizations of appropriations.................        615
Sec. 3502. Supplemental formula grants for States regarding 
                            activities under part B of title 
                               XIX of Public Health Service 
Act.                                                                616
Sec. 3503. Capital costs of development of certain centers          621
                            and clinics.
           Part 2--Authoritsubpart a--reportticipating States
Sec. 3511. Report on intsubpart b--pilot programh systems...        622
Sec. 3521. Pilot program....................................        626
   Subtitle G--Comprehensive School Health Education; School-Related 
                            Health Services

                       Part 1--General Provisions

Sec. 3601. Purposes.........................................        627
Sec. 3602. Definitions......................................        629
          Part 2--School Health Education; General Provisions

Sec. 3611. Authorizations of appropriations.................        631
Sec. 3612. Waivers of statutory and regulatory requirements.        632
  Part 3subpart a--planning grants for state education agenciesencies
Sec. 3621. Application for grant............................        636
Sec. 3622. Approval of Secretary............................        638
Sec. 3623. Amount of grant..................................        638
Sec. subpart b--implementation grants for state education agencies  639
Sec. 3631. Application for grant............................        640
Sec. 3632. Selection of grantees............................        642
Sec. 3633. Amount of grant..................................        642
Sec. 3634. Authorized activities; limitation on                     643
                            administrative costs.
Sec. 3635. Subgrantsubpart c--state and local reports.......        644
Sec. 3641. State and local reports..........................        646
 Part 4--School Health Education; Grants to Certain Local Educational 
                         subpart a--eligibility
Sec. 365subpart b--planning grants for local education agencies     647
Sec. 3661. Application for grant............................        647
Sec. 3662. Selection of grantees............................        649
Sec. 3663. Amount of grant..................................        649
Sec.subpart c--implementation grants for local educational agencies 650
Sec. 3671. Application for grant............................        651
Sec. 3672. Selection of grantees............................        653
Sec. 3673. Amount of grant..................................        654
Sec. 3674. Authorized activities............................        655
Sec. 3675. Reports..........................................        655
            subpart a--development and operation of projects
Sec. 3681. Authorizations of appropriations.................        656
Sec. 3682. Eligibility for development and operation grants.        656
Sec. 3683. Preferences......................................        658
Sec. 3684. Grants for development of projects...............        659
Sec. 3685. Grants for operation of projects.................        662
Sec. 3686. Fsubpart b--capital costs of developing projects.        666
Sec. 3691. Loans and loan guarantees regarding projects.....        666
Sec. 3692. Funding..........................................        667
              Subtitle H--Public Health Service Initiative

Sec. 3701. Public health service initiative.................        667
       Subtitle I--Coordination With COBRA Continuation Coverage

Sec. 3801. Public Health Service Act; coordination with             668
                            COBRA continuation coverage.

                                                  Title III, Subtitle A

        Subtitle A--Workforce Priorities Under Federal Payments

 PART 1--INSTITUTIONAL COSTS OF GRADUATE MEDICAL EDUCATION; WORKFORCE 
                               PRIORITIES

       Subpart A--National Council Regarding Workforce Priorities

SEC. 3001. NATIONAL COUNCIL ON GRADUATE MEDICAL EDUCATION.

    (a) In General.--There is established within the Department of 
Health and Human Services a council to be known as the National Council 
on Graduate Medical Education.
    (b) Duties.--The Secretary shall carry out subpart B acting through 
the National Council.
    (c) Composition.--
            (1) In general.--The membership of the National Council 
        shall include individuals who are appointed to the Council from 
        among individuals who are not officers or employees of the 
        United States. Such individuals shall be appointed by the 
        Secretary, and shall include individuals from each of the 
        following categories:
                    (A) Consumers of health care services.
                    (B) Physicians who are faculty members of medical 
                schools.
                    (C) Physicians in private practice who are not 
                physicians described in subparagraph (B).
                    (D) Officers or employees of regional and corporate 
                health alliances.
                    (E) Officers or employees of health care plans that 
                participate in such alliances.
                    (F) Such other individuals as the Secretary 
                determines to be appropriate.
            (2) Ex officio members; other federal officers or 
        employees.--The membership of the National Council shall 
        include individuals designated by the Secretary to serve as 
        members of the Council from among Federal officers or employees 
        who are appointed by the President, or by the Secretary or 
        other Federal officers who are appointed by the President with 
        the advice and consent of the Senate.
    (d) Chair.--The Secretary shall, from among members of the National 
Council appointed under subsection (c)(1), designate an individual to 
serve as the Chair of the Council.
    (e) Definitions.--For purposes of this subtitle:
            (1) The term ``medical school'' means a school of medicine 
        (as defined in section 799 of the Public Health Service Act) or 
        a school of osteopathic medicine (as defined in such section).
            (2) The term ``National Council'' means the council 
        established in subsection (a).

         Subpart B--Authorized Positions in Specialty Training

SEC. 3011. COOPERATION REGARDING APPROVED PHYSICIAN TRAINING PROGRAMS.

    (a) In General.--With respect to an approved physician training 
program in a medical specialty, a funding agreement for payments under 
section 3031 for a calendar year is that the program will ensure that 
the number of individuals enrolled in the program in the subsequent 
academic year is in accordance with this subpart.
    (b) Definitions.--
            (1) Approved program.--For purposes of this subtitle:
                    (A) The term ``approved physician training 
                program'', with respect to the medical speciality 
                involved, means a residency or other postgraduate 
                program that trains physicians and meets the following 
                conditions:
                            (i) Participation in the program may be 
                        counted toward certification in the medical 
                        specialty.
                            (ii) The program is accredited by the 
                        Accreditation Council on Graduate Medical 
                        Education, or approved by the Council on 
                        Postgraduate Training of the American 
                        Osteopathic Association.
                    (B) The term ``approved physician training 
                program'' includes any postgraduate program described 
                in subparagraph (A) that provides health services in an 
                ambulatory setting, without regard to whether the 
                program provides inpatient hospital services.
                    (C) The term ``approved physician training 
                program'' includes any postgraduate program described 
                in subparagraph (A), whether operated by academic 
                health centers, teaching hospitals, multispecialty 
                group practices, ambulatory care providers, prepaid 
                health plans, or other entities.
            (2) Eligible program; subpart definition.--For purposes of 
        this subpart, the term ``eligible program'', with respect to an 
        academic year, means an approved physician training program 
        that receives payments under subpart C for the calendar year in 
        which the academic year begins.
            (3) Other definitions.--For purposes of this subtitle:
                    (A)(i) The term ``academic year'' means the 1-year 
                period beginning on July 1. The academic year beginning 
                July 1, 1993, is academic year 1993-94.
                    (ii) With respect to the funding agreement 
                described in subsection (a), the term ``subsequent 
                academic year'' means the academic year beginning July 
                1 of the calendar year for which payments are to be 
                made under the agreement.
                    (B) The term ``funding agreement'', with respect to 
                payments under section 3031 to an eligible program, 
                means that the Secretary may make the payments only if 
                the program makes the agreement involved.
                    (C) The term ``medical specialty'' includes all 
                medical, surgical, and other physician specialties and 
                subspecialties.

SEC. 3012. ANNUAL AUTHORIZATION OF NUMBER OF SPECIALTY POSITIONS; 
              REQUIREMENTS REGARDING PRIMARY HEALTH CARE.

    (a) Annual Authorization of Number of Positions.--In the case of 
each medical specialty, the National Council shall, pursuant to section 
3011, designate for each academic year the number of individuals 
nationwide who are authorized to be enrolled in eligible programs. The 
preceding sentence is subject to subsection (c)(2).
    (b) Primary Health Care.--
            (1) In general.--Subject to paragraph (2), in carrying out 
        subsection (a) for an academic year, the National Council shall 
        ensure that, of the class of training participants entering 
        eligible programs for academic year 1998-99 or any subsequent 
        academic year, the percentage of such class that completes 
        eligible programs in primary health care is not less than 55 
        percent (without regard to the academic year in which the 
        members of the class complete the programs).
            (2) Rule of construction.--The requirement of paragraph (1) 
        regarding a percentage applies in the aggregate to training 
        participants entering eligible programs for the academic year 
        involved, and not individually to any eligible program.
    (c) Designations Regarding 3-Year Periods.--
            (1) Designation periods.--For each medical specialty, the 
        National Council shall make the annual designations under 
        subsection (a) for periods of 3 academic years.
            (2) Initial period.--The first designation period 
        established by the National Council after the date of the 
        enactment of this Act shall be the academic years 1998-99 
        through 2000-01.
    (d) Certain Considerations in Designating Annual Numbers.--
            (1) In general.--Factors considered by the National Council 
        in designating the annual number of specialty positions for an 
        academic year for a medical specialty shall include the extent 
        to which there is a need for additional practitioners in the 
        speciality, as indicated by the following:
                    (A) The incidence and prevalence (in the general 
                population and in various other populations) of the 
                diseases, disorders, or other health conditions with 
                which the specialty is concerned.
                    (B) The number of physicians who will be practicing 
                in the specialty in the academic year.
                    (C) The number of physicians who will be practicing 
                in the specialty at the end of the 5-year period 
                beginning on the first day of the academic year.
            (2) Recommendations of private organizations.--In 
        designating the annual number of specialty positions for an 
        academic year for a medical specialty, the National Council 
        shall consider the recommendations of organizations 
        representing physicians in the specialty and the 
        recommendations of organizations representing consumers of the 
        services of such physicians.
            (3) Total of respective annual numbers.--
                    (A) Subject to subparagraph (B), for academic year 
                1998-99 and subsequent academic years, the National 
                Council shall ensure that the total of the respective 
                annual numbers designated under subsection (a) for an 
                academic year is a total that--
                            (i) bears a relationship to the number of 
                        individuals who graduated from medical schools 
                        in the United States in the preceding academic 
                        year; and
                            (ii) is consistent with the purposes of 
                        this subpart.
                    (B) For each of the academic years 1998-99 through 
                2002-03, the total determined under subparagraph (A) 
                shall be reduced by a percentage determined by the 
                National Council.
    (e) Definitions.--For purposes of this subtitle:
            (1) The term ``annual number of specialty positions'', with 
        respect to a medical specialty, means the number designated by 
        the National Council under subsection (a) for eligible programs 
        for the academic year involved.
            (2) The term ``designation period'' means a 3-year period 
        under subsection (c)(1) for which designations under subsection 
        (a) are made by the National Council.
            (3) The term ``primary health care'' means the following 
        medical specialties: Family medicine, general internal 
        medicine, general pediatrics, and obstetrics and gynecology.
            (4) The term ``specialty position'' means a position as a 
        training participant.
            (5) The term ``training participant'' means an individual 
        who is enrolled in an approved physician training program.

SEC. 3013. ALLOCATIONS AMONG SPECIALITIES AND PROGRAMS.

    (a) In General.--For each academic year, the National Council shall 
for each medical specialty make allocations among eligible programs of 
the annual number of specialty positions that the Council has 
designated for such year. The preceding sentence is subject to 
subsection (b)(3).
    (b) Allocations Regarding 3-Year Period.--
            (1) In general.--For each medical specialty, the National 
        Council shall make the annual allocations under subsection (a) 
        for periods of 3 academic years.
            (2) Advance notice to programs.--With respect to the first 
        academic year of an allocation period established by the 
        National Council, the National Council shall, not later than 
        July 1 of the preceding academic year, notify each eligible 
        program of the allocations made for the program for each of the 
        academic years of the period.
            (3) Initial period.--The first allocation period 
        established by the National Council after the date of the 
        enactment of this Act shall be the academic years 1998-99 
        through 2000-01.
    (c) Certain Considerations.--
            (1) Geographic areas; quality of programs.--In making 
        allocations under subsection (a) for eligible programs of the 
        various geographic areas, the National Council shall include 
        among the factors considered the historical distribution among 
        the areas of approved physician training programs, and the 
        quality of such programs.
            (2) Underrepresentation of minority groups.--In making an 
        allocation under subsection (a) for an eligible program, the 
        National Council shall include among the factors considered the 
        following:
                    (A) The extent to which the population of training 
                participants in the program includes training 
                participants who are members of racial or ethnic 
                minority groups.
                    (B) With respect to a racial or ethnic group 
                represented among the training participants, the extent 
                to which the group is underrepresented in the field of 
                medicine generally and in the various medical 
                specialities.
            (3) Recommendations of private organizations.--In making 
        allocations under subsection (a) for eligible programs, the 
        National Council shall consider the recommendations of 
        organizations representing physicians in the medical 
        specialties and the recommendations of organizations 
        representing consumers of the services of such physicians.
    (d) Definitions.--For purposes of this subtitle, the term 
``allocation period'' means a 3-year period under subsection (b)(1) for 
which allocations under subsection (a) are made by the National 
Council.

      Subpart C--Institutional Costs of Graduate Medical Education

SEC. 3031. FEDERAL FORMULA PAYMENTS TO APPROVED PHYSICIAN TRAINING 
              PROGRAMS.

    (a) In General.--In the case of an approved physician training 
program that in accordance with section 3032 submits to the Secretary 
an application for calendar year 1996 or any subsequent calendar year, 
the Secretary shall make payments for such year to the program for the 
purpose specified in subsection (b). The Secretary shall make the 
payments in an amount determined in accordance with section 3033, and 
may administer the payments as a contract, grant, or cooperative 
agreement.
    (b) Payments for Operation of Approved Physician Training 
Programs.--The purpose of payments under subsection (a) is to assist an 
eligible program with the costs of operation. A funding agreement for 
such payments is that the approved physician training program involved 
will expend the payments only for such purpose.
    (c) Eligible Program; Subpart Definition.--For purposes of this 
subpart, the term ``eligible program'', with respect to the calendar 
year involved, means an approved physician training program that 
submits to the Secretary an application for such year in accordance 
with section 3032.

SEC. 3032. APPLICATION FOR PAYMENTS.

    (a) In General.--For purposes of section 3031(a), an application 
for payments under such section for a calendar year is in accordance 
with this section if--
            (1) the approved physician training program involved 
        submits the application not later than the date specified by 
        the Secretary;
            (2) the application demonstrates that the condition 
        described in subsection (b) is met with respect to the program;
            (3) the application contains each funding agreement 
        described in this part and the application provides such 
        assurances of compliance with the agreements as the Secretary 
        may require; and
            (4) 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 part.
    (b) Certain Conditions.--An approved physician training program 
meets the condition described in this subsection for receiving payments 
under section 3031 for a calendar year if the institution within which 
the program operates agrees that such payments will be made by the 
Secretary directly to the program (and such agreement is included in 
the application under subsection (a)), and the Secretary shall ensure 
that such institution is permitted to participate as a provider in a 
regional or corporate alliance health plan during such year only if 
each of the approved physician training programs of the institution 
meets the requirements for receiving payments under such section for 
such year.

SEC. 3033. AVAILABILITY OF FUNDS FOR PAYMENTS; ANNUAL AMOUNT OF 
              PAYMENTS.

    (a) Annual Health Professions Workforce Account.--
            (1) In general.--Subject to paragraph (2) and section 3034, 
        the amount available for a calendar year for making payments 
        under sections 3031 and 3051 (constituting an account to be 
        known as the annual health professions workforce account) is 
        the following, as applicable to the calendar year:
                    (A) In the case of calendar year 1996, 
                $3,200,000,000.
                    (B) In the case of calendar year 1997, 
                $3,550,000,000.
                    (C) In the case of calendar year 1998, 
                $4,800,000,000.
                    (D) In the case of each of the calendar years 1999 
                and 2000, $5,800,000,000.
                    (E) In the case of each subsequent calendar year, 
                the amount specified in subparagraph (D) increased by 
                the product of such amount and the general health care 
                inflation factor for such year (as defined in 
                subsection (d)).
            (2) Transitional provision.--
                    (A) With respect to making payments under sections 
                3031 and 3051 for calendar year 1996 or 1997, the 
                Secretary shall first make payments under section 3031 
                to eligible programs described in subparagraph (B) in 
                the amount determined for the programs under subsection 
                (b) for such year, and then, from such amounts as 
                remain available in the annual health professions 
                workforce account for such year, shall make payments 
                under section 3031 to other eligible programs and shall 
                make payments under section 3051.
                    (B) An eligible program described in this 
                subparagraph is such a program that is operated in a 
                State that is a participating State under title I.
    (b) Amount of Payments for Individual Eligible Programs.--
            (1) In general.--Subject to the annual health professions 
        workforce account available for a calendar year, the amount of 
        payments required in section 3031 to be made to an eligible 
        program for the calendar year is an amount equal to the product 
        of--
                    (A) the number of full-time equivalent training 
                participants in the program; and
                    (B) the national average of the costs of such 
                programs in training such a participant, as determined 
                by consideration of the following factors (and as 
                adjusted under paragraph (2)):
                            (i) The national average salary of training 
                        participants.
                            (ii) The national average costs of such 
                        programs in providing for faculty supervision 
                        of training participants and for related 
                        activities.
            (2) Additional provisions regarding national average 
        cost.--
                    (A) The Secretary shall in accordance with 
                paragraph (1)(B) determine, for academic year 1992-93, 
                an amount equal to the national average described in 
                such paragraph with respect to training a participant 
                in an approved physician training program in the 
                medical specialty involved. The national average 
                applicable under such paragraph for a calendar year for 
                such programs is, subject to subparagraph (B), the 
                amount determined under the preceding sentence 
                increased by the amount necessary to offset the effects 
                of inflation occurring since academic year 1992-93, as 
                determined through use of the consumer price index.
                    (B) The national average determined under 
                subparagraph (A) and applicable to a calendar year 
                shall, in the case of the eligible program involved, be 
                adjusted by a factor to reflect regional differences in 
                the applicable wage and wage-related costs.
    (c) Limitation.--If, subject to subsection (a)(2), the annual 
health professions workforce account available for a calendar year is 
insufficient for providing each eligible program with the amount of 
payments determined under subsection (b) for the program for such year, 
the Secretary shall make such pro rata reductions in the amounts so 
determined as may be necessary to ensure that the total of payments 
made under section 3031 for such year equals the total of such account.
    (d) Definitions.--For purposes of this subtitle:
            (1) The term ``annual health professions workforce 
        account'' means the account established pursuant to subsection 
        (a)(1).
            (2) The term ``consumer price index'' has the meaning given 
        such term in section 1902.
            (3) The term ``general health care inflation factor'', with 
        respect to a year, has the meaning given such term in section 
        6001(a)(3) for such year.

SEC. 3034. ADDITIONAL FUNDING PROVISIONS.

    (a) Sources of Funds for Annual Health Professions Workforce 
Account.--The amount specified in section 3033(a)(1) for the annual 
health professions workforce account for a calendar year shall be 
derived from the sources specified in subsection (b).
    (b) Contributions From Medicare Trust Funds, Regional Alliances, 
and Corporate Alliances.--For purposes of subsection (a), the sources 
specified in this subsection for a calendar year are the following:
            (1) Transfers made by the Secretary under section 4051.
            (2) Payments made by regional alliances under section 1353 
        and--
                    (A) in the case of each of the calendar years 1996 
                and 1997, transferred in an amount equal to 50 percent 
                of such payments made for the calendar year involved; 
                and
                    (B) in the case of calendar year 1998 and each 
                subsequent calendar year, transferred in an amount 
                equal to the aggregate regional alliance portion 
                determined under subsection (c)(2)(A).
            (3) The transfer made under subsection (d)(1).
    (c) Contributions From Regional and Corporate Alliances.--
            (1) Determination of aggregate regional and corporate 
        alliance amount.--For purposes regarding the provision of funds 
        for the annual health professions workforce account for a 
        calendar year (other than calendar year 1996 or 1997), the 
        Secretary shall determine an aggregate regional and corporate 
        alliance amount, which amount is to be paid by such alliances 
        pursuant to paragraphs (2)(B) and (3) of subsection (b), 
        respectively, and which amount shall be equal to the difference 
        between--
                    (A) the amount specified in section 3033(a)(1) for 
                the annual health professions workforce account for 
                such year; and
                    (B) the amount transferred under section 4051 for 
                the year.
            (2) Allocation of amount among regional and corporate 
        alliances.--With respect to the aggregate regional and 
        corporate alliance amount determined under paragraph (1) for a 
        calendar year (other than calendar year 1996 or 1997)--
                    (A) the aggregate regional alliance portion of such 
                amount is the product of such amount and the percentage 
                constituted by the ratio of the total plan payments of 
                regional alliances to the combined total plan payments 
                of regional alliances and corporate alliances; and
                    (B) the aggregate corporate alliance portion of 
                such amount is the product of such amount and the 
                percentage constituted by the ratio of the total plan 
                payments of corporate alliances to such combined total 
                plan payments.
    (d) Compliance Regarding Corporate Alliances.--
            (1) In general.--Effective January 15 of calendar year 1996 
        and each subsequent calendar year, there is hereby transferred 
        to the Secretary, out of any money in the Treasury not 
        otherwise appropriated--
                    (A) in the case of each of the calendar years 1996 
                and 1997, an amount equal to the difference between--
                            (i) the amount specified in section 
                        3033(a)(1) for the annual health professions 
                        workforce account for the calendar year 
                        involved; and
                            (ii) the sum of the amount transferred 
                        under section 4051 for such year and the amount 
                        transferred under subsection (b)(2)(A) for such 
                        year; and
                    (B) in the case of calendar year 1998 and each 
                subsequent calendar year, an amount equal to the 
                aggregate corporate alliance portion determined under 
                subsection (c)(2)(B) for the calendar year involved.
            (2) Manner of compliance.--The payment by corporate 
        alliances of the tax imposed under section 3461 of the Internal 
        Revenue Code of 1986 (as added by section 7121 of this Act), 
        together with the transfer made in paragraph (1)(B) for the 
        calendar year involved, is deemed to be the payment required 
        pursuant to subsection (c)(1) for corporate alliances for such 
        year.
            (3) Graduate nurse education.--Effective January 15 of 
        calendar year 1996 and each subsequent calendar year, there is 
        hereby transferred to the Secretary, out of any money in the 
        Treasury not otherwise appropriated, 50 percent of the amount 
        specified in section 3063(b) with respect to the annual 
        graduate nurse training account.
    (e) Definitions.--For purposes of this subtitle, the term ``plan 
payments'' with respect to a regional or corporate alliance, means the 
amount paid to health plans by the alliance.

                     Subpart D--General Provisions

SEC. 3041. DEFINITIONS.

    For purposes of this subtitle:
            (1) The term ``academic year'' has the meaning given such 
        term in section 3011(b).
            (2) The term ``allocation period'' has the meaning given 
        such term in section 3013(d).
            (3) The term ``annual health professions workforce 
        account'' has the meaning given such term in section 3033(d).
            (4) The term ``annual number of specialty positions'' has 
        the meaning given such term in section 3012(e).
            (5) The term ``approved physician training program'' has 
        the meaning given such term in section 3011(b).
            (6) The term ``consumer price index'' has the meaning given 
        such term in section 3033(d).
            (7) The term ``designation period'' has the meaning given 
        such term in section 3012(e).
            (8) The term ``eligible program'' has the meaning given 
        such term in section 3011(b), in the case of subpart B; and has 
        the meaning given such term in section 3031(c), in the case of 
        subpart C.
            (9) The term ``funding agreement'' has the meaning given 
        such term in section 3011(b).
            (10) The term ``general health care inflation factor'' has 
        the meaning given such term in section 3033(d).
            (11) The term ``medical school'' has the meaning given such 
        term in section 3001(e).
            (12) The term ``medical specialty'' has the meaning given 
        such term in section 3011(b).
            (13) The term ``National Council'' has the meaning given 
        such term in section 3001(e).
            (14) The term ``plan payments'' has the meaning given such 
        term in section 3034(e).
            (15) The term ``primary health care'' has the meaning given 
        such term in section 3012(e).
            (16) The term ``specialty position'' has the meaning given 
        such term in section 3012(e).
            (17) The term ``training participant'' has the meaning 
        given such term in section 3012(e).

                   Subpart E--Transitional Provisions

SEC. 3051. TRANSITIONAL PAYMENTS TO INSTITUTIONS.

    (a) Payments Regarding Effects of Subpart B Allocations.--For each 
of the four calendar years specified in subsection (b)(2), in the case 
of an institution that submits to the Secretary an application for such 
year in accordance with subsection (d), the Secretary shall make 
payments for the year to the institution for the purpose specified in 
subsection (c). The Secretary shall make the payments in an amount 
determined in accordance with subsection (e), and may administer the 
payments as a contract, grant, or cooperative agreement.
    (b) Institutions Losing Specialty Positions; Relevant Years 
Regarding Payments.--
            (1) Institutions losing specialty positions.--The Secretary 
        may make payments under subsection (a) to an institution only 
        if, with respect to the calendar year involved, the institution 
        meets the following conditions:
                    (A) The institution operates one or more programs 
                that--
                            (i) are approved physician training 
                        programs; and
                            (ii) are receiving payments under section 
                        3031 for such year.
                    (B) The aggregate number of speciality positions in 
                such programs (in the medical specialities with respect 
                to which such payments are made) is below the aggregate 
                number of such positions at the institution for 
                academic year 1993-94 as a result of allocations under 
                subpart B.
            (2) Relevant years.--The Secretary may make payments under 
        subsection (a) to an institution only for the first four 
        calendar years after calendar 1997 for which the institution 
        meets the conditions described in paragraph (1).
            (3) Eligible institution.--For purposes of this section, 
        the term ``eligible institution'' means an institution that 
        submits to the Secretary an application in accordance with 
        subsection (d).
    (c) Purpose of Payments.--The purpose of payments under subsection 
(a) is to assist an eligible institution with the costs of operation. A 
funding agreement for such payments is that the institution involved 
will expend the payments only for such purpose.
    (d) Application for Payments.--For purposes of subsection (a), an 
application for payments under such subsection is in accordance with 
this subsection if the institution involved submits the application not 
later than the date specified by the Secretary; the application 
demonstrates that the institution meets the conditions described in 
subsection (b)(1) and that the institution has cooperated with the 
approved physician training programs of the institution in meeting the 
condition described in section 3032(b); the application contains each 
funding agreement described in this subpart and the application 
provides such assurances of compliance with the agreements as the 
Secretary may require; 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 subpart.
    (e) Amount of Payments.--
            (1) In general.--Subject to the annual health professions 
        workforce account available for the calendar year involved, the 
        amount of payments required in subsection (a) to be made to an 
        eligible institution for such year is the product of the amount 
        determined under paragraph (2) and the applicable percentage 
        specified in paragraph (3).
            (2) Number of specialty positions lost; national average 
        salary.--For purposes of paragraph (1), the amount determined 
        under this paragraph for an eligible institution for the 
        calendar year involved is the product of--
                    (A) an amount equal to the aggregate number of 
                full-time equivalent specialty positions lost; and
                    (B) the national average salary of training 
                participants.
            (3) Applicable percentage.--For purposes of paragraph (1), 
        the applicable percentage for a calendar year is the following, 
        as applicable to such year:
                    (A) For the first calendar year after calendar 1997 
                for which the eligible institution involved meets the 
                conditions described in subsection (b)(1), 100 percent.
                    (B) For the second such year, 75 percent.
                    (C) For the third such year, 50 percent.
                    (D) For the fourth such year, 25 percent.
            (4) Determination of specialty positions lost.--
                    (A) For purposes of this subsection, the aggregate 
                number of specialty positions lost, with respect to a 
                calendar year, is the difference between--
                            (i) the aggregate number of specialty 
                        positions described in subparagraph (B) that 
                        are estimated for the eligible institution 
                        involved for the academic year beginning in 
                        such calendar year; and
                            (ii) the aggregate number of such specialty 
                        positions at the institution for academic year 
                        1993-94.
                    (B) For purposes of subparagraph (A), the specialty 
                positions described in this subparagraph are specialty 
                positions in the medical specialities with respect to 
                which payments under section 3031 are made to the 
                approved physician training programs of the eligible 
                institution involved.
            (5) Additional provision regarding national average 
        salary.--
                    (A) The Secretary shall determine, for academic 
                year 1992-93, an amount equal to the national average 
                described in paragraph (2)(B). The national average 
                applicable under such paragraph for a calendar year is, 
                subject to subparagraph (B), the amount determined 
                under the preceding sentence increased by an amount 
                necessary to offset the effects of inflation occurring 
                since academic year 1992-93, as determined through use 
                of the consumer price index.
                    (B) The national average determined under 
                subparagraph (A) and applicable to a calendar year 
                shall, in the case of the eligible institution 
                involved, be adjusted by a factor to reflect regional 
                differences in the applicable wage and wage-related 
                costs.

 PART 2--INSTITUTIONAL COSTS OF GRADUATE NURSING EDUCATION; WORKFORCE 
                               PRIORITIES

SEC. 3061. NATIONAL COUNCIL; AUTHORIZED GRADUATE NURSE TRAINING 
              POSITIONS; INSTITUTIONAL COSTS.

    (a) Program Regarding Graduate Nurse Training Programs.--The 
Secretary shall, in accordance with this part, carry out a program with 
respect to graduate nurse training programs that is equivalent to the 
program carried out under part 1 with respect to approved physician 
training programs.
    (b) Definitions.--For purposes of this part:
            (1) The term ``graduate nurse training programs'' means 
        programs for advanced nurse education, programs for education 
        as nurse practitioners, programs for education as nurse 
        midwives, programs for education as nurse anesthetists, and 
        such other programs for training in clinical nurse specialties 
        as are determined by the Secretary to require advanced 
        education.
            (2) The term ``graduate nurse training position'' means a 
        position as an individual who is enrolled in a graduate nurse 
        training program.
            (3) The term ``programs for advanced nurse education'' 
        means programs meeting the conditions to be programs for which 
        awards of grants and contracts may be made under section 821 of 
        the Public Health Service Act.
            (4) The term ``programs for education as nurse 
        practitioners'' means programs meeting the conditions to be 
        programs for which awards of grants and contracts may be made 
        under section 822 of the Public Health Service Act for 
        education as a nurse practitioners.
            (5) The term ``programs for education as nurse midwives'' 
        means programs meeting the conditions to be programs for which 
        awards of grants and contracts may be made under section 822 of 
        the Public Health Service Act for education as nurse midwives.
            (6) The term ``programs for education as nurse 
        anesthetists'' means programs meeting the conditions to be 
        programs for which awards of grants may be made under section 
        831 of the Public Health Service Act for education as nurse 
        anesthetists.

SEC. 3062. APPLICABILITY OF PART 1 PROVISIONS.

    (a) In General.--The provisions of part 1 apply to the program 
carried out under section 3061 to the same extent and in the same 
manner as such provisions apply to the program carried out under part 
1, subject to the subsequent provisions of this section. Section 3051 
does not apply for purposes of the preceding sentence.
    (b) National Council.--With respect to section 3001 as applied to 
this part, the council shall be known as the National Council on 
Graduate Nurse Education (in this part referred to as the ``National 
Council''). The provisions of section 851 of the Public Health Service 
Act regarding the composition of the council under such section apply 
to the composition of the National Council to the same extent and in 
the same manner as such provisions apply to the council under such 
section 851.
    (c) Allocation of Graduate Nurse Training Positions; Formula 
Payments for Operating Costs.--With respect to subparts B and C of part 
1 as applied to this part--
            (1) the funding agreement described in section 3011 is to 
        be made by graduate nurse training programs;
            (2) designations under section 3012 and allocations under 
        section 3013 apply to graduate nurse training positions; and
            (3) payments under section 3031 are to be made to graduate 
        nurse training programs, subject to the requirements for such 
        payments.

SEC. 3063. FUNDING.

    (a) In General.--With respect to sections 3033 and 3034 as applied 
to this part, the provisions of this section apply.
    (b) Annual Graduate Nurse Training Account.--Subject to subsection 
(c), the amount available for each calendar year for making payments 
pursuant to section 3062(c)(3) to graduate nurse training programs 
(constituting an account to be known as the annual graduate nurse 
training account) is $200,000,000.
    (c) Sources of Funds for Account.--The amount specified in 
subsection (b) for the annual graduate nurse training account for a 
calendar year shall be derived from the following sources:
            (1) The transfer under section 3034(d)(3).
            (2) The transfer under section 3104(d)(3).

                        PART 3--RELATED PROGRAMS

SEC. 3071. PROGRAMS OF THE SECRETARY OF HEALTH AND HUMAN SERVICES.

    (a) In General.--
            (1) Funding.--For purposes of carrying out the programs 
        described in this section, there is authorized to be 
        appropriated $400,000,000 for fiscal year 1994 and each 
        subsequent fiscal year (in addition to amounts that may 
        otherwise be authorized to be appropriated for carrying out the 
        programs).
            (2) Administration.--The programs described in this section 
        and carried out with amounts made available under subsection 
        (a) shall be carried out by the Secretary of Health and Human 
        Services.
    (b) Primary Care Physician and Physician Assistant Training.--For 
purposes of subsection (a), the programs described in this section 
include programs to support projects to train additional numbers of 
primary care physicians and physician assistants, including projects to 
enhance community-based generalist training for medical students, 
residents, and practicing physicians; to retrain mid-career physicians 
previously certified in a nonprimary care medical specialty; to expand 
the supply of physicians with special training to serve in rural and 
inner-city medically underserved areas; to support expansion of 
service-linked educational networks that train a range of primary care 
providers in community settings; to provide for training in managed 
care, cost-effective practice management, and continuous quality 
improvement; and to develop additional information on primary care 
workforce issues as required to meet future needs in health care.
    (c) Training of Underrepresented Minorities and Disadvantaged 
Persons.--For purposes of subsection (a), the programs described in 
this section include a program to support projects to increase the 
number of underrepresented minority and disadvantaged persons in 
medicine, osteopathy, dentistry, nursing, public health, and other 
health professions, including projects to provide continuing financial 
assistance for such persons entering health professions training 
programs; to increase support for recruitment and retention of such 
persons in the health professions; to maintain efforts to foster 
interest in health careers among such persons at the preprofessional 
level; and to increase the number of minority health professions 
faculty.
    (d) Nurse Training.--For purposes of subsection (a), the programs 
described in this section include a program to support projects to 
support midlevel provider training and address priority nursing 
workforce needs, including projects to train additional nurse 
practitioners and nurse midwives; to support baccalaureate-level nurse 
training programs providing preparation for careers in teaching, 
community health service, and specialized clinical care; to train 
additional nurse clinicians and nurse anesthetists; to support 
interdisciplinary school-based community nursing programs; and to 
promote research on nursing workforce issues.
    (e) Inappropriate Practice Barriers; Full Utilization of Skills.--
For purposes of subsection (a), the programs described in this section 
include a program--
            (1) to develop and encourage the adoption of model 
        professional practice statutes for advanced practice nurses and 
        physician assistants, and to otherwise support efforts to 
        remove inappropriate barriers to practice by such nurses and 
        such physician assistants; and
            (2) to promote the full utilization of the professional 
        education and clinical skills of advanced practice nurses and 
        physician assistants.
    (f) Other Programs.--For purposes of subsection (a), the programs 
described in this section include a program to train health 
professionals and administrators in managed care, cost-effective 
practice management, continuous quality improvement practices, and 
provision of culturally sensitive care.
    (g) Relationship to Existing Programs.--This section may be carried 
out through programs established in title VII or VIII of the Public 
Health Service Act, as appropriate and as consistent with the purposes 
of such programs.

SEC. 3072. PROGRAMS OF THE SECRETARY OF LABOR.

    (a) In General.--
            (1) Funding.--For purposes of carrying out the programs 
        described in this section, and for carrying out section 3073, 
        there is authorized to be appropriated $200,000,000 for fiscal 
        year 1994 and each subsequent fiscal year (in addition to 
        amounts that may otherwise be authorized to be appropriated for 
        carrying out the programs).
            (2) Administration.--The programs described in this section 
        and carried out with amounts made available under subsection 
        (a) shall be carried out by the Secretary of Labor (in this 
        section referred to as the ``Secretary'').
    (b) Retraining Programs; Advanced Career Positions; Workforce 
Adjustment Programs.--
            (1) In general.--For purposes of subsection (a), the 
        programs described in this section are the following:
                    (A) A program for skills upgrading and occupational 
                retraining (including retraining health care workers 
                for more advanced positions as technicians, nurses, and 
                physician assistants), and for quality and workforce 
                improvement.
                    (B) A demonstration program to assist workers in 
                health care institutions in obtaining advanced career 
                positions.
                    (C) A program to develop and operate health-worker 
                job banks in local employment services agencies, 
                subject to the following:
                            (i) Such job banks shall be available to 
                        all health care providers in the community 
                        involved.
                            (ii) Such job banks shall begin operation 
                        not later than 90 days after the date of the 
                        enactment of this Act.
                    (D) A program to provide for joint labor-management 
                decision-making in the health care sector on workplace 
                matters related to the restructuring of the health care 
                delivery system provided for in this Act.
                    (E) A program to facilitate the comprehensive 
                workforce adjustment initiative.
            (2) Use of funds.--Amounts made available under subsection 
        (a) for carrying out this section may be expended for program 
        support, faculty development, trainee support, workforce 
        analysis, and dissemination of information, as necessary to 
        produce required performance outcomes.
    (c) Certain Requirements for Programs.--In carrying out the 
programs described in subsection (b), the Secretary shall, with respect 
to the organizations and employment positions involved, provide for the 
following:
            (1) Explicit, clearly defined skill requirements developed 
        for all the positions and projections of the number of openings 
        for each position.
            (2) Opportunities for internal career movement.
            (3) Opportunities to work while training or completing an 
        educational program.
            (4) Evaluation and dissemination.
            (5) Training opportunities in several forms, as 
        appropriate.
    (d) Administrative Requirements.--In carrying out the programs 
described in subsection (b), the Secretary shall, with respect to the 
organizations and employment positions involved, provide for the 
following:
            (1) Joint labor-management implementation and 
        administration.
            (2) Discussion with employees as to training needs for 
        career advancement.
            (3) Commitment to a policy of internal hirings and 
        promotion.
            (4) Provision of support services.
            (5) Consultations with employers and with organized labor.

SEC. 3073. NATIONAL INSTITUTE FOR HEALTH CARE WORKFORCE DEVELOPMENT.

    (a) Establishment of Institute.--The Secretary of Health and Human 
Services and the Secretary of Labor shall jointly establish an office 
to be known as the National Institute for Health Care Workforce 
Development.
    (b) Director.--The Institute shall be headed by a director, who 
shall be appointed jointly by the Secretaries.
    (c) Duties.--
            (1) In general.--The Director of the Institute shall make 
        recommendations to the Secretaries regarding--
                    (A) the supply of health care workers needed for 
                proper staffing of the health care delivery system 
                serving the regional and corporate alliance health 
                plans established under title I;
                    (B) the impact of this Act, and of related changes 
                regarding health care, on health care workers and the 
                needs of such workers with respect to such matters, 
                including needs regarding education, training, and 
                other matters relating to career development; and
                    (C) the development and implementation of high-
                performance, high-quality health care delivery systems, 
                including employee participation committee systems and 
                employee team systems, that will contribute to the 
                development of better, more effective health care by 
                increasing the role, the responsibilities and the area 
                of independent decision-making authority of health care 
                workers.
            (2) Administration of programs regarding retraining, 
        advanced career positions, job banks, and high-performance 
        workplaces.--The Secretary of Labor is authorized to--
                    (A) carry out section 3073 acting through the 
                Director of the Institute; and
                    (B) implement the recommendations of the Director 
                regarding employee participation committees and other 
                high-performance systems.
    (d) Advisory Board.--
            (1) In general.--The Secretaries shall establish an 
        advisory board to assist in the develop of recommendations 
        under subsection (c).
            (2) Composition.--The Advisory Board shall be composed of--
                    (A) the Secretary of Labor;
                    (B) the Secretary of Health and Human Services;
                    (C) representatives of health care workers in 
                organized labor;
                    (D) representatives of health care institutions;
                    (E) representatives of health care education 
                organizations;
                    (F) representatives of consumer organizations; and
                    (G) such other individuals as the Secretaries 
                determine to be appropriate.
    (e) Staff, Quarters, and Other Assistance.--The Secretaries shall 
provide the Institute and the Advisory Board with such staff, quarters, 
and other administrative assistance as may be necessary for the 
Institute and the Advisory Board to carry out this section.
    (f) Definitions.--For purposes of this section:
            (1) The term ``Advisory Board'' means the advisory board 
        established under subsection (d).
            (2) The term ``employee participation committees'' means 
        committees of workers independently drawn from a facility's 
        workforce, or selected by unions where collective bargaining 
        agreements are in effect, and which operate without employer 
        interference and consult with management on issues of costs and 
        efficiency, workplace reorganizations, productivity, and 
        quality of care.
            (3) The term ``Institute'' means the Institute established 
        under subsection (a).
            (4) The term ``Secretaries'' means the Secretary of Health 
        and Human Services and the Secretary of Labor.
    (g) Sunset.--Effective upon the end of calendar year 2000, this 
section is repealed.

SEC. 3074. REQUIREMENT FOR CERTAIN PROGRAMS REGARDING REDEPLOYMENT OF 
              HEALTH CARE WORKERS.

    (a) State Programs for Home and Community-Based Services for 
Individuals with Disabilities.--With respect to the plan required in 
section 2102(a) (for State programs for home and community-based 
services for individuals with disabilities under part 1 of subtitle B 
of title II), the plan shall, in addition to requirements under such 
part, provide for the following:
            (1) Before initiating the process of implementing the State 
        program under such plan, negotiations will be commenced with 
        labor unions representing the employees of the affected 
        hospitals or other facilities.
            (2) Negotiations under paragraph (1) will address the 
        following:
                    (A) The impact of the implementation of the program 
                upon the workforce.
                    (B) Methods to redeploy workers to positions in the 
                proposed system, in the case of workers affected by the 
                program.
            (3) The plan will provide evidence that there has been 
        compliance with paragraphs (1) and (2), including a description 
        of the results of the negotiations.
    (b) Plan for Integration of Mental Health Systems.--With respect to 
the plan required in section 3511(a) (relating to the integration of 
the mental health and substance abuse services of a State and its 
political subdivisions with the mental health and substance abuse 
services included in the comprehensive benefit package under title I), 
the plan shall, in addition to requirements under such section, provide 
for the following:
            (1) Before initiating the process of implementing the 
        integration of such services, negotiations will be commenced 
        with labor unions representing the employees of the affected 
        hospitals or other facilities.
            (2) Negotiations under paragraph (1) will address the 
        following:
                    (A) The impact of the proposed changes upon the 
                workforce.
                    (B) Methods to redeploy workers to positions in the 
                proposed system, in the case of workers affected by the 
                proposed changes.
            (3) The plan will provide evidence that there has been 
        compliance with paragraphs (1) and (2), including a description 
        of the results of the negotiations.

                                                  Title III, Subtitle B

                  Subtitle B--Academic Health Centers

                        PART 1--FORMULA PAYMENTS

SEC. 3101. FEDERAL FORMULA PAYMENTS TO ACADEMIC HEALTH CENTERS.

    (a) In General.--In the case of a qualified academic health center 
or qualified teaching hospital that in accordance with section 3102 
submits to the Secretary a written request for calendar year 1996 or 
any subsequent calendar year, the Secretary shall make payments for 
such year to the center or hospital for the purpose specified in 
subsection (b). The Secretary shall make the payments in an amount 
determined in accordance with section 3103, and may administer the 
payments as a contract, grant, or cooperative agreement.
    (b) Payments for Costs Attributable to Academic Nature of 
Institutions.--The purpose of payments under subsection (a) is to 
assist eligible institutions with costs that are not routinely incurred 
by other entities in providing health services, but are incurred by 
such institutions in providing health services by virtue of the 
academic nature of such institutions. Such costs include--
            (1) with respect to productivity in the provision of health 
        services, costs resulting from the reduced rate of productivity 
        of faculty due to teaching responsibilities;
            (2) the uncompensated costs of clinical research; and
            (3) exceptional costs associated with the treatment of 
        health conditions with respect to which an eligible institution 
        has specialized expertise (including treatment of rare 
        diseases, treatment of unusually severe conditions, and 
        providing other specialized health care).
    (c) Definitions.--
            (1) Academic health center.--For purposes of this subtitle, 
        the term ``academic health center'' means an entity that--
                    (A) operates a school of medicine or osteopathic 
                medicine, as defined in section 799 of the Public 
                Health Service Act;
                    (B) operates, or is affiliated with, one or more 
                other types of schools or programs described in such 
                section, or with one or more schools of nursing (as 
                defined in section 853 of such Act); and
                    (C) operates, or is affiliated with, one or more 
                teaching hospitals.
            (2) Teaching hospital.--For purposes of this subtitle, the 
        term ``teaching hospital'' means a hospital that operates an 
        approved physician training program (as defined in section 
        3011(b)).
            (3) Qualified center or hospital.--For purposes of this 
        subtitle:
                    (A) The term ``qualified academic health center'' 
                means an academic health center that operates a 
                teaching hospital.
                    (B) The term ``qualified teaching hospital'' means 
                any teaching hospital other than a teaching hospital 
                that is operated by an academic health center.
            (4) Eligible institution.--For purposes of this subtitle, 
        the term ``eligible institution'', with respect to a calendar 
        year, means a qualified academic health center, or a qualified 
        teaching hospital, that submits to the Secretary a written 
        request in accordance with section 3102.

SEC. 3102. REQUEST FOR PAYMENTS.

  (a) In General.--For purposes of section 3101, a written request for 
payments under such section is in accordance with this section if the 
qualified academic health center or qualified teaching hospital 
involved submits the request not later than the date specified by the 
Secretary; the request is accompanied by each funding agreement 
described in this part; and the request 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 part.
    (b) Continued Status as Academic Health Center.--A funding 
agreement for payments under section 3101 is that the qualified 
academic health center or qualified teaching hospital involved will 
maintain status as such a center or hospital, respectively. For 
purposes of this subtitle, the term ``funding agreement'', with respect 
to payments under section 3101 to such a center or hospital, means that 
the Secretary may make the payments only if the center or hospital 
makes the agreement involved.

SEC. 3103. AVAILABILITY OF FUNDS FOR PAYMENTS; ANNUAL AMOUNT OF 
              PAYMENTS.

    (a) Annual Academic Health Center Account.--Subject to section 
3104, the amount available for a calendar year for making payments 
under section 3101 (constituting an account to be known as the annual 
academic health center account) is the following, as applicable to the 
calendar year:
            (1) In the case of calendar year 1996, $3,100,000,000.
            (2) In the case of each of the calendar years 1997 and 
        1998, $3,200,000,000.
            (3) In the case of calendar year 1999, $3,700,000,000.
            (4) In the case of calendar year 2000, $3,800,000,000.
            (5) In the case of each subsequent calendar year, the 
        amount specified in paragraph (4) increased by the product of 
        such amount and the general health care inflation factor (as 
        defined in subsection (d)).
    (b) Amount of Payments for Individual Eligible Institutions.--The 
amount of payments required in section 3101 to be made to an eligible 
institution for a calendar year is an amount equal to the product of--
            (1) the annual academic health center account available for 
        the calendar year; and
            (2) the percentage constituted by the ratio of--
                    (A) an amount equal to the product of--
                            (i) the portion of the gross receipts of 
                        the institution for the preceding calendar year 
                        that was derived from providing services to 
                        patients (both inpatients and outpatients); and
                            (ii) the indirect teaching adjustment 
                        factor determined under section 
                        1886(d)(5)(B)(ii) of the Social Security Act 
                        (as in effect before January 1, 1998) and--
                                    (I) applicable to patients 
                                discharged from the institution (or 
                                hospitals of the institution, as the 
                                case may be) in such preceding year; or
                                    (II) in the case of patients 
                                discharged on or after January 1, 1998, 
                                applicable to patients discharged in 
                                calendar year 1997; to
                    (B) the sum of the respective amounts determined 
                under subparagraph (A) for eligible institutions.
    (c) Report Regarding Modifications in Formula.--Not later than July 
1, 1996, the Secretary shall submit to the Congress a report containing 
any recommendations of the Secretary regarding policies for allocating 
amounts under subsection (a) among eligible institutions. In making 
such recommendations, the Secretary shall consider the costs described 
in section 3101(b) that are incurred by such institutions.
    (d) Definition.--For purposes of this subtitle:
            (1) The term ``annual academic health center account'' 
        means the account established pursuant to subsection (a).
            (2) The term ``general health care inflation factor'', with 
        respect to a year, has the meaning given such term in section 
        6001(a)(3) for such year.

SEC. 3104. ADDITIONAL FUNDING PROVISIONS.

    (a) Sources of Funds for Annual Academic Health Center Account.--
The amount specified in section 3103(a) for the annual academic health 
center account for a calendar year shall be derived from the sources 
specified in subsection (b).
    (b) Contributions From Medicare Trust Funds, Regional Alliances, 
and Corporate Alliances.--For purposes of subsection (a), the sources 
specified in this subsection for a calendar year are the following:
            (1) Transfers made by the Secretary under section 4052.
            (2) Payments made by regional alliances under section 1353 
        and--
                    (A) in the case of each of the calendar years 1996 
                and 1997, transferred in an amount equal to 50 percent 
                of such payments made for the calendar year involved; 
                and
                    (B) in the case of calendar year 1998 and each 
                subsequent calendar year, transferred in an amount 
                equal to the aggregate regional alliance portion 
                determined under subsection (c)(2)(A).
            (3) The transfer made under subsection (d)(1).
    (c) Contributions From Regional and Corporate Alliances.--
            (1) Determination of aggregate regional and corporate 
        alliance amount.--For purposes regarding the provision of funds 
        for the annual academic health center account for a calendar 
        year (other than calendar year 1996 or 1997), the Secretary 
        shall determine an aggregate regional and corporate alliance 
        amount, which amount is to be paid by such alliances pursuant 
        to paragraphs (2)(B) and (3) of subsection (b), respectively, 
        and which amount shall be equal to the difference between--
                    (A) the amount specified in section 3103(a) for the 
                annual academic health center account for such year; 
                and
                    (B) the amount transferred under section 4052 for 
                the year.
            (2) Allocation of amount among regional and corporate 
        alliances.--With respect to the aggregate regional and 
        corporate alliance amount determined under paragraph (1) for a 
        calendar year (other than calendar year 1996 or 1997)--
                    (A) the aggregate regional alliance portion of such 
                amount is the product of such amount and the percentage 
                constituted by the ratio of the total plan payments of 
                regional alliances to the combined total plan payments 
                of regional alliances and corporate alliances; and
                    (B) the aggregate corporate alliance portion of 
                such amount is the product of such amount and the 
                percentage constituted by the ratio of the total plan 
                payments of corporate alliances to such combined total 
                plan payments.
    (d) Compliance Regarding Corporate Alliances.--
            (1) In general.--Effective January 15 of calendar year 1996 
        and each subsequent calendar year, there is hereby transferred 
        to the Secretary, out of any money in the Treasury not 
        otherwise appropriated--
                    (A) in the case of each of the calendar years 1996 
                and 1997, an amount equal to the difference between--
                            (i) the amount specified in section 3103(a) 
                        for the annual academic health center account 
                        for the calendar year involved; and
                            (ii) the sum of the amount transferred 
                        under section 4052 for such year and the amount 
                        transferred under subsection (b)(2)(A) for such 
                        year; and
                    (B) in the case of calendar year 1998 and each 
                subsequent calendar year, an amount equal to the 
                aggregate corporate alliance portion determined under 
                subsection (c)(2)(B) for the calendar year involved.
            (2) Manner of compliance.--The payment by corporate 
        alliances of the tax imposed under section 3461 of the Internal 
        Revenue Code of 1986 (as added by section 7121 of this Act), 
        together with the transfer made in paragraph (1)(B) for the 
        calendar year involved, is deemed to be the payment required 
        pursuant to subsection (c)(1) for corporate alliances for such 
        year.
            (3) Graduate nurse education.--Effective January 15 of 
        calendar year 1996 and each subsequent calendar year, there is 
        hereby transferred to the Secretary, out of any money in the 
        Treasury not otherwise appropriated, 50 percent of the amount 
        specified in section 3063(b) with respect to the annual 
        graduate nurse training account.
    (e) Definitions.--For purposes of this subtitle, the term ``plan 
payments'' with respect to a regional or corporate alliance, means the 
amount paid to health plans by the alliance.

         PART 2--ACCESS OF PATIENTS TO ACADEMIC HEALTH CENTERS

SEC. 3131. CONTRACTS FOR ENSURING ACCESS TO CENTERS.

    (a) Contracts With Health Plans.--Regional and corporate health 
alliances under this Act shall ensure that, in accordance with 
subsection (b), the health plans of the alliances enter into sufficient 
contracts with eligible centers to ensure that enrollees in regional or 
corporate alliance health plans, as appropriate, receive the 
specialized treatment expertise of such centers, subject to such 
exceptions as the Secretary may provide.
    (b) Utilization of Specialized Treatment Expertise of Centers.--
Contracts under subsection (a) between eligible centers and health 
plans are in accordance with this subsection if the contracts provide 
that, with respect to health conditions within the specialized 
treatment expertise of the centers, health plans will refer medical 
cases involving such conditions to the centers.
    (c) Specialized Treatment Expertise.--For purposes of this 
subtitle, the term ``specialized treatment expertise'', with respect to 
treatment of a health condition by an academic health center, means 
expertise in treating rare diseases, treating unusually severe 
conditions, and providing other specialized health care.

SEC. 3132. DISCRETIONARY GRANTS REGARDING ACCESS TO CENTERS.

    (a) Rural Information and Referral Systems.--The Secretary may make 
grants to eligible centers for the establishment and operation of 
information and referral systems to provide the services of such 
centers to rural regional and corporate health alliance health plans.
    (b) Other Purposes Regarding Urban and Rural Areas.--The Secretary 
may make grants to eligible centers to carry out activities (other than 
activities carried out under subsection (a)) for the purpose of 
providing the services of eligible centers to residents of rural or 
urban communities who otherwise would not have adequate access to such 
services.

                                                  Title III, Subtitle C

                Subtitle C--Health Research Initiatives

                 PART 1--PROGRAMS FOR CERTAIN AGENCIES

SEC. 3201. BIOMEDICAL AND BEHAVIORAL RESEARCH ON HEALTH PROMOTION AND 
              DISEASE PREVENTION.

    Section 402(f) of the Public Health Service Act (42 U.S.C. 282(f)), 
as amended by section 201 of Public Law 103-43 (107 Stat. 144), is 
amended--
            (1) in paragraph (3), by redesignating subparagraphs (A) 
        and (B) as clauses (i) and (ii), respectively;
            (2) by redesignating paragraphs (1) through (3) as 
        subparagraphs (A) through (C);
            (3) by inserting ``(1)'' after ``(f)''; and
            (4) by adding at the end the following paragraph:
    ``(2)(A) The Director of NIH, in collaboration with the Associate 
Director for Prevention and with the heads of the agencies of the 
National Institutes of Health, shall ensure that such Institutes 
conduct and support biomedical and behavioral research on promoting 
health and preventing diseases, disorders, and other health conditions 
(including Alzheimer's disease, breast cancer, heart disease, and 
stroke).
    ``(B) In carrying out subparagraph (A), the Director of NIH shall 
give priority to conducting and supporting research on child and 
adolescent health (including birth defects), chronic and recurrent 
health conditions, reproductive health, mental health, elderly health, 
substance abuse, infectious diseases, health and wellness promotion, 
and environmental health, and to resource development related to such 
research.''.

SEC. 3202. HEALTH SERVICES RESEARCH.

    Section 902 of the Public Health Service Act (42 U.S.C. 299a), as 
amended by section 2(b) of Public Law 102-410 (106 Stat. 2094), is 
amended by adding at the end the following subsection:
    ``(f) Research on Health Care Reform.--
            ``(1) In general.--In carrying out section 901(b), the 
        Administrator shall conduct and support research on the reform 
        of the health care system of the United States, as directed by 
        the National Board.
            ``(2) Priorities.--In carrying out paragraph (1), the 
        Administrator shall give priority to the following:
                    ``(A) Conducting and supporting research on the 
                appropriateness and effectiveness of alternative 
                clinical strategies; the quality and outcomes of care; 
                and administrative simplification.
                    ``(B) Conducting and supporting research on 
                consumer choice and information resources; the effects 
                of health care reform on health delivery systems; 
                workplace injury and illness prevention; methods for 
                risk adjustment; factors influencing access to health 
                care for underserved populations; and primary care.
                    ``(C) The development of clinical practice 
                guidelines consistent with section 913, the 
                dissemination of such guidelines consistent with 
                section 903, and the assessment of the effectiveness of 
                such guidelines.''.

                      PART 2--FUNDING FOR PROGRAMS

SEC. 3211. AUTHORIZATIONS OF APPROPRIATIONS.

    (a) Biomedical and Behavioral Research on Health Promotion and 
Disease Prevention.--For the purpose of carrying out activities 
pursuant to the amendments made by section 3201, there are authorized 
to be appropriated $400,000,000 for fiscal year 1995, and $500,000,000 
for each of the fiscal years 1996 through 2000.
    (b) Health Services Research.--For the purpose of carrying out 
activities pursuant to the amendments made by section 3202, there are 
authorized to be appropriated $150,000,000 for fiscal year 1995, 
$400,000,000 for fiscal year 1996, $500,000,000 for fiscal year 1997, 
and $600,000,000 for each of the fiscal years 1998 through 2000.
    (c) Relation to Other Funds.--The authorizations of appropriations 
established in subsections (a) and (b) are in addition to any other 
authorizations of appropriations that are available for the purposes 
described in such subsections.

    Subtitle D--Core Functions of Public Health Programs; National 
                Initiatives Regarding Preventive Health

                                                  Title III, Subtitle D

                            PART 1--FUNDING

SEC. 3301. AUTHORIZATIONS OF APPROPRIATIONS.

    (a) Core Functions of Public Health Programs.--For the purpose of 
carrying out part 2, there are authorized to be appropriated 
$12,000,000 for fiscal year 1995, $325,000,000 for fiscal year 1996, 
$450,000,000 for fiscal year 1997, $550,000,000 for fiscal year 1998, 
$650,000,000 for fiscal year 1999, and $750,000,000 for fiscal year 
2000.
    (b) National Initiatives Regarding Health Promotion and Disease 
Prevention.--For the purpose of carrying out part 3, there are 
authorized to be appropriated $175,000,000 for fiscal year 1996, and 
$200,000,000 for each of the fiscal years 1997 through 2000.
    (c) Relation to Other Funds.--The authorizations of appropriations 
established in subsections (a) and (b) are in addition to any other 
authorizations of appropriations that are available for the purposes 
described in such subsections.

            PART 2--CORE FUNCTIONS OF PUBLIC HEALTH PROGRAMS

SEC. 3311. PURPOSES.

    Subject to the subsequent provisions of this subtitle, the purposes 
of this part are to strengthen the capacity of State and local public 
health agencies to carry out the following functions:
            (1) To monitor and protect the health of communities 
        against communicable diseases and exposure to toxic 
        environmental pollutants, occupational hazards, harmful 
        products, and poor quality health care.
            (2) To identify and control outbreaks of infectious disease 
        and patterns of chronic disease and injury.
            (3) To inform and educate health care consumers and 
        providers about their roles in preventing and controlling 
        disease and the appropriate use of medical services.
            (4) To develop and test new prevention and public health 
        control interventions.

SEC. 3312. GRANTS TO STATES FOR CORE HEALTH FUNCTIONS.

    (a) In General.--The Secretary may make grants to States for the 
purpose of carrying out one or more of the functions described in 
subsection (b).
    (b) Core Functions of Public Health Programs.--For purposes of 
subsection (a), the functions described in this subsection are, subject 
to subsection to subsection (c), as follows:
            (1) Data collection, activities related to population 
        health measurement and outcomes monitoring, including the 
        regular collection and analysis of public health data, vital 
        statistics, and personal health services data and analysis for 
        planning and needs assessment purposes of data collected from 
        health plans through the information system under title V of 
        this Act.
            (2) Activities to protect the environment and to assure the 
        safety of housing, workplaces, food and water, including the 
        following activities:
                    (A) Monitoring the overall public health quality 
                and safety of communities.
                    (B) Assessing exposure to high lead levels and 
                water contamination.
                    (C) Monitoring sewage and solid waste disposal, 
                radiation exposure, radon exposure, and noise levels.
                    (D) Abatement of lead-related hazards.
                    (E) Assuring recreation and worker safety.
                    (F) Enforcing public health safety and sanitary 
                codes.
                    (G) Other activities relating to promoting the 
                public health of communities.
            (3) Investigation and control of adverse health conditions, 
        including improvements in emergency treatment preparedness, 
        cooperative activities to reduce violence levels in 
        communities, activities to control the outbreak of disease, 
        exposure related conditions and other threats to the health 
        status of individuals.
            (4) Public information and education programs to reduce 
        risks to health such as use of tobacco, alcohol and other 
        drugs, sexual activities that increase the risk to HIV 
        transmission and sexually transmitted diseases, poor diet, 
        physical inactivity, and low childhood immunization levels.
            (5) Accountability and quality assurance activities, 
        including monitoring the quality of personal health services 
        furnished by health plans and providers of medical and health 
        services in a manner consistent with the overall quality of 
        care monitoring activities undertaken under title V, and 
        monitoring communities' overall access to health services.
            (6) Provision of public health laboratory services to 
        complement private clinical laboratory services and that screen 
        for diseases and conditions such as metabolic diseases in 
        newborns, provide toxicology assessments of blood lead levels 
        and other environmental toxins, diagnose sexually transmitted 
        diseases, tuberculosis and other diseases requiring partner 
        notification, test for infectious and food-borne diseases, and 
        monitor the safety of water and food supplies.
            (7) Training and education to assure provision of care by 
        all health professionals, with special emphasis placed on the 
        training of public health professions including 
        epidemiologists, biostatisticians, health educators, public 
        health administrators, sanitarians and laboratory technicians.
            (8) Leadership, policy development and administration 
        activities, including needs assessment, the setting of public 
        health standards, the development of community public health 
        policies, and the development of community public health 
        coalitions.
    (c) Restrictions on Use of Grant.--
             (1) In general.--A funding agreement for a grant under 
        subsection (a) for a State is that the grant will not be 
        expended--
                    (A) to provide inpatient services;
                    (B) to make cash payments to intended recipients of 
                health services;
                    (C) to purchase or improve land, purchase, 
                construct, or permanently improve (other than minor 
                remodeling) any building or other facility, or purchase 
                major medical equipment;
                    (D) to satisfy any requirement for the expenditure 
                of non-Federal funds as a condition for the receipt of 
                Federal funds; or
                    (E) to provide financial assistance to any entity 
                other than a public or nonprofit private entity.
            (2) Limitation on administrative expenses.--A funding 
        agreement for a grant under subsection (a) is that the State 
        involved will not expend more than 10 percent of the grant for 
        administrative expenses with respect to the grant.
    (d) Maintenance of Effort.--A funding agreement for a grant under 
subsection (a) is that the State involved will maintain expenditures of 
non-Federal amounts for core health functions at a level that is not 
less than the level of such expenditures maintained by the State for 
the fiscal year preceding the first fiscal year for which the State 
receives such a grant.

SEC. 3313. SUBMISSION OF INFORMATION.

    The Secretary may make a grant under section 3312 only if the State 
involved submits to the Secretary the following information:
            (1) A description of existing deficiencies in the State's 
        public health system (at the State level and the local level), 
        using standards of sufficiency developed by the Secretary.
            (2) A description of health status measures to be improved 
        within the State (at the State level and the local level) 
        through expanded public health functions.
            (3) Measurable outcomes and process objectives for 
        improving health status and core health functions for which the 
        grant is to be expended.
            (4) Information regarding each such function, which--
                    (A) identifies the amount of State and local 
                funding expended on each such function for the fiscal 
                year preceding the fiscal year for which the grant is 
                sought; and
                    (B) provides a detailed description of how 
                additional Federal funding will improve each such 
                function by both the State and local public health 
                agencies.
            (5) A description of the core health functions to be 
        carried out at the local level, and a specification for each 
        such function of--
                    (A) the communities in which the function will be 
                carried out; and
                    (B) the amount of the grant to be expended for the 
                function in each community so specified.

SEC. 3314. REPORTS.

    A funding agreement for a grant under section 3312 is that the 
States involved will, not later than the date specified by the 
Secretary, submit to the Secretary a report describing--
            (1) the purposes for which the grant was expended; and
            (2) describing the extent of progress made by the State in 
        achieving measurable outcomes and process objectives described 
        in section 3313(3).

SEC. 3315. APPLICATION FOR GRANT.

    The Secretary may make a grant under section 3312 only if an 
application for the grant is submitted to the Secretary, the 
application contains each agreement described in this part, the 
application contains the information required in section 3314, 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 part.

SEC. 3316. GENERAL PROVISIONS.

    (a) Uniform Data Sets.--The Secretary, in consultation with the 
States, shall develop uniform sets of data for the purpose of 
monitoring the core health functions carried out with grants under 
section 3312.
    (b) Duration of Grant.--The period during which payments are made 
to a State from a grant under section 3312 may not exceed 5 years. The 
provision of such payments shall be subject to annual approval by the 
Secretary of the payments. This subsection may not be construed as 
establishing a limitation on the number of grants under such section 
that may be made to the State.

SEC. 3317. ALLOCATIONS FOR CERTAIN ACTIVITIES.

    Of the amounts made available under section 3301 for a fiscal year 
for carrying out this part, the Secretary may reserve not more than 5 
percent for carrying out the following activities:
            (1) Technical assistance with respect to planning, 
        development, and operation of core health functions carried out 
        under section 3312, including provision of biostatistical and 
        epidemiological expertise and provision of laboratory 
        expertise.
            (2) Development and operation of a national information 
        network among State and local health agencies.
            (3) Program monitoring and evaluation of core health 
        functions carried out under section 3312.
            (4) Development of a unified electronic reporting mechanism 
        to improve the efficiency of administrative management 
        requirements regarding the provision of Federal grants to State 
        public health agencies.

SEC. 3318. DEFINITIONS.

    For purposes of this part:
            (1) The term ``funding agreement'', with respect to a grant 
        under section 3312 to a State, means that the Secretary may 
        make the grant only if the State makes the agreement involved.
            (2) The term ``core health functions'', with respect to a 
        State, means the functions described in section 3312(b).

  PART 3--NATIONAL INITIATIVES REGARDING HEALTH PROMOTION AND DISEASE 
                               PREVENTION

SEC. 3331. GRANTS FOR NATIONAL PREVENTION INITIATIVES.

    (a) In General.--The Secretary may make grants to entities 
described in subsection (b) for the purpose of carrying out projects to 
develop and implement innovative community-based strategies to provide 
for health promotion and disease prevention activities for which there 
is a significant need, as identified under section 1701 of the Public 
Health Service Act.
    (b) Eligible Entities.--The entities referred to in subsection (a) 
are agencies of State or local government, private nonprofit 
organizations (including research institutions), and coalitions that 
link two or more of these groups.
    (c) Certain Activities.--The Secretary shall ensure that projects 
carried out under subsection (a)--
            (1) reflect approaches that take into account the special 
        needs and concerns of the affected populations;
            (2) are targeted to the most needy and vulnerable 
        population groups and geographic areas of the Nation;
            (3) examine links between various high priority preventable 
        health problems and the potential community-based remedial 
        actions; and
            (4) establish or strengthen the links between the 
        activities of agencies engaged in public health activities with 
        those of health alliances, health care providers, and other 
        entities involved in the personal health care delivery system 
        described in title I.

SEC. 3332. PRIORITIES.

    (a) Establishment.--
            (1) Annual statement.--The Secretary shall for each fiscal 
        year develop a statement of proposed priorities for grants 
        under section 3331 for the fiscal year.
            (2) Allocations among priorities.--With respect to the 
        amounts available under section 3301(b) for the fiscal year for 
        carrying out this part, each statement under paragraph (1) for 
        a fiscal year shall include a specification of the percentage 
        of the amount to be devoted to projects addressing each of the 
        proposed priorities established in the statement.
            (3) Process for establishing priorities.--Not later than 
        January 1 of each fiscal year, the Secretary shall publish a 
        statement under paragraph (1) in the Federal Register. A period 
        of 60 days shall be allowed for the submission of public 
        comments and suggestions concerning the proposed priorities. 
        After analyzing and considering comments on the proposed 
        priorities, the Secretary shall publish in the Federal Register 
        final priorities (and associated reservations of funds) for 
        approval of projects for the following fiscal year.
    (b) Applicability to Making of Grants.--
            (1) In general.--The Secretary may make grants under 
        section 3331 for projects that the Secretary determines--
                    (A) are consistent with the applicable final 
                statement of priorities and otherwise meets the 
                objectives described in subsection (a); and
                    (B) will assist in meeting a health need or concern 
                of a population served by a health plan or health 
                alliance established under title I.
            (2) Special consideration for certain projects.--In making 
        grants under section 3331, the Secretary shall give special 
        consideration to applicants that will carry out projects that, 
        in addition to being consistent with the applicable published 
        priorities under subsection (a) and otherwise meeting the 
        requirements of this part, have the potential for replication 
        in other communities.

SEC. 3333. SUBMISSION OF INFORMATION.

    The Secretary may make a grant under section 3331 only if the 
applicant involved submits to the Secretary the following information:
            (1) A description of the activities to be conducted, and 
        the manner in which the activities are expected to contribute 
        to meeting one or more of the priority health needs specified 
        under section 3332 for the fiscal year for which the grant is 
        initially sought.
            (2) A description of the total amount of Federal funding 
        requested, the geographic area and populations to be served, 
        and the evaluation procedures to be followed.
            (3) Such other information as the Secretary determines to 
        be appropriate.

SEC. 3334. APPLICATION FOR GRANT.

    The Secretary may make a grant under section 3331 only if an 
application for the grant is submitted to the Secretary, the 
application contains each agreement described in this part, the 
application contains the information required in section 3333, 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 part.

   Subtitle E--Health Services for Medically Underserved Populations

                                                  Title III, Subtitle E

              PART 1--COMMUNITY AND MIGRANT HEALTH CENTERS

SEC. 3401. AUTHORIZATIONS OF APPROPRIATIONS.

    (a) Grants to Community and Migrant Health Centers.--The Secretary 
shall make grants in accordance with this part to migrant health 
centers and community health centers.
    (b) Authorization of Appropriations.--For the purpose of carrying 
out subsection (a), there are authorized to be appropriated 
$100,000,000 for each of the fiscal years 1995 through 2000.
    (c) Relation to Other Funds.--The authorizations of appropriations 
established in subsection (b) for the purpose described in such 
subsection are in addition to any other authorizations of 
appropriations that are available for such purpose.
    (d) Definitions.--For purposes of this subtitle, the terms 
``migrant health center'' and ``community health center'' have the 
meanings given such terms in sections 329(a)(1) and 330(a) of the 
Public Health Service Act, respectively.

SEC. 3402. USE OF FUNDS.

    (a) Development, Operation, and Other Purposes Regarding Centers.--
Subject to subsection (b), grants under section 3401 to migrant health 
centers and community health centers may be made only in accordance 
with the conditions upon which grants are made under sections 329 and 
330 of the Public Health Service Act, respectively.
    (b) Required Financial Reserves.--The Secretary may authorize 
migrant health centers and community health centers to expend a grant 
under section 3401 to establish and maintain the financial reserves 
required under title I for providers of health services.

             PART 2--INITIATIVES FOR ACCESS TO HEALTH CARE

                      Subpart A--Purposes; Funding

SEC. 3411. PURPOSES.

    Subject to the provisions of subparts B through D, the purposes of 
this part are as follows:
            (1) To improve access to health services for urban and 
        rural medically-underserved populations through a program of 
        flexible grants, contracts, and loans.
            (2) To facilitate transition to a system in which 
        medically-underserved populations have an adequate choice of 
        community-oriented providers and health plans.
            (3) To promote the development of community practice 
        networks and community health plans that integrate health 
        professionals and health care organizations supported through 
        public funding with other providers in medically underserved 
        areas.
            (4) To support linkages between providers of health care 
        for medically-underserved populations and regional and 
        corporate alliance health plans.
            (5) To expand the capacity of community practice networks 
        and community health plans in underserved areas by increasing 
        the number of practice sites and by renovating and converting 
        substandard inpatient and outpatient facilities.
            (6) To link providers in underserved areas with each other 
        and with regional health care institutions and academic health 
        centers through information systems and telecommunications.
            (7) To support activities that enable medically underserved 
        populations to gain access to the health care system and use it 
        effectively.

SEC. 3412. AUTHORIZATIONS OF APPROPRIATIONS.

    (a) Development of Qualified Community Health Plans and Practice 
Groups.--For the purpose of carrying out subparts B and C, there are 
authorized to be appropriated $200,000,000 for fiscal year 1995, 
$500,000,000 for fiscal year 1996, $600,000,000 for fiscal year 1997, 
$700,000,000 for fiscal year 1998, $500,000,000 for fiscal year 1999, 
and $200,000,000 for fiscal year 2000.
    (b) Relation to Other Funds.--The authorizations of appropriations 
established in subsection (a) are in addition to any other 
authorizations of appropriations that are available for the purpose 
described in such subsection.
    (c) Relationship to Program Regarding School-Related Health 
Services.--This section is subject to section 3692.

Subpart B--Development of Qualified Community Health Plans and Practice 
                                Networks

SEC. 3421. GRANTS AND CONTRACTS FOR DEVELOPMENT OF PLANS AND NETWORKS.

    (a) In General.--The Secretary may make grants to and enter into 
contracts with consortia of public or private health care providers for 
the development of qualified community health plans and qualified 
community practice networks. For purposes of this subtitle, the term 
``qualified community health group'' means such a health plan or such a 
practice network.
    (b) Qualified Community Health Plans.--For purposes of this 
subtitle, the term ``qualified community health plan'' means a health 
plan that meets the following conditions:
            (1) The health plan is a public or nonprofit private entity 
        whose principal purpose is, with respect to the items and 
        services included in the comprehensive benefit package under 
        title I, to provide each of such items and services in one or 
        more health professional shortage areas or to provide such 
        items and services to a significant number of individuals who 
        are members of a medically underserved population.
            (2) The health plan is a participant in one or more health 
        alliances.
            (3) Two or more of the categories specified in subsection 
        (d) are represented among the entities providing health 
        services through the health plan.
    (c) Qualified Community Practice Networks.--For purposes of this 
subtitle, the term ``qualified community practice network'' means a 
consortium of health care providers meeting the following conditions:
            (1) The consortium is a public or nonprofit private entity 
        whose principal purpose is the purpose described in subsection 
        (b)(1).
            (2) The consortium has an agreement with one or more health 
        plans that are participating in one or more health alliances.
            (3) The participation of health care providers in the 
        consortium is governed by a written agreement to which each of 
        the participating providers is a party.
            (4) Two or more of the categories described in subsection 
        (d) are represented among the entities participating in the 
        consortium.
    (d) Relevant Categories of Entities.--For purposes of subsections 
(b)(3) and (c)(4), the categories described in this subsection are the 
following categories of entities:
            (1) Physicians, other health professionals, or health care 
        institutions that provide health services in one or more health 
        professional shortage areas or provide such services to a 
        significant number of individuals who are members of a 
        medically underserved population, and that do not provide 
        health services under any of the programs specified in 
        paragraphs (2) through (7) or as employees of public entities.
            (2) Entities providing health services under grants under 
        sections 329 and 330 of the Public Health Service Act.
            (3) Entities providing health services under grants under 
        sections 340 and 340A of such Act.
            (4) Entities providing health services under grants under 
        section 1001 or title XXVI of such Act.
            (5) Entities providing health services under title V of the 
        Social Security Act.
            (6) Entities providing health services through rural health 
        clinics and other federally qualified health centers.
            (7) Entities providing health services in urban areas 
        through programs under title V of the Indian Health Care 
        Improvement Act, and entities providing outpatient health 
        services through programs under the Indian Self-Determination 
        Act.
            (8) Programs providing personal health services and 
        operating through State or local public health agencies.
    (e) Rule of Construction.--The consortia to which the Secretary may 
make an award of financial assistance under subsection (a) for the 
development of qualified community practice networks include any health 
plan that participates in one or more health alliances, without regard 
to whether the health plan is a qualified community health plan.
    (f) Service Area.--In making an award of financial assistance under 
subsection (a), the Secretary shall designate the geographic area with 
respect to which the qualified community health group involved is to 
provide health services. A funding agreement for such an award is that 
the qualified community health group involved will provide such 
services in the area so designated.
    (g) Definitions.--For purposes of this subtitle:
            (1) The term ``health professional shortage areas'' means 
        health professional shortage areas designated under section 332 
        of the Public Health Service Act.
            (2) The term ``medically underserved population'' means a 
        medically underserved population designated under section 330 
        of the Public Health Service Act.
            (3) The term ``rural health clinic'' has the meaning given 
        such term in section 1861(aa)(2) of the Social Security Act.
            (4) The term ``federally qualified health centers'' has the 
        meaning given such term in section 1861(aa)(4) of the Social 
        Security Act.
            (5) The term ``service area'', with respect to a qualified 
        community health group, means the geographic area designated 
        under subsection (f).
            (6) The term ``funding agreement'', with respect to an 
        award of financial assistance under this section, means that 
        the Secretary may make the award only if the applicant for the 
        award makes the agreement involved.
            (7) The term ``financial assistance'', with respect to 
        awards under subsection (a), means a grant or contract.

SEC. 3422. PREFERENCES IN MAKING AWARDS OF ASSISTANCE.

    In making awards of financial assistance under section 3421, the 
Secretary shall give preference to applicants in accordance with the 
following:
            (1) The Secretary shall give preference if 3 or more of the 
        categories described in subsection (d) of such section will be 
        represented in the qualified community health group involved 
        (pursuant to subsection (b)(3) or (c)(4) of such section, as 
        the case may be).
            (2) Of applicants receiving preference under paragraph (1), 
        the Secretary shall give a greater degree of preference 
        according to the extent to which a greater number of categories 
        are represented.
            (3) Of applicants receiving preference under paragraph (1), 
        the Secretary shall give a greater degree of preference if one 
        of the categories represented is the category described in 
        subsection (d)(1) of such section.

SEC. 3423. CERTAIN USES OF AWARDS.

    (a) In General.--Subject to subsection (b), the purposes for which 
an award of financial assistance under section 3421 may be expended in 
developing a qualified community health group include the following:
            (1) Planning such group, including entering into contracts 
        between the recipient of the award and health care providers 
        who are to participate in the group.
            (2) Recruitment, compensation, and training of health 
        professionals and administrative staff.
            (3) Acquisition, expansion, modernization, and conversion 
        of facilities, including for purposes of providing for sites at 
        which health services are to be provided through such group.
            (4) Acquisition and development of information systems 
        (exclusive of systems that the Secretary determines are 
        information highways).
            (5) Such other expenditures as the Secretary determines to 
        be appropriate.
    (b) Twenty-year Obligation Regarding Significant Capital 
Expenditures; Right of Recovery.--
            (1) In general.--With respect to a facility for which 
        substantial capital costs are to paid from an award of 
        financial assistance under section 3421, the Secretary may make 
        the award only if the applicant involved agrees that the 
        applicant will be liable to the United States for the amount of 
        the award expended for such costs, together with an amount 
        representing interest, if at any time during the 20-year period 
        beginning on the date of completion of the activities involved, 
        the facility--
                    (A) ceases to be a facility utilized by a qualified 
                community health group, or by another public or 
                nonprofit private entity that provides health services 
                in one or more health professional shortage areas or 
                that provides such services to a significant number of 
                individuals who are members of a medically underserved 
                population; or
                    (B) is sold or transferred to any entity other than 
                an entity that is--
                            (i) a qualified community health group or 
                        other entity described in subparagraph (A); and
                            (ii) approved by the Secretary as a 
                        purchaser or transferee regarding the facility.
            (2) Subordination; waivers.--The Secretary may subordinate 
        or waive the right of recovery under paragraph (1), and any 
        other Federal interest that may be derived by virtue of an 
        award of financial assistance under section 3421 from which 
        substantial capital costs are to paid, if the Secretary 
        determines that subordination or waiver will further the 
        objectives of this part.

SEC. 3424. ACCESSIBILITY OF SERVICES.

    (a) Services for Certain Individuals.--A funding agreement for an 
award of financial assistance under section 3421 is that the qualified 
community health group involved will ensure that the services of the 
group will be accessible directly or through formal contractual 
arrangements with its participating providers regardless of whether 
individuals who seek care from the applicant are eligible persons under 
title I.
    (b) Use of Third-Party Payors.--A funding agreement for an award of 
financial assistance under section 3421 is that the qualified community 
health group involved will ensure that the health care providers of the 
group are all approved by the Secretary as providers under title XVIII 
of the Social Security Act and by the appropriate State agency as 
providers under title XIX of the Social Security Act, and the applicant 
has made or will make every reasonable effort to collect appropriate 
reimbursement for its costs in providing health services to individuals 
who are entitled to health benefits under title I of this Act, 
insurance benefits under title XVIII of the Social Security Act, 
medical assistance under a State plan approved under title XIX of the 
Social Security Act, or to assistance for medical expenses under any 
other public assistance program or private health insurance program.
    (c) Schedule of Fees.--A funding agreement for an award of 
financial assistance under section 3421 is that the qualified community 
health group involved will--
            (1) prepare a schedule of fees or payments for the 
        provision of health services not covered by title I that is 
        consistent with locally prevailing rates or charges and 
        designed to cover its reasonable costs of operation and has 
        prepared a corresponding schedule of discounts to be applied to 
        the payment of such fees or payments (or payments of cost 
        sharing amounts owed in the case of covered benefits) which 
        discounts are applied on the basis of the patient's ability to 
        pay; and
            (2) make every reasonable effort to secure from patients 
        payment in accordance with such schedules, and to collect 
        reimbursement for services to persons entitled to public or 
        private insurance benefits or other medical assistance on the 
        basis of full fees without application of discounts, except 
        that the applicant will ensure that no person is denied service 
        based on the person's inability to pay therefor.
    (d) Barriers Within Service Area.--A funding agreement for an award 
of financial assistance under section 3421 is that the qualified 
community health group involved will ensure that the following 
conditions are met:
            (1) In the service area of the group, the group will ensure 
        that--
                    (A) the services of the group are accessible to all 
                residents; and
                    (B) to the maximum extent possible, barriers to 
                access to the services of the group are eliminated, 
                including barriers resulting from the area's physical 
                characteristics, its residential patterns, its 
                economic, social and cultural groupings, and available 
                transportation.
            (2) The group will periodically conduct reviews within the 
        service area of the group to determine whether the conditions 
        described in paragraph (1) are being met.
    (e) Limited Ability to Speak English Language.--A funding agreement 
for an award of financial assistance under section 3421 is that, if the 
service area of the qualified community health group involved includes 
a substantial number of individuals who have a limited ability to speak 
the English language, the applicant will--
            (1) maintain arrangements responsive to the needs of such 
        individuals for providing services to the extent practicable in 
        the language and cultural context most appropriate to such 
        individuals; and
            (2) maintain a sufficient number of staff members who are 
        fluent in both English and the languages spoken by such 
        individuals, and will ensure that the responsibilities of the 
        employees include providing guidance and assistance to such 
        individuals and to other staff members of the group.

SEC. 3425. ADDITIONAL AGREEMENTS.

    (a) Required Services.--A funding agreement for an award of 
financial assistance under section 3421 is that the qualified community 
health group involved will provide enabling services (as defined in 
section 3461(g)) and all of the items and services identified by the 
Secretary in rules regarding qualified community health plans and 
practice networks.
    (b) Quality Control System.--A funding agreement for an award of 
financial assistance under section 3421 is that the qualified community 
health group involved will maintain a community-oriented, patient 
responsive, quality control system under which the group, in accordance 
with regulations prescribed by the Secretary--
            (1) conducts an ongoing quality assurance program for the 
        health services delivered by participating provider entities;
            (2) maintains a continuous community health status 
        improvement process; and
            (3) maintains a system for development, compilation, 
        evaluation and reporting of information to the public regarding 
        the costs of operation, service utilization patterns, 
        availability, accessibility and acceptability of services, 
        developments in the health status of the populations served, 
        uniform health and clinical performance measures and financial 
        performance of the network or plan.
    (c) Use of Existing Resources.--A funding agreement for an award of 
financial assistance under section 3421 is that the applicant will, in 
developing the qualified community health group involved, utilize 
existing resources to the maximum extent practicable.

SEC. 3426. SUBMISSION OF CERTAIN INFORMATION.

    (a) Assessment of Need.--The Secretary may make an award of 
financial assistance under section 3421 only if the applicant involved 
submits to the Secretary an assessment of the need that the medically 
underserved population or populations proposed to be served by the 
applicant have for health services and for enabling services (as 
defined in section 3461(g)).
    (b) Description of Intended Expenditures; Related Information.--The 
Secretary may make an award of financial assistance under section 3421 
only if the applicant involved submits to the Secretary the following 
information:
            (1) A description of how the applicant will design the 
        proposed quality community health plan or practice network 
        (including the service sites involved) for such populations 
        based on the assessment of need.
            (2) A description of efforts to secure, within the proposed 
        service area of such health plan or practice network (including 
        the service sites involved), financial and professional 
        assistance and support for the project.
            (3) Evidence of significant community involvement in the 
        initiation, development and ongoing operation of the project.

SEC. 3427. REPORTS; AUDITS.

    A funding agreement for an award of financial assistance under 
section 3421 is that the applicant involved will--
            (1) provide such reports and information on activities 
        carried out under this section in a manner and form required by 
        the Secretary; and
            (2) provide an annual organization-wide audit that meets 
        applicable standards of the Secretary.

SEC. 3428. APPLICATION FOR ASSISTANCE.

    The Secretary may make an award of financial assistance under 
section 3421 only if an application for the award is submitted to the 
Secretary, the application contains each funding agreement described in 
this subpart, the application contains the information required in 
section 3426, 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 subpart.

SEC. 3429. GENERAL PROVISIONS.

    (a) Limitation on Number of Awards.--The Secretary may not make 
more than two awards of financial assistance under section 3421 for the 
same project.
    (b) Amount.--The amount of any award of financial assistance under 
section 3421 for any project shall be determined by the Secretary.

 Subpart C--Capital Cost of Development of Qualified Community Health 
                      Plans and Practice Networks

SEC. 3441. LOANS AND LOAN GUARANTEES REGARDING PLANS AND NETWORKS.

    (a) In General.--The Secretary may make loans to, and guarantee the 
payment of principal and interest to Federal and non-Federal lenders on 
behalf of, public and private entities for the capital costs of 
developing qualified community health groups (as defined in section 
3421(a)).
    (b) Preferences; Accessibility of Services; Certain Other 
Provisions.--The provisions of subpart B apply to loans and loan 
guarantees under subsection (a) to the same extent and in the same 
manner as such provisions apply to awards of grants and contracts under 
section 3421.
    (c) Use of Assistance.--
            (1) In general.--With respect to the development of 
        qualified community health groups, the capital costs for which 
        loans made pursuant to subsection (a) may be expended are, 
        subject to paragraphs (2) and (3), the following:
                    (A) The acquisition, modernization, expansion or 
                construction of facilities, or the conversion of 
                unneeded hospital facilities to facilities that will 
                assure or enhance the provision and accessibility of 
                health care and enabling services to medically 
                underserved populations.
                    (B) The purchase of major equipment, including 
                equipment necessary for the support of external and 
                internal information systems.
                    (C) The establishment of reserves required for 
                furnishing services on a prepaid basis.
                    (D) Such other capital costs as the Secretary may 
                determine are necessary to achieve the objectives of 
                this section.
            (2) Priorities regarding use of funds.--In providing loans 
        or loan guarantees under subsection (a) for an entity, the 
        Secretary shall give priority to authorizing the use of amounts 
        for projects for the renovation and modernization of medical 
        facilities necessary to prevent or eliminate safety hazards, 
        avoid noncompliance with licensure or accreditation standards, 
        or projects to replace obsolete facilities.
            (3) Limitation.--The Secretary may authorize the use of 
        amounts under subsection (a) for the construction of new 
        buildings only if the Secretary determines that appropriate 
        facilities are not available through acquiring, modernizing, 
        expanding or converting existing buildings, or that 
        construction new buildings will cost less.
    (d) Amount of assistance.--The principal amount of loans or loan 
guarantees under subsection (a) may, when added to any other assistance 
under this section, cover up to 100 percent of the costs involved.

SEC. 3442. CERTAIN REQUIREMENTS.

    (a) Loans.--
            (1) In general.--The Secretary may approve a loan under 
        section 3441 only if--
                    (A) the Secretary is reasonably satisfied that the 
                applicant for the project for which the loan would be 
                made will be able to make payments of principal and 
                interest thereon when due; and
                    (B) the applicant provides the Secretary with 
                reasonable assurances that there will be available to 
                it such additional funds as may be necessary to 
                complete the project or undertaking with respect to 
                which such loan is requested.
            (2) Terms and conditions.--Any loan made under section 3441 
        shall, subject to the Federal Credit Reform Act of 1990, meet 
        such terms and conditions (including provisions for recovery in 
        case of default) as the Secretary, in consultation with the 
        Secretary of the Treasury, determines to be necessary to carry 
        out the purposes of such section while adequately protecting 
        the financial interests of the United States. Terms and 
        conditions for such loans shall include provisions regarding 
        the following:
                    (A) Security.
                    (B) Maturity date.
                    (C) Amount and frequency of installments.
                    (D) Rate of interest, which shall be at a rate 
                comparable to the rate of interest prevailing on the 
                date the loan is made.
    (b) Loan Guarantees.--The Secretary may not approve a loan 
guarantee under section 3441 unless the Secretary determines that the 
terms, conditions, security (if any), schedule and amount of repayments 
with respect to the loan are sufficient to protect the financial 
interests of the United States and are otherwise reasonable. Such loan 
guarantees shall be subject to such further terms and conditions as the 
Secretary determines, in consultation with the Secretary of the 
Treasury, and subject to the Federal Credit Reform Act of 1990, to be 
necessary to ensure that the purposes of this section will be achieved.
    (c) Use of Existing Resources.--The Secretary may provide a loan or 
loan guarantee under section 3441 only if the applicant involved agrees 
that, in developing the qualified community health group involved, the 
applicant will utilize existing resources to the maximum extent 
practicable.

SEC. 3443. DEFAULTS; RIGHT OF RECOVERY.

    (a) Defaults.--
            (1) In general.--The Secretary may take such action as may 
        be necessary to prevent a default on loans or loan guarantees 
        under section 3441, including the waiver of regulatory 
        conditions, deferral of loan payments, renegotiation of loans, 
        and the expenditure of funds for technical and consultative 
        assistance, for the temporary payment of the interest and 
        principal on such a loan, and for other purposes.
            (2) Foreclosure.--The Secretary may take such action, 
        consistent with State law respecting foreclosure procedures, as 
        the Secretary deems appropriate to protect the interest of the 
        United States in the event of a default on a loan made pursuant 
        to section 3441, including selling real property pledged as 
        security for such a loan or loan guarantee and for a reasonable 
        period of time taking possession of, holding, and using real 
        property pledged as security for such a loan or loan guarantee.
            (3) Waivers.--The Secretary may, for good cause, but with 
        due regard to the financial interests of the United States, 
        waive any right of recovery which the Secretary has by reasons 
        of the failure of a borrower to make payments of principal of 
        and interest on a loan made pursuant to section 3441, except 
        that if such loan is sold and guaranteed, any such waiver shall 
        have no effect upon the Secretary's guarantee of timely payment 
        of principal and interest.
    (b) Twenty-year Obligation; Right of Recovery.--
            (1) In general.--With respect to a facility for which a 
        loan is to be made pursuant to section 3441, the Secretary may 
        provide the loan or loan guarantee only if the applicant 
        involved agrees that the applicant will be liable to the United 
        States for the amount of the loan or loan guarantee, together 
        with an amount representing interest, if at any time during the 
        20-period beginning on the date of completion of the activities 
        involved, the facility--
                    (A) ceases to be a facility utilized by a qualified 
                community health group, or by another public or 
                nonprofit private entity that provides health services 
                in one or more health professional shortage areas or 
                that provides such services to a significant number of 
                individuals who are members of a medically underserved 
                population; or
                    (B) is sold or transferred to any entity other than 
                an entity that is--
                            (i) a qualified community health group or 
                        other entity described in subparagraph (A); and
                            (ii) approved by the Secretary as a 
                        purchaser or transferee regarding the facility.
            (2) Subordination; waivers.--The Secretary may subordinate 
        or waive the right of recovery under paragraph (1), and any 
        other Federal interest that may be derived by virtue of a loan 
        or loan guarantee under subsection (a), if the Secretary 
        determines that subordination or waiver will further the 
        objectives of this part.

SEC. 3444. PROVISIONS REGARDING CONSTRUCTION OR EXPANSION OF 
              FACILITIES.

    (a) Submission of Information.--In the case of a project for 
construction, conversion, expansion or modernization of a facility, the 
Secretary may provide loans or loan guarantees under section 3441 only 
if the applicant submits to the Secretary the following:
            (1) A description of the site.
            (2) Plans and specifications which meet requirements 
        prescribed by the Secretary.
            (3) Information reasonably demonstrating that title to such 
        site is vested in one or more of the entities filing the 
        application (unless the agreement described in subsection 
        (b)(1) is made).
            (4) A specification of the type of assistance being 
        requested under section 3441.
    (b) Agreements.--In the case of a project for construction, 
conversion, expansion or modernization of a facility, the Secretary may 
provide loans or loan guarantees under section 3441 only if the 
applicant makes the following agreements:
            (1) Title to such site will be vested in one or more of the 
        entities filing the application (unless the assurance described 
        in subsection (a)(3) has been submitted under such subsection).
            (2) Adequate financial support will be available for 
        completion of the project and for its maintenance and operation 
        when completed.
            (3) All laborers and mechanics employed by contractors or 
        subcontractors in the performance of work on a project will be 
        paid wages at rates not less than those prevailing on similar 
        construction in the locality as determined by the Secretary of 
        Labor in accordance with the Act of March 3, 1931 (40 U.S.C. 
        276a et seq; commonly known as the Davis-Bacon Act), and the 
        Secretary of Labor shall have with respect to such labor 
        standards the authority and functions set forth in 
        Reorganization Plan Numbered 14 of 1950 (15 FR 3176; 5 U.S.C. 
        Appendix) and section 276c of title 40.
            (4) The facility will be made available to all persons 
        seeking service regardless of their ability to pay.

SEC. 3445. APPLICATION FOR ASSISTANCE.

    The Secretary may provide loans or loan guarantees under section 
3441 only if an application for such assistance is submitted to the 
Secretary, the application contains each agreement described in this 
subpart, the application contains the information required in section 
3444(a), 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 subpart.

SEC. 3446. ADMINISTRATION OF PROGRAMS.

    This subpart, and any other program of the Secretary that provides 
loans or loan guarantees, shall be carried out by a centralized loan 
unit established within the Department of Health and Human Services.

                      Subpart D--Enabling Services

SEC. 3461. GRANTS AND CONTRACTS FOR ENABLING SERVICES.

    (a) In General.--
            (1) Grants and contracts.--The Secretary may make grants to 
        and enter into contracts with entities described in paragraph 
        (2) to assist such entities in providing the services described 
        in subsection (b) for the purpose of increasing the capacity of 
        individuals to utilize the items and services included in the 
        comprehensive benefits package under title I.
            (2) Relevant entities.--For purposes of paragraph (1), the 
        entities described in this paragraph are qualified community 
        health groups (as defined in section 3421(a)), and other public 
        or nonprofit private entities, that--
                    (A) provide health services in one or more health 
                professional shortage areas or that provide such 
                services to a significant number of individuals who are 
                members of a medically underserved population; and
                    (B) are experienced in providing services to 
                increase the capacity of individuals to utilize health 
                services.
    (b) Enabling Services.--The services referred to in subsection 
(a)(1) are transportation, community and patient outreach, patient 
education, translation services, and such other services as the 
Secretary determines to be appropriate in carrying out the purpose 
described in such subsection.
    (c) Certain Requirements Regarding Project Area.--The Secretary may 
make an award of a grant or contract under subsection (a) only if the 
applicant involved--
            (1) submits to the Secretary--
                    (A) information demonstrating that the medically 
                underserved populations in the community to be served 
                under the award have a need for enabling services; and
                    (B) a proposed budget for providing such services; 
                and
            (2) the applicant for the award agrees that the residents 
        of the community will be significantly involved in the project 
        carried out with the award.
    (d) Imposition of Fees.--The Secretary may make an award of a grant 
or contract under subsection (a) only if the applicant involved agrees 
that, in the project carried out under such subsection, enabling 
services will be provided without charge to the recipients of the 
services.
    (e) Use of Existing Resources.--The Secretary may make an award of 
a grant or contract under subsection (a) only if the applicant involved 
agrees that, in carrying out the project under such subsection, the 
applicant will utilize existing resources to the maximum extent 
practicable.
    (f) Application for Awards of Assistance.--The Secretary may make 
an award of a grant or contract under subsection (a) only if an 
application for the award is submitted to the Secretary, the 
application contains each agreement described in this subpart, the 
application contains the information required in subsection (d)(1), 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 subpart.
    (g) Definition.--For purposes of this section, the term ``enabling 
services'' means services described in subsection (b) that are provided 
for the purpose described in subsection (a)(1).

SEC. 3462. AUTHORIZATIONS OF APPROPRIATIONS.

    (a) Enabling Services.--For the purpose of carrying out section 
3461, there are authorized to be appropriated $200,000,000 for fiscal 
year 1996, $300,000,000 for each of the fiscal years 1997 through 1999, 
and $100,000,000 for fiscal year 2000.
    (b) Relation to Other Funds.--The authorizations of appropriations 
established in subsection (a) are in addition to any other 
authorizations of appropriations that are available for the purpose 
described in such subsection.

                 PART 3--NATIONAL HEALTH SERVICE CORPS

SEC. 3471. AUTHORIZATIONS OF APPROPRIATIONS.

    (a) Additional Funding; General Corps Program; Allocations 
Regarding Nurses.--For the purpose of carrying out subpart II of part D 
of title III of the Public Health Service Act, and for the purpose of 
carrying out section 3472, there are authorized to be appropriated 
$50,000,000 for fiscal year 1995, $100,000,000 for fiscal year 1996, 
and $200,000,000 for each of the fiscal years 1997 through 2000.
    (b) Relation to Other Funds.--The authorizations of appropriations 
established in subsection (a) are in addition to any other 
authorizations of appropriations that are available for the purpose 
described in such subsection.
    (c) Availability of Funds.--An appropriation under this section for 
any fiscal year may be made at any time before that fiscal year and may 
be included in an Act making an appropriation under an authorization 
under subsection (a) for another fiscal year; but no funds may be made 
available from any appropriation under this section for obligation 
under sections 331 through 335, section 336A, and section 337 before 
the fiscal year involved.

SEC. 3472. ALLOCATION FOR PARTICIPATION OF NURSES IN SCHOLARSHIP AND 
              LOAN REPAYMENT PROGRAMS.

    Of the amounts appropriated under section 3471, the Secretary shall 
reserve such amounts as may be necessary to ensure that, of the 
aggregate number of individuals who are participants in the Scholarship 
Program under section 338A of the Public Health Service Act, or in the 
Loan Repayment Program under section 338B of such Act, the total number 
who are being educated as nurses or are serving as nurses, 
respectively, is increased to 20 percent.

      PART 4--PAYMENTS TO HOSPITALS SERVING VULNERABLE POPULATIONS

SEC. 3481. PAYMENTS TO HOSPITALS.

    (a) Entitlement Status.--The Secretary shall make payments in 
accordance with this part to eligible hospitals described in section 
3482. The preceding sentence--
            (1) is an entitlement in the Secretary on behalf of such 
        eligible hospitals (but is not an entitlement in the State in 
        which any such hospital is located or in any individual 
        receiving services from any such hospital); and
            (2) constitutes budget authority in advance of 
        appropriations Acts and represents the obligation of the 
        Federal Government to provide funding for such payments in the 
        amounts, and for the fiscal years, specified in subsection (b).
    (b) Amount of Entitlement.--
            (1) In general.--For purposes of subsection (a)(2), the 
        amounts and fiscal years specified in this subsection are (in 
        the aggregate for all eligible hospitals) $800,000,000 for the 
        fiscal year in which the general effective date occurs and for 
        each subsequent fiscal year.
            (2) Special rule for years before general effective date.--
                    (A) In general.--For any fiscal year that begins 
                prior to the general effective date, the amount 
                specified in this subsection for purposes of subsection 
                (a)(2) shall be equal to the aggregate DSH percentage 
                of the amount otherwise determined under paragraph (1).
                    (B) Aggregate dsh percentage defined.--In 
                subparagraph (A), the ``aggregate DSH percentage'' for 
                a year is the amount (expressed as a percentage) equal 
                to--
                            (i) the total amount of payment made by the 
                        Secretary under section 1903(a) of the Social 
                        Security Act during the base year with respect 
                        to payment adjustments made under section 
                        1923(c) of such Act for hospitals in the States 
                        in which eligible hospitals for the year are 
                        located; divided by
                            (ii) the total amount of payment made by 
                        the Secretary under section 1903(a) of such Act 
                        during the base year with respect to payment 
                        adjustments made under section 1923(c) of such 
                        Act for hospitals in all States.
    (c) Period of Payment.--An eligible hospital shall receive a 
payment under this section for a period of 5 years, without regard to 
the year for which the hospital first receives a payment.
    (d) Payments Made on Quarterly Basis.--Payments to an eligible 
hospital under this section for a year shall be made on a quarterly 
basis during the year.

SEC. 3482. IDENTIFICATION OF ELIGIBLE HOSPITALS.

    (a) Hospitals in Participating States.--In order to be an eligible 
hospital under this part, a hospital must be located in a State that is 
a participating State under this Act, except that an eligible hospital 
remains eligible to receive a payment under this part notwithstanding 
that, during the 5-year period for which the payment is to be made, the 
State in which it is located no longer meets the requirements for 
participating States under this Act.
    (b) State Identification.--In accordance with the criteria 
described in subsection (c) and such procedures as the Secretary may 
require, each State shall identify the hospitals in the State that meet 
such criteria and provide the Secretary with a list of such hospitals.
    (c) Criteria for Eligibility.--A hospital meets the criteria 
described in this subsection if the hospital's low-income utilization 
rate for the base year under section 1923(b)(3) of the Social Security 
Act (as such section is in effect on the day before the date of the 
enactment of this Act) is not less than 25 percent.

SEC. 3483. AMOUNT OF PAYMENTS.

    (a) Distribution of Allocation for Low-Income Assistance.--
            (1) Allocation from total amount.--Of the total amount 
        available for payments under this section in a year, 75 percent 
        shall be allocated to hospitals for low-income assistance in 
        accordance with this subsection.
            (2) Determination of hospital payment amount.--The amount 
        of payment to an eligible hospital from the allocation made 
        under paragraph (1) during a year shall be the equal to the 
        hospital's low-income percentage of the allocation for the 
        year.
    (b) Distribution of Allocation for Assistance for Uncovered 
Services.--
            (1) Allocation from total amount; determination of State-
        specific portion of allocation.--Of the total amount available 
        for payments under this section in a year, 25 percent shall be 
        allocated to hospitals for assistance in furnishing inpatient 
        hospital services that are not covered services under title I 
        (in accordance with regulations of the Secretary) in accordance 
        with this subsection. The amount available for payments to 
        eligible hospitals in a State shall be equal to an amount 
        determined in accordance with a methodology specified by the 
        Secretary.
            (2) Determination of hospital payment amount.--The amount 
        of payment to an eligible hospital in a State from the amount 
        available for payments to eligible hospitals in the State under 
        paragraph (1) during a year shall be the equal to the 
        hospital's low-income percentage of such amount for the year.
    (c) Low-Income Percentage Defined.--
            (1) In general.--In this subsection, an eligible hospital's 
        ``low-income percentage'' for a year is equal to the amount 
        (expressed as a percentage) of the total low-income days for 
        all eligible hospitals for the year that are attributable to 
        the hospital.
            (2) Low-income days described.--For purposes of paragraph 
        (1), an eligible hospital's low-income days for a year shall be 
        equal to the product of--
                    (A) the total number of inpatient days for the 
                hospital for the year (as reported to the Secretary by 
                the State in which the hospital is located, in 
                accordance with a reporting schedule and procedures 
                established by the Secretary); and
                    (B) the hospital's low-income utilization rate for 
                the base year under section 1923(b)(3) of the Social 
                Security Act (as such section is in effect on the day 
                before the date of the enactment of this Act).

SEC. 3484. BASE YEAR.

    In this part, the ``base year'' is, with respect to a State and 
hospitals in a State, the year immediately prior to the year in which 
the general effective date occurs.

                                                  Title III, Subtitle F

               Subtitle F--Mental Health; Substance Abuse

                      PART 1--FINANCIAL ASSISTANCE

SEC. 3501. AUTHORIZATIONS OF APPROPRIATIONS.

    (a) In General.--For the purpose of carrying out this part, there 
are authorized to be appropriated $100,000,000 for fiscal year 1995, 
$150,000,000 for fiscal year 1996, and $250,000,000 for each of the 
fiscal years 1997 through 2000.
    (b) Allocation Among Programs.--Of the amounts made available under 
subsection (a) for a fiscal year--
            (1) the Secretary may reserve for carrying out section 3503 
        such amounts as the Secretary determines to be appropriate; and
            (2) the Secretary shall, of the remaining amounts, reserve 
        50 percent for carrying out subsection (a) of section 3502 and 
        50 percent for carrying out subsection (b) of such section.
    (c) Relation to Other Funds.--The authorizations of appropriations 
established in subsection (a) are in addition to any other 
authorizations of appropriations that are available for the purpose 
described in such subsection.

SEC. 3502. SUPPLEMENTAL FORMULA GRANTS FOR STATES REGARDING ACTIVITIES 
              UNDER PART B OF TITLE XIX OF PUBLIC HEALTH SERVICE ACT.

    (a) Mental Health.--
            (1) In general.--In the case of any State that submits to 
        the Secretary an application in accordance with subsection (e) 
        for a fiscal year with respect to mental health, the Secretary 
        shall make a grant to the State for the purposes authorized in 
        subsection (c) with respect to mental health. The grant shall 
        consist of the allotment determined under paragraph (2) for the 
        State for such year.
            (2) Determination of allotment.--For purposes of paragraph 
        (1), the allotment under this paragraph for a State for a 
        fiscal year shall be determined as follows: With respect to the 
        amount reserved under section 3501(b)(2) for carrying out this 
        subsection, section 1918 of the Public Health Service Act shall 
        be applied to such amount to the same extent and in the same 
        manner as such section 1918 is applied to the amount determined 
        under section 1918(a)(2) of such Act.
    (b) Substance Abuse.--
            (1) In general.--In the case of any State that submits to 
        the Secretary an application in accordance with subsection (e) 
        for a fiscal year with respect to substance abuse, the 
        Secretary shall make a grant to the State for the purposes 
        authorized in subsection (c) with respect to substance abuse. 
        The grant shall consist of the allotment determined under 
        paragraph (2) for the State for such year.
            (2) Determination of allotment.--For purposes of paragraph 
        (1), the allotment under this paragraph for a State for a 
        fiscal year shall be determined as follows: With respect to the 
        amount reserved under section 3501(b)(2) for carrying out this 
        subsection, section 1933 of the Public Health Service Act shall 
        be applied to such amount to the same extent and in the same 
        manner as such section 1933 is applied to the amount determined 
        pursuant to sections 1933(a)(1)(B)(i) and 1918(a)(2)(A) of such 
        Act.
    (c) Use of Grants.--
            (1) In general.--With respect to the expenditure of a grant 
        to a State under subsection (a) or (b), the Secretary--
                    (A) shall designate as authorized expenditures such 
                of the activities described in paragraph (2) with 
                respect to mental health and substance abuse, 
                respectively, as the Secretary determines to be 
                appropriate; and
                    (B) may make the grant only if the State agrees to 
                expend the grant in accordance with the activities so 
                designated.
            (2) Description of activities.--The activities referred to 
        in paragraph (1) are (as applicable to the grant involved) the 
        following:
                    (A) For the purpose of increasing the access of 
                individuals to services relating to mental health and 
                substance abuse, the following services: 
                Transportation, community and patient outreach, patient 
                education, translation services, and such other 
                services as the Secretary determines to be appropriate 
                regarding such purpose.
                    (B) Improving the capacity of State and local 
                service systems to coordinate and monitor mental health 
                and substance abuse services, including improvement of 
                management information systems, and establishment of 
                linkages between providers of mental health and 
                substance abuse services and primary care providers and 
                health plans.
                    (C) Providing incentives to integrate public and 
                private systems for the treatment of mental health and 
                substance abuse disorders.
                    (D) Any activity for which a grant under section 
                1911 or section 1921 of the Public Health Service Act 
                is authorized to be expended.
    (d) Maintenance of Effort.--
            (1) In general.--With respect to the activities for which a 
        grant under subsection (a) or (b) is to be made, the Secretary 
        may make the grant only if the State involved agrees to 
        maintain expenditures of non-Federal amounts for such 
        activities at a level that is not less than the level of such 
        expenditures maintained by the State for the fiscal year 
        preceding the first fiscal year for which the State receives 
        such a grant.
            (2) Waiver.--The Secretary may waive all or part of the 
        requirement established for a State under paragraph (1) if--
                    (A) the State agrees that the amounts that 
                otherwise would have been subject to such requirement 
                will be expended for the purpose of developing 
                community-based systems of care to promote the eventual 
                integration of the public and private systems for 
                treatment of mental health, or substance abuse, as 
                applicable to the grant;
                    (B) the State submits to the Secretary a request 
                for the waiver and a description of the manner in which 
                the State will carry out such purpose; and
                    (C) the Secretary approves the waiver.
    (e) Application for Grant.--For purposes of subsection (a)(1) and 
(b)(1), an application for a grant under this section regarding mental 
health or substance abuse, respectively, is in accordance with this 
subsection if the State involved submits the application not later than 
the date specified by the Secretary, the application contains each 
applicable agreement described in this section, and the application 
otherwise is in such form, is made in such manner, and contains such 
agreements, assurances, and information as the Secretary determines to 
be necessary to carry out the purpose involved.

SEC. 3503. CAPITAL COSTS OF DEVELOPMENT OF CERTAIN CENTERS AND CLINICS.

    (a) In General.--The Secretary may make loans to, and guarantee the 
payment of principal and interest to Federal and non-Federal lenders on 
behalf of, public and private entities for the capital costs to be 
incurred by the entities in the development of non-acute, residential 
treatment centers and community-based ambulatory clinics.
    (b) Priorities Regarding Use of Funds.--In providing loans or loan 
guarantees under subsection (a), the Secretary shall give priority to 
authorizing the use of amounts for projects in health professional 
shortage areas or in geographic area in which there resides a 
significant number of individuals who are members of a medically 
underserved population.
    (c) Applicability of Certain Provisions.--The Secretary may provide 
loans or loan guarantees under subsection (a) only if the applicant 
involved agrees that, except to the extent inconsistent with the 
purpose described in subsection (a), subpart C of part 2 of subtitle E 
applies to such assistance to the same extent and in the same manner as 
such subpart applies to loans and loan guarantees under section 3441.

           PART 2--AUTHORITIES REGARDING PARTICIPATING STATES

                           Subpart A--Report

SEC. 3511. REPORT ON INTEGRATION OF MENTAL HEALTH SYSTEMS.

    (a) In General.--As a condition of being a participating State 
under title I, each State shall, not later than October 1, 1998, submit 
to the Secretary a report on (including a plan for) the measures to be 
implemented by the State to achieve the integration of the mental 
illness and substance abuse services of the State and its political 
subdivisions with the mental illness and substance abuse services that 
are included in the comprehensive benefit package under title I. The 
plan required in the preceding sentence shall meet the conditions 
described in section 3074(b).
    (b) Required Contents.--With respect to the provision of items and 
services relating to mental illness and substance abuse, the report of 
a State under subsection (a) shall, at a minimum, contain the following 
information:
            (1) Information on the number of individuals served by or 
        through mental illness and substance abuse programs 
        administered by State and local agencies and the proportion who 
        are eligible persons under title I.
            (2) The following information on services furnished to 
        eligible persons:
                    (A) Each type of benefit furnished.
                    (B) The mental illness diagnoses for which each 
                type of benefit is covered, the amount, duration and 
                scope of coverage for each covered benefit, and any 
                applicable limits on benefits.
                    (C) Cost sharing rules that apply.
            (3) Information on the extent to which each health provider 
        furnishing mental illness and substance abuse services under a 
        State program participates in one or more regional or corporate 
        alliance health plans, and, in the case of providers that do 
        not so participate, the reasons for the lack of participation.
            (4) The amount of revenues from health plans received by 
        mental illness and substance abuse providers that are 
        participating in such health plans and are funded under one or 
        more State programs.
            (5) With respect to the two years preceding the year in 
        which the State becomes a participating State under title I--
                    (A) the amount of funds expended by the State and 
                its political subdivisions for each of such years for 
                items and services that are included in the 
                comprehensive benefit package under such title;
                    (B) the amount of funds expended for medically 
                necessary and appropriate items and services not 
                included in such benefit package, including medical 
                care, other health care, and supportive services 
                related to the provision of health care.
            (6) An estimate of the amount that the State will expend to 
        furnish items and services not included in such package once 
        the expansion of coverage for mental illness and substance 
        abuse services is implemented in the year 2001.
            (7) A description of how the State will assure that all 
        individuals served by mental illness and substance abuse 
        programs funded by the State will be enrolled in a health plan 
        and how mental illness and substance abuse services not covered 
        under the benefit package will continue to be furnished to such 
        enrollees.
            (8) A description of the conditions under which the 
        integration of mental illness and substance abuse providers 
        into regional and corporate alliances can be achieved, and an 
        identification of changes in participation and certification 
        requirements that are needed to achieve the integration of such 
        programs and providers into health plans.
            (9) If the integration of mental illness and substance 
        abuse programs operated by the State into one or more health 
        plans is not medically appropriate or feasible for one or more 
        groups of individuals treated under State programs, a 
        description of the reasons that integration is not feasible or 
        appropriate and a plan for assuring the coordination for such 
        individuals of the care and services covered under the 
        comprehensive benefit package with the additional items and 
        services furnished by such programs.
    (c) General Provisions.--Reports under subsection (a) shall be 
provided at the time and in the manner prescribed by the Secretary.

                        Subpart B--Pilot Program

SEC. 3521. PILOT PROGRAM.

    (a) In General.--The Secretary shall establish a pilot program to 
demonstrate model methods of achieving the integration of the mental 
illness and substance abuse services of the States with the mental 
illness and substance abuse services that are included in the 
comprehensive benefit package under title I.
    (b) Certain Considerations.--With respect to the provision of items 
and services relating to mental illness and substance abuse, the 
Secretary, in carrying out subsection (a), shall consider the 
following:
            (1) The types of items and services needed in addition to 
        the items and services included in the comprehensive benefits 
        package under title I.
            (2) The optimal methods of treatment for individuals with 
        long-term conditions.
            (3) The capacity of alliance health plans to furnish such 
        treatment.
            (4) The modifications that should be made in the items and 
        services furnished by such health plans.
            (5) The role of publicly-funded health providers in the 
        integration of acute and long-term treatment.

   Subtitle G--Comprehensive School Health Education; School-Related 
                            Health Services

                       PART 1--GENERAL PROVISIONS

                                                  Title III, Subtitle G

SEC. 3601. PURPOSES.

    Subject to the subsequent provisions of this subtitle, the purposes 
of this subtitle are as follows:
            (1) To support the provision in kindergarten through grade 
        12 of sequential, age-appropriate, comprehensive health 
        education programs that address locally relevant priorities.
            (2) To establish a national framework within which States 
        can create comprehensive school health education programs 
        that--
                    (A) target the health risk behaviors accounting for 
                the majority of the morbidity and mortality among youth 
                and adults, including the following: Tobacco use; 
                alcohol and other drug abuse; sexual behaviors 
                resulting in infection with the human immunodeficiency 
                virus, in other sexually transmitted diseases or in 
                unintended pregnancy; behaviors resulting in 
                intentional and unintentional injuries; dietary 
                patterns resulting in disease; and sedentary 
                lifestyles; and
                    (B) are integrated with plans and programs in the 
                State, if any, under title III of the Goals 2000: 
                Educate America Act and those targeting health 
                promotion and disease prevention goals related to the 
                national health objectives set forth in Healthy People 
                2000.
            (3) To pay the initial costs of planning and establishing 
        Statewide comprehensive school health education programs that 
        will be implemented and maintained with local, State, and other 
        Federal resources.
            (4) To support Federal activities such as research and 
        demonstrations, evaluations, and training and technical 
        assistance regarding comprehensive school health education.
            (5) To motivate youth, especially low-achieving youth, to 
        stay in school, avoid teen pregnancy, and strive for success by 
        providing intensive, high-quality health education programs 
        that include peer-teaching, family, and community involvement.
            (6) To improve the knowledge and skills of children and 
        youth by integrating academic and experiential learning in 
        health education with other elements of a comprehensive school 
        health program.
            (7) To further the National Education Goals set forth in 
        title I of the Goals 2000: Educate America Act and the national 
        health objectives set forth in Healthy People 2000.

SEC. 3602. DEFINITIONS.

    (a) Comprehensive School Health Education Program.--For purposes of 
this subtitle, the term ``comprehensive school health education 
program'' means a program that addresses locally relevant priorities 
and meets the following conditions:
            (1) The program is sequential, and age and developmentally 
        appropriate.
            (2) The program is provided, in the area served by the 
        program, every year for all students from kindergarten through 
        grade 12.
            (3) The program provides comprehensive health education, 
        including the following components:
                    (A) Community health.
                    (B) Environmental health.
                    (C) Personal health.
                    (D) Family life.
                    (E) Growth and development.
                    (F) Nutritional health.
                    (G) Prevention and control of disease and 
                disorders.
                    (H) Safety and prevention of injuries.
                    (I) Substance abuse, including tobacco and alcohol 
                use.
                    (J) Consumer health, including education to ensure 
                that students understand the benefits and appropriate 
                use of medical services, including immunizations and 
                other clinical preventive services.
            (4) The program promotes personal responsibility for a 
        healthy lifestyle and provides the knowledge and skills 
        necessary to adopt a healthy lifestyle, including teaching the 
        legal, social, and health consequences of behaviors that pose 
        health risks.
            (5) The program is sensitive to cultural and ethnic issues 
        in the content of instructional materials and approaches.
            (6) The program includes activities that support 
        instruction.
            (7) The program includes activities to promote involvement 
        by parents, families, community organizations, and other 
        appropriate entities.
            (8) The program is coordinated with other Federal, State, 
        and local health education and prevention programs and with 
        other Federal, State and local education programs, including 
        those carried out under title I of the Elementary and Secondary 
        Education Act of 1965.
            (9) The program focuses on the particular health concerns 
        of the students in the State, school district, or school, as 
        the case may be.
    (b) Other Definitions.--For purposes of this subtitle:
            (1) The term ``local educational agency'' has the meaning 
        given such term in section 1471(12) of the Elementary and 
        Secondary Education Act of 1965.
            (2) The term ``State educational agency'' has the meaning 
        given such term in section 1471(23) of the Elementary and 
        Secondary Education Act of 1965.

          PART 2--SCHOOL HEALTH EDUCATION; GENERAL PROVISIONS

SEC. 3611. AUTHORIZATIONS OF APPROPRIATIONS.

    (a) Funding for School Health Education.--For the purpose of 
carrying out parts 3 and 4, there are authorized to be appropriated 
$50,000,000 for each of the fiscal year 1995 through 2000.
    (b) Allocations.--Of the amounts appropriated under subsection (a) 
for a fiscal year--
            (1) the Secretary may reserve not more than $13,000,000 for 
        carrying out part 4;
            (2) the Secretary may reserve not more than $5,000,000 to 
        support national leadership activities, such as research and 
        demonstration, evaluation, and training and technical 
        assistance in comprehensive school health education; and
            (3) the Secretary may reserve not more than 5 percent for 
        administrative expenses regarding parts 3 and 4.
    (c) Relation to Other Funds.--The authorizations of appropriations 
established in subsection (a) are in addition to any other 
authorizations of appropriations that are available for the purpose 
described in such subsection.

SEC. 3612. WAIVERS OF STATUTORY AND REGULATORY REQUIREMENTS.

    (a) In General.--
            (1) Waivers.--Except as provided in subsection (c), upon 
        the request of an entity receiving funds under part 3 or part 4 
        and under a program specified in paragraph (2), the Secretary 
        of Health and Human Services or the Secretary of Education (as 
        the case may be, according to which Secretary administers the 
        program so specified) may grant to the entity a waiver of any 
        requirement of such program regarding the use of funds, or of 
        the regulations issued for the program by the Secretary 
        involved, if the following conditions are met with respect to 
        such program:
                    (A) The Secretary involved determines that the 
                requirement of such program impedes the ability of the 
                State educational agency or other recipient to achieve 
                more effectively the purposes of part 3 or 4.
                    (B) The Secretary involved determines that, with 
                respect to the use of funds under such program, the 
                requested use of the funds by the entity would be 
                consistent with the purposes of part 3 or 4.
                    (C) In the case of a request for a waiver submitted 
                by a State educational agency, the State educational 
                agency--
                            (i) provides all interested local 
                        educational agencies in the State with notice 
                        and an opportunity to comment on the proposal; 
                        and
                            (ii) submits the comments to the Secretary 
                        involved.
                    (D) In the case of a request for a waiver submitted 
                by a local educational agency or other agency, 
                institution, or organization that receives funds under 
                part 3 from the State educational agency, such request 
                has been reviewed by the State educational agency and 
                is accompanied by the comments, if any, of such agency.
            (2) Relevant programs.--For purposes of paragraph (1), the 
        programs specified in this paragraph are as follows:
                    (A) In the case of programs administered by the 
                Secretary of Health and Human Services, the following:
                            (i) The program known as the Prevention, 
                        Treatment, and Rehabilitation Model Projects 
                        for High Risk Youth, carried out under section 
                        517 of the Public Health Service Act.
                            (ii) The program known as the State and 
                        Local Comprehensive School Health Programs to 
                        Prevent Important Health Problems and Improve 
                        Educational Outcomes, carried out under such 
                        Act.
                    (B) In the case of programs administered by the 
                Secretary of Education, any program carried out under 
                part B of the Drug-Free Schools and Communities Act of 
                1986.
    (b) Waiver Period.--
            (1) In general.--A waiver under this section shall be for a 
        period not to exceed three years.
            (2) Extensions.--The Secretary involved under subsection 
        (a) may extend such period if the Secretary determines that--
                    (A) the waiver has been effective in enabling the 
                State or affected recipients to carry out the 
                activities for which it was requested and has 
                contributed to improved performance; and
                    (B) such extension is in the public interest.
    (c) Waivers Not Authorized.--The Secretary involved under 
subsection (a) may not waive, under this section, any statutory or 
regulatory requirement relating to--
            (1) comparability of services;
            (2) maintenance of effort;
            (3) the equitable participation of students attending 
        private schools;
            (4) parental participation and involvement;
            (5) the distribution of funds to States or to local 
        educational agencies or other recipients of funds under the 
        programs specified in subsection (a)(2);
            (6) maintenance of records;
            (7) applicable civil rights requirements; or
            (8) the requirements of sections 438 and 439 of the General 
        Education Provisions Act.
    (d) Termination of Waiver.--The Secretary involved under subsection 
(a) shall terminate a waiver under this section if the Secretary 
determines that the performance of the State or other recipient 
affected by the waiver has been inadequate to justify a continuation of 
the waiver or if it is no longer necessary to achieve its original 
purposes.

  PART 3--SCHOOL HEALTH EDUCATION; GRANTS TO STATE EDUCATION AGENCIES

        Subpart A--Planning Grants for State Education Agencies

SEC. 3621. APPLICATION FOR GRANT.

    (a) In General.--Any State educational agency that wishes to 
receive a planning grant under this subpart shall submit an application 
to the Secretary of Health and Human Services, at such time and in such 
manner as the Secretary may require.
    (b) Application; Joint Development; Contents.--An application under 
subsection (a) shall be jointly developed by the State educational 
agency and the State health agencies of the State involved, and shall 
contain the following:
            (1) An assessment of the State's need for comprehensive 
        school health education, using goals established by the 
        Department of Health and Human Services and the Department of 
        Education and the State's school improvement plan, if any, 
        under title III of Goals 2000: Educate America Act.
            (2) A description of how the State educational agency will 
        collaborate with the State health agency in the planning and 
        development of a comprehensive school health education program 
        in the State, including coordination of existing health 
        education programs and resources.
            (3) A plan to build capacity at the State and local levels 
        to provide staff development and technical assistance to local 
        educational agency and local health agency personnel involved 
        with comprehensive school health education.
            (4) A preliminary plan for evaluating comprehensive school 
        health education activities.
            (5) Information demonstrating that the State has 
        established a State-level advisory council whose membership 
        includes representatives of the State agencies with principal 
        responsibilities for programs regarding health, education, and 
        mental health.
            (6) A timetable and proposed budget for the planning 
        process.
            (7) Such other information and assurances as the Secretary 
        may require.
    (c) Number of Grants.--States may receive one planning grant 
annually and no more than two planning grants may be awarded to any one 
State.

SEC. 3622. APPROVAL OF SECRETARY.

    The Secretary may approve the application of a State under section 
3621 if the Secretary determines that--
            (1) the application meets the requirements of this subpart; 
        and
            (2) there is a substantial likelihood that the State will 
        be able to develop and implement a comprehensive school health 
        education plan that complies with the requirements of subpart 
        B.

SEC. 3623. AMOUNT OF GRANT.

    For any fiscal year, the minimum grant to any State under this 
subpart is an amount determined by the Secretary to be necessary to 
enable the State to conduct the planning process, and the maximum such 
grant is $500,000.

SEC. 3624. AUTHORIZED ACTIVITIES.

    A State may use funds received under this subpart only for the 
following:
            (1) To establish and carry out the State planning process.
            (2) To conduct Statewide or sub-State regional coordination 
        and collaboration activities for local educational agencies, 
        local health agencies, and other agencies and organizations, as 
        appropriate.
            (3) To conduct activities to build capacity to provide 
        staff development and technical assistance services to local 
        educational agency and local health agency personnel involved 
        with comprehensive school health education.
            (4) To develop student learning objectives and assessment 
        instruments.
            (5) To work with State and local health agencies and State 
        and local educational agencies to reduce barriers to the 
        implementation of comprehensive school health education 
        programs in schools.
            (6) To prepare the plan required to receive an 
        implementation grant under subpart B.
            (7) To adopt, validate, and disseminate curriculum models 
        and program strategies, if the Secretary determines that such 
        activities are necessary to achieving the objectives of the 
        State's program.

     Subpart B--Implementation Grants for State Education Agencies

SEC. 3631. APPLICATION FOR GRANT.

    (a) In General.--Any State that wishes to receive an implementation 
grant under this subpart shall submit an application to the Secretary 
of Health and Human Services, at such time, in such manner, and 
containing such information and assurances as the Secretary may 
require.
    (b) Application and State Plan; Joint Development; Contents.--An 
application under subsection (a) shall be jointly developed by the 
State educational agency and the State health agencies of the State 
involved, and shall include a State plan for comprehensive school 
health education programs (as defined in section 3602) that describes 
the following:
            (1) The State's goals and objectives for those programs.
            (2) How the State will allocate funds to local educational 
        agencies in accordance with section 3634.
            (3) How the State will coordinate programs under this 
        subpart with other local, State and Federal health education 
        programs.
            (4) How comprehensive school health education programs will 
        be coordinated with other local, State and Federal education 
        programs, such as programs under title I of the Elementary and 
        Secondary Education Act of 1965, with the State's school 
        improvement plan, if any, under title III of the Goals 2000: 
        Educate America Act, and with any similar programs.
            (5) How the State has worked with State and local education 
        agencies and with State and local health agencies to reduce 
        barriers to implementing comprehensive school health education 
        programs.
            (6) How the State will monitor the implementation of such 
        programs by local educational agencies.
            (7) How the State will build capacity for professional 
        development of health educators.
            (8) How the State will provide staff development and 
        technical assistance to local educational agencies.
            (9) The respective roles of the State educational agency, 
        local educational agencies, the State health agency, and the 
        local health agencies in developing and implementing such 
        school health education programs.
            (10) How such school health education programs will be 
        tailored to the extent practicable to be culturally and 
        linguistically sensitive and responsive to the various needs of 
        the students served, including individuals with disabilities, 
        and individuals from disadvantaged backgrounds (including 
        racial and ethnic minorities).
            (11) How the State will evaluate and report on the State's 
        progress toward attaining the goals and objectives described in 
        paragraph (1).

SEC. 3632. SELECTION OF GRANTEES.

    (a) Selection of Grantees.--The Secretary shall establish criteria 
for the competitive selection of grantees under this subpart.
    (b) Opportunity for Planning Grant.--If the Secretary does not 
approve a State's application under this subpart and determines that 
the State could benefit from a planning grant under subpart A, the 
Secretary shall inform the State of any planning grant funds that may 
be available to it under subpart A, subject to section 3621(c).

SEC. 3633. AMOUNT OF GRANT.

    (a) In General.--For any fiscal year, the minimum grant to any 
State under this subpart is an amount determined by the Secretary to be 
necessary to enable the State to conduct the implementation process.
    (b) Criteria.--In determining the amount of any such grant, the 
Secretary may consider such factors as the number of children enrolled 
in schools in the State, the number of school-aged children living in 
poverty in the State, and the scope