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Placed on Calendar Senate (11/23/1993)

 
[Congressional Bills 103th Congress]
[From the U.S. Government Printing Office]
[S. 1770 Placed on Calendar Senate (PCS)]

                                                       Calendar No. 338

103d CONGRESS

  1st Session

                                S. 1770

_______________________________________________________________________

                                 A BILL

To provide comprehensive reform of the health care system of the United 
                    States, and for other purposes.

_______________________________________________________________________

                           November 23, 1993

            Read the second time and placed on the calendar





                                                       Calendar No. 338
103d CONGRESS
  1st Session
                                S. 1770

To provide comprehensive reform of the health care system of the United 
                    States, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           November 22, 1993

Mr. Chafee (for himself, Mr. Dole, Mr. Bond, Mr. Hatfield, Mr. Bennett, 
   Mr. Hatch, Mr. Danforth, Mr. Brown, Mr. Gorton, Mr. Simpson, Mr. 
   Stevens, Mr. Cohen, Mrs. Kassebaum, Mr. Warner, Mr. Specter, Mr. 
 Faircloth, Mr. Domenici, Mr. Lugar, Mr. Grassley, Mr. Durenberger Mr. 
 Boren, and Mr. Kerrey) introduced the following bill; which was read 
                             the first time

                           November 23, 1993

            Read the second time and placed on the calendar

_______________________________________________________________________

                                 A BILL


 
To provide comprehensive reform of the health care system of the United 
                    States, and for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Health Equity and 
Access Reform Today Act of 1993''.
    (b) Table of Contents.--The table of contents is as follows:

 TITLE I--BASIC REFORMS TO EXPAND ACCESS TO HEALTH INSURANCE COVERAGE 
                    AND TO ENSURE UNIVERSAL COVERAGE

                      Subtitle A--Universal Access

Sec. 1001. Access for each individual.
Sec. 1002. Promotion of coverage through expanded tax deductibility.
Sec. 1003. Low-income assistance with qualified health plan premiums.
Sec. 1004. Expanded access to employer plans.
 Subtitle B--Qualified General Access Plans in the Small Employer and 
                         Individual Marketplace

         subpart a--establishment and application of standards
Sec. 1101. Qualified general access plans.
Sec. 1102. Establishment of standards.
Sec. 1103. Application of subpart b--standards.
Sec. 1111. Guaranteed eligibility, availability, and renewability.
Sec. 1112. Nondiscrimination based on health status.
Sec. 1113. Benefits offered.
Sec. 1114. Financial solvency requirements.
Sec. 1115. Enrollment.
Sec. 1116. Rating limitations.
Sec. 1117. Risk adjustment.
Sec. 1118. Collection and provision of standardized information.
Sec. 1119. Quality assurance.
Sec. 1120. Mediation procedures relating to malpractice claims.
Sec. 1121. Service to designated underserved areas.
Sec. 1122. Additional requirements.
        Part II--Individual and Small Employer Purchasing Groups

Sec. 1141. Establishment and organization.
Sec. 1142. Agreements with qualified general access plans.
Sec. 1143. Provision of information.
Sec. 1144. Enrolling eligible employees and eligible individuals in 
                            qualified general access plans through a 
                            purchasing group.
Sec. 1145. Restriction on charges.
            Part III--Consumer Protection and Market Reforms

Sec. 1161. Requirement for provision of information by brokers.
Sec. 1162. Prohibition of improper incentives.
  Subtitle C--Qualified Health Plans in the Large Employer Marketplace

              Part I--Requirements on Large Employer Plans

Sec. 1201. Standards applied to large employer plans.
Sec. 1202. Establishment of standards applicable to large employer 
                            plans.
Sec. 1203. Offer of different benefit packages required.
Sec. 1204. Enrollment in large employer plans in satisfaction of 
                            enrollment requirement.
Sec. 1205. Development of large or multiple employer purchasing groups.
Sec. 1207. Corrective actions.
                      Part II--Amendments to ERISA

Sec. 1221. Limitation on coverage of group health plans under title I 
                            of ERISA.
     Part III--Revision of COBRA Continuation Coverage Requirements

Sec. 1231. Amendments to the Employee Retirement Income Security Act of 
                            1974
Sec. 1232. Amendment to Public Health Service Act.
Sec. 1233. Additional revisions.
               Subtitle D--Benefits; Benefits Commission

                            Part I--Benefits

Sec. 1301. Offering of benefit packages.
                      Part II--Benefits Commission

Sec. 1311. Establishment.
Sec. 1312. Duties.
Sec. 1313. Operation of the Commission.
Sec. 1314. Congressional consideration of Commission proposals.
Sec. 1315. Implementation.
Subtitle E--State and Federal Responsibilities in Relation to Qualified 
                              Health Plans

                  subpart a--general responsibilities
Sec. 1401. Establishment of State insurance market reform programs.
Sec. 1402. Certification of insured health plans.
Sec. 1403. Establishment of health care coverage areas.
Sec. 1404. Procedures for purchasing groups.
Sec. 1405. Preparation of information concerning plans and purchasing 
                            groups.
Sec. 1406. Risk adjustment program.
Sec. 1407 Development of binding arbitration process.
Sec. 1408. Specificsubpart b--waiver of requirements. period.
Sec. 1421. Alternate State systems allowed.
Sec. 1422. State opt-out.
Sec. 1423. Waisubpart c--preemption of certain state laws
Sec. 1431. Preemption from State benefit mandates.
Sec. 1432. Preemption of State law restrictions on network plans.
                   Part II--Federal Responsibilities

Sec. 1441. Federal role with respect to multi-State employer plans.
Sec. 1442. Federal role in the case of a default by a State.
Sec. 1443. Establishment of residency rules.
Sec. 1444. Rules determining separate employer status.
                     Subtitle F--Universal Coverage

Sec. 1501. Requirement of coverage.
                        Subtitle G--Definitions

Sec. 1601. Definitions.
                TITLE II--TAX AND ENFORCEMENT PROVISIONS

Sec. 2000. Amendment of 1986 Code.
                   Subtitle A--General Tax Provisions

Sec. 2001. Certain employer health plan contributions included in 
                            income.
Sec. 2002. Deductions for costs of qualified health plans.
Sec. 2003. Medical savings accounts.
Sec. 2004. Eliminating commonality of interest or geographic location 
                            requirement for tax exempt trust status.
Sec. 2005. Revision of COBRA continuation coverage requirements.
   Subtitle B--Provisions Relating to Acceleration of Death Benefits

Sec. 2101. Tax treatment of payments under life insurance contracts for 
                            terminally ill individuals.
Sec. 2102. Tax treatment of companies issuing qualified terminal 
                            illness riders.
               Subtitle C--Long-Term Care Tax Provisions

                       Part I--General Provisions

Sec. 2201. Qualified long-term care services treated as medical care.
Sec. 2202. Treatment of long-term care insurance or plans.
Sec. 2203. Effective dates.
                Part II--Consumer Protection Provisions

Sec. 2301. Policy requirements.
Sec. 2302. Additional requirements for issuers of long-term care 
                            insurance policies.
Sec. 2303. Coordination with State requirements.
Sec. 2304. Uniform language and definitions.
Sec. 2305. Effective dates.
                   Subtitle D--Enforcement Provisions

                       Part I--General Provisions

Sec. 2401. Universal coverage.
Sec. 2402. Role of employers and large employer plans.
Sec. 2403. Enforcement before State certification programs or standards 
                            in place.
Sec. 2404. Disclosure of information regarding reconciliation of 
                            assistance.
                 Part II--Other Enforcement Provisions

Sec. 2411. Conforming ERISA changes regarding enforcement of employer 
                            failures.
Sec. 2412. Equitable relief regarding insurers failing to comply with 
                            qualified health plan standards.
            TITLE III--QUALITY ASSURANCE AND SIMPLIFICATION

                     Subtitle A--Quality Assurance

             Part I--Standards and Measurements of Quality

Sec. 3001. Standards for quality assurance and performance measures 
                            programs.
Sec. 3002. National health data system.
Sec. 3003. Measures of quality of care of specialized centers of care.
Sec. 3004. Clinical evaluations.
Sec. 3005. Report and recommendations on achieving universal coverage.
Sec. 3006. Monitoring reinsurance market.
Sec. 3007. Authorization of appropriations.
          Part II--Agency for Health Care Policy and Research

Sec. 3101. Agency for Health Care Policy and Research.
              Part III--National Fund for Medical Research

Sec. 3201. National Fund for Medical Research.
               Subtitle B--Administrative Simplification

Sec. 3301. Establishment of health care data interchange system.
Sec. 3302. Development of proposed regulations by Panel.
Sec. 3303. Promulgation and implementation of proposed regulations by 
                            OMB.
Sec. 3304. Selection and establishment of data and transaction 
                            standards, conventions, and requirements 
                            for the data interchange system.
Sec. 3305. Standards for operation of a uniform working file.
Sec. 3306. Code sets for system.
Sec. 3307. Establishment of unique identifiers.
Sec. 3308. Privacy and confidentiality standards.
Sec. 3309. Transfer of information between health plans.
Sec. 3310. Fines and penalties for failure to comply.
Sec. 3311. Oversight of uniform working file, health care information 
                            clearinghouses, and value-added networks.
Sec. 3312. Annual reports to Congress.
Sec. 3313. Health Care Data Panel.
Sec. 3314. National Health Informatics Commission.
Sec. 3315. Definitions.
                       TITLE IV--JUDICIAL REFORMS

                  Subtitle A--Medical Liability Reform

Sec. 4001. Definitions.
          Part I--Mediation and Alternative Dispute Resolution

Sec. 4011. Mediation.
Sec. 4012. Failure of mediation.
Sec. 4013. Alternative dispute resolution.
Sec. 4014. Court actions.
                       Part II--Liability Reform

Sec. 4021. Applicability.
Sec. 4022. Limitation on amount of attorney's contingency fees.
Sec. 4023. Reform of damages.
Sec. 4024. Reform of procedures.
Sec. 4025. Practice guidelines.
Sec. 4026. Drugs and devices.
Sec. 4027. Report.
            Subtitle B--Anti-Fraud and Abuse Control Program

           Part I--All-Payer Fraud and Abuse Control Program

Sec. 4101. All-payer fraud and abuse control program.
Sec. 4102. Application of Federal health anti-fraud and abuse sanctions 
                            to all fraud and abuse against any health 
                            care plan.
Sec. 4103. Reporting of fraudulent actions under medicare.
      Part II--Revisions to Current Sanctions for Fraud and Abuse

Sec. 4111. Mandatory exclusion from participation in Medicare and State 
                            health care programs.
Sec. 4112. Establishment of minimum period of exclusion for certain 
                            individuals and entities subject to 
                            permissive exclusion from Medicare and 
                            State health care programs.
Sec. 4113. Permissive exclusion of individuals with ownership or 
                            control interest in sanctioned entities.
Sec. 4114. Civil monetary penalties.
Sec. 4115. Actions subject to criminal penalties.
Sec. 4116. Sanctions against practitioners and persons for failure to 
                            comply with statutory obligations.
Sec. 4117. Intermediate sanctions for Medicare health maintenance 
                            organizations.
Sec. 4118. Effective date.
         Part III--Administrative and Miscellaneous Provisions

Sec. 4121. Establishment of the health care fraud and abuse data 
                            collection program.
Sec. 4122. Quarterly publication of adverse actions taken.
                  Part IV--Amendments to Criminal Law

Sec. 4131. Health care fraud.
Sec. 4132. Forfeitures for Federal health care offenses.
Sec. 4133. Injunctive relief relating to Federal health care offenses.
Sec. 4134. Racketeering activity relating to Federal health care 
                            offenses.
              Part V--Amendments to Civil False Claims Act

Sec. 4141. Amendments to Civil False Claims Act.
  Subtitle C--Treatment of Certain Activities Under the Antitrust Laws

Sec. 4201. Exemption from antitrust laws for certain competitive and 
                            collaborative activities.
Sec. 4202. Safe harbors.
Sec. 4203. Designation of additional safe harbors.
Sec. 4204. Certificates of review.
Sec. 4205. Notifications providing reduction in certain penalties under 
                            antitrust law for health care cooperative 
                            ventures.
Sec. 4206. Review and reports on safe harbors and certificates of 
                            review.
Sec. 4207. Rules, regulations, and guidelines.
Sec. 4208. Establishment of HHS office of health care competition 
                            policy.
Sec. 4209. Definitions.
TITLE V--SPECIAL ASSISTANCE FOR FRONTIER, RURAL, AND URBAN UNDERSERVED 
                                 AREAS

        Subtitle A--Frontier, Rural, and Urban Underserved Areas

Sec. 5001. Establishment of grant program.
Sec. 5002. Establishment of new program to provide funds to allow 
                            federally qualified health centers and 
                            other entities or organizations to provide 
                            expanded services to medically underserved 
                            individuals.
Sec. 5003. Tax incentives for practice in frontier, rural, and urban 
                            underserved areas.
Sec. 5004. Rural emergency access care hospitals.
Sec. 5005. Grants to States regarding aircraft for transporting rural 
                            victims of medical emergencies.
Sec. 5006. Demonstration projects to encourage the development and 
                            operation of rural health networks.
Sec. 5007. Study on expanding benefits under qualified health plans for 
                            individuals residing in rural areas.
              Subtitle B--Primary Care Provider Education

Sec. 5101. Graduate medical education demonstration projects.
Sec. 5102. Funding under medicare for training in nonhospital-owned 
                            facilities.
Sec. 5103. Increase in National Health Service Corps funding.
Sec. 5104. Increase in health professions funding for primary care 
                            physicians.
Sec. 5105. Health professions funding for nurse practitioners and 
                            physician assistants programs.
Sec. 5106. State grants to increase the number of primary care 
                            providers.
 Subtitle C--Programs Relating to Primary and Preventive Care Services

Sec. 5201. Maternal and infant care coordination.
Sec. 5202. Comprehensive school health education program.
Sec. 5203. Frontier States.
            TITLE VI--TREATMENT OF EXISTING FEDERAL PROGRAMS

Sec. 6000. References in title.
                      Subtitle A--Medicaid Program

         Part I--Optional Coverage Under Qualified Health Plans

Sec. 6001. Optional coverage under qualified health plans.
        Part II--Limitation on Certain Federal Medicaid Payments

Sec. 6011. Cap on Federal payments made for acute medical services 
                            furnished under the medicaid program.
 Part III--State Flexibility To Contract for Coordinated Care Services

Sec. 6021. Modification of Federal requirements to allow States more 
                            flexibility in contracting for coordinated 
                            care services under medicaid.
                       Part IV--Other Provisions

Sec. 6031. Phased-in elimination of medicaid hospital disproportionate 
                            share adjustment payments.
                          Subtitle B--Medicare

 Part I--Enrollment of Medicare Beneficiaries in Qualified Health Plans

Sec. 6101. Legislative proposal on enrolling medicare beneficiaries in 
                            qualified health plans.
Sec. 6102. Interim enrollment of medicare beneficiaries in qualified 
                            health plans.
            Part II--Enhancement of Medicare Risk Contracts

Sec. 6111. Revisions in the payment methodology for risk contractors.
Sec. 6112. Adjustment in medicare capitation payments to take into 
                            account secondary payer status.
Sec. 6113. Establishment of outlier pool.
                       Part III--Medicare Select

Sec. 6121. Medicare select.
                       Part IV--Other Provisions

Sec. 6131. Medicare part B premium.
Sec. 6132. Increase in medicare part B premium for individuals with 
                            high income.
Sec. 6133. Permanent 10-percent reduction in payments for capital-
                            related costs of outpatient hospital 
                            services.
Sec. 6134. Permanent reduction in payments for other costs of 
                            outpatient hospital services.
Sec. 6135. Imposition of coinsurance on laboratory services.
Sec. 6136. Imposition of copayment for certain home health visits.
Sec. 6137. Phased-in elimination of medicare hospital disproportionate 
                            share adjustment payments.
Sec. 6138. Elimination of bad debt recognition for hospital services.
Sec. 6139. Medicare as secondary payer.
 TITLE VII--PATIENT'S RIGHT TO SELF-DETERMINATION REGARDING HEALTH CARE

Sec. 7001. Treatment of advance directives.
Sec. 7002. Effect on other laws.
Sec. 7003. Information provided to certain individuals.
Sec. 7004. Recommendations to the Congress on issues relating to a 
                            patient's right of self-determination.
Sec. 7005. Effective date.

 TITLE I--BASIC REFORMS TO EXPAND ACCESS TO HEALTH INSURANCE COVERAGE 
                    AND TO ENSURE UNIVERSAL COVERAGE

                      Subtitle A--Universal Access

SEC. 1001. ACCESS FOR EACH INDIVIDUAL.

    Each individual who is a citizen or lawful permanent resident of 
the United States is provided access to health insurance coverage under 
a qualified health plan under this title.

SEC. 1002. PROMOTION OF COVERAGE THROUGH EXPANDED TAX DEDUCTIBILITY.

    For provisions expanding health insurance tax deductibility, see 
section 2002.

SEC. 1003. LOW-INCOME ASSISTANCE WITH QUALIFIED HEALTH PLAN PREMIUMS.

    (a) Premium Assistance to Qualified Individuals and Families.--With 
respect to each calendar year, in the case of a qualified family (as 
defined in subsection (b)), the Secretary shall provide for payment 
through a voucher of the voucher amount (specified in subsection (c)), 
which may be applied against the cost of the premium for a qualified 
health plan under this title.
    (b) Qualified Family.--For purposes of this section--
            (1) In general.--Subject to paragraph (3), the term 
        ``qualified family'' means a family (as defined in section 
        1601(8)) the family income of which does not exceed the phase-
        in eligibility percentage (specified in paragraph (2)) of the 
        poverty line for a family of the size involved.
            (2) Phase-in eligibility percentage.--For purposes of 
        paragraph (1) and subject to subsection (d), the phase-in 
        eligibility percentage shall be determined under the following 
        table:
                                                             Applicable
Calendar year:
                                                   phase-in percentage:
        1997.........................................            90    
        1998.........................................           110    
        1999.........................................           130    
        2000.........................................           150    
        2001.........................................           170    
        2002.........................................           190    
        2003.........................................           210    
        2004.........................................           230    
        2005.........................................          240.    
            (3) Not qualified during period of coverage under 
        medicaid.--No family is eligible for a voucher if such family 
        is a member of a class or category described in 1902(a)(64) of 
        the Social Security Act (as added by section 6011(b)).
    (c) Amount of Voucher.--
            (1) In general.--The amount of a voucher specified in this 
        subsection for a qualified family is the lesser of--
                    (A) the annual premium paid the individual or 
                family for such year for coverage under a qualified 
                health plan in which the family is enrolled, or
                    (B) the voucher percentage (specified in paragraph 
                (2)) of the applicable dollar limit for such year for 
                such family (determined under section 91(b)(2) of the 
                Internal Revenue Code of 1986, as added by section 2001 
                of this Act, and determined on an annual basis).
            (2) Voucher percentage.--For purposes of paragraph (1), the 
        term ``voucher percentage'' means, for a family, 100 percent 
        reduced (but not below zero percent) by the ratio of 100 to 140 
        for each 1 percentage point (or portion thereof) such family's 
        income equals or exceeds 100 percent of the income official 
        poverty line (as defined by the Office of Management and 
        Budget, and revised annually in accordance with section 673(2) 
        of the Omnibus Budget Reconciliation Act of 1981) applicable to 
        a family of the size involved.
    (d) Modification of Phase-in of Eligibility.--
            (1) Estimation of total expenditures.--Between July 15 and 
        August 1 of each calendar year (beginning with 1997), the 
        Director of the Office of Management and Budget (in this 
        subsection referred to as the ``Director'') shall estimate the 
        sum of--
                    (A) the expenditures under titles XVIII and XIX of 
                the Social Security Act for the fiscal year beginning 
                in such year, and
                    (B) the total amount of the vouchers to be provided 
                under this section in that fiscal year.
            (2) Comparison with baseline.--
                    (A) More savings than anticipated.--If the sum 
                estimated under paragraph (1) for a fiscal year is less 
                than the baseline amount under paragraph (3) for the 
                fiscal year, then paragraph (4) shall apply for the 
                fiscal year.
                    (B) Less savings than anticipated.--If the sum 
                estimated under paragraph (1) for a fiscal year is more 
                than the baseline amount under paragraph (3), then 
                paragraph (5)(B) shall apply for the fiscal year 
                (except as provided in paragraph (5)(A)).
                    (C) Report to congress.--The Director shall 
                promptly report to Congress on determinations under 
                subparagraph (A).
            (3) Baseline.--For purposes of this subsection, the 
        baseline amount under this paragraph for fiscal year--
                    (A) 1997, is $318,000,000,000;
                    (B) 1998, is $352,000,000,000;
                    (C) 1999, is $391,000,000,000;
                    (D) 2000, is $435,000,000,000;
                    (E) 2001, is $483,000,000,000;
                    (F) 2002, is $535,000,000,000;
                    (G) 2003, is $593,000,000,000; or
                    (H) 2004 and any succeeding fiscal year, is the 
                baseline under this paragraph for the previous fiscal 
                year increased by the percentage increase in the per 
                capita Gross Domestic Product for the previous fiscal 
                year.
            (4) Application of savings to increase eligibility for 
        vouchers.--
                    (A) In general.--If this paragraph applies for a 
                year (before 2005), subject to subparagraph (B), the 
                applicable percentage under subsection (b)(2) for the 
                year shall be increased by such whole number of 
                percentage points as the Director estimates will result 
                in aggregate additional expenditures in the year that 
                do not exceed the amount by which the baseline amount 
                under paragraph (3) for the fiscal year will exceed the 
                sum estimated under paragraph (1) for the fiscal year. 
                Such increase shall only apply to that calendar year 
                involved.
                    (B) Limitation.--In no case shall the increase 
                under subparagraph (A) for a year result in an 
                applicable percentage exceeding the applicable 
                percentage specified in the table in subsection (b)(2) 
                for the following year.
            (5) Recovery of deficit through adjustment mechanism.--
                    (A) In general.--In the case described in paragraph 
                (2)(B), the Director shall submit to the Benefits 
                Commission a report on the deficit for the year. With 
                respect to a fiscal year in which subparagraph (B)(i) 
                applies, the Commission may submit recommended 
                modifications under section 1312(c)(2) in response to 
                such a deficit. With respect to a fiscal year in which 
                subparagraph (B)(ii) applies, the Commission shall 
                submit recommended modifications under section 
                1312(c)(2) in response to such a deficit. If Congress 
                adopts the modifications recommended by the Commission 
                under such section, then subparagraph (B) shall not 
                apply for such year.
                    (B) Adjustment mechanism.--
                            (i) Before full phase-in.--If this 
                        subparagraph applies for a year (up to the full 
                        phase-in year) (as defined in clause (iii)), 
                        then for the following year the phase-in 
                        eligibility percentage under subsection (b)(2) 
                        shall be decreased by such whole number of 
                        percentage points as the Director estimates 
                        will result in aggregate decrease in 
                        expenditures that are equal to the amount by 
                        which the sum estimated under paragraph (1) for 
                        the fiscal year will exceed the baseline amount 
                        under paragraph (3) for the fiscal year. Such 
                        decrease shall only apply to the year involved.
                            (ii) After full phase-in.--If this 
                        subparagraph applies for a year (after the full 
                        phase-in year), then for the following year the 
                        phase-in eligibility percentage under 
                        subsection (b)(2) shall be decreased by such 
                        whole number of percentage points as the 
                        Director estimates will result in aggregate 
                        decrease in expenditures that are equal to the 
                        amount by which the sum estimated under 
                        paragraph (1) for the fiscal year will exceed 
                        the baseline amount under paragraph (3) for the 
                        fiscal year. Such decrease shall only apply to 
                        the year involved.
                            (iii) Full phase-in defined.--In this 
                        subparagraph, the term ``full phase-in year'' 
                        means the first year in which the phase-in 
                        eligibility percentage under subsection (b)(2) 
                        has equaled 240 percent.
                    (C) Report to congress.--The Director shall submit 
                to Congress a report on any determinations and any 
                adjustments under this paragraph.
            (6) Accumulation of small deficits.--If the sum estimated 
        under paragraph (1) for a fiscal year is determined by the 
        Director to be such a small amount as to not be 
        administratively cost efficient, no adjustments need be made.
            (7) No administrative or judicial review.--There shall be 
        no administrative or judicial review of any determination under 
        this subsection.
    (e) Application for Assistance.--
            (1) In general.--Any family may file an application for a 
        voucher under this section at any time in accordance with this 
        subsection.
            (2) Use of simple form.--The Secretary shall use an 
        application which shall be as simple in form as possible and 
        understandable to the average individual. The application may 
        require attachment of such documentation as deemed necessary by 
        the Secretary in order to ensure eligibility for assistance. 
        The Secretary shall use, as deemed practicable by the 
        Secretary, any existing forms employed for Federal income tax 
        filings as an application for assistance.
            (3) Availability of forms.--The Secretary shall make 
        application forms available through health care providers and 
        plans, public assistance offices, public libraries, and at 
        other locations (including post offices) accessible to a broad 
        cross-section of families.
            (4) Submission of application form.--An application form 
        under this subsection may be submitted in such manner as the 
        Secretary shall provide.
            (5) Permitting submission of revised application.--During a 
        year, a family may submit a revised application to reflect 
        changes in the estimated income of the family, including 
        changes in employment status of family members, during the 
        year. The voucher amount shall be revised to reflect such a 
        revised application.
            (6) Enrollment at point of application.--To the extent 
        practicable, the Secretary shall provide for the option of 
        enrollment in a qualified health plan as part of the 
        application and approval process for assistance under this 
        section. In providing for such an option, the Secretary may 
        require the State of residence to provide such information and 
        assistance regarding qualified health plans and purchasing 
        groups as may be necessary.
    (f) Determination of Eligibility.--
            (1) In general.--The Secretary shall provide in a prompt 
        manner for--
                    (A) a determination of eligibility on each 
                application for a voucher submitted under subsection 
                (e), and
                    (B) notice of such determination to the family 
                involved.
            (2) Election with respect to income determination.--As 
        elected by a family at the time of submission of an application 
        for a voucher under this section, income shall be determined 
        either--
                    (A) by multiplying by a factor of 4 the income for 
                the 3-month period immediately preceding the month in 
                which the application is made, or
                    (B) based upon estimated income for the entire year 
                in which the application is submitted.
    (g) Use of Voucher.--A voucher provided to a family under this 
section shall be remitted by any individual in such family to the 
qualified health plan, the purchasing group, or, in the case of an 
employment-related qualified health plan, to the employee's employer, 
as the case may be, for payment by the Secretary. The qualified health 
plan, purchasing group, or employer shall make proper adjustments in 
billing statements to reflect such family's remaining premium 
obligations (if any).
    (h) Reconciliation.--
            (1) Notice of voucher amount by secretary.--In the case of 
        a qualified family that has received a voucher under this 
        section for any month in a year, the Secretary shall, not later 
        than January 31 of the following year, notify such family of 
        the total amount of the vouchers that such family received 
        during the year.
            (2) Filing of notice.--A family that receives a notice 
        under paragraph (1) shall attach such notice to the tax return 
        filed by such family for the year involved. The Secretary of 
        the Treasury shall establish a procedure to enable a family 
        that is not required to file a tax return for the year involved 
        to file the notice received under paragraph (1).
            (3) Reconciliation of assistance based on actual income.--
                    (A) In general.--Based on and using the information 
                contained in the notice filed under paragraph (2) with 
                respect to a family, the Secretary of the Treasury 
                shall compute the amount of the voucher that should 
                have been provided under this section with respect to 
                the family in the year involved.
                    (B) Overpayment of voucher.--If the amount of the 
                voucher provided was greater than the amount computed 
                under subparagraph (A), the excess amount shall be 
                treated as an underpayment of a tax imposed by chapter 
                1 of the Internal Revenue Code of 1986 and paid by the 
                Secretary of the Treasury to the family involved.
                    (C) Underpayment of voucher.--If the amount 
                computed under subparagraph (A) is greater than the 
                amount of the voucher provided, the amount of the 
                difference shall be treated as an overpayment of tax 
                imposed by such chapter, or in the event such family is 
                entitled to a refund of such a tax, subject to the 
                provisions of section 6402(d) of such Code.
            (4) Failure to file.--In the case of any family that is 
        required to file a notice under paragraph (2) for a year and 
        that fails to file such a notice by the deadline specified by 
        the Secretary, the entire amount of the voucher provided in 
        such year shall be considered the excess amount under paragraph 
        (3)(B). The Secretary shall waive the application of this 
        paragraph if the family establishes, to the satisfaction of the 
        Secretary, good cause for the failure to file the notice on a 
        timely basis.
            (5) Penalties for false information.--Any individual who 
        knowingly makes a material misrepresentation of information in 
        an application for assistance under this section, shall be 
        liable to the Federal Government for excess payments made based 
        on such misrepresentation and interest on such excess payments 
        at a rate specified by the Secretary, and, in addition, shall 
        be liable to the Federal Government for $1,000 or, if greater, 
        3 times the excess payments made based on such 
        misrepresentation.
            (6) Instructions for filing notice.--The Secretary shall 
        provide instructions for filing the notice described in 
        paragraph (2) (in such form as the Secretary prescribes) no 
        later than January 31 of the year following the year involved.
    (i) Administration by a State.--Upon application of a State, the 
Secretary may provide for the administration of this section in a State 
through an appropriate State agency.
    (j) Definitions and Determination of Income.--For purposes of this 
section:
            (1) Poverty line.--The term ``poverty line'' means the 
        income official poverty line (as defined by the Office of 
        Management and Budget, and revised annually in accordance with 
        section 673(2) of the Omnibus Budget Reconciliation Act of 
        1981) applicable to a family of the size involved.
            (2) Determinations of income.--
                    (A) In general.--The term ``income'' means adjusted 
                gross income (as defined in section 62(a) of the 
                Internal Revenue Code of 1986)--
                            (i) determined without regard to sections 
                        135, 162(l), 911, 931, and 933 of such Code; 
                        and
                            (ii) increased by--
                                    (I) the amount of interest received 
                                or accrued which is exempt from tax, 
                                plus
                                    (II) the amount of social security 
                                benefits (described in section 86(d) of 
                                such Code) which is not includible in 
                                gross income under section 86 of such 
                                Code.
                    (B) Family income.--The term ``family income'' 
                means, with respect to a family, the sum of the income 
                for all members of the family (as defined in section 
                1601(8)), not including the income of a dependent child 
                with respect to which no return is required under the 
                Internal Revenue Code of 1986.
                    (C) Family size.--The family size to be applied 
                under this section, with respect to family income, is 
                the number of individuals included in the family for 
                purposes of coverage under a qualified health plan.

SEC. 1004. EXPANDED ACCESS TO EMPLOYER PLANS.

    (a) Qualified Health Plans Made Available.--Each employer shall 
make available, either directly, through a purchasing group, or 
otherwise, enrollment in a qualified health plan to each eligible 
employee of such employer. A small employer may meet the requirement of 
the previous sentence only through a qualified insured health plan.
    (b) Forwarding Information.--
            (1) Information regarding plans.--An employer must provide 
        each employee of such employer (including any part-time or 
        seasonal employee) with information provided by the State under 
        section 1405 regarding all qualified health plans offered in 
        the health care coverage area (in this title referred to as a 
        ``HCCA'') in which the employer is located and, if the employee 
        resides in another HCCA, information regarding how to obtain 
        information on qualified health plans offered to residents of 
        such other HCCA.
            (2) Information regarding employees.--An employer must 
        forward the name and address (and any other necessary 
        identifying information specified by the Secretary) of each 
        eligible employee--
                    (A) to the qualified health plan in which such 
                employee is enrolled, or
                    (B) to the purchasing group (if any) through which 
                such enrollment is made.
    (c) Payroll Deduction.--
            (1) In general.--If any employer is advised by a qualified 
        health plan (or by a purchasing group on behalf of a qualified 
        insured health plan) that an eligible employee is enrolled in 
        such a plan, the employer, upon authorization by the employee, 
        shall provide for the deduction, from the employee's wages or 
        other compensation, of the premium amount due (less any 
        employer contribution) to the plan or purchasing group.
            (2) Application of voucher.--The employer shall reduce the 
        amount so deducted by the amount of any voucher (described in 
        section 1003) presented by the employee to the employer.
    (d) Limited Employer Obligation.--Nothing in this section shall be 
construed as requiring an employer to make, or preventing such employer 
from making, an employer contribution toward coverage of employees (and 
their dependents) under a qualified health plan.
    (e) No Requirement to Enroll in Employer-Provided Plan.--An 
eligible employee of a small employer may elect not to enroll in a 
qualified health plan offered by an employer under this section. Such 
an employee may enroll--
            (1) in any qualified health plan offered in the HCCA in 
        which the employee works or in which the employee resides 
        (including qualified health plans offered through purchasing 
        groups serving such HCCA), or
            (2) in a plan offered by an association which is organized 
        for purposes other than to offer health plan coverage to the 
        association's members and which is offering such coverage as of 
        the date of the enactment of this Act.

 Subtitle B--Qualified General Access Plans in the Small Employer and 
                         Individual Marketplace

               PART I--STANDARDS FOR GENERAL ACCESS PLANS

         Subpart A--Establishment and Application of Standards

SEC. 1101. QUALIFIED GENERAL ACCESS PLANS.

    (a) In General.--In order to be a qualified general access plan, a 
health plan must be certified under subtitle E as meeting the 
applicable standards established under section 1102 for a qualified 
general access plan.
    (b) Special Rules for Large Employer Plans.--For special rules 
regarding the application of similar standards to large employer plans, 
see part I of subtitle C.
    (c) Construction.--Whenever in this title a requirement or standard 
is imposed on a health plan, the requirement or standard is deemed to 
have been imposed on the insurer or health plan sponsor of the plan in 
relation to that plan.

SEC. 1102. ESTABLISHMENT OF STANDARDS.

    (a) Role of the NAIC.--The Secretary shall request that the 
National Association of Insurance Commissioners--
            (1) develop specific standards, in the form of a model Act 
        and model regulations, to implement the requirements of 
        sections 1111 through 1117 and 1122 of subpart B; and
            (2) report to the Secretary on such standards, within 6 
        months after the date of the enactment of this Act. If such 
        Association develops such standards within such period and the 
        Secretary finds that such standards implement the requirements 
        of such section, such standards shall be applicable under this 
        part.
    (b) Role of the Secretary.--If the National Association of 
Insurance Commissioners Association fails to develop and report on the 
standards described in subsection (a) by the date specified in such 
subsection or the Secretary finds that such standards do not implement 
the requirements of sections 1111 through 1117 and 1122, the Secretary 
shall develop and publish such standards, by not later than the date 
that is 1 year after the date of enactment of this Act, and such 
standards shall be applicable under this part.
    (c) Reference to Insurance Reform Standards.--For purposes of this 
subtitle, the term ``insurance reform standards'' means the standards 
developed under this section and applicable under this part and 
includes the requirements under sections 1118 through 1122 of subpart 
B.

SEC. 1103. APPLICATION OF INTERIM REQUIREMENTS.

    (a) In General.--Prior to the date on which a State establishes a 
certification program under subsection (a), an insurer may only offer 
an insured health plan in such State if such plan meets the 
requirements specified in subsection (c) applicable to qualified 
general access plans.
    (b) Noncompliance.--An insurer that offers an insured health plan 
in a State referred to in subsection (a) that fails to meet the 
requirements of subsection (c) shall be subject to a sanction under the 
amendment made by section 2403(a).
    (c) Requirements Applicable.--For purposes of this section, the 
requirements of this subsection are the requirements specified in the 
following provisions:
            (1) Subsections (a), (e), and (f) of section 1111 (relating 
        to guaranteed eligibility, availability, and renewability).
            (2) Section 1112 (relating to nondiscrimination based on 
        health status), except (for purposes of this section) that--
                    (A) any reference to 3 months in section 
                1112(b)(1)(A) is deemed a reference to 6 months,
                    (B) any reference to 6 months in section 
                1112(b)(1)(B) is deemed a reference to 9 months, and
                    (C) any reference to 3-month period in section 
                1112(b)(3)(B) is deemed a reference to 6-month period.
            (3) Section 1114 (relating to financial solvency 
        requirements).
            (4) Section 1116(d) (relating to rating limitations).
            (5) Section 1120 (relating to mediation procedures).

                          Subpart B--Standards

SEC. 1111. GUARANTEED ELIGIBILITY, AVAILABILITY, AND RENEWABILITY.

    (a) In General.--Except as otherwise provided in this section, no 
insurer may exclude from coverage under a qualified general access plan 
any eligible employee or eligible individual applying for coverage.
    (b) Standards.--The insurance reform standards shall prohibit 
marketing or other practices by an insurer intended to discourage or 
limit the issuance of a qualified general access plan to an eligible 
employee or eligible individual on the basis of health status, employer 
size or industry, geographic area, or other risk factors.
    (c) Availability.--A qualified general access plan must be made 
available throughout the entire HCCA in which such plan is offered.
    (d) Geographic Limitations.--A qualified general access plan may 
deny coverage under the plan to an eligible employee or eligible 
individual who resides outside the HCCA in which such plan is offered, 
but only if such denial is applied uniformly, without regard to health 
status or insurability of individuals.
    (e) Application of Capacity Limits.--
            (1) In general.--Subject to paragraph (2), a qualified 
        general access plan may apply to the appropriate certifying 
        authority (as defined in section 1601(1)) to cease enrolling 
        eligible employees and eligible individuals under the plan if--
                    (A) the plan ceases to enroll any new eligible 
                employees and eligible individuals; and
                    (B) the plan can demonstrate to the applicable 
                certifying authority that its financial or provider 
                capacity to serve previously covered groups or 
                individuals (and additional individuals who will be 
                expected to enroll because of affiliation with such 
                previously covered groups or individuals) will be 
                impaired if it is required to enroll other eligible 
                employees and eligible individuals.
            (2) First-come-first-served.--A qualified general access 
        plan is only eligible to exercise the limitations provided for 
        in paragraph (1) if such plan provides for enrollment of 
        eligible employees and eligible individuals on a first-come-
        first-served basis (except in the case of additional 
        individuals described in paragraph (1)(B)).
    (f) Renewability.--
            (1) In general.--A qualified general access plan that is 
        issued to a small employer, eligible employee, or eligible 
        individual shall be renewed, at the option of the employer, 
        employee, or individual, unless the plan is terminated for a 
        reason specified in paragraph (2) or (3).
            (2) Grounds for refusal to renew.--An insurer may refuse to 
        renew, or may terminate, a qualified general access plan under 
        this subtitle only for--
                    (A) nonpayment of premiums;
                    (B) fraud or misrepresentation; or
                    (C) change in residence to a HCCA not served under 
                the plan.
            (3) Termnation.--
                    (A) In general.--An insurer is not required to 
                renew or make available a qualified general access plan 
                through a particular type of delivery system (as 
                defined in section 1601) with respect to a small 
                employer, eligible employee, or eligible individual, is 
                the insurer--
                            (i) elects not to renew all of its 
                        qualified general access plans using such 
                        delivery system issued to small employers, 
                        eligible employees, and eligible individuals in 
                        a HCCA; and
                            (ii) provides notice to the appropriate 
                        certifying authority and to each small employer 
                        and eligible individual covered under the plan 
                        of such termination at least 180 days before 
                        the date of expiration of the plan.
                    (B) Prohibition on market reentry.--In the case of 
                such a termination, the insurer may not provide for 
                issuance of any qualified general access plan using 
                such a delivery system to an eligible employer, 
                eligible employee, or eligible individual in the State 
                during the 5-year period beginning on the date of the 
                termination of the last plan not so renewed.
    (g) Exception During Transition.--
            (1) In general.--Until the date specified in section 1501, 
        an insurer may exclude from coverage any individual who does 
        not apply for enrollment on a timely basis, consistent with 
        this subsection.
            (2) Clarification of timely enrollment.--
                    (A) General initial enrollment requirement.--Except 
                as provided in this paragraph, an insurer may consider 
                enrollment of an eligible employee or eligible 
                individual in a plan not to be timely if such employee 
                or individual fails to enroll in the plan during an 
                initial enrollment period, if such period is at least 
                30 days long.
                    (B) Enrollment due to loss of previous employer 
                coverage.--Enrollment in a qualified general access 
                plan is considered to be timely in the case of an 
                eligible employee or eligible individual who--
                            (i) was covered under another health plan 
                        at the time of the individual's initial 
                        enrollment period;
                            (ii) stated at the time of the initial 
                        enrollment period that coverage under a health 
                        plan was the reason for declining enrollment;
                            (iii) lost coverage under another health 
                        plan (as a result of the termination of the 
                        other plan's coverage, termination or reduction 
                        of employment, or other reason); and
                            (iv) requests enrollment within 30 days 
                        after termination of such coverage.
                    (C) Requirement applies during open enrollment 
                periods.--Each qualified general access plan shall 
                provide for at least one period (of not less than 30 
                days) each year during which enrollment under the plan 
                shall be considered to be timely.
                    (D) Exception for court orders.--Enrollment of a 
                spouse or minor child of an eligible employee or 
                eligible individual shall be considered to be timely 
                if--
                            (i) a court has ordered that coverage be 
                        provided for the spouse or child under a 
                        covered employee's or individual's health plan, 
                        and
                            (ii) a request for enrollment is made 
                        within 30 days after the date the court issues 
                        the order.
                    (E) Enrollment of spouses and dependents.--
                            (i) In general.--Enrollment of the spouse 
                        (including a child of the spouse) and any 
                        dependent child of an eligible employee or 
                        eligible individual shall be considered to be 
                        timely if a request for enrollment is made 
                        either--
                                    (I) within 30 days of the date of 
                                the marriage or of the date of the 
                                birth or adoption of a child, if family 
                                coverage is available as of such date, 
                                or
                                    (II) within 30 days of the date 
                                family coverage is first made 
                                available.
                            (ii) Coverage.--If a plan makes family 
                        coverage available and enrollment is made under 
                        the plan on a timely basis under clause (i)(I), 
                        the coverage shall become effective not later 
                        than the first day of the first month beginning 
                        after the date of the marriage or the date of 
                        birth or adoption of the child (as the case may 
                        be).

SEC. 1112. NONDISCRIMINATION BASED ON HEALTH STATUS.

    (a) In General.--Except as provided under subsection (b), a 
qualified health plan may not deny, limit, or condition the coverage 
under (or benefits of) the plan based on the health status, claims 
experience, receipt of health care, execution of an advance directive, 
medical history, or lack of evidence of insurability, of an individual.
    (b) Treatment of Preexisting Condition Exclusions for All 
Services.--
            (1) In general.--A qualified health plan may not impose 
        (and an insurer may not require a small employer under a 
        qualified health plan to impose through a waiting period for 
        coverage under a plan or similar requirement) a limitation or 
        exclusion of benefits relating to treatment of a condition 
        based on the fact that the condition preexisted the effective 
        date of the plan with respect to an individual if--
                    (A) the condition relates to a condition that was 
                not diagnosed or treated during the 3-month period 
                ending on the day before the first date of coverage 
                under the plan;
                    (B) the limitation or exclusion extends over more 
                than 6 months after the date of coverage under the 
                plan;
                    (C) the limitation or exclusion applies to an 
                individual who, as of the date of birth, was covered 
                under the plan; or
                    (D) the limitation or exclusion relates to 
                pregnancy.
        In the case of an individual who is eligible for coverage under 
        a qualified health plan but for a waiting period imposed by an 
        employer, in applying subparagraphs (A) and (B), the individual 
        shall be treated as having been covered under the plan as of 
        the earliest date of the beginning of the waiting period.
            (2) Crediting of previous coverage.--A qualified health 
        plan shall provide that if an individual under such plan is in 
        a period of continuous coverage with respect to particular 
        services as of the date of initial coverage under such plan, 
        any period of exclusion of coverage with respect to a 
        preexisting condition for such services or type of services 
        shall be reduced by 1 month for each month in the period of 
        continuous coverage.
            (3) Definitions.--As used in this subsection:
                    (A) Period of continuous coverage.--The term 
                ``period of continuous coverage'' means, with respect 
                to particular services, the period beginning on the 
                date an individual is enrolled under a qualified health 
                plan or an equivalent health care program which 
                provides benefits with respect to such services and 
                ends on the date the individual is not so enrolled for 
                a continuous period of more than 3 months.
                    (B) Preexisting condition.--The term ``preexisting 
                condition'' means, with respect to coverage under a 
                qualified health plan, a condition the diagnosis of 
                which was known or which was treated, within the 3-
                month period ending on the day before the first date of 
                such coverage (without regard to any waiting period).

SEC. 1113. BENEFITS OFFERED.

    (a) In General.--A qualified general access plan shall--
            (1) offer to all enrollees in the plan coverage for the 
        covered items and services specified under subtitle D;
            (2) imposes on such enrollees the cost sharing requirements 
        for such items and services specified under such subtitle;
            (3) demonstrate the ability to provide such items and 
        services throughout the HCCA in which the plan enrolls 
        individuals; and
            (4) covers the routine medical costs of certain 
        investigational treatments referred to in section 1301(d)(3).
However, no specific procedure or treatment is required to be covered 
in such a plan.
    (b) Availability of Services in Entire Coverage Area.--Each 
qualified general access plan offered in a HCCA shall provide 
assurances to the appropriate certifying authority that it has the 
capacity to deliver the full range of covered items and services to 
potential enrollees who reside within the HCCA served by the plan.
    (c) Limitation on Offering Additional Benefits.--An insurer 
offering a qualified general access plan may only offer coverage of 
items and services that are not covered items or services, or a 
reduction in cost sharing below the cost sharing specified under 
subtitle D for the benefit package applicable, if--
            (1) such additional coverage is offered and priced 
        separately from the standard or catastrophic package offered;
            (2) the purchase of the plan is not conditioned upon the 
        purchase of such additional coverage; and
            (3) coverage of such additional items and services is 
        offered to individuals who are not enrolled in such plan.
    (d) Application of Arbitration.--A qualified general access plan 
shall provide for a mandatory binding arbitration in accordance with 
the process described in section 1407.

SEC. 1114. FINANCIAL SOLVENCY REQUIREMENTS.

    (a) Solvency Protection.--Each insurer offering a qualified general 
access plan shall meet financial solvency requirements to assure 
protection of enrollees with respect to potential insolvency.
    (b) Protection Against Provider Claims.--In the case of a failure 
of a qualified general access plan to make payments with respect to 
covered items and services, an individual who is enrolled under the 
plan is not liable to any health care provider or practitioner with 
respect to the provision of such items and services for payments in 
excess of the amount for which the enrollee would have been liable if 
the plan were to have made payments in a timely manner.

SEC. 1115. ENROLLMENT.

    (a) Enrollment Process.--
            (1) In general.--A qualified general access plan shall 
        establish an enrollment process consistent with this 
        subsection.
            (2) Initial enrollment period.--Each eligible employee or 
        eligible individual, at the time the individual first becomes 
        an eligible employee or eligible individual in the HCCA in 
        which a qualified general access plan is offered, shall have an 
        initial enrollment period (of not less than 30 days) in which 
        to enroll in the plan.
            (3) General enrollment period.--Each qualified general 
        access plan shall permit eligible employees and eligible 
        individuals to enroll (or change enrollment) in the plan during 
        each general annual enrollment period specified by the 
        appropriate certifying authority under section 1408.
            (4) Special enrollment periods.--In the case of an eligible 
        employee or eligible individual who--
                    (A) through marriage, divorce, birth, or adoption 
                of a child, or similar circumstances, experiences a 
                change in family composition;
                    (B) experiences a change in employment status 
                (including a significant change in the terms and 
                conditions of employment); or
                    (C) changes residence to another HCCA;
        each qualified general access plan shall provide for a special 
        enrollment period in which the employee or individual is 
        permitted to change the individual or family basis of coverage 
        or the plan in which the employee or individual is enrolled. 
        The circumstances under which such special enrollment periods 
        are required and the duration of such periods shall be 
        specified in the insurance reform standards.
            (5) Transitional enrollment period.--Each qualified general 
        access plan that will be offered at the beginning of the first 
        certification year (as defined in section 1601(9)) shall 
        provide for a special transitional enrollment period (during a 
        period beginning in the months of October through December of 
        the previous year) during which eligible employees and eligible 
        individuals may first enroll.
    (b) Period of Coverage.--
            (1) Initial enrollment period.--In the case of an eligible 
        employee or eligible individual who enrolls with a qualified 
        general access plan during an initial enrollment period, 
        coverage under the plan shall begin on such date (not later 
        than the first day of the first month that begins at least 15 
        days after the date of enrollment) as the insurance reform 
        standards specify.
            (2) General enrollment periods.--In the case of an eligible 
        employee or eligible individual who enrolls with a qualified 
        general access plan during a general enrollment period, 
        coverage under the plan shall begin on the first day of the 
        first month beginning at least 15 days after the end of such 
        period.
            (3) Special enrollment periods.--
                    (A) In general.--In the case of an eligible 
                employee or eligible individual who enrolls with a 
                qualified general access plan during a special 
                enrollment period described in subsection (a)(4), 
                coverage under the plan shall begin on such date (not 
                later than the first day of the first month that begins 
                at least 15 days after the date of enrollment) as the 
                insurance reform standards specify, except that 
                coverage of family members shall begin as soon as 
                possible on or after the date of the event that gives 
                rise to the special enrollment period.
                    (B) Transitional special enrollment period.--In the 
                case of an eligible employee or eligible individual who 
                enrolls with a qualified general access plan during the 
                transitional special enrollment period described in 
                subsection (a)(5), coverage under the plan shall begin 
                on January 1 of the first certification year.
            (4) Minimum period of enrollment.--
                    (A) In general.--In order to avoid adverse 
                selection, each qualified general access plan may 
                require, consistent with the insurance reform 
                standards, that enrollments with the plan be for not 
                less than a specified minimum enrollment period (with 
                exceptions permitted for such exceptional circumstances 
                as the standards may recognize).
                    (B) Sunset.--Subparagraph (A) shall not apply on 
                and after the date that the universal coverage 
                requirement of section 1501 first applies.

SEC. 1116. RATING LIMITATIONS.

    (a) Limit on Variation of Premiums for Enrollees Under Age 65.--
            (1) In general.--Subject to paragraph (2), the premium 
        charged by an insurer for coverage under a qualified general 
        access plan offered to all eligible employees and eligible 
        individuals within an age band specified under subsection (b) 
        for a class of family enrollment in a HCCA may not exceed such 
        premium within another age band for such class and HCCA so 
        specified by more than--
                    (A) 20 percent, for the first certification year,
                    (B) 18, 16, 14, and 12 percent, for each of the 
                next 4 respective years, and
                    (C) 10 percent for each succeeding year thereafter.
            (2) Adjustment based on differences in administrative 
        costs.--In accordance with the insurance reform standards, an 
        insurer may vary the premiums based on identifiable differences 
        in marketing and other legitimate administrative costs (as 
        defined in such standards), except that such premiums may not 
        vary under this paragraph with respect to enrollees within a 
        particular purchasing group.
    (b) Establishment of Classes of Family Enrollment and Age Bands.--
            (1) Classes of family enrollment.--For purposes of this 
        title, there are 2 classes of family enrollment:
                    (A) Enrollment of an individual without dependents 
                (in this section referred to as ``individual 
                enrollment'').
                    (B) Enrollment of an individual with dependents.
            (2) Age bands.--For purposes of this title, the insurance 
        reform standards shall specify age bands for individuals under 
        65 years of age, which shall be applied to the premium for each 
        class of family enrollment based on the age of the principal or 
        other enrollee (as specified under such standards).
    (c) Standard Premiums With Respect to Eligible Employees and 
Eligible Individuals.--
            (1) In general.--Each qualified general access plan to be 
        offered to an eligible employee or eligible individual which 
        provides for--
                    (A) the standard package, shall establish a 
                standard premium for such package, or
                    (B) the catastrophic package, shall establish a 
                standard premium for such package,,
        for individual enrollment within each HCCA in which the plan is 
        offered. Subject to paragraph (2), within a HCCA for eligible 
        employees and eligible individuals, the standard premium for 
        each such package for all such employees and individuals shall 
        be the same.
            (2) Application to individuals.--The premium charged for 
        coverage in a qualified general access plan shall be the 
        product of--
                    (A) the standard premium (established under 
                paragraph (1));
                    (B) in the case of enrollment other than individual 
                enrollment, the family adjustment factor specified 
                under paragraph (3); and
                    (C) the age factor (specified under paragraph (4)) 
                for the age band in which the enrollment is classified.
            (3) Family adjustment factor.--The insurance reform 
        standards shall specify a family adjustment factor that 
        reflects the relative actuarial costs of benefit packages based 
        on a family enrollment (as compared with such costs for 
        individual enrollment). Such factor may be different for the 
        standard package and the catastrophic package, but may not 
        differ based on the geographic area in which the plan is 
        offered.
            (4) Age adjustment factor.--
                    (A) In general.--The insurance reform standards 
                shall specify, for each age band established under 
                subsection (b)(2), an age adjustment factor that 
                reflects the relative actuarial costs of benefit 
                packages among enrollees classified in the different 
                age bands. Such factors may be different for the 
                standard package and the catastrophic package.
                    (B) Limit on variation in age adjustment factors.--
                The highest age adjustment factor may not exceed twice 
                the lowest age adjustment factor.
    (d) Full Disclosure of Rating Practices.--
            (1) In general.--At the time an insurer offers a qualified 
        general access plan, the insurer shall fully disclose rating 
        practices for such plan.
            (2) Notice on expiration.--An insurer providing a qualified 
        general access plan shall provide for notice, at least 60 days 
        before the date of expiration of the plan, of the terms for 
        renewal of the plan. Such notice shall include an explanation 
        of the extent to which any increase in premiums is due to 
        actual or expected claims experience of the individuals covered 
        under the plan contract.
    (e) Notification of Failure to Receive Premium.--If a qualified 
general access plan fails to receive payment on a premium due with 
respect to an individual covered under the plan, the plan shall provide 
notice of such failure to the individual within the 20-day period after 
the date on which such premium payment was due.
    (f) Actuarial Certification.--Each insurer shall file annually with 
the appropriate certifying authority a written statement by a member of 
the American Academy of Actuaries (or other individual acceptable to 
such authority) certifying that, based upon an examination by the 
individual which includes a review of the appropriate records and of 
the actuarial assumptions of the insurer and methods used by the 
insurer in establishing premium rates for qualified general access 
plans--
            (1) the insurer is in compliance with the applicable 
        provisions of this section; and
            (2) the rating methods are actuarially sound.
Each insurer shall retain a copy of such statement for examination by 
any individual at its principal place of business.
    (g) Payment of Premiums.--
            (1) In general.--With respect to a new enrollee in a 
        qualified general access plan, the plan may require advanced 
        payment of an amount equal to monthly applicable premium for 
        the plan at the time such individual is enrolled.
            (2) Requirement for payroll deductions.--
                    (A) In general.--Subject to subparagraph (C)(ii), a 
                qualified general access plan may require, in the case 
                of an individual enrolled under the plan as an eligible 
                employee, that payment of premiums with respect to the 
                individual be made through payroll deduction.
                    (B) Frequency.--In the case of an eligible employee 
                who is paid wages or other compensation--
                            (i) on a monthly or more frequent basis, a 
                        qualified general access plan may not require 
                        the employer to provide for payment of such an 
                        amount other than at the same time at which 
                        such an amount is deducted from such wages or 
                        other compensation, or
                            (ii) less frequently than monthly, a 
                        qualified general access plan may require the 
                        employer to provide for payment of such an 
                        amount on a monthly basis.
                    (C) Employee protections.--
                            (i) Withholding constitutes satisfaction of 
                        obligation.--Withholding of an amount by an 
                        employer under this paragraph shall constitute 
                        satisfaction of the employee's obligation to 
                        pay the qualified general access plan with 
                        respect to such amount.
                            (ii) Direct payment allowed in case of 
                        nonpayment.--In the case of the nonpayment to a 
                        qualified general access plan of any amount 
                        withheld by an employer, the plan shall notify 
                        such employee of such nonpayment and shall 
                        allow the employee to make direct payments to 
                        the plan effective with the next succeeding 
                        payment period.

SEC. 1117. RISK ADJUSTMENT.

    (a) In General.--Each qualified general access plan shall 
participate in a risk adjustment program of the State (or the Secretary 
if the Secretary is the appropriate certifying authority) described in 
section 1406.
    (b) Risk Adjustment Process and Factors.--
            (1) In general.--The insurance reform standards shall 
        specify the risk adjustment process and factors to be used 
        under such risk adjustment programs.
            (2) Factors.--
                    (A) In general.--Such risk-adjustment factors shall 
                be established for each class of family enrollment in a 
                qualified general access plan based on all individuals 
                in such class enrolled in the plan. Each factor shall 
                be correlated with increased or diminished risk for 
                consumption of the type of health services included in 
                the covered items and services under section 1301. To 
                the maximum extent practicable, such factors shall be 
                determined without regard to the delivery system used 
                by individual qualified general access plans in the 
                provision of such items and services.
                    (B) Rules.--In determining such a factor for a 
                class, in the case of a qualified general access plan 
                that--
                            (i) on average has a lower-than-average 
                        risk for consumption of the covered items and 
                        services, the factor shall be a number, less 
                        than zero, reflecting the degree of such lower 
                        risk;
                            (ii) has an average risk for consumption of 
                        such items and services, the factor shall be 
                        zero; or
                            (iii) on average has a higher-than-average 
                        risk for consumption of such items and 
                        services, the factor shall be a number, greater 
                        than zero, reflecting the degree of such higher 
                        risk.

SEC. 1118. COLLECTION AND PROVISION OF STANDARDIZED INFORMATION.

    (a) In General.--A qualified health plan shall provide the State 
(at a time, not less frequently than annually) such information as the 
Secretary shall prescribe by regulation as necessary, consistent with 
this section and sections 1405 and 3301, to evaluate the performance of 
the qualified health plan and to prepare the comparative materials 
described in section 1405. A qualified general access plan shall 
provide each State with such additional information as such State may 
determine to be necessary with respect to qualified general access 
plans. The data collection standards shall specify the standardized 
format for such information (including model forms) for use by 
qualified health plans in providing information under this subsection. 
Such standards shall be consistent with subtitle B of title III.
    (b) Use of Uniform Claims Forms.--Each qualified health plan shall 
use standardized forms, including uniform claims forms, identified by 
the insurance reform standards.
    (c) Conditioning Certain Provider Payments.--
            (1) In general.--In order to assure the collection of all 
        information required from the direct providers of services for 
        which benefits are available through a qualified general access 
        plan, a qualified general access plan may not provide payment 
        for services (other than emergency services) furnished under a 
        benefits package unless the provider has given the plan 
        standard information (specified in or pursuant to the insurance 
        reform standards) respecting the services.
            (2) Forwarding information.--If information under paragraph 
        (1) is given to the qualified general access plan, the plan is 
        responsible for forwarding the information to the State (or the 
        Secretary) under subsection (a).
    (d) Information Regarding a Patient's Right to Self Determination 
Regarding Health Care.--Each qualified health plan shall provide 
written information to each individual enrolling in such plan of such 
individual's right under State law (whether statutory or as recognized 
by the courts of the State) to make decisions concerning medical care, 
including the right to accept or refuse medical treatment and the right 
to formulate advance directives (as defined in section 1866(f)(3) of 
the Social Security Act (42 U.S.C. 1395cc(f)(3))), and the written 
policies of the qualified health plan with respect to such right.

SEC. 1119. QUALITY ASSURANCE.

    Each qualified general access plan shall establish and maintain a 
quality assurance program that complies with the standards developed 
under section 3001.

SEC. 1120. MEDIATION PROCEDURES RELATING TO MALPRACTICE CLAIMS.

    Each qualified general access plan shall establish and maintain a 
mediation procedures program that complies with the standards developed 
under section 4011.

SEC. 1121. SERVICE TO DESIGNATED UNDERSERVED AREAS.

    Each qualified general access plan shall contain assurances of 
compliance with any requirements relating to the provision of covered 
items and services in designated underserved areas as determined by the 
appropriate certifying authority.

SEC. 1122. ADDITIONAL REQUIREMENTS.

    Each qualified general access plan shall comply with the 
requirements of part III and meet such other requirements as may be 
imposed under the insurance reform standards or by the appropriate 
certifying authority. If such authority is a State, the authority may 
require such a plan to enter into an agreement under section 1933(b)(3) 
of the Social Security Act, as added by section 6021(a) of this Act, 
for the provision of items and services on a capitated basis under the 
medicaid program.

        PART II--INDIVIDUAL AND SMALL EMPLOYER PURCHASING GROUPS

SEC. 1141. ESTABLISHMENT AND ORGANIZATION.

    (a) In General.--Individual and small employer purchasing groups 
(in this Act referred to as ``purchasing groups'') may be established 
in accordance with this part. Each purchasing group shall be chartered 
under State law and operated as a not-for-profit corporation. An 
insurer may not form, underwrite, or possess a majority vote of a 
purchasing group, but may administer such a group.
    (b) Board of Directors.--
            (1) In general.--Each purchasing group shall be governed by 
        a Board of Directors. Such Board shall initially be appointed 
        under procedures under section 1404(a). Subsequently, the Board 
        shall be elected by the members of the group in accordance with 
        paragraph (3). Such Board shall be composed of individuals who 
        are small employers (or representatives of small employers), 
        eligible employees of small employers (or representatives of 
        such employees), and eligible individuals in the HCCA in which 
        the group operates.
            (2) Membership.--A purchasing group shall accept all small 
        employers, eligible employees, and eligible individuals 
        residing within the HCCA served by the group as members if such 
        employers, employees or individuals request such membership.
            (3) Voting.--Members of a purchasing group shall have 
        voting rights consistent with the rules established under 
        section 1404(b).
    (c) Duties of Purchasing Groups.--
            (1) In general.--Subject to paragraph (2), each purchasing 
        group shall--
                    (A) market qualified general access plans to 
                members throughout the entire HCCA served by the group;
                    (B) enter into agreements with qualified general 
                access plans under section 1142;
                    (C) enter into agreements with small employers 
                under section 1143;
                    (D) enroll individuals in qualified general access 
                plans, only in accordance with section 1144; and
                    (E) carry out other functions provided for under 
                this title.
            (2) Limitation on activities.--A purchasing group shall 
        not--
                    (A) perform any activity (including review, 
                approval, or enforcement) relating to payment rates for 
                providers;
                    (B) perform any activity (including certification 
                or enforcement) relating to compliance of general 
                access plans with the requirements of part 1 of this 
                subtitle;
                    (C) assume financial risk in relation to any such 
                plan; or
                    (D) perform other activities identified by the 
                State as being inconsistent with the performance of its 
                duties under paragraph (1).
    (d) Rules of Construction.--
            (1) Establishment not required.--Nothing in this section 
        shall be construed as requiring--
                    (A) that a purchasing group be established in each 
                HCCA; and
                    (B) that there be only one purchasing group 
                established with respect to a HCCA.
            (2) Single organization serving multiple hccas.--Nothing in 
        this section shall be construed as preventing a single not-for-
        profit corporation from being the purchasing group for more 
        than one HCCA.

SEC. 1142. AGREEMENTS WITH QUALIFIED GENERAL ACCESS PLANS.

    (a) Agreements.--
            (1) In general.--Except as provided in paragraph (3), each 
        purchasing group for a HCCA shall enter into an agreement under 
        this section with each qualified general access plan that 
        desires to be made available through the purchasing group in 
        accordance with procedures under section 1404.
            (2) Termination of agreement.--An agreement under paragraph 
        (1) shall remain in effect for a 12-month period, except that 
        the purchasing group may terminate an agreement under paragraph 
        (1) if the qualified general access plan's certification under 
        section 1402 is terminated or for other good cause shown.
            (3) Limitation on renewal of agreements.--Subsequent to the 
        12-month period described in paragraph (2), a purchasing group 
        may--
                    (A) refuse to enter into a subsequent agreement 
                with a qualified general access plan if the group 
                determines that the plan enrollment or plan premium is 
                too low, and
                    (B) if a previous agreement with a qualified 
                general access plan was terminated for good cause and 
                the group determines appropriate actions have not been 
                taken to correct the problems, refuse to enter into a 
                subsequent agreement with the plan.
            (4) No prohibition on offering of plans.--Nothing in this 
        subsection shall be construed as prohibiting a qualified 
        general access plan that does not enter into an agreement under 
        paragraph (1) from being offered to small employers and 
        eligible individuals within a HCCA.
    (b) Receipt of Premiums on Behalf of Plans.--
            (1) In general.--Under an agreement under this section 
        between a purchasing group and a qualified general access plan, 
        payment of premiums may be made by individuals (or employers on 
        their behalf) directly to the purchasing group for the benefit 
        of the plan.
            (2) Timing of payment of premiums.--Premiums may be payable 
        on a monthly basis (or, at the option of an eligible employee 
        or individual, on a quarterly basis). The purchasing group may 
        provide for reasonable penalties and grace periods for late 
        payment.
            (3) Qualified general access plans retain risk of 
        nonpayment.--Nothing in this subsection shall be construed as 
        placing upon a purchasing group any risk associated with the 
        failure of individuals and employers to make prompt payment of 
        premiums (other than the portion of the premium representing 
        the purchasing group administrative fee under section 1145). 
        Each small employer and eligible individual who enrolls with a 
        qualified general access plan through the purchasing group is 
        liable to the plan for premiums.
    (c) Forwarding of Premiums.--
            (1) In general.--If, under an agreement under subsection 
        (a), premium payments under a qualified general access plan are 
        made to the purchasing group, the purchasing group shall 
        forward to the plan the amount of the premiums.
            (2) Payments.--Payments shall be made by the purchasing 
        group under this subsection within a period of days (specified 
        by the Secretary and not to exceed 7 days) after receipt of the 
        premium from the small employer of the eligible employee or the 
        eligible individual, as the case may be.

SEC. 1143. PROVISION OF INFORMATION.

    (a) In General.--Each purchasing group for a HCCA shall provide to 
each small employer that employs individuals in the HCCA and to each 
eligible individual who resides in the HCCA--
            (1) information provided to the purchasing group under 
        section 1405 by the State in which such group is located, and
            (2) the opportunity to enter into an agreement with the 
        group for the purchase of a qualified general access plan.
    (b) Forwarding Information and Payroll Deductions.--As part of an 
agreement entered into under this section, a small employer shall 
forward the information and make the payroll deductions required under 
section 1004.

SEC. 1144. ENROLLING ELIGIBLE EMPLOYEES AND ELIGIBLE INDIVIDUALS IN 
              QUALIFIED GENERAL ACCESS PLANS THROUGH A PURCHASING 
              GROUP.

    A purchasing group shall offer, on behalf of each qualified general 
access plan with which an agreement was entered into under section 1142 
and in accordance with the enrollment procedures of such plans, 
enrollment in the plan only to--
            (1) all eligible employees employed by small employers in 
        the HCCA served by the purchasing group; and
            (2) all eligible individuals residing in such HCCA.

SEC. 1145. RESTRICTION ON CHARGES.

    (a) In General.--A purchasing group may impose an administrative 
fee with respect to an eligible employee or eligible individual 
enrolled under a qualified general access plan offered through the 
purchasing group.
    (b) Fee.--A purchasing group that elects to impose a fee under 
subsection (a) shall ensure that such fee is set as a percentage of the 
premium for each such plan and is imposed uniformly with respect to all 
qualified general access plans offered through the group.

            PART III--CONSUMER PROTECTION AND MARKET REFORMS

SEC. 1161. REQUIREMENT FOR PROVISION OF INFORMATION BY BROKERS.

    Brokers or insurers who offer coverage under a qualified general 
access plan to small employers (or eligible employees of small 
employers) or eligible individuals must disclose to such prospective 
enrollees the information developed by the State under section 1405.

SEC. 1162. PROHIBITION OF IMPROPER INCENTIVES.

    (a) Limitation on Financial Incentives.--No insurer that offers a 
qualified general access plan may vary the commission or financial or 
other remuneration to a person based on the claims experience or health 
status of individuals enrolled by or through the person.
    (b) Prohibition of Tie-in Arrangements.--No insurer that offers a 
qualified general access plan may require the purchase of any other 
insurance or product as a condition for the purchase of a qualified 
general access plan.

SEC. 1163. PROHIBITION OF SALE OF DUPLICATE COVERAGE OR SALE TO CERTAIN 
              POPULATIONS.

    (a) Duplicate Coverage Prohibition.--It is unlawful for a person to 
sell or issue a qualified insured general access plan to an 
individual--
            (1) with knowledge that the individual is covered under a 
        qualified health plan or under an equivalent health care 
        program, or
            (2) without obtaining such information as the Secretary may 
        specify (taking into account the type of information described 
        in section 1882(d)(1)(B) of the Social Security Act).
    (b) Exception.--Subsection (a) shall not apply to a plan the sale 
or issuance of which is intended to replace another qualified health 
plan. Subsection (a) also does not apply in the case of coverage for 
insurance described in section 1601(14)(B).
    (c) Enforcement.--Any person who violates subsection (a) is subject 
to a civil money 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.

  Subtitle C--Qualified Health Plans in the Large Employer Marketplace

              PART I--REQUIREMENTS ON LARGE EMPLOYER PLANS

SEC. 1201. STANDARDS APPLIED TO LARGE EMPLOYER PLANS.

    Each large employer plan (as defined in section 1601(16)) shall 
meet the applicable standards developed under section 1202.

SEC. 1202. ESTABLISHMENT OF STANDARDS APPLICABLE TO LARGE EMPLOYER 
              PLANS.

    (a) Establishment of Standards by Secretary of Health and Human 
Services.--
            (1) In general.--The Secretary of Health and Human 
        Services, in consultation with the Secretary of Labor, shall 
        develop and publish standards applicable to large employer 
        plans relating to the requirements described in paragraph (2). 
        The Secretary shall develop and publish such standards by not 
        later than the date that is 6 months after the date of 
        enactment of this Act. Such standards shall be the insurance 
        standards applicable under this part.
            (2) Requirements specified.--Subject to paragraph (3), the 
        requirements referred to in paragraph (1) are requirements 
        specified in the following provisions:
                    (A) Subsection (a) of section 1111 (relating to 
                guaranteed eligibility), subject to subsections (d) and 
                (e) of such section, except that such subsection shall 
                be applied (for purposes of this subsection) only with 
                respect to eligible employees of the large employer.
                    (B) Section 1112 (relating to nondiscrimination 
                based on health status).
                    (C) Section 1113 (relating to benefits).
                    (D) Section 1115 (relating to enrollment) or 
                establish such comparable enrollment procedures as the 
                Secretary of Labor specifies, other than the 
                requirement for a general enrollment period under 
                subsection (a)(3) of such section.
                    (E) Section 1118 (relating to collection and 
                provision of standardized information).
                    (F) Section 1119 (relating to quality assurance).
            (3) Collective bargaining exception.--Paragraph (2)(A) 
        shall not apply to a large employer plan that is providing 
        benefits pursuant to a collective bargaining agreement.
            (4) Reference to enforcement.--For provision enforcing 
        requirements of this subsection, see the amendments made by 
        sections 2402, 2411, and 2412.
    (b) Establishment of Standards by Secretary of Labor.--
            (1) In general.--The Secretary of Labor, in consultation 
        with the Secretary of Health and Human Services, shall develop 
        and publish standards applicable to large employer plans 
        relating to the requirements specified in paragraph (2). The 
        Secretary shall develop and publish such standards by not later 
        than the date that is 6 months after the date of enactment of 
        this Act. Such standards shall be the insurance standards 
        applicable under this part.
            (2) Requirements specified.--Subject to paragraph (3), the 
        requirements referred to in paragraph (1) are requirements 
        specified in the following provisions:
                    (A) Section 1114 (relating to financial solvency) 
                or such standards similar to the standards established 
                under such section as the Secretary of Labor specifies, 
                except that such standards shall be consistent with the 
                applicable rules under section 414 of the Employee 
                Retirement Income Security Act of 1974.
                    (B) Section 1116(g) (relating to payment of 
                premiums).
                    (C) Section 1120 (relating to mediation procedures 
                relating to malpractice claims).
                    (D) Section 1203 (relating to required offer of 
                different benefit packages).
    (c) Consideration of NAIC Standards.--In establishing standards 
under this section, the Secretary of Health and Human Services and the 
Secretary of Labor shall take into account standards established under 
subtitle B relating to comparable requirements.
    (d) Application of Standards to Health Plans Offered Under FEHBP.--
Notwithstanding any other provision of law, each health plan offered 
under chapter 89 of title 5, United States Code, shall meet the 
standards applicable to large employer plans under this subtitle, in 
the same manner and as of the same date such standards first apply to 
such plans.

SEC. 1203. OFFER OF DIFFERENT BENEFIT PACKAGES REQUIRED.

    (a) In General.--Each large employer shall make available to each 
eligible employee at least--
            (1) a qualified large employer plan that includes the 
        standard package, and
            (2) a qualified large employer plan that includes the 
        catastrophic package.
    (b) Selection of Plans by Majority of Employees.--
            (1) In general.--The large employer shall make the 
        selections of qualified large employer plans under paragraphs 
        (1) and (2) of subsection (a) on an annual basis. In making 
        each such selection, the large employer shall comply with any 
        selection of a qualified large employer plan made by at least 
        50 percent of the eligible employees of the large employer. The 
        Secretary of Labor shall prescribe rules which shall govern the 
        manner in which employees may make such a selection. Nothing in 
        this subsection shall be construed to require an employer to 
        make any financial contribution towards the cost of such a 
        qualified large employer plan or for such an employer to refuse 
        to offer such a plan for good cause.
            (2) Limitation.--Paragraph (1) shall not apply in the case 
        of a large employer that contributes to the cost of the 
        qualified large employer plan.
    (c) Enforcement.--For enforcement of the requirement of this 
section, see amendment made by section 2402(b) of this Act.

SEC. 1204. ENROLLMENT IN LARGE EMPLOYER PLANS IN SATISFACTION OF 
              ENROLLMENT REQUIREMENT.

    In the case of an individual who qualifies for coverage under large 
employer plan (and is not eligible for coverage under an equivalent 
health care program or under a qualified health plan that is not a 
large employer plan), the individual shall satisfy the requirement of 
section 1501 through enrollment in the large employer plan.

SEC. 1205. DEVELOPMENT OF LARGE OR MULTIPLE EMPLOYER PURCHASING GROUPS.

    (a) In General.--Nothing in this title shall be construed as 
prohibiting 2 or more large employers from forming a purchasing group 
with respect to the employees of such employer or employers.
    (b) No Use of Individual and Small Employer Purchasing Groups.--A 
large employer shall be ineligible to purchase health insurance through 
an individual and small employer purchasing group.

SEC. 1207. CORRECTIVE ACTIONS.

    (a) In General.--The plan sponsor of each large employer plan shall 
determine semiannually whether the requirements of this part are met. 
In any case in which the plan sponsor determines that there is reason 
to believe that there is or will be a failure to meet such 
requirements, or the Secretary or the Secretary of Labor makes such a 
determination and so notifies the plan sponsor, the plan sponsor shall, 
within 90 days after making such determination or receiving such 
notification, notify such Secretary (in such form and manner as such 
Secretary may prescribe by regulation) of a description of the 
corrective actions (if any) that the plan sponsor has taken or plans to 
take in response to such recommendations. The plan sponsor shall 
thereafter report to such Secretary, in such form and frequency as such 
Secretary may specify to the plan sponsor, regarding corrective action 
taken by the plan sponsor until such requirements are met. Either such 
Secretary may make a determination that a large employer plan has 
ceased to be a qualified large employer plan only if such Secretary is 
satisfied that the necessary corrective action cannot reasonably be 
expected to occur on a timely basis necessary to avoid failure to 
provide benefits for which the plan is obligated.
    (b) Disqualified or Termination of Plan.--
            (1) In general.--In any case in which the plan sponsor of a 
        large employer plan determines that there is reason to believe 
        that the plan will cease to be a qualified large employer plan 
        or will terminate, the plan sponsor shall so inform the 
        Secretary and the Secretary of Labor, shall develop a plan for 
        winding up the affairs of the plan in connection with such 
        disqualification or termination in a manner which will result 
        in timely payment of all benefits for which the plan is 
        obligated, and shall submit such plan in writing to such 
        Secretaries. Actions required under this subparagraph shall be 
        taken in such form and manner as may be prescribed in 
        regulations jointly prescribed by such Secretaries.
            (2) Actions required in connection with disqualification or 
        termination.--
                    (A) In general.--In any case in which--
                            (i) the Secretary or the Secretary of Labor 
                        has been notified under paragraph (1) of a 
                        failure of a large employer plan to meet the 
                        requirements of this part and has not been 
                        notified by the plan sponsor that corrective 
                        action has restored compliance with such 
                        requirements, and
                            (ii) such Secretary determines, in 
                        consultation with the other Secretary referred 
                        to in clause (i), that the continuing failure 
                        to meet such requirements can be reasonably 
                        expected to result in a continuing failure to 
                        pay benefits for which the plan is obligated,
                the plan sponsor and the large employer shall comply 
                with the requirements of subparagraph (B) or (C), as 
                applicable.
                    (B) Actions by plan sponsor.--Upon a determination 
                by the Secretary or the Secretary of Labor under 
                subparagraph (A)(ii), the plan sponsor shall, at the 
                direction of such Secretary, terminate the plan and, in 
                the course of the termination, take such actions as 
                such Secretary, in consultation with the other 
                Secretary referred to in subparagraph (A)(i), may 
                require as necessary to ensure that the affairs of the 
                plan will be, to the maximum extent possible, wound up 
                in a manner which will result in timely payment of all 
                benefits for which the plan is obligated.
                    (C) Actions by large employer.--Upon a 
                determination by the Secretary or the Secretary of 
                Labor under subparagraph (A)(ii), the large employer 
                shall provide for such contingency coverage for all 
                eligible employees of the employer in accordance with 
                regulations which shall be prescribed in joint 
                regulations of such Secretaries. Such regulations may 
                provide for temporary coverage of such employees under 
                a plan provided by a purchasing group in the 
                appropriate HCCA, a plan provided under chapter 89 of 
                title 5, United States Code, or other appropriate means 
                established in such regulations.''.

                      PART II--AMENDMENTS TO ERISA

SEC. 1221. LIMITATION ON COVERAGE OF GROUP HEALTH PLANS UNDER TITLE I 
              OF ERISA.

    (a) In General.--Section 4 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1003) is amended--
            (1) in subsection (a), by striking ``subsection (b)'' and 
        inserting ``subsections (b) and (c)'';
            (2) in subsection (b), by striking ``The provisions'' and 
        inserting ``Except as provided in subsection (c), the 
        provisions''; and
            (3) by adding at the end the following new subsection:
    ``(c) Coverage of Group Health Plans.--
            ``(1) Limited inclusion.--This title shall apply to a group 
        health plan to the extent provided in this subsection. For 
        purposes of this title, a plan, fund, or program shall not be 
        treated as a group health plan solely because an employer makes 
        the plan available (and takes related actions) in compliance 
        with the applicable requirements of section 1004 or section 
        1203 of the Health Equity and Access Reform Today Act of 1993.
            ``(2) Coverage under certain provisions with respect to 
        large employer plans.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), parts 1 and 4 of subtitle B shall 
                apply to a large employer plan.
                    ``(B) Inapplicability with respect to insured 
                qualified health plans.--Subparagraph (A) shall not 
                apply with respect to any employee welfare benefit plan 
                to the extent such plan provides for health benefits 
                under or through a qualified insured health plan (as 
                defined in section 1601 of the Health Equity and Access 
                Reform Today Act of 1993).
            ``(3) Claims procedures.--Section 503 shall apply in the 
        case of any large employer plan.
            ``(4) Civil actions by participants, beneficiaries, and 
        fiduciaries and by the secretary.--Section 502 shall apply in 
        the case of any large employer plan and any other group health 
        plan for which the plan sponsor makes a contribution.
            ``(5) Definitions and enforcement provisions.--Sections 3, 
        501, 504, 505, 506, 510, and 511 and the preceding provisions 
        of this section shall apply to a group health plan to the 
        extent necessary to effectively carry out, and enforce the 
        requirements under, the provisions of this title as they apply 
        pursuant to this subsection.
            ``(6) Applicability of preemption rules.--Section 514 shall 
        apply in the case of any group health plan to the extent that 
        parts 1 and 4 of subtitle B apply to such plan under paragraph 
        (2).''.
    (b) Reporting and Disclosure Requirements Applicable to Group 
Health Plans.--
            (1) In general.--Part 1 of subtitle B of title I of such 
        Act is amended--
                    (A) in the heading for section 110, by adding ``by 
                pension plans'' at the end;
                    (B) by redesignating section 111 as section 112; 
                and
                    (C) by inserting after section 110 the following 
                new section:

                 ``special rules for group health plans

    ``Sec. 111. In General.--The Secretary may by regulation provide 
special rules for the application of this part to group health plans 
which are consistent with the purposes of this title and the Health 
Equity and Access Reform Today Act of 1993 and which take into account 
the special needs of participants, beneficiaries, and health care 
providers under such plans.
    ``(b) Expeditious Reporting and Disclosure.--Such special rules may 
include rules providing for--
            ``(1) reductions in the periods of time referred to in this 
        part,
            ``(2) increases in the frequency of reports and disclosures 
        required under this part, and
            ``(3) such other changes in the provisions of this part as 
        may result in more expeditious reporting and disclosure of plan 
        terms and changes in such terms to the Secretary and to plan 
        participants and beneficiaries,
to the extent that the Secretary determines that the rules described in 
this subsection are necessary to ensure timely reporting and disclosure 
of information consistent with the purposes of this part and the Health 
Equity and Access Reform Today Act of 1993 as they relate to group 
health plans.
    ``(c) Additional Requirements.--Such special rules may include 
rules providing for reporting and disclosure to the Secretary and to 
participants and beneficiaries of additional information or at 
additional times with respect to group health plans to which this part 
applies under section 4(c)(2), if such reporting and disclosure would 
be comparable to and consistent with similar requirements applicable 
under the Health Equity and Access Reform Today Act of 1993 with 
respect to small employer plans and applicable regulations of the 
Secretary of Health and Human Services prescribed thereunder.''.
            (2) Clerical amendment.--The table of contents in section 1 
        of such Act is amended by striking the items relating to 
        sections 110 and 111 and inserting the following new items:

``Sec. 110. Alternative methods of compliance by pension plans.
``Sec. 111. Special rules for group health plans.
``Sec. 112. Repeal and effective date.''.
    (c) Treatment of Multiple Employer Welfare Arrangements.--
            (1) Inapplicability of preemption rules.--Section 
        514(b)(6)(A) of such Act (29 U.S.C. 1144(b)(6)(A)) is amended 
        by adding at the end (after and below clause (ii)) the 
        following new sentence:
``This paragraph shall not apply in the case of a group health plan.''.
            (2) Special rules for multiple employer welfare arrangement 
        providing health benefits.--
                    (A) In general.--Subject to subparagraph (B), any 
                multiple employer welfare arrangement with respect to 
                which there is in effect a certification by the 
                Secretary of Labor under this paragraph shall be 
                treated for purposes of this title as a large employer 
                plan.
                    (B) Requirements.--Subparagraph (A) shall apply to 
                a multiple employer welfare arrangement only if--
                            (i) the benefits provided under the 
                        arrangement consist solely of medical care (as 
                        defined in section 213(d) of the Internal 
                        Revenue Code of 1986),
                            (ii) such arrangement meets the 
                        requirements of clause (i) of section 
                        514(b)(6)(A) of the Employee Retirement Income 
                        Security Act of 1974 (as in effect immediately 
                        before the amendment made by paragraph (1)), 
                        and
                            (iii) the sponsoring entity is organized 
                        and maintained in good faith, with a 
                        constitution and bylaws specifically stating 
                        its purpose, as a trade association, an 
                        industry association, a professional 
                        association, or a chamber of commerce or other 
                        business group, for substantial purposes other 
                        than that of obtaining or providing medical 
                        care described in section 213(d) of the 
                        Internal Revenue Code of 1986, and the 
                        applicant demonstrates to the satisfaction of 
                        the Secretary that the sponsoring entity is 
                        established as a permanent entity which 
                        receives the active support of its members.
                    (C) Restriction on commencement of new 
                arrangements.--A multiple employer welfare arrangement 
                providing benefits which consist of medical care (as 
                defined in section 213(d) of the Internal Revenue Code 
                of 1986) which has not commenced operations as of 
                January 1, 1994, may commence operations only if a 
                certification of the arrangement under this paragraph 
                is in effect.
                    (D) Certification procedure.--The Secretary of 
                Labor shall certify a multiple employer welfare 
                arrangement under this paragraph if--
                            (i) an application for such certification 
                        with respect to such arrangement, identified 
                        individually or by class, has been duly filed 
                        in complete form with the Secretary of Labor in 
                        accordance with this paragraph,
                            (ii) such application demonstrates 
                        compliance with the requirements of section 
                        1202, and
                            (iii) the Secretary of Labor finds that 
                        such certification is--
                                    (I) administratively feasible,
                                    (II) not adverse to the interests 
                                of the individuals covered under the 
                                arrangement, and
                                    (III) protective of the rights and 
                                benefits of the individuals covered 
                                under the arrangement.
                In the case of an arrangement which has commenced 
                operations as of January 1, 1994, an application under 
                this paragraph must be filed not later than January 1, 
                1996.
                    (E) Designation of plan sponsor.--The Secretary of 
                Labor shall provide by regulation for designation of 
                the entities to be treated as the plan sponsor.
                    (F) Revocation of certification.--The Secretary of 
                Labor may revoke a certification under this paragraph 
                for any cause that may serve as the basis for the 
                denial of an initial application for such a 
                certification under this paragraph.
                    (G) Review of actions by secretary of labor.--Any 
                decision by the Secretary of Labor which involves the 
                denial of an application by a multiple employee welfare 
                arrangement for certification under this paragraph or 
                the revocation of such a certification shall contain a 
                statement of the specific reason or reasons supporting 
                the Secretary's action, including reference to the 
                specific terms of the certification and the statutory 
                provision or provisions relevant to the determination. 
                Any such denial or revocation shall be subject to 
                review as provided in section 502 of the Employee 
                Retirement Income Security Act of 1974.

     PART III--REVISION OF COBRA CONTINUATION COVERAGE REQUIREMENTS

SEC. 1231. AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
              1974.

    (A) Period of Coverage.--Subparagraph (D) of section 602(2) of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1161(2)) is 
amended--
            (1) by striking ``or'' at the end of clause (i), by 
        striking the period at the end of clause (ii) and inserting ``, 
        or'', and by adding at the end the following new clause:
                            ``(iii) eligible for coverage under a 
                        qualified health plan in accordance with title 
                        I of the Health Equity and Access Reform Today 
                        Act of 1993.'', and
            (2) by striking ``or medicare entitlement'' in the heading 
        and inserting ``, medicare entitlement, or qualified health 
        plan eligibility''.
    (b) Qualified Beneficiary.--Section 607(3) of such Act (29 U.S.C. 
1167(2)) is amended by adding at the end the following new 
subparagraph:
                    ``(D) Special rule for individuals covered by 
                health equity and access reform today act of 1993.--The 
                term `qualified beneficiary' shall not include any 
                individual who, upon termination of coverage under a 
                group health plan, is eligible for coverage under a 
                qualified health plan in accordance with title I of the 
                Health Equity and Access Reform Today Act of 1993.''
    (c) Repeal Upon Implementation of Health Equity and Access Reform 
Today Act of 1993.--
            (1) In general.--Part 6 of subtitle B of title I of such 
        Act (29 U.S.C. 601 et seq.) is amended by striking sections 601 
        through 608 and by redesignating section 609 as section 601.
            (2) Conforming amendments.--
                    (A) Section 502(a)(7) of such Act (29 U.S.C. 
                1132(a)(7)) is amended by striking ``609(a)(2)(A)'' and 
                inserting ``601(a)(2)(A)''.
                    (B) Section 502(c)(1) is amended by striking 
                ``paragraph (1) or (4) of section 606''.
                    (C) Section 514 of such Act (29 U.S.C. 1144) is 
                amended by striking ``609'' each place it appears in 
                subsections (b)(7) and (b)(8) and inserting ``601''.
                    (D) The table of contents in section 1 of such Act 
                is amended by striking the items relating to sections 
                601 through 609 and inserting the following new item:

``Sec. 601. Additional standards for group health plans.''
    (d) Effective Date.--
            (1) Subsections (a) and (b).--The amendments made by 
        subsections (a) and (b) shall take effect on the date of the 
        enactment of this Act.
            (2) Subsection (c).--The amendments made by subsection (c) 
        shall take effect on the first January 1 following the deadline 
        specified in section 1401(c)(2) of this Act.

SEC. 1232. AMENDMENT TO PUBLIC HEALTH SERVICE ACT.

    (a) Period of Coverage.--Subparagraph (D) of section 2202(2) of the 
Public Health Service Act (42 U.S.C. 300bb-2(2)) is amended--
            (1) by striking ``or'' at the end of clause (i), by 
        striking the period at the end of clause (ii) and inserting ``, 
        or'', and by adding at the end the following new clause:
                            ``(iii) eligible for coverage under a 
                        qualified health plan in accordance with title 
                        I of the Health Equity and Access Reform Today 
                        Act of 1993,'', and
            (2) by striking ``or medicare entitlement'' in the heading 
        and inserting ``, medicare entitlement, or qualified health 
        plan eligibility''.
    (b) Qualified Beneficiary.--Section 2208(3) of such Act (42 U.S.C. 
300bb-8(3)) is amended by adding at the end the following new 
subparagraph:
                    ``(C) Special rule for individuals covered by the 
                health equity and access reform today act of 1993.--The 
                term `qualified beneficiary' shall not include any 
                individual who, upon termination of coverage under a 
                group health plan, is eligible for coverage under a 
                qualified health plan in accordance with title I of the 
                Health Equity and Access Reform Today Act of 1993.''.
    (c) Repeal Upon Implementation of Health Equity and Access Reform 
Today Act of 1993.--
            (1) In general.--Title XXII of such Act (42 U.S.C. 300bb-1 
        et seq.) is hereby repealed.
            (2) Conforming amendment.--The table of contents of such 
        Act is amended by striking the item relating to title XXII.
    (d) Effective Date.--
            (1) Subsections (a) and (b).--The amendments made by 
        subsections (a) and (b) shall take effect on the date of the 
        enactment of this Act.
            (2) Subsection (c).--The amendments made by subsection (c) 
        shall take effect on the first January 1 following the deadline 
        specified in section 1401(c)(2) of this Act.

SEC. 1233. ADDITIONAL REVISIONS.

    For additional revisions, see the amendments made by section 2005 
of this Act.

               Subtitle D--Benefits; Benefits Commission

                            PART I--BENEFITS

SEC. 1301. OFFERING OF BENEFIT PACKAGES.

    (a) Benefit Packages.--Each qualified health plan shall provide one 
(or both) of the following benefit packages:
            (1) Standard package.--The standard package consists of the 
        covered items and services specified under subsection (b), 
        subject to the applicable cost sharing requirement specified 
        under subsection (c)(1) for such a package.
            (2) Catastrophic package.--The catastrophic package 
        consists of the covered items and services (specified under 
        subsection (b)), subject to the applicable cost sharing 
        requirement specified under subsection (c)(2) for such a 
        package.
    (b) Covered Items and Services.--Subject to the procedures for 
clarification and modification described in part II, covered items and 
services consist of the following items and services, but only when the 
provision of the item or service is medically necessary or appropriate;
            (1) Medical and surgical services (and supplies incident to 
        such services).
            (2) Medical equipment.
            (3) Prescription drugs and biologicals.
            (4) Preventive services.
            (5) Rehabilitation and home health services related to an 
        acute care episode.
            (6) Services for severe mental illness.
            (7) Substance abuse services.
            (8) Hospice services.
            (9) Emergency transportation and transportation for non-
        elective medically necessary services in frontier and similar 
        areas.
    (c) Cost Sharing.--
            (1) Standard package.--The standard package shall include 
        deductibles, copayments, coinsurance, and out-of-pocket limits 
        on cost sharing established for such package pursuant to part 
        II.
            (2) Catastrophic package.--The catastrophic package shall 
        include a general deductible amount and an out-of-pocket limit 
        on cost sharing established for such package pursuant to part 
        II (and may include such other deductibles, copayments, and 
        coinsurance as a qualified health plan may provide consistent 
        with such part).
            (3) Limitation.--In establishing cost sharing requirements 
        under part II, the Commission shall establish a limit on the 
        total amount of cost-sharing that may be incurred by a family 
        within a class of family enrollment in a year.
    (d) Criteria for Determination of Medical Necessity and 
Appropriateness.--
            (1) In general.--A qualified health plan shall provide for 
        coverage of the items and services described in subsection (b) 
        only for treatments and diagnostic procedures that are 
        medically necessary or appropriate. In the case of dispute 
        concerning a determination of medical necessity or 
        appropriateness and subject to the succeeding provisions of 
        this subsection, for purposes of this title, a treatment (as 
        defined in subparagraph (6)(A)) or diagnostic procedure shall 
        be considered to be ``medically necessary or appropriate'' if 
        the following criteria are met:
                    (A) Treatment or diagnosis of medical condition.--
                            (i) In general.--The treatment or 
                        diagnostic procedure is for a medical 
                        condition.
                            (ii) Medical condition defined.--The term 
                        ``medial condition'' means a disease, illness, 
                        injury, or biological or psychological 
                        condition or status for which treatment is 
                        indicated to improve, maintain, or stabilize a 
                        health outcome (as defined in paragraph (6)(B)) 
                        or which, in the absence of treatment, could 
                        lead to an adverse change in a health outcome.
                            (iii) Adverse change in health outcome 
                        defined.--In clause (ii), an adverse change in 
                        a health outcome occurs if there is a 
                        biological or psychological decremental change 
                        in a health status.
                    (B) Not investigational.--There must be sufficient 
                evidence on which to base conclusions about the 
                existence and magnitude of the change in health outcome 
                resulting from the treatment or diagnostic procedure 
                compared with the best available alternative (or with 
                no treatment or diagnostic procedure if no alternative 
                treatment or procedure is available).
                    (C) Effective and safe.--The evidence must 
                demonstrate that the treatment or diagnostic procedure 
                can reasonably be expected to produce the intended 
                health result or provide intended information and is 
                safe and the treatment or diagnostic procedure provides 
                a clinically meaningful benefit with respect to safety 
                and effectiveness in comparison to other available 
                alternatives or the patients current health status.
            (2) Relationship to fda review.--
                    (A) Approved drugs, biologicals, and medical 
                devices.--
                            (i) Drugs.--A drug that has been found to 
                        be safe and effective under section 505 of the 
                        Federal Food, Drug, and Cosmetic Act is deemed 
                        to meet the requirements of paragraphs (1)(B) 
                        and (1)(C) (relating to not investigational and 
                        safety and effectiveness.)
                            (ii) Biologicals.--A biological that has 
                        been found to be safe and effective under 
                        section 351 of the Public Health Service Act is 
                        deemed to meet the requirements of paragraphs 
                        (1)(B) and (1)(C) (relating to not 
                        investigational and safety and effectiveness).
                            (iii) Medical devices.--A medical device 
                        that is marketed after the provision of a 
                        notice under section 510(k) of the Federal 
                        Food, Drug, and Cosmetic Act or that has an 
                        application for premarket approval approved 
                        under section 515 of such Act is deemed to meet 
                        the requirements of paragraphs (1)(B) and 
                        (1)(C) (relating to not investigational and 
                        safety and effectiveness).
                    (B) Other drugs, biologicals, and devices.--A drug, 
                biological, or medical device not described in 
                subparagraph (A) shall be considered to be 
                investigational. Nothing shall prohibit a qualified 
                health plan from covering (nor as compelling such a 
                plan to cover) such drugs, biologicals, and medical 
                devices, including treatment investigational new drugs.
            (3) Coverage of investigational treatments in approved 
        research trials.--
                    (A) In general.--Coverage of the routine medial 
                costs (as defined in subparagraph (C)) associated with 
                the delivery of investigational treatments (as defined 
                in subparagraph (B)) shall be considered to be 
                medically necessary or appropriate only if the 
                treatment is part of an approved research trial (as 
                defined in subparagraph (D)).
                    (B) Investigational treatment defined.--In 
                subparagraph (A), the term ``investigational 
                treatment'' means a treatment for which there is not 
                sufficient evidence to determine the health outcome of 
                the treatment compared with the best available 
                alternative treatment (or with no treatment if there is 
                no alternative treatment).
                    (C) Routine medical costs defined.--In subparagraph 
                (A), the term ``routine medical costs'' means the cost 
                of health services required to provide treatment 
                according to the design of the trial, except those 
                costs normally paid for by other funding sources (as 
                defined by the Secretary). Such costs do not include 
                the cost of the investigational agent, devices or 
                procedures themselves, the costs of any nonhealth 
                services that might be required for a person to receive 
                the treatment, or the costs of managing the research.
                    (D) Approved research trial defined.--In 
                subparagraph (A), the term ``approved research trial'' 
                means a trial--
                            (i) conducted for the primary purpose of 
                        determining the safety, effectiveness, 
                        efficacy, or health outcomes of a treatment, 
                        compared with the best available alternative 
                        treatment, and
                            (ii) approved by the Secretary.
                A trial is deemed to be approved under clause (ii) if 
                it is approved by the National Institutes of Health, 
                the Food and Drug Administration (through an 
                investigational new drug exemption), the Department of 
                Veterans Affairs, the Department of Defense, or by a 
                qualified non-governmental research entity (as 
                identified in guidelines issued by one or more of the 
                National Institutes of Health).
            (4) Documentation.--
                    (A) In general.--Each qualified health plan is 
                responsible for maintaining documentary evidence 
                supporting the plan's decisions to cover or to deny 
                coverage based on the criteria specified in this 
                subsection.
                    (B) Disclosure.--Each qualified health plan shall 
                disclose to its enrollees, in a manner specified by the 
                State, its coverage decisions and must submit 
                information on such decisions to the State.
            (5) Binding arbitration evidence.--The evidence that may be 
        used in making coverage decisions under a binding arbitration 
        process under this section and section 1407 includes--
                    (A) published peer-reviewed literature,
                    (B) opinions of medical specialty groups and other 
                medical experts; and
                    (C) evidence of general acceptance by the medical 
                community.
            (6) Treatment and health outcome defined.--As used in this 
        subsection:
                    (A) In general.--The term ``treatment'' means any 
                health care intervention undertaken, with respect to a 
                specific indication, to improve, maintain, or stabilize 
                a health outcome or to prevent or mitigate an adverse 
                change in a health outcome.
                    (B) Health outcome.--The term ``health outcome'' 
                means an outcome that affects the length and quality of 
                an enrollee's life.
    (e) Application in Binding Arbitration Process.--The criteria 
specified in subsection (d) shall be applied by arbitrators under the 
binding arbitration process for disputes described in paragraphs (1)(C) 
and (2) of section 1407.
    (f) Freedom To Offer Benefits.--Nothing in this section shall be 
construed to prohibit a health plan that is not a qualified health plan 
from offering any health care benefits.

                      PART II--BENEFITS COMMISSION

SEC. 1311. ESTABLISHMENT.

    There is established a commission to be known as the Benefits 
Commission (in this part referred to as the ``Commission'').

SEC. 1312. DUTIES.

    (a) Initial Proposal.--Not later than the termination of the 6-
month period beginning on the date of the enactment of this Act, the 
Commission shall develop and submit to the Congress a proposal for 
legislation that includes the following:
            (1) Clarification of covered items and services.--A 
        clarification of the items and services to be included in the 
        covered items and services under section 1301(b). Such 
        clarification--
                    (A) may eliminate a category of items or services 
                described in paragraphs (1) through (7) of such 
                section;
                    (B) may not specify the categories of health care 
                providers who are authorized to deliver items or 
                services;
                    (C) with respect to covered items and services, may 
                not specify (in this Act or by regulations) particular 
                procedures or treatments, or classes thereof;
                    (D) may not establish limitations or cost sharing 
                requirements with respect to services for severe mental 
                illness that do not apply with respect to other items 
                or services; and
                    (E) with respect to section 1301(b)(9), shall, 
                after consultation with the Federal Aviation 
                Administration, provide for maximum flexibility to air 
                ambulance services, consistent with basic public safety 
                requirements, in order to avoid an adverse change in 
                health outcomes (within the meaning of section 
                1301(d)(1)(A)) for persons using such services.
            (2) Specification of cost sharing.--A specification of the 
        precise deductibles, copayments, coin-insurance, and out-of-
        pocket limits on cost sharing that are to apply to the standard 
        package and the catastrophic package under section 1301(c). 
        Such specification--
                    (A) shall establish multiple cost sharing schedules 
                that vary depending on the delivery system by which 
                health care is delivered to individuals enrolled in a 
                qualified health plan; and
                    (B) shall provide that the general deductible 
                amount described in section 1301(c)(2) is greater than 
                any general deductible amount applicable to the 
                standard package.
            (3) Cost estimate.--An estimate of the cost of the standard 
        package and the catastrophic package in 5 diverse regions of 
        the United States.
            (4) No addition of benefits.--A clarification under this 
        subsection may not add a new category of items or services.
    (b) Resubmission of Initial Proposal.--If the proposal described in 
subsection (a) is not approved by the Congress, the Commission shall 
submit to the Congress a second proposal conforming to the requirements 
of subsection (a) not later than the termination of the 6-month period 
beginning on the date an approval resolution with respect to the first 
proposal is subject to a vote on final passage in the last House to 
consider the resolution under section 1314. If such second proposal is 
not approved, the Commission shall submit to the Congress a third 
proposal in accordance with the procedure described in the preceding 
sentence. If such third proposal is not approved by the Congress, the 
members of the Commission shall vacate their positions, and new members 
shall be appointed under section 1313 to fill such vacancies. Such new 
members shall submit to the Congress not more than three proposals 
conforming to the requirements of subsection (a) in accordance with the 
procedure described in this subsection.
    (c) Proposed Modifications.--
            (1) In general.--Not earlier than January 1 of the year 
        that occurs 1 year after a legislative proposal described in 
        subsection (a) or (b) is enacted, and not more frequently than 
        annually, the Commission may submit to the Congress a proposal 
        for legislation containing recommended modifications to such 
        enactment. Such a proposal shall be treated as an initial 
        proposal under subsection (a) for purposes of consideration in 
        the Congress under section 1314 and implementation under 
        section 1315. Subsection (a)(4) shall not apply to such a 
        proposal.
            (2) Submission of proposal if deficit.--If the Commission 
        receives a report concerning a deficit under section 
        1003(d)(5)(A) for a year, within 60 days after receiving such 
        report, the Commission may submit under paragraph (1) a propsal 
        to make modifications (which may only include modifications 
        described in paragraph (3)) that will result in the sum of--
                    (A) the amount of the reduction in Federal 
                expenditures for vouchers under section 1003, and
                    (B) the amount of the increase in Federal revenues,
        for the next fiscal year being equal to the aggregate amount of 
        such deficit. The Commission shall submit such a proposal in 
        the case of any year after the full phase-in year (as defined 
        in section 1003(d)(5)(B)(iii)).
            (3) Modifications.--Modifications described in this 
        paragraph are--
                    (A) changes in the items, services, and cost 
                sharing under sections 1301(b) and 1301(c);
                    (B) a reduction in the applicable phase-in 
                percentage (specified in the table under section 
                1003(b)(2));
                    (C) reductions in expenditures under the medicare 
                program, the medicaid program, or both; and
                    (D) a reduction in the applicable dollar limit 
                determined under section 91(b)(2) of the Internal 
                Revenue Code of 1986, based on family income.

SEC. 1313. OPERATION OF THE COMMISSION.

    (a) Membership.--
            (1) In general.--The Commission shall be composed of 5 
        members appointed by the President.
            (2) Consultation.--In selecting individuals for nominations 
        for appointments for the Commission, the President should 
        consult with--
                    (A) the Speaker of the House of Representatives 
                concerning the appointment of 1 member;
                    (B) the Majority Leader of the Senate concerning 
                the appointment of 1 member;
                    (C) the Minority Leader of the House of 
                Representatives concerning the appointment of 1 member; 
                and
                    (D) the Minority Leader of the Senate concerning 
                the appointment of 1 member.
            (3) Chairperson.--The President shall designate 1 
        individual described in paragraph (1) who shall serve as 
        Chairperson of the Commission.
    (b) Composition.--The membership of the Commission shall include 
individuals with national recognition for their expertise in health 
economics, hospital and health plan management, health services, 
medical research and effectiveness, and other related fields, who 
provide a mix of different professions, broad geographic 
representation, and a balance between urban and rural representatives, 
including physicians and other providers of health care services, 
employers, third party payors, individuals skilled in the conduct and 
interpretation of biomedical, health services, and health economics 
research, and individuals having expertise in the research and 
development of technological and scientific advances in health care.
    (c) Terms.--The terms of members of the Commission shall be for 3 
years, except that of the members first appointed 2 shall be appointed 
for a term of 1 year and 2 shall be appointed for a term of 2 years.
    (d) Vacancies.--A vacancy in the Commission shall be filled in the 
same manner as the original appointment, but the individual appointed 
to fill the vacancy shall serve only for the unexpired portion of the 
term for which the individual's predecessor was appointed.
    (e) Administrative Provisions.--
            (1) Meetings.--Each meeting of the Commission shall be open 
        to the public.
            (2) Pay and travel expenses.--
                    (A) In general.--Each member, other than the 
                chairperson of the Commission, shall be paid at a rate 
                equal to the daily equivalent of the minimum annual 
                rate of basic pay payable for level IV of the Executive 
                Schedule under section 5315 of title 5, United States 
                Code, for each day (including travel time) during which 
                the member is engaged in the actual performance of 
                duties vested in the Commission.
                    (B) Chairperson.--The chairperson of the Commission 
                shall be paid for each day referred to in subparagraph 
                (A) at a rate equal to the daily equivalent of the 
                minimum annual rate of basic pay payable for level III 
                of the Executive Schedule under section 5314 of title 
                5, United States Code.
                    (C) Travel expenses.--Members shall receive travel 
                expenses, including per diem in lieu of subsistence, in 
                accordance with sections 5702 and 5703 of title 5, 
                United States Code.
            (3) Director of staff.--
                    (A) In general.--The Commission shall, without 
                regard to section 5311(b) of title 5, United States 
                Code, appoint a Director.
                    (B) Pay.--The Director shall be paid at the rate of 
                basic pay payable for level IV of the Executive 
                Schedule under section 5315 of title 5, United States 
                Code.
            (4) Staff.--
                    (A) In general.--Subject to subparagraphs (B) and 
                (C), the Director, with the approval of the Commission, 
                may appoint and fix the pay of additional personnel.
                    (B) Pay.--The Director may make such appointments 
                without regard to the provisions of title 5, United 
                States Code, governing appointments in the competitive 
                service, and any personnel so appointed may be paid 
                without regard to the provisions of chapter 51 and 
                subchapter III of chapter 53 of such title, relating to 
                classification and General Schedule pay rates, except 
                that an individual so appointed may not receive pay in 
                excess of 120 percent of the annual rate of basic pay 
                payable for GS-15 of the General Schedule.
                    (C) Detailed personnel.--
                            (i) In general.--Upon request of the 
                        Director, the head of any Federal department or 
                        agency may detail any of the personnel of that 
                        department or agency to the Commission to 
                        assist the Commission in carrying out its 
                        duties under this Act.
                            (ii) Agreement with comptroller general.--
                        The Comptroller General of the United States 
                        shall provide assistance, including the 
                        detailing of employees, to the Commission in 
                        accordance with an agreement entered into with 
                        the Commission.
            (5) Other authority.--
                    (A) Contract services.--The Commission may procure 
                by contract, to the extent funds are available, the 
                temporary or intermittent services of experts or 
                consultants pursuant to section 3109 of title 5, United 
                States Code.
                    (B) Leases and property.--The Commission may lease 
                space and acquire personal property to the extent funds 
                are available.

SEC. 1314. CONGRESSIONAL CONSIDERATION OF COMMISSION PROPOSALS.

    (a) Consideration.--A legislative proposal submitted to the 
Congress by the Commission (except in the case of a proposal submitted 
pursuant to the second sentence of section 1003(d)(5)(A)) shall be 
considered by the Congress under the procedures described in this 
section.
    (b) Rules of House of Representatives and Senate.--This section is 
enacted by the Congress--
            (1) as an exercise of the rulemaking power of the House of 
        Representatives and the Senate, respectively, and as such is 
        deemed a part of the rules of each House, respectively, but 
        applicable only with respect to the procedure to be followed in 
        that House in the case of approval resolutions described in 
        subsection (c), and supersedes other rules only to the extent 
        that such rules are inconsistent therewith; and
            (2) with full recognition of the constitutional right of 
        either House to change the rules (so far as relating to the 
        procedure of that House) at any time, in the same manner and to 
        the same extent as in the case of any other rule of that House.
    (c) Terms of the Resolution.--For purposes of this part, the term 
``approval resolution'' means only a joint resolution of the two Houses 
of the Congress, providing in--
            (1) the matter after the resolving clause of which is as 
        follows: ``That the Congress approves the recommendations of 
        the Benefits Commission as submitted by the Commission on 
        ____________________________'', the blank space being filled in 
        with the appropriate date; and
            (2) the title of which is as follows: ``Joint Resolution 
        approving the recommendation of the Benefits Commission''.
    (d) Introduction and Referral.--On the day on which a 
recommendation of the Commission is transmitted to the House of 
Representatives and the Senate, an approval resolution with respect to 
such recommendation shall be introduced (by request) in the House of 
Representatives by the majority leader of the House, for himself or 
herself and the minority leader of the House, or by Members of the 
House designated by the majority leader and minority leader of the 
House; and shall be introduced (by request) in the Senate by the 
majority leader of the Senate, for himself or herself and the minority 
leader of the Senate, or by Members of the Senate designated by the 
majority leader and minority leader of the Senate. If either House is 
not in session on the day on which such recommendation is transmitted, 
the approval resolution with respect to such recommendation shall be 
introduced in the House, as provided in the preceding sentence, on the 
first day thereafter on which the House is in session. The approval 
resolution introduced in the House of Representatives and the Senate 
shall be referred to the appropriate committees of each House.
    (e) Amendments Prohibited.--No amendment to an approval resolution 
shall be in order in either the House of Representatives or the Senate; 
and no motion to suspend the application of this subsection shall be in 
order in either House, nor shall it be in order in either House for the 
Presiding Officer to entertain a request to suspend the application of 
this subsection by unanimous consent.
    (f) Period for Committee and Floor Consideration.--
            (1) In general.--Except as provided in paragraph (2), if 
        the committee or committees of either House to which an 
        approval resolution has been referred have not reported it at 
        the close of the 30th day after its introduction, such 
        committee or committees shall be automatically discharged from 
        further consideration of the approval resolution and it shall 
        be placed on the appropriation calendar. A vote on final 
        passage of the approval resolution shall be taken in each House 
        on or before the close of the 30th day after the approval 
        resolution is reported by the committees or committee of that 
        House to which it was referred, or after such committee or 
        committees have been discharged from further consideration of 
        the approval resolution. If prior to the passage by one House 
        of an approval resolution of that House, that House receives 
        the same approval resolution from the other House then--
                    (A) the procedure in that House shall be the same 
                as if no approval resolution had been received from the 
                other House; but
                    (B) the vote on final passage shall be on the 
                approval resolution of the other House.
            (2) Computation of days.--For purposes of paragraph (1), in 
        computing a number of days in either House, there shall be 
        excluded any day on which the House is not in session.
    (g) Floor Consideration in the House of Representatives.--
            (1) Motion to proceed.--A motion in the House of 
        Representatives to proceed to the consideration of an approval 
        resolution shall be highly privileged and not debatable. An 
        amendment to the motion shall not be in order, nor shall it be 
        in order to move to reconsider the vote by which the motion is 
        agreed to or disagreed to.
            (2) Debate.--Debate in the House of Representatives on an 
        approval resolution shall be limited to not more than 20 hours, 
        which shall be divided equally between those favoring and those 
        opposing the bill or resolution. A motion further to limit 
        debate shall not be debatable. It shall not be in order to move 
        to recommit an approval resolution or to move to reconsider the 
        vote by which an approval resolution is agreed to or disagreed 
        to.
            (3) Motion to postpone.--Motions to postpone, made in the 
        House of Representatives with respect to the consideration of 
        an approval resolution, and motions to proceed to the 
        consideration of other business, shall be decided without 
        debate.
            (4) Appeals.--All appeals from the decisions of the 
        chairperson relating to the application of the Rules of the 
        House of Representatives to the procedure relating to an 
        approval resolution shall be decided without debate.
            (5) General rules apply.--Except to the extent specifically 
        provided in the preceding provisions of this subsection, 
        consideration of an approval resolution shall be governed by 
        the Rules of the House of Representatives applicable to other 
        bills and resolutions in similar circumstances.
    (h) Floor Consideration in the Senate.--
            (1) Motion to proceed.--A motion in the Senate to proceed 
        to the consideration of an approval resolution shall be 
        privileged and not debatable. An amendment to the motion shall 
        not be in order, nor shall it be in order to move to reconsider 
        the vote by which the motion is agreed to or disagreed to.
            (2) General debate.--Debate in the Senate on an approval 
        resolution, and all debatable motions and appeals in connection 
        therewith, shall be limited to not more than 20 hours. The time 
        shall be equally divided between, and controlled by, the 
        majority leader and the minority leader or their designees.
            (3) Debate of motions and appeals.--Debate in the Senate on 
        any debatable motion or appeal in connection with an approval 
        resolution shall be limited to not more than 1 hour, to be 
        equally divided between, and controlled by, the mover and the 
        manager of the approval resolution, except that in the event 
        the manager of the approval resolution is in favor of any such 
        motion or appeal, the time in opposition thereto, shall be 
        controlled by the Minority Leader or his designee. Such 
        leaders, or either of them, may, from time under their control 
        on the passage of an approval resolution, allot additional time 
        to any Senator during the consideration of any debatable motion 
        or appeal.
            (4) Other motions.--A motion in the Senate to further limit 
        debate is not debatable. A motion to recommit an approval 
        resolution is not in order.

SEC. 1315. IMPLEMENTATION.

    The provisions of a legislative proposal approved under section 
1314 shall become effective and a part of the certification process of 
each State (and the Secretary) on January 1 of the year following the 
year of the date of approval of such proposal (unless such period of 
time is less than 3 months, in which case such provisions shall become 
effective on January 1 of the second year following the date of 
approval of such proposal).

Subtitle E--State and Federal Responsibilities in Relation to Qualified 
                              Health Plans

                     PART I--STATE RESPONSIBILITIES

SEC. 1401. ESTABLISHMENT OF STATE INSURANCE MARKET REFORM PROGRAMS.

    (a) In General.--Each State shall establish a program (in this part 
referred to as a ``State program'') to carry out State responsibilities 
specified in this part.
    (b) Summary of Responsibilities.--The State responsibilities under 
this subtitle include--
            (1) the certification of insured health plans as qualified 
        insured health plans under section 1402, including the 
        enforcement of the insurance reform standards;
            (2) dissemination of information under section 1403;
            (3) establishment of procedures for establishment and 
        operation of purchasing groups under section 1404;
            (4) preparation of information concerning plans and 
        purchasing groups under section 1405;
            (5) providing for a risk adjustment program and adjustment 
        for differences in nonpayments among qualified insured health 
        plans under section 1406;
            (6) development of a binding arbitration process under 
        section 1407; and
            (7) specification of an annual general enrollment period 
        under section 1408.
    (c) Deadline.--
            (1) In general.--Each State shall establish a State program 
        under this section by not later than the deadline specified in 
        paragraph (2).
            (2) Deadline.--The deadline specified in this paragraph is 
        the date that occurs 1 year after the date of the insurance 
        reform standards are established under section 1102.
    (d) Periodic Secretarial Review of State Programs.--
            (1) In general.--The Secretary may periodically review 
        State programs established under subsection (a) to determine if 
        such programs continue to meet the requirements of subsection 
        (b).
            (2) Reporting requirements of states.--For purposes of 
        paragraph (1), each State shall submit to the Secretary, at 
        intervals established by the Secretary, a report on the 
        compliance of the State with the requirements of subsection 
        (b).
            (3) Failure of state.--If the Secretary finds that a State 
        has failed to establish a State program under subsection (a) by 
        the deadline specified in subsection (c)(2) or its State 
        program has failed to meet the requirements of subsection (b), 
        the Secretary shall notify the State of such finding and shall 
        assume, with respect to insured health plans and groups in the 
        State, the responsibilities of the State with such a program 
        under this part.

SEC. 1402. CERTIFICATION OF INSURED HEALTH PLANS.

    Each State program shall provide for the certification of insured 
health plans as qualified insured health plans if the appropriate 
certifying authority finds that the plan meets the applicable 
requirements of subtitle B.

SEC. 1403. ESTABLISHMENT OF HEALTH CARE COVERAGE AREAS.

    (a) Establishment.--Each State program shall provide, by not later 
than the deadline specified in section 1401(c)(2), for the division of 
the State into 1 or more health care coverage areas or HCCAs. The 
program may revise the boundaries of such areas from time to time 
consistent with this section.
    (b) Multiple Areas.--With respect to a HCCA--
            (1) no metropolitan statistical area in a State may be 
        incorporated into more than 1 HCCA in such State;
            (2) the number of individuals residing within a HCCA may 
        not be less than 250,000; and
            (3) no area incorporated in a HCCA may be incorporated into 
        another HCCA.
    (c) Interstate Areas.--Two or more contiguous States may provide 
for the establishment of a HCCA that includes adjoining portions of the 
States so long as all portions of any metropolitan statistical area 
within such States are within the same HCCA.

SEC. 1404. PROCEDURES FOR PURCHASING GROUPS.

    (a) Procedures.--Consistent with part II of subtitle B, each State 
program shall have procedures for the establishment and operation of 
individual and small employer purchasing groups with respect to HCCAs 
within such State.
    (b) Voting Rights.--Such procedures shall specify the voting rights 
of members of a purchasing group.

SEC. 1405. PREPARATION OF INFORMATION CONCERNING PLANS AND PURCHASING 
              GROUPS.

    Each State program shall prepare and make available to purchasing 
groups and employers located in the State (and to eligible individuals 
upon request) information, in comparative form, concerning the 
qualified health plans certified by such State and purchasing groups 
operating in the State. Such information shall include a description of 
the following:
            (1) The prices, outcomes, enrollee satisfaction, and other 
        information pertaining to the quality of such plans.
            (2) The HCCAs in the State and the qualified health plans 
        available with respect to each HCCA.
            (3) The existence of purchasing groups within each such 
        HCCA.
            (4) Any other information determined appropriate by the 
        State.

SEC. 1406. RISK ADJUSTMENT PROGRAM.

    (a) In General.--Each State program under this part shall provide 
for a risk adjustment program using the risk adjustment process and 
factors described in section 1117(b) to adjust the premiums of 
qualified general access plans to reflect the relative actuarial risk 
of eligible employees and eligible individuals enrolled in the 
qualified general access plans participating in the program. The 
program shall apply such risk-adjustment factors, in accordance with a 
methodology established under the standards under such section, so that 
the sum of such factors is zero for all participating qualified general 
access plans, within a class of family enrollment in each HCCA.
    (b) Adjustment for Differences in Nonpayment Rates.--In accordance 
with rules established by the Secretary, each State program under this 
part shall provide that if the rates of nonpayment of premiums for 
qualified general access plans during grace periods (established under 
section 1142(b)(2) or otherwise) vary appreciably among qualified 
general access plans, the State program shall provide for such 
adjustments in the payments made among such plans as will place each 
qualified general access plan in the same position as if the rates of 
nonpayment were the same.

SEC. 1407. DEVELOPMENT OF BINDING ARBITRATION PROCESS.

    Each State program shall establish an arbitration process that--
            (1) resolves in a timely manner disputes concerning--
                    (A) a claim for payment or provision of benefits 
                under a qualified insured health plan;
                    (B) a request for preauthorization of items or 
                services which is submitted to such a plan prior to 
                receipt of the items or services; or
                    (C) decisions by a plan relating to the coverage of 
                a particular item or service for enrollees generally; 
                and
            (2) with respect to disputes involving a determination by a 
        plan that an item or service is not medically necessary or 
        appropriate with respect to a specific enrollee, requires a 
        person who contests such determination to demonstrate to an 
        arbitrator by a preponderance of the evidence that the 
        determination is inappropriate based on the available 
        scientific evidence.

SEC. 1408. SPECIFICATION OF ANNUAL GENERAL ENROLLMENT PERIOD.

    Each State program shall specify an annual period, of not less than 
30 days, during which eligible employees and eligible individuals in 
the State may enroll in qualified insured health plans or change the 
qualified insured health plan in which the individual is enrolled.

                   Subpart B--Waiver of Requirements

SEC. 1421. ALTERNATE STATE SYSTEMS ALLOWED.

    (a) Waiver Authority.--
            (1) In general.--In accordance with this section, each 
        State may submit an application to the Secretary to waive the 
        requirements specified in subsection (b) as they apply to the 
        State (and to qualified insured health plans and purchasing 
        groups in the State).
            (2) Establishment of criteria.--The Secretary shall 
        establish criteria for the approval of such waiver 
        applications.
            (3) Expedited procedure.--The Secretary shall establish an 
        expedited procedure for the consideration and disposition of 
        waiver applications under this subsection. The procedure 
        established by the Secretary shall provide that such 
        consideration and disposition shall be completed within 90 
        days.
    (b) Requirements Specified.--The requirements specified in this 
subsection are as follows:
            (1) Availability.--The requirements of section 1111(c) 
        (relating to availability of qualified health plans).
            (2) MSA boundaries.--Subject to subsection (c)(1), the 
        requirements of paragraphs (1) and (3) of section 1403(b) 
        (relating to the treatment of metropolitan statistical areas in 
        drawing the boundaries of HCCAs).
            (3) Corporate structure of purchasing groups.--The 
        requirement of section 1141(a) (relating to corporate structure 
        of a purchasing group), insofar as it prevents the 
        establishment of a public (or quasi-public) entity as a 
        purchasing group.
            (4) Covered items and services.--Subject to subsection 
        (c)(2), the items and services included as covered items and 
        services under the standard and catastrophic packages under 
        section 1301(b).
    (c) Limitations on Waivers.--
            (1) Anti-redlining.--In establishing boundaries for HCCAs, 
        a State may not discriminate on the basis of or otherwise take 
        into account race, religion, national origin, socio-economic 
        status, disability, or perceived health status.
            (2) Substitution of actuarially equivalent benefits.--A 
        State may not waive the requirement described in subsection 
        (b)(4) unless the State provides for the inclusion of benefits 
        that are actuarially equivalent to the benefits not included.
    (d) Construction.--Nothing in this section shall be construed as 
allowing a State to waive all the requirements of subtitle B in order 
to establish a single-payer system.

SEC. 1422. STATE OPT-OUT.

    Any State that applies to the Secretary and demonstrates to the 
satisfaction of the Secretary that, because of unique geographic and 
related features that inhibit a competitive market, no more than two 
qualified general access plans are made available in the State, the 
Secretary may waive such requirements of this title as may be necessary 
to assure the provision of covered items and services to all eligible 
employees and eligible individuals.

SEC. 1423. WAIVER OF CERTAIN MEDICAID REQUIREMENTS.

    For provisions authorizing States to waive certain medicaid 
requirements, in order to permit managed care, etc., see section 6001.

              Subpart C--Preemption of Certain State Laws

SEC. 1431. PREEMPTION FROM STATE BENEFIT MANDATES.

    Effective as of January 1, 1995, no State shall establish or 
enforce any law or regulation that--
            (1) requires the offering, as part of a qualified health 
        plan, or any services, category of care, or services of any 
        class or type of provider that is different from the covered 
        items and services specified under subtitle C;
            (2) specifies the individuals to be covered under such a 
        plan or the duration of such coverage; or
            (3) requires a right of conversion from a group health plan 
        that is a qualified health plan to an individual health plan.

SEC. 1432. PREEMPTION OF STATE LAW RESTRICTIONS ON NETWORK PLANS.

    (a) Limitation on Restrictions on Network Plans.--Effective as of 
January 1, 1995--
            (1) a State may not prohibit or limit a network plan from 
        including incentives for enrollees to use the services of 
        participating providers;
            (2) a State may not prohibit or limit a network plan from 
        limiting coverage of services to those provided by a 
        participating provider;
            (3) a State may not prohibit or limit the negotiation of 
        rates and forms of payments for providers under a network plan;
            (4) a State may not prohibit or limit a network plan from 
        limiting the number of participating providers;
            (5) a State may not prohibit or limit a network plan from 
        requiring that services be provided (or authorized) by a 
        practitioner selected by the enrollee from a list of available 
        participating providers; and
            (6) a State may not prohibit or limit the corporate 
        practice of medicine.
    (b) Definitions.--In this section:
            (1) Network plan.--The term ``network plan'' means a 
        qualified health plan--
                    (A) which--
                            (i) limits coverage of covered items and 
                        services to those provided by participating 
                        providers, or
                            (ii) provides, with respect to such 
                        services provided by persons who are not 
                        participating providers, for cost-sharing which 
                        are in excess of those permitted under the 
                        standard or catastrophic package for 
                        participating providers;
                    (B) which has a sufficient number and distribution 
                of participating providers to assure that the uniform 
                set of effective benefits (i) is available and 
                accessible to each enrollee, within the area served by 
                the plan, with reasonable promptness and in a manner 
                which assures continuity, and (ii) when medically 
                necessary, is available and accessible twenty-four 
                hours a day and seven days a week; and
                    (C) which provides benefits for covered items and 
                services not furnished by participating providers if 
                the services are medically necessary and immediately 
                required because of an unforeseen illness, injury, or 
                condition.
            (2) Participating provider.--The term ``participating 
        provider'' means an entity or individual which provides, sells, 
        or leases health care services under a contract with a network 
        plan, which contract does not permit--
                    (A) cost sharing in excess of the cost-sharing 
                permitted under a standard or catastrophic package, and
                    (B) any enrollee charges (for covered items or 
                services) in excess of such cost sharing.

                   PART II--FEDERAL RESPONSIBILITIES

SEC. 1441. FEDERAL ROLE WITH RESPECT TO MULTI-STATE EMPLOYER PLANS.

    In the case of an insured health plan offered by an employer which 
has employees who are employed in 2 or more States, the Secretary shall 
carry out activities under this section in the same manner as a State 
program would carry out activities under part I with respect to a 
health plan subject to such part.

SEC. 1442. FEDERAL ROLE IN THE CASE OF A DEFAULT BY A STATE.

    (a) Failure to Establish State Program.--If a State fails to 
establish a State program under part I or, having established such a 
program, the program fails to continue to meet the requirements of such 
part, the Secretary shall, after notice and opportunity for correction, 
terminate such program and shall carry out activities under part I in 
the same manner as a State program would carry out activities under 
such part.
    (b) Failure of State To Designate HCCAs.--If a State fails to 
designate 1 or more HCCAs under section 1403(a) by the deadline 
specified in section 1401(c)(2), the Secretary shall make such 
designation.

SEC. 1443. ESTABLISHMENT OF RESIDENCY RULES.

    The Secretary shall establish rules relating to identifying the 
State (and HCCA) in which individuals reside. Such rules shall be based 
on the principal residence of such an individual.

SEC. 1444. RULES DETERMINING SEPARATE EMPLOYER STATUS.

    Under rules of the Secretary, employers that are related (as 
defined under such rules) shall be treated under this title as a single 
employer if a reason for their separation relates to the health risk 
characteristics of eligible employees of such employers.

                     Subtitle F--Universal Coverage

SEC. 1501. REQUIREMENT OF COVERAGE.

    (a) In General.--Effective January 1, 2005, each individual who is 
a citizen or lawful permanent resident of the United States shall be 
covered under--
            (1) a qualified health plan, or
            (2) an equivalent health care program (as defined in 
        section 1601(7)).
    (b) Exception.--Subsection (a) shall not apply in the case of an 
individual who is opposed for religious reasons to health plan 
coverage, including an individual who declines health plan coverage due 
to a reliance on healing using spiritual means through prayer alone.

                        Subtitle G--Definitions

SEC. 1601. DEFINITIONS.

    Unless specifically provided otherwise, as used in this Act:
            (1) Appropriate certifying authority.--The term 
        ``appropriate certifying authority'' means--
                    (A) in the case of a health plan offered in a State 
                with a qualified health plan certification program 
                meeting the requirements of this Act, the State 
                commissioner or superintendent of insurance or other 
                State authority responsible for regulation of health 
                insurance; or
                    (B) in all other cases, the Secretary.
            (2) Covered items and services.--The term ``covered items 
        and services'' means items and services described in section 
        1301(b).
            (3) Delivery system.--Each of the following is considered 
        to be a distinct ``delivery system'' with respect to a health 
        plan:
                    (A) Fee-for-service.
                    (B) Use of preferred providers.
                    (C) Staff or group model health maintenance 
                organizations.
                    (D) Such other systems as the Secretary may 
                recognize.
            (4) Dependent.--The term ``dependent'' means, with respect 
        to any individual, any person who is--
                    (A) the spouse of such individual, or
                    (B) under regulations of the Secretary, a child 
                (including an adopted child) of such individual and 
                who--
                            (i) is under 19 years of age,
                            (ii) is under 25 years of age and a full-
                        time student, or
                            (iii) regardless of age is incapable of 
                        self-support because of mental or physical 
                        disability.
            (5) Eligible employee.--The term ``eligible employee'' 
        means, with respect to an employer, in any month after the 
        month which includes the hiring date, an employee who normally 
        performs at least 30 hours of service per week for that 
        employer, and includes any dependent of such employee.
            (6) Eligible individual.--The term ``eligible individual'' 
        means an individual who--
                    (A) is otherwise not eligible for coverage under an 
                employer-based qualified health plan or 1 of the 
                equivalent health care programs (as defined in 
                paragraph (7)), or
                    (B) in the case of eligible employee of a small 
                employer, has elected not to enroll in a qualified 
                health plan offered by such employer.
            (7) Equivalent health care program.--The term ``equivalent 
        health care program'' means--
                    (A) part A or part B of the medicare program under 
                title XVIII of the Social Security Act,
                    (B) the medicaid program under title XIX of the 
                Social Security Act,
                    (C) the health care program for active military 
                personnel under title 10, United States Code,
                    (D) the veterans health care program under chapter 
                17 of title 38, United States Code,
                    (E) the Civilian Health and Medical Program of the 
                Uniformed Services (CHAMPUS), as defined in section 
                1073(4) of title 10, United States Code,
                    (F) the Indian health service program under the 
                Indian Health Care Improvement Act (25 U.S.C. 1601 et 
                seq.), and
                    (G) any other plan recognized by the Secretary the 
                purpose of which is to provide retiree health benefits.
            (8) Family.--The term ``family'' means as individual and 
        includes the individual's dependents (if any), as defined in 
        paragraph (4), but only if such an individual or dependent is a 
        citizen or lawful permanent resident of the United States.
            (9) First certification year.--The term ``first 
        certification year'' means, with respect to a qualified health 
        plan in a State, the first year in which the State has in 
        effect a State program under part I of subtitle E as of January 
        1 of such year, but not later than the first January 1 
        following the deadline specified in section 1401(c)(2).
            (10) General access plan.--The term ``general access plan'' 
        means an insured health plan offered with respect to eligible 
        employees of small employers and eligible individuals under 
        subtitle B.
            (11) HCCA.--The term ``HCCA'' means a health care coverage 
        area established under section 1403.
            (12) Health plan.--the term ``health plan'' means an 
        insured health plan and a self-insured health plan.
            (13) Health plan sponsor.--The term ``health plan sponsor'' 
        means, with respect to an insured health plan or self-insured 
        health plan, the insurer offering the plan or the self-insured 
        sponsor for the plan, respectively.
            (14) Insured health plan.--
                    (A) In general.--Except as provided in subparagraph 
                (B), the term ``insured health plan'' means any 
                hospital or medical service policy or certificate, 
                hospital or medical service plan contract, or health 
                maintenance organization group contract offered by an 
                insurer.
                    (B) Exception.--Such term does not include any of 
                the following--
                            (i) coverage only for accident, dental, 
                        vision, disability income, or long-term care 
                        insurance, or any combination thereof,
                            (ii) medicare supplemental health 
                        insurance,
                            (iii) coverage issued as a supplement to 
                        liability insurance,
                            (iv) worker's compensation or similar 
                        insurance,
                            (v) automobile medical-payment insurance,
                            (vi) coverage for a specified disease or 
                        illness, or
                            (vii) a hospital or fixed indemnity policy 
                        (unless the Secretary determines that such a 
                        policy provides sufficiently comprehensive 
                        coverage of a benefit so that it should be 
                        treated as an insured health plan),
                or any combination thereof.
            (15) Insurer.--The term ``insurer'' means--
                    (A) a licensed insurance company,
                    (B) a prepaid hospital or medical service plan,
                    (C) a health maintenance organization, or
                    (D) other entity providing a plan of health 
                insurance or health benefits,
        with respect to which State regulation is not preempted by 
        reason of section 514(b)(2) of the Employee Retirement Income 
        Security Act of 1974.
            (16) Large employer.--The term ``large employer'' means an 
        employer that is not a small employer.
            (17) Large employer plan.--The term ``large employer plan'' 
        means a qualified health plan which is made available by a 
        large employer, whether the plan is insured or self-insured.
            (18) Multiple employer welfare arrangement.--The term 
        ``multiple employer welfare arrangement'' has the meaning given 
        such term in section 3(40) of the Employee Retirement Income 
        Security Act of 1974.
            (19) Purchasing group.--The term ``purchasing group'' means 
        an individual and small employer purchasing group established 
        under section 1141.
            (20) Qualified health plan.--The term ``qualified'' means--
                    (A) with respect to a insured health plan, a health 
                plan that is certified as qualified under section 1402, 
                or
                    (B) with respect to a self-insured health plan, a 
                health plan that meets the requirements of a large 
                employer plan under section 1201.
            (21) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (22) Self-insured health plan.--The term ``self-insured 
        health plan''--
                    (A) means an employee welfare benefit plan or other 
                arrangement insofar as the plan or arrangement provides 
                health benefits and that is funded in a manner other 
                than through the purchase of one or more insured health 
                plans, but
                    (B) does not include any coverage or insurance 
                described in paragraph (14)(B).
            (23) Self-insured sponsor.--The term ``self-insured 
        sponsor'' includes, with respect to a self-insured plan, any 
        entity which establishes or maintains the plan.
            (24) Small employer.--
                    (A) In general.--The term ``small employer'' means, 
                with respect to a calendar year, an employer that 
                normally employs 1 or more but less than 101 eligible 
                employees on a typical business day.
                    (B) Treatment of self-employed.--For the purposes 
                of subparagraph (A), the term ``employee'' includes a 
                self-employed individual.
                    (C) Treatment of lines of business, etc.--For 
                purposes of making a determination under subparagraph 
                (A), an employer may treat each line of business or 
                each geographic location as a separate employer.
            (25) State.--The term ``State'' means each of the several 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, the United States Virgin Islands, Guam, American Samoa, 
        and the Commonwealth of the Northern Mariana Islands.

                TITLE II--TAX AND ENFORCEMENT PROVISIONS

SEC. 2000. AMENDMENT OF 1986 CODE.

    Except as otherwise expressly provided, whenever in this title an 
amendment or repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the reference shall be considered to 
be made to a section or other provision of the Internal Revenue Code of 
1986.

                   Subtitle A--General Tax Provisions

SEC. 2001. CERTAIN EMPLOYER HEALTH PLAN CONTRIBUTIONS INCLUDED IN 
              INCOME.

    (a) Exclusion for Employer Health Plan Contributions Limited to 
Contributions to Qualified Health Plans.--
            (1) In general.--Section 106 (relating to contributions by 
        employer to accident and health plans) is amended to read as 
        follows:

``SEC. 106. CONTRIBUTIONS BY EMPLOYER TO QUALIFIED HEALTH PLANS.

    ``Except as provided in section 91, gross income of an employee 
does not include employer-provided coverage under a qualified health 
plan (as defined in section 1601(20) of the Health Equity and Access 
Reform Today Act of 1993) or employer-provided contributions to such 
employee's medical savings account''.
    (b) Clerical Amendment.--The table of sections of part III of 
subchapter B of chapter 1 is amended by striking the item relating to 
section 106 and inserting the following new item:

``Sec. 106. Contributions by employer to qualified health plans.''
    (b) Inclusion in Income.--
            (1) In general.--Part II of subchapter B of chapter 1 
        (relating to items specifically included in gross income) is 
        amended by adding at the end the following new section:

``SEC. 91. EXCESS EMPLOYER CONTRIBUTIONS TO QUALIFIED HEALTH PLANS.

    ``(a) General Rule.--Notwithstanding section 106, if--
            ``(1) an employee is covered by a qualified health plan at 
        any time during any month, and
            ``(2) there is an excess employer contribution with respect 
        to the employee to such plan for such month,
the gross income of such employee for the taxable year which includes 
such month shall include an amount equal to such excess employer 
contribution for such month.
    ``(b) Excess Employer Contribution Defined.--
            ``(1) In general.--For purposes of this section, the term 
        `excess employer contribution' means, with respect to an 
        employee enrolled in a qualified health plan for any month, the 
        excess of--
                    ``(A) the employer contribution to such plan for 
                such month, over
                    ``(B) the applicable dollar limit for such employee 
                for such month.
            ``(2) Applicable dollar limit.--For purposes of paragraph 
        (1)--
                    ``(A) In general.--The applicable dollar limit for 
                an employee for any month is equal to \1/12\ of the 
                average premium cost for the calendar year of the 
                lowest priced \1/2\ of standard packages (within the 
                meaning of section 1301(a)(1) of the Health Equity and 
                Access Reform Today Act of 1993) of qualified health 
                plans offered in such year in the HCCA (as defined in 
                section 1601(11) of such Act) within which is offered 
                the qualified health plan in which the employee is 
                enrolled.
                    ``(B) Determination of limit.--
                            ``(i) Annual determination.--The applicable 
                        dollar limit shall be determined annually by 
                        the Secretary, in consultation with the 
                        Secretary of Health and Human Services, from 
                        information submitted by each State with 
                        respect to each HCCA.
                            ``(ii) Determination based on enrollment 
                        and age status.--
                                    ``(I) In general.--The applicable 
                                dollar limit shall be determined with 
                                respect to individual and family 
                                enrollments, and within each such 
                                enrollment status, determined with 
                                respect to the age of the principal 
                                enrollee.
                                    ``(II) Age bands established.--In 
                                carrying out subclause (I), the 
                                Secretary shall establish reasonable 
                                age bands (consistent with such bands 
                                established under section 1116 of the 
                                Health Equity and Access Reform Today 
                                Act of 1993) within which premium 
                                amounts will not vary for a type of 
                                enrollment.
    ``(c) Special Rule for Multiemployer Health Plans.--In the case of 
employer contributions with respect to any employee made to a 
multiemployer health plan on a basis other than per employee per month, 
the Secretary may by regulations prescribe the method of determining 
that portion of such contributions that is not included in gross income 
of the employee.
    ``(d) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Qualified health plan.--The term `qualified health 
        plan' shall have the meaning given to such term by section 
        1601(20) of the Health Equity and Access Reform Today Act of 
        1993.
            ``(2) Employee includes former employee.--The term 
        `employee' includes a former employee.
            ``(3) Determination of employer contribution.--
                    ``(A) In general.--The employer contribution to any 
                qualified health plan for any month shall be that 
                portion of the cost of such plan for such month which 
                is incurred by the employer.
                    ``(B) Self-insured plan may use annual estimates.--
                An employer who maintains a self-insured health plan 
                may elect (in such manner and at such time as may be 
                provided in regulations) to determine the actual 
                employer contribution under subsection (b)(1)(A) for 
                any period of not more than 12 months on the basis of a 
                reasonable estimate of the cost of providing coverage 
                for such month. To the extent practicable, such 
                estimate shall be made on an actuarial basis, and in 
                the making of any such estimate, there shall be taken 
                into account such factors as may be required under 
                regulations.
                    ``(C) Employees only taken into account for periods 
                covered.--For purposes of determining the employer 
                contribution, amounts shall be taken into account with 
                respect to an employee only for periods during which 
                such employee is covered by the plan.
            ``(4) Coverage for only part of month.--If an employee is 
        covered under a qualified health plan for only a portion of a 
        month, the amount required to be included under subsection (a) 
        in the gross income of such employee with respect to such month 
        shall be an amount which bears the same ratio to the excess 
        employer contribution for such month as such portion bears to 
        the entire month.
            ``(5) Certain related employers treated as 1 employer.--
        Rules similar to the rules provided by subsections (b) and (c) 
        of section 414 shall apply.
            ``(6) Month.--The term `month' means a calendar month.
            ``(7) Multiemployer health plan.--The term `multiemployer 
        health plan' means a qualified health plan which is part of an 
        employee welfare benefit plan (within the meaning of section 
        3(1) of the Employee Retirement Income Security Act of 1974)--
                    ``(A) to which more than 1 employer is required to 
                contribute, and
                    ``(B) which is maintained pursuant to 1 or more 
                collective bargaining agreements between 1 or more 
                employee organizations and more than 1 employer.''.
            (2) Clerical amendment.--The table of sections for part II 
        of subchapter B of chapter 1 is amended by adding at the end 
        the following:

``Sec. 91. Excess employer contributions to qualified health plans.''
    (c) Employment Tax Amendments.--
            (1) General rule.--Chapter 25 (relating to general 
        provisions relating to employment taxes) is amended by adding 
        at the end the following new section:

``SEC. 3510. TREATMENT OF EXCESS EMPLOYER CONTRIBUTIONS.

    ``(a) In General.--For purposes of this subtitle and section 209 of 
the Social Security Act, any amount required to be included in the 
gross income of an employee under section 91(a) with respect to any 
month--
            ``(1) shall be treated as paid in cash to such employee at 
        the close of such month, and
            ``(2) shall not be treated as paid under a health or 
        similar plan of the employer.
For purposes of paragraph (1), an employer may elect to prorate any 
such amount to any payroll period (or portion thereof) covering such 
month rather than treat it as being paid at the close of such month.
    ``(b) Special Rules in the Case of Self-Insured Plans.--
            ``(1) Safe harbor for employees whose estimates are at 
        least 95 percent of actual employer contributions.--In the case 
        of an employer who maintains a self-insured qualified health 
        plan, if for any calendar year the excess of--
                    ``(A) the actual employer contributions determined 
                under section 91 with respect to all employees for such 
                year, over
                    ``(B) the amount estimated by the employer under 
                section 91(d)(3)(B) as the employer contributions with 
                respect to all employees for such year,
        is not greater than 5 percent of the amount determined under 
        subparagraph (A) then, except as provided in paragraph (2), no 
        penalty shall be imposed under section 6672 on the employer for 
        failure to pay, or to deduct and withhold, any tax imposed by 
        this subtitle on such excess.
            ``(2) Employer must pay certain taxes on excess.--Paragraph 
        (1) shall not apply to any tax imposed, or required to be 
        deducted and withheld, under sections 3111, 3221, 3301, and 
        3402 on the excess described in paragraph (1) unless the 
        employer pays any such tax within the time prescribed by the 
        Secretary under regulations.
            ``(3) Special rules for employee's social security tax and 
        credit.--In the case of the excess described in paragraph (1)--
                    ``(A) no tax shall be imposed by section 3101, and
                    ``(B) the amount of such excess shall not be taken 
                into account for purposes of section 209 of the Social 
                Security Act.
    ``(c) Liability for Withholding and Payment of Tax.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        applicable payor shall withhold, and be liable for, payment of 
        any tax required to be withheld or paid under this subtitle on 
        any amount described in subsection (a).
            ``(2) Special rules for multiemployer health plans.--In the 
        case of any multiemployer health plan, the plan administrator 
        shall comply with such rules with respect to the withholding 
        of, and liability for, any tax required to be withheld or paid 
        under this subtitle as the Secretary may require by 
        regulations.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Applicable payor.--The term `applicable payor' means 
        the payor of remuneration for services which qualifies the 
        employee for coverage under a multiemployer health plan.
            ``(2) Employee.--The term `employee' does not include a 
        former employee.
            ``(3) Multiemployer health plan.--The term `multiemployer 
        health plan' has the meaning given such term by section 
        91(d)(7).''.
            (2) Clerical amendment.--The table of sections for chapter 
        25 is amended by adding at the end the following new item:

``Sec. 3510. Treatment of excess employer contributions.''.
    (d) Effective Dates.--
            (1) In general.--The amendments made by subsections (a) and 
        (b) shall apply to taxable years beginning after the first 
        December 31 following the deadline specified in section 
        1401(c)(2) of this Act.
            (2) Employment tax.--The amendments made by subsection (c) 
        shall take effect on and after the first January 1 following 
        the deadline specified in such section 1401(c)(2).

SEC. 2002. DEDUCTIONS FOR COSTS OF QUALIFIED HEALTH PLANS.

    (a) Business Expense Deduction for Health Insurance.--Section 162 
(relating to trade or business expenses) is amended by redesignating 
subsection (m) as subsection (n) and by inserting after subsection (l) 
the following new subsection:
    ``(m) Group Health Plans.--The amount of expenses paid or incurred 
by an employer for a group health plan or as contributions to an 
employee's medical savings account shall not be allowed as a deduction 
under this section--
            ``(1) unless the plan is a qualified health plan (as 
        defined in section 1601(20) of the Health Equity and Access 
        Reform Today Act of 1993), and
            ``(2) with respect to each employee, to the extent such 
        amount exceeds the applicable dollar limit for such employee 
        (within the meaning of section 91(b)(2) and determined on an 
        annual basis).''.
    (b) Permanent Extension and Increase in Health Insurance Tax 
Deduction for Self-Employed Individuals.--
            (1) Permanent extension of deduction.--
                    (A) In general.--Subsection (l) of section 162 
                (relating to special rules for health insurance costs 
                of self-employed individuals) is amended by striking 
                paragraph (6).
                    (B) Effective date.--The amendment made by this 
                paragraph shall apply to taxable years beginning after 
                December 31, 1993.
            (2) Increase in amount of deduction; insurance purchased 
        must meet certain standards.--
                    (A) Increase in amount of deduction.--Paragraph (1) 
                of section 162(l) is amended--
                            (i) by striking ``25 percent of'' and 
                        inserting ``100 percent of'', and
                            (ii) by striking ``dependents.'' and 
                        inserting ``dependents, and only to the extent 
                        such amount does not exceed the applicable 
                        dollar limit for such taxpayer (within the 
                        meaning of section 91(b)(2) and determined on 
                        an annual basis).''
                    (B) Insurance purchased must meet certain 
                standards.--Paragraph (2) of section 162(l) is amended 
                by adding at the end the following new subparagraph:
                    ``(C) Insurance must meet certain standards.--
                Paragraph (1) shall apply only to insurance which is a 
                qualified health plan (as defined in section 1601(20) 
                of the Health Equity and Access Reform Today Act of 
                1993).''.
                    (C) Treatment of multiemployer health plans.--
                Subsection (l) of section 162 is amended by adding at 
                the end the following new paragraph:
            ``(6) Treatment of multiemployer health plans.--For 
        purposes of this subsection, an amount paid into a 
        multiemployer health plan (as defined in section 91(d)(7) shall 
        be deemed to be an amount paid for insurance which constitutes 
        medical care.''.
    (c) Rules Relating to Deductions for Individuals.--
            (1) Deduction for premiums limited to qualified health 
        plans.--Subparagraph (C) of section 213(d)(1) (defining medical 
        care) is amended by striking ``for insurance'' and inserting 
        ``for a qualified health plan (as defined in section 1601(20) 
        of the Health Equity and Access Reform Today Act of 1993).''
            (2) Deduction not subject to agi limitation.--Section 213 
        (relating to medical, dental, etc., expenses) is amended by 
        adding at the end the following new subsection:
    ``(f) Special Rules for Qualified Health Care Premium Expenses.--
            ``(1) In general.--In computing the deduction under 
        subsection (a) with respect to amounts paid for premiums for 
        coverage under a qualified health plan (as defined in section 
        1601(20) of the Health Equity and Access Reform Today Act of 
        1993)--
                    ``(A) the limitation under subsection (a) based on 
                adjusted gross income shall not apply to such amounts 
                (and such amounts shall not be taken into account in 
                determining whether such limitation applies to other 
                amounts), and
                    ``(B) no deduction shall be allowed to the extent 
                such amounts exceed the applicable dollar limit for the 
                taxpayer (within the meaning of section 91(b)(2) and 
                determined on an annual basis).
            ``(2) Limit.--In computing the amount allowed as a 
        deduction under paragraph (1) with respect to the cost of 
        providing coverage for any individual, the applicable dollar 
        limit shall be reduced by the aggregate amount of payments to, 
        or on behalf of, such individual by--
                    ``(A) the Secretary of Health and Human Services 
                under section 1003 of the Health Equity and Access 
                Reform Today Act of 1993, and
                    ``(B) all other entities (including any employer or 
                governmental agency),
        for coverage of such individual under a qualified health plan 
        (as so defined).''.
            (3) Deduction allowed against gross income.--Section 62(a) 
        (defining adjusted gross income) is amended by inserting after 
        paragraph (15) the following new paragraph:
            ``(16) Deduction for qualified health plan premiums.--The 
        deduction allowed under section 213(f).''.
    (d) Effective Date.--Except as provided in subsection (b)(1)(B), 
the amendments made by this section shall apply to taxable years 
beginning after the first December 31 following the deadline specified 
in section 1401(c)(2) of this Act.

SEC. 2003. MEDICAL SAVINGS ACCOUNTS.

    (a) In General.--Part VII of subchapter B of chapter 1 (relating to 
additional itemized deductions for individuals) is amended by 
redesignating section 220 as section 221 and by inserting after section 
219 the following new section:

``SEC. 220. MEDICAL SAVINGS ACCOUNTS.

    ``(a) Deduction Allowed.--In the case of an eligible individual, 
there shall be allowed as a deduction the amounts paid in cash during 
the taxable year by such individual to a medical savings account for 
the benefit of such individual or for the benefit of any spouse or 
dependent of such individual who is an eligible individual.
    ``(b) Limitations.--
            ``(1) Only 1 account per family.--Except as provided in 
        regulations prescribed by the Secretary, no deduction shall be 
        allowed under subsection (a) for amounts paid to any medical 
        savings account for the benefit of an individual, such 
        individual's spouse, or any dependent of such individual if 
        such individual, spouse, or dependent is a beneficiary of any 
        other medical savings account.
            ``(2) Dollar limitation.--The amount allowable as a 
        deduction under subsection (a) with respect to any individual 
        for the taxable year shall not exceed the excess of--
                    ``(A) the applicable dollar limit with respect to 
                such individual (within the meaning of section 91(b)(2) 
                and determined on an annual basis), over
                    ``(B) the sum of--
                            ``(i) the aggregate amount paid by, or on 
                        behalf of such individual, as a premium for a 
                        catastrophic health plan covering such eligible 
                        individual for such taxable year, plus
                            ``(ii) the aggregate amount contributed to 
                        the eligible individual's medical savings 
                        account by persons other than the eligible 
                        individual.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Eligible individual.--The term `eligible individual' 
        means any individual who is covered under a catastrophic health 
        plan during any portion of the calendar year with or within 
        which the taxable year begins.
            ``(2) Catastrophic health plan.--For purposes of paragraph 
        (1), the term `catastrophic health plan' means a qualified 
        health plan providing health plan coverage through a 
        catastrophic package. For purposes of the preceding sentence, 
        the terms `qualified health plan' and `catastrophic package' 
        have the meanings given to such terms by sections 1601(20) and 
        1301(a)(2) of the Health Equity and Access Reform Today Act of 
        1993.
    ``(d) Medical Savings Accounts.--For purposes of this section--
            ``(1) Medical savings account.--
                    ``(A) In general.--The term `medical savings 
                account' means a trust created or organized in the 
                United States exclusively for the purpose of paying the 
                medical expenses of the beneficiaries of such trust, 
                but only if the written governing instrument creating 
                the trust meets the following requirements:
                            ``(i) Except in the case of a rollover 
                        contribution described in subsection (e)(4), no 
                        contribution will be accepted unless it is in 
                        cash, and, subject to subsection (e)(2), 
                        contributions will not be accepted in excess of 
                        the amount allowed as a deduction under this 
                        section for the taxable year.
                            ``(ii) The trustee is a bank (as defined in 
                        section 408(n)) or another person who 
                        demonstrates to the satisfaction of the 
                        Secretary that the manner in which such person 
                        will administer the trust will be consistent 
                        with the requirements of this section.
                            ``(iii) No part of the trust assets will be 
                        invested in life insurance contracts.
                            ``(iv) The assets of the trust will not be 
                        commingled with other property except in a 
                        common trust fund or common investment fund.
                            ``(v) The interest of an individual in the 
                        balance in his account is nonforfeitable.
                            ``(vi) Under regulations prescribed by the 
                        Secretary, rules similar to the rules of 
                        section 401(a)(9) shall apply to the 
                        distribution of the entire interest of 
                        beneficiaries of such trust.
                    ``(B) Treatment of comparable accounts held by 
                insurance companies.--For purposes of this section, an 
                account held by an insurance company in the United 
                States shall be treated as a medical savings account 
                (and such company shall be treated as a bank) if--
                            ``(i) such account is part of a health 
                        insurance plan that includes a catastrophic 
                        health plan (as defined in subsection (c)(2)),
                            ``(ii) such account is exclusively for the 
                        purpose of paying the medical expenses of the 
                        beneficiaries of such account who are covered 
                        under such catastrophic health plan, and
                            ``(iii) the written instrument governing 
                        the account meets the requirements of clauses 
                        (i), (v), and (vi) of subparagraph (A).
            ``(2) Medical expenses.--
                    ``(A) In general.--The term `medical expenses' 
                means, with respect to an individual, amounts paid or 
                incurred by such individual for--
                            ``(i) medical care (as defined in section 
                        213), or
                            ``(ii) long-term care (as defined in 
                        paragraph (3)),
                for such individual, the spouse of such individual, and 
                any dependent (as defined in section 152) of such 
                individual, but only to the extent such amounts are not 
                compensated for by insurance or otherwise.
                    ``(B) Health plan coverage may not be purchased 
                from account.--
                            ``(i) In general.--Such term shall not 
                        include any amount paid for coverage under a 
                        health plan.
                            ``(ii) Exception.--Clause (i) shall not 
                        apply--
                                    ``(I) in the case of coverage of an 
                                individual under 65 years of age under 
                                a catastrophic health plan or under a 
                                long-term care insurance plan, or
                                    ``(II) in the case of coverage of 
                                an individual 65 years of age or older 
                                under a medicare supplemental policy or 
                                under a long-term care insurance plan 
                                or for payment of premiums under part A 
                                or part B of title XVIII of the Social 
                                Security Act.
            ``(3) Long-term care.--
                    ``(A) In general.--The term `long-term care' means 
                diagnostic, preventive, therapeutic, rehabilitative, 
                maintenance, or personal care services which are 
                required by, and provided to, a functionally impaired 
                individual, which have as their primary purpose the 
                direct provision of needed assistance with 1 or more 
                activities of daily living (or the alleviation of the 
                conditions necessitating such assistance) that the 
                individual is certified under subparagraph (B) as being 
                unable to perform, and which are provided in a setting 
                other than an acute care unit of a hospital pursuant to 
                a continuing plan of care prescribed by a physician or 
                registered professional nurse. Such term does not 
                include food or lodging provided in an institutional or 
                other setting, or basic living services associated with 
                the maintenance of a household or participation in 
                community life, such as case management, transportation 
                or legal services, or the performance of home 
                maintenance or household chores.
                    ``(B) Functionally impaired individual.--The term 
                `functionally impaired individual' means an individual 
                who is certified by a physician or registered 
                professional nurse as being unable to perform at least 
                3 activities of daily living without substantial 
                assistance from another individual. For purposes of 
                this paragraph, the term `activities of daily living' 
                means bathing, dressing, eating, toileting, 
                transferring, and walking.
            ``(4) Time when contributions deemed made.--A contribution 
        shall be deemed to be made on the last day of the preceding 
        taxable year if the contribution is made on account of such 
        taxable year and is made not later than the time prescribed by 
        law for filing the return for such taxable year (not including 
        extensions thereof).
    ``(e) Tax Treatment of Distributions.--
            ``(1) In general.--Any amount paid or distributed out of a 
        medical savings account shall be included in the gross income 
        of the individual for whose benefit such account was 
        established unless such amount is used exclusively to pay the 
        medical expenses of such individual or the spouse or any 
        dependent of such individual.
            ``(2) Excess contributions returned before due date of 
        return.--Paragraph (1) shall not apply to the distribution of 
        any contribution paid during a taxable year to a medical 
        savings account to the extent that such contribution exceeds 
        the amount allowable as a deduction under subsection (a) if--
                    ``(A) such distribution is received by the 
                individual on or before the last day prescribed by law 
                (including extensions of time) for filing such 
                individual's return for such taxable year, and
                    ``(B) such distribution is accompanied by the 
                amount of net income attributable to such excess 
                contribution.
        Any net income described in subparagraph (B) shall be included 
        in the gross income of the individual for the taxable year in 
        which it is received.
            ``(3) Penalty for distributions not used for medical 
        expenses.--
                    ``(A) In general.--The tax imposed by this chapter 
                for any taxable year in which there is a payment or 
                distribution from a medical savings account which is 
                not used to pay the medical expenses of the individual 
                for whose benefit the account was established, shall be 
                increased by 10 percent of the amount of such payment 
                or distribution which is includible in gross income 
                under paragraph (1).
                    ``(B) Account balance limitation.--If--
                            ``(i) the tax imposed by this chapter is 
                        required to be increased under subparagraph (A) 
                        by reason of a distribution, and
                            ``(ii) after such distribution, the balance 
                        of the medical savings account established for 
                        the benefit of the individual, is less than the 
                        amount of the deductible under the catastrophic 
                        health plan covering such individual,
                subparagraph (A) shall be applied by substituting `50 
                percent' for `10 percent'.
            ``(4) Rollovers.--Paragraph (1) shall not apply to any 
        amount paid or distributed out of a medical savings account to 
        the individual for whose benefit the account is maintained, if 
        the entire amount received (including money and any other 
        property) is paid into another medical savings account for the 
        benefit of such individual not later than the 60th day after 
        the day on which the individual received the payment or 
        distribution.
            ``(5) Penalty for mandatory distributions not made from 
        account.--
                    ``(A) In general.--If during any taxable year--
                            ``(i) there is a payment of a mandatory 
                        distribution expense incurred by a beneficiary 
                        of a medical savings account, and
                            ``(ii) the person making such payment is 
                        not reimbursed for such payment with a 
                        distribution from such account before the 60th 
                        day after such payment,
                the taxpayer's tax imposed by this chapter for such 
                taxable year shall be increased by 100 percent of the 
                excess of the amount of such payment over the amount of 
                reimbursement made before such 60th day.
                    ``(B) Mandatory distribution expense.--For purposes 
                of subparagraph (A), the term `mandatory distribution 
                expense' means--
                            ``(i) any expense incurred which may be 
                        counted toward a deductible, or for a copayment 
                        or coinsurance, under the catastrophic health 
                        plan covering such beneficiary, and
                            ``(ii) in the case of a beneficiary who has 
                        attained age 65, any expense for coverage 
                        described in subsection (d)(2)(B)(ii)(II) and 
                        any expense incurred which may be counted 
                        toward a deductible, or for a copayment or 
                        coinsurance, under title XVIII of the Social 
                        Security Act.
    ``(f) Tax Treatment of Accounts.--
            ``(1) Exemption from tax.--Any medical savings account is 
        exempt from taxation under this subtitle unless such account 
        has ceased to be a medical savings account by reason of 
        paragraph (2) or (3). Notwithstanding the preceding sentence, 
        any such account shall be subject to the taxes imposed by 
        section 511 (relating to imposition of tax on unrelated 
        business income of charitable, etc. organizations).
            ``(2) Account terminates if individual engages in 
        prohibited transaction.--
                    ``(A) In general.--If, during any taxable year of 
                the individual for whose benefit the medical savings 
                account was established, such individual engages in any 
                transaction prohibited by section 4975 with respect to 
                the account, the account ceases to be a medical savings 
                account as of the first day of that taxable year.
                    ``(B) Account treated as distributing all its 
                assets.--In any case in which any account ceases to be 
                a medical savings account by reason of subparagraph (A) 
                on the first day of any taxable year, paragraph (1) of 
                subsection (e) shall be applied as if there were a 
                distribution on such first day in an amount equal to 
                the fair market value (on such first day) of all assets 
                in the account (on such first day) and no portion of 
                such distribution were used to pay medical expenses.
            ``(3) Effect of pledging account as security.--If, during 
        any taxable year, the individual for whose benefit a medical 
        savings account was established uses the account or any portion 
        thereof as security for a loan, the portion so used is treated 
        as distributed to that individual and not used to pay medical 
        expenses.
    ``(g) Custodial Accounts.--For purposes of this section, a 
custodial account shall be treated as a trust if--
            ``(1) the assets of such account are held by a bank (as 
        defined in section 408(n)) or another person who demonstrates 
        to the satisfaction of the Secretary that the manner in which 
        he will administer the account will be consistent with the 
        requirements of this section, and
            ``(2) the custodial account would, except for the fact that 
        it is not a trust, constitute a medical savings account 
        described in subsection (d).
For purposes of this title, in the case of a custodial account treated 
as a trust by reason of the preceding sentence, the custodian of such 
account shall be treated as the trustee thereof.
    ``(h) Reports.--The trustee of a medical savings account shall make 
such reports regarding such account to the Secretary and to the 
individual for whose benefit the account is maintained with respect to 
contributions, distributions, and such other matters as the Secretary 
may require under regulations. The reports required by this subsection 
shall be filed at such time and in such manner and furnished to such 
individuals at such time and in such manner as may be required by those 
regulations.''.
    (b) Deduction Allowed Whether or Not Individual Itemizes Other 
Deductions.--Subsection (a) of section 62 (defining adjusted gross 
income), as amended by section 2002(c)(3), is amended by inserting 
after paragraph (16) the following new paragraph:
            ``(17) Medical savings accounts.--The deduction allowed by 
        section 220.''.
    (c) Distributions From Medical Savings Accounts Not Allowed as 
Medical Expense Deduction.--Section 213 (relating to medical, dental, 
etc., expenses), as amended by section 2002(c)(2), is amended by adding 
at the end the following new subsection:
    ``(g) Coordination With Medical Savings Accounts.--The amount 
otherwise taken into account under subsection (a) as expenses paid for 
medical care shall be reduced by the amount (if any) of the 
distributions from any medical savings account of the taxpayer during 
the taxable year which is not includible in gross income by reason of 
being used for medical care.''.
    (d) Exclusion of Employer Contributions to Medical Savings Accounts 
From Employment Taxes.--
            (1) Social security taxes.--
                    (A) Subsection (a) of section 3121 (defining wages) 
                is amended by striking ``or'' at the end of paragraph 
                (20), by striking the period at the end of paragraph 
                (21) and inserting ``; or'', and by inserting after 
                paragraph (21) the following new paragraph:
            ``(22) remuneration paid to or on behalf of an employee if 
        (and to the extent that) at the time of payment of such 
        remuneration it is reasonable to believe that a corresponding 
        deduction is allowable under section 220.''.
                    (B) Subsection (a) of section 209 of the Social 
                Security Act (42 U.S.C. 409) is amended by striking 
                ``or'' at the end of paragraph (17), by striking the 
                period at the end of paragraph (18) and inserting ``; 
                or'', and by inserting after paragraph (18) the 
                following new paragraph:
            ``(19) remuneration paid to or on behalf of an employee if 
        (and to the extent that) at the time of payment of such 
        remuneration it is reasonable to believe that a corresponding 
        deduction is allowable under section 220 of the Internal 
        Revenue Code of 1986.''.
            (2) Railroad retirement tax.--Subsection (e) of section 
        3231 (defining compensation) is amended by adding at the end 
        the following new paragraph:
            ``(10) Employer contributions to medical savings 
        accounts.--The term `compensation' shall not include any 
        payment made to or on behalf of an employee if (and to the 
        extent that) at the time of payment of such remuneration it is 
        reasonable to believe that a corresponding deduction is 
        allowable under section 220.''.
            (3) Unemployment tax.--Subsection (b) of section 3306 
        (defining wages) is amended by striking ``or'' at the end of 
        paragraph (15), by striking the period at the end of paragraph 
        (16) and inserting ``; or'', and by inserting after paragraph 
        (16) the following new paragraph:
            ``(17) remuneration paid to or on behalf of an employee if 
        (and to the extent that) at the time of payment of such 
        remuneration it is reasonable to believe that a corresponding 
        deduction is allowable under section 220.''.
            (4) Withholding tax.--Subsection (a) of section 3401 
        (defining wages) is amended by striking ``or'' at the end of 
        paragraph (19), by striking the period at the end of paragraph 
        (20) and inserting ``; or'', and by inserting after paragraph 
        (20) the following new paragraph:
            ``(21) remuneration paid to or on behalf of an employee if 
        (and to the extent that) at the time of payment of such 
        remuneration it is reasonable to believe that a corresponding 
        deduction is allowable under section 220.''.
    (e) Tax on Excess Contributions.--Section 4973 (relating to tax on 
excess contributions to individual retirement accounts, certain section 
403(b) contracts, and certain individual retirement annuities) is 
amended--
            (1) by inserting ``medical savings accounts,'' after 
        ``accounts,'' in the heading of such section,
            (2) by striking ``or'' at the end of paragraph (1) of 
        subsection (a),
            (3) by redesignating paragraph (2) of subsection (a) as 
        paragraph (3) and by inserting after paragraph (1) the 
        following:
            ``(2) a medical savings account (within the meaning of 
        section 220(d)), or'', and
            (4) by adding at the end the following new subsection:
    ``(d) Excess Contributions to Medical Savings Accounts.--For 
purposes of this section, in the case of a medical savings account 
(within the meaning of section 220(d)), the term `excess contributions' 
means the amount by which the amount contributed for the taxable year 
to the account exceeds the amount deductible under section 220 for such 
taxable year. For purposes of this subsection, any contribution which 
is distributed out of the medical savings account in a distribution to 
which section 220(e)(2) applies shall be treated as an amount not 
contributed.''.
    (f) Tax on Prohibited Transactions.--Section 4975 (relating to 
prohibited transactions) is amended--
            (1) by adding at the end of subsection (c) the following 
        new paragraph:
            ``(4) Special rule for medical savings accounts.--An 
        individual for whose benefit a medical savings account (within 
        the meaning of section 220(d)) is established shall be exempt 
        from the tax imposed by this section with respect to any 
        transaction concerning such account (which would otherwise be 
        taxable under this section) if, with respect to such 
        transaction, the account ceases to be a medical savings account 
        by reason of the application of section 220(f)(2)(A) to such 
        account.'', and
            (2) by inserting ``or a medical savings account described 
        in section 220(d)'' in subsection (e)(1) after ``described in 
        section 408(a)''.
    (g) Failure To Provide Reports on Medical Savings Accounts.--
Section 6693 (relating to failure to provide reports on individual 
retirement accounts or annuities) is amended--
            (1) by inserting ``or on medical savings accounts'' after 
        ``annuities'' in the heading of such section, and
            (2) by adding at the end of subsection (a) the following: 
        ``The person required by section 220(h) to file a report 
        regarding a medical savings account at the time and in the 
        manner required by such section shall pay a penalty of $50 for 
        each failure unless it is shown that such failure is due to 
        reasonable cause.''.
    (h) Clerical Amendments.--
            (1) The table of sections for part VII of subchapter B of 
        chapter 1 is amended by striking the last item and inserting 
        the following:

                              ``Sec. 220. Medical savings accounts.
                              ``Sec. 221. Cross reference.''
            (2) The table of sections for chapter 43 is amended by 
        striking the item relating to section 4973 and inserting the 
        following:

                              ``Sec. 4973. Tax on excess contributions 
                                        to individual retirement 
                                        accounts, medical savings 
                                        accounts, certain 403(b) 
                                        contracts, and certain 
                                        individual retirement 
                                        annuities.''
            (3) The table of sections for subchapter B of chapter 68 is 
        amended by inserting ``or on medical savings accounts'' after 
        ``annuities'' in the item relating to section 6693.
    (i) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the first December 31 following 
the deadline specified in section 1401(c)(2) of this Act.

SEC. 2004. ELIMINATING COMMONALITY OF INTEREST OR GEOGRAPHIC LOCATION 
              REQUIREMENT FOR TAX EXEMPT TRUST STATUS.

    (a) In General.--Paragraph (9) of section 501(c) (relating to 
exempt organizations) is amended--
            (1) by inserting ``(A)'' after ``(9)''; and
            (2) by adding at the end the following:
            ``(B) Any determination of whether a health plan maintained 
        by one or more large employers (within the meaning of section 
        1601(16) of the Health Equity and Access Reform Today Act of 
        1993) is a voluntary employees' beneficiary association meeting 
        the requirements of this paragraph shall be made without regard 
        to any determination of commonality of interest or geographic 
        location if the plan is a qualified health plan (as defined in 
        such section).''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply with respect to determinations made on or after January 1, 1994.

SEC. 2005. REVISION OF COBRA CONTINUATION COVERAGE REQUIREMENTS.

    (a) Period of Coverage.--Clause (iv) of section 4980B(f)(2)(B) 
(defining period of coverage) is amended--
            (1) by striking ``or'' at the end of subclause (I), by 
        striking the period at the end of subclause (II) and inserting 
        ``, or'', and by adding at the end the following new subclause:
            ``(III) eligible for coverage under a qualified health plan 
        in accordance with title I of the Health Equity and Access 
        Reform Today Act of 1993.'', and
            (2) by striking ``or medicare entitlement'' in the heading 
        and inserting ``, medicare entitlement, or qualified health 
        plan eligibility''.
    (b) Qualified Beneficiary.--Section 4980B(g)(1) (defining qualified 
beneficiary) is amended by adding at the end the following new 
subparagraph:
                    ``(E) Special rule for individuals covered by 
                health equity and access reform today act of 1993.--The 
                term `qualified beneficiary' shall not include any 
                individual who, upon termination of coverage under a 
                group health plan, is eligible coverage under a 
                qualified health plan in accordance with title I of the 
                Health Equity and Access Reform Today Act of 1993.''
    (c) Repeal Upon Implementation of Health Equity and Access Reform 
Today Act of 1993.--
            (1) In general.--Section 4980B (relating to failure to 
        satisfy continuation coverage requirements of group health care 
        plans) is hereby repealed.
            (2) Conforming amendments.--
                    (A) Section 414(n)(3)(C) is amended by striking 
                ``505, and 4980B'' and inserting ``and 505''.
                    (B) Section 414(t)(2) is amended by striking ``505, 
                or 4980B'' and inserting ``or 505''.
                    (C) The table of sections for chapter 43 is amended 
                by striking the item relating to section 4980B.
    (d) Effective Date.--
            (1) Subsections (a) and (b).--The amendments made by 
        subsections (a) and (b) shall take effect on the date of the 
        enactment of this Act.
            (2) Subsection (c).--The amendments made by subsection (c) 
        shall take effect on the first January 1 following the deadline 
        specified in section 1401(c)(2) of this Act.

   Subtitle B--Provisions Relating to Acceleration of Death Benefits

SEC. 2101. TAX TREATMENT OF PAYMENTS UNDER LIFE INSURANCE CONTRACTS FOR 
              TERMINALLY ILL INDIVIDUALS .

    (a) General Rule.--Section 101 (relating to certain death benefits) 
is amended by adding at the end the following new subsection:
    ``(g) Treatment of Amounts Paid With Respect to Terminally Ill 
Individuals.--
            ``(1) In general.--For purposes of this section, any amount 
        paid to an individual under a life insurance contract on the 
        life of an insured who is a terminally ill individual shall be 
        treated as an amount paid by reason of the death of such 
        insured.
            ``(2) Terminally ill individual.--For purposes of this 
        subsection, the term `terminally ill individual' means an 
        individual who has been certified by a licensed physician as 
        having an illness or physical condition which can reasonably be 
        expected to result in death in 12 months or less.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 1993.

SEC. 2102. TAX TREATMENT OF COMPANIES ISSUING QUALIFIED TERMINAL 
              ILLNESS RIDERS.

    (a) Qualified Terminal Illness Rider Treated as Life Insurance.--
Section 818 (relating to other definitions and special rules) is 
amended by adding at the end the following new subsection:
    ``(g) Qualified Terminal Illness Rider Treated as Life Insurance.--
For purposes of this part--
            ``(1) In general.--Any reference to life insurance shall be 
        treated as including a reference to a qualified terminal 
        illness rider.
            ``(2) Qualified terminal illness rider.--For purposes of 
        this subsection, the term `qualified terminal illness rider' 
        means any rider or addendum on, or other provision of, a life 
        insurance contract which provides for payments to an individual 
        upon the insured becoming a terminally ill individual (as 
        defined in section 101(g)(2)).''
    (b) Definitions of Life Insurance and Modified Endowment 
Contracts.--
            (1) Rider treated as qualified additional benefit.--
        Paragraph (5)(A) of section 7702(f) is amended by striking 
        ``or'' at the end of clause (iv), by redesignating clause (v) 
        as clause (vi), and by inserting after clause (iv) the 
        following new clause:
                            ``(v) any qualified terminal illness rider 
                        (as defined in section 818(g)(2)), or''.
            (2) Transitional rule.--For purposes of applying section 
        7702 or 7702A of the Internal Revenue Code of 1986 to any 
        contract (or determining whether either such section applies to 
        such contract), the issuance of a qualified terminal illness 
        rider (as defined in section 818(g)(2) of such Code) with 
        respect to any contract shall not be treated as a modification 
        or material change of such contract.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning before, on, or after December 31, 
1993.

               Subtitle C--Long-Term Care Tax Provisions

                       PART I--GENERAL PROVISIONS

SEC. 2201. QUALIFIED LONG-TERM CARE SERVICES TREATED AS MEDICAL CARE.

    (a) General Rule.--Paragraph (1) of section 213(d) (defining 
medical care), as amended by section 2002(c)(1), is amended by striking 
``or'' at the end of subparagraph (B), by redesignating subparagraph 
(C) as subparagraph (D), and by inserting after subparagraph (B) the 
following new subparagraph:
                    ``(C) for qualified long-term care services (as 
                defined in subsection (g)), or''.
    (b) Qualified Long-Term Care Services Defined.--Section 213 
(relating to deduction for medical, dental, etc. expenses), as amended 
by section 2002(c)(2), is amended by adding at the end the following 
new subsection:
    ``(g) Qualified Long-Term Care Services.--For purposes of this 
section--
            ``(1) In general.--The term `qualified long-term care 
        services' means necessary diagnostic, preventive, therapeutic, 
        rehabilitative, and maintenance (including personal care) 
        services--
                    ``(A) which are required by an individual during 
                any period during which such individual is a 
                functionally impaired individual,
                    ``(B) which have as their primary purpose the 
                provision of needed assistance with 1 or more 
                activities of daily living which a functionally 
                impaired individual is certified as being unable to 
                perform under paragraph (2)(A), and
                    ``(C) which are provided pursuant to a continuing 
                plan of care prescribed by a licensed health care 
                practitioner (other than a relative of such 
                individual).
            ``(2) Functionally impaired individual.--
                    ``(A) In general.--The term `functionally impaired 
                individual' means any individual who is certified by a 
                licensed health care practitioner (other than a 
                relative of such individual) as being unable to 
                perform, without substantial assistance from another 
                individual (including assistance involving verbal 
                reminding, physical cueing, or substantial 
                supervision), at least 3 activities of daily living 
                described in paragraph (3).
                    ``(B) Special rule for home health care services.--
                In the case of services which are provided during any 
                period during which an individual is residing within 
                the individual's home (whether or not the services are 
                provided within the home), subparagraph (A) shall be 
                applied by substituting `2' for `3'. For purposes of 
                this subparagraph, a nursing home or similar facility 
                shall not be treated as a home.
            ``(3) Activities of daily living.--Each of the following is 
        an activity of daily living:
                    ``(A) Eating.
                    ``(B) Transferring.
                    ``(C) Toileting.
                    ``(D) Dressing.
                    ``(E) Bathing.
            ``(4) Licensed health care practitioner.--
                    ``(A) In general.--The term `licensed health care 
                practitioner' means--
                            ``(i) a physician or registered 
                        professional nurse,
                            ``(ii) a qualified community care case 
                        manager (as defined in subparagraph (B)), or
                            ``(iii) any other individual who meets such 
                        requirements as may be prescribed by the 
                        Secretary after consultation with the Secretary 
                        of Health and Human Services.
                    ``(B) Qualified community care case manager.--The 
                term `qualified community care case manager' means an 
                individual or entity which--
                            ``(i) has experience or has been trained in 
                        providing case management services and in 
                        preparing individual care plans;
                            ``(ii) has experience in assessing 
                        individuals to determine their functional and 
                        cognitive impairment;
                            ``(iii) is not a relative of the individual 
                        receiving case management services; and
                            ``(iv) meets such requirements as may be 
                        prescribed by the Secretary after consultation 
                        with the Secretary of Health and Human 
                        Services.
            ``(5) Relative.--The term `relative' means an individual 
        bearing a relationship to another individual which is described 
        in paragraphs (1) through (8) of section 152(a).''.
    (c) Technical Amendments.--
            (1) Subparagraph (D) of section 213(d)(1) (as redesignated 
        by subsection (a)) is amended to read as follows:
                    ``(D) for a qualified health plan (as defined in 
                section 1601(20) of the Health Equity and Access Reform 
                Today Act of 1993) (including amounts paid as premiums 
                under part B of title XVIII of the Social Security Act, 
                relating to supplementary medical insurance for the 
                aged)--
                            ``(i) covering medical care referred to in 
                        subparagraphs (A) and (B), or
                            ``(ii) covering medical care referred to in 
                        subparagraph (C), but only if such coverage is 
                        provided under a qualified long-term care 
                        insurance contract (as defined in section 
                        7702B(b)).''
            (2) Paragraph (6) of section 213(d) is amended--
                    (A) by striking ``subparagraphs (A) and (B)'' in 
                the matter preceding subparagraph (A) and inserting 
                ``subparagraphs (A), (B), and (C)'', and
                    (B) by striking ``paragraph (1)(C)'' in 
                subparagraph (A) and inserting ``paragraph (1)(D)''.
            (3) Paragraph (7) of section 213(d) is amended by striking 
        ``subparagraphs (A) and (B)'' and inserting ``subparagraphs 
        (A), (B), and (C)''.

SEC. 2202. TREATMENT OF LONG-TERM CARE INSURANCE OR PLANS.

    (a) General Rule.--Chapter 79 (relating to definitions) is amended 
by inserting after section 7702A the following new section:

``SEC. 7702B. TREATMENT OF LONG-TERM CARE INSURANCE OR PLANS.

    ``(a) General Rule.--For purposes of this title--
            ``(1) a qualified long-term care insurance contract shall 
        be treated as an accident or health insurance contract,
            ``(2) any plan of an employer providing coverage of 
        qualified long-term care services shall be treated as an 
        accident or health plan with respect to such services,
            ``(3) amounts received under such a contract or plan with 
        respect to qualified long-term care services shall be treated 
        as amounts received for personal injuries or sickness, and
            ``(4) payments described in subsection (b)(5) shall be 
        treated as payments made with respect to qualified long-term 
        care services.
    ``(b) Qualified Long-Term Care Insurance Contract.--
            ``(1) In general.--For purposes of this title, the term 
        `qualified long-term care insurance contract' means any 
        insurance contract if--
                    ``(A) the only insurance protection provided under 
                such contract is coverage of qualified long-term care 
                services,
                    ``(B) such contract meets the requirements of 
                paragraphs (2), (3), and (4), and
                    ``(C) such contract is issued by a qualified 
                issuer.
            ``(2) Premium requirements.--
                    ``(A) In general.--The requirements of this 
                paragraph are met with respect to a contract if such 
                contract provides that--
                            ``(i) premium payments may not be made 
                        earlier than the date such payments would have 
                        been made if the contract provided for level 
                        annual payments over the life of the contract 
                        (or, if shorter, 20 years), and
                            ``(ii) all refunds of premiums, and all 
                        policyholder dividends or similar amounts, 
                        under such contract are to be applied as a 
                        reduction in future premiums or to increase 
                        future benefits.
                A contract shall not be treated as failing to meet the 
                requirements of clause (i) solely by reason of a 
                provision providing for a waiver of premiums if the 
                policyholder becomes a functionally impaired 
                individual.
                    ``(B) Refunds upon death or complete surrender or 
                cancellation.--Subparagraph (A)(ii) shall not apply to 
                any refund on the death of the policyholder, or on any 
                complete surrender or cancellation of the contract, if, 
                under the contract, the amount refunded may not exceed 
                the amount of the premiums paid under the contract. For 
                purposes of this title, any refund described in the 
                preceding sentence shall be includible in gross income 
                to the extent that any deduction or exclusion was 
                allowed with respect to the refund.
            ``(3) Borrowing, pledging, or assigning prohibited.--The 
        requirements of this paragraph are met with respect to a 
        contract if such contract provides that no money may be 
        borrowed under such contract and that such contract (or any 
        portion thereof) may not be assigned or pledged as collateral 
        for a loan.
            ``(4) Prohibition of duplicate payment.--The requirements 
        of this paragraph are met with respect to a contract if such 
        contract does not cover expenses incurred to the extent that 
        such expenses are reimbursable under title XVIII of the Social 
        Security Act.
            ``(5) Per diem and other periodic payments permitted.--
                    ``(A) In general.--For purposes of subsection 
                (a)(4), and except as provided in subparagraph (B), 
                payments are described in this paragraph for any 
                calendar year if, under the contract, such payments are 
                made to (or on behalf of) a functionally impaired 
                individual on a per diem or other periodic basis 
                without regard to the expenses incurred or services 
                rendered during the period to which the payments 
                relate.
                    ``(B) Exception where aggregate payments exceed 
                limit.--If the aggregate payments under the contract 
                for any period (whether on a periodic basis or 
                otherwise) exceed the dollar amount in effect for such 
                period--
                            ``(i) subparagraph (A) shall not apply for 
                        such period, and
                            ``(ii) the requirements of paragraph (1)(A) 
                        shall be met only if such payments are made 
                        with respect to qualified long-term care 
                        services provided during such period.
                    ``(C) Dollar amount.--The dollar amount in effect 
                under this paragraph shall be $100 per day (or the 
                equivalent amount in the case of payments on another 
                periodic basis).
                    ``(D) Adjustments for increased costs.--
                            ``(i) In general.--In the case of any 
                        calendar year after 1995, the dollar amount in 
                        effect under subparagraph (C) for any period 
                        occurring during such calendar year shall be 
                        equal to the sum of--
                                    ``(I) the amount in effect under 
                                subparagraph (C) for the preceding 
                                calendar year (after application of 
                                this subparagraph), plus
                                    ``(II) the applicable percentage of 
                                the amount under subclause (I).
                            ``(ii) Applicable percentage.--For purposes 
                        of clause (i), the term `applicable percentage' 
                        means, with respect to any calendar year, the 
                        greater of--
                                    ``(I) 5 percent, or
                                    ``(II) the cost-of-living 
                                adjustment for such calendar year.
                            ``(iii) Cost-of-living adjustment.--For 
                        purposes of clause (ii), the cost-of-living 
                        adjustment for any calendar year is the 
                        percentage (if any) by which the cost index 
                        under clause (iv) for the preceding calendar 
                        year exceeds such index for the second 
                        preceding calendar year. In the case of any 
                        calendar year beginning before 1997, this 
                        clause shall be applied by substituting the 
                        Consumer Price Index (as defined in section 
                        1(f)(5)) for the cost index under clause (iv).
                            ``(iv)  Cost index.--The Secretary, in 
                        consultation with the Secretary of Health and 
                        Human Services, shall before January 1, 1997, 
                        establish a cost index to measure increases in 
                        costs of nursing home and similar facilities. 
                        The Secretary may from time to time revise such 
                        index to the extent necessary to accurately 
                        measure increases or decreases in such costs.
                    ``(E) Aggregation rule.--For purposes of this 
                paragraph, all contracts issued with respect to the 
                same policyholder by the same company shall be treated 
                as 1 contract.
    ``(c) Qualified Issuer.--For purposes of this section, the term 
`qualified issuer' means any person which at the time of the issuance 
of a long-term care insurance contract--
            ``(1) uses a one year preliminary term method for setting 
        up reserves, and
            ``(2) maintains a capital ratio equal to not less than 25 
        percent of long-term care insurance premium receivables.
    ``(d) Special Rules for Tax Treatment of Policyholders.--For 
purposes of this title, solely with respect to the policyholder under 
any qualified long-term care insurance contract--
            ``(1) Aggregate payments in excess of limits.--If the 
        aggregate payments under all qualified long-term care insurance 
        contracts with respect to an policyholder for any period 
        (whether on a periodic basis or otherwise) exceed the dollar 
        amount in effect for such period under subsection (b)(5)--
                    ``(A) subsection (b)(5) shall not apply for such 
                period, and
                    ``(B) such payments shall be treated as made for 
                qualified long-term care services only if made with 
                respect to such services provided during such period.
            ``(2) Assignment or pledge.--Such contract shall not be 
        treated as a qualified long-term care insurance contract during 
        any period on or after the date on which the contract (or any 
        portion thereof) is assigned or pledged as collateral for a 
        loan.
    ``(e) Treatment of Coverage as Part of a Life Insurance Contract.--
Except as provided in regulations, in the case of coverage of qualified 
long-term care services provided as part of a life insurance contract, 
the requirements of this section shall apply as if the portion of the 
contract providing such coverage was a separate contract.
    ``(f) Qualified Long-Term Care Services.--For purposes of this 
section--
            ``(1) In general.--The term `qualified long-term care 
        services' has the meaning given such term by section 213(g).
            ``(2) Recertification.--If an individual has been certified 
        as a functionally impaired individual under section 
        213(g)(2)(A), services shall not be treated as qualified long-
        term care services with respect to the individual unless such 
        individual is recertified no less frequently than annually as a 
        functionally impaired individual in the same manner as under 
        such section, except that such recertification may be made by 
        any licensed health care practitioner (as defined in section 
        213(g)(4)), other than a relative (as defined by section 
        213(g)(5)) of such individual.
    ``(g) Continuation Coverage Excise Tax Not To Apply.--Section 4980B 
shall not apply to--
            ``(1) qualified long-term care insurance contracts, or
            ``(2) plans described in subsection (a)(2).
    ``(h) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out the requirements of this section, 
including regulations to prevent the avoidance of this section by 
providing qualified long-term care services under a life insurance 
contract.''.
    (b) Clerical Amendment.--The table of sections for chapter 79 is 
amended by inserting after the item relating to section 7702A the 
following new item:

                              ``Sec. 7702B. Treatment of long-term care 
                                        insurance or plans.''

SEC. 2203. EFFECTIVE DATES.

    (a) Section 2201.--The amendments made by section 2201 shall apply 
to taxable years beginning after December 31, 1994.
    (b) Section 2202.--The amendments made by section 2202 shall apply 
to contracts issued after December 31, 1994.
    (c) Transition Rule.--If, after the date of the enactment of this 
Act and before January 1, 1995, a contract providing coverage for 
services which are similar to qualified long-term care services (as 
defined in section 213(g) of the Internal Revenue Code of 1986) and 
issued on or before January 1, 1994, is exchanged for a qualified long-
term care insurance contract (as defined in section 7702B(b) of such 
Code), such exchange shall be treated as an exchange to which section 
1035 of such Code applies.

                PART II--CONSUMER PROTECTION PROVISIONS

SEC. 2301. POLICY REQUIREMENTS.

    (a) In General.--Section 7702B (as added by section 2202) is 
amended by redesignating subsection (h) as subsection (i) and by 
inserting after subsection (g) the following new subsection:
    ``(h) Consumer Protection Provisions.--
            ``(1) In general.--The requirements of this subsection are 
        met with respect to any contract if any long-term care 
        insurance policy issued under the contract meets--
                    ``(A) the requirements of the model regulation and 
                model Act described in paragraph (2),
                    ``(B) the disclosure requirement of paragraph (3),
                    ``(C) the requirements relating to 
                nonforfeitability under paragraph (4), and
                    ``(D) the requirements relating to rate 
                stabilization under paragraph (5).
            ``(2) Requirements of model regulation and act.--
                    ``(A) In general.--The requirements of this 
                paragraph are met with respect to any policy if such 
                policy meets--
                            ``(i) Model regulation.--The following 
                        requirements of the model regulation:
                                    ``(I) Section 7A (relating to 
                                guaranteed renewal or 
                                noncancellability), and the 
                                requirements of section 6B of the model 
                                Act relating to such section 7A.
                                    ``(II) Section 7B (relating to 
                                prohibitions on limitations and 
                                exclusions).
                                    ``(III) Section 7C (relating to 
                                extension of benefits).
                                    ``(IV) Section 7D (relating to 
                                continuation or conversion of 
                                coverage).
                                    ``(V) Section 7E (relating to 
                                discontinuance and replacement of 
                                policies).
                                    ``(VI) Section 8 (relating to 
                                unintentional lapse).
                                    ``(VII) Section 9 (relating to 
                                disclosure), other than section 9F 
                                thereof.
                                    ``(VIII) Section 10 (relating to 
                                prohibitions against post-claims 
                                underwriting).
                                    ``(IX) Section 11 (relating to 
                                minimum standards).
                                    ``(X) Section 12 (relating to 
                                requirement to offer inflation 
                                protection), except that any 
                                requirement for a signature on a 
                                rejection of inflation protection shall 
                                permit the signature to be on an 
                                application or on a separate form.
                                    ``(XI) Section 23 (relating to 
                                prohibition against preexisting 
                                conditions and probationary periods in 
                                replacement policies or certificates).
                            ``(ii) Model act.--The following 
                        requirements of the model Act:
                                    ``(I) Section 6C (relating to 
                                preexisting conditions).
                                    ``(II) Section 6D (relating to 
                                prior hospitalization).
                    ``(B) Definitions.--For purposes of this 
                paragraph--
                            ``(i) Model provisions.--The terms `model 
                        regulation' and `model Act' mean the long-term 
                        care insurance model regulation, and the long-
                        term care insurance model Act, respectively, 
                        promulgated by the National Association of 
                        Insurance Commissioners (as adopted in January 
                        of 1993).
                            ``(ii) Coordination.--Any provision of the 
                        model regulation or model Act listed under 
                        clause (i) or (ii) of subparagraph (A) shall be 
                        treated as including any other provision of 
                        such regulation or Act necessary to implement 
                        the provision.
            ``(3) Tax disclosure requirement.--The requirement of this 
        paragraph is met with respect to any policy if such policy 
        meets the requirements of section 4980D(d)(1).
            ``(4) Nonforfeiture requirements.--
                    ``(A) In general.--The requirements of this 
                paragraph are met with respect to any level premium 
                long-term care insurance policy, if the issuer of such 
                policy offers to the policyholder, including any group 
                policyholder, a nonforfeiture provision.
                    ``(B) Requirements of provision.--The nonforfeiture 
                provision required under subparagraph (A) shall meet 
                the following requirements:
                            ``(i) The nonforfeiture provision shall be 
                        appropriately captioned.
                            ``(ii) The nonforfeiture provision shall 
                        provide for a benefit available in the event of 
                        a default in the payment of any premiums and 
                        the amount of the benefit may be adjusted 
                        subsequent to being initially granted only as 
                        necessary to reflect changes in claims, 
                        persistency, and interest as reflected in 
                        changes in rates for premium paying policies 
                        approved by the Secretary for the same policy 
                        form.
                            ``(iii) The nonforfeiture provision shall 
                        provide at least one of the following:
                                    ``(I) Reduced paid-up insurance.
                                    ``(II) Extended term insurance.
                                    ``(III) Shortened benefit period.
                                    ``(IV) Other similar offerings 
                                approved by the Secretary.
            ``(5) Rate stabilization.--
                    ``(A) In general.--The requirements of this 
                paragraph are met with respect to any long-term care 
                insurance policy, including any group master policy, 
                if--
                            ``(i) such policy contains the minimum rate 
                        guarantees specified in subparagraph (B), and
                            ``(ii) the issuer of such policy meets the 
                        requirements specified in subparagraph (C).
                    ``(B) Minimum rate guarantees.--The minimum rate 
                guarantees specified in this subparagraph are as 
                follows:
                            ``(i) Rates under the policy shall be 
                        guaranteed for a period of at least 3 years 
                        from the date of issue of the policy.
                            ``(ii) After the expiration of the 3-year 
                        period required under clause (i), any rate 
                        increase shall be guaranteed for a period of at 
                        least 2 years from the effective date of such 
                        rate increase.
                            ``(iii) In the case of any individual age 
                        75 or older who has maintained coverage under a 
                        long-term care insurance policy for 10 years, 
                        rate increases under such policy shall not 
                        exceed 10 percent in any 12-month period.
                    ``(C) Increases in premiums.--The requirements 
                specified in this subparagraph are as follows:
                            ``(i) In general.--If an issuer of any 
                        long-term care insurance policy, including any 
                        group master policy, plans to increase the 
                        premium rates for a policy, such issuer shall, 
                        at least 90 days before the effective date of 
                        the rate increase, offer to each individual 
                        policyholder under such policy the option to 
                        remain insured under the policy at a reduced 
                        level of benefits which maintains the premium 
                        rate at the rate in effect on the day before 
                        the effective date of the rate increase.
                            ``(ii) Increases of more than 50 percent.--
                                    ``(I) In general.--If an issuer of 
                                any long-term care insurance policy, 
                                including any group master policy, 
                                increases premium rates for a policy by 
                                more than 50 percent in any 3-year 
                                period--
                                            ``(aa) in the case of a 
                                        group master long-term care 
                                        insurance policy, the issuer 
                                        shall discontinue issuing all 
                                        group master long-term care 
                                        insurance policies in any State 
                                        in which the issuer issues such 
                                        policy for a period of 2 years 
                                        from the effective date of such 
                                        premium increase; and
                                            ``(bb) in the case of an 
                                        individual long-term care 
                                        insurance policy, the issuer 
                                        shall discontinue issuing all 
                                        individual long-term care 
                                        policies in any State in which 
                                        the issuer issues such policy 
                                        for a period of 2 years from 
                                        the effective date of such 
                                        premium increase.
                                    ``(II) Applicability.--Subclause 
                                (I) shall apply to any issuer of long-
                                term care insurance policies or any 
                                other person that purchases or 
                                otherwise acquires any long-term care 
                                insurance policies from another issuer 
                                or person.
                    ``(D) Modifications or waivers of requirements.--
                The Secretary may modify or waive any of the 
                requirements under this paragraph if--
                            ``(i) such requirements will adversely 
                        effect an issuer's solvency;
                            ``(ii) such modification or waiver is 
                        required for the issuer to meet other State or 
                        Federal requirements;
                            ``(iii) medical developments, new disabling 
                        diseases, changes in long-term care delivery, 
                        or a new method of financing long-term care 
                        will result in changes to mortality and 
                        morbidity patterns or assumptions;
                            ``(iv) judicial interpretation of a 
                        policy's benefit features results in unintended 
                        claim liabilities; or
                            ``(v) in the case of a purchase or other 
                        acquisition of long-term care insurance 
                        policies of an issuer or other person, the 
                        continued sale of other long-term care 
                        insurance policies by the purchasing issuer or 
                        person is in the best interests of individual 
                        consumers.
            ``(6) Long-term care insurance policy defined.--For 
        purposes of this subsection, the term `long-term care insurance 
        policy' has the meaning given such term by section 4980D(e).''.
    (b) Conforming Amendment.--Section 7702B(b)(1)(B) (as added by 
section 2202) is amended by inserting ``and of subsection (h)'' after 
``and (4)''.

SEC. 2302. ADDITIONAL REQUIREMENTS FOR ISSUERS OF LONG-TERM CARE 
              INSURANCE POLICIES.

    (a) In General.--Chapter 43, as amended by section 2403, is amended 
by adding at the end the following new section:

``SEC. 4980D. FAILURE TO MEET REQUIREMENTS FOR LONG-TERM CARE INSURANCE 
              POLICIES.

    ``(a) General Rule.--There is hereby imposed on any person failing 
to meet the requirements of subsection (c) or (d) a tax in the amount 
determined under subsection (b).
    ``(b) Amount of Tax.--
            ``(1) In general.--The amount of the tax imposed by 
        subsection (a) shall be $100 per policy for each day any 
        requirements of subsection (c), (d), or (e) are not met with 
        respect to each long-term care insurance policy.
            ``(2) Waiver.--In the case of a failure which is due to 
        reasonable cause and not to willful neglect, the Secretary may 
        waive part or all of the tax imposed by subsection (a) to the 
        extent that payment of the tax would be excessive relative to 
        the failure involved.
    ``(c) Additional Responsibilities.--The requirements of this 
subsection are as follows:
            ``(1) Requirements of model provisions.--
                    ``(A) Model regulation.--The following requirements 
                of the model regulation must be met:
                            ``(i) Section 13 (relating to application 
                        forms and replacement coverage).
                            ``(ii) Section 14 (relating to reporting 
                        requirements), except that the issuer shall 
                        also report at least annually the number of 
                        claims denied during the reporting period for 
                        each class of business (expended as a 
                        percentage of claims denied), other than claims 
                        denied for failure to meet the waiting period 
                        or because of any applicable pre-existing 
                        condition.
                            ``(iii) Section 20 (relating to filing 
                        requirements for marketing).
                            ``(iv) Section 21 (relating to standards 
                        for marketing), including inaccurate completion 
                        of medical histories, other than section 21C(1) 
                        and 21C(6) thereof, except that--
                                    ``(I) in addition to such 
                                requirements, no person shall, in 
                                selling or offering to sell a long-term 
                                care insurance policy, misrepresent a 
                                material fact; and
                                    ``(II) no such requirements shall 
                                include a requirement to inquire or 
                                identify whether a prospective 
                                applicant or enrollee for long-term 
                                care insurance has accident and 
                                sickness insurance.
                            ``(v) Section 22 (relating to 
                        appropriateness of recommended purchase).
                            ``(vi) Section 24 (relating to standard 
                        format outline of coverage).
                            ``(vii) Section 25 (relating to requirement 
                        to deliver shopper's guide).
                    ``(B) Model act.--The following requirements of the 
                model Act must be met:
                            ``(i) Section 6F (relating to right to 
                        return), except that such section shall also 
                        apply to denials of applications and any refund 
                        shall be made within 30 days of the return or 
                        denial.
                            ``(ii) Section 6G (relating to outline of 
                        coverage).
                            ``(iii) Section 6H (relating to 
                        requirements for certificates under group 
                        plans).
                            ``(iv) Section 6I (relating to policy 
                        summary).
                            ``(v) Section 6J (relating to monthly 
                        reports on accelerated death benefits).
                            ``(vi) Section 7 (relating to 
                        incontestability period).
                    ``(C) Definitions.--For purposes of this paragraph, 
                the terms `model regulation' and `model Act' have the 
                meanings given such terms by section 7702B(h)(2)(B).
            ``(2) Delivery of policy.--If an application for a long-
        term care insurance policy (or for a certificate under a group 
        long-term care insurance policy) is approved, the issuer shall 
        deliver to the applicant (or policyholder or certificate-
        holder) the policy (or certificate) of insurance not later than 
        30 days after the date of the approval.
            ``(3) Information on denials of claims.--If a claim under a 
        long-term care insurance policy is denied, the issuer shall, 
        within 60 days of the date of a written request by the 
        policyholder or certificate-holder (or representative)--
                    ``(A) provide a written explanation of the reasons 
                for the denial, and
                    ``(B) make available all information directly 
                relating to such denial.
    ``(d) Disclosure.--The requirements of this subsection are met if 
either of the following statements, whichever is applicable, is 
prominently displayed on the front page of any long-term care insurance 
policy and in the outline of coverage required under subsection 
(c)(1)(B)(ii):
            ``(1) A statement that: `This policy is intended to be a 
        qualified long-term care insurance contract under section 
        7702B(b) of the Internal Revenue Code of 1986.'.
            ``(2) A statement that: `This policy is not intended to be 
        a qualified long-term care insurance contract under section 
        7702B(b) of the Internal Revenue Code of 1986.'.
    ``(e) Long-Term Care Insurance Policy Defined.--For purposes of 
this section, the term `long-term care insurance policy' means any 
product which is advertised, marketed, or offered as long-term care 
insurance.''.
    (b) Conforming Amendment.--The table of sections for chapter 43, as 
amended by section 2403, is amended by adding at the end the following 
new item:

                              ``Sec. 4980D. Failure to meet 
                                        requirements for long-term care 
                                        insurance policies.''.

SEC. 2303. COORDINATION WITH STATE REQUIREMENTS.

    Nothing in this subtitle shall be construed as preventing a State 
from applying standards that provide greater protection of 
policyholders of long-term care insurance policies (as defined in 
section 4980D(e) of the Internal Revenue Code of 1986).

SEC. 2304. UNIFORM LANGUAGE AND DEFINITIONS.

    (a) In General.--The National Association of Insurance 
Commissioners shall not later than January 1, 1995, promulgate 
standards for the use of uniform language and definitions in long-term 
care insurance policies (as defined in section 4980D(e) of the Internal 
Revenue Code 1986).
    (b) Variations.--Standards under subsection (a) may permit the use 
of nonuniform language to the extent required to take into account 
differences among States in the licensing of nursing facilities and 
other providers of long-term care.

SEC. 2305. EFFECTIVE DATES.

    (a) Section 2301.--The amendments made by section 2301 shall apply 
to contracts issued after December 31, 1994. The provisions of section 
2203(c) of this Act shall apply to such contracts.
    (b) Section 2302.--The amendments made by section 2302 shall apply 
to actions taken after December 31, 1994.

                   Subtitle D--Enforcement Provisions

                       PART I--GENERAL PROVISIONS

SEC. 2401. UNIVERSAL COVERAGE.

    (a) Required Reporting.--
            (1) In general.--Section 1144 of the Social Security Act 
        (42 U.S.C. 1320b-14) is amended to read as follows:

                 ``health insurance coverage data bank

    ``Sec. 1144. (a) Establishment of Data Bank.--The Secretary shall 
establish a Health Insurance Coverage Data Bank (hereafter in this 
section referred to as the `Data Bank') to--
            ``(1) further the purposes of subtitle F of title I of the 
        Health Equity and Access Reform Today Act of 1993,
            ``(2) further the purposes of section 1862(b) in the 
        identification of, and collection from, third parties 
        responsible for payment for health care items and services 
        furnished to medicare beneficiaries, and
            ``(3) assist in the identification of, and the collection 
        from, third parties responsible for the reimbursement of costs 
        incurred by any State plan under title XIX with respect to 
        medicaid beneficiaries, upon request by the State agency 
        described in section 1902(a)(5) administering such plan.
    ``(b) Information in Data Bank.--
            ``(1) In general.--The Data Bank shall contain information 
        obtained pursuant to section 6103(l)(12) of the Internal 
        Revenue Code of 1986 and subsection (c).
            ``(2) Disclosure of information in data bank.--The 
        Secretary is authorized until September 30, 1998--
                    ``(A) (subject to the restriction in subparagraph 
                (D)(i) of section 6103(l)(12) of the Internal Revenue 
                Code of 1986) to disclose any information in the Data 
                Bank obtained pursuant to such section solely for the 
                purposes of such section,
                    ``(B) (subject to the restriction in subsection 
                (c)(5)) to disclose any other information in the Data 
                Bank to any State agency described in section 
                1902(a)(5), employer, or qualified health plan solely 
                for the purposes described in subsection (a), and
                    ``(C) to disclose any other information in the Data 
                Bank to the Secretary of the Treasury for the purpose 
                of carrying out the purposes of section 5000A of the 
                Internal Revenue Code of 1986.
    ``(c) Requirement To Report Information.--
            ``(1) Reporting requirement.--
                    ``(A) In general.--Any employer described in 
                paragraph (2), any qualified health plan in the case of 
                individuals enrolling in non-employer-provided plans, 
                and any governmental or nongovernmental official 
                responsible for any equivalent health care program (as 
                defined in section 1601(7) of the Health Equity and 
                Access Reform Today Act of 1993 shall report to the 
                Secretary (in such form and manner as the Secretary 
                determines will minimize the burden of such reporting) 
                with respect to each individual the information 
                required under paragraph (3) for each applicable 
                calendar year.
                    ``(B) Special rule.--To the extent a qualified 
                health plan provides information required under 
                paragraph (3) in a form and manner specified by the 
                Secretary (in consultation with the Secretary of Labor) 
                on behalf of an employer in accordance with section 
                101(f) of the Employee Retirement Income Security Act 
                of 1974, the employer has complied with the reporting 
                requirement under subparagraph (A) with respect to the 
                reporting of such information.
                    ``(C) Applicable year.--For purposes of this 
                paragraph, the term `applicable calendar year' means 
                any calendar year beginning after 1994, and before the 
                calendar year with respect to which the Secretary makes 
                a determination that the health care data interchange 
                system established under subtitle B of title III of the 
                Health Equity and Access Reform Today Act of 1993 is 
                providing the information necessary to meet the 
                purposes described in subsection (a).
            ``(2) Employer described.--
                    ``(A) In general.--An employer is described in this 
                paragraph if such employer has, or contributes to, a 
                qualified health plan, with respect to which at least 1 
                employee of such employer is an electing individual.
                    ``(B) Electing individual.--For purposes of this 
                paragraph, the term `electing individual' means an 
                individual associated or formerly associated with the 
                employer in a business relationship who elects coverage 
                under the employer's qualified health plan.
                    ``(C) Certain individuals excluded.--For purposes 
                of this paragraph, an individual providing service 
                referred to in section 3121(a)(7)(B) of the Internal 
                Revenue Code of 1986 shall not be considered an 
                employee or electing individual with respect to an 
                employer.
            ``(3) Information required.--For purposes of paragraph (1), 
        each employer, qualified health plan, or Secretary shall 
        provide the following information:
                    ``(A) The name and TIN of the individual.
                    ``(B) The type of qualified health plan coverage 
                (single or family) elected by the individual.
                    ``(C) The name, address, and identifying number of 
                the qualified health plan elected by such individual.
                    ``(D) The name and TIN of each other individual 
                covered under the qualified health plan pursuant to 
                such election.
                    ``(E) The period during which such coverage is 
                elected.
                    ``(F) The name, address, and TIN of the employer or 
                qualified health plan.
            ``(4) Time of filing.--For purposes of determining the date 
        for filing the report under paragraph (1), such report shall be 
        treated as a statement described in section 6051(d) of the 
        Internal Revenue Code of 1986.
            ``(5) Limits on disclosure of information reported.--
                    ``(A) In general.--The disclosure of the 
                information reported under paragraph (1) shall be 
                restricted by the Secretary under rules similar to the 
                rules of subsections (a) and (p) of section 6103 of the 
                Internal Revenue Code of 1986.
                    ``(B) Penalty for unauthorized willful disclosure 
                of information.--The unauthorized disclosure of any 
                information reported under paragraph (1) shall be 
                subject to the penalty described in paragraph (1), (2), 
                (3), or (4) of section 7213(a) of such Code.
            ``(6) Penalty for failure to report.--In the case of the 
        failure of an employer (other than a Federal or other 
        governmental entity) or a qualified health plan to report under 
        paragraph (1)(A) with respect to each individual, the Secretary 
        shall impose a penalty as described in part II of subchapter B 
        of chapter 68 of the Internal Revenue Code of 1986.
    ``(d) Fees for Data Bank Services.--The Secretary shall establish 
fees for services provided under this section which shall remain 
available, without fiscal year limitation, to the Secretary to cover 
the administrative costs to the Data Bank of providing such services.
    ``(e) Definitions.--In this section:
            ``(1) Medicare beneficiary.--The term `medicare 
        beneficiary' means an individual entitled to benefits under 
        part A, or enrolled under part B, of title XVIII, but does not 
        include such an individual enrolled in part A under section 
        1818.
            ``(2) Medicaid beneficiary.--The term `medicaid 
        beneficiary' means an individual entitled to benefits under a 
        State plan for medical assistance under title XIX (including a 
        State plan operating under a statewide waiver under section 
        1115).
            ``(3) Qualified health plan.--The term `qualified health 
        plan' shall have the meaning given to such term by section 
        1601(20) of the Health Equity and Access Reform Today Act of 
        1993.
            ``(4) TIN.--The term `TIN' shall have the meaning given to 
        such term by section 7701(a)(41) of such Code.''.
            (2) Medicaid conforming amendments.--Section 
        1902(a)(25)(A)(i) of the Social Security Act (42 U.S.C. 
        1396a(a)(25)(A)(i)) is amended by striking ``Medicare and 
        Medicaid Coverage Data Bank'' and inserting ``Health Insurance 
        Coverage Data Bank''.
            (3) Conforming amendments to erisa.--Section 101(f) of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1021(f)) is amended--
                    (A) by striking ``(as added by section 13581 of the 
                Omnibus Budget Reconciliation Act of 1993)'' in 
                paragraph (1)(A), and
                    (B) by striking ``Medicare and Medicaid Coverage 
                Data Bank'' in paragraph (1)(A)(i) and inserting 
                ``Health Insurance Coverage Data Bank'',
            (4) Effective date.--The amendments made by this subsection 
        shall take effect on and after the first January 1 following 
        the deadline specified in section 1401(c)(2) of this Act.
    (b) Enforcement.--
            (1) In general.--Chapter 47 (relating to excise taxes on 
        qualified pension, etc. plans) is amended by inserting after 
        section 5000 the following new section:

``SEC. 5000A. FAILURE OF INDIVIDUALS WITH RESPECT TO HEALTH INSURANCE.

    ``(a) General Rule.--There is hereby imposed a tax on the failure 
of any individual to comply with the requirements of section 1501 of 
the Health Equity and Access Reform Today Act of 1993.
    ``(b) Amount of Tax.--The amount of tax imposed by subsection (a) 
with respect to any calendar year shall be equal to 120 percent of the 
applicable dollar limit for such year for such individual (within the 
meaning of section 91(b)(2) and determined on an annual basis).
    ``(c) Limitation on Tax.--
            ``(1) Tax not to apply where failures corrected within 30 
        days.--No tax shall be imposed by subsection (a) with respect 
        to any failure if--
                    ``(A) such failure was due to reasonable cause and 
                not to willful neglect, and
                    ``(B) such failure is corrected during the 30-day 
                period (or such period as the Secretary may determine 
                appropriate) beginning on the 1st date any of the 
                individuals on whom the tax is imposed knew, or 
                exercising reasonable diligence would have known, that 
                such failure existed.
            ``(2) Waiver by secretary.--In the case of a failure which 
        is due to reasonable cause and not to willful neglect, the 
        Secretary may waive part or all of the tax imposed by 
        subsection (a) to the extent that the payment of such tax would 
        be excessive relative to the failure involved.
            ``(3) Low-assistance exemption.--No tax shall be imposed by 
        subsection (a) on any individual who would have received a 
        voucher for the calendar year under section 1003, but for a 
        decrease in the phase-in eligibility percentage provided under 
        subsection (d)(5)(B) thereof.''.
            (2) Clerical amendment.--The table of sections for such 
        chapter 47 is amended by adding at the end the following new 
        item:

                              ``Sec. 5000A. Failure of individuals with 
                                        respect to health insurance.''.
            (3) Effective date.--The amendments made by this section 
        shall take effect on January 1, 2005.

SEC. 2402. ROLE OF EMPLOYERS AND LARGE EMPLOYER PLANS.

    (a) In General.--Chapter 47 (relating to excise taxes on qualified 
pension, etc. plans), as amended by section 2401(b)(1), is amended by 
inserting after section 5000A the following new section:

``SEC. 5000B. FAILURE OF EMPLOYERS OR LARGE EMPLOYER PLANS WITH RESPECT 
              TO HEALTH INSURANCE.

    ``(a) General Rule.--There is hereby imposed a tax on the failure 
of any person or plan to comply with the requirements of section 1004 
or section 1201 of the Health Equity and Access Reform Today Act of 
1993 with respect to any employee of the person or enrollee of the 
plan.
    ``(b) Amount of Tax.--
            ``(1) In general.--The amount of the tax imposed by 
        subsection (a) on any failure with respect to an employee or 
        enrollee shall be $100 for each day in the noncompliance period 
        with respect to such failure.
            ``(2) Noncompliance period.--For purposes of this section, 
        the term `noncompliance period' means, with respect to any 
        failure, the period--
                    ``(A) beginning on the date such failure first 
                occurs, and
                    ``(B) ending on the date such failure is corrected.
            ``(3) Correction.--A failure of a person or plan to comply 
        with the requirements of section 1004 or section 1201 of the 
        Health Equity and Access Reform Today Act of 1993 with respect 
        to any employee of the person or enrollee of the plan shall be 
        treated as corrected if--
                    ``(A) such failure is retroactively undone to the 
                extent possible, and
                    ``(B) the employee or enrollee is placed in a 
                financial position which is as good as such employee or 
                enrollee would have been in had such failure not 
                occurred.
    ``(c) Limitations on Amount of Tax.--
            ``(1) Tax not to apply to failures corrected within 30 
        days.--No tax shall be imposed by subsection (a) on any failure 
        if--
                    ``(A) such failure was due to reasonable cause and 
                not to willful neglect, and
                    ``(B) such failure is corrected during the 30-day 
                period (or such period as the Secretary may determine 
                appropriate) beginning on the first date any of the 
                persons referred to in subsection (d) knew, or 
                exercising reasonable diligence would have known, that 
                such failure existed.
            ``(2) Waiver by secretary.--In the case of a failure which 
        is due to reasonable cause and not to willful neglect, the 
        Secretary may waive part or all of the tax imposed by 
        subsection (a) to the extent that the payment of such tax would 
        be excessive relative to the failure involved.
    ``(d) Liability for Tax.--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, the following shall be liable for the tax imposed 
        by subsection (a) on a failure:
                    ``(A) In the case of a health plan other than a 
                multiemployer plan, the employer.
                    ``(B) In the case of a multiemployer plan, the 
                plan.
                    ``(C) Each person who is responsible (other than in 
                a capacity as an employee) for administering or 
                providing benefits under the health plan and whose act 
                or failure to act caused (in whole or in part) the 
                failure.
            ``(2) Special rules for persons described in paragraph 
        (1)(c).--A person described in subparagraph (C) (and not in 
        subparagraphs (A) and (B)) of paragraph (1) shall be liable for 
        the tax imposed by subsection (a) on any failure only if such 
        person assumed (under a legally enforceable written agreement) 
        responsibility for the performance of the act to which the 
        failure relates.''
    (b) Clerical Amendment.--The table of sections for chapter 47, as 
amended by section 2401(b)(2), is amended by adding at the end the 
following new item:

                              ``Sec. 5000B. Failure of employers and 
                                        large employer plans with 
                                        respect to health insurance.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on or after the first January 1 following the deadline specified 
in section 1401(c)(2).

SEC. 2403. ENFORCEMENT BEFORE STATE CERTIFICATION PROGRAMS OR STANDARDS 
              IN PLACE.

    (a) Enforcement by Excise Tax for Insurers.--Chapter 43 (relating 
to qualified pension, etc., plans) is amended by adding at the end the 
following new section:

``SEC. 4980C. FAILURE OF INSURER OR LARGE EMPLOYER PLAN TO COMPLY WITH 
              CERTAIN PLAN STANDARDS.

    ``(a) Imposition of Tax.--
            ``(1) In general.--There is hereby imposed a tax on the 
        failure of an insurer or of a sponsor of a large employer plan 
        to comply with the requirements applicable to such insurer or 
        plan under section 1103(c) or subparagraph (A) or (B) of 
        section 1202(a)(2) of the Health Equity and Access Reform Today 
        Act of 1993.
            ``(2) Exception.--Paragraph (1) shall not apply to a 
        failure by an insurer in a State if the Secretary of Health and 
        Human Services determines that the State has in effect a 
        regulatory enforcement mechanism that provides adequate 
        sanctions with respect to such a failure by such an insurer.
    ``(b) Amount of Tax.--
            ``(1)  In general.--Subject to paragraph (2), the amount of 
        the tax imposed by subsection (a) shall be $100 for each day 
        during which such failure persists for each individual to which 
        such failure relates. A rule similar to the rule of section 
        4980B(b)(3) shall apply for purposes of this section.
            ``(2) Limitation.--The amount of the tax imposed by 
        subsection (a) for an insurer or plan sponsor with respect to a 
        health plan shall not exceed 25 percent of the amounts received 
        under the plan for coverage during the period such failure 
        persists.
    ``(c) Liability for Tax.--The tax imposed by this section shall be 
paid by the insurer or plan sponsor.
    ``(d) Limitations on Amount of Tax.--
            ``(1) Tax not to apply to failures corrected within 30 
        days.--No tax shall be imposed by subsection (a) on any failure 
        if--
                    ``(A) such failure was due to reasonable cause and 
                not to willful neglect, and
                    ``(B) such failure is corrected during the 30-day 
                period (or such period as the Secretary may determine 
                appropriate) beginning on the first date the insurer or 
                plan sponsor knows, or exercising reasonable diligence 
                could have known, that such failure existed.
            ``(2) Waiver by secretary.--In the case of a failure which 
        is due to reasonable cause and not to willful neglect, the 
        Secretary may waive part or all of the tax imposed by 
        subsection (a) to the extent that the payment of such tax would 
        be excessive relative to the failure involved.
    ``(e) Definitions.--For purposes of this section, the terms `health 
plan', `insurer', and `self-insured health plan' have the meanings 
given such terms in section 1601 of the Health Equity and Access Reform 
Today Act of 1993.''.
    (b) Clerical Amendment.--The table of sections for chapter 43 is 
amended by adding at the end the following new item:

                              ``Sec. 4980C. Failure of insurer or large 
                                        employer plan to comply with 
                                        certain plan standards.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 2404. DISCLOSURE OF INFORMATION REGARDING RECONCILIATION OF 
              ASSISTANCE.

    Paragraph (7) of section 6103(l) (relating to disclosure of return 
information to Federal, State, and local agencies administering certain 
programs under the Social Security Act, the Food Stamp Act of 1977, or 
title 38, United States Code, or certain housing assistance programs) 
is amended--
            (1) by striking the semicolon at the end of clauses (i), 
        (ii), (iii), (iv), (v), and (vi) and inserting a period,
            (2) by striking ``; and'' at the end of the matter 
        following clause (viii) and inserting a period, and
            (3) by adding at the end (following the matter following 
        clause (ix)) the following new clause:
                            ``(x) voucher assistance provided under 
                        section 1003 of the Health Equity and Access 
                        Reform Today Act of 1993.''

                 PART II--OTHER ENFORCEMENT PROVISIONS

SEC. 2411. CONFORMING ERISA CHANGES REGARDING ENFORCEMENT OF EMPLOYER 
              FAILURES.

    (a) In General.--Section 502(a) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1132(a)) is amended by striking ``or'' 
at the end of paragraph (5), by striking the period at the end of 
paragraph (6) and inserting ``; or'', and by inserting at the end the 
following new paragraph:
            ``(7) by an employee of any person, or by the Secretary--
                    ``(A) for the relief provided in subsection (c)(4), 
                or
                    ``(B) to enjoin any act or practice which violates 
                section 1004 of the Health Equity and Access Reform 
                Today Act of 1993, or to obtain other appropriate 
                equitable relief to redress such violation or to 
                enforce the provisions of such section.''.
    (b) Civil Penalty.--Section 502(c) of such Act (29 U.S.C. 1132(c)) 
is amended by adding at the end the following new paragraph:
            ``(4)(A) The Secretary may assess a civil penalty against 
        any employer who fails to meet the requirements of section 1004 
        of the Health Equity and Access Reform Today Act of 1993 in an 
        amount not to exceed $100 per day from the date of the failure. 
        Such penalty shall not be assessed if a tax has been imposed 
        under section 5000B with respect to the failure.
            ``(B) No penalty shall be imposed under subparagraph (A) on 
        any failure during any period for which it is established to 
        the satisfaction of the Secretary that the employer did not 
        know, or exercising reasonable diligence would not have known, 
        that such failure existed.
            ``(C) No penalty shall be imposed by subparagraph (A) on 
        any failure if--
                    ``(i) such failure was due to reasonable cause and 
                not to willful neglect, and
                    ``(ii) such failure is corrected during the 30-day 
                period beginning on the first date the employer knew, 
                or exercising reasonable diligence would have known, 
                that such failure existed.
            ``(D) In the case of a failure which is due to reasonable 
        cause and not to willful neglect, the Secretary may waive part 
        or all of the penalty imposed by subparagraph (A) to the extent 
        that the payment of such penalty would be excessive relative to 
        the failure involved.''.

SEC. 2412. EQUITABLE RELIEF REGARDING INSURERS FAILING TO COMPLY WITH 
              QUALIFIED HEALTH PLAN STANDARDS.

    (a) In General.--The Secretary of Labor may--
            (1) assess a civil penalty against any insurer who fails to 
        comply with the requirements applicable to the insurer under 
        subtitle B of title I of the Health Equity and Access Reform 
        Today Act of 1993 in an amount not to exceed $100 for each day 
        during which the failure persists, except that the aggregate 
        amount of the penalty with respect to any failure shall not 
        exceed 25 percent of the amounts received under the plan during 
        the period during which the failure persists, or
            (2) bring a civil action--
                    (A) to enjoin an insurer from any such failure, or
                    (B) to obtain other appropriate equitable relief to 
                address any such failure or to enforce the provisions 
                of such subtitle.
    (b) Exceptions to Penalty.--
            (1) In general.--The provisions of subparagraphs (B), (C), 
        and (D) of section 502(c)(4) of the Employee Retirement Income 
        Security Act of 1974 shall apply to any failure to which 
        subsection (a)(1) applies.
            (2) Exception.--Subsection (a)(1) shall not apply to a 
        failure by an insurer in a State if the Secretary of Health and 
        Human Services determines that the State has in effect a 
        regulatory enforcement mechanism that provides adequate 
        sanctions with respect to such a failure by such an insurer.
            (3) Coordination with tax.--No penalty shall be assessed 
        under subsection (a)(1) if a tax has been imposed under section 
        5000C with respect to the failure.
    (c) Applicable Rules.--The provisions of part 5 of title I of the 
Employee Retirement Income Security Act of 1974 shall apply to the 
extent necessary to effectively carry out, and enforce the requirements 
under, subsection (a).

            TITLE III--QUALITY ASSURANCE AND SIMPLIFICATION

                     Subtitle A--Quality Assurance

             PART I--STANDARDS AND MEASUREMENTS OF QUALITY

SEC. 3001. STANDARDS FOR QUALITY ASSURANCE AND PERFORMANCE MEASURES 
              PROGRAMS.

    (a) Development.--The Secretary, in consultation with relevant 
agencies (such as the Agency for Health Care Policy and Research and 
other agencies determined appropriate by the Secretary) and recognized 
private entities engaged in quality assurance activities related to 
health insurance (such as the Joint Commission on Accreditation of 
Health Care Organizations and the National Committee for Quality 
Assurance), shall develop and publish in the Federal Register standards 
that quality assurance programs must comply with. Such standards shall 
apply to all facilities, including network providers. Such standards 
may be annually modified if determined appropriate by the Secretary.
    (b) Quality Data.--
            (1) Requirement.--The Secretary shall ensure that the 
        standards developed under subsection (a) contain a requirement 
        that a qualified health plan annually provide quality data, 
        including information concerning treatment outcomes and 
        effectiveness under the plan, to the Secretary, the relevant 
        HCCA and to individuals enrolled in a qualified health plan.
            (2) Format.--The Secretary shall develop and publish in the 
        Federal Register a quality data format that a qualified health 
        plan must adhere to in providing quality data as required under 
        paragraph (1).
    (c) Performance Measures.--In developing the standards under 
subsection (a), the Secretary shall ensure that appropriate performance 
measures are established. Such measures shall be utilized by the Health 
Care Data Panel established under section 3214 as the basis upon which 
the specifications and requirements for information under subtitle B of 
this title will be developed.
    (d) Provider Risk Programs.--The Secretary shall ensure that the 
standards developed under subsection (a) contain a requirement that a 
qualified health plan provide for a provider risk program to prevent or 
provide early warning of practices that may result in injury.

SEC. 3002. NATIONAL HEALTH DATA SYSTEM.

    (a) Standardization of Information.--
            (1) In general.--The Secretary, in consultation with the 
        States, shall establish standards for the periodic provision by 
        qualified health plans of information under section 1118 to the 
        States and the auditing of the information so provided by the 
        Secretary.
            (2) Patient confidentiality.--The standards developed under 
        paragraph (1) shall be established in a manner that protects 
        the confidentiality of individual enrollees, but may provide 
        for the disclosure of information which discloses particular 
        providers within a qualified health plan.
    (b) Analysis of Information.--
            (1) In general.--The Secretary shall analyze the 
        information provided to the States under section 1118 with 
        respect to qualified health plans.
            (2) Central access.--The Secretary shall make available, in 
        a central location and consistent with subsection (a)(2), all 
        of such analyses.
            (3) Distribution of analyses.--The Secretary shall 
        distribute the analyses in a form, consistent with subsection 
        (a)(2), that reports, on a National, State and community basis, 
        the levels and trends of health care expenditures, the rates 
        and trends in the provision of individual procedures, and (to 
        the extent such procedures are priced separately) the price 
        levels and rates of price change for such procedures. The 
        reports shall include both aggregate and per capita measures 
        for areas and shall include comparative data for different 
        areas.
    (c) Distribution of Information.--
            (1) Annual report on expenditures.--The Secretary shall 
        publish annually (beginning with 1997) a report on expenditures 
        for procedures, volumes of procedures, and, to the extent such 
        procedures are priced separately, the prices of procedures. 
        Such report shall be distributed to each qualified health plan, 
        each purchasing group, each Governor, and each State 
        legislature.
            (2) Annual reports.--The Secretary shall publish an annual 
        report, based on analyses under this section, that identifies--
                    (A) procedures for which, as reflected in 
                variations in use or rates of increase, there appear to 
                be the greatest need to develop valid clinical 
                protocols for clinical decision-making and review,
                    (B) procedures for which, as reflected in price 
                variations and price inflation, there appear to be the 
                greatest need for strengthening competitive purchasing, 
                and
                    (C) States and localities for which, as reflected 
                in expenditure levels and rates of increase, there 
                appear to be the greatest need for additional cost 
                control measures.
            (3) Special distributions.--The Secretary may provide for 
        the distribution to--
                    (A) a qualified health plan of such information 
                relating to the plan as may be appropriate in order to 
                encourage the plan to improve its delivery of care, and
                    (B) business, consumer, and other groups and 
                individuals of such information as may improve their 
                ability to effect improvements in the outcomes, 
                quality, and efficiency of health services.
            (4) Access by agency for health care policy and research.--
        The Secretary shall make available to the Agency for Health 
        Care Policy and Research information obtained under this 
        section in a manner consistent with subsection (a)(2).

SEC. 3003. MEASURES OF QUALITY OF CARE OF SPECIALIZED CENTERS OF CARE.

    (a) Collection of Information.--The Secretary shall provide a 
process whereby a specialized center of care (as defined in subsection 
(d)) may submit to the Secretary, or such independent entity as the 
Secretary may designate, such clinical and other information bearing on 
the quality of care provided with respect to the covered items and 
services under section 1301 at the center as the Secretary may specify. 
Such information shall include sufficient information to take into 
account outcomes and the risk factors associated with individuals 
receiving care through the center. Such information shall be provided 
at such frequency (not less often than annually) as the Secretary 
specifies.
    (b) Measures of Quality.--Using information submitted under 
subsection (a) and information reported under section 3002, the 
Secretary shall--
            (1) analyze the performance of such centers with respect to 
        the quality of care provided,
            (2) rate the performance of such a center with respect to a 
        class of services relative to the performance of other 
        specialized centers of care and relative to the performance of 
        qualified health plans generally, and
            (3) publish such ratings.
    (c) Use of Service Mark for Specialized Centers of Care.--The 
Secretary may establish a service mark for specialized centers of care 
the performance of which has been rated under subsection (b). Such 
service mark shall be treated as if registered under the Trademark Act 
of 1946. For purposes of such Act, such service mark shall be deemed to 
be used in commerce. For purposes of this subsection, the ``Trademark 
Act of 1946'' refers to the Act entitled ``An Act to provide for the 
registration and protection of trademarks used in commerce, to carry 
out the provisions of international conventions, and for other 
purposes'', approved July 5, 1946 (15 U.S.C. 1051 et seq.).
    (d) Specialized Center of Care Defined.--As used in this section, 
the term ``specialized center of care'' means an institution or other 
organized system for the provision of specific services, which need not 
be multi-disciplinary, and does not include (except as the Secretary 
may provide) individual practitioners.

SEC. 3004. CLINICAL EVALUATIONS.

    (a) Establishment.--The Secretary shall examine the feasibility of 
creating an Agency for Clinical Evaluations (to be headed by an 
Administrator) under which the following responsibilities will be 
consolidated:
            (1) Responsibilities of the Administrator for Health Care 
        Policy and Research, under title IX of the Public Health 
        Service Act and under section 1142 of the Social Security Act.
            (2) Responsibilities of the Director of the National Center 
        for Health Statistics (under section 306 of the Public Health 
        Service Act).
            (3) Responsibilities of the Director of the Office of 
        Medical Applications of Research at the National Institutes of 
        Health.
            (4) Responsibilities of the Director of the Office of 
        Research and Demonstrations of the Health Care Financing 
        Administration, insofar as such responsibilities relate to 
        clinical evaluations.
    (b) Specific Duties.--In addition to carrying out subsection (a), 
the Secretary shall--
            (1) set priorities for the research community to strengthen 
        the research base;
            (2) support research and evaluation (both on a contract and 
        investigator-initiated basis) on medical effectiveness through 
        technology assessment, consensus development, outcomes research 
        practice guidelines, and other appropriate activities;
            (3) conduct effectiveness trials in collaboration with 
        medical specialty societies, medical educators, and qualified 
        health plans;
            (4) maintain a clearinghouse and other registries on 
        clinical trials and outcomes research data;
            (5) assure the systematic evaluation of existing as well as 
        new treatments and diagnostic technologies in a constant, 
        continuous effort to upgrade the knowledge base for clinical 
        decisionmaking and policy choice; and
            (6) design a computerized dissemination system for 
        providers to provide an interactive system of information on 
        outcomes research, practice guidelines, and other information.
    (c) Assistance.--The Secretary shall provide the Benefits 
Commission established under subtitle D of title I with such 
information, on evaluations related to the covered items and services 
under section 1301 and any other information developed in the scope of 
carrying out the responsibilities of the Secretary, as may be 
appropriate.
    (d) Cooperation with Other Agencies.--In carrying out 
responsibilities under this section, the Secretary shall cooperate and 
consult with the Director of the National Institutes of Health, the 
Commissioner of Food and Drugs, the Secretary of Veterans Affairs, and 
the heads of any other interested Federal department or agency.
    (e) Additional Authorization of Appropriations.--For purposes of 
carrying out this section, there are authorized to be appropriated 
$250,000,000 for each fiscal year (beginning with fiscal year 1995).

SEC. 3005. REPORT AND RECOMMENDATIONS ON ACHIEVING UNIVERSAL COVERAGE.

    (a) Factors Affecting Coverage.--
            (1) Collection of information.--The Secretary, on a 
        continuing basis, shall collect information concerning, and 
        analyze the number and characteristics of, eligible individuals 
        (as defined in subsection (c)) who are not enrolled with 
        qualified health plans compared to such number and 
        characteristics of individuals so enrolled. Such 
        characteristics shall include age, sex, race, ethnicity, family 
        status, employment status, whether the individual is an 
        eligible employee, income, health status, health risk factors, 
        geography, whether the individual resides in a rural or 
        medically underserved area, and such other factors as may 
        affect the election of an eligible individual to obtain health 
        insurance coverage.
            (2) Report.--Not later than April 1 of each year (beginning 
        with 1997), the Secretary shall prepare and submit to the 
        appropriate committees of Congress a report analyzing the 
        information collected under paragraph (1). Such report shall 
        include an description of the primary factors contributing to 
        lack of coverage of identifiable groups of eligible 
        individuals.
    (b) Recommendations for Increasing Coverage.--
            (1) In general.--Not later than January 1, 1998, the 
        Secretary shall prepare and submit to Congress recommendations 
        on the feasibility, cost-effectiveness, and the economic impact 
        of using different voluntary and other methods for increasing 
        the coverage of eligible individuals.
            (2) Individual mandate.--The Secretary shall specifically 
        make recommendations under paragraph (1) regarding establishing 
        a requirement that all eligible individuals obtain health 
        coverage through enrollment with a qualified health plan.
    (c) Eligible Individual Defined.--In this section, the term 
``eligible individual'' has the same meaning given such term by section 
1601(5).

SEC. 3006. MONITORING REINSURANCE MARKET.

    (a) In General.--The Secretary shall monitor the reinsurance market 
for qualified health plans.
    (b) Periodic Reports.--The Secretary shall periodically report to 
Congress respecting the availability of reinsurance for qualified 
health plans at reasonable rates and the impact of such availability on 
the establishment of new plans and on the financial solvency of current 
plans.

SEC. 3007. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated to the Benefits Commission 
established under subtitle D of title I for each of fiscal years 1995 
through 2001 such sums as may be necessary to carry out activities 
under this Act.

          PART II--AGENCY FOR HEALTH CARE POLICY AND RESEARCH

SEC. 3101. AGENCY FOR HEALTH CARE POLICY AND RESEARCH.

    Title IX of the Public Health Service Act (42 U.S.C. 299 et seq.) 
is amended--
            (1) in section 902(a) (42 U.S.C. 299a(a))--
                    (A) in the matter preceding paragraph (1), by 
                inserting after ``guideline development,'' the 
                following: ``effectiveness trials (in collaboration 
                with medical speciality societies and qualified health 
                plans under the Health Equity and Access Reform Today 
                Act of 1993),'';
                    (B) in paragraph (7), by striking ``and'' at the 
                end thereof;
                    (C) in paragraph (8), by striking the period and 
                inserting ``; and''; and
                    (D) by adding at the end thereof the following new 
                paragraph:
            ``(9) priorities that would enable the research community 
        to strengthen and expand the health care research base.'';
            (2) in section 902, by adding at the end thereof the 
        following new subsections:
    ``(f) Clearinghouse.--The Administrator shall establish within the 
Agency a clearinghouse, and such other registries as the Administrator 
determines are appropriate, to compile and make available information 
and research data concerning clinical trials undertaken under this 
title.
    ``(g) Fund Investigator.--The Administrator shall appoint an 
individual to serve as the fund investigator of the Agency. The fund 
investigator shall be responsible for initiating research, through 
grants or contracts under this title, with respect to the relationship 
between health care treatments and outcomes. The fund investigator 
shall be compensated in accordance with section 925(a)(2).''; and
            (3) in section 911(b)(2) (42 U.S.C. 299b-1(b)(2)), by 
        striking ``and medical review organizations'' and inserting ``, 
        medical review organizations, and qualified health plans under 
        the Health Equity and Access Reform Today Act of 1993''.

              PART III--NATIONAL FUND FOR MEDICAL RESEARCH

SEC. 3201. NATIONAL FUND FOR MEDICAL RESEARCH.

    (a) Designation of Overpayments and Contributions for the National 
Fund for Medical Research.--
            (1) In general.--Subchapter A of chapter 61 of the Internal 
        Revenue Code of 1986 (relating to returns and records) is 
        amended by adding at the end the following new part:

   ``PART IX--DESIGNATION OF OVERPAYMENTS AND CONTRIBUTIONS FOR THE 
                   NATIONAL FUND FOR MEDICAL RESEARCH

``Sec. 6097. Amounts for the National Fund for Medical Research.

``SEC. 6097. AMOUNTS FOR THE NATIONAL FUND FOR MEDICAL RESEARCH.

    ``(a) In General.--Every individual (other than a nonresident 
alien) may designate that--
            ``(1) a portion (not less than $1) of any overpayment of 
        the tax imposed by chapter 1 for the taxable year, and
            ``(2) a cash contribution (not less than $1),
be paid over to the National Fund for Medical Research. In the case of 
a joint return of a husband and wife, each spouse may designate one-
half of any such overpayment of tax (not less than $2).
    ``(b) Manner and Time of Designation.--Any designation under 
subsection (a) may be made with respect to any taxable year only at the 
time of filing the original return of the tax imposed by chapter 1 for 
such taxable year. Such designation shall be made either on the 1st 
page of the return or on the page bearing the taxpayer's signature.
    ``(c) Overpayments Treated as Refunded.--For purposes of this 
section, any overpayment of tax designated under subsection (a) shall 
be treated as being refunded to the taxpayer as of the last day 
prescribed for filing the return of tax imposed by chapter 1 
(determined with regard to extensions) or, if later, the date the 
return is filed.
    ``(d) Designated Amounts Not Deductible.--No amount designated 
pursuant to subsection (a) shall be allowed as a deduction under 
section 170 or any other section for any taxable year.
    ``(e) Termination.--This section shall not apply to taxable years 
beginning in a calendar year after a determination by the Secretary 
that the sum of all designations under subsection (a) for taxable years 
beginning in the second and third calendar years preceding the calendar 
year is less than $5,000,000.''.
            (2) Clerical amendment.--The table of parts for subchapter 
        A of chapter 61 of such Code is amended by adding at the end 
        the following new item:

                              ``Part IX. Designation of overpayments 
                                        and contributions for the 
                                        National Fund for Medical 
                                        Research.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after December 31, 1993.
    (b) Establishment of the National Fund for Medical Research.--
            (1) In general.--Subchapter A of chapter 98 of the Internal 
        Revenue Code of 1986 (relating to the trust fund code) is 
        amended by adding at the end the following new section:

``SEC. 9512. NATIONAL FUND FOR MEDICAL RESEARCH.

    ``(a) Creation of Fund.--There is established in the Treasury of 
the United States a fund to be known as the `National Fund for Medical 
Research', consisting of such amounts as may be credited or paid to 
such Fund as provided in this section or section 9602(b).
    ``(b) Transfers to Fund.--There is hereby transferred to the 
National Fund for Medical Research amounts equivalent to--
            ``(1) the amounts designated under section 6097 (relating 
        to designation of overpayments and contributions to the Fund), 
        and
            ``(2) amounts equivalent to the civil penalties imposed 
        under section 502(c)(4) of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1132(c)) and section 2412 of 
        the Health Equity and Access Reform Today Act of 1993.
    ``(c) Expenditures From Fund.--
            ``(1) In general.--The Secretary shall pay annually, within 
        30 days after the President signs an appropriations Act for the 
        Departments of Labor, Health and Human Services, and Education, 
        and related agencies, or by the end of the first quarter of the 
        fiscal year, to the Secretary of Health and Human Services on 
        behalf of the National Institutes of Health, an amount equal to 
        the amount in the National Fund for Medical Research at the 
        time of such payment, to carry out the purposes of section 404F 
        of the Public Health Service Act, less any administrative 
        expenses which may be paid under paragraph (2).
            ``(2) Administrative expenses.--Amounts in the National 
        Fund for Medical Research shall be available to pay the 
        administrative expenses of the Department of the Treasury 
        directly allocable to--
                    ``(A) modifying the individual income tax return 
                forms to carry out section 6097,
                    ``(B) carrying out this chapter with respect to 
                such Fund, and
                    ``(C) processing amounts received under section 
                6097 and transferring such amounts to such Fund.
    ``(d) Budget Treatment of Amounts in Fund.--The amounts in the 
National Fund for Medical Research shall be excluded from, and shall 
not be taken into account, for purposes of any budget enforcement 
procedure under the Congressional Budget Act of 1974 or the Balanced 
Budget and Emergency Deficit Control Act of 1985.''.
            (2) Clerical amendment.--The table of sections for 
        subchapter A of chapter 98 of the Internal Revenue Code of 1986 
        is amended by adding at the end the following new item:

                              ``Sec. 9512. National Fund for Medical 
                                        Research.''.
    (c) Purposes for Expenditures From Fund.--Part A of title IV of the 
Public Health Service Act is amended by adding at the end the following 
new section:

``SEC. 404F. EXPENDITURES FROM THE NATIONAL FUND FOR MEDICAL RESEARCH.

    ``(a) Distribution of Amounts.--From amounts received for any 
fiscal year from the National Fund for Medical Research, the Secretary 
shall distribute--
            ``(1) 3 percent of such amounts to the Director of NIH to 
        be allocated at the Director's discretion for--
                    ``(A) carrying out the responsibilities of the 
                Director of NIH, including the Office of Research on 
                Women's Health, the Office of Research on Minority 
                Health, the Office on Alternative Medicine, and the 
                Office of Rare Disease Research;
                    ``(B) construction of, and acquisition of equipment 
                for, facilities of or used by the National Institutes 
                of Health; and
                    ``(C) transfer to the National Center for Research 
                Resources to carry out section 481A concerning 
                biomedical and behavioral research facilities;
            ``(2) 1 percent of such amounts for carrying out section 
        301 and part D of this title with respect to health information 
        communications; and
            ``(3) the remainder of such amounts to member institutes 
        and centers of the National Institutes of Health in the same 
        proportion to the total amount received under this subsection, 
        as the amount of annual appropriations under appropriations 
        Acts for each member institute or center for the fiscal year 
        bears to the total amount of appropriations under 
        appropriations Acts for all member institutes and centers of 
        the National Institutes of Health for the fiscal year.
    ``(b) Plans of Allocation.--The amounts transferred under 
subsection (a) shall be allocated by the Director of NIH or the various 
directors of the institutes and centers, as the case may be, pursuant 
to allocation plans developed by the various advisory councils to such 
directors, after consultation with such directors.
    ``(c) Grants and Contracts Fully Funded in First Year.--With 
respect to any grant or contract funded by amounts distributed under 
subsection (a), the full amount of the total obligation of such grant 
or contract shall be funded in the first year of such grant or 
contract, and shall remain available until expended.
    ``(d) Maintenance of Effort.--No amounts transferred under 
subsection (a) shall replace or reduce the amount of appropriations for 
the National Institutes of Health under appropriations Acts.''.

               Subtitle B--Administrative Simplification

SEC. 3301. ESTABLISHMENT OF HEALTH CARE DATA INTERCHANGE SYSTEM.

    (a) In General.--In accordance with the procedures provided in this 
subtitle, there shall be established a health care data interchange 
system the purpose of which is to make health care data available on a 
uniform basis to all participants in the health care system.
    (b) General Requirements for System.--The system described in 
subsection (a) shall ensure--
            (1) the integration of all participants in the health care 
        system;
            (2) the use of uniform processes which will permit 
        participants in the health care system to communicate 
        electronically for the submission and receipt of health care 
        data;
            (3) the privacy of individuals who are patients receiving 
        health care services and the confidentiality of information in 
        the data interchange system;
            (4) that the data in the system is verifiable, timely, 
        accurate, reliable, useful, complete, relevant, time and date 
        stamped, and comparable; and
            (5) an overall reduction in the administrative burdens and 
        costs of the health care system, an overall increase in the 
        productivity, effectiveness, and efficiency of the system, and 
        an overall increase in the quality of care furnished by the 
        system.
    (c) General Implementation.--The system described in subsection (a) 
shall be implemented through--
            (1) the development of proposed regulations as provided 
        under section 3302 by the Health Care Data Panel established 
        under section 3313 (referred to in this subtitle as the 
        ``Panel''); and
            (2) the development of final regulations through the Office 
        of Management and Budget (referred to in this subtitle as 
        ``OMB'') as provided under section 3303.

SEC. 3302. DEVELOPMENT OF PROPOSED REGULATIONS BY PANEL.

    (a) In General.--The Panel shall, in consultation with the National 
Health Informatics Commission established under section 3314, develop 
proposed regulations for the implementation and ongoing operation of an 
integrated electronic health care data interchange system that are 
based on the operating standards, conventions, requirements, and 
procedures for the system established, selected, or developed by the 
Panel under sections 3304 through 3310.
    (b) Requirements Relating to Proposed Regulations.--The proposed 
regulations developed under subsection (a) shall--
            (1) be submitted to OMB not later than 30 days after the 
        date on which the Panel is required to establish, select, or 
        develop any of such operating standards, conventions, 
        requirements, and procedures for the system; and
            (2) provide that the general requirements for the system 
        referred to in section 3301(b) are met.
    (c) Modifications.--The Panel shall continuously monitor the 
implementation of the regulations promulgated by OMB under section 3303 
and shall submit to OMB any proposed modifications to such regulations 
determined appropriate by the Panel. The requirements of section 3303 
shall apply to any such proposed modifications in the same manner as 
such requirements apply to the proposed regulations initially submitted 
by the Panel.

SEC. 3303. PROMULGATION AND IMPLEMENTATION OF PROPOSED REGULATIONS BY 
              OMB.

    (a) Promulgation of Regulations.--OMB shall promulgate regulations 
based on the proposed regulations submitted under section 3302 within 
90 days after the date such proposed regulations are submitted.
    (b) Applicability.--
            (1) In general.--The regulations promulgated by OMB shall 
        apply to all participants in the health care system.
            (2) Special rule regarding the medicare program.--The 
        Secretary may incorporate the capabilities of the common 
        working file used in the medicare program under title XVIII of 
        the Social Security Act into a uniform working file system 
        developed and operated according to the regulations referred to 
        in subsection (a).
    (c) Compliance with Regulations.--
            (1) In general.--Not later than 1 year after the date on 
        which any regulations (other than the regulations described in 
        paragraph (2)) are promulgated by OMB, all participants in the 
        health care system shall be required to comply with such 
        regulations.
            (2) Comprehensive quality measurement data.--Not later than 
        2 years after the date on which any regulations relating to 
        standards, conventions, and requirements for comprehensive 
        quality measurement data (as described in subsection 
        3304(e)(3)) are promulgated by OMB, all participants in the 
        health care system shall be required to comply with such 
        regulations.

SEC. 3304. SELECTION AND ESTABLISHMENT OF DATA AND TRANSACTION 
              STANDARDS, CONVENTIONS, AND REQUIREMENTS FOR THE DATA 
              INTERCHANGE SYSTEM.

    (a) In General.--The Panel, in consultation with the American 
National Standards Institute (referred to in this subtitle as 
``ANSI''), shall select and establish data and transaction standards, 
conventions, and requirements that permit the electronic interchange of 
any health care data the Panel determines necessary for the efficient 
and effective administration of the health care system.
    (b) Minimum Requirements.--The data and transaction standards, 
conventions, and requirements selected and established by the Panel 
under this section shall, at a minimum--
            (1) ensure that the data interchange system shall have the 
        capability to comply with such standards, conventions, and 
        requirements; and
            (2) be based on any standards that are in use and generally 
        accepted on the date of the enactment of this subtitle or that 
        are recommended by nationally recognized standard setting 
        groups, including ANSI, the National Uniform Billing Committee, 
        the Uniform Claim Form Task Force, the National Committee for 
        Prescription Drug Programs, and the Healthcare Informatics 
        Standards Planning Panel.
    (c) Applicability.--The proposed regulations developed by the Panel 
shall provide that--
            (1) any participant in the health care system who has the 
        capability to interchange data through a uniform working file 
        developed by the Panel under section 3305 shall be required to 
        transmit and receive such data using the standards, 
        conventions, and requirements developed by the Panel under this 
        section; and
            (2) any participant in the health care system who does not 
        have such capability shall be required to transmit and receive 
        data through a health care information clearinghouse or a 
        health care value-added network that is certified under the 
        procedure established pursuant to 3311.
    (d) Additional Requirements.--
            (1) In general.--The proposed regulations developed by the 
        Panel shall provide that no participant in the health care 
        system shall be permitted to establish data requirements in 
        addition to such standards, conventions, and requirements 
        established by the Panel and included in regulations 
        promulgated by OMB--
                    (A) unless 2 or more participants voluntarily 
                establish such additional requirements and the 
                requirements meet all of the privacy and 
                confidentiality standards developed by the Panel under 
                this subtitle and included in any regulations 
                promulgated by OMB; or
                    (B) unless a waiver is granted under paragraph (2) 
                to establish such additional requirements.
            (2) Conditions for waivers.--
                    (A) In general.--The proposed regulations developed 
                by the Panel shall provide that any participant in the 
                health care system may request a waiver to establish 
                additional data requirements.
                    (B) Consideration of waiver requests.--The proposed 
                regulations developed by the Panel shall provide that 
                no waiver shall be granted under this paragraph unless 
                the entity granting such waiver considers the value of 
                the additional data to be exchanged for research or 
                other purposes determined appropriate by the Panel, the 
                administrative cost of the additional data 
                requirements, the burden of the additional data 
                requirements, and the burden of the timing of the 
                imposition of the additional data requirements.
                    (C) Certain requests for waivers.--The proposed 
                regulations developed by the Panel shall provide that 
                if a participant in the health care system attempts to 
                impose additional data requirements on any other such 
                participant, the participant on which such requirements 
                are being imposed may contact the Secretary. The Panel 
                shall develop a procedure under which any participant 
                in the health care system contacting the Secretary 
                under the preceding sentence shall remain anonymous. 
                The Secretary shall notify the participant imposing the 
                additional data requirements that such requirements may 
                not be imposed on any other participant unless such 
                other participant voluntarily agrees to such 
                requirements or a waiver is obtained under this 
                paragraph.
    (e) Timetable for Standards, Conventions, and Requirements.--
            (1) Standards, conventions, and requirements relating to 
        financial and administrative transactions.--Not later than 9 
        months after the date of the enactment of this subtitle, the 
        Panel shall develop data and transaction standards, 
        conventions, and requirements for the following items relating 
        to the financing and administration of health care:
                    (A) Enrollment.
                    (B) Eligibility.
                    (C) Payment and remittance advice.
                    (D) Claims.
                    (E) Claims status.
                    (F) Coordination of benefits.
                    (G) Crossover billing.
                    (H) First report of injury.
                    (I) Standardized claim attachments.
                    (J) Any other items relating to the financing and 
                administration of health care delivery.
            (2) Standards, conventions, and requirements relating to 
        initial quality measurement indicators.--Not later than 12 
        months after the date of the enactment of this subtitle, the 
        Panel shall develop data and transaction standards, 
        conventions, and requirements for participants in the health 
        care system to transmit data derived from the financial and 
        administrative transactions data described in paragraph (1) on 
        quality measurement, utilization monitoring, risk assessment, 
        patient satisfaction, outcomes, and access.
            (3) Standards, conventions, and requirements relating to 
        comprehensive quality measurement data.--Not later than 24 
        months after the date of the enactment of this subtitle, the 
        Panel shall develop standards, conventions, and requirements 
        for participants in the health care system to transmit 
        comprehensive data collected at the site of care on quality 
        measurement, utilization monitoring, risk assessment, patient 
        satisfaction, outcomes, and access.
            (4) Standards, conventions, and requirements relating to 
        data on patient care records.--Not later than 36 months after 
        the date of the enactment of this subtitle, the Panel shall 
        develop standards, conventions, and requirements related to the 
        inclusion of data from patient care records into the health 
        care data interchange system, including standards, conventions, 
        and requirements on the identification of the origin of any 
        data from such records that is included in such system.
            (5) Standards, conventions, and requirements for the 
        centers for disease control and prevention.--Not later than 36 
        months after the date of the enactment of this subtitle, the 
        Panel, in collaboration with the Centers for Disease Control 
        and Prevention (referred to in this subtitle as the ``CDCP'') 
        and in consultation with State departments of health, shall 
        develop standards, conventions, and requirements for the 
        electronic interchange of data on vital health statistics 
        collected by CDCP or the States or any other such data as CDCP 
        determines appropriate.
    (f) Waivers of Compliance.--
            (1) Financial and administrative transactions.--The 
        proposed regulations developed by the Panel shall provide that 
        any of the data and transaction standards, conventions, and 
        requirements relating to financial and administrative 
        transactions developed by the Panel under subsection (e)(1) may 
        be waived until January 1, 1995, for a health care provider 
        that--
                    (A) does not have access to a health care 
                information clearinghouse or a health care value-added 
                network, is in the process of developing a system that 
                complies with such standards, conventions, and 
                requirements, and executes an agreement with the 
                appropriate regulatory entity that such provider will 
                meet such standards, conventions, and requirements by a 
                specified date (not later than January 1, 1995); or
                    (B) is a small rural hospital (as defined by the 
                Panel and included in regulations promulgated by OMB).
            (2) Comprehensive quality measurement data.--The proposed 
        regulations developed by the Panel shall provide that any of 
        the data and transaction standards, conventions, and 
        requirements relating to comprehensive quality measurement data 
        developed by the Panel under subsection (e)(3) may be waived 
        until January 1, 1998, for a health care provider that--
                    (A) does not have access to a health care 
                information clearinghouse or a health care value-added 
                network, is in the process of developing a system that 
                complies with such standards, conventions, and 
                requirements, and executes an agreement with the 
                appropriate regulatory entity that such provider will 
                meet such standards and requirements by a specified 
                date (not later than January 1, 1998); or
                    (B) agrees to obtain from such provider's records 
                the data elements that are needed to meet the standards 
                and requirements developed under subsection (e)(3) and 
                agrees to subject the provider's data transfer process 
                to a quality assurance program that is satisfactory to 
                the appropriate regulatory entity.

SEC. 3305. STANDARDS FOR OPERATION OF A UNIFORM WORKING FILE.

    Not later than 24 months after the date of the enactment of this 
subtitle the Panel shall establish standards for the development and 
operation of a uniform working file system that is national in scope. 
Such standards shall ensure--
            (1) that all participants in the health care system may be 
        linked electronically (directly or indirectly) to the uniform 
        working file system;
            (2) that any privacy and confidentiality standards 
        established by the Panel under section 3308 are satisfied;
            (3) that the uniform working file system improves the 
        efficiency and effectiveness of the administration of the 
        health care system, including health care quality measurement;
            (4) the interoperability of the uniform working file system 
        by--
                    (A) supporting the data and transaction standards, 
                conventions, and requirements selected and established 
                by the Panel; and
                    (B) making use of such standards, conventions, and 
                requirements; and
            (5) the support of any other requirements selected or 
        established by the Panel.

SEC. 3306. CODE SETS FOR SYSTEM.

    Not later than 9 months after the date of the enactment of this 
subtitle, the Panel shall select and establish code sets that are 
maintained by private and public entities as the Panel's official code 
sets for use in a national uniform working file system. The proposed 
regulations developed by the Panel shall provide that any changes or 
updates to such code sets that are established or requested by the 
private or public entity which maintains the code set--
            (1) shall preserve the informational value of data retained 
        either within the uniform working file system or within the 
        information systems of parties making use of the data and 
        transactions standards, conventions, and requirements;
            (2) shall include instructions on how existing data 
        containing such codes is to be converted or translated so as to 
        preserve its value;
            (3) shall be incorporated into the official code set in 
        such a manner as to minimize the disruption to the national 
        uniform working file system and minimize the cost to all 
        entities within the system for reprogramming to accommodate 
        such changes or updates; and
            (4) shall be implemented--
                    (A) only after at least 90 days advance notice has 
                been provided to participants in the health care 
                system; and
                    (B) no more frequently than on an annual basis.

SEC. 3307. ESTABLISHMENT OF UNIQUE IDENTIFIERS.

    (a) In General.--Not later than 9 months after the date of the 
enactment of this subtitle, the Panel shall develop unique identifiers 
for each participant in the health care system.
    (b) Special Rules.--
            (1) Individuals.--Each individual shall have a unique 
        identifier developed by the Panel.
            (2) Health plans or providers.--In developing unique 
        identifiers for each health plan or provider, the Panel shall 
        take into account multiple uses for such identifiers and shall 
        consider multiple physical locations and specialty 
        classifications for providers. The unique identifiers for 
        health plans or providers may be based on the system used under 
        title XVIII of the Social Security Act on the date of the 
        enactment of this subtitle.

SEC. 3308. PRIVACY AND CONFIDENTIALITY STANDARDS.

    (a) In General.--Not later than 9 months after the date of the 
enactment of this subtitle, the Panel, after taking into consideration 
the Insurance Information and Privacy Protection Model Act of the 
National Association of Insurance Commissioners, other model 
legislation, and international guidelines, shall develop requirements 
that protect the privacy of participants in the health care system and 
ensure the confidentiality of information in the data interchange 
system.
    (b) Principles Considered.--In developing the requirements referred 
to in subsection (a), the Panel shall take into consideration the 
following principles:
            (1) Information relating to an identifiable or identified 
        individual should be collected only to the extent necessary to 
        carry out the purpose for which the information is collected.
            (2) Information relating to an identifiable or identified 
        individual collected for a particular purpose should generally 
        not be used for another purpose without the individual's 
        informed consent unless the pooling of information renders an 
        individual's data unidentifiable.
            (3) Information relating to an identifiable or identified 
        individual should be disposed of when no longer necessary to 
        carry out the purpose for which it was collected, unless the 
        pooling of information renders an individual's data 
        unidentifiable.
            (4) Methods to ensure the verifiability, timeliness, 
        accuracy, reliability, utility, completeness, relevance, and 
        comparability of information relating to an identifiable or 
        identified individual should be instituted.
            (5) An individual should be notified in advance of the 
        collection of information relating to such individual with 
        regard to--
                    (A) whether the furnishing of information is 
                mandatory or voluntary;
                    (B) the recordkeeping practices with respect to any 
                information provided; and
                    (C) the uses to be made of any information 
                provided.
            (6) If informed consent is necessary for the intended 
        primary or secondary use of information relating to an 
        identifiable or identified individual, the individual should be 
        provided the opportunity to reject such uses at the time the 
        information is collected, except where such uses are necessary 
        to comply with law.
            (7) An individual should be permitted to inspect and 
        correct any information which concerns such individual and 
        should be able to obtain information on how such information is 
        being used.

SEC. 3309. TRANSFER OF INFORMATION BETWEEN HEALTH PLANS.

    Not later than 9 months after the date of the enactment of this 
subtitle, the Panel shall develop rules and procedures--
            (1) for determining the financial liability of health plans 
        when health care benefits are payable under two or more health 
        plans; and
            (2) concerning the transfer among health plans of 
        appropriate official data sets needed to carry out the 
        coordination of benefits, the sequential processing of claims, 
        and other health data as determined necessary by the Panel for 
        individuals who have more than one health plan, according to 
        the priorities established under the rules and procedures 
        established under paragraph (1).

SEC. 3310. FINES AND PENALTIES FOR FAILURE TO COMPLY.

    (a) Development by the Panel.--
            (1) Compliance with standards for privacy and 
        confidentiality.--Not later than 9 months after the date of the 
        enactment of this subtitle, the Panel shall develop civil fines 
        and penalties, as determined appropriate by the Panel, to 
        enforce any of the requirements developed by the Panel under 
        section 3308 relating to privacy and confidentiality. The civil 
        fines and penalties developed by the Panel under this paragraph 
        shall not be less than $1,000 for each violation.
            (2) Compliance with other requirements.--
                    (A) In general.--Not later than 9 months after the 
                date of the enactment of this subtitle, the Panel shall 
                develop civil fines and penalties, as determined 
                appropriate by the Panel, to enforce any of the 
                requirements developed by the Panel under this subtitle 
                other than the requirements related to privacy and 
                confidentiality. The civil fines and penalties 
                developed by the Panel under this paragraph shall not 
                exceed $100 for each violation.
                    (B) Limitations.--
                            (i) Penalties not to apply where 
                        noncompliance not discovered exercising 
                        reasonable diligence.--No civil fine or penalty 
                        developed by the Panel under this paragraph 
                        shall be imposed if it is established that the 
                        person liable for the fine or penalty did not 
                        know, and by exercising reasonable diligence 
                        would not have known, that such person failed 
                        to comply with any of the requirements 
                        described in subparagraph (A).
                            (ii) Penalties not to apply to compliance 
                        failures corrected within 30 days.--No civil 
                        fine or penalty developed by the Panel under 
                        this paragraph shall be imposed if--
                                    (I) the failure to comply was due 
                                to reasonable cause and not to willful 
                                neglect, and
                                    (II) the failure to comply is 
                                corrected during the 30-day period 
                                beginning on the 1st date the person 
                                liable for the fine or penalty knew, or 
                                by exercising reasonable diligence 
                                would have known, that the failure to 
                                comply occurred.
                            (iii) Waiver.--In the case of a failure to 
                        comply which is due to reasonable cause and not 
                        to willful neglect, any civil fine or penalty 
                        developed by the Panel under this paragraph may 
                        be waived to the extent that the payment of 
                        such fine or penalty would be excessive 
                        relative to the compliance failure involved.
    (b) Legislative Proposal on Certain Criminal Fines and Penalties.--
Not later than 12 months after the date of the enactment of this 
subtitle, the Panel shall submit to Congress a legislative proposal 
relating to any criminal fines and penalties determined appropriate by 
the Panel to enforce any of the requirements developed by the Panel 
under section 3308 relating to privacy and confidentiality.

SEC. 3311. OVERSIGHT OF UNIFORM WORKING FILE, HEALTH CARE INFORMATION 
              CLEARINGHOUSES, AND VALUE-ADDED NETWORKS.

    (a) Periodic Reviews.--Not later than 9 months after the date of 
the enactment of this subtitle, the Secretary shall establish a 
procedure for the periodic review of business practices, performance, 
and fees with respect to the uniform working file and each health care 
information clearinghouse and value-added network to ensure that such 
entities are not taking unfair advantage of participants in the health 
care system through the application of any regulations promulgated by 
OMB.
    (b) Certification Procedure.--Not later than 12 months after the 
date of the enactment of this subtitle, the Panel shall establish a 
certification procedure for the uniform working file, health care 
information clearinghouses, and value-added networks. The requirements 
for certification shall include--
            (1) adherence to the data and transaction standards and 
        requirements and the privacy and confidentiality standards 
        included in any regulations promulgated by OMB;
            (2) making public standardized indicators of performance 
        such as accessibility, transaction responsiveness, 
        administrative efficiency, reliability, dependability, and any 
        other indicators determined appropriate by the Secretary; and
            (3) any other requirements determined appropriate by the 
        Secretary.

SEC. 3312. ANNUAL REPORTS TO CONGRESS.

    (a) In General.--The Panel shall annually prepare and submit to 
Congress a report on--
            (1) the status of the data interchange system, including 
        the system's ability to provide data on cost, quality, and 
        patient satisfaction;
            (2) the savings and costs of implementing the data 
        interchange system; and
            (3) any legislative recommendations related to the data 
        interchange system.
    (b) Availability to the Public.--Any information in the report 
submitted to Congress under subsection (a) shall be made available to 
the public unless such information may not be disclosed by law.

SEC. 3313. HEALTH CARE DATA PANEL.

    (a) Establishment.--There is established a panel to be known as the 
Health Care Data Panel.
    (b) Membership.--
            (1) In general.--The Panel shall be composed of the 
        following members:
                    (A) The Secretary.
                    (B) The Secretary of Defense.
                    (C) The Secretary of Veterans Affairs.
                    (D) A representative of the Agency for Health Care 
                Policy and Research.
                    (E) A representative of the National Institute of 
                Standards and Technology.
                    (F) A representative of the National 
                Telecommunication and Information Administration.
                    (G) Six additional Federal officers determined 
                appropriate by the Secretary.
            (2) Chair.--The Secretary shall be the Chair of the Panel.
    (c) Meetings.--
            (1) In general.--Except as provided in paragraph (2), the 
        Panel shall meet at the call of the Chair.
            (2) Initial and subsequent meetings.--The Panel shall hold 
        a meeting not later than 30 days after the date of the 
        enactment of this section and at least annually thereafter.
            (3) Quorum.--A majority of the members of the Panel shall 
        constitute a quorum, but a lesser number of members may hold 
        hearings.
    (d) Powers of the Panel.--
            (1) Hearings.--The Panel may hold such hearings, sit and 
        act at such times and places, take such testimony, and receive 
        such evidence as the Panel considers advisable to carry out the 
        purposes of this section.
            (2) Information from federal agencies.--The Panel may 
        secure directly from any Federal department or agency such 
        information as the Panel considers necessary to carry out the 
        provisions of this section. Upon request of the Chair of the 
        Panel, the head of such department or agency shall furnish such 
        information to the Panel.
            (3) Postal services.--The Panel may use the United States 
        mails in the same manner and under the same conditions as other 
        departments and agencies of the Federal Government.
            (4) Gifts.--The Panel may accept, use, and dispose of gifts 
        or donations of services or property.
    (e) Panel Personnel Matters.--
            (1) Compensation of members.--Members of the Panel shall 
        serve without compensation in addition to that received for 
        their services as officers or employees of the Federal 
        Government.
            (2) Staff.--
                    (A) Detail of government employees.--Upon the 
                request of the Chair, any Federal Government employee 
                may be detailed to the Panel without reimbursement, and 
                such detail shall be without interruption or loss of 
                civil service status or privilege.
                    (B) Contracts.--The Chair may enter into contracts 
                or other arrangements that may be necessary for the 
                Panel to perform its duties.
                    (C) Internal organization.--The Chair may prescribe 
                such rules as the Chair determines necessary with 
                respect to the internal organization of the Panel.

SEC. 3314. NATIONAL HEALTH INFORMATICS COMMISSION.

    (a) Appointment.--The Panel shall provide for appointment of a 
National Health Informatics Commission (referred to in this section as 
the ``Commission'') to advise the Panel on its activities.
    (b) Membership.--
            (1) In general.--The Commission shall consist of 15 
        members. The Panel shall designate 1 member of the Commission 
        as the Chair.
            (2) Expertise.--Members of the Commission shall be 
        individuals who--
                    (A) represent different professions and different 
                geographic areas, including urban and rural areas;
                    (B) represent Federal or State government health 
                programs;
                    (C) represent applicable standard-setting groups, 
                including the National Uniform Billing Committee, the 
                Uniform Claim Form Task Force, American National 
                Standards Institute, and the Healthcare Informatics 
                Standards Planning Panel;
                    (D) represent consumers of health care services; 
                and
                    (E) have expertise in--
                            (i) electronic data interchange of health 
                        care information and computerized information 
                        systems associated with the operation and 
                        administration of matters relating to health 
                        care;
                            (ii) the provision and financing of health 
                        care;
                            (iii) conducting and interpreting health 
                        economics research;
                            (iv) research and development of 
                        technological and scientific advances in health 
                        care;
                            (v) health care eligibility, enrollment, 
                        and claims administration;
                            (vi) health care financial management;
                            (vii) health care reimbursement; or
                            (viii) health care outcomes research.
            (3) Terms.--The Chair shall serve on the Commission at the 
        pleasure of the Panel. Each other member of the Commission 
        shall be appointed for a term of 5 years, except with respect 
        to the members first appointed--
                    (A) 3 members shall be appointed for a term of 1 
                year;
                    (B) 3 members shall be appointed for terms of 2 
                years;
                    (C) 3 members shall be appointed for terms of 3 
                years;
                    (D) 3 members shall be appointed for terms of 4 
                years; and
                    (E) 2 members shall be appointed for terms of 5 
                years.
            (4) Vacancies.--
                    (A) In general.--A vacancy on the Commission shall 
                be filled in the manner in which the original 
                appointment was made and shall be subject to any 
                conditions which applied with respect to the original 
                appointment.
                    (B) Filling unexpired term.--An individual chosen 
                to fill a vacancy shall be appointed for the unexpired 
                term of the member replaced.
                    (C) Expiration of terms.--The term of any member 
                shall not expire before the date on which the member's 
                successor takes office.
    (c) Meetings.--
            (1) In general.--Except as provided in paragraph (2), the 
        Commission shall meet at the call of the Chair.
            (2) Initial meeting.--No later than 30 days after the date 
        on which all members of the Commission have been appointed, the 
        Commission shall hold its first meeting.
            (3) Quorum.--A majority of the members of the Commission 
        shall constitute a quorum, but a lesser number of members may 
        hold hearings.
    (d) Duties.--
            (1) In general.--Not later than 60 days prior to any date 
        on which the Panel is required to select, establish, or develop 
        any requirements relating to the data interchange system, the 
        Commission shall make recommendations to the Panel with respect 
        to the issues relating to such requirements.
            (2) Additional studies and projects.--As directed by the 
        Panel, the Commission shall undertake such studies and projects 
        as the Panel may deem necessary.
    (e) Powers of the Commission.--
            (1) Hearings.--The Commission may hold such hearings, sit 
        and act at such times and places, take such testimony, and 
        receive such evidence as the Commission considers advisable to 
        carry out the purposes of this section.
            (2) Information from federal agencies.--The Commission may 
        secure directly from any Federal department or agency such 
        information as the Commission considers necessary to carry out 
        the provisions of this section. Upon request of the Chair, the 
        head of such department or agency shall furnish such 
        information to the Commission.
            (3) Postal services.--The Commission may use the United 
        States mails in the same manner and under the same conditions 
        as other departments and agencies of the Federal Government.
            (4) Gifts.--The Commission may accept, use, and dispose of 
        gifts or donations of services or property.
    (f) Commission Personnel Matters.--
            (1) Compensation of members.--Each member of the Commission 
        who is not an officer or employee of the Federal Government 
        shall be compensated at a rate equal to the daily equivalent of 
        the annual rate of basic pay prescribed for level IV of the 
        Executive Schedule under section 5315 of title 5, United States 
        Code, for each day (including travel time) during which such 
        member is engaged in the performance of the duties of the 
        Commission. All members of the Commission who are officers or 
        employees of the United States shall serve without compensation 
        in addition to that received for their services as officers or 
        employees of the United States.
            (2) Travel expenses.--The members of the Commission shall 
        be allowed travel expenses, including per diem in lieu of 
        subsistence, at rates authorized for employees of agencies 
        under subchapter I of chapter 57 of title 5, United States 
        Code, while away from their homes or regular places of business 
        in the performance of services for the Commission.
            (3) Staff.--
                    (A) In general.--The Chair may, without regard to 
                civil service laws and regulations, appoint and 
                terminate such personnel as may be necessary to enable 
                the Commission to perform its duties.
                    (B) Compensation.--The Chair may fix the 
                compensation of personnel without regard to the 
                provisions of chapter 51 and subchapter III of chapter 
                53 of title 5, United States Code, relating to 
                classification of positions and General Schedule pay 
                rates, except that the rate of pay for the personnel 
                may not exceed the rate payable for level V of the 
                Executive Schedule under section 5316 of such title.
                    (C) Detail of government employees.--Any Federal 
                Government employee may be detailed to the Commission 
                without reimbursement, and such detail shall be without 
                interruption or loss of civil service status or 
                privilege.
                    (D) Procurement of temporary and intermittent 
                services.--The Chair may procure temporary and 
                intermittent services under section 3109(b) of title 5, 
                United States Code, at rates for individuals which do 
                not exceed the daily equivalent of the annual rate of 
                basic pay prescribed for level V of the Executive 
                Schedule under section 5316 of such title.
                    (E) Contracts.--The Chair may enter into contracts 
                or other arrangements that may be necessary for the 
                Commission to perform its duties.
                    (F) Internal organization.--The Chair may prescribe 
                such rules as the Chair determines necessary with 
                respect to the internal organization of the Commission. 
                The Commission shall create such committees (composed 
                of Commission members and others as appointed by the 
                Chair) as necessary to enable the Commission to meet 
                its responsibilities and functions.
    (g) Reports.--The Commission shall submit to the Panel such reports 
as may be requested by the Panel on each study or project conducted by 
the Commission. Such reports shall contain such information as 
requested by the Panel.
    (h) Termination of Commission.--The Commission shall terminate 20 
years after the date of the enactment of this title.
    (i) Authorization of Appropriations.--
            (1) In general.--There are authorized to be appropriated 
        such sums as may be necessary to carry out the purposes of this 
        section.
            (2) Availability.--Any sums appropriated under the 
        authorization contained in this subsection shall remain 
        available, without fiscal year limitation, until expended.

SEC. 3315. DEFINITIONS.

    For purposes of this subtitle:
            (1) Administrator.--The term ``administrator'' has the 
        meaning given that term in section 3(16)(A) of the Employee 
        Retirement Income Security Act of 1974.
            (2) Code sets.--The term ``code sets'' means any codes used 
        for supplying specific data in a uniform data set, including 
        tables of terms, medical diagnostic codes, medical procedure 
        codes, identification numbers, and any code sets of the 
        National Uniform Billing Committee, the Health Care Financing 
        Administration, or ANSI.
            (3) Employee welfare benefit plan.--The term ``employee 
        welfare benefit plan'' has the meaning given that term in 
        section 3(1) of the Employee Retirement Income Security Act of 
        1974.
            (4) Health care information clearinghouse.--The term 
        ``health care information clearinghouse'' means a public or 
        private entity that--
                    (A) processes data that cannot be sent directly due 
                to lack of proper formatting or editing; and
                    (B) facilitates the translation of data to the 
                standardized data set and code sets between persons who 
                normally would send or receive the transaction;
        but does not store information processed beyond the time 
        required to complete its task and communicate the information.
            (5) Health care value-added network.--The term ``health 
        care value-added network'' means any entity that provides 
        additional services beyond the transmission of data or value, 
        such as the storage of electronic data or value and the 
        transfer of such data or value between health care entities.
            (6) Insurer.--The term ``insurer'' means any entity that 
        offers a health plan under which such entity is at risk for all 
        or part of the cost of benefits under the plan, and includes 
        any agent of such entity.
            (7) Participant in the health care system.--The term 
        ``participant in the health care system'' means any Federal 
        health care program, State, employee welfare benefit plan, 
        health plan, administrator, insurer, or provider.
            (8) Provider.--The term ``provider'' means a physician, 
        hospital, pharmacy, laboratory, or other person licensed or 
        otherwise authorized under applicable State laws to furnish 
        health care items or services.

                       TITLE IV--JUDICIAL REFORMS

                  Subtitle A--Medical Liability Reform

SEC. 4001. DEFINITIONS.

    For purposes of this subtitle:
            (1) Alternative dispute resolution system; adr.--The term 
        ``alternative dispute resolution system'' or ``ADR'' means a 
        system that provides for the resolution of health care 
        malpractice claims in a manner other than through health care 
        malpractice actions.
            (2) Claimant.--The term ``claimant'' means any person who 
        alleges a health care malpractice claim, and any person on 
        whose behalf such a claim is alleged, including the decedent in 
        the case of an action brought through or on behalf of an 
        estate.
            (3) Economic losses.--The term ``economic losses'' means 
        losses for hospital and medical expenses, lost wages, lost 
        employment, and other pecuniary losses incurred by an 
        individual with respect to which a health care malpractice 
        claim or action is pursued.
            (4) Health care professional.--The term ``health care 
        professional'' means any individual who provides health care 
        services in a State and who is required by State law or 
        regulation to be licensed or certified by the State to provide 
        such services in the State.
            (5) Health care provider.--The term ``health care 
        provider'' means any organization or institution that is 
        engaged in the delivery of health care services in a State and 
        that is required by State or Federal law or regulation to be 
        licensed or certified by the State or Federal Government to 
        engage in the delivery of such services in a State.
            (6) Health care negligence.--The term ``health care 
        negligence'' means an act or omission by a health care provider 
        or a health care professional which deviates from the 
        applicable State standard of care and causes an injury.
            (7) Health care malpractice action.--The term ``health care 
        malpractice action'' means a civil action brought in a State or 
        Federal court against a health care provider, health care 
        professional, or other defendant joined in the action 
        (regardless of the theory of liability on which the claim is 
        based) in which the claimant alleges a health care malpractice 
        claim.
            (8) Health care malpractice claim.--The term ``health care 
        malpractice claim'' means a claim brought against a health care 
        provider, health care professional, or other defendant joined 
        in a claim alleging that an injury was suffered by the claimant 
        as the result of health care negligence or gross negligence, 
        breach of express or implied warranty or contract, or failure 
        to discharge a duty to warn or instruction to obtain consent 
        arising from the provision of (or failure to provide) health 
        care services.
            (9) Injury.--The term ``injury'' means an injury, illness, 
        disease, or other harm suffered by an individual as a result of 
        the provision of health care services by a health care provider 
        or health care professional.
            (10) Noneconomic losses.--The term ``noneconomic losses'' 
        means losses for physical and emotional pain, suffering, 
        inconvenience, physical impairment, mental anguish, 
        disfigurement, loss of enjoyment of life, and other 
        nonpecuniary losses incurred by an individual with respect to 
        which a health care malpractice claim or action is pursued.

          PART I--MEDIATION AND ALTERNATIVE DISPUTE RESOLUTION

SEC. 4011. MEDIATION.

    (a) Requirements for Qualified Health Plans.--In accordance with 
section 1120, a qualified health plan shall provide effective mediation 
procedures for hearing and resolving health care malpractice claims.
    (b) Certification and Standards.--
            (1) Certification.--A qualified health plan meets the 
        requirement of subsection (a) if the mediation procedures 
        provided under the plan are certified by the State as being in 
        compliance with the standards developed under paragraph (2).
            (2) Standards.--
                    (A) In general.--The standards developed under 
                subpart B of part I of subtitle B of title I shall 
                contain minimum mediation standards that qualified 
                health plans must meet in order to be certified by the 
                State under paragraph (1).
                    (B) Mediation services.--The standards developed 
                under subparagraph (A) shall require a qualified health 
                plan to provide mediation services through--
                            (i) the Federal Mediation and Conciliation 
                        Service; or
                            (ii) a private mediation service that has 
                        been certified by the State as being eligible 
                        to mediate health care malpractice claims.
    (c) Notification.--A qualified health plan shall provide notice to 
enrollees and potential enrollees concerning the mediation procedures 
available under the plan and the procedures under which an enrollee 
commences the mediation process.
    (d) Participation.--
            (1) Requirement.--A party to a dispute brought to mediation 
        under this section shall be required to participate in the 
        mediation if requested by another party.
            (2) Privilege.--All information disclosed in a mediation 
        procedure under this section shall be privileged and may not be 
        used in any other proceeding unless such information is 
        discovered independently of such mediation procedure.

SEC. 4012. FAILURE OF MEDIATION.

    With respect to a claim submitted to mediation as provided for in 
section 4011, if the mediation process fails to resolve the dispute 
from which such claim arose, the parties to such claim shall 
participate in an applicable alternative dispute resolution method 
under section 4013.

SEC. 4013. ALTERNATIVE DISPUTE RESOLUTION.

    (a) Application to Health Care Malpractice Claims Under Plans.--In 
the case of any health care malpractice claim, no health care 
malpractice action may be brought with respect to such claim until the 
final resolution of the claim under the alternative dispute resolution 
method adopted by the State under subsection (b).
    (b) Adoption of Mechanism by States.--Each State shall--
            (1) adopt at least one of the alternative dispute 
        resolution methods specified under this part for the resolution 
        of health care malpractice claims arising from the provision of 
        health care services; and
            (2) require that health plans disclose to enrollees (and 
        potential enrollees), in accordance with standards established 
        by the Secretary, the availability and procedures for consumer 
        grievances under the plan, including mediation and the 
        alternative dispute resolution method or methods adopted under 
        this section.
    (c) Specification of Permissible Alternative Dispute Resolution 
Methods.--
            (1) In general.--The Secretary shall, by regulation, 
        develop alternative dispute resolution methods for the use by 
        States in resolving health care malpractice claims under 
        subsection (a). Such methods shall include at least the 
        following:
                    (A) Binding arbitration.--The use of binding 
                arbitration.
                    (B) Fault-based systems.--The use of fault-based 
                administrative systems, expedited review and dismissal 
                of claims when not adequately supported.
                    (C) Early offers of settlement.--The use of a 
                process under which parties have the option to make 
                early offers of settlement.
                    (D) Catastrophic systems.--The use of catastrophic 
                injury compensation systems.
            (2) Standards for establishing methods.--In developing 
        alternative dispute resolution methods under paragraph (1), the 
        Secretary shall assure that the methods promote the resolution 
        of health care malpractice claims in a manner that--
                    (A) is affordable for the parties involved;
                    (B) provides for timely resolution of claims;
                    (C) provides for the consistent and fair resolution 
                of claims; and
                    (D) provides for reasonably convenient access to 
                dispute resolution for individuals enrolled in 
                qualified health plans.
    (d) State Initiated Alternative.--A State will be permitted to 
operate an alternative dispute resolution method (other than a method 
described in subsection (c)) that otherwise complies with this part if 
such system--
            (1) is determined by the Secretary to accomplish the 
        purposes and otherwise meet the requirements of this part; and
            (2) is certified by the Secretary as an appropriate 
        alternative dispute resolution method.
    (e) Failure To Establish System.--If a State fails to establish an 
alternative resolution system that meets the requirements of this part, 
the Secretary shall provide for the operation of an approved 
alternative dispute resolution method in such State until such time as 
a system under this part is adopted.

SEC. 4014. COURT ACTIONS.

    (a) In General.--The extent to which any party seeks further 
redress (subsequent to a decision of an alternative dispute resolution 
method) concerning a health care malpractice claim or action in a 
Federal or State court shall be dependent upon the methods of 
alternative dispute resolution adopted by the State. With respect to 
such further redress, if the party initiating such court action 
receives a worse result, with respect to liability or level of damages, 
under the decision of the court than under the State alternative 
dispute resolution method, such party shall bear the costs, including 
legal fees, incurred in the court action by the other party or parties 
to such action.
    (b) Requirement for Performance Bond.--The court in a health care 
malpractice action may require the party that contested the ruling of 
the alternative dispute resolution method with respect to the health 
care malpractice claim that is the subject of the action to post a 
performance bond (in such amount and consisting of such funds and 
assets as the court determines to be appropriate), except that the 
court may waive the application of such requirement to a party if the 
court determines that the posting of such a bond is not necessary to 
ensure that the party shall meet the requirements of this section to 
pay the opposing party the costs incurred by the opposing party under 
the action.

                       PART II--LIABILITY REFORM

SEC. 4021. APPLICABILITY

    (a) In General.--This part shall apply with respect to any health 
care malpractice action brought in any State or Federal court, except 
that this part shall not apply to a claim or action for damages arising 
from a vaccine-related injury or death to the extent that title XXI of 
the Public Health Service Act applies to the claim or action.
    (b) Preemption.--The provisions of this part shall preempt any 
State law to the extent such law is inconsistent with the limitations 
contained in such provisions. The provisions of this part shall not 
preempt any State law that provides for liability defenses or places 
limitations on a person's liability for damages in addition to those 
contained in this subtitle, places greater limitations on the amount of 
attorneys' fees that can be collected, or otherwise imposes greater 
restrictions than those provided in this part.
    (c) Effect on Sovereign Immunity and Choice of Law or Venue.--
Nothing in subsection (b) shall be construed to--
            (1) waive or affect any defense of sovereign immunity 
        asserted by any State under any provision of law;
            (2) waive or affect any defense of sovereign immunity 
        asserted by the United States;
            (3) affect the applicability of any provision of the 
        Foreign Sovereign Immunities Act of 1976;
            (4) preempt State choice-of-law rules with respect to 
        claims brought by a foreign nation or a citizen of a foreign 
        nation; or
            (5) affect the right of any court to transfer venue or to 
        apply the law of a foreign nation or to dismiss a claim of a 
        foreign nation or of a citizen of a foreign nation on the 
        ground of inconvenient forum.
    (d) Federal Court Jurisdiction Not Established on Federal Question 
Grounds.--Nothing in this part shall be construed to establish any 
jurisdiction in the district courts of the United States over health 
care malpractice actions on the basis of section 1331 or 1337 of title 
28, United States Code.

SEC. 4022. LIMITATION ON AMOUNT OF ATTORNEY'S CONTINGENCY FEES.

    (a) In General.--An attorney who represents, on a contingency fee 
basis, a plaintiff in a health care malpractice claim or action may not 
charge, demand, receive, or collect for services rendered in connection 
with such action (including the resolution of the claim that is the 
subject of the action under any alternative dispute resolution) in 
excess of 25 percent of the total amount recovered by judgment or 
settlement in such action.
    (b) Calculation of Fees in the Event of Periodic Payments.--In the 
event that a judgment or settlement includes periodic or future 
payments of damages, the amount recovered for purposes of computing the 
limitation on the contingency fee under subsection (a) shall be based 
on the cost of the annuity or trust established to make the payments. 
In any case in which an annuity or trust is not established to make 
such payments, such amount shall be based on the present value of the 
payments.
    (c) Contingency Fee Defined.--As used in this section, the term 
``contingency fee'' means any fee for professional legal services which 
is, in whole or in part, contingent upon the recovery of any amount of 
damages, whether through judgment or settlement.

SEC. 4023. REFORM OF DAMAGES.

    (a) Limitation on Noneconomic Damages.--With respect to a health 
care malpractice claim or action brought in any forum, the total amount 
of damages that may be awarded to an individual and the family members 
of such individual for noneconomic losses resulting from an injury 
alleged under such claim or action may not exceed $250,000, regardless 
of the number of health care professionals, health care providers and 
other defendants against whom the action is brought or the number of 
actions brought with respect to the injury. With respect to actions 
heard by a jury, the jury may not be informed of limitation contained 
in this subsection, and if necessary, a reduction in the jury's damage 
award shall be made by the court.
    (b) Mandatory Offsets for Damages Paid by a Collateral Source.--
            (1) In general.--With respect to a health care malpractice 
        claim or action, the total amount of damages received by an 
        individual under such action shall be reduced, in accordance 
        with paragraph (2), by any other payment that has been, or will 
        be, made to an individual to compensate such individual for the 
        injury that was the subject of such action.
            (2) Amount of reduction.--The amount by which an award of 
        damages to an individual for an injury shall be reduced under 
        paragraph (1) shall be--
                    (A) the total amount of any payments (other than 
                such award) that have been made or that will be made to 
                such individual to pay costs of or compensate such 
                individual for the injury that was the subject of the 
                action; minus
                    (B) the amount paid by such individual (or by the 
                spouse, parent, or legal guardian of such individual) 
                to secure the payments described in subparagraph (A).
    (c) Periodic Payments.--With respect to a health care malpractice 
action referred to in subsection (a), no person may be required to pay 
more than $100,000 for future damages in a single payment of a damages 
award, but a person shall be permitted to make such payments of the 
award on a periodic basis. The periods for such payments shall be 
determined by the adjudicating body, based upon projections of future 
losses and shall be reduced to present value.
    (d) Punitive Damages.--
            (1) Fund.--Each State shall establish a health care 
        education and disciplinary program, to be approved by the 
        Secretary, and a fund consisting of such amounts as are 
        transferred to the fund under paragraph (2).
            (2) Transfer of amounts.--Each State shall require that 75 
        percent of all awards of punitive damages resulting from all 
        health care malpractice claims or actions in that State be 
        transferred to the fund established under paragraph (1) in the 
        State.
            (3) Obligations from fund.--The chief executive officer of 
        a State shall obligate such sums as are available in the fund 
        established in that State under paragraph (1) to provide 
        additional resources to State health care practitioner 
        disciplinary boards for the monitoring, education, and 
        disciplining of health care practitioners.
    (e) Attorney Disclosure.--Attorneys hired to represent any parties 
involved in a health care malpractice action referred to in subsection 
(a) shall, at the time of entering into the agreement with respect to 
such hiring, disclose--
            (1) the estimated probability of success on the action;
            (2) the number of hours the attorney estimates will be 
        needed to handle the action;
            (3) an estimate of the attorney fee required (and whether 
        any costs will be assessed outside the contingency fee 
        arrangement); and
            (4) an alternative fee type or rate (hourly or contingency) 
        if available.
At the close of the action, an attorney shall provide to the client, 
and the court if the action was litigated, a full, documented 
disclosure of the hours spent, a description of the work conducted 
during those hours, the total compensation received and the calculated 
hourly fee concerning such action. Failure to provide the information 
required in this subsection will result in a fee limit of 10 percent of 
the award.

SEC. 4024. REFORM OF PROCEDURES.

    (a) Statute of Limitations.--
            (1) In general.--Except as provided in paragraph (2), no 
        health care malpractice claim or action may be initiated after 
        the expiration of the 2-year period that begins on the date on 
        which the alleged injury and its cause should reasonably have 
        been discovered, but in no event later than 6 years after the 
        date of the alleged occurrence of the injury.
            (2) Exception for minors.--In the case of an alleged injury 
        suffered by a minor who has not attained 6 years of age, no 
        health care malpractice claim or action may be initiated after 
        the expiration of the 2-year period that begins on the date on 
        which the alleged injury and its cause should reasonably have 
        been discovered, but in no event later than 6 years after the 
        date of the alleged occurrence of the injury and its cause or 
        the date on which the minor attains 12 years of age, whichever 
        is later.
    (b) Joint and Several Liability.--
            (1) In general.--With respect to a health care malpractice 
        claim or action, the liability of each defendant for 
        noneconomic and punitive damages shall be several only, and 
        shall not be joint. Each defendant shall be liable only for the 
        amount of noneconomic and punitive damages allocated to such 
        defendant in direct proportion to such defendant's percentage 
        of responsibility as determined under paragraph (2).
            (2) Proportion of responsibility.--For purposes of this 
        subsection, the trier of fact shall determine the proportion of 
        responsibility of each party for the claimant's harm.
    (c) Frivolous Actions.--
            (1) By attorney.--With respect to a health care malpractice 
        claim or action, if the court or the adjudicating body 
        determines that the claim or action, or any part thereof, was 
        pursued by an attorney where the attorney does not have 
        reasonable grounds to believe that the action was well grounded 
        in fact and was warranted by existing law, the court shall 
        impose an appropriate sanction, including the reasonable costs 
        and attorneys fees attributable to the frivolous claims.
            (2) By claimant.--Sanctions under paragraph (1) may apply 
        against a claimant if the court determines that the frivolous 
        nature of the action was a result of the misrepresentation of 
        facts by the claimant to the attorney.

SEC. 4025. PRACTICE GUIDELINES.

    (a) Rebuttable Presumption.--
            (1) Development.--Each State shall develop, for 
        certification by the Secretary, a set of specialty clinical 
        practice guidelines, based on recommended guidelines developed 
        by the Agency for Health Care Policy and Research.
            (2) Provision of health care under guidelines.--
        Notwithstanding any other provision of law, in any claim or 
        action brought in a Federal or State court or other forum 
        arising from the provision of a health care service to an 
        individual, if the service was provided to the individual in 
        accordance with the guidelines developed by the State (that 
        certified or regulates the health plan involved in the action) 
        and certified by the Secretary under paragraph (1), the 
        guidelines--
                    (A) may be introduced by a provider who is a party 
                to the claim or action;
                    (B) if introduced, shall establish a rebuttable 
                presumption that the service prescribed by the 
                guidelines is the appropriate standard of medical care; 
                and
                    (C) if used to establish a rebuttable presumption, 
                may only be overcome by the presentation of clear and 
                convincing evidence on behalf of the party against whom 
                the presumption operates.
    (b) Absolute Defense.--With respect to new or experimental 
treatments that are part of approved research trials (as defined in 
subsection (c)), no health care provider may be required to provide or 
held liable for failing to provide such treatment until that treatment 
is found to be safe and efficacious by the Agency for Health Care 
Policy and Research.
    (c) Definitions.--As used in this section--
            (1) New or experimental treatments.--The term ``new or 
        experimental treatments'' means a treatment for which there is 
        not sufficient evidence to determine the health outcome of the 
        treatment compared with the best available alternative 
        treatment (or with no treatment if there is no alternative 
        treatment).
            (2) Approved research trials.--The term ``approved research 
        trial'' means a trial--
                    (A) conducted for the primary purpose of 
                determining the safety, effectiveness, efficacy, or 
                health outcomes of a treatment, compared with the best 
                available alternative treatment, and
                    (B) approved by the Secretary.
        A trial is deemed to be approved under subparagraph (B) if it 
        is approved by the National Institutes of Health, the Food and 
        Drug Administration (through an investigational new drug 
        exemption), the Department of Defense, the Department of 
        Veterans Affairs, or by a qualified nongovernmental research 
        entity (as identified in guidelines issued by one or more of 
        the National Institutes of Health).

SEC. 4026. DRUGS AND DEVICES.

    (a) Definitions.--For purposes of this section:
            (1) Device.--The term ``device'' has the meaning given the 
        term in section 201(h) of the Federal Food, Drug, and Cosmetic 
        Act (21 U.S.C. 321(h)).
            (2) Drug.--The term ``drug'' has the meaning given the term 
        in section 201(g)(1) of the Federal Food, Drug, and Cosmetic 
        Act (21 U.S.C. 321(g)(1)).
            (3) Health care producer.--The term ``health care 
        producer'' means any firm or business enterprise that designs, 
        manufactures, produces, or sells a drug or device that is the 
        subject of a health care malpractice claim or action.
    (b) Limitation.--
            (1) In general.--Punitive damages otherwise permitted by 
        applicable law shall not be awarded in a health care 
        malpractice claim or action under this Act against a health 
        care producer of a drug or device (or other defendant joined in 
        such claim or action) that caused the harm complained of by the 
        claimant if--
                    (A) the drug or device--
                            (i) was subject to approval under section 
                        505 (21 U.S.C. 355) or premarket approval under 
                        section 515 (21 U.S.C. 360e), respectively, of 
                        the Federal Food, Drug, and Cosmetic Act, by 
                        the Food and Drug Administration, with respect 
                        to--
                                    (I) the safety of the formulation 
                                or performance of the aspect of the 
                                drug or device that caused the harm; or
                                    (II) the adequacy of the packaging 
                                or labeling of the drug or device; and
                            (ii) was approved by the Food and Drug 
                        Administration; or
                    (B) the drug or device is generally recognized as 
                safe and effective pursuant to conditions established 
                by the Food and Drug Administration and applicable 
                regulations, including packaging and labeling 
                regulations.
            (2) Withheld information; misrepresentation; illegal 
        payment.--The provisions of paragraph (1) shall not apply in 
        any case in which the defendant--
                    (A) withheld from or misrepresented to the Food and 
                Drug Administration or any other agency or official of 
                the Federal Government, information that is material 
                and relevant to the performance of the drug or device; 
                or
                    (B) made an illegal payment to an official of the 
                Food and Drug Administration for the purpose of 
                securing approval of the drug or device.
    (c) Separate Proceeding.--
            (1) Considerations.--At the request of the health care 
        producer, or other defendant joined, in an action described in 
        subsection (b), the trier of fact shall consider in a separate 
        proceeding--
                    (A) whether punitive damages are to be awarded and 
                the amount of the award; or
                    (B) the amount of punitive damages following a 
                determination of punitive liability.
            (2) Evidence.--If a separate proceeding is requested in 
        accordance with paragraph (1), evidence relevant only to the 
        claim of punitive damages, as determined by applicable State 
        law, shall be inadmissible in any proceeding to determine 
        whether compensatory damages are to be awarded.
    (d) Amount of Punitive Damages.--In determining the amount of 
punitive damages in an action described in subsection (b) or (c), the 
trier of fact shall consider all relevant evidence, including--
            (1) the financial condition of the health care producer;
            (2) the severity of the harm caused by the conduct of the 
        health care producer;
            (3) the duration of the conduct or any concealment of the 
        conduct by the health care producer;
            (4) the profitability of the conduct to the health care 
        producer;
            (5) the number of products sold by the health care producer 
        of the kind causing the harm complained of by the claimant;
            (6) awards of punitive or exemplary damages to persons 
        similarly situated to the claimant;
            (7) prospective awards of compensatory damages to persons 
        similarly situated to the claimant;
            (8) any criminal penalties imposed on the health care 
        producer as a result of the conduct complained of by the 
        claimant; and
            (9) the amount of any civil fines assessed against the 
        defendant as a result of the conduct complained of by the 
        claimant.
    (e) Strict Liability Defense.--In a civil action brought by a 
claimant in a Federal or State court under which the claimant alleges 
that a health care producer of a drug or device is strictly liable to 
such claimant for injuries sustained from the use of such drug or 
device, a showing by the defendant that such drug or devices was 
subject to approval and was approved by the Food and Drug 
Administration as described in subsection (b)(1)(A) shall be an 
absolute defense to such strict liability claims.

SEC. 4027. REPORT.

    The Secretary shall continuously monitor the operation of the 
provision of this subtitle. Not later than 3 years after the date of 
enactment of this Act, the Secretary shall prepare and submit to the 
appropriate committees of Congress a report outlining the effects of 
this subtitle on--
            (1) access to health care;
            (2) the costs of health care;
            (3) the cost reductions passed on to the consumers of 
        health care;
            (4) the number of health care malpractice actions filed;
            (5) the time needed to resolve these claims;
            (6) the numbers of claims resolved through alternative 
        dispute resolution; and
            (7) the effect on the quality of health care.

            Subtitle B--Anti-Fraud and Abuse Control Program

           PART I--ALL-PAYER FRAUD AND ABUSE CONTROL PROGRAM

SEC. 4101. ALL-PAYER FRAUD AND ABUSE CONTROL PROGRAM.

    (a) Establishment of Program.--
            (1) In general.--Not later than January 1, 1995, the 
        Secretary shall establish in the Office of the Inspector 
        General of the Department of Health and Human Services a 
        program--
                    (A) to coordinate Federal, State, and local law 
                enforcement programs to control fraud and abuse with 
                respect to the delivery of and payment for health care 
                in the United States,
                    (B) to conduct investigations, audits, evaluations, 
                and inspections relating to the delivery of and payment 
                for health care in the United States, and
                    (C) to facilitate the enforcement of the provisions 
                of sections 1128, 1128A, and 1128B of the Social 
                Security Act and other statutes applicable to health 
                care fraud and abuse.
            (2) Coordination with health care plans.--In carrying out 
        the program established under paragraph (1), the Secretary 
        shall consult with, and arrange for the sharing of data with, 
        representatives of health care plans.
            (3) Regulations.--
                    (A) In general.--The Secretary shall by regulation 
                establish standards to carry out the program under 
                paragraph (1).
                    (B) Information standards.--
                            (i) In general.--Such standards shall 
                        include standards relating to the furnishing of 
                        information by health care plans, providers, 
                        and others to enable the Secretary to carry out 
                        the program (including coordination with health 
                        care plans under paragraph (2)).
                            (ii) Confidentiality.--Such standards shall 
                        include procedures to assure that such 
                        information is provided and utilized in a 
                        manner that appropriately protects the 
                        confidentiality of the information and the 
                        privacy of individuals receiving health care 
                        services and items.
                            (iii) Qualified immunity for providing 
                        information.--The provisions of section 1157(a) 
                        of the Social Security Act (relating to 
                        limitation on liability) shall apply to a 
                        person providing information to the Secretary 
                        under the program under this section, with 
                        respect to the Secretary's performance of 
                        duties under the program, in the same manner as 
                        such section applies to information provided to 
                        organizations with a contract under part B of 
                        title XI of such Act, with respect to the 
                        performance of such a contract.
                    (C) Disclosure of ownership information.--
                            (i) In general.--Such standards shall 
                        include standards relating to the disclosure of 
                        ownership information described in clause (ii) 
                        by any entity providing health care services 
                        and items.
                            (ii) Ownership information described.--The 
                        ownership information described in this clause 
                        includes--
                                    (I) a description of such items and 
                                services provided by such entity;
                                    (II) the names and unique physician 
                                identification numbers of all 
                                physicians with a financial 
                                relationship (as defined in section 
                                1877(a)(2) of the Social Security Act) 
                                with such entity;
                                    (III) the names of all other 
                                individuals with such an ownership or 
                                investment interest in such entity; and
                                    (IV) any other ownership and 
                                related information required to be 
                                disclosed by such entity under section 
                                1124 or section 1124A of the Social 
                                Security Act.
            (4) Authorization of appropriations for investigators and 
        other personnel.--In addition to any other amounts authorized 
        to be appropriated to the Secretary for health care anti-fraud 
        and abuse activities for a fiscal year, there are authorized to 
        be appropriated additional amounts as may be necessary to 
        enable the Secretary to conduct investigations and audits of 
        allegations of health care fraud and abuse and otherwise carry 
        out the program established under paragraph (1) in a fiscal 
        year.
            (5) Ensuring access to documentation.--
                    (A) In general.--The Inspector General of the 
                Department of Health and Human Services is authorized 
                to exercise the authority described in paragraphs (4) 
                and (5) of section 6 of the Inspector General Act of 
                1978 (relating to subpoenas and administration of 
                oaths) with respect to the activities under the all-
                payer fraud and abuse control program established under 
                this subsection to the same extent as such Inspector 
                General may exercise such authorities to perform the 
                functions assigned by such Act.
                    (B) Permissive exclusion.--Section 1128(b) of the 
                Social Security Act (42 U.S.C. 1320a-7(b)) is amended 
                by adding at the end the following new paragraph:
            ``(15) Failure to supply requested information to the 
        inspector general.--Any individual or entity that fails fully 
        and accurately to provide, upon request of the Inspector 
        General of the Department of Health and Human Services, 
        records, documents, and other information necessary for the 
        purposes of carrying out activities under the all-payer fraud 
        and abuse control program established under section 4101 of the 
        Health Equity and Access Reform Today Act of 1993.''.
            (6) Health care plan defined.--For the purposes of this 
        subsection, the term ``health care plan'' shall have the 
        meaning given such term in section 1128(i) of the Social 
        Security Act.
    (b) Establishment of Anti-Fraud and Abuse Trust Fund.--
            (1) Establishment.--
                    (A) In general.--There is hereby created on the 
                books of the Treasury of the United States a trust fund 
                to be known as the ``Anti-Fraud and Abuse Trust Fund'' 
                (in this section referred to as the ``Trust Fund''). 
                The Trust Fund shall consist of such gifts and bequests 
                as may be made as provided in subparagraph (B) and such 
                amounts as may be deposited in, or appropriated to, 
                such Trust Fund as provided in subsection (a)(5), and 
                title XI of the Social Security Act.
                    (B) Authorization to accept gifts.--The Managing 
                Trustee of the Trust Fund is authorized to accept on 
                behalf of the United States money gifts and bequests 
                made unconditionally to the Trust Fund, for the benefit 
                of the Trust Fund, or any activity financed through the 
                Trust Fund.
            (2) Management.--
                    (A) In general.--The Trust Fund shall be managed by 
                the Secretary through a Managing Trustee designated by 
                the Secretary.
                    (B) Investment of funds.--
                            (i) In general.--It shall be the duty of 
                        the Managing Trustee to invest such portion of 
                        the Trust Fund as is not, in the Managing 
                        Trustee's judgment, required to meet current 
                        withdrawals.
                            (ii) General form of investment.--
                        Investments described in clause (i) may be made 
                        only in interest-bearing obligations of the 
                        United States or in obligations guaranteed as 
                        to both principal and interest by the United 
                        States. For such purpose such obligations may 
                        be acquired--
                                    (I) on original issue at the issue 
                                price, or
                                    (II) by purchase of outstanding 
                                obligations at market price.
                            (iii) Issuance of public-debt 
                        obligations.--The purposes for which 
                        obligations of the United States may be issued 
                        under chapter 31 of title 31, United States 
                        Code, are hereby extended to authorize the 
                        issuance at par of public-debt obligations for 
                        purchase by the Trust Fund. Such obligations 
                        issued for purchase by the Trust Fund shall 
                        have maturities fixed with due regard for the 
                        needs of the Trust Fund and shall bear interest 
                        at a rate equal to the average market yield 
                        (computed by the Managing Trustee on the basis 
                        of market quotations as of the end of the 
                        calendar month next preceding the date of such 
                        issue) on all marketable interest-bearing 
                        obligations of the United States then forming a 
                        part of the public debt which are not due or 
                        callable until after the expiration of 4 years 
                        from the end of such calendar month, except 
                        that where such average is not a multiple of 
                        \1/8\ of 1 percent, the rate of interest on 
                        such obligations shall be the multiple of \1/8\ 
                        of 1 percent nearest such market yield.
                            (iv) Purchases of other obligations.--The 
                        Managing Trustee may purchase other interest-
                        bearing obligations of the United States or 
                        obligations guaranteed as to both principal and 
                        interest by the United States, on original 
                        issue or at the market price, only where the 
                        Managing Trustee determines that the purchase 
                        of such other obligations is in the public 
                        interest.
                    (C) Sale of obligations.--Any obligations acquired 
                by the Trust Fund (except public-debt obligations 
                issued exclusively to the Trust Fund) may be sold by 
                the Managing Trustee at the market price, and such 
                public-debt obligations may be redeemed at par plus 
                accrued interest.
                    (D) Interest on obligations and proceeds from sale 
                or redemption of obligations.--The interest on, and the 
                proceeds from the sale or redemption of, any 
                obligations held in the Trust Fund shall be credited to 
                and form a part of the Trust Fund.
                    (E) Receipts and disbursements not included in 
                united states government budget totals.--The receipts 
                and disbursements of the Secretary in the discharge of 
                the functions of the Secretary under the all-payer 
                fraud and abuse control program established under 
                subsection (a) shall not be included in the totals of 
                the budget of the United States Government. For 
                purposes of part C of the Balanced Budget and Emergency 
                Deficit Control Act of 1985, the Secretary and the 
                Trust Fund shall be treated in the same manner as the 
                Federal Retirement Thrift Investment Board and the 
                Thrift Savings Fund, respectively. The United States is 
                not liable for any obligation or liability incurred by 
                the Trust Fund.
            (3) Use of funds.--
                    (A) In general.--Amounts in the Trust Fund shall be 
                used without regard to fiscal year limitation to assist 
                the Inspector General of the Department of Health and 
                Human Services in carrying out the all-payer fraud and 
                abuse control program established under subsection (a).
                    (B) Overall administration.--The Managing Trustee 
                shall also pay from time to time from the Trust Fund 
                such amounts as the Secretary certifies are necessary 
                to carry out the all-payer fraud and abuse control 
                program established under subsection (a).
            (4) Annual report.--The Managing Trustee shall be required 
        to submit an annual report to Congress on the amount of revenue 
        which is generated and disbursed by the Trust Fund in each 
        fiscal year. Such report shall include an estimate of the 
        amount of additional appropriations authorized under subsection 
        (a)(5) necessary for the Secretary to conduct the all-payer 
        fraud and abuse program established under subsection (a) in the 
        next fiscal year.

SEC. 4102. APPLICATION OF FEDERAL HEALTH ANTI-FRAUD AND ABUSE SANCTIONS 
              TO ALL FRAUD AND ABUSE AGAINST ANY HEALTH CARE PLAN.

    (a) Civil Monetary Penalties.--Section 1128A of the Social Security 
Act (42 U.S.C. 1320a-7a) is amended as follows:
            (1) In subsection (a)(1), by inserting ``or of any health 
        care plan (as defined in section 1128(i)),'' after ``subsection 
        (i)(1)),''.
            (2) In subsection (b)(1)(A), by inserting ``or under a 
        health care plan'' after ``title XIX''.
            (3) In subsection (f)--
                    (A) by redesignating paragraph (3) as paragraph 
                (4); and
                    (B) by inserting after paragraph (2) the following 
                new paragraph:
            ``(3) With respect to amounts recovered arising out of a 
        claim under a health care plan, the portion of such amounts as 
        is determined to have been paid by the plan shall be repaid to 
        the plan, and the portion of such amounts attributable to the 
        amounts recovered under this section by reason of the 
        amendments made by subtitle B of title IV of the Health Equity 
        and Access Reform Today Act of 1993 (as estimated by the 
        Secretary) shall be deposited into the Anti-Fraud and Abuse 
        Trust Fund.''.
            (4) In subsection (i)--
                    (A) in paragraph (2), by inserting ``or under a 
                health care plan'' before the period at the end, and
                    (B) in paragraph (5), by inserting ``or under a 
                health care plan'' after ``or XX''.
    (b) Crimes.--
            (1) Social security act.--Section 1128B of such Act (42 
        U.S.C. 1320a-7b) is amended as follows:
                    (A) In the heading, by adding at the end the 
                following: ``or health care plans''.
                    (B) In subsection (a)(1)--
                            (i) by striking ``title XVIII or'' and 
                        inserting ``title XVIII,'', and
                            (ii) by adding at the end the following: 
                        ``or a health care plan (as defined in section 
                        1128(i)),''.
                    (C) In subsection (a)(5), by striking ``title XVIII 
                or a State health care program'' and inserting ``title 
                XVIII, a State health care program, or a health care 
                plan''.
                    (D) In the second sentence of subsection (a)--
                            (i) by inserting after ``title XIX'' the 
                        following: ``or a health care plan'', and
                            (ii) by inserting after ``the State'' the 
                        following: ``or the plan''.
                    (E) In subsection (b)(1), by striking ``title XVIII 
                or a State health care program'' each place it appears 
                and inserting ``title XVIII, a State health care 
                program, or a health care plan''.
                    (F) In subsection (b)(2), by striking ``title XVIII 
                or a State health care program'' each place it appears 
                and inserting ``title XVIII, a State health care 
                program, or a health care plan''.
                    (G) In subsection (b)(3), by striking ``title XVIII 
                or a State health care program'' each place it appears 
                in subparagraphs (A) and (C) and inserting ``title 
                XVIII, a State health care program, or a health care 
                plan''.
            (2) Identification of community service opportunities.--
        Section 1128B of such Act (42 U.S.C. 1320a-7b) is further 
        amended by adding at the end the following new subsection:
    ``(f) The Secretary may--
            ``(1) in consultation with State and local health care 
        officials, identify opportunities for the satisfaction of 
        community service obligations that a court may impose upon the 
        conviction of an offense under this section, and
            ``(2) make information concerning such opportunities 
        available to Federal and State law enforcement officers and 
        State and local health care officials.''.
    (c) Health Care Plan Defined.--Section 1128 of such Act (42 U.S.C. 
1320a-7) is amended by redesignating subsection (i) as subsection (j) 
and by inserting after subsection (h) the following new subsection:
    ``(i) Health Care Plan Defined.--For purposes of sections 1128A and 
1128B, the term `health care plan' means a public or private program 
for the delivery of or payment for health care items or services other 
than the medicare program, the medicaid program, or a State health care 
program.''.
    (d) Effective Date.--The amendments made by this section shall take 
effect on January 1, 1995.

SEC. 4103. REPORTING OF FRAUDULENT ACTIONS UNDER MEDICARE.

    Not later than 1 year after the date of the enactment of this Act, 
the Secretary shall establish a program through which individuals 
entitled to benefits under the medicare program may report to the 
Secretary on a confidential basis (at the individual's request) 
instances of suspected fraudulent actions arising under the program by 
providers of items and services under the program.

      PART II--REVISIONS TO CURRENT SANCTIONS FOR FRAUD AND ABUSE

SEC. 4111. MANDATORY EXCLUSION FROM PARTICIPATION IN MEDICARE AND STATE 
              HEALTH CARE PROGRAMS.

    (a) Individual Convicted of Felony Relating to Fraud.--
            (1) In general.--Section 1128(a) of the Social Security Act 
        (42 U.S.C. 1320a-7(a)) is amended by adding at the end the 
        following new paragraph:
            ``(3) Felony conviction relating to fraud.--Any individual 
        or entity that has been convicted, under Federal or State law, 
        in connection with the delivery of a health care item or 
        service or with respect to any act or omission in a program 
        (other than those specifically described in paragraph (1)) 
        operated by or financed in whole or in part by any Federal, 
        State, or local government agency, of a criminal offense 
        consisting of a felony relating to fraud, theft, embezzlement, 
        breach of fiduciary responsibility, or other financial 
        misconduct.''.
            (2) Conforming amendment.--Section 1128(b)(1) of such Act 
        (42 U.S.C. 1320a-7(b)(1)) is amended--
                    (A) in the heading, by striking ``Conviction'' and 
                inserting ``Misdemeanor conviction''; and
                    (B) by striking ``criminal offense'' and inserting 
                ``criminal offense consisting of a misdemeanor''.
    (b) Individual Convicted of Felony Relating to Controlled 
Substance.--
            (1) In general.--Section 1128(a) of the Social Security Act 
        (42 U.S.C. 1320a-7(a)), as amended by subsection (a), is 
        amended by adding at the end the following new paragraph:
            ``(4) Felony conviction relating to controlled substance.--
        Any individual or entity that has been convicted, under Federal 
        or State law, of a criminal offense consisting of a felony 
        relating to the unlawful manufacture, distribution, 
        prescription, or dispensing of a controlled substance.''.
            (2) Conforming amendment.--Section 1128(b)(3) of such Act 
        (42 U.S.C. 1320a-7(b)(3)) is amended--
                    (A) in the heading, by striking ``Conviction'' and 
                inserting ``Misdemeanor conviction''; and
                    (B) by striking ``criminal offense'' and inserting 
                ``criminal offense consisting of a misdemeanor''.

SEC. 4112. ESTABLISHMENT OF MINIMUM PERIOD OF EXCLUSION FOR CERTAIN 
              INDIVIDUALS AND ENTITIES SUBJECT TO PERMISSIVE EXCLUSION 
              FROM MEDICARE AND STATE HEALTH CARE PROGRAMS.

    Section 1128(c)(3) of the Social Security Act (42 U.S.C. 1320a-
7(c)(3)) is amended by adding at the end the following new 
subparagraphs:
    ``(D) In the case of an exclusion of an individual or entity under 
paragraph (1), (2), or (3) of subsection (b), the period of the 
exclusion shall be 3 years, unless the Secretary determines in 
accordance with published regulations that a shorter period is 
appropriate because of mitigating circumstances or that a longer period 
is appropriate because of aggravating circumstances.
    ``(E) In the case of an exclusion of an individual or entity under 
subsection (b)(4) or (b)(5), the period of the exclusion shall not be 
less than the period during which the individual's or entity's license 
to provide health care is revoked, suspended, or surrendered, or the 
individual or the entity is excluded or suspended from a Federal or 
State health care program.
    ``(F) In the case of an exclusion of an individual or entity under 
subsection (b)(6)(B), the period of the exclusion shall be not less 
than 1 year.''.

SEC. 4113. PERMISSIVE EXCLUSION OF INDIVIDUALS WITH OWNERSHIP OR 
              CONTROL INTEREST IN SANCTIONED ENTITIES.

    Section 1128(b) of the Social Security Act (42 U.S.C. 1320a-7(b)), 
as amended by section 4101(a)(6)(B), is further amended by adding at 
the end the following new paragraph:
            ``(16) Individuals controlling a sanctioned entity.--Any 
        individual who has a direct or indirect ownership or control 
        interest of 5 percent or more, or an ownership or control 
        interest (as defined in section 1124(a)(3)) in, or who is an 
        officer, director, agent, or managing employee (as defined in 
        section 1126(b)) of, an entity--
                    ``(A) that has been convicted of any offense 
                described in subsection (a) or in paragraph (1), (2), 
                or (3) of this subsection;
                    ``(B) against which a civil monetary penalty has 
                been assessed under section 1128A; or
                    ``(C) that has been excluded from participation 
                under a program under title XVIII or under a State 
                health care program.''.

SEC. 4114. CIVIL MONETARY PENALTIES.

    (a) Prohibition Against Offering Inducements to Individuals 
Enrolled Under or Employed By Programs or Plans.--
            (1) Inducements to individuals enrolled under medicare.--
                    (A) Offer of remuneration.--Section 1128A(a) of the 
                Social Security Act (42 U.S.C. 1320a-7a(a)) is 
                amended--
                            (i) by striking ``or'' at the end of 
                        paragraph (1)(D);
                            (ii) by striking ``, or'' at the end of 
                        paragraph (2) and inserting a semicolon;
                            (iii) by striking the semicolon at the end 
                        of paragraph (3) and inserting ``; or''; and
                            (iv) by inserting after paragraph (3) the 
                        following new paragraph:
            ``(4) offers to or transfers remuneration to any individual 
        eligible for benefits under title XVIII of this Act, or under a 
        State health care program (as defined in section 1128(h)) that 
        such person knows or should know is likely to influence such 
        individual to order or receive from a particular provider, 
        practitioner, or supplier any item or service for which payment 
        may be made, in whole or in part, under title XVIII, or a State 
        health care program;''.
                    (B) Remuneration defined.--Section 1128A(i) is 
                amended by adding the following new paragraph:
            ``(6) The term `remuneration' includes the waiver of 
        coinsurance and deductible amounts (or any part thereof), and 
        transfers of items or services for free or for other than fair 
        market value. The term `remuneration' does not include the 
        waiver of coinsurance and deductible amounts by a person, if--
                    ``(A) the waiver is not offered as part of any 
                advertisement or solicitation;
                    ``(B) the person does not routinely waive 
                coinsurance or deductible amounts; and
                    ``(C) the person--
                            ``(i) waives the coinsurance and deductible 
                        amounts after determining in good faith that 
                        the individual is in financial need;
                            ``(ii) fails to collect coinsurance or 
                        deductible amounts after making reasonable 
                        collection efforts; or
                            ``(iii) provides for any permissible waiver 
                        as specified in section 1128B(b)(3) or in 
                        regulations issued by the Secretary.''.
            (2) Inducements to employees.--Section 1128A(a) of such Act 
        (42 U.S.C. 1320a-7a(a)), as amended by paragraph (1), is 
        further amended--
                    (A) by striking ``or'' at the end of paragraph (3);
                    (B) by striking the semicolon at the end of 
                paragraph (4) and inserting ``; or''; and
                    (C) by inserting after paragraph (4) the following 
                new paragraph:
            ``(5) pays a bonus, reward, or any other remuneration, 
        directly or indirectly, to an employee to induce the employee 
        to encourage individuals to seek or obtain covered items or 
        services for which payment may be made under the medicare 
        program, or a State health care program where the amount of the 
        remuneration is determined in a manner that takes into account 
        (directly or indirectly) the value or volume of any referrals 
        by the employee to the employer for covered items or 
        services;''.
    (b) Excluded Individual Retaining Ownership or Control Interest in 
Participating Entity.--Section 1128A(a) of such Act, as amended by 
subsection (a), is further amended--
            (1) by striking ``or'' at the end of paragraph (4);
            (2) by striking the semicolon at the end of paragraph (5) 
        and inserting ``; or''; and
            (3) by inserting after paragraph (5) the following new 
        paragraph:
            ``(6) in the case of a person who is not an organization, 
        agency, or other entity, is excluded from participating in a 
        program under title XVIII or a State health care program in 
        accordance with this subsection or under section 1128 and who, 
        during the period of exclusion, retains a direct or indirect 
        ownership or control interest of 5 percent or more, or an 
        ownership or control interest (as defined in section 
        1124(a)(3)) in, or who is an officer, director, agent, or 
        managing employee (as defined in section 1126(b)) of, an entity 
        that is participating in a program under title XVIII or a State 
        health care program;''.
    (c) Modifications of Amounts of Penalties and Assessments.--Section 
1128A(a) of such Act (42 U.S.C. 1320a-7a(a)), as amended by subsections 
(a) and (b), is amended in the matter following paragraph (6)--
            (1) by striking ``$2,000'' and inserting ``$10,000'';
            (2) by inserting ``; in cases under paragraph (4), $10,000 
        for each such offer or transfer; in cases under paragraph (5), 
        $10,000 for each such payment; in cases under paragraph (6), 
        $10,000 for each day the prohibited relationship occurs; in 
        cases under paragraph (7), $10,000 per violation'' after 
        ``false or misleading information was given'';
            (3) by striking ``twice the amount'' and inserting ``3 
        times the amount''; and
            (4) by inserting ``(or, in cases under paragraphs (4), (5), 
        and (7), 3 times the amount of the illegal remuneration)'' 
        after ``for each such item or service''.
    (d) Claim for Item or Service Based on Incorrect Coding or 
Medically Unnecessary Services.--Section 1128A(a)(1) of such Act (42 
U.S.C. 1320a-7a(a)(1)) is amended--
            (1) in subparagraph (A) by striking ``claimed,'' and 
        inserting the following: ``claimed, including any person who 
        presents or causes to be presented a claim for an item or 
        service that is based on a code that the person knows or should 
        know will result in a greater payment to the person than the 
        code the person knows or should know is applicable to the item 
        or service actually provided,'';
            (2) in subparagraph (C), by striking ``or'' at the end;
            (3) in subparagraph (D), by striking ``; or'' and inserting 
        ``, or''; and
            (4) by inserting after subparagraph (D) the following new 
        subparagraph:
                    ``(E) is for a medical or other item or service 
                that a person knows or should know is not medically 
                necessary; or''.
    (e) Permitting Parties To Bring Actions on Own Behalf.--Section 
1128A of such Act (42 U.S.C. 1320a-7a) is amended by adding at the end 
the following new subsection:
    ``(m)(1) Subject to paragraphs (2) and (3), any person (including 
an organization, agency, or other entity, but excluding a beneficiary, 
as defined in subsection (i)(5)) that suffers harm or monetary loss as 
a result of any activity of an individual or entity which makes the 
individual or entity subject to a civil monetary penalty under this 
section may, in a civil action against the individual or entity in the 
United States District Court, obtain treble damages and costs including 
attorneys' fees against the individual or entity and such equitable 
relief as is appropriate.
    ``(2) A person may bring a civil action under this subsection only 
if--
            ``(A) the person provides the Secretary with written notice 
        of--
                    ``(i) the person's intent to bring an action under 
                this subsection,
                    ``(ii) the identities of the individuals or 
                entities the person intends to name as defendants to 
                the action, and
                    ``(iii) all information the person possesses 
                regarding the activity that is the subject of the 
                action that may materially affect the Secretary's 
                decision to initiate a proceeding to impose a civil 
                monetary penalty under this section against the 
                defendants, and
            ``(B) one of the following conditions is met:
                    ``(i) During the 60-day period that begins on the 
                date the Secretary receives the written notice 
                described in subparagraph (A), the Secretary does not 
                notify the person that the Secretary intends to 
                initiate an investigation to determine whether to 
                impose a civil monetary penalty under this section 
                against the defendants.
                    ``(ii) The Secretary notifies the person during the 
                60-day period described in clause (i) that the 
                Secretary intends to initiate an investigation to 
                determine whether to impose a civil monetary penalty 
                under this section against the defendants, and the 
                Secretary subsequently notifies the person that the 
                Secretary no longer intends to initiate an 
                investigation or proceeding to impose a civil monetary 
                penalty against the defendants.
                    ``(iii) After the expiration of the 2-year period 
                that begins on the date written notice is provided to 
                the Secretary, the Secretary has not initiated a 
                proceeding to impose a civil monetary penalty against 
                the defendants.
    ``(3) If a person is awarded any amounts in an action brought under 
this subsection that are in excess of the damages suffered by the 
person as a result of the defendant's activities, 20 percent of such 
amounts shall be withheld from the person for payment into the Anti-
Fraud and Abuse Trust Fund established under section 4101(b) of the 
Health Equity and Access Reform Act of 1993.
    ``(4) No action may be brought under this subsection more than 6 
years after the date of the activity with respect to which the action 
is brought.''.

SEC. 4115. ACTIONS SUBJECT TO CRIMINAL PENALTIES.

    (a) Permitting Secretary To Impose Civil Monetary Penalty.--Section 
1128A(b) of the Social Security Act (42 U.S.C. 1320a-7a(a)) is amended 
by adding the following new paragraph:
            ``(3) Any person (including any organization, agency, or 
        other entity, but excluding a beneficiary as defined in 
        subsection (i)(5)) who the Secretary determines has violated 
        section 1128(B)(b) of this title shall be subject to a civil 
        monetary penalty of not more than $10,000 for each such 
        violation. In addition, such person shall be subject to an 
        assessment of not more than twice the total amount of the 
        remuneration offered, paid, solicited, or received in violation 
        of section 1128B(b). The total amount of remuneration subject 
        to an assessment shall be calculated without regard to whether 
        some portion thereof also may have been intended to serve a 
        purpose other than one proscribed by section 1128B(b).''.
    (b) Restriction on Application of Exception for Amounts Paid to 
Employees.--Section 1128B(b)(3)(B) of such Act (42 U.S.C. 1320a-
7b(b)(3)(B)) is amended by striking ``services;'' and inserting the 
following: ``services, but only if the amount of remuneration under the 
arrangement is (i) consistent with fair market value; (ii) not 
determined in a manner that takes into account (directly or indirectly) 
the volume or value of any referrals by the employee to the employer 
for the furnishing (or arranging for the furnishing) of such items or 
services; and (iii) provided pursuant to an arrangement that would be 
commercially reasonable even if no referrals were made;''.

SEC. 4116. SANCTIONS AGAINST PRACTITIONERS AND PERSONS FOR FAILURE TO 
              COMPLY WITH STATUTORY OBLIGATIONS.

    (a) Minimum Period of Exclusion for Practitioners and Persons 
Failing To Meet Statutory Obligations.--
            (1) In general.--The second sentence of section 1156(b)(1) 
        of the Social Security Act (42 U.S.C. 1320c-5(b)(1)) is amended 
        by striking ``may prescribe)'' and inserting ``may prescribe, 
        except that such period may not be less than 1 year)''.
            (2) Conforming amendment.--Section 1156(b)(2) of such Act 
        (42 U.S.C. 1320c-5(b)(2)) is amended by striking ``shall 
        remain'' and inserting ``shall (subject to the minimum period 
        specified in the second sentence of paragraph (1)) remain''.
    (b) Repeal of ``Unwilling or Unable'' Condition for Imposition of 
Sanction.--Section 1156(b)(1) of such Act (42 U.S.C. 1320c-5(b)(1)) is 
amended--
            (1) in the second sentence, by striking ``and determines'' 
        and all that follows through ``such obligations,''; and
            (2) by striking the third sentence.
    (c) Amount of Civil Money Penalty.--Section 1156(b)(3) of such Act 
(42 U.S.C. 1320c-5(b)(3)) is amended by striking ``the actual or 
estimated cost'' and inserting the following: ``up to $10,000 for each 
instance''.

SEC. 4117. INTERMEDIATE SANCTIONS FOR MEDICARE HEALTH MAINTENANCE 
              ORGANIZATIONS.

    (a) Application of Intermediate Sanctions for Any Program 
Violations.--
            (1) In general.--Section 1876(i)(1) of the Social Security 
        Act (42 U.S.C. 1395mm(i)(1)) is amended by striking ``the 
        Secretary may terminate'' and all that follows and inserting 
        the following: ``in accordance with procedures established 
        under paragraph (9), the Secretary may at any time terminate 
        any such contract or may impose the intermediate sanctions 
        described in paragraph (6)(B) or (6)(C) (whichever is 
        applicable) on the eligible organization if the Secretary 
        determines that the organization--
                    ``(A) has failed substantially to carry out the 
                contract;
                    ``(B) is carrying out the contract in a manner 
                inconsistent with the efficient and effective 
                administration of this section;
                    ``(C) is operating in a manner that is not in the 
                best interests of the individuals covered under the 
                contract; or
                    ``(D) no longer substantially meets the applicable 
                conditions of subsections (b), (c), (e), and (f).''.
            (2) Other intermediate sanctions for miscellaneous program 
        violations.--Section 1876(i)(6) of such Act (42 U.S.C. 
        1395mm(i)(6)) is amended by adding at the end the following new 
        subparagraph:
    ``(C) In the case of an eligible organization for which the 
Secretary makes a determination under paragraph (1) the basis of which 
is not described in subparagraph (A), the Secretary may apply the 
following intermediate sanctions:
            ``(i) Civil money penalties of not more than $25,000 for 
        each determination under paragraph (1) if the deficiency that 
        is the basis of the determination has directly adversely 
        affected (or has the substantial likelihood of adversely 
        affecting) an individual covered under the organization's 
        contract.
            ``(ii) Civil money penalties of not more than $10,000 for 
        each week beginning after the initiation of procedures by the 
        Secretary under paragraph (9) during which the deficiency that 
        is the basis of a determination under paragraph (1) exists.
            ``(iii) Suspension of enrollment of individuals under this 
        section after the date the Secretary notifies the organization 
        of a determination under paragraph (1) and until the Secretary 
        is satisfied that the deficiency that is the basis for the 
        determination has been corrected and is not likely to recur.''.
            (3) Procedures for imposing sanctions.--Section 1876(i) of 
        such Act (42 U.S.C. 1395mm(i)) is amended by adding at the end 
        the following new paragraph:
    ``(9) The Secretary may terminate a contract with an eligible 
organization under this section or may impose the intermediate 
sanctions described in paragraph (6) on the organization in accordance 
with formal investigation and compliance procedures established by the 
Secretary under which--
            ``(A) the Secretary provides the organization with the 
        opportunity to develop and implement a corrective action plan 
        to correct the deficiencies that were the basis of the 
        Secretary's determination under paragraph (1);
            ``(B) in deciding whether to impose sanctions, the 
        Secretary considers aggravating factors such as whether an 
        entity has a history of deficiencies or has not taken action to 
        correct deficiencies the Secretary has brought to their 
        attention;
            ``(C) there are no unreasonable or unnecessary delays 
        between the finding of a deficiency and the imposition of 
        sanctions; and
            ``(D) the Secretary provides the organization with 
        reasonable notice and opportunity for hearing (including the 
        right to appeal an initial decision) before imposing any 
        sanction or terminating the contract.''.
            (4) Conforming amendments.--
                    (A) In general.--Section 1876(i)(6)(B) of such Act 
                (42 U.S.C. 1395mm(i)(6)(B)) is amended by striking the 
                second sentence.
                    (B) Procedural provisions.--Section 1876(i)(6) of 
                such Act (42 U.S.C. 1395mm(i)(6)) is further amended by 
                adding at the end the following new subparagraph:
    ``(D) The provisions of section 1128A (other than subsections (a) 
and (b)) shall apply to a civil money penalty under subparagraph (A) or 
(B) in the same manner as they apply to a civil money penalty or 
proceeding under section 1128A(a).''.
    (b) Agreements With Peer Review Organizations.--
            (1) Requirement for written agreement.--Section 
        1876(i)(7)(A) of the Social Security Act (42 U.S.C. 
        1395mm(i)(7)(A)) is amended by striking ``an agreement'' and 
        inserting ``a written agreement''.
            (2) Development of model agreement.--Not later than July 1, 
        1995, the Secretary shall develop a model of the agreement that 
        an eligible organization with a risk-sharing contract under 
        section 1876 of the Social Security Act must enter into with an 
        entity providing peer review services with respect to services 
        provided by the organization under section 1876(i)(7)(A) of 
        such Act.
            (3) Report by gao.--
                    (A) Study.--The Comptroller General shall conduct a 
                study of the costs incurred by eligible organizations 
                with risk-sharing contracts under section 1876(b) of 
                such Act of complying with the requirement of entering 
                into a written agreement with an entity providing peer 
                review services with respect to services provided by 
                the organization, together with an analysis of how 
                information generated by such entities is used by the 
                Secretary to assess the quality of services provided by 
                such eligible organizations.
                    (B) Report to congress.--Not later than July 1, 
                1997, the Comptroller General shall submit a report to 
                the Committee on Ways and Means and the Committee on 
                Energy and Commerce of the House of Representatives and 
                the Committee on Finance and the Special Committee on 
                Aging of the Senate on the study conducted under 
                subparagraph (A).
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to contract years beginning on or after January 1, 
1995.

SEC. 4118. EFFECTIVE DATE.

    The amendments made by this part shall take effect January 1, 1995.

         PART III--ADMINISTRATIVE AND MISCELLANEOUS PROVISIONS

SEC. 4121. ESTABLISHMENT OF THE HEALTH CARE FRAUD AND ABUSE DATA 
              COLLECTION PROGRAM.

    (a) Findings.--The Congress finds the following:
            (1) Fraud and abuse with respect to the delivery of and 
        payment for health care services is a significant contributor 
        to the growing costs of the Nation's health care.
            (2) Control of fraud and abuse in health care services 
        warrants greater efforts of coordination than those that can be 
        undertaken by individual States or the various Federal, State, 
        and local law enforcement programs.
            (3) There is a national need to coordinate information 
        about health care providers and entities that have engaged in 
        fraud and abuse in the delivery of and payment for health care 
        services.
            (4) There is no comprehensive national data collection 
        program for the reporting of public information about final 
        adverse actions against health care providers, suppliers, or 
        licensed health care practitioners that have engaged in fraud 
        and abuse in the deliver of and payment for health care 
        services.
            (5) A comprehensive national data collection program for 
        the reporting of public information about final adverse actions 
        will facilitate the enforcement of the provisions of the Social 
        Security Act and other statutes applicable to health care fraud 
        and abuse.
    (b) General Purpose.--Not later than January 1, 1995, the Secretary 
shall establish a national health care fraud and abuse data collection 
program for the reporting of final adverse actions (not including 
settlements where no finding of liability has been made) against health 
care providers, suppliers, or practitioners as required by subsection 
(c), with access as set forth in subsection (d).
    (c) Reporting of Information.--
            (1) In general.--Each government agency and health care 
        plan shall report any final adverse action (not including 
        settlements where no finding of liability has been made) taken 
        against a health care provider, supplier, or practitioner.
            (2) Information to be reported.--The information to be 
        reported under paragraph (1) includes:
                    (A) The name of any health care provider, supplier, 
                or practitioner who is the subject of a final adverse 
                action.
                    (B) The name (if known) of any health care entity 
                with which a health care provider, supplier, or 
                practitioner is affiliated or associated.
                    (C) The nature of the final adverse action.
                    (D) A description of the acts or omissions and 
                injuries upon which the final adverse action was based, 
                and such other information as the Secretary determines 
                by regulation is required for appropriate 
                interpretation of information reported under this 
                section.
            (3) Confidentiality.--In determining what information is 
        required, the Secretary shall include procedures to assure that 
        the privacy of individuals receiving health care services is 
        appropriately protected.
            (4) Timing and form of reporting.--The information required 
        to be reported under this subsection shall be reported 
        regularly (but not less often than monthly) and in such form 
        and manner as the Secretary prescribes. Such information shall 
        first be required to be reported on a date specified by the 
        Secretary.
            (5) To whom reported.--The information required to be 
        reported under this subsection shall be reported to the 
        Secretary.
    (d) Disclosure and Correction of Information.--
            (1) Disclosure.--With respect to the information about 
        final adverse actions (not including settlements where no 
        findings of liability has been made) reported to the Secretary 
        under this section respecting a health care provider, supplier, 
        or practitioner, the Secretary shall, by regulation, provide 
        for--
                    (A) disclosure of the information, upon request, to 
                the health care provider, supplier, or licensed 
                practitioner, and
                    (B) procedures in the case of disputed accuracy of 
                the information.
            (2) Corrections.--Each Government agency and health care 
        plan shall report corrections of information already reported 
        about any final adverse action taken against a health care 
        provider, supplier, or practitioner, in such form and manner 
        that the Secretary prescribes by regulation.
    (e) Access to Reported Information.--
            (1) Availability.--The information in this database shall 
        be available to the public, Federal and State government 
        agencies, and health care plans pursuant to procedures that the 
        Secretary shall provide by regulation.
            (2) Fees for disclosure.--The Secretary may establish or 
        approve reasonable fees for the disclosure of information in 
        this database. The amount of such a fee may not exceed the 
        costs of processing the requests for disclosure and of 
        providing such information. Such fees shall be available to the 
        Secretary or, in the Secretary's discretion to the agency 
        designated under this section to cover such costs.
    (f) Protection From Liability for Reporting.--No person or entity, 
including the agency designated by the Secretary in subsection (c)(5) 
shall be held liable in any civil action with respect to any report 
made as required by this section, without knowledge of the falsity of 
the information contained in the report.
    (g) Definitions and Special Rules.--For purposes of this section:
            (1) The term ``final adverse action'' includes:
                    (A) Civil judgments against a health care provider 
                in Federal or State court related to the delivery of a 
                health care item or service.
                    (B) Federal or State criminal convictions related 
                to the delivery of a health care item or service.
                    (C) Actions by State or Federal agencies 
                responsible for the licensing and certification of 
                health care providers, suppliers, and licensed health 
                care practitioners, including--
                            (i) formal or official actions, such as 
                        revocation or suspension of a license (and the 
                        length of any such suspension), reprimand, 
                        censure or probation,
                            (ii) any other loss of license of the 
                        provider, supplier, or practitioner, by 
                        operation of law, or
                            (iii) any other negative action or finding 
                        by such State or Federal agency that is 
                        publicly available information.
                    (D) Exclusion from participation in Federal or 
                State health care programs.
                    (E) Any other adjudicated actions or decisions that 
                the Secretary shall establish by regulation.
            (2) The terms ``licensed health care practitioner'', 
        ``licensed practitioner'', and ``practitioner'' mean, with 
        respect to a State, an individual who is licensed or otherwise 
        authorized by the State to provide health care services (or any 
        individual who, without authority holds himself or herself out 
        to be so licensed or authorized).
            (3) The term ``health care provider'' means a provider of 
        services as defined in section 1861(u) of the Social Security 
        Act, and any entity, including a health maintenance 
        organization, group medical practice, or any other entity 
        listed by the Secretary in regulation, that provides health 
        care services.
            (4) The term ``supplier'' means a supplier of health care 
        items and services described in sections 1819 (a) and (b), and 
        section 1861 of the Social Security Act.
            (5) The term ``Government agency'' shall include:
                    (A) The Department of Justice.
                    (B) The Department of Health and Human Services.
                    (C) Any other Federal agency that either 
                administers or provides payment for the delivery of 
                health care services, including, but not limited to the 
                Department of Defense and the Department of Veterans 
                Affairs.
                    (D) State law enforcement agencies.
                    (E) State medicaid fraud and abuse units.
                    (F) State or Federal agencies responsible for the 
                licensing and certification of health care providers 
                and licensed health care practitioners.
            (6) The term ``health care plan'' has the meaning given to 
        such term by section 1128(i) of the Social Security Act.
            (7) For purposes of paragraph (2), the existence of a 
        conviction shall be determined under paragraph (4) of section 
        1128(j) of the Social Security Act.
    (h) Conforming Amendment.--Section 1921(d) of the Social Security 
Act is amended by inserting ``and section 4121 of the Health Equity and 
Access Reform Today Act of 1993'' after ``section 422 of the Health 
Care Quality Improvement Act of 1986''.

SEC. 4122. QUARTERLY PUBLICATION OF ADVERSE ACTIONS TAKEN.

    (a) In General.--Part A of title XI of the Social Security Act (42 
U.S.C. 1301 et seq.) is amended by adding at the end the following new 
section:

            ``quarterly publication of adverse actions taken

    ``Sec. 1144. Not later than 30 days after the end of each calendar 
quarter, the Secretary shall publish in the Federal Register a listing 
of all final adverse actions taken during the quarter under this part 
(including penalties imposed under section 1107, exclusions under 
section 1128, the imposition of civil monetary penalties under section 
1128A, and the imposition of criminal penalties under section 1128B) 
and under section 1156.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to calendar quarters beginning on or after January 1, 1995.

                  PART IV--AMENDMENTS TO CRIMINAL LAW

SEC. 4131. HEALTH CARE FRAUD.

    (a) In General.--
            (1) Fines and imprisonment for health care fraud 
        violations.--Chapter 63 of title 18, United States Code, is 
        amended by adding at the end the following:
``Sec. 1347. Health care fraud
    ``(a) Whoever knowingly executes, or attempts to execute, a scheme 
or artifice--
            ``(1) to defraud any health care plan or other person, in 
        connection with the delivery of or payment for health care 
        benefits, items, or services; or
            ``(2) to obtain, by means of false or fraudulent pretenses, 
        representations, or promises, any of the money or property 
        owned by, or under the custody or control of, any health care 
        plan, or person in connection with the delivery of or payment 
        for health care benefits, items, or services;
shall be fined under this title or imprisoned not more than 10 years, 
or both. If the violation results in serious bodily injury (as defined 
in section 1365(g)(3) of this title), such person shall be imprisoned 
for life or any term of years.
    ``(b) For purposes of this section, the term `health care plan' 
means a federally funded public program or private program for the 
delivery of or payment for health care items or services.''.
            (2) Clerical amendment.--The table of sections at the 
        beginning of chapter 63 of title 18, United States Code, is 
        amended by adding at the end the following:

``1347. Health care fraud.''.

SEC. 4132. FORFEITURES FOR FEDERAL HEALTH CARE OFFENSES.

    Section 982(a) of title 18, United States Code, is amended by 
inserting after paragraph (5) the following:
    ``(6)(A) If the court determines that a Federal health care offense 
is of a type that poses a serious threat to the health of any person or 
has a significant detrimental impact on the health care system, the 
court, in imposing sentence on a person convicted of that offense, 
shall order that person to forfeit property, real or personal, that--
            ``(i)(I) is used in the commission of the offense; or
            ``(II) constitutes or is derived from proceeds traceable to 
        the commission of the offense; and
            ``(ii) is of a value proportionate to the seriousness of 
        the offense.
    ``(B) For purposes of this paragraph, the term `Federal health care 
offense' means a violation of, or a criminal conspiracy to violate--
            ``(i) section 1347 of this title;
            ``(ii) section 1128B of the Social Security Act;
            ``(iii) sections 287, 371, 664, 666, 1001, 1027, 1341, 
        1343, or 1954 of this title if the violation or conspiracy 
        relates to health care fraud;
            ``(iv) section 501 or 511 of the Employee Retirement Income 
        Security Act of 1974, if the violation or conspiracy relates to 
        health care fraud; and
            ``(v) section 301, 303(a)(2), or 303 (b) or (e) of the 
        Federal Food, Drug and Cosmetic Act, if the violation or 
        conspiracy relates to health care fraud.''.

SEC. 4133. INJUNCTIVE RELIEF RELATING TO FEDERAL HEALTH CARE OFFENSES.

    Section 1345(a)(1) of title 18, United States Code, is amended--
            (1) by striking ``or'' at the end of subparagraph (A);
            (2) by inserting ``or'' at the end of subparagraph (B); and
            (3) by adding at the end the following:
                    ``(C) committing or about to commit a Federal 
                health care offense (as defined in section 982(a)(6)(B) 
                of this title);''.

SEC. 4134. RACKETEERING ACTIVITY RELATING TO FEDERAL HEALTH CARE 
              OFFENSES.

    Section 1961 of title 18, United States Code, is amended by 
inserting ``section 982(a)(6) (relating to Federal health care 
offenses),'' after ``sections 891-894 (relating to extortionate credit 
transactions),''.

              PART V--AMENDMENTS TO CIVIL FALSE CLAIMS ACT

SEC. 4141. AMENDMENTS TO CIVIL FALSE CLAIMS ACT.

    Section 3729 of title 31, United States Code, is amended--
            (1) in subsection (a)(7), by inserting ``or to a health 
        care plan,'' after ``property to the Government,'';
            (2) in the matter following subsection (a)(7), by inserting 
        ``or health care plan'' before ``sustains because of the act of 
        that person,'';
            (3) at the end of the first sentence of subsection (a), by 
        inserting ``or health care plan'' before ``sustains because of 
        the act of the person.'';
            (4) in subsection (c)--
                    (A) by inserting ``the term'' after ``section,''; 
                and
                    (B) by adding at the end the following: ``The term 
                also includes any request or demand, whether under 
                contract or otherwise, for money or property which is 
                made or presented to a health care plan.''; and
            (5) by adding at the end the following:
    ``(f) Health Care Plan Defined.--For purposes of this section, the 
term `health care plan' means a federally funded public program for the 
delivery of or payment for health care items or services.''.

  Subtitle C--Treatment of Certain Activities Under the Antitrust Laws

SEC. 4201. EXEMPTION FROM ANTITRUST LAWS FOR CERTAIN COMPETITIVE AND 
              COLLABORATIVE ACTIVITIES.

    (a) Exemption Described.--An activity relating to the provision of 
health care services shall be exempt from the antitrust laws if--
            (1) the activity is within one of the categories of safe 
        harbors described in section 4202;
            (2) the activity is within an additional safe harbor 
        designated by the Attorney General under section 4203; or
            (3) the activity is specified in and in compliance with the 
        terms of a certificate of review issued by the Attorney General 
        under section 4204 and the activity occurs--
                    (A) while the certificate is in effect, or
                    (B) in the case of a certificate issued during the 
                2-year period beginning on the date of the enactment of 
                this Act, at any time on or after the first day of the 
                2-year period that ends on the date the certificate 
                takes effect.
    (b) Award of Attorney's Fees and Costs of Suit.--
            (1) In general.--If any person brings an action alleging a 
        claim under the antitrust laws and the activity on which the 
        claim is based is found by the court to be exempt from such 
        laws under subsection (a), the court shall, at the conclusion 
        of the action--
                    (A) award to a substantially prevailing claimant 
                the cost of suit attributable to such claim, including 
                a reasonable attorney's fee, or
                    (B) award to a substantially prevailing party 
                defending against such claim the cost of such suit 
                attributable to such claim, including reasonable 
                attorney's fee, if the claim, or the claimant's conduct 
                during litigation of the claim, was frivolous, 
                unreasonable, without foundation, or in bad faith.
            (2) Offset in cases of bad faith.--The court may reduce an 
        award made pursuant to paragraph (1) in whole or in part by an 
        award in favor of another party for any part of the cost of 
        suit (including a reasonable attorney's fee) attributable to 
        conduct during the litigation by any prevailing party that the 
        court finds to be frivolous, unreasonable, without foundation, 
        or in bad faith.

SEC. 4202. SAFE HARBORS.

    The following activities are safe harbors for purposes of section 
4201(a)(1):
            (1) Combinations with market share below threshold.--
        Activities relating to health care services of any combination 
        of health care providers if the number of each type or 
        specialty of provider in question does not exceed 20 percent of 
        the total number of such type or specialty of provider in the 
        relevant market area.
            (2) Activities of medical self-regulatory entities.--
                    (A) In general.--Subject to subparagraph (B), any 
                activity of a medical self-regulatory entity relating 
                to standard setting or standard enforcement activities 
                that are designed to promote the quality of health care 
                provided to patients.
                    (B) Exception.--No activity of a medical self-
                regulatory entity may be deemed to fall under the safe 
                harbor established under this paragraph if the activity 
                is conducted for purposes of financial gain.
            (3) Participation in surveys.--The participation of a 
        provider of health care services in a written survey of the 
        prices of services, reimbursement levels, or the compensation 
        and benefits of employees and personnel, but only if--
                    (A) the survey is conducted by a third party, such 
                as a purchaser of health care services, governmental 
                entity, institution of higher education, or trade 
                association;
                    (B) the information provided by participants in the 
                survey is based on prices charged, reimbursements 
                received, or compensation and benefits paid prior to 
                the third month preceding the month in which the 
                information is provided; and
                    (C) if the results of the survey are disseminated, 
                the results are aggregated in a manner that ensures 
                that no recipient of the results may identify the 
                prices charged, reimbursement received, or compensation 
                and benefits paid by any particular provider.
            (4) Joint ventures for high technology and costly equipment 
        and services.--Any activity of a health care cooperative 
        venture relating to the purchase, operation, or marketing of 
        high technology or other expensive medical equipment, or the 
        provision of high cost or complex services, but only if the 
        number of participants in the venture does not exceed the 
        lowest number needed to support the venture. Other providers 
        may be included in the venture, but only if such other 
        providers could not purchase, operate, or market such equipment 
        or provide a competing service either alone or through the 
        formation of a competing venture.
            (5) Hospital mergers.--Activities relating to a merger of 2 
        hospitals if, during the 3-year period preceding the merger, 
        one of the hospitals had an average of 150 or fewer operational 
        beds and an average daily inpatient census of less than 50 
        percent of such beds.
            (6) Joint purchasing arrangements.--Any joint purchasing 
        arrangement among health care providers if--
                    (A) the purchases under the arrangement represent 
                less than 35 percent of the total sales of the product 
                or service purchased in the relevant market; and
                    (B) the cost of the products and services purchased 
                jointly accounts for less than 20 percent of the total 
                revenues from all products or services sold by each 
                participant in the joint purchasing arrangement.
            (7) Negotiations.--Activities consisting of good faith 
        negotiations to carry out any activity--
                    (A) described in this section,
                    (B) within an additional safe harbor designated by 
                the Attorney General under section 4203,
                    (C) that is the subject of an application for a 
                certificate of review under section 4204, or
                    (D) that is deemed a submission of a notification 
                under section 4205(a)(2)(B),
        without regard to whether such an activity is carried out.

SEC. 4203. DESIGNATION OF ADDITIONAL SAFE HARBORS.

    (a) In General.--
            (1) Solicitation of proposals.--Not later than 30 days 
        after the date of the enactment of this Act, the Attorney 
        General shall publish a notice in the Federal Register 
        soliciting proposals for additional safe harbors.
            (2) Review and report on proposed safe harbors.--Not later 
        than 180 days after the date of the enactment of this Act, the 
        Attorney General (in consultation with the Secretary of Health 
        and Human Services and the Chair of the Federal Trade 
        Commission) shall--
                    (A) review the proposed safe harbors submitted 
                under paragraph (1); and
                    (B) submit a report to Congress describing the 
                proposals to be included in the publication of 
                additional safe harbors described in paragraph (3) and 
                the proposals that are not to be so included, together 
                with explanations therefore.
            (3) Publication of additional safe harbors.--Not later than 
        180 days after the date of the enactment of this Act, the 
        Attorney General (in consultation with the Secretary of Health 
        and Human Services and the Chair of the Federal Trade 
        Commission) shall publish in the Federal Register proposed 
        additional safe harbors for purposes of section 4201(a)(2) for 
        providers of health care services. Not later than 180 days 
        after publishing such proposed safe harbors in the Federal 
        Register, the Attorney General shall issue final rules 
        establishing such safe harbors.
    (b) Criteria for Safe Harbors.--In establishing safe harbors under 
subsection (a), the Attorney General shall take into account the 
following:
            (1) The extent to which a competitive or collaborative 
        activity will accomplish any of the following:
                    (A) An increase in access to health care services.
                    (B) The enhancement of the quality of health care 
                services.
                    (C) The establishment of cost efficiencies that 
                will be passed on to consumers, including economies of 
                scale and reduced transaction and administrative costs.
                    (D) An increase in the ability of health care 
                facilities to provide services in medically underserved 
                areas or to medically underserved populations.
                    (E) An improvement in the utilization of health 
                care resources or the reduction in the inefficient 
                duplication of the use of such resources.
            (2) Whether the designation of an activity as a safe harbor 
        under subsection (a) will result in the following outcomes:
                    (A) Health plans and other health care insurers, 
                consumers of health care services, and health care 
                providers will be better able to negotiate payment and 
                service arrangements which will reduce costs to 
                consumers.
                    (B) Taking into consideration the characteristics 
                of the particular purchasers and providproviders 
                involved, competition will not be unduly restricted.
                    (C) Equally efficient and less restrictive 
                alternatives do not exist to meet the criteria 
                described in paragraph (1).
                    (D) The activity will not unreasonably foreclose 
                competition by denying competitors a necessary element 
                of competition.

SEC. 4204. CERTIFICATES OF REVIEW.

    (a) Establishment of Program.--In consultation with the Secretary 
and the Chair, the Attorney General shall (not later than 180 days 
after the date of the enactment of this Act) issue certificates of 
review in accordance with this section for providers of health care 
services and advise and assist any person with respect to applying for 
such a certificate of review.
    (b) Procedures for Application for Certificate.--
            (1) Form; content.--To apply for a certificate of review, a 
        person shall submit to the Attorney General a written 
        application which--
                    (A) specifies the activities relating to the 
                provision of health care services which satisfy the 
                criteria described in section 4203(b) and which will be 
                included in the certificate; and
                    (B) is in a form and contains any information, 
                including information pertaining to the overall market 
                in which the applicant operates, required by rule or 
                regulation promulgated under section 4207.
            (2) Publication of notice in federal register.--Within 10 
        days after an application submitted under paragraph (1) is 
        received by the Attorney General, the Attorney General shall 
        publish in the Federal Register a notice that announces that an 
        application for a certificate of review has been submitted, 
        identifies each person submitting the application, and 
        describes the conduct for which the application is submitted.
            (3) Establishment of procedures for issuance of 
        certificate.--In consultation with the Chair and the Secretary, 
        the Attorney General shall establish procedures to be used in 
        applying for and in determining whether to approve an 
        application for a certificate of review under this subtitle. 
        Under such procedures the Attorney General shall approve an 
        application if the Attorney General determines that the 
        activities to be covered under the certificate will satisfy the 
        criteria described in section 4203(b) for additional safe 
        harbors designated under such section and that the benefits of 
        the issuance of the certificate will outweigh any disadvantages 
        that may result from reduced competition.
            (4) Timing for decision on application.--
                    (A) In general.--Within 90 days after the Attorney 
                General receives an application for a certificate of 
                review, the Attorney General shall determine whether 
                the applicant's health care market activities are in 
                accordance with the procedures described in paragraph 
                (3). If the Attorney General, with the concurrence of 
                the Secretary, determines that such procedures are met, 
                the Attorney General shall issue to the applicant a 
                certificate of review. The certificate of review shall 
                specify--
                            (i) the health care market activities to 
                        which the certificate applies,
                            (ii) the person to whom the certificate of 
                        review is issued, and
                            (iii) any terms and conditions the Attorney 
                        General or the Secretary deems necessary to 
                        assure compliance with the applicable 
                        procedures described in paragraph (3).
                    (B) Applications deemed approved.--If the Attorney 
                General does not reject an application before the 
                expiration of the 90-period beginning on the date the 
                Attorney General receives the application, the Attorney 
                General shall be deemed to have approved the 
                application and to have issued a certificate of review 
                relating to the applicant's health care market 
                activities covered under the application.
            (5) Expedited action.--If the applicant indicates a special 
        need for prompt disposition, the Attorney General and the 
        Secretary may expedite action on the application, except that 
        no certificate of review may be issued within 30 days of 
        publication of notice in the Federal Register under subsection 
        (b)(2).
            (6) Actions upon denial.--
                    (A) Notification.--If the Attorney General denies 
                in whole or in part an application for a certificate, 
                the Attorney General shall notify the applicant of the 
                Attorney General's determination and the reasons for 
                it.
                    (B) Request for reconsideration.--An applicant may, 
                within 30 days of receipt of notification that the 
                application has been denied in whole or in part, 
                request the Attorney General to reconsider the 
                determination. The Attorney General, with the 
                concurrence of the Secretary, shall notify the 
                applicant of the determination upon reconsideration 
                within 30 days of receipt of the request.
                    (C) Return of documents.--If the Attorney General 
                denies an application for the issuance of a certificate 
                of review and thereafter receives from the applicant a 
                request for the return of documents submitted by the 
                applicant in connection with the application for the 
                certificate, the Attorney General and the Secretary 
                shall return to the applicant, not later than 30 days 
                after receipt of the request, the documents and all 
                copies of the documents available to the Attorney 
                General and the Secretary, except to the extent that 
                the information has been made public under an exception 
                to the rule against public disclosure described in 
                subsection (g)(2)(B).
            (7) Fraudulent procurement.--A certificate of review shall 
        be void ab initio with respect to any health care market 
        activities for which the certificate was procured by fraud.
    (c) Amendment and Revocation of Certificates.--
            (1) Notification of changes.--Any applicant who receives a 
        certificate of review--
                    (A) shall promptly report to the Attorney General 
                any change relevant to the matters specified in the 
                certificate; and
                    (B) may submit to the Attorney General an 
                application to amend the certificate to reflect the 
                effect of the change on the conduct specified in the 
                certificate.
            (2) Amendment to certificate.--An application for an 
        amendment to a certificate of review shall be treated as an 
        application for the issuance of a certificate. The effective 
        date of an amendment shall be the date on which the application 
        for the amendment is submitted to the Attorney General.
            (3) Revocation.--
                    (A) Grounds for revocation.--In accordance with 
                this paragraph, the Attorney General may revoke in 
                whole or in part a certificate of review issued under 
                this section. The following shall be considered grounds 
                for the revocation of a certificate:
                            (i) After the expiration of the 2-year 
                        period beginning on the date a person's 
                        certificate is issued, the activities of the 
                        person have not substantially accomplished the 
                        purposes for the issuance of the certificate.
                            (ii) The person has failed to comply with 
                        any of the terms or conditions imposed under 
                        the certificate by the Attorney General or the 
                        Secretary under subsection (b)(4).
                            (iii) The activities covered under the 
                        certificate no longer satisfy the criteria set 
                        forth in section 4203(b).
                    (B) Request for compliance information.--If the 
                Attorney General or Secretary has reason to believe 
                that any of the grounds for revocation of a certificate 
                of review described in subparagraph (A) may apply to a 
                person holding the certificate, the Attorney General 
                shall request such information from such person as the 
                Attorney General or the Secretary deems necessary to 
                resolve the matter of compliance. Failure to comply 
                with such request shall be grounds for revocation of 
                the certificate under this paragraph.
                    (C) Procedures for revocation.--If the Attorney 
                General or the Secretary determines that any of the 
                grounds for revocation of a certificate of review 
                described in subparagraph (A) apply to a person holding 
                the certificate, or that such person has failed to 
                comply with a request made under subparagraph (B), the 
                Attorney General shall give written notice of the 
                determination to such person. The notice shall include 
                a statement of the circumstances underlying, and the 
                reasons in support of, the determination. In the 60-day 
                period beginning 30 days after the notice is given, the 
                Attorney General shall revoke the certificate or modify 
                it as the Attorney General or the Secretary deems 
                necessary to cause the certificate to apply only to 
                activities that meet the procedures for the issuance of 
                certificates described in subsection (b)(2).
                    (D) Investigation authority.--For purposes of 
                carrying out this paragraph, the Attorney General may 
                conduct investigations in the same manner as the 
                Attorney General conducts investigations under section 
                3 of the Antitrust Civil Process Act, except that no 
                civil investigative demand may be issued to a person to 
                whom a certificate of review is issued if such person 
                is the target of such investigation.
    (d) Review of Determinations.--
            (1) Availability of review for certain actions.--If the 
        Attorney General denies, in whole or in part, an application 
        for a certificate of review or for an amendment to a 
        certificate, or revokes or modifies a certificate pursuant to 
        paragraph (3), the applicant or certificate holder (as the case 
        may be) may, within 30 days of the denial or revocation, bring 
        an action in any appropriate district court of the United 
        States to set aside the determination on the ground that such 
        determination is erroneous based on the preponderance of the 
        evidence.
            (2) No other review permitted.--Except as provided in 
        paragraph (1), no action by the Attorney General or the 
        Secretary pursuant to this subtitle shall be subject to 
        judicial review.
            (3) Effect of rejected application.--If the Attorney 
        General denies, in whole or in part, an application for a 
        certificate of review or for an amendment to a certificate, or 
        revokes or amends a certificate, neither the negative 
        determination nor the statement of reasons therefore shall be 
        admissible in evidence, in any administrative or judicial 
        proceeding, concerning any claim under the antitrust laws.
    (e) Publication of Decisions.--The Attorney General shall publish a 
notice in the Federal Register on a timely basis of each decision made 
with respect to an application for a certificate of review under this 
section or the amendment or revocation of such a certificate, in a 
manner that protects the confidentiality of any proprietary information 
relating to the application.
    (f) Annual Reports.--Every person to whom a certificate of review 
is issued shall submit to the Attorney General an annual report, in 
such form and at such time as the Attorney General may require, that 
contains any necessary updates to the information required under 
subsection (b) and a description of the activities of the holder under 
the certificate during the preceding year.
    (g) Restrictions on Disclosure of Information.--
            (1) Waiver of disclosure requirements under administrative 
        procedure act.--Information submitted by any person in 
        connection with the issuance, amendment, or revocation of a 
        certificate of review shall be exempt from disclosure under 
        section 552 of title 5, United States Code.
            (2) Restrictions on disclosure of commercial or financial 
        information.--
                    (A) In general.--Except as provided in subparagraph 
                (B), no officer or employee of the United States shall 
                disclose commercial or financial information submitted 
                in connection with the issuance, amendment, or 
                revocation of a certificate of review if the 
                information is privileged or confidential and if 
                disclosure of the information would cause harm to the 
                person who submitted the information.
                    (B) Exceptions.--Subparagraph (A) shall not apply 
                with respect to information disclosed--
                            (i) upon a request made by the Congress or 
                        any committee of the Congress,
                            (ii) in a judicial or administrative 
                        proceeding, subject to appropriate protective 
                        orders,
                            (iii) with the consent of the person who 
                        submitted the information,
                            (iv) in the course of making a 
                        determination with respect to the issuance, 
                        amendment, or revocation of a certificate of 
                        review, if the Attorney General deems 
                        disclosure of the information to be necessary 
                        in connection with making the determination,
                            (v) in accordance with any requirement 
                        imposed by a statute of the United States, or
                            (vi) in accordance with any rule or 
                        regulation promulgated under subsection (i) 
                        permitting the disclosure of the information to 
                        an agency of the United States or of a State on 
                        the condition that the agency will disclose the 
                        information only under the circumstances 
                        specified in clauses (i) through (v).
            (3) Prohibition against use of information to support or 
        answer claims under antitrust laws.--Any information disclosed 
        in an application for a certificate of review under this 
        section shall only be admissible into evidence in a judicial or 
        administrative proceeding for the sole purpose of establishing 
        that a person is entitled to the protections provided by such a 
        certificate.

SEC. 4205. NOTIFICATIONS PROVIDING REDUCTION IN CERTAIN PENALTIES UNDER 
              ANTITRUST LAW FOR HEALTH CARE COOPERATIVE VENTURES.

    (a) Notifications Described.--
            (1) Submission of notification by venture.--Any party to a 
        health care cooperative venture, acting on such venture's 
        behalf, may, not later than 90 days after entering into a 
        written agreement to form such venture or not later than 90 
        days after the date of the enactment of this Act, whichever is 
        later, file with the Attorney General a written notification 
        disclosing--
                    (A) the identities of the parties to such venture,
                    (B) the nature and objectives of such venture, and
                    (C) such additional information as the Attorney 
                General may require by regulation.
            (2) Activities deemed submission of notification.--The 
        following health care cooperative ventures shall be deemed to 
        have filed a written notification with respect to the venture 
        under paragraph (1):
                    (A) Submission of application for certificate of 
                review.--Any health care cooperative venture for which 
                an application for a certificate of review is filed 
                with the Attorney General under section 4203.
                    (B) Certain ventures.--Any health care cooperative 
                venture meeting the following requirements:
                            (i) The venture consists of a network of 
                        non-institutional providers not greater than--
                                    (I) in the case of a nonexclusive 
                                network in which the participating 
                                members are permitted to create or join 
                                other competing networks, 50 percent of 
                                the providers of health care services 
                                in the relevant geographic area and 50 
                                percent of the members of the provider 
                                specialty group in the relevant market; 
                                or
                                    (II) in the case of an exclusive 
                                network in which the participating 
                                members are not permitted to create or 
                                join other competing networks, 35 
                                percent of the providers of health care 
                                services in the relevant geographic 
                                area and 35 percent of the members of 
                                the provider specialty group in the 
                                relevant market.
                            (ii) Each member of the venture assumes 
                        substantial financial risk for the operation of 
                        the venture through risk-sharing arrangements, 
                        including (but not limited to)--
                                    (I) the acceptance of capitation 
                                contracts;
                                    (II) the acceptance of contracts 
                                with fee withholding mechanisms 
                                relating to the ability to meet 
                                established goals for utilization 
                                review and management; and
                                    (III) the holding by members of 
                                significant ownership or equity 
                                interests in the venture, where the 
                                capital contributed by the members is 
                                used to fund the operational costs of 
                                the venture such as administration, 
                                marketing, and computer-operated 
                                medical information, if the venture 
                                develops and operates comprehensive 
                                programs for utilization management and 
                                quality assurance that include controls 
                                over the use of institutional, 
                                specialized, and ancillary medical 
                                services.
            (3) Submission of additional information.--
                    (A) Request of attorney general.--At any time after 
                receiving a notification filed under paragraph (1), the 
                Attorney General may require the submission of 
                additional information or documentary material relevant 
                to the proposed health care cooperative venture.
                    (B) Parties to venture.--Any party to a health care 
                cooperative venture may submit such additional 
                information on the venture's behalf as may be 
                appropriate to ensure that the venture will receive the 
                protections provided under subsection (b).
                    (C) Required submission of information on changes 
                to venture.--A health care cooperative venture for 
                which a notification is in effect under this section 
                shall submit information on any change in the 
                membership of the venture not later than 90 days after 
                such change occurs.
            (4) Publication of notification.--
                    (A) Information made publicly available.--Not later 
                than 30 days after receiving a notification with 
                respect to a venture under paragraph (1), the Attorney 
                General shall publish in the Federal Register a notice 
                with respect to the venture that identifies the parties 
                to the venture and generally describes the purpose and 
                planned activity of the venture. Prior to its 
                publication, the contents of the notice shall be made 
                available to the parties to the venture.
                    (B) Restriction on disclosure of other 
                information.--All information and documentary material 
                submitted pursuant to this section and all information 
                obtained by the Attorney General in the course of any 
                investigation or case with respect to a potential 
                violation of the antitrust laws by the health care 
                cooperative venture (other than information and 
                material described in subparagraph (A)) shall be exempt 
                from disclosure under section 552 of title 5, United 
                States Code, and shall not be made publicly available 
                by any agency of the United States to which such 
                section applies except in a judicial proceeding in 
                which such information and material is subject to any 
                protective order.
            (5) Withdrawal of notification.--Any person who files a 
        notification pursuant to this section may withdraw such 
        notification before a publication by the Attorney General 
        pursuant to paragraph (4). Any person who is deemed to have 
        filed a notification under paragraph (2)(A) shall be deemed to 
        have withdrawn the notification if the certificate of review in 
        question is revoked or withdrawn under section 4204.
            (6) No judicial review permitted.--Any action taken or not 
        taken by the Attorney General with respect to notifications 
        filed pursuant to this subsection shall not be subject to 
        judicial review.
    (b) Protections for Ventures Subject to Notification.--
            (1) In general.--
                    (A) Protections described.--The provisions of 
                paragraphs (2), (3), (4), and (5) shall apply with 
                respect to any action under the antitrust laws 
                challenging conduct within the scope of a notification 
                which is in effect pursuant to subsection (a)(1).
                    (B) Timing of protections.--The protections 
                described in this subsection shall apply to the venture 
                that is the subject of a notification under subsection 
                (a)(1) as of the earlier of--
                            (i) the date of the publication in the 
                        Federal Register of the notice published with 
                        respect to the notification; or
                            (ii) if such notice is not published during 
                        the period required under subsection (a)(4), 
                        the expiration of the 30-day period that begins 
                        on the date the Attorney General receives any 
                        necessary information required to be submitted 
                        under subsection (a)(1) or any additional 
                        information required by the Attorney General 
                        under subsection (a)(3)(A).
            (2) Applicability of rule of reason standard.--In any 
        action under the antitrust laws, the conduct of any person 
        which is within the scope of a notification filed under 
        subsection (a) shall not be deemed illegal per se, but shall be 
        judged on the basis of its reasonableness, taking into account 
        all relevant factors affecting competition, including, but not 
        limited to, effects on competition in relevant markets.
            (3) Limitation on recovery to actual damages and 
        interest.--Notwithstanding section 4 of the Clayton Act, any 
        person who is entitled to recovery under the antitrust laws for 
        conduct that is within the scope of a notification filed under 
        subsection (a) shall recover the actual damages sustained by 
        such person and interest calculated at the rate specified in 
        section 1961 of title 28, United States Code, for the period 
        beginning on the earliest date for which injury can be 
        established and ending on the date of judgment, unless the 
        court finds that the award of all or part of such interest is 
        unjust under the circumstances.
            (4) Award of attorney's fees and costs of suit.--
                    (A) In general.--In any action under the antitrust 
                laws brought against a health care cooperative venture 
                for conduct that is within the scope of a notification 
                filed under subsection (a), the court shall, at the 
                conclusion of the action--
                            (i) award to a substantially prevailing 
                        claimant the cost of suit attributable to such 
                        claim, including a reasonable attorney's fee, 
                        or
                            (ii) award to a substantially prevailing 
                        party defending against such claim the cost of 
                        such suit attributable to such claim, including 
                        reasonable attorney's fee, if the claim, or the 
                        claimant's conduct during litigation of the 
                        claim, was frivolous, unreasonable, without 
                        foundation, or in bad faith.
                    (B) Offset in cases of bad faith.--The court may 
                reduce an award made pursuant to subparagraph (A) in 
                whole or in part by an award in favor of another party 
                for any part of the cost of suit (including a 
                reasonable attorney's fee) attributable to conduct 
                during the litigation by any prevailing party that the 
                court finds to be frivolous, unreasonable, without 
                foundation, or in bad faith.
            (5) Restrictions on admissibility of information.--
                    (A) In general.--Any information disclosed in a 
                notification submitted under subsection (a)(1) and the 
                fact of the publication of a notification by the 
                Attorney General under subsection (a)(4) shall only be 
                admissible into evidence in a judicial or 
                administrative proceeding for the sole purpose of 
                establishing that a party to a health care cooperative 
                venture is entitled to the protections described in 
                this subsection.
                    (B) Actions of attorney general.--No action taken 
                by the Attorney General pursuant to this section shall 
                be admissible into evidence in any judicial or 
                administrative proceeding for the purpose of supporting 
                or answering any claim under the antitrust laws.

SEC. 4206. REVIEW AND REPORTS ON SAFE HARBORS AND CERTIFICATES OF 
              REVIEW.

    (a) In General.--The Attorney General (in consultation with the 
Secretary and the Chair) shall periodically review the safe harbors 
described in section 4202, the additional safe harbors designated under 
section 4203, and the certificates of review issued under section 4204, 
and--
            (1) with respect to the safe harbors described in section 
        4202, submit such recommendations to Congress as the Attorney 
        General considers appropriate for modifications of such safe 
        harbors;
            (2) with respect to the additional safe harbors under 
        designated under section 4203, issue proposed revisions to such 
        activities and publish the revisions in the Federal Register; 
        and
            (3) with respect to the certificates of review, submit a 
        report to Congress on the issuance of such certificates, and 
        shall include in the report a description of the effect of such 
        certificates on increasing access to high quality health care 
        services at reduced costs.
    (b) Recommendations for Legislation.--The Attorney General shall 
include in the reports submitted under subsection (a)(3) any 
recommendations of the Attorney General for legislation to improve the 
program for the issuance of certificates of review established under 
this subtitle.

SEC. 4207. RULES, REGULATIONS, AND GUIDELINES.

    (a) Safe Harbors, Certificates, and Notifications.--The Attorney 
General, with the concurrence of the Secretary, shall promulgate such 
rules, regulations, and guidelines as are necessary to carry out 
sections 4202, 4203, 4204, and 4205, including guidelines defining or 
relating to relevant geographic and product markets for health care 
services and providers of health care services.
    (b) Guidance for Providers.--
            (1) In general.--To promote greater certainty regarding the 
        application of the antitrust laws to activities in the health 
        care market, the Attorney General, in consultation with the 
        Secretary and the Chair, shall (not later than 1 year after the 
        date of the enactment of this Act), taking into account the 
        criteria used to designate additional safe harbors under 
        section 4203 and grant certificates of review under section 
        4204, publish guidelines--
                    (A) to assist providers of health care services in 
                analyzing whether the activities of such providers may 
                be subject to a safe harbor under sections 4202 or 
                4203; and
                    (B) describing specific types of activities which 
                would meet the requirements for a certificate of review 
                under section 4204, and summarizing the factual and 
                legal bases on which the activities would meet the 
                requirements.
            (2) Periodic update.--The Attorney General shall 
        periodically update the guidelines published under paragraph 
        (1) as the Attorney General considers appropriate.
            (3) Waiver of administrative procedure act.--Section 553 of 
        title 5, United States Code, shall not apply to the issuance of 
        guidelines under paragraph (1).

SEC. 4208. ESTABLISHMENT OF HHS OFFICE OF HEALTH CARE COMPETITION 
              POLICY.

    (a) In General.--There is established within the Department of 
Health and Human Services an Office to be known as the Office of Health 
Care Competition Policy (hereafter in this section referred to as the 
``Office''). The Office shall be headed by a director, who shall be 
appointed by the Secretary.
    (b) Duties.--The Office shall coordinate the responsibilities of 
the Secretary under this subtitle and otherwise assist the Secretary in 
developing policies relating to the competitive and collaborative 
activities of providers of health care services.

SEC. 4209. DEFINITIONS.

    In this subtitle, the following definitions shall apply:
            (1) The term ``antitrust laws''--
                    (A) has the meaning given it in subsection (a) of 
                the first section of the Clayton Act (15 U.S.C. 12(a)), 
                except that such term includes section 5 of the Federal 
                Trade Commission Act (15 U.S.C. 45) to the extent such 
                section applies to unfair methods of competition; and
                    (B) includes any State law similar to the laws 
                referred to in subparagraph (A).
            (2) The term ``Chair'' means the Chair of the Federal Trade 
        Commission.
            (3) The term ``health care cooperative venture'' means any 
        activities, including attempts to enter into or perform a 
        contract or agreement, carried out by 2 or more persons for the 
        purpose of providing health care services.
            (4) The term ``health care services'' means any services 
        for which payment may be made under a health plan, including 
        services related to the delivery or administration of such 
        services.
            (5) The term ``medical self-regulatory entity'' means a 
        medical society or association, a specialty board, a recognized 
        accrediting agency, or a hospital medical staff, and includes 
        the members, officers, employees, consultants, and volunteers 
        or committees of such an entity.
            (6) The term ``person'' includes a State or unit of local 
        government.
            (7) The term ``provider of health care services'' means any 
        individual or entity that is engaged in the delivery of health 
        care services in a State and that is required by State law or 
        regulation to be licensed or certified by the State to engage 
        in the delivery of such services in the State.
            (8) The term ``specialty group'' means a medical specialty 
        or subspecialty in which a provider of health care services may 
        be licensed to practice by a State (as determined by the 
        Secretary in consultation with the certification boards for 
        such specialties and subspecialties).
            (9) The term ``standard setting and enforcement 
        activities'' means--
                    (A) accreditation of health care practitioners, 
                health care providers, medical education institutions, 
                or medical education programs,
                    (B) technology assessment and risk management 
                activities,
                    (C) the development and implementation of practice 
                guidelines or practice parameters, or
                    (D) official peer review proceedings undertaken by 
                a hospital medical staff (or committee thereof) or a 
                medical society or association for purposes of 
                evaluating the professional conduct or quality of 
                health care provided by a medical professional.

TITLE V--SPECIAL ASSISTANCE FOR FRONTIER, RURAL, AND URBAN UNDERSERVED 
                                 AREAS

        Subtitle A--Frontier, Rural, and Urban Underserved Areas

SEC. 5001. ESTABLISHMENT OF GRANT PROGRAM.

    Subpart I of part D of title III of the Public Health Service Act 
(42 U.S.C. 254b et seq.) is amended by adding at the end the following 
new section:

``SEC. 330A. COMMUNITY-BASED PRIMARY HEALTH CARE GRANT PROGRAM.

    ``(a) Establishment.--The Secretary shall establish and administer 
a program to provide allotments to States to enable such States to 
provide grants for the creation or enhancement of community-based 
primary health care entities that provide services to low-income or 
medically underserved populations.
    ``(b) Allotments to States.--
            ``(1) In general.--From the amount available for allotment 
        under subsection (h) for a fiscal year, the Secretary shall 
        allot to each State an amount equal to the product of the grant 
        share of the State (as determined under paragraph (2)) 
        multiplied by such amount available.
            ``(2) Grant share.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the grant share of a State shall be the product of the 
                need-adjusted population of the State (as determined 
                under subparagraph (B)) multiplied by the Federal 
                matching percentage of the State (as determined under 
                subparagraph (C)), expressed as a percentage of the sum 
                of the products of such factors for all States.
                    ``(B) Need-adjusted population.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A), the need-adjusted population 
                        of a State shall be the product of the total 
                        population of the State (as estimated by the 
                        Secretary of Commerce) multiplied by the need 
                        index of the State (as determined under clause 
                        (ii)).
                            ``(ii) Need index.--For purposes of clause 
                        (i), the need index of a State shall be the 
                        ratio of--
                                    ``(I) the weighted sum of the 
                                geographic percentage of the State (as 
                                determined under clause (iii)), the 
                                poverty percentage of the State (as 
                                determined under clause (iv)), and the 
                                multiple grant percentage of the State 
                                (as determined under clause (v)); to
                                    ``(II) the general population 
                                percentage of the State (as determined 
                                under clause (vi)).
                            ``(iii) Geographic percentage.--
                                    ``(I) In general.--For purposes of 
                                clause (ii)(I), the geographic 
                                percentage of the State shall be the 
                                estimated population of the State that 
                                is residing in nonurbanized areas (as 
                                determined under subclause (II)) 
                                expressed as a percentage of the total 
                                nonurbanized population of all States.
                                    ``(II) Nonurbanized population.--
                                For purposes of subclause (I), the 
                                estimated population of the State that 
                                is residing in nonurbanized areas shall 
                                be one minus the urbanized population 
                                of the State (as determined using the 
                                most recent decennial census), 
                                expressed as a percentage of the total 
                                population of the State (as determined 
                                using the most recent decennial 
                                census), multiplied by the current 
                                estimated population of the State.
                                    ``(III) State of alaska.--
                                Notwithstanding subclause (I), the 
                                geographic percentage for the State of 
                                Alaska shall be the relative population 
                                density of the State expressed as the 
                                ratio of--
                                            ``(aa) the average number 
                                        of individuals residing in 
                                        Alaska per square mile; to
                                            ``(bb) the average number 
                                        of individuals residing in the 
                                        United States per square mile.
                            ``(iv) Poverty percentage.--For purposes of 
                        clause (ii)(I), the poverty percentage of the 
                        State shall be the estimated number of people 
                        residing in the State with incomes below 200 
                        percent of the income official poverty line (as 
                        adjusted for actual costs and incomes in each 
                        State and as determined by the Office of 
                        Management and Budget) expressed as a 
                        percentage of the total number of such people 
                        residing in all States.
                            ``(v) Multiple grant percentage.--For 
                        purposes of clause (ii)(I), the multiple grant 
                        percentage of the State shall be the amount of 
                        Federal funding received by the State under 
                        grants awarded under sections 329, 330, and 
                        340, expressed as a percentage of the total 
                        amounts received under such grants by all 
                        States. With respect to a State, such 
                        percentage shall not exceed twice the general 
                        population percentage of the State under clause 
                        (vi) or be less than one-half of the States 
                        general population percentage.
                            ``(vi) General population percentage.--For 
                        purposes of clause (ii)(II), the general 
                        population percentage of the State shall be the 
                        total population of the State (as determined by 
                        the Secretary of Commerce) expressed as a 
                        percentage of the total population of all 
                        States.
                    ``(C) Federal matching percentage.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A), the Federal matching 
                        percentage of the State shall be equal to one, 
                        less the State matching percentage (as 
                        determined under clause (ii)).
                            ``(ii) State matching percentage.--For 
                        purposes of clause (i), the State matching 
                        percentage of the State shall be 0.25 
                        multiplied by the ratio of the total taxable 
                        resource percentage (as determined under clause 
                        (iii)) to the need-adjusted population of the 
                        State (as determined under subparagraph (B)).
                            ``(iii) Total taxable resource 
                        percentage.--For purposes of clause (ii), the 
                        total taxable resources percentage of the State 
                        shall be the total taxable resources of a State 
                        (as determined by the Secretary of the 
                        Treasury) expressed as a percentage of the sum 
                        of the total taxable resources of all States.
            ``(3) Annual estimates.--
                    ``(A) In general.--If the Secretary of Commerce 
                does not produce the annual estimates required under 
                paragraph (2)(B)(iv), such estimates shall be 
                determined by multiplying the percentage of the 
                population of the State that is below 200 percent of 
                the income official poverty line as determined using 
                the most recent decennial census by the most recent 
                estimate of the total population of the State. Except 
                as provided in subparagraph (B), the calculations 
                required under this subparagraph shall be made based on 
                the most recent 3-year average of the total taxable 
                resources of individuals within the State.
                    ``(B) District of columbia.--Notwithstanding 
                subparagraph (A), the calculations required under such 
                subparagraph with respect to the District of Columbia 
                shall be based on the most recent 3-year average of the 
                personal income of individuals residing within the 
                District as a percentage of the personal income for all 
                individuals residing within the District, as determined 
                by the Secretary of Commerce.
                    ``(C) State of alaska.--Notwithstanding 
                subparagraph (A), the calculations required under such 
                subparagraph with respect to the State of Alaska shall 
                be based on the quotient of--
                            ``(i) the most recent 3-year average of the 
                        per capita income of individuals residing in 
                        the State; divided by
                            ``(ii) 1.25.
            ``(4) Matching requirement.--A State that receives an 
        allotment under this section shall make available State 
        resources (either directly or indirectly) to carry out this 
        section in an amount that shall equal the State matching 
        percentage for the State (as determined under paragraph 
        (2)(C)(ii)) divided by the Federal matching percentage (as 
        determined under paragraph (2)(C)).
    ``(c) Application.--
            ``(1) In general.--To be eligible to receive an allotment 
        under this section, a State shall prepare and submit an 
        application to the Secretary at such time, in such manner, and 
        containing such information as the Secretary may by regulation 
        require.
            ``(2) Assurances.--A State application submitted under 
        paragraph (1) shall contain an assurance that--
                    ``(A) the State will use amounts received under its 
                allotment consistent with the requirements of this 
                section; and
                    ``(B) the State will provide, from non-Federal 
                sources, the amounts required under subsection (b)(4).
    ``(d) Use of Funds.--
            ``(1) In general.--The State shall use amounts received 
        under this section to award grants to eligible public and 
        nonprofit private entities, or consortia of such entities, 
        within the State to enable such entities or consortia to 
        provide services of the type described in paragraph (2) of 
        section 329(h) to low-income or medically underserved 
        populations.
            ``(2) Eligibility.--To be eligible to receive a grant under 
        paragraph (1), an entity or consortium shall--
                    ``(A) prepare and submit to the administering 
                entity of the State, an application at such time, in 
                such manner, and containing such information as such 
                administering entity may require, including a plan for 
                the provision of services of the type described in 
                paragraph (3);
                    ``(B) provide assurances that services will be 
                provided under the grant at fee rates established or 
                determined in accordance with section 330(e)(3)(F); and
                    ``(C) provide assurances that in the case of 
                services provided to individuals with health insurance, 
                such insurance shall be used as the primary source of 
                payment for such services.
            ``(3) Services.--The services to be provided under a grant 
        awarded under paragraph (1) shall include--
                    ``(A) one or more of the types of primary health 
                services described in section 330(b)(1);
                    ``(B) one or more of the types of supplemental 
                health services described in section 330(b)(2); and
                    ``(C) any other services determined appropriate by 
                the administering entity of the State.
            ``(4) Target populations.--Entities or consortia receiving 
        grants under paragraph (1) shall, in providing the services 
        described in paragraph (3), substantially target populations of 
        low-income or medically underserved populations within the 
        State who reside in medically underserved or health 
        professional shortage areas, areas certified as underserved 
        under the rural health clinic program, or other areas 
        determined appropriate by the administering entity of the 
        State, within the State.
            ``(5) Priority.--In awarding grants under paragraph (1), 
        the State shall--
                    ``(A) give priority to entities or consortia that 
                can demonstrate through the plan submitted under 
                paragraph (2) that--
                            ``(i) the services provided under the grant 
                        will expand the availability of primary care 
                        services to the maximum number of low-income or 
                        medically underserved populations who have no 
                        access to such care on the date of the grant 
                        award; and
                            ``(ii) the delivery of services under the 
                        grant will be cost-effective; and
                    ``(B) ensure that an equitable distribution of 
                funds is achieved among urban and rural entities or 
                consortia.
    ``(e) Reports and Audits.--Each State shall prepare and submit to 
the Secretary annual reports concerning the State's activities under 
this section which shall be in such form and contain such information 
as the Secretary determines appropriate. Each such State shall 
establish fiscal control and fund accounting procedures as may be 
necessary to assure that amounts received under this section are being 
disbursed properly and are accounted for, and include the results of 
audits conducted under such procedures in the reports submitted under 
this subsection.
    ``(f) Payments.--
            ``(1) Entitlement.--Each State for which an application has 
        been approved by the Secretary under this section shall be 
        entitled to payments under this section for each fiscal year in 
        an amount not to exceed the State's allotment under subsection 
        (b) to be expended by the State in accordance with the terms of 
        the application for the fiscal year for which the allotment is 
        to be made.
            ``(2) Method of payments.--The Secretary may make payments 
        to a State in installments, and in advance or by way of 
        reimbursement, with necessary adjustments on account of 
        overpayments or underpayments, as the Secretary may determine.
            ``(3) State spending of payments.--Payments to a State from 
        the allotment under subsection (b) for any fiscal year must be 
        expended by the State in that fiscal year or in the succeeding 
        fiscal year.
    ``(g) Definition.--As used in this section, the term `administering 
entity of the State' means the agency or official designated by the 
chief executive officer of the State to administer the amounts provided 
to the State under this section.
    ``(h) Funding.--Notwithstanding any other provision of law, the 
Secretary shall use 50 percent of the amounts that the Secretary is 
required to utilize under section 330B(h) in each fiscal year to carry 
out this section.''.

SEC. 5002. ESTABLISHMENT OF NEW PROGRAM TO PROVIDE FUNDS TO ALLOW 
              FEDERALLY QUALIFIED HEALTH CENTERS AND OTHER ENTITIES OR 
              ORGANIZATIONS TO PROVIDE EXPANDED SERVICES TO MEDICALLY 
              UNDERSERVED INDIVIDUALS.

    (a) In General.--Subpart I of part D of title III of the Public 
Health Service Act (42 U.S.C. 254b et seq.) (as amended by section 
5001) is amended by adding at the end the following new section:

``SEC. 330B. ESTABLISHMENT OF NEW PROGRAM TO PROVIDE FUNDS TO ALLOW 
              FEDERALLY QUALIFIED HEALTH CENTERS AND OTHER ENTITIES OR 
              ORGANIZATIONS TO PROVIDE EXPANDED SERVICES TO MEDICALLY 
              UNDERSERVED INDIVIDUALS.

    ``(a) Establishment of Health Services Access Program.--From 
amounts appropriated under this section, the Secretary shall, acting 
through the Bureau of Health Care Delivery Assistance, award grants 
under this section to federally qualified health centers (hereinafter 
referred to in this section as `FQHC's') and other entities and 
organizations submitting applications under this section (as described 
in subsection (c)) for the purpose of providing access to services for 
medically underserved populations (as defined in section 330(b)(3)) or 
in high impact areas (as defined in section 329(a)(5)) not currently 
being served by a FQHC.
    ``(b) Eligibility for Grants.--
            ``(1) In general.--The Secretary shall award grants under 
        this section to entities or organizations described in this 
        paragraph and paragraph (2) which have submitted a proposal to 
        the Secretary to expand such entities or organizations 
        operations (including expansions to new sites (as determined 
        necessary by the Secretary)) to serve medically underserved 
        populations or high impact areas not currently served by a FQHC 
        and which--
                    ``(A) have as of January 1, 1991, been certified by 
                the Secretary as a FQHC under section 1905(l)(2)(B) of 
                the Social Security Act; or
                    ``(B) have submitted applications to the Secretary 
                to qualify as FQHC's under such section 1905(l)(2)(B); 
                or
                    ``(C) have submitted a plan to the Secretary which 
                provides that the entity will meet the requirements to 
                qualify as a FQHC when operational.
            ``(2) Non fqhc entities.--
                    ``(A) Eligibility.--The Secretary shall also make 
                grants under this section to public or private 
                nonprofit agencies, health care entities or 
                organizations which meet the requirements necessary to 
                qualify as a FQHC except, the requirement that such 
                entity have a consumer majority governing board and 
                which have submitted a proposal to the Secretary to 
                provide those services provided by a FQHC as defined in 
                section 1905(l)(2)(B) of the Social Security Act and 
                which are designed to promote access to primary care 
                services or to reduce reliance on hospital emergency 
                rooms or other high cost providers of primary health 
                care services, provided such proposal is developed by 
                the entity or organizations (or such entities or 
                organizations acting in a consortium in a community) 
                with the review and approval of the Governor of the 
                State in which such entity or organization is located.
                    ``(B) Limitation.--The Secretary shall provide in 
                making grants to entities or organizations described in 
                this paragraph that no more than 10 percent of the 
                funds provided for grants under this section shall be 
                made available for grants to such entities or 
                organizations.
    ``(c) Application Requirements.--
            ``(1) In general.--In order to be eligible to receive a 
        grant under this section, a FQHC or other entity or 
        organization must submit an application in such form and at 
        such time as the Secretary shall prescribe and which meets the 
        requirements of this subsection.
            ``(2) Requirements.--An application submitted under this 
        section must provide--
                    ``(A)(i) for a schedule of fees or payments for the 
                provision of the services provided by the entity 
                designed to cover its reasonable costs of operations; 
                and
                    ``(ii) for a corresponding schedule of discounts to 
                be applied to such fees or payments, based upon the 
                patient's ability to pay (determined by using a sliding 
                scale formula based on the income of the patient);
                    ``(B) assurances that the entity or organization 
                provides services to persons who are eligible for 
                benefits under title XVIII of the Social Security Act, 
                for medical assistance under title XIX of such Act or 
                for assistance for medical expenses under any other 
                public assistance program or private health insurance 
                program; and
                    ``(C) assurances that the entity or organization 
                has made and will continue to make every reasonable 
                effort to collect reimbursement for services--
                            ``(i) from persons eligible for assistance 
                        under any of the programs described in 
                        subparagraph (B); and
                            ``(ii) from patients not entitled to 
                        benefits under any such programs.
    ``(d) Limitations on Use of Funds.--
            ``(1) In general.--From the amounts awarded to an entity or 
        organization under this section, funds may be used for purposes 
        of planning but may only be expended for the costs of--
                    ``(A) assessing the needs of the populations or 
                proposed areas to be served;
                    ``(B) preparing a description of how the needs 
                identified will be met; and
                    ``(C) development of an implementation plan that 
                addresses--
                            ``(i) recruitment and training of 
                        personnel; and
                            ``(ii) activities necessary to achieve 
                        operational status in order to meet FQHC 
                        requirements under 1905(l)(2)(B) of the Social 
                        Security Act.
            ``(2) Recruiting, training and compensation of staff.--From 
        the amounts awarded to an entity or organization under this 
        section, funds may be used for the purposes of paying for the 
        costs of recruiting, training and compensating staff (clinical 
        and associated administrative personnel (to the extent such 
        costs are not already reimbursed under title XIX of the Social 
        Security Act or any other State or Federal program)) to the 
        extent necessary to allow the entity to operate at new or 
        expended existing sites.
            ``(3) Facilities and equipment.--From the amounts awarded 
        to an entity or organization under this section, funds may be 
        expended for the purposes of acquiring facilities and equipment 
        but only for the cost of--
                    ``(A) construction of new buildings (to the extent 
                that new construction is found to be the most cost-
                efficient approach by the Secretary);
                    ``(B) acquiring, expanding, and modernizing of 
                existing facilities;
                    ``(C) purchasing essential (as determined by the 
                Secretary) equipment; and
                    ``(D) amortization of principal and payment of 
                interest on loans obtained for purposes of site 
                construction, acquisition, modernization, or expansion, 
                as well as necessary equipment.
            ``(4) Services.--From the amounts awarded to an entity or 
        organization under this section, funds may be expanded for the 
        payment of services but only for the costs of--
                    ``(A) providing or arranging for the provision of 
                all services through the entity necessary to qualify 
                such entity as a FQHC under section 1905(l)(2)(B) of 
                the Social Security Act;
                    ``(B) providing or arranging for any other service 
                that a FQHC may provide and be reimbursed for under 
                title XIX of such Act; and
                    ``(C) providing any unreimbursed costs of providing 
                services as described in section 330(a) to patients.
    ``(e) Priorities in the Awarding of Grants.--
            ``(1) Certified fqhc's.--The Secretary shall give priority 
        in awarding grants under this section to entities which have, 
        as of January 1, 1991, been certified as a FQHC under section 
        1905(l)(2)(B) of the Social Security Act and which have 
        submitted a proposal to the Secretary to expand their 
        operations (including expansion to new sites) to serve 
        medically underserved populations for high impact areas not 
        currently served by a FQHC. The Secretary shall give first 
        priority in awarding grants under this section to those FQHCs 
        or other entities which propose to serve populations with the 
        highest degree of unmet need, and which can demonstrate the 
        ability to expand their operations in the most efficient 
        manner.
            ``(2) Qualified fqhc's.--The Secretary shall give second 
        priority in awarding grants to entities which have submitted 
        applications to the Secretary which demonstrate that the entity 
        will qualify as a FQHC under section 1905(l)(2)(B) of the 
        Social Security Act before it provides or arranges for the 
        provision of services supported by funds awarded under this 
        section, and which are serving or proposing to serve medically 
        underserved populations or high impact areas which are not 
        currently served (or proposed to be served) by a FQHC.
            ``(3) Expanded services and projects.--The Secretary shall 
        give third priority in awarding grants in subsequent years to 
        those FQHCs or other entities which have provided for expanded 
        services and project and are able to demonstrate that such 
        entity will incur significant unreimbursed costs in providing 
        such expanded services.
    ``(f) Return of Funds to Secretary for Costs Reimbursed From Other 
Sources.--To the extent that an entity or organization receiving funds 
under this section is reimbursed from another source for the provision 
of services to an individual, and does not use such increased 
reimbursement to expand services furnished, areas served, to compensate 
for costs of unreimbursed services provided to patients, or to promote 
recruitment, training, or retention of personnel, such excess revenues 
shall be returned to the Secretary.
    ``(g) Termination of Grants.--
            ``(1) Failure to meet fqhc requirements.--
                      ``(A) In general.--With respect to any entity 
                that is receiving funds awarded under this section and 
                which subsequently fails to meet the requirements to 
                qualify as a FQHC under section 1905(l)(2)(B) or is an 
                entity that is not required to meet the requirements to 
                qualify as a FQHC under section 1905(l)(2)(B) of the 
                Social Security Act but fails to meet the requirements 
                of this section, the Secretary shall terminate the 
                award of funds under this section to such entity.
                    ``(B) Notice.--Prior to any termination of funds 
                under this section to an entity, the entities shall be 
                entitled to 60 days prior notice of termination and, as 
                provided by the Secretary in regulations, an 
                opportunity to correct any deficiencies in order to 
                allow the entity to continue to receive funds under 
                this section.
            ``(2) Requirements.--Upon any termination of funding under 
        this section, the Secretary may (to the extent practicable)--
                    ``(A) sell any property (including equipment) 
                acquired or constructed by the entity using funds made 
                available under this section or transfer such property 
                to another FQHC, provided, that the Secretary shall 
                reimburse any costs which were incurred by the entity 
                in acquiring or constructing such property (including 
                equipment) which were not supported by grants under 
                this section; and
                    ``(B) recoup any funds provided to an entity 
                terminated under this section.
    ``(h) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section, $400,000,000 for fiscal year 
1995, $800,000,000 for fiscal year 1996, $1,200,000,000 for fiscal year 
1997, $1,600,000,000 for fiscal year 1998, and $1,600,000,000 for 
fiscal year 1999.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
become effective with respect to services furnished by a federally 
qualified health center or other qualifying entity described in this 
section beginning on or after October 1, 1995.
    (c) Study and Report on Services Provided by Community Health 
Centers and Hospitals.--
            (1) In general.--The Secretary of Health and Human Services 
        (hereinafter referred to in this subsection as the 
        ``Secretary'') shall provide for a study to examine the 
        relationship and interaction between community health centers 
        and hospitals in providing services to individuals residing in 
        medically underserved areas. The Secretary shall ensure that 
        the National Rural Research Centers participate in such study.
            (2) Report.--The Secretary shall provide to the appropriate 
        committees of Congress a report summarizing the findings of the 
        study within 90 days of the end of each project year and shall 
        include in such report recommendations on methods to improve 
        the coordination of and provision of services in medically 
        underserved areas by community health centers and hospitals.
            (3) Authorization.--There are authorized to be appropriated 
        to carry out the study provided for in this subsection $150,000 
        for each of fiscal years 1995 and 1996.

SEC. 5003. TAX INCENTIVES FOR PRACTICE IN FRONTIER, RURAL, AND URBAN 
              UNDERSERVED AREAS.

    (a) Nonrefundable Credit for Certain Primary Health Services 
Providers.--
            (1) In general.--Subpart A of part IV of subchapter A of 
        chapter 1 of the Internal Revenue Code of 1986 (relating to 
        nonrefundable personal credits) is amended by inserting after 
        section 25 the following new section:

``SEC. 25A. PRIMARY HEALTH SERVICES PROVIDERS.

    ``(a) Allowance of Credit.--In the case of a qualified primary 
health services provider, there is allowed as a credit against the tax 
imposed by this chapter for any taxable year in a mandatory service 
period an amount equal to the product of--
            ``(1) the lesser of--
                    ``(A) the number of months of such period occurring 
                in such taxable year, or
                    ``(B) 36 months, reduced by the number of months 
                taken into account under this paragraph with respect to 
                such provider for all preceding taxable years (whether 
                or not in the same mandatory service period), 
                multiplied by
            ``(2) $1,000 ($500 in the case of a qualified primary 
        health services provider who is a physician assistant or a 
        nurse practitioner).
    ``(b) Qualified Primary Health Services Provider.--For purposes of 
this section, the term `qualified primary health services provider' 
means any physician, physician assistant, or nurse practitioner who for 
any month during a mandatory service period is certified by the Bureau 
to be a primary health services provider who--
            ``(1) is providing primary health services--
                    ``(A) full time, and
                    ``(B) to individuals at least 80 percent of whom 
                reside in a health professional shortage area (as 
                defined in subsection (d)(2)),
            ``(2) is not receiving during such year a scholarship under 
        the National Health Service Corps Scholarship Program or a loan 
        repayment under the National Health Service Corps Loan 
        Repayment Program,
            ``(3) is not fulfilling service obligations under such 
        Programs, and
            ``(4) has not defaulted on such obligations.
    ``(c) Mandatory Service Period.--For purposes of this section, the 
term `mandatory service period' means the period of 60 consecutive 
calendar months beginning with the first month the taxpayer is a 
qualified primary health services provider.
    ``(d) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Bureau.--The term `Bureau' means the Bureau of Health 
        Care Delivery and Assistance, Health Resources and Services 
        Administration of the United States Public Health Service.
            ``(2) Health professional shortage area.--The term `health 
        professional shortage area' means--
                    ``(A) a geographic area in which there are 6 or 
                fewer individuals residing per square mile,
                    ``(B) a health professional shortage area (as 
                defined in section 332(a)(1)(A) of the Public Health 
                Service Act),
                    ``(C) an area which is determined by the Secretary 
                of Health and Human Services as equivalent to an area 
                described in subparagraph (A) and which is designated 
                by the Bureau of the Census as not urbanized, or
                    ``(D) a community that is certified as underserved 
                by the Secretary for purposes of participation in the 
                rural health clinic program under title XVIII of the 
                Social Security Act.
            ``(3) Physician.--The term `physician' has the meaning 
        given to such term by section 1861(r) or the Social Security 
        Act.
            ``(4) Physician assistant; nurse practitioner.--The terms 
        `physician assistant' and `nurse practitioner' have the 
        meanings given to such terms by section 1861(aa)(5) of the 
        Social Security Act.
            ``(5) Primary health services provider.--The term `primary 
        health services provider' means a provider of primary health 
        services (as defined in section 330(b)(1) of the Public Health 
        Service Act).
    ``(e) Recapture of Credit.--
            ``(1) In general.--If, during any taxable year, there is a 
        recapture event, then the tax of the taxpayer under this 
        chapter for such taxable year shall be increased by an amount 
        equal to the product of--
                    ``(A) the applicable percentage, and
                    ``(B) the aggregate unrecaptured credits allowed to 
                such taxpayer under this section for all prior taxable 
                years.
            ``(2) Applicable recapture percentage.--
                    ``(A) In general.--For purposes of this subsection, 
                the applicable recapture percentage shall be determined 
                from the following table:

  
                                                         The applicable
                    ``If the recapture
                                                              recapture
                      event occurs during:
                                                         percentage is:
                            Months 1-24..............           100    
                            Months 25-36.............            75    
                            Months 37-48.............            50    
                            Months 49-60.............            25    
                            Months 61 and thereafter.            0.    
                    ``(B) Timing.--For purposes of subparagraph (A), 
                month 1 shall begin on the first day of the mandatory 
                service period.
            ``(3) Recapture event defined.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `recapture event' means the failure of the 
                taxpayer to be a qualified primary health services 
                provider for any month during any mandatory service 
                period.
                    ``(B) Cessation of designation.--The cessation of 
                the designation of any area as a rural health 
                professional shortage area after the beginning of the 
                mandatory service period for any taxpayer shall not 
                constitute a recapture event.
                    ``(C) Secretarial waiver.--The Secretary may waive 
                any recapture event caused by extraordinary 
                circumstances.
            ``(4) No credits against tax.--Any increase in tax under 
        this subsection shall not be treated as a tax imposed by this 
        chapter for purposes of determining the amount of any credit 
        under subpart A, B, or D of this part.''.
            (2) Clerical amendment.--The table of sections for subpart 
        A of part IV of subchapter A of chapter 1 of such Code is 
        amended by inserting after the item relating to section 25 the 
        following new item:

                              ``Sec. 25A. Primary health services 
                                        providers.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after the date of the 
        enactment of this Act.
    (b) National Health Service Corps Loan Repayments Excluded From 
Gross Income.--
            (1) In general.--Part III of subchapter B of chapter 1 of 
        the Internal Revenue Code of 1986 (relating to items 
        specifically excluded from gross income) is amended by 
        redesignating section 137 as section 138 and by inserting after 
        section 136 the following new section:

``SEC. 137. NATIONAL HEALTH SERVICE CORPS LOAN REPAYMENTS.

    ``(a) General Rule.--Gross income shall not include any qualified 
loan repayment.
    ``(b) Qualified Loan Repayment.--For purposes of this section, the 
term `qualified loan repayment' means any payment made on behalf of the 
taxpayer by the National Health Service Corps Loan Repayment Program 
under section 338B(g) of the Public Health Service Act.''.
            (2) Conforming amendment.--Paragraph (3) of section 338B(g) 
        of the Public Health Service Act is amended by striking 
        ``Federal, State, or local'' and inserting ``State or local''.
            (3) Clerical amendment.--The table of sections for part III 
        of subchapter B of chapter 1 of the Internal Revenue Code of 
        1986 is amended by striking the item relating to section 136 
        and inserting the following:

                              ``Sec. 137. National Health Service Corps 
                                        loan repayments.
                              ``Sec. 138. Cross references to other 
                                        Acts.''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply to payments made under section 338B(g) of the 
        Public Health Service Act after the date of the enactment of 
        this Act.
    (c) Expensing of Medical Equipment.--
            (1) In general.--Section 179 of the Internal Revenue Code 
        of 1986 (relating to election to expense certain depreciable 
        business assets) is amended--
                    (A) by striking paragraph (1) of subsection (b) and 
                inserting the following:
            ``(1) Dollar limitation.--
                    ``(A) General rule.--The aggregate cost which may 
                be taken into account under subsection (a) for any 
                taxable year shall not exceed $17,500.
                    ``(B) Rural health care property.--In the case of 
                rural health care property, the aggregate cost which 
                may be taken into account under subsection (a) for any 
                taxable year shall not exceed $32,500, reduced by the 
                amount otherwise taken into account under subsection 
                (a) for such year.''; and
                    (B) by adding at the end of subsection (d) the 
                following new paragraph:
            ``(11) Rural health care property.--For purposes of this 
        section, the term `rural health care property' means section 
        179 property--
                    ``(A) which is medical equipment used in the 
                screening, monitoring, observation, diagnosis, or 
                treatment of patients in a laboratory, medical, or 
                hospital environment,
                    ``(B) which is owned (directly or indirectly) and 
                used by a physician (as defined in section 1861(r) of 
                the Social Security Act) in the active conduct of such 
                physician's full-time trade or business of providing 
                primary health services (as defined in section 
                330(b)(1) of the Public Health Service Act) in a rural 
                health professional shortage area (as defined in 
                section 25A(d)(5)), and
                    ``(C) substantially all the use of which is in such 
                area.''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to property placed in service in taxable years 
        beginning after the date of enactment of this Act.
    (d) Deduction for Student Loan Payments by Medical Professionals 
Practicing in Rural Areas.--
            (1) Interest on student loans not treated as personal 
        interest.--Section 163(h)92) of the Internal Revenue Code of 
        1986 (defining personal interest) is amended by striking 
        ``and'' at the end of subparagraph (D), by striking the period 
        at the end of subparagraph (E) and inserting ``, and'', and by 
        adding at the end thereof the following new subparagraph:
            ``(F) any qualified medical education interest (within the 
        meaning of subsection (k)).''.
            (2) Qualified medical education interest defined.--Section 
        163 of such Code (relating to interest expenses) is amended by 
        redesignating subsection (k) as subsection (l) and by inserting 
        after subsection (j) the following new subsection:
    ``(k) Qualified Medical Education Interest of Medical Professionals 
Practicing in Rural Areas.--
            ``(1) In general.--For purposes of subsection (h)(2)(F), 
        the term `qualified medical education interest' means an amount 
        which bears the same ratio to the interest paid on qualified 
        educational loans during the taxable year by an individual 
        performing services under a qualified rural medical practice 
        agreement as--
                    ``(A) the number of months during the taxable year 
                during which such services were performed, bears to
                    ``(B) the number of months in the taxable year.
            ``(2) Dollar limitation.--The aggregate amount which may be 
        treated as qualified medical education interest for any taxable 
        year with respect to an individual shall not exceed $5,000.
            ``(3) Qualified rural medical practice agreement.--For 
        purposes of this subsection--
                    ``(A) In general.--The term `qualified rural 
                medical practice agreement' means a written agreement 
                between an individual and an applicable rural community 
                under which the individual agrees--
                            ``(i) in the case of a medical doctor, upon 
                        completion of the individual's residency (or 
                        internship if no residency is required), or
                            ``(ii) in the case of a registered nurse, 
                        nurse practitioner, or physician's assistant, 
                        upon completion of the education to which the 
                        qualified education loan relates, to perform 
                        full-time services as such a medical 
                        professional in the applicable rural community 
                        for a period of 24 consecutive months. An 
                        individual and an applicable rural community 
                        may elect to have the agreement apply for 36 
                        consecutive months rather than 24 months.
                    ``(B) Special rule for computing periods.--An 
                individual shall be treated as meeting the 24- or 36-
                consecutive month requirement under subparagraph (A) 
                if, during each 12-consecutive month period within 
                either such period, the individual performs full-time 
                services as a medical doctor, registered nurse, nurse 
                practitioner, or physician's assistant, whichever 
                applies, in the applicable rural community during 9 of 
                the months in such 12-consecutive month period. For 
                purposes of this subsection, an individual meeting the 
                requirements of the preceding sentence shall be treated 
                as performing services during the entire 12-month 
                period.
                    ``(C) Applicable rural community.--The term 
                `applicable rural community' means--
                            ``(i) any political subdivision of a State 
                        which--
                                    ``(I) has a population of 5,000 or 
                                less, and
                                    ``(II) has a per capita income of 
                                $15,000 or less, or
                            ``(ii) an Indian reservation which has a 
                        per capita income of $15,000 or less.
            ``(4) Qualified educational loan.--The term `qualified 
        educational loan' means any indebtedness to pay qualified 
        higher education expenses (within the meaning of section 
        135(c)(2)) and reasonable living expenses--
                    ``(A) which are paid or incurred--
                            ``(i) as a candidate for a degree as a 
                        medical doctor at an educational institution 
                        described in section 170(b)(1)(A)(ii), or
                            ``(ii) in connection with courses of 
                        instruction at such an institution necessary 
                        for certification as a registered nurse, nurse 
                        practitioner, or physician's assistant, and
                    ``(B) which are paid or incurred within a 
                reasonable time before or after such indebtedness is 
                incurred.
            ``(5) Recapture.--If an individual fails to carry out a 
        qualified rural medical practice agreement during any taxable 
        year, then--
                    ``(A) no deduction with respect to such agreement 
                shall be allowable by reason of subsection (h)(2)(F) 
                for such taxable year and any subsequent taxable year, 
                and
                    ``(B) there shall be included in gross income for 
                such taxable year the aggregate amount of the 
                deductions allowable under this section (by reason of 
                subsection (h)(2)(F)) for all preceding taxable years.
            ``(6) Definitions.--For purposes of this subsection, the 
        terms `registered nurse', `nurse practitioner', and 
        `physician's assistant' have the meaning given such terms by 
        section 1861 of the Social Security Act.''.
            (3) Deduction allowed in computing adjusted gross income.--
        Section 62(a) of such Code, as amended by sections 2002(c)(3) 
        and 2003(b), is amended by inserting after paragraph (17) the 
        following new paragraph:
            ``(18) Interest on student loans of rural health 
        professionals.--The deduction allowable by reason of section 
        163(h)(2)(F) (relating to student loan payments of medical 
        professionals practicing in rural areas).''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after the date of the 
        enactment of this Act.

SEC. 5004. RURAL EMERGENCY ACCESS CARE HOSPITALS.

    (a) Rural Emergency Access Care Hospitals Described.--Section 1861 
of the Social Security Act (42 U.S.C. 1395x) is amended by adding at 
the end the following new subsection:

  ``Rural Emergency Access Care Hospital; Rural Emergency Access Care 
                           Hospital Services

    ``(oo)(1) The term `rural emergency access care hospital' means, 
for a fiscal year, a facility with respect to which the Secretary finds 
the following:
            ``(A) The facility is located in a rural area (as defined 
        in section 1886(d)(2)(D)).
            ``(B) The facility was a hospital under this title at any 
        time during the 5-year period that ends on the date of the 
        enactment of this subsection.
            ``(C) The facility is in danger of closing due to low 
        inpatient utilization rates and negative operating losses, and 
        the closure of the facility would limit the access of 
        individuals residing in the facility's service area to 
        emergency services.
            ``(D) The facility has entered into (or plans to enter 
        into) an agreement with a hospital with a participation 
        agreement in effect under section 1866(a), and under such 
        agreement the hospital shall accept patients transferred to the 
        hospital from the facility and receive data from and transmit 
        data to the facility.
            ``(E) There is a practitioner who is qualified to provide 
        advanced cardiac life support services (as determined by the 
        State in which the facility is located) on-site at the facility 
        on a 24-hour basis.
            ``(F) A physician is available on-call to provide emergency 
        medical services on a 24-hour basis.
            ``(G) The facility meets such staffing requirements as 
        would apply under section 1861(e) to a hospital located in a 
        rural area, except that--
                    ``(i) the facility need not meet hospital standards 
                relating to the number of hours during a day, or days 
                during a week, in which the facility must be open, 
                except insofar as the facility is required to provide 
                emergency care on a 24-hour basis under subparagraphs 
                (E) and (F); and
                    ``(ii) the facility may provide any services 
                otherwise required to be provided by a full-time, on-
                site dietician, pharmacist, laboratory technician, 
                medical technologist, or radiological technologist on a 
                part-time, off-site basis.
            ``(H) The facility meets the requirements applicable to 
        clinics and facilities under subparagraphs (C) through (J) of 
        paragraph (2) of section 1861(aa) and of clauses (ii) and (iv) 
        of the second sentence of such paragraph (or, in the case of 
        the requirements of subparagraph (E), (F), or (J) of such 
        paragraph, would meet the requirements if any reference in such 
        subparagraph to a `nurse practitioner' or to `nurse 
        practitioners' was deemed to be a reference to a `nurse 
        practitioner or nurse' or to `nurse practitioners or nurses'), 
        except that in determining whether a facility meets the 
        requirements of this subparagraph, subparagraphs (E) and (F) of 
        that paragraph shall be applied as if any reference to a 
        `physician' is a reference to a physician as defined in section 
        1861(r)(1).
    ``(2) The term `rural emergency access care hospital services' 
means medical and other health services furnished by a rural emergency 
access care hospital.''.
    (b) Coverage of and Payment for Services.--Section 1832(a)(2) of 
the Social Security Act (42 U.S.C. 1395k(a)(2)) is amended--
            (1) by striking ``and'' at the end of subparagraph (I);
            (2) by striking the period at the end of subparagraph (J) 
        and inserting ``; and''; and
            (3) by adding at the end the following new subparagraph:
                    ``(K) rural emergency access care hospital services 
                (as defined in section 1861(oo)(2)).''.
    (c) Payment Based on Payment for Outpatient Rural Primary Care 
Hospital Services.--
            (1) In general.--Section 1833(a)(6) of the Social Security 
        Act (42 U.S.C. 1395l(a)(6)) is amended by striking 
        ``services,'' and inserting ``services and rural emergency 
        access care hospital services,''.
            (2) Payment methodology described.--Section 1834(g) of such 
        Act (42 U.S.C. 1395m(g)) is amended--
                    (A) in the heading, by striking ``Services'' and 
                inserting ``Services and Rural Emergency Access Care 
                Hospital Services'';
                    (B) in paragraph (1), by striking ``during a year 
                before 1993'' and inserting ``during a year before the 
                prospective payment system described in paragraph (2) 
                is in effect'';
                    (C) in paragraph (1), by adding at the end the 
                following: ``The amount of payment shall be determined 
                under either method without regard to the amount of the 
                customary or other charge.'';
                    (D) in paragraph (2), by striking ``January 1, 
                1993,'' and inserting ``January 1, 1996,''; and
                    (E) by adding at the end the following new 
                paragraph:
            ``(3) Application of methods to payment for rural emergency 
        access care hospital services.--The amount of payment for rural 
        emergency access care hospital services provided during a year 
        shall be determined using the applicable method provided under 
        this subsection for determining payment for outpatient rural 
        primary care hospital services during the year.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to fiscal years beginning on or after October 1, 1994.

SEC. 5005. GRANTS TO STATES REGARDING AIRCRAFT FOR TRANSPORTING RURAL 
              VICTIMS OF MEDICAL EMERGENCIES.

    Part E of title XII of the Public Health Service Act (42 U.S.C. 
300d-51 et seq.) is amended by adding at the end thereof the following 
new section:

``SEC. 1252. GRANTS FOR SYSTEMS TO TRANSPORT RURAL VICTIMS OF MEDICAL 
              EMERGENCIES.

    ``(a) In General.--The Secretary shall make grants to States to 
assist such States in the creation or enhancement of air medical 
transport systems that provide victims of medical emergencies in rural 
areas with access to treatments for the injuries or other conditions 
resulting from such emergencies.
    ``(b) Application and Plan.--
            ``(1) Application.--To be eligible to receive a grant under 
        subsection (a), a State shall prepare and submit to the 
        Secretary an application in such form, made in such manner, and 
        containing such agreements, assurances, and information, 
        including a State plan as required in paragraph (2), as the 
        Secretary determines to be necessary to carry out this section.
            ``(2) State plan.--An application submitted under paragraph 
        (1) shall contain a State plan that shall--
                    ``(A) describe the intended uses of the grant 
                proceeds and the geographic areas to be served;
                    ``(B) demonstrate that the geographic areas to be 
                served, as described under subparagraph (A), are rural 
                in nature;
                    ``(C) demonstrate that there is a lack of 
                facilities available and equipped to deliver advanced 
                levels of medical care in the geographic areas to be 
                served;
                    ``(D) demonstrate that in utilizing the grant 
                proceeds for the establishment or enhancement of air 
                medical services the State would be making a cost-
                effective improvement to existing ground-based or air 
                emergency medical service systems;
                    ``(E) demonstrate that the State will not utilize 
                the grant proceeds to duplicate the capabilities of 
                existing air medical systems that are effectively 
                meeting the emergency medical needs of the populations 
                they serve;
                    ``(F) demonstrate that in utilizing the grant 
                proceeds the State is likely to achieve a reduction in 
                the morbidity and mortality rates of the areas to be 
                served, as determined by the Secretary;
                    ``(G) demonstrate that the State, in utilizing the 
                grant proceeds, will--
                            ``(i) maintain the expenditures of the 
                        State for air and ground medical transport 
                        systems at a level equal to not less than the 
                        level of such expenditures maintained by the 
                        State for the fiscal year preceding the fiscal 
                        year for which the grant is received; and
                            ``(ii) ensure that recipients of direct 
                        financial assistance from the State under such 
                        grant will maintain expenditures of such 
                        recipients for such systems at a level at least 
                        equal to the level of such expenditures 
                        maintained by such recipients for the fiscal 
                        year preceding the fiscal year for which the 
                        financial assistance is received;
                    ``(H) demonstrate that persons experienced in the 
                field of air medical service delivery were consulted in 
                the preparation of the State plan; and
                    ``(I) contain such other information as the 
                Secretary may determine appropriate.
    ``(c) Considerations in Awarding Grants.--In determining whether to 
award a grant to a State under this section, the Secretary shall--
            ``(1) consider the rural nature of the areas to be served 
        with the grant proceeds and the services to be provided with 
        such proceeds, as identified in the State plan submitted under 
        subsection (b); and
            ``(2) give preference to States with State plans that 
        demonstrate an effective integration of the proposed air 
        medical transport systems into a comprehensive network or plan 
        for regional or statewide emergency medical service delivery.
    ``(d) State Administration and Use of Grant.--
            ``(1) In general.--The Secretary may not make a grant to a 
        State under subsection (a) unless the State agrees that such 
        grant will be administered by the State agency with principal 
        responsibility for carrying out programs regarding the 
        provision of medical services to victims of medical emergencies 
        or trauma.
            ``(2) Permitted uses.--A State may use amounts received 
        under a grant awarded under this section to award subgrants to 
        public and private entities operating within the State.
            ``(3) Opportunity for public comment.--The Secretary may 
        not make a grant to a State under subsection (a) unless that 
        State agrees that, in developing and carrying out the State 
        plan under subsection (b)(2), the State will provide public 
        notice with respect to the plan (including any revisions 
        thereto) and facilitate comments from interested persons.
    ``(e) Number of Grants.--The Secretary shall award grants under 
this section to not less than 7 States.
    ``(f) Reports.--
            ``(1) Requirement.--A State that receives a grant under 
        this section shall annually (during each year in which the 
        grant proceeds are used) prepare and submit to the Secretary a 
        report that shall contain--
                    ``(A) a description of the manner in which the 
                grant proceeds were utilized;
                    ``(B) a description of the effectiveness of the air 
                medical transport programs assisted with grant 
                proceeds; and
                    ``(C) such other information as the Secretary may 
                require.
            ``(2) Termination of fundings.--In reviewing reports 
        submitted under paragraph (1), if the Secretary determines that 
        a State is not using amounts provided under a grant awarded 
        under this section in accordance with the State plan submitted 
        by the State under subsection (b), the Secretary may terminate 
        the payment of amounts under such grant to the State until such 
        time as the Secretary determines that the State comes into 
        compliance with such plan.
    ``(g) Definition.--As used in this section, the term `rural areas' 
means geographic areas that are located outside of standard 
metropolitan statistical areas, as identified by the Secretary.
    ``(h) Authorization of Appropriations.--There are authorized to be 
appropriated to make grants under this section, $15,000,000 for fiscal 
year 1995, and such sums as may be necessary for each for fiscal years 
1996 and 1997.''.

SEC. 5006. DEMONSTRATION PROJECTS TO ENCOURAGE THE DEVELOPMENT AND 
              OPERATION OF RURAL HEALTH NETWORKS.

    (a) In General.--
            (1) Establishment.--
                    (A) In general.--The Secretary may conduct a 
                demonstration project under which public and private 
                entities may apply for waivers of any of the provisions 
                of title XVIII and XIX of the Social Security Act in 
                order to operate rural health networks (as defined in 
                subsection (d)(1)) which--
                            (i) improve the access of medicare 
                        beneficiaries (as defined in subsection (d)(2)) 
                        and medicaid beneficiaries (as defined in 
                        subsection (d)(3)) to health care services;
                            (ii) improve the quality of health care 
                        services furnished to such beneficiaries; and
                            (iii) improve the outcomes of health care 
                        services furnished to such beneficiaries.
                    (B) Number of waivers.--The Secretary may grant 
                waivers to operate rural health networks under the 
                demonstration project conducted under this section to a 
                number of public and private entities determined 
                appropriate by the Secretary.
            (2) Applications.--
                    (A) In general.--In order to participate in the 
                demonstration project conducted under this subsection, 
                a public or private entity desiring to operate a rural 
                health network shall submit an application to the 
                Secretary which meets the requirements of subparagraph 
                (B). Such application shall be submitted in such manner 
                and at such time as the Secretary shall require.
                    (B) Requirements.--An application submitted by a 
                public or private entity under this subsection must 
                provide--
                            (i) a description of the health care 
                        providers participating in the rural health 
                        network;
                            (ii) a description of the geographic area 
                        served by the rural health networks;
                            (iii) information demonstrating that the 
                        public or private entity has consulted with 
                        interested parties with respect to the 
                        operation of the rural health network, 
                        including local government entities and 
                        community groups;
                            (iv) a description of the operational 
                        structure of the rural health network, 
                        including whether the network is a managed care 
                        entity or a fee-for-service provider;
                            (v) a proposal for how payments should be 
                        made to the rural health network under titles 
                        XVIII and XIX of the Social Security Act, 
                        including a statement as to whether such 
                        payments should be made pursuant to the 
                        provisions of such titles or pursuant to an 
                        alternative payment methodology described in 
                        the application;
                            (vi) assurances that medicare beneficiaries 
                        served by the rural health network will receive 
                        care and services of the same quality as the 
                        care and services received by other 
                        beneficiaries under title XVIII of the Social 
                        Security Act;
                            (vii) assurances that medicaid 
                        beneficiaries served by the rural health 
                        network will receive care and services of the 
                        same quality as the care and services received 
                        by other beneficiaries under title XIX of the 
                        Social Security Act;
                            (viii) a description of how the rural 
                        health network plans to handle any situation in 
                        which a medicare beneficiary or medicaid 
                        beneficiary served by the network receives 
                        health care services from providers outside the 
                        network;
                            (ix) assurances that the rural health 
                        network is furnishing health care services to a 
                        significant number of individuals who are not 
                        receiving benefits under titles XVIII and XIX 
                        of the Social Security Act;
                            (x) assurances that through sharing of 
                        facilities, land, and equipment, the rural 
                        health network will result in a reduction of 
                        total capital costs for the area served by the 
                        network;
                            (xi) a plan for cooperation in service 
                        delivery by health care providers participating 
                        in the rural health network that demonstrates 
                        the elimination of unnecessary duplication and, 
                        when appropriate, the consolidation of 
                        specialized services within the area served by 
                        the network;
                            (xii) evidence that the rural health 
                        network furnishes services which address the 
                        special access needs of the medicare 
                        beneficiaries and medicaid beneficiaries served 
                        by the network;
                            (xiii) evidence of capability and expertise 
                        in network planning and management; and
                            (xiv) such additional information as the 
                        Secretary determines appropriate.
                    (C) Approval of application.--
                            (i) Initial review.--Within 60 days after 
                        an application is submitted by a public or 
                        private entity under this subsection, the 
                        Secretary shall review and approve such 
                        application or provide the entity with a list 
                        of the modifications that are necessary for 
                        such application to be approved.
                            (ii) Additional review.--Within 60 days 
                        after a public or private entity resubmits any 
                        application under this subsection, the 
                        Secretary shall review and approve such 
                        application or provide the entity with a 
                        summary of which items included on the list 
                        provided to the State under clause (i) remain 
                        unsatisfied. An entity may resubmit an 
                        application under this subparagraph as many 
                        times as necessary to gain approval.
            (3) Coordination with other programs.--The Secretary shall 
        coordinate the demonstration project conducted under this 
        subsection with any other relevant Federal or State programs in 
        order to prevent duplication and improve the quality and 
        delivery of health care services to medicare beneficiaries and 
        medicaid beneficiaries.
            (4) Payments to networks.--
                    (A) In general.--The Secretary shall determine the 
                amount of payments to be made under titles XVIII and 
                XIX to a rural health network participating in a 
                demonstration project under this subsection based on 
                historic costs adjusted based on population and 
                geographic area as the Secretary determines appropriate 
                to take into account the costs of furnishing health 
                care services in the area served by the network.
                    (B) Budget neutrality.--The Secretary shall provide 
                that in carrying out the demonstration project under 
                this section, the aggregate payments under titles XVIII 
                and XIX of the Social Security Act to providers 
                participating in a rural health network shall be no 
                greater or lesser than what such payments would have 
                been if such providers were not participating in such 
                network.
            (5) Duration of waivers.--Any waiver granted under the 
        demonstration project conducted under this subsection shall be 
        granted for a period determined appropriate by the Secretary. 
        The Secretary may terminate such a waiver at any time if the 
        Secretary determines that the rural health network has failed 
        to furnish health care services in accordance with the terms of 
        the waiver.
            (6) Reports.--
                    (A) In general.--Each public or private entity 
                receiving a wavier to operate a rural health network 
                under the demonstration project conducted under this 
                subsection shall, through an independent entity, 
                evaluate the network and submit interim and final 
                reports to the Secretary at such times and containing 
                such information as the Secretary shall require.
                    (B) Report to congress.--Not later than 60 days 
                after the receipt of a final report by a rural health 
                network under subparagraph (A) the Secretary shall 
                submit a report to Congress.
    (b) Grants for the Development of Rural Health Networks.--
            (1) In general.--The Secretary shall award grants to public 
        and private entities which have received a wavier under the 
        demonstration project conducted under subsection (a) for the 
        purpose of planning and developing rural health networks.
            (2) Application process.--
                    (A) Submission of application.--Each public or 
                private entity desiring to receive a grant under this 
                subsection shall submit an application to the Secretary 
                at such time and containing such information as the 
                Secretary determines appropriate.
                    (B) Consideration of applications.--The Secretary 
                shall develop a system for determining the priority for 
                distributing grants under this subsection and such 
                grants shall be distributed in accordance with such 
                system.
            (3) Use of grant funds.--A State that is awarded grant 
        funds under this subsection may use such funds for all costs 
        associated with assisting public or private entities in 
        planning and developing rural health networks.
            (4) Authorization of appropriations.--There are authorized 
        to be appropriated such sums as may be necessary for the 
        purposes of awarding grants under this subsection.
    (c) Grants for the Operation of Rural Health Networks.--
            (1) In general.--The Secretary shall award grants to public 
        and private entities which have received a waiver under the 
        demonstration project conducted under subsection (a) for the 
        operation of rural health networks.
            (2) Application process.--
                    (A) Submission of application.--Any public or 
                private entity which desires to receive a grant under 
                this subsection shall submit an application of the 
                Secretary at such time and containing such information 
                as the Secretary determines appropriate.
                    (B) Consideration of applications.--The Secretary 
                shall develop a system for determining the priority for 
                distributing grants under this subsection and such 
                grants shall be distributed in accordance with such 
                priority.
            (3) Use of grant funds.--A public or private entity that is 
        awarded grant funds under this subsection may use such funds 
        for all costs associated with operating a rural health network.
            (4) Authorization of appropriations.--There are authorized 
        to be appropriated such sums as may be necessary for the 
        purposes of awarding grants under this subsection.
    (d) Definitions.--For purposes of this section:
            (1) Rural health network.--The term ``rural health 
        network'' means a formal cooperative arrangement between 
        participating hospitals, physicians, and other health care 
        providers which--
                    (A) furnishes health care services to medicare 
                beneficiaries and medicaid beneficiaries;
                    (B) is located in a rural area; and
                    (C) is governed by a board of directors selected by 
                participating health care providers.
            (2) Medicaid beneficiary.--The term ``medicaid 
        beneficiary'' means an individual receiving benefits under this 
        XIX of the Social Security Act who resides in a rural area or 
        who receives health care services from a health care provider 
        located in a rural area.
            (3) Medicare beneficiary.--The term ``medicare 
        beneficiary'' means an individual receiving benefits under 
        title XVIII of the Social Security Act who resides in a rural 
        area or who receives health care services from a health care 
        provider located in a rural area.
            (4) Rural area.--The term ``rural area'' means a rural area 
        as described in section 1886(d)(2)(D).

SEC. 5007. STUDY ON EXPANDING BENEFITS UNDER QUALIFIED HEALTH PLANS FOR 
              INDIVIDUALS RESIDING IN RURAL AREAS.

    (a) Study.--
            (1) In general.--The Secretary shall conduct a study on the 
        possible benefits of a program under which issuers of qualified 
        health plans covering individuals who reside in rural areas 
        may--
                    (A) develop a package of benefits targeted at 
                improving access to health care services which would 
                supplement the benefits included under such plan; and
                    (B) receive premium payments for such package of 
                benefits from the Secretary.
            (2) Consultation with certain entities.--In conducting the 
        study under paragraph (1), the Secretary shall consult with the 
        Office of Rural Health Policy and private and public entities 
        with expertise in rural health issues.
    (b) Report.--Not later than 1 year after the date of the enactment 
of this Act the Secretary shall submit a report to Congress containing 
the results of the study conducted under subsection (a) and any 
legislative recommendations determined appropriate by the Secretary.

              Subtitle B--Primary Care Provider Education

SEC. 5101. GRADUATE MEDICAL EDUCATION DEMONSTRATION PROJECTS.

    Part C of title VII of the Public Health Service Act (42 U.S.C. 
293j et seq.) is amended by adding at the end the following new 
section:

``SEC. 753. GRADUATE MEDICAL EDUCATION DEMONSTRATION PROJECTS.

    ``(a) State Demonstration Program.--
            ``(1) In general.--The Secretary of Health and Human 
        Services (hereafter referred to in this section as the 
        `Secretary') acting through the Administrator of the Health 
        Resources and Services Administration shall provide for the 
        establishment of demonstration projects in no more than 7 
        States for the purpose of testing and evaluating mechanisms to 
        increase the number and percentage of medical students entering 
        primary care practice relative to those entering nonprimary 
        care practice through the use of funds otherwise available for 
        direct graduate medical education costs under section 1886(h) 
        of the Social Security Act.
            ``(2) Applications.--
                    ``(A) In general.--Each State desiring to conduct a 
                demonstration project under this subsection shall 
                prepare and submit to the Secretary an application, at 
                such time, in such manner, and containing such 
                information as the Secretary may require, including--
                            ``(i) information demonstrating that the 
                        State has consulted with interested parties 
                        with respect to conducting a demonstration 
                        project under this subsection, including State 
                        medical associations, State hospital 
                        associations, and medical schools located in 
                        the State;
                            ``(ii) an assurance that in conducting a 
                        demonstration project under this subsection no 
                        single teaching hospital located in the State 
                        will lose more than 10 percent of such 
                        hospital's approved medical residency positions 
                        in any year; and
                            ``(iii) an explanation of a plan for 
                        evaluating the project.
                    ``(B) Approval of applications.--A State that 
                submits an application under subparagraph (A) may begin 
                a demonstration project under this subsection--
                            ``(i) upon approval of such application by 
                        the Secretary; or
                            ``(ii) at the end of the 60-day period 
                        beginning on the date such application is 
                        submitted, unless the Secretary denies the 
                        application during such period.
                    ``(C) Notice and comment.--A State shall issue a 
                public notice on the date it submits an application 
                under subparagraph (A) which contains a general 
                description of the proposed demonstration project. Any 
                interested party may comment on the proposed 
                demonstration project to the State or the Secretary 
                during the 30-day period beginning on the date the 
                public notice is issued.
            ``(3) Funding for demonstration projects.--
                    ``(A) Allocation of gme funds.--
                            ``(i) In general.--For each year a State 
                        conducts a demonstration project under this 
                        subsection the Secretary shall pay to such 
                        State an amount equal to the total amount 
                        available to hospitals located in the State 
                        under section 1886(h) of the Social Security 
                        Act. In the case of a State which establishes 
                        any health care training consortium under 
                        clause (ii)(II), the State shall designate a 
                        teaching hospital for each resident assigned to 
                        such a consortium which the Secretary shall use 
                        to calculate the State's payment amount under 
                        such section. Such teaching hospital shall be 
                        the hospital where the resident receives the 
                        majority of the resident's hospital-based, 
                        nonambulatory training experience.
                            ``(ii) Use of funds.--Each State that 
                        receives a payment under clause (i) shall use 
                        such funds to conduct activities which test and 
                        evaluate mechanisms to increase the number and 
                        percentage of medical students entering primary 
                        care practice relative to those entering 
                        nonprimary care practice as follows:
                                    ``(I) The State may apply weighting 
                                factors that are different than the 
                                weighting factors set forth in section 
                                1886(h)(4)(C) of the Social Security 
                                Act for the purpose of making direct 
                                graduate medical education payments. In 
                                applying different weighting factors, 
                                the State may require entities 
                                receiving payments to use a portion of 
                                such payments to increase stipends paid 
                                to primary care residents relative to 
                                nonprimary care residents.
                                    ``(II) The State may use funds to 
                                provide for the establishment and 
                                operation of any health care training 
                                consortium. The State shall make 
                                payments to any such consortium through 
                                an entity identified by the consortium 
                                as appropriate for receiving payment on 
                                behalf of the consortium. The 
                                consortium shall have discretion in 
                                determining the purposes for which such 
                                payments may be used and may direct 
                                such payments to consortium medical 
                                schools for primary care medical 
                                student education programs.
                    ``(B) Grants for planning and evaluations.--
                            ``(i) In general.--The Secretary may award 
                        grants to States conducting demonstration 
                        projects under this subsection for the purpose 
                        of developing and evaluating such projects. A 
                        State may conduct such an evaluation or 
                        contract with a private entity to conduct the 
                        evaluation. Each State desiring to receive a 
                        grant under this subparagraph shall prepare and 
                        submit to the Secretary an application, at such 
                        time, in such manner, and containing such 
                        information as the Secretary may require.
                            ``(ii) Authorization of appropriations.--
                        There are authorized to be appropriated such 
                        sums as may be necessary to carry out the 
                        purposes of this subparagraph for fiscal years 
                        1995 through 2003.
            ``(4) Maintenance of effort.--Any funds available for the 
        activities covered by a demonstration project conducted under 
        this subsection shall supplement, and shall not supplant, funds 
        that are expended for similar purposes under any State, 
        regional, or local program.
    ``(b) Consortium Demonstration Program.--
            ``(1) In general.--The Secretary, acting through the 
        Administrator of the Health Resources and Services 
        Administration, shall provide for the establishment of 
        demonstration projects for no more than 7 health care training 
        consortia which are located in States that are not conducting a 
        demonstration project under subsection (a) for the purpose of 
        testing and evaluating mechanisms to increase the number and 
        percentage of medical students entering primary care practice 
        relative to those entering nonprimary care practice through the 
        use of funds otherwise available for direct graduate medical 
        education costs under section 1886(h) of the Social Security 
        Act.
            ``(2) Applications.--
                    ``(A) In general.--Each health care training 
                consortium desiring to conduct a demonstration project 
                under this subsection shall prepare and submit to the 
                Secretary an application, at such time, in such manner, 
                and containing such information as the Secretary may 
                require, including an explanation of a plan for 
                evaluating the project.
                    ``(B) Approval of applications.--A consortium that 
                submits an application under subparagraph (A) may begin 
                a demonstration project under this subsection--
                            ``(i) upon approval of such application by 
                        the Secretary; or
                            ``(ii) at the end of the 60-day period 
                        beginnning on the date such application is 
                        submitted, unless the Secretary denies the 
                        application during such period.
            ``(3) Funding for demonstration projects.--
                    ``(A) Allocation of gme funds.--
                            ``(i) In general.--For each year a 
                        consortium conducts a demonstration project 
                        under this subsection the Secretary shall pay 
                        to such consortium an amount equal to the total 
                        amount available to hospitals that are members 
                        of the consortium under section 1886(h) of the 
                        Social Security Act. The consortium shall 
                        designate a teaching hospital for each resident 
                        assigned to the consortium which the Secretary 
                        shall use to calculate the consortium's payment 
                        amount under such section. Such teaching 
                        hospital shall be the hospital where the 
                        resident receives the majority of the 
                        resident's hospital-based, nonambulatory 
                        training experience.
                            ``(ii) Use of funds.--
                                    ``(I) Testing and evaluation.--Each 
                                consortium that receives a payment 
                                under clause (i) shall use such funds 
                                to conduct activities which test and 
                                evaluate mechanisms to increase the 
                                number and percentage of medical 
                                students entering primary care practice 
                                relative to those entering nonprimary 
                                care practice.
                                    ``(II) Establishment and 
                                operation.--Each consortium that 
                                receives a payment under clause (i) may 
                                also use such funds for the 
                                establishment and operation of the 
                                consortium. The Secretary shall make 
                                payments to the consortium through an 
                                entity identified by the consortium as 
                                appropriate for receiving payment on 
                                behalf of the consortium. The 
                                consortium shall have discretion in 
                                determining the purposes for which such 
                                payments may be used and may direct 
                                such payments to consortium medical 
                                schools for primary care medical 
                                student education programs.
                    ``(B) Grants for planning and evaluations.--
                            ``(i) In general.--The Secretary may award 
                        grants to consortia conducting demonstration 
                        projects under this subsection for the purpose 
                        of developing and evaluating such projects. 
                        Each consortium desiring to receive a grant 
                        under this subparagraph shall prepare and 
                        submit to the Secretary an application, at such 
                        time, in such manner, and containing such 
                        information as the Secretary may require.
                            ``(ii) Authorization of appropriations.--
                        There are authorized to be appropriated such 
                        sums as may be necessary to carry out the 
                        purposes of this subparagraph for fiscal years 
                        1995 through 2003.
            ``(4) Maintenance of effort.--Any funds available for the 
        activities covered by a demonstration project conducted under 
        this subsection shall supplement, and shall not supplant, funds 
        that are expended for similar purposes under any State, 
        regional, or local program.
    ``(c) Duration.--A demonstration project under this section shall 
be conducted for a period not to exceed 8 years. The Secretary may 
terminate a project if the Secretary determines that the State or 
consortium conducting the project is not in substantial compliance with 
the terms of the application approved by the Secretary under this 
section.
    ``(d) Evaluations and Reports.--
            ``(1) Evaluations.--Each State or consortium that conducts 
        a demonstration project under this section shall submit to the 
        Secretary a final evaluation of such project within 360 days of 
        the termination of such project and such interim evaluations as 
        the Secretary may require.
            ``(2) Reports to congress.--Not later than 360 days after 
        the first demonstration project under this section begins, and 
        annually thereafter for each year in which a project is 
        conducted under this section, the Secretary shall submit a 
        report to the appropriate committees of the Congress which 
        evaluates the effectiveness of the demonstration projects 
        conducted under this section and includes any legislative 
        recommendations determined appropriate by the Secretary.
    ``(e) Definitions.--For purposes of this section:
            ``(1) Ambulatory training sites.--The term `ambulatory 
        training sites' includes, but is not limited to, health 
        maintenance organizations, federally qualified health centers, 
        community health centers, migrant health centers, rural health 
        clinics, nursing homes, hospice, and other community-based 
        providers, including private practices.
            ``(2) Health care training consortium.--The term `health 
        care training consortium' means a State, regional, or local 
        entity which--
                    ``(A) includes teaching hospitals, ambulatory 
                training sites, and one or more schools of medicine 
                located in the same geographic region; and
                    ``(B) is operated in a manner intended to ensure 
                that by the end of the 8-year demonstration project at 
                least 50 percent of the graduates of the schools 
                included in the entity will become primary care 
                providers during the 1-year period immediately 
                following the date such graduates complete their 
                residency training.
            ``(3) Primary care.--The term `primary care' means family 
        practice, general internal medicine, and general pediatrics, 
        and may also include obstetrics and gynecology if such care is 
        person-centered, comprehensive care that is not organ or 
        problem specific.''.

SEC. 5102. FUNDING UNDER MEDICARE FOR TRAINING IN NONHOSPITAL-OWNED 
              FACILITIES.

    (a) Residency Training Time in Nonhospital-Owned Facilities Counted 
in Determining Full-Time-Equivalent Residents for Direct Graduate 
Medical Education Payments.--Section 1886(h)(4)(E) of the Social 
Security Act (42 U.S.C. 1395ww(h)(4)(E)) is amended by striking ``, if 
the hospital incurs all, or substantially all, of the costs for the 
training program in that setting''.
    (b) Residency Training Time in Nonhospital-Owned Facilities Counted 
in Determining Full-Time-Equivalent Residents for Indirect Medical 
Education Payments.--
            (1) In general.--Section 1886(d)(5)(B)(iv) of the Social 
        Security Act (42 U.S.C. 1395ww(d)(5)(B)(iv)) is amended to read 
        as follows:
                            ``(iv) In determining such adjustment, the 
                        Secretary shall count interns and residents--
                                    ``(I) assigned to any patient 
                                service environment which is part of 
                                the hospital's approved medical 
                                residency training program (as defined 
                                in section 1886(h)(5)(A)), or
                                    ``(II) providing services at any 
                                entity receiving a grant under section 
                                330 of the Public Health Service Act 
                                that is under the ownership or control 
                                of the hospital (if the hospital incurs 
                                all, or substantially all, of the costs 
                                of the services furnished by such 
                                interns and residents),
                        as part of the calculation of the full-time-
                        equivalent number of interns and residents.''.
            (2) Adjustment of indirect teaching adjustment factor to 
        achieve budget neutrality.--Section 1886(d)(5)(B)(ii) of the 
        Social Security Act (42 U.S.C. 1395ww(d)(5)(B)(ii)) is amended 
        to read as follows:
                            ``(ii)(I) For purposes of clause (i)(II), 
                        the indirect teaching adjustment factor is 
                        equal to 1.89  x  (((1+r  x  t) to the nth 
                        power)-1).
                            ``(II) For purposes of subclause (i)--
                                    ``(aa) `r' is the ratio of the 
                                hospital's full-time-equivalent interns 
                                and residents to beds;
                                    ``(bb) `t' is the ratio of the 
                                number of full-time-equivalent interns 
                                and residents of all hospitals paid 
                                under this paragraph and used in the 
                                calculation of `r' on June 1, 1993, to 
                                the number of full-time-equivalent 
                                interns and residents of all hospitals 
                                paid under this paragraph and used in 
                                the calculation of `r' on June 1, 1994; 
                                and
                                    ``(cc) `n' equals .405.''.

SEC. 5103. INCREASE IN NATIONAL HEALTH SERVICE CORPS FUNDING.

    (a) General Authorization.--Section 338H(b)(1) of the Public Health 
Service Act (42 U.S.C. 254q(b)(1)) is amended--
            (1) by striking ``1991, and'' and inserting ``1991,''; and
            (2) by striking ``through 2000'' and inserting ``, 1993, 
        and 1994, $120,000,000 for fiscal year 1995, and such sums as 
        may be necessary for each of the fiscal years 1996 through 
        1998''.
    (b) Grants for State Loan Repayment Programs.--Section 338I(i)(1) 
of such Act (42 U.S.C. 254q-1(i)(1)) is amended to read as follows:
            ``(1) In general.--The Secretary shall ensure that not less 
        than one-third of the amounts appropriated under section 
        338H(b)(1) for each fiscal year shall be made available for 
        grants under this section.''.

SEC. 5104. INCREASE IN HEALTH PROFESSIONS FUNDING FOR PRIMARY CARE 
              PHYSICIANS.

    (a) Family Medicine.--Section 747(d)(1) of the Public Health 
Service Act (42 U.S.C. 293k(d)(1)) is amended by striking ``for each 
of'' and all that follows through ``1995'' and inserting ``for each of 
the fiscal years 1993 and 1994, $67,500,000 for fiscal year 1995, and 
such sums as may be necessary for each of the fiscal years 1996 and 
1997''.
    (b) General Internal Medicine and Pediatrics.--Section 748(c) of 
the Public Health Service Act (42 U.S.C. 293l(c)) is amended by 
striking ``for each of'' and all that follows through ``1995'' and 
inserting ``for each of the fiscal years 1993 and 1994, $31,250,000 for 
fiscal year 1995, and such sums as may be necessary for each of the 
fiscal years 1996 and 1997''.

SEC. 5105. HEALTH PROFESSIONS FUNDING FOR NURSE PRACTITIONERS AND 
              PHYSICIAN ASSISTANTS PROGRAMS.

    (a) Physician Assistants.--Section 750(d)(1) of the Public Health 
Service Act (42 U.S.C. 293n(d)(1)) is amended by striking ``for each of 
the fiscal years 1993 through 1995'' and inserting ``for each of the 
fiscal years 1993 and 1994, $11,250,000 for fiscal year 1995, and such 
sums as may be necessary for each of the fiscal years 1996 and 1997.''.
    (b) Nurse Practitioners.--Section 822(d) of such Act (42 U.S.C. 
296m(d)) is amended by striking ``1994.'' and inserting ``1994, 
$25,000,000 for fiscal year 1995, and such sums as may be necessary for 
each of the fiscal years 1996 and 1997''.
    (c) Advanced Education or Professional Nurses.--Section 830(f)(1) 
of the Public Health Service Act (42 U.S.C. 297(f)(1)) is amended by 
striking ``for each of'' and all that follows through ``1995'' and 
inserting ``for each of the fiscal years 1993 and 1994, $25,000,000 for 
fiscal year 1995, and such sums as may be necessary for each of the 
fiscal years 1996 and 1997''.
    (d) Scholarship Program for Physician Assistants.--Part C of title 
VII of the Public Health Service Act (42 U.S.C. 293j et seq.), as 
amended by section 511, is further amended by adding at the end thereof 
the following new section:

``SEC. 754. PHYSICIAN ASSISTANT SCHOLARSHIP PROGRAM.

    ``(a) In General.--The Secretary may award grants to public and 
nonprofit private entities to enable such entities to meet the cost of 
providing traineeships for individuals in baccalaureate and advanced-
degree programs in order to educate such individuals to serve in and 
prepare for practice as physician assistants.
    ``(b) Special Consideration in Making Grants.--In awarding grants 
for traineeships under subsection (a), the Secretary shall give special 
consideration to entities submitting applications for the conduct of 
traineeship programs that conform to the guidelines established by the 
Secretary under section 750(b)(2).
    ``(c) Preferences in Awarding Grants.--The Secretary may award a 
grant under subsection (a) only if the grant applicant involved agrees 
that, in providing traineeships under such grant, the applicant will 
give preference to individuals who are residents of health professional 
shortage areas designated under section 332.
    ``(d) Use of Grant.--The Secretary may award a grant under 
subsection (a) only if the grant applicant involved agrees that 
traineeships provided with amounts received under the grant will pay 
all or part of the costs of--
            ``(1) the tuition, books, and fees of the physician 
        assistants' program with respect to which the traineeship is 
        provided; and
            ``(2) amounts necessary to pay the reasonable living 
        expenses of the individual involved during the period for which 
        the traineeship is provided.
    ``(e) Authorization of Appropriations.--For the purpose of carrying 
out this section, there are authorized to be appropriated $25,000,000 
for fiscal year 1995, and such sums as may be necessary for each of the 
fiscal years 1996 and 1997.''.

SEC. 5106. STATE GRANTS TO INCREASE THE NUMBER OF PRIMARY CARE 
              PROVIDERS.

    Part B of title III of the Public Health Service Act (42 U.S.C. 243 
et seq.) is amended by adding at the end thereof the following new 
section:

``SEC. 320A. PRIMARY CARE DEMONSTRATION GRANTS.

    ``(a) Authorization.--The Secretary, acting through the Health 
Resources and Services Administration, shall award grants to States or 
nonprofit entities to fund not less than 10 demonstration projects to 
enable such States or entities to evaluate one or more of the 
following:
            ``(1) State mechanisms, including changes in the scope of 
        practice laws, to enhance the delivery of primary care by nurse 
        practitioners or physician assistants.
            ``(2) The feasibility of, and the most effective means to 
        train subspecialists to deliver primary care as primary care 
        providers.
            ``(3) State mechanisms to increase the supply or improve 
        the distribution of primary care providers.
    ``(b) Application.--To be eligible to receive a grant under this 
section a State or nonprofit entity shall prepare and submit to the 
Secretary an application at such time, in such manner, and containing 
such information as the Secretary may require.
    ``(c) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section, $9,000,000 for fiscal year 
1995, and such sums as may be necessary for each of the fiscal years 
1996 through 1998.''.

 Subtitle C--Programs Relating to Primary and Preventive Care Services

SEC. 5201. MATERNAL AND INFANT CARE COORDINATION.

    (a) Purpose.--It is the purpose of this section to assist States in 
the development and implementation of coordinated, multidisciplinary, 
and comprehensive primary health care and social services, and health 
and nutrition education programs, designed to improve maternal and 
child health.
    (b) Grants for Implementation of Programs.--
            (1) Authority.--The Secretary of Health and Human Services 
        (hereafter referred to in this section as the ``Secretary'') is 
        authorized to award grants to States to enable such States to 
        plan and implement coordinated, multidisciplinary, and 
        comprehensive primary health care and social service programs 
        targeted to pregnant women and infants.
            (2) Eligibility.--To be eligible to receive a grant under 
        this section, a State shall--
                    (A) prepare and submit to the Secretary an 
                application at such time, in such manner, and 
                containing such information as the Secretary may 
                require;
                    (B) as part of the State application, provide 
                assurances that under the program established with 
                amounts received under a grant, individuals will have 
                access to a broad range of primary health care 
                services, social services, and health and nutrition 
                programs designed to improve maternal and child health 
                and a description of how coordination of such services 
                will improve maternal and child health based upon the 
                goals of ``Healthy People 2000: National Health 
                Promotion and Disease Prevention Objectives'';
                    (C) as part of the State application, submit a plan 
                for the coordination of existing and proposed Federal 
                and State resources, as appropriate, including amounts 
                provided under the medicaid program under title XIX of 
                the Social Security Act, the special supplemental food 
                program under section 17 of the Child Nutrition Act of 
                1966, family planning programs, substance abuse 
                programs, State maternal and child health programs 
                funded under title V of the Social Security Act, 
                community and migrant health center programs under the 
                Public Health Service Act, and other publicly, or where 
                practicable, privately supported programs;
                    (D) demonstrate that the major service providers to 
                be involved, including private nonprofit entities 
                committed to improving maternal and infant health, are 
                committed to and involved in the program to be funded 
                with amounts received under the grant;
                    (E) with respect to States with high infant 
                mortality rates among minority populations, demonstrate 
                the involvement of major health, multiservice, 
                professional, or civic group representatives of such 
                minority groups in the planning and implementation of 
                the State program; and
                    (F) demonstrate that activities under the State 
                program are targeted to women of child-bearing age, 
                particularly those at risk for having low birth weight 
                babies.
            (3) Term of grant.--A grant awarded under this subsection 
        shall be for a period of 5 years.
            (4) Use of amounts.--Amounts received by a State under a 
        grant awarded under this subsection shall be used to establish 
        a State program to provide coordinated, multidisciplinary, and 
        comprehensive primary health care and social services, and 
        health and nutrition education program services, that are 
        designed to improve maternal and child health. Such amounts 
        shall not be used for the construction of buildings or the 
        purchase of medical equipment.
            (5) Maintenance of effort.--Any funds received by a State 
        under this subsection shall supplement, and shall not supplant, 
        funds that are expended for similar purposes by the State.
            (6) Authorization of appropriations.--There are authorized 
        to be appropriated such sums as may be necessary to carry out 
        the purposes of this subsection for fiscal years 1995 through 
        1998.

SEC. 5202. COMPREHENSIVE SCHOOL HEALTH EDUCATION PROGRAM.

    Section 4605 of the Elementary and Secondary Education Act of 1965 
(20 U.S.C. 3155) is amended to read as follows:

``SEC. 4605. COMPREHENSIVE SCHOOL HEALTH EDUCATION PROGRAMS.

    ``(a) Purpose.--It is the purpose of this section to establish a 
comprehensive school health education and prevention program for 
elementary and secondary school students.
    ``(b) Program Authorized.--The Secretary, through the Office of 
Comprehensive School Health Education established in subsection (d), 
shall award grants to States to enable such States to--
            ``(1) award grants to local or intermediate educational 
        agencies, and consortia thereof, to enable such agencies or 
        consortia to establish, operate and improve local programs of 
        comprehensive health education and prevention, early health 
        intervention, and health education, in elementary and secondary 
        schools (including preschool, kindergarten, intermediate, and 
        junior high schools); and
            ``(2) develop training, technical assistance and 
        coordination activities for the programs assisted pursuant to 
        paragraph (1).
    ``(c) Use of Funds.--Grant funds under this section may be used to 
improve elementary and secondary education in the areas of--
            ``(1) personal health and fitness;
            ``(2) prevention of chronic diseases;
            ``(3) prevention and control of communicable diseases;
            ``(4) nutrition;
            ``(5) substance use and abuse;
            ``(6) accident prevention and safety;
            ``(7) community and environmental health;
            ``(8) mental and emotional health; and
            ``(9) the effective use of the health services delivery 
        system.
    ``(d) Office of Comprehensive School Health Education.--The 
Secretary shall establish within the Office of the Secretary an Office 
of Comprehensive School Health Education which shall have the following 
responsibilities:
            ``(1) To recommend mechanisms for the coordination of 
        school health education programs conducted by the various 
        departments and agencies of the Federal Government.
            ``(2) To advise the Secretary on formulation of school 
        health education policy within the Department of Education.
            ``(3) To disseminate information on the benefits to health 
        education of utilizing a comprehensive health curriculum in 
        schools.
    ``(e) Authorization of Appropriations.--
            ``(1) In general.--There are authorized to be appropriated 
        such sums as may be necessary to carry out the purposes of this 
        subsection for fiscal years 1995 through 1998.
            ``(2) Availability.--Funds appropriated pursuant to the 
        authority of paragraph (1) in any fiscal year shall remain 
        available for obligation and expenditure until the end of the 
        fiscal year succeeding the fiscal year for which such funds 
        were appropriated.''.

SEC. 5203. FRONTIER STATES.

    (a) In General.--Frontier States (including Alaska, Wyoming and 
Montana) may implement proposals to offer preventive services, 
including mobile preventive health centers which may include centers 
equipped with various preventive health services, such as mammography, 
eye care, X-ray, and other advanced equipment, and which may be located 
on aircraft, watercraft, or other forms of transportation.
    (b) Demonstration Projects.--Frontier States may participate in 
demonstration projects under this or any other Act to improve 
recruitment, retention, and training of rural providers, including 
nurse practitioners and physician assistants. Such demonstration 
projects shall give special consideration to the diverse needs of 
Frontier States, and shall involve cooperative agreements with a range 
of service delivery systems and teaching hospitals.

            TITLE VI--TREATMENT OF EXISTING FEDERAL PROGRAMS

SEC. 6000. REFERENCES IN TITLE.

    Except as otherwise specifically provided, whenever in this title 
an amendment is expressed in terms of an amendment to or repeal of a 
section or other provision, the reference shall be considered to be 
made to that section or other provision of the Social Security Act.

                      Subtitle A--Medicaid Program

         PART I--OPTIONAL COVERAGE UNDER QUALIFIED HEALTH PLANS

SEC. 6001. OPTIONAL COVERAGE UNDER QUALIFIED HEALTH PLANS.

    (a) State Option.--Section 1902(a) (42 U.S.C. 1396a(a)) is 
amended--
            (1) by striking ``and'' at the end of paragraph (61);
            (2) by striking the period at the end of paragraph (62) and 
        inserting ``; and''; and
            (3) by adding at the end the following new paragraph:
            ``(63) at the option of the State, provide that an 
        individual eligible for medical assistance under the State plan 
        has the option to receive medical assistance consisting of the 
        items or services covered under the standard benefit package 
        required to be offered by a qualified health plan (as defined 
        in section 1931(d)(2)) through enrollment with such a qualified 
        health plan offered in the health care coverage area (as 
        defined in section 1931(d)(1)) in which such individual resides 
        instead of through enrollment in the State plan, in accordance 
        with the requirements of section 1931.''.
    (b) Requirements Described.--Title XIX (42 U.S.C. 1396 et seq.) is 
amended by redesignating section 1931 as section 1932 and by inserting 
after section 1930 the following new section:

 ``requirements for states providing optional coverage under qualified 
                              health plans

    ``Sec. 1931. (a) In General.--For purposes of section 1902(a)(63), 
a State meets the requirements of this section with respect to 
individuals eligible for medical assistance under the State plan if the 
State meets the following requirements:
            ``(1) Choice of plans.--The State may not restrict the 
        individual's choice of a qualified health plan under such 
        section, except that nothing in this paragraph may be construed 
        to waive any limits on the capacity of a qualified health plan 
        applicable under title I of the Health Equity and Access Reform 
        Today Act of 1993.
            ``(2) Informed choice.--The State shall ensure that each 
        individual who is eligible for medical assistance under the 
        State plan is provided sufficient information to make an 
        informed choice about enrolling in a qualified health plan 
        under such section and selecting such a plan.
            ``(3) Payments to qualified health plans by states.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                State shall make all necessary payments of premiums, 
                copayments, and deductibles applicable under a 
                qualified health plan on behalf of an individual who 
                enrolls in a qualified health plan under such section.
                    ``(B) Limitation on amount of premium payments.--
                With respect to an individual who is enrolled in a 
                qualified health plan in a health care coverage area 
                under such section, the State is not required to pay 
                more than the applicable dollar limit for such area (as 
                determined under section 2001 of the Health Equity and 
                Access Reform Today Act of 1993).
            ``(4) Annual studies and reports.--
                    ``(A) Annual study.--The State shall provide for an 
                annual study focusing on the health outcomes of 
                individuals in the State who have elected to enroll in 
                qualified health plans under such section.
                    ``(B) Annual reports.--The results of the studies 
                conducted pursuant to paragraph (1) shall be summarized 
                in reports submitted to the Secretary at such time and 
                in such manner as the Secretary determines appropriate.
    ``(b) Treatment of Payments as Medical Assistance.--For purposes of 
determining the amount of Federal financial participation for a State 
under section 1903 in a quarter, any payments made by a State under 
subsection (a)(3) shall be treated as expenditures for medical 
assistance under the State plan for such quarter.
    ``(c) Limitation on Number of Individuals Permitted to Make 
Election.--
            ``(1) In general.--
                    ``(A) Limitation.--The number of AFDC-eligible and 
                SSI-eligible individuals electing to enroll in a 
                qualified health plan under section 1902(a)(63) in a 
                State during a year may not exceed the applicable 
                percentage of the Secretary's estimate of the number of 
                such individuals in the State who are eligible to 
                enroll in qualified health plans under such section 
                during the year.
                    ``(B) Applicable percentage described.--In 
                subparagraph (A), the `applicable percentage' with 
                respect to a State for a year--
                            ``(i) for each of the first 3 years for 
                        which the State exercises the option described 
                        in such section, 15 percent; and
                            ``(ii) for each succeeding year for which 
                        the State exercises such option, the applicable 
                        percentage under this subparagraph for the 
                        preceding year, increased by 10 percent.
            ``(2) Waiver of limitation.--The limit on the number of 
        individuals provided in paragraph (1) may be waived by the 
        Secretary with respect to a State if the Secretary determines 
        that such a waiver is appropriate.
            ``(3) Definitions.--
                    ``(A) AFDC recipient.--The term `AFDC recipient' 
                means 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.
                    ``(B) SSI recipient.--The term `SSI recipient' 
                means an individual--
                            ``(i) with respect to whom supplemental 
                        security income benefits are being paid under 
                        title XVI,
                            ``(ii) who is receiving a supplementary 
                        payment under section 1616 or under section 212 
                        of Public Law 93-66, or
                            ``(iii) who is receiving monthly benefits 
                        under section 1619(a) (whether or not pursuant 
                        to section 1616(c)(3)).
    ``(d) Definitions.--For purposes of this section:
            ``(1) Health care coverage area.--The term `health care 
        coverage area' means a health care coverage area established 
        under section 1403 of the Health Equity and Access Reform Today 
        Act of 1993.
            ``(2) Qualified health plan.--The term `qualified health 
        plan' means a health plan that is certified as a qualified 
        health plan under section 1402 of the Health Equity and Access 
        Reform Today Act of 1993.''.

       PART II--LIMITATION ON CERTAIN FEDERAL MEDICAID PAYMENTS.

SEC. 6011. CAP ON FEDERAL PAYMENTS MADE FOR ACUTE MEDICAL SERVICES 
              FURNISHED UNDER THE MEDICAID PROGRAM.

    (a) In General.--Title XIX (42 U.S.C. 1396 et seq.) is amended by 
redesignating section 1932 as section 1933 and by inserting after 
section 1931 the following new section:

        ``cap on federal payment made for acute medical services

    ``Sec. 1932. (a) Annual Federal Cap.--Federal financial 
participation is not available under section 1903(a)(1) for 
expenditures for acute medical services (as defined in subsection 
(c)(1)), including expenditures consisting of payments to qualified 
health plans under section 1931(a)(3) on behalf of individuals 
enrolling in such plans under section 1902(a)(63), for a class of 
medicaid categorical individuals (as defined in subsection (c)(2)) for 
a State for a quarter in a fiscal year, to the extent such expenditures 
exceed \1/4\ of the product of--
            ``(1) the per-capita limit determined under subsection (b) 
        for the State for such fiscal year for such class, multiplied 
        by
            ``(2) the average number of medicaid categorical 
        individuals in such class entitled to receive medical 
        assistance under the State plan in any month in the quarter.
    ``(b) Per-Capita Limit.--
            ``(1) In general.--For purposes of subsection (a), the per-
        capita limit for a class of medicaid categorical individuals 
        for a State for--
                    ``(A) fiscal year 1996, is an amount equal to the 
                base per-capita funding amount (as determined under 
                paragraph (2)) for such class for such State, increased 
                by 18.8 percent; and
                    ``(B) fiscal year 1997 and each succeeding fiscal 
                year, is an amount equal to the amount determined under 
                this paragraph for the previous fiscal year for the 
                class updated by the applicable percentage for such 
                fiscal year (described in paragraph (3)).
            ``(2) Base per-capita funding amount.--
                    ``(A) In general.--The base per-capita funding 
                amount for a State for a class is an amount equal to 
                the quotient of--
                            ``(i) the total expenditures made under the 
                        State plan with respect to medical assistance 
                        furnished for acute medical services for 
                        individuals within such class for calendar 
                        quarters in fiscal year 1994, but does not 
                        include such expenditures for which no Federal 
                        financial participation is provided under such 
                        plan; divided by
                            ``(ii) the average total number of medicaid 
                        categorical individuals in such class in the 
                        State in any month during fiscal year 1994.
                    ``(B) Disproportionate share payments not 
                included.--In applying subparagraph (A), payments made 
                under section 1923 shall not be counted in the gross 
                amount of payments.
                    ``(C) Treatment of disallowances.--The amount 
                determined under this paragraph shall take into account 
                amounts (or an estimate of amounts) disallowed.
            ``(3) Applicable percentage.--In paragraph (1), the 
        applicable percentage for a fiscal year is equal to--
                    ``(A) 6 percent, for each of fiscal years 1997 
                through 2000; and
                    ``(B) 5 percent, for fiscal year 2001 and each 
                succeeding fiscal year.
            ``(4) Estimations of and adjustments to state total funding 
        amount.--The Secretary shall--
                    ``(A) establish a process for estimating the limit 
                on expenditures for acute medical services applicable 
                under subsection (a) at the beginning of each fiscal 
                year and adjusting such amount during such fiscal year; 
                and
                    ``(B) notifying each State of the estimations and 
                adjustments referred to in subparagraph (A).
    ``(c) Definitions.--For purposes of this section and section 1931:
            ``(1) Acute medical services.--The term `acute medical 
        services' means items and services described in section 1905(a) 
        other than the following:
                    ``(A) Nursing facility services (as defined in 
                section 1905(f)).
                    ``(B) Intermediate care facility for the mentally 
                retarded services (as defined in section 1905(d)).
                    ``(C) Personnel care services (as described in 
                section 1905(a)(24)).
                    ``(D) Private duty nursing services (as referred to 
                in section 1905(a)(8)).
                    ``(E) Home or community-based services furnished 
                under a waiver granted under subsection (c), (d), or 
                (e) of section 1915.
                    ``(F) Home and community care furnished to 
                functionally disabled elderly individuals under section 
                1929.
                    ``(G) Community supported living arrangements 
                services under section 1930.
                    ``(H) Case-management services (as described in 
                section 1915(g)(2)).
                    ``(I) Home health care services (as referred to in 
                section 1905(a)(7)), clinic services, and 
                rehabilitation services that are furnished to an 
                individual who has a condition or disability that 
                qualifies the individual to receive any of the services 
                described in a previous subparagraph.
                    ``(J) Hospice care.
            ``(2) Medicaid categorical individual.--The term `medicaid 
        categorical individual' means an individual described in 
        section 1902(a)(10)(A).
            ``(3) Class of medicaid categorical individuals.--The term 
        `class' means individuals within each of the following classes:
                    ``(A) SSI-related individuals.--Medicaid 
                categorical individuals--
                            ``(i) with respect to whom supplemental 
                        security income benefits are being paid under 
                        title XVI of the Social Security Act,
                            ``(ii) who receiving a supplementary 
                        payment under section 1616 of such Act or under 
                        section 212 of Public Law 93-66, or
                            ``(iii) who receiving monthly benefits 
                        under section 1619(a) of such Act (whether or 
                        not pursuant to section 1616(c)(3) of such 
                        Act).
                    ``(B) Other individuals.--Medicaid categorical 
                individuals not described in subparagraph (A).''.
    (b) Requiring State Maintenance of Effort.--Section 1902(a) (42 
U.S.C. 1369a(a)), as amended by section 6001(a), is amended--
            (1) by striking ``and'' at the end of paragraph (62);
            (2) by striking the period at the end of paragraph (63) and 
        inserting ``; and ''; and
            (3) by adding at the end the following new paragraph:
            ``(64) provided that the State will continue to make 
        eligible for medical assistance under section 1902(a)(10)(A) 
        any class or category of individuals eligible for medical 
        assistance under such section during fiscal year 1994.''.
    (c) Discontinuation of Reimbursement Standards for Inpatient 
Hospital Services.--Section 1902(a)(13)(A) (42 U.S.C. 1396a(a)(13)(A)) 
is amended--
            (1) by striking ``hospital services, nursing facility 
        services, and'' and inserting ``nursing facilities services 
        and'';
            (2) by striking ``, in the case of hospitals,'' and all 
        that follows through ``(v)(1)(G))) which'';
            (3) by striking ``and to assure'' and all that follows 
        through ``adequate quality''; and
            (4) by striking ``each hospital, nursing facility, and '' 
        and inserting ``each nursing facility and''.
    (d) Revision of Federal Medical Assistance Percentage for Certain 
States.--Section 1905(b) (42 U.S.C. 1396d(b)) is amended--
            (1) by redesignating clauses (1) and (2) as clauses (2) and 
        (3) and by inserting after ``except that'' the following: ``(1) 
        for Alaska and Hawaii, the State percentage shall be that 
        percentage which bears the same ratio to 45 per centum as the 
        square of the adjusted per capita income of such State bears to 
        the square of the per capita income of the United States;''; 
        and
            (2) by inserting after the first sentence the following: 
        ``The `adjusted per capita income' for Alaska shall be 
        determined by dividing the State 3-year average per capita 
        income by 1.25, and for Hawaii by dividing the State 3-year 
        average per capita income by 1.15.''.
    (e) Effective Date.--The amendments made by this section shall 
become effective on October 1, 1995.

 PART III--STATE ELIGIBILITY TO CONTRACT FOR COORDINATED CARE SERVICES

SEC. 6021. MODIFICATION OF FEDERAL REQUIREMENTS TO ALLOW STATES MORE 
              FLEXIBILITY IN CONTRACTING FOR COORDINATED CARE SERVICES 
              UNDER MEDICAID.

    (a) In General.--
            (1) Payment provisions.--Section 1903(m) (42 U.S.C. 
        1396b(m)) is amended to read as follows:
    ``(m)(1) No payment shall be made under this title to a State with 
respect to expenditures incurred by such State for payment to an entity 
which is at risk (as defined in section 1933(a)(4)) for services 
provided by such entity to individuals eligible for medical assistance 
under the State plan under this title, unless the entity is a risk 
contracting entity (as defined in section 1933(a)(3)) and the State and 
such entity comply with the applicable provisions of section 1933.
    ``(2) No payment shall be made under this title to a State with 
respect to expenditures incurred by such State for payment for services 
provided to an individual eligible for medical assistance under the 
State plan under this title if such payment by the State is contingent 
upon the individual receiving such services from a specified health 
care provider or subject to the approval of a specified health care 
provider, unless the entity receiving payment is a primary care case 
management entity (as defined in section 1933(a)(2)) and the State and 
such entity comply with the applicable provisions of section 1933.''.
            (2) Requirements for coordinated care services.--Title XIX 
        (42 U.S.C. 1396 et seq.) is amended by redesignating section 
        1933 as section 1934 and by inserting after section 1932 the 
        following new section:

              ``requirements for coordinated care services

    ``Sec. 1933. (a) Definitions.--For purposes of this title--
          ``(1) Primary care case management program.--The term 
        `primary care case management program' means a program operated 
        by a State agency under which such State agency enters into 
        contracts with primary care case management entities for the 
        provision of health care items and services which are specified 
        in such contracts and the provision of case management services 
        to individuals who are--
                    ``(A) eligible for medical assistance under the 
                State plan,
                    ``(B) enrolled with such primary care case 
                management entities, and
                    ``(C) entitled to receive such specified health 
                care items and services and case management services 
                only as approved and arranged for, or provided, by such 
                entities.
            ``(2) Primary care case management entity.--The term 
        `primary care case management entity' means a health care 
        provider which--
                    ``(A) must be a physician, group of physicians, a 
                Federally qualified health center, a rural health 
                clinic, or an entity employing or having other 
                arrangements with physicians operating under a contract 
                with a State to provide services under a primary care 
                case management program,
                    ``(B) receives payment on a fee for service basis 
                (or, in the case of a Federally qualified health center 
                or a rural health clinic, on a reasonable cost per 
                encounter basis) for the provision of health care items 
                and services specified in such contract to enrolled 
                individuals,
                    ``(C) receives an additional fixed fee per enrollee 
                for a period specified in such contract for providing 
                case management services (including approving and 
                arranging for the provision of health care items and 
                services specified in such contract on a referral 
                basis) to enrolled individuals, and
                    ``(D) is not an entity that is at risk (as defined 
                in paragraph (4)) for such case management services.
            ``(3) Risk contracting entity.--The term `risk contracting 
        entity' means an entity which has a contract with the State 
        agency (or a health insuring organization described in 
        subsection (n)(2)) under which the entity--
                    ``(A) provides or arranges for the provision of 
                health care items or services which are specified in 
                such contract to individuals eligible for medical 
                assistance under the State plan, and
                    ``(B) is at risk (as defined in paragraph (4)) for 
                part or all of the cost of such items or services 
                furnished to individuals eligible for medical 
                assistance under such plan.
            ``(4) At risk.--The term `at risk' means an entity which--
                    ``(A) has a contract with the State agency under 
                which such entity is paid a fixed amount for providing 
                or arranging for the provision of health care items or 
                services specified in such contract to an individual 
                eligible for medical assistance under the State plan 
                and enrolled with such entity, regardless of whether 
                such items or services are furnished to such 
                individual, and
                    ``(B) is liable for all or part of the cost of 
                furnishing such items or services, regardless of 
                whether such cost exceeds such fixed payment.
            ``(5) Federally qualified health center.--The term 
        `Federally qualified health center' means a Federally qualified 
        health center as defined in section 1905(l)(2)(B).
            ``(6) Rural health clinic.--The term `rural health clinic' 
        means a rural health clinic as defined in section 1905(l)(1).
    ``(b) General Requirements for Risk Contracting Entities.--
            ``(1) Organization.--A risk contracting entity meets the 
        requirements of this section only if such entity--
                    ``(A)(i) is a qualified health maintenance 
                organization as defined in section 1310(d) of the 
                Public Health Service Act, as determined by the 
                Secretary pursuant to section 1312 of such Act; or
                    ``(ii) is described in subparagraph (C), (D), (E), 
                (F), or (G) of subsection (e)(4);
                    ``(B) is a Federally qualified health center or a 
                rural health clinic which has made adequate provision 
                against the risk of insolvency (pursuant to the 
                guidelines and regulations issued by the Secretary 
                under this section), and ensures that individuals 
                eligible for medical assistance under the State plan 
                are not held liable for such entity's debts in case of 
                such entity's insolvency; or
                    ``(C) is an entity which meets all applicable State 
                licensing requirements and has made adequate provision 
                against the risk of insolvency (pursuant to the 
                guidelines and regulations issued by the Secretary 
                under this section), and ensures that individuals 
                eligible for medical assistance under the State plan 
                are not held liable for such entity's debts in case of 
                such entity's insolvency.
            ``(2) Guarantees of enrollee access.--A risk contracting 
        entity meets the requirements of this section only if--
                    ``(A) the geographic locations, hours of operation, 
                patient to staff ratios, and other relevant 
                characteristics of such entity are sufficient to afford 
                individuals eligible for medical assistance under the 
                State plan access to such entities that is at least 
                equivalent to the access to health care providers that 
                would be available to such individuals if such 
                individuals were not enrolled with such entity;
                    ``(B) such entity has reasonable and adequate hours 
                of operation, including 24-hour availability of--
                            ``(i)(I) treatment for an unforeseen 
                        illness, injury, or condition of an individual 
                        eligible for medical assistance under the State 
                        plan and enrolled with such entity; or
                            ``(II) referral to other health care 
                        providers for such treatment; and
                            ``(ii) other information, as determined by 
                        the Secretary or the State; and
                    ``(C) such entity complies with such other 
                requirements relating to access to care as the 
                Secretary or the State may impose.
            ``(3) Contract with state agency.--A risk contracting 
        entity meets the requirements of this section only if such 
        entity has a written contract with the State agency which 
        provides--
                    ``(A) that the entity will comply with all 
                applicable provisions of this section, that the State 
                has the right to penalize the entity for failure to 
                comply with such requirements and to terminate the 
                contract in accordance with subsection (j), and that 
                the entity will be subject to penalties imposed by the 
                Secretary under subsection (i) for failure to comply 
                with such requirements;
                    ``(B) for a payment methodology based on experience 
                rating or another actuarially sound methodology 
                approved by the Secretary, which guarantees (as 
                demonstrated by such models or formulas as the 
                Secretary may approve) that--
                            ``(i) payments to the entity under the 
                        contract shall not exceed an amount equal to 
                        100 percent of the costs (which shall include 
                        administrative costs and which may include 
                        costs for inpatient hospital services that 
                        would have been incurred in the absence of such 
                        contract) that would have been incurred by the 
                        State agency in the absence of the contract; 
                        and
                            ``(ii) the financial risk for inpatient 
                        hospital services is limited to an extent 
                        established by the State;
                    ``(C) that the Secretary and the State (or any 
                person or organization designated by either) shall have 
                the right to audit and inspect any books and records of 
                the entity (and of any subcontractor) that pertain--
                            ``(i) to the ability of the entity (or a 
                        subcontractor) to bear the risk of potential 
                        financial losses; or
                            ``(ii) to services performed or 
                        determinations of amounts payable under the 
                        contract;
                    ``(D) that in the entity's enrollment, 
                reenrollment, or disenrollment of individuals eligible 
                for medical assistance under the State plan and 
                eligible to enroll, reenroll, or disenroll with the 
                entity pursuant to the contract, the entity will not 
                discriminate among such individuals on the basis of 
                such individuals' health status or requirements for 
                health care services;
                    ``(E)(i) individuals eligible for medical 
                assistance under the State plan who have enrolled with 
                the entity are permitted to terminate such enrollment 
                without cause as of the beginning of the first calendar 
                month (or in the case of an entity described in 
                subsection (e)(4), as of the beginning of the first 
                enrollment period) following a full calendar month 
                after a request is made for such termination;
                    ``(ii) that when an individual has relocated 
                outside the entity's service area, and the entity has 
                been notified of the relocation, services (within 
                reasonable limits) furnished by a health care provider 
                outside the service area will be reimbursed either by 
                the entity or by the State agency; and
                    ``(iii) for written notification of each such 
                individual's right to terminate enrollment, which shall 
                be provided at the time of such individual's 
                enrollment, and, in the case of a child with special 
                health care needs as defined in subsection 
                (e)(1)(B)(ii), at the time the entity identifies such a 
                child;
                    ``(F) in the case of services immediately required 
                to treat an unforeseen illness, injury, or condition, 
                of an individual eligible for medical assistance under 
                the State plan and enrolled with the entity--
                            ``(i) that such services shall not be 
                        subject to a preapproval requirement; and
                            ``(ii) where such services are furnished by 
                        a health care provider other than the entity, 
                        for reimbursement of such provider either by 
                        the entity or by the State agency;
                    ``(G) for disclosure of information in accordance 
                with subsection (h) and section 1124;
                    ``(H) that any physician incentive plan operated by 
                the entity meets the requirements of section 
                1876(i)(8);
                    ``(I) for maintenance of sufficient patient 
                encounter data to identify the physician who delivers 
                services to patients;
                    ``(J) that the entity will comply with the 
                requirement of section 1902(w) with respect to each 
                enrollee;
                    ``(K) that the entity will implement a grievance 
                system, inform enrollees in writing about how to use 
                such grievance system, ensure that grievances are 
                addressed in a timely manner, and report grievances to 
                the State at intervals to be determined by the State;
                    ``(L) that contracts between the entity and each 
                subcontractor of such entity will require each 
                subcontractor--
                            ``(i) to cooperate with the entity in the 
                        implementation of its internal quality 
                        assurance program under paragraph (4) and 
                        adhere to the standards set forth in the 
                        quality assurance program, including standards 
                        with respect to access to care, facilities in 
                        which patients receive care, and availability, 
                        maintenance, and review of medical records;
                            ``(ii) to cooperate with the Secretary, the 
                        State agency and any contractor to the State in 
                        monitoring and evaluating the quality and 
                        appropriateness of care provided to enrollees 
                        as required by Federal or State laws and 
                        regulations; and
                            ``(iii) where applicable, to adhere to 
                        regulations and program guidance with respect 
                        to reporting requirements under section 
                        1905(r);
                    ``(M) that, where the State deems it necessary to 
                ensure the timely provision to enrollees of the 
                services listed in subsection (f)(2)(C)(ii), the State 
                may arrange for the provision of such services by 
                health care providers other than the entity and may 
                adjust its payments to the entity accordingly;
                    ``(N) that the entity and the State will comply 
                with guidelines and regulations issued by the Secretary 
                with respect to procedures for marketing and 
                information that must be provided to individuals 
                eligible for medical assistance under the State plan;
                    ``(O) that the entity must provide payments to 
                hospitals for inpatient hospital services furnished to 
                infants who have not attained the age of 1 year, and to 
                children who have not attained the age of 6 years and 
                who receive such services in a disproportionate share 
                hospital, in accordance with paragraphs (2) and (3) of 
                section 1902(s);
                    ``(P) that the entity shall report to the State, at 
                such time and in such manner as the State shall 
                require, on the rates paid for hospital services (by 
                type of hospital and type of service) furnished to 
                individuals enrolled with the entity;
                    ``(Q) detailed information regarding the relative 
                responsibilities of the entity and the State, for 
                providing (or arranging for the provision of), and 
                making payment for, the following items and services:
                            ``(i) immunizations;
                            ``(ii) the purchase of vaccines;
                            ``(iii) lead screening and treatment 
                        services;
                            ``(iv) screening and treatment for 
                        tuberculosis;
                            ``(v) screening and treatment for, and 
                        preventive services related to, sexually 
                        transmitted diseases, including HIV infection;
                            ``(vi) screening, diagnostic, and treatment 
                        services required under section 1905(r);
                            ``(vii) family planning services;
                            ``(viii) services prescribed under--
                                    ``(I) an Individual Education Plan 
                                or Individualized Family Service Plan 
                                under part B or part H of the 
                                Individuals with Disabilities Education 
                                Act; and
                                    ``(II) any other individual plan of 
                                care or treatment developed under this 
                                title or title V;
                            ``(ix) transportation needed to obtain 
                        services to which the enrollee is entitled 
                        under the State plan or pursuant to an 
                        individual plan of care or treatment described 
                        in subclauses (I) and (II) of clause (viii); 
                        and
                            ``(x) such other services as the Secretary 
                        may specify;
                    ``(R) detailed information regarding the procedures 
                for coordinating the relative responsibilities of the 
                entity and the State to ensure prompt delivery of, 
                compliance with any applicable reporting requirements 
                related to, and appropriate record keeping with respect 
                to, the items and services described in subparagraph 
                (Q); and
                    ``(S) such other provisions as the Secretary may 
                require.
            ``(4) Internal quality assurance.--A risk contracting 
        entity meets the requirements of this section only if such 
        entity has in effect a written internal quality assurance 
        program which includes a systematic process to achieve 
        specified and measurable goals and objectives for access to, 
        and quality of, care, which--
                    ``(A) identifies the organizational units 
                responsible for performing specific quality assurance 
                functions, and ensures that such units are accountable 
                to the governing body of the entity and that such units 
                have adequate supervision, staff, and other necessary 
                resources to perform these functions effectively,
                    ``(B) if any quality assurance functions are 
                delegated to other entities, ensures that the risk 
                contracting entity remains accountable for all quality 
                assurance functions and has mechanisms to ensure that 
                all quality assurance activities are carried out,
                    ``(C) includes methods to ensure that physicians 
                and other health care professionals under contract with 
                the entity are licensed or certified as required by 
                State law, or are otherwise qualified to perform the 
                services such physicians and other professionals 
                provide, and that these qualifications are ensured 
                through appropriate credentialing and recredentialing 
                procedures,
                    ``(D) provides for continuous monitoring of the 
                delivery of health care, through--
                            ``(i) identification of clinical areas to 
                        be monitored, including immunizations, prenatal 
                        care, services required under section 1905(r), 
                        and other appropriate clinical areas, to 
                        reflect care provided to enrollees eligible for 
                        medical assistance under the State plan,
                            ``(ii) use of quality indicators and 
                        standards for assessing the quality and 
                        appropriateness of care delivered, and the 
                        availability and accessibility of all services 
                        for which the entity is responsible under such 
                        entity's contract with the State,
                            ``(iii) use of epidemiological data or 
                        chart review, as appropriate, and patterns of 
                        care overall,
                            ``(iv) patient surveys, spot checks, or 
                        other appropriate methods to determine 
                        whether--
                                    ``(I) enrollees are able to obtain 
                                timely appointments with primary care 
                                providers and specialists, and
                                    ``(II) enrollees are otherwise 
                                guaranteed access and care as provided 
                                under paragraph (2),
                            ``(v) provision of written information to 
                        health care providers and other personnel on 
                        the outcomes, quality, availability, 
                        accessibility, and appropriateness of care, and
                            ``(vi) implementation of corrective 
                        actions,
                    ``(E) includes standards for timely enrollee access 
                to information and care which at a minimum shall 
                incorporate standards used by the State or professional 
                or accreditation bodies for facilities furnishing 
                perinatal and neonatology care and other forms of 
                specialized medical and surgical care,
                    ``(F) includes standards for the facilities in 
                which patients receive care,
                    ``(G) includes standards for managing and treating 
                medical conditions prevalent among such entity's 
                enrollees eligible for medical assistance under the 
                State plan,
                    ``(H) includes mechanisms to ensure that enrollees 
                eligible for medical assistance under the State plan 
                receive services for which the entity is responsible 
                under the contract which are consistent with standards 
                established by the applicable professional societies or 
                government agencies,
                    ``(I) includes standards for the availability, 
                maintenance, and review of medical records consistent 
                with generally accepted medical practice,
                    ``(J) provides for dissemination of quality 
                assurance procedures to health care providers under 
                contract with the entity, and
                    ``(K) meets any other requirements prescribed by 
                the Secretary or the State.
    ``(c) General Requirements for Primary Care Case Management 
Programs.--A primary care case management program implemented by a 
State under this section shall--
            ``(1) provide that each primary care case management entity 
        participating in such program has a written contract with the 
        State agency,
            ``(2) include methods for selection and monitoring of 
        participating primary care case management entities to ensure--
                    ``(A) that the geographic locations, hours of 
                operation, patient to staff ratio, and other relevant 
                characteristics of such entities are sufficient to 
                afford individuals eligible for medical assistance 
                under the State plan access to such entities that is at 
                least equivalent to the access to health care providers 
                that would be available to such individuals if such 
                individuals were not enrolled with such entity,
                    ``(B) that such entities and their professional 
                personnel are licensed as required by State law and 
                qualified to provide case management services, through 
                methods such as ongoing monitoring of compliance with 
                applicable requirements and providing information and 
                technical assistance, and
                    ``(C) that such entities--
                            ``(i) provide timely and appropriate 
                        primary care to such enrollees consistent with 
                        standards established by applicable 
                        professional societies or governmental 
                        agencies, or such other standards prescribed by 
                        the Secretary or the State, and
                            ``(ii) where other items and services are 
                        determined to be medically necessary, give 
                        timely approval of such items and services and 
                        referral to appropriate health care providers,
            ``(3) provide that no preapproval shall be required for 
        emergency health care items or services, and
            ``(4) permit individuals eligible for medical assistance 
        under the State plan who have enrolled with a primary care case 
        management entity to terminate such enrollment without cause 
        not later than the beginning of the first calendar month 
        following a full calendar month after the request is made for 
        such termination.
    ``(d) Exemptions From State Plan Requirements.--A State plan may 
permit or require an individual eligible for medical assistance under 
such plan to enroll with a risk contracting entity or a primary care 
case management entity without regard to the requirements set forth in 
the following paragraphs of section 1902(a):
            ``(1) Paragraph (1) (concerning statewideness).
            ``(2) Paragraph (10)(B) (concerning comparability of 
        benefits), to the extent benefits not included in the State 
        plan are provided.
            ``(3) Paragraph (23) (concerning freedom of choice of 
        provider), except with respect to services described in section 
        1905(a)(4)(C) and except as required under subsection (e).
    ``(e) State Options With Respect to Enrollment and Disenrollment.--
            ``(1) Mandatory enrollment.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), a State plan may require an 
                individual eligible for medical assistance under such 
                plan to enroll with a risk contracting entity or a 
                primary care case management entity only if the 
                individual is permitted a choice within a reasonable 
                service area (as defined by the State)--
                            ``(i) between or among 2 or more risk 
                        contracting entities,
                            ``(ii) among a risk contracting entity and 
                        a primary care case management program, or
                            ``(iii) among primary care case management 
                        entities.
                    ``(B) Special needs children.--
                            ``(i) In general.--A State may not require 
                        a child with special health care needs (as 
                        defined in clause (ii)) to enroll with a risk 
                        contracting entity or a primary care case 
                        management entity.
                            ``(ii) Definition.--For purposes of this 
                        subparagraph, the term `child with special 
                        health care needs' refers to an individual 
                        eligible for supplemental security income under 
                        title XVI, a child described under section 
                        501(a)(1)(D), or a child described in section 
                        1902(e)(3).
            ``(2) Reenrollment of individuals who regain eligibility.--
        In the case of an individual who--
                    ``(A) in a month is eligible for medical assistance 
                under the State plan and enrolled with a risk 
                contracting entity with a contract under this section,
                    ``(B) in the next month (or next 2 months) is not 
                eligible for such medical assistance, but
                    ``(C) in the succeeding month is again eligible for 
                such benefits,
        the State agency (subject to subsection (b)(3)(E)) may enroll 
        the individual for that succeeding month with such entity, if 
        the entity continues to have a contract with the State agency 
        under this subsection.
            ``(3) Disenrollment.--
                    ``(A) Restrictions on disenrollment without 
                cause.--Except as provided in subparagraph (C), a State 
                plan may restrict the period in which individuals 
                enrolled with risk contracting entities described in 
                paragraph (4) may terminate such enrollment without 
                cause to the first month of each period of enrollment 
                (as defined in subparagraph (B)), but only if the State 
                provides notification, at least once during each such 
                enrollment period, to individuals enrolled with such 
                entity of the right to terminate such enrollment and 
                the restriction on the exercise of this right. Such 
                restriction shall not apply to requests for termination 
                of enrollment for cause.
                    ``(B) Period of enrollment.--For purposes of this 
                paragraph, the term `period of enrollment' means--
                            ``(i) a period not to exceed 6 months in 
                        duration, or
                        ``    (ii) a period not to exceed 1 year in 
                        duration, in the case of a State that, on the 
                        effective date of this paragraph, had in effect 
                        a waiver under section 1115 of requirements 
                        under this title under which the State could 
                        establish a 1-year minimum period of enrollment 
                        with risk contracting entities.
                    ``(C) Special needs children.--A State may not 
                restrict disenrollment of a child with special health 
                care needs (as defined in paragraph (1)(B)(ii)).
            ``(4) Entities eligible for disenrollment restrictions.--A 
        risk contracting entity described in this paragraph is--
                    ``(A) a qualified health maintenance organization 
                as defined in section 1310(d) of the Public Health 
                Service Act,
                    ``(B) an eligible organization with a contract 
                under section 1876,
                    ``(C) an entity that is receiving (and has received 
                during the previous 2 years) a grant of at least 
                $100,000 under section 329(d)(1)(A) or 330(d)(1) of the 
                Public Health Service Act,
                    ``(D) an entity that--
                            ``(i) received a grant of at least $100,000 
                        under section 329(d)(1)(A) or section 330(d)(1) 
                        of the Public Health Service Act in the fiscal 
                        year ending June 30, 1976, and has been a 
                        grantee under either such section for all 
                        periods after that date, and
                            ``(ii) provides to its enrollees, on a 
                        prepaid capitation or other risk basis, all of 
                        the services described in paragraphs (1), (2), 
                        (3), (4)(C), and (5) of section 1905(a) (and 
                        the services described in section 1905(a)(7), 
                        to the extent required by section 
                        1902(a)(10)(D)),
                    ``(E) an entity that is receiving (and has received 
                during the previous 2 years) at least $100,000 (by 
                grant, subgrant, or subcontract) under the Appalachian 
                Regional Development Act of 1965,
                    ``(F) a nonprofit primary health care entity 
                located in a rural area (as defined by the Appalachian 
                Regional Commission)--
                            ``(i) which received in the fiscal year 
                        ending June 30, 1976, at least $100,000 (by 
                        grant, subgrant, or subcontract) under the 
                        Appalachian Regional Development Act of 1965, 
                        and
                            ``(ii) which, for all periods after such 
                        date, either has been the recipient of a grant, 
                        subgrant, or subcontract under such Act or has 
                        provided services on a prepaid capitation or 
                        other risk basis under a contract with the 
                        State agency initially entered into during a 
                        year in which the entity was the recipient of 
                        such a grant, subgrant, or subcontract,
                    ``(G) an entity that had contracted with the State 
                agency prior to 1970 for the provision, on a prepaid 
                risk basis, of services (which did not include 
                inpatient hospital services) to individuals eligible 
                for medical assistance under the State plan,
                    ``(H) a program pursuant to an undertaking 
                described in subsection (n)(3) in which at least 25 
                percent of the membership enrolled on a prepaid basis 
                are individuals who--
                            ``(i) are not insured for benefits under 
                        part B of title XVIII or eligible for medical 
                        assistance under the State plan, and
                            ``(ii) (in the case of such individuals 
                        whose prepayments are made in whole or in part 
                        by any government entity) had the opportunity 
                        at the time of enrollment in the program to 
                        elect other coverage of health care costs that 
                        would have been paid in whole or in part by any 
                        governmental entity,
                    ``(I) an entity that, on the date of enactment of 
                this provision, had a contract with the State agency 
                under a waiver under section 1115 or 1915(b) and was 
                not subject to a requirement under this title to permit 
                disenrollment without cause, or
                    ``(J) an entity that has a contract with the State 
                agency under a waiver under section 1915(b)(5).
    ``(f) State Monitoring and External Review.--
            ``(1) State grievance procedure.--A State contracting with 
        a risk contracting entity or a primary care case management 
        entity under this section shall provide for a grievance 
        procedure for enrollees of such entity with at least the 
        following elements:
                    ``(A) A toll-free telephone number for enrollee 
                questions and grievances.
                    ``(B) Periodic notification of enrollees of their 
                rights with respect to such entity or program.
                    ``(C) Periodic sample reviews of grievances 
                registered with such entity or program or with the 
                State.
                    ``(D) Periodic survey and analysis of enrollee 
                satisfaction with such entity or program, including 
                interviews with individuals who disenroll from the 
                entity or program.
            ``(2) State monitoring of quality and access.--
                    ``(A) Risk contracting entities.--A State 
                contracting with a risk contracting entity under this 
                section shall provide for ongoing monitoring of such 
                entity's compliance with the requirements of subsection 
                (b), including compliance with the requirements of such 
                entity's contract under subsection (b)(3), and shall 
                undertake appropriate followup activities to ensure 
                that any problems identified are rectified and that 
                compliance with the requirements of subsection (b) and 
                the requirements of the contract under subsection 
                (b)(3) is maintained.
                    ``(B) Primary care case management entities.--A 
                State electing to implement a primary care case 
                management program shall provide for ongoing monitoring 
                of the program's compliance with the requirements of 
                subsection (c) and shall undertake appropriate followup 
                activities to ensure that any problems identified are 
                rectified and that compliance with subsection (c) is 
                maintained.
                    ``(C) Services.--
                            ``(i) In general.--The State shall 
                        establish procedures (in addition to those 
                        required under subparagraphs (A) and (B)) to 
                        ensure that the services listed in clause (ii) 
                        are available in a timely manner to an 
                        individual enrolled with a risk contracting 
                        entity or a primary care case management 
                        entity. Where necessary to ensure the timely 
                        provision of such services, the State shall 
                        arrange for the provision of such services by 
                        health care providers other than the risk 
                        contracting entity or the primary care case 
                        management entity in which an individual is 
                        enrolled.
                            ``(ii) Services listed.--The services 
                        listed in this clause are--
                                    ``(I) prenatal care;
                                    ``(II) immunizations;
                                    ``(III) lead screening and 
                                treatment;
                                    ``(IV) prevention, diagnosis and 
                                treatment of tuberculosis, sexually 
                                transmitted diseases (including HIV 
                                infection), and other communicable 
                                diseases; and
                                    ``(V) such other services as the 
                                Secretary may specify.
                            ``(iii) Report.--The procedures referred to 
                        in clause (i) shall be described in an annual 
                        report to the Secretary provided by the State.
            ``(3) External independent review.--
                    ``(A) In general.--Except as provided in paragraph 
                (4), a State contracting with a risk contracting entity 
                under this section shall provide for an annual external 
                independent review of the quality and timeliness of, 
                and access to, the items and services specified in such 
                entity's contract with the State agency. Such review 
                shall be conducted by a utilization control and peer 
                review organization with a contract under section 1153 
                or another organization unaffiliated with the State 
                government or with any risk contracting entity and 
                approved by the Secretary.
                    ``(B) Contents of review.--An external independent 
                review conducted under this paragraph shall include the 
                following:
                            ``(i) A review of the entity's medical 
                        care, through sampling of medical records or 
                        other appropriate methods, for indications of 
                        quality of care and inappropriate utilization 
                        (including overutilization) and treatment.
                            ``(ii) A review of enrollee inpatient and 
                        ambulatory data, through sampling of medical 
                        records or other appropriate methods, to 
                        determine trends in quality and appropriateness 
                        of care.
                            ``(iii) Notification of the entity and the 
                        State when the review under this paragraph 
                        indicates inappropriate care, treatment, or 
                        utilization of services (including 
                        overutilization).
                            ``(iv) Other activities as prescribed by 
                        the Secretary or the State.
                    ``(C) Availability.--The results of each external 
                independent review conducted under this paragraph shall 
                be available to the public consistent with the 
                requirements for disclosure of information contained in 
                section 1160.
            ``(4) Deemed compliance with external independent quality 
        of care review requirements.--
                    ``(A) In general.--The Secretary may deem the State 
                to have fulfilled the requirement for independent 
                external review of quality of care with respect to an 
                entity which has been accredited by an organization 
                described in subparagraph (B) and approved by the 
                Secretary.
                    ``(B) Accrediting organization.--An accrediting 
                organization described in this subparagraph must--
                            ``(i) exist for the primary purpose of 
                        accrediting coordinated care organizations;
                            ``(ii) be governed by a group of 
                        individuals representing health care providers, 
                        purchasers, regulators, and consumers (a 
                        minority of which shall be representatives of 
                        health care providers);
                            ``(iii) have substantial experience in 
                        accrediting coordinated care organizations, 
                        including an organization's internal quality 
                        assurance program;
                            ``(iv) be independent of health care 
                        providers or associations of health care 
                        providers;
                            ``(v) be a nonprofit organization; and
                            ``(vi) have an accreditation process which 
                        meets requirements specified by the Secretary.
            ``(5) Federal monitoring responsibilities.--The Secretary 
        shall review the external independent reviews conducted 
        pursuant to paragraph (3) and shall monitor the effectiveness 
        of the State's monitoring and followup activities required 
        under subparagraph (A) of paragraph (2). If the Secretary 
        determines that a State's monitoring and followup activities 
        are not adequate to ensure that the requirements of paragraph 
        (2) are met, the Secretary shall undertake appropriate followup 
        activities to ensure that the State improves its monitoring and 
        followup activities.
    ``(g) Participation of Federally Qualified Health Centers and Rural 
Health Clinics.--
            ``(1) In general.--Each risk contracting entity shall, with 
        respect to each electing essential community provider (as 
        defined in paragraph (5)) located within the plan's service 
        area, either--
                    ``(A) enter into a written provider participation 
                agreement (described in paragraph (2)) with the 
                provider, or
                    ``(B) enter into a written agreement under which 
                the plan shall make payment to the provider in 
                accordance with paragraph (3).
            ``(2) Participation agreement.--A participation agreement 
        between a risk contracting entity and an electing essential 
        community provider under this subsection shall provide that the 
        entity agrees to treat the provider in accordance with terms 
        and conditions at least as favorable as those that are 
        applicable to other participating providers with the risk 
        contracting entity with respect to each of the following:
                    ``(A) The scope of services for which payment is 
                made by the entity to the provider.
                    ``(B) The rate of payment for covered care and 
                services.
                    ``(C) The availability of financial incentives to 
                participating providers.
                    ``(D) Limitations on financial risk provided to 
                other participating providers.
                    ``(E) Assignment of enrollees to participating 
                providers.
                    ``(F) Access by the provider's patients to 
                providers in medical specialties or subspecialties 
                participating in the plan.
            ``(3) Payments for providers without participation 
        agreements.--Payment in accordance with this paragraph is 
        payment based 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).
            ``(4) Election.--
                    ``(A) In general.--In this subsection, the term 
                `electing essential community provider' means, with 
                respect to a risk contracting entity, an essential 
                community provider that elects this subpart to apply to 
                the entity.
                    ``(B) Form of election.--An election under this 
                paragraph shall be made in a form and manner specified 
                by the Secretary, and shall include notice to the risk 
                contracting entity involved. Such an election may be 
                made annually with respect to an entity, except that 
                the entity and provider may agree to make such an 
                election on a more frequent basis.
            ``(5) Providers described.--The categories of providers and 
        organizations described in this subsection are as follows:
                    ``(A) Migrant health centers.--A recipient or 
                subrecipient of a grant under section 329 of the Public 
                Health Service Act.
                    ``(B) Community health centers.--A recipient or 
                subrecipient of a grant under section 330 of the Public 
                Health Service Act.
                    ``(C) Homeless program providers.--A recipient or 
                subrecipient of a grant under section 340 of the Public 
                Health Service Act.
                    ``(D) Public housing providers.--A recipient or 
                subrecipient of a grant under section 340A of the 
                Public Health Service Act.
                    ``(E) Family planning clinics.--A recipient or 
                subrecipient of a grant under title X of the Public 
                Health Service Act.
                    ``(F) 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.
                    ``(G) 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 
                XXIII of the Public Health Service Act.
                    ``(H) 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.
                    ``(I) 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)).
            ``(6) Subrecipient defined.--In this subsection, the term 
        `subrecipient' means, with respect to a recipient of a grant 
        under a particular authority, an entity that--
                    ``(A) is receiving funding from such a grant under 
                a contract with the principal recipient of such a 
                grant, and
                    ``(B) meets the requirements established to be a 
                recipient of such a grant.
            ``(7) Sunset of requirement.--The requirements of this 
        subsection shall only apply to risk contracting entities during 
        calendar years 1995 through 2000.
    ``(h) Transactions With Parties in Interest.--
            ``(1) In general.--Each risk contracting entity which is 
        not a qualified health maintenance organization (as defined in 
        section 1310(d) of the Public Health Service Act) must report 
        to the State and, upon request, to the Secretary, the Inspector 
        General of the Department of Health and Human Services, and the 
        Comptroller General of the United States a description of 
        transactions between the entity and a party in interest (as 
        defined in section 1318(b) of such Act), including the 
        following transactions:
                    ``(A) Any sale or exchange, or leasing of any 
                property between the entity and such a party.
                    ``(B) Any furnishing for consideration of goods, 
                services (including management services), or facilities 
                between the entity and such a party, but not including 
                salaries paid to employees for services provided in the 
                normal course of their employment.
                    ``(C) Any lending of money or other extension of 
                credit between the entity and such a party.
        The State or the Secretary may require that information 
        reported with respect to a risk contracting entity which 
        controls, or is controlled by, or is under common control with, 
        another entity be in the form of a consolidated financial 
        statement for the risk contracting entity and such entity.
            ``(2) Availability of information.--Each risk contracting 
        entity shall make the information reported pursuant to 
        paragraph (1) available to its enrollees upon reasonable 
        request.
    ``(i) Remedies for Failure To Comply.--
            ``(1) In general.--If the Secretary determines that a risk 
        contracting entity or a primary care case management entity--
                    ``(A) fails substantially to provide services 
                required under section 1905(r), when such an entity is 
                required to do so, or provide medically necessary items 
                and services that are required to be provided to an 
                individual enrolled with such an entity, if the failure 
                has adversely affected (or has substantial likelihood 
                of adversely affecting) the individual;
                    ``(B) imposes premiums on individuals enrolled with 
                such an entity in excess of the premiums permitted 
                under this title;
                    ``(C) acts to discriminate among individuals in 
                violation of the provision of subsection (b)(3)(D), 
                including expulsion or refusal to reenroll an 
                individual or engaging in any practice that would 
                reasonably be expected to have the effect of denying or 
                discouraging enrollment (except as permitted by this 
                section) by eligible individuals with the entity whose 
                medical condition or history indicates a need for 
                substantial future medical services;
                    ``(D) misrepresents or falsifies information that 
                is furnished--
                            ``(i) to the Secretary or the State under 
                        this section; or
                            ``(ii) to an individual or to any other 
                        entity under this section; or
                    ``(E) fails to comply with the requirements of 
                section 1876(i)(8),
        the Secretary may provide, in addition to any other remedies 
        available under law, for any of the remedies described in 
        paragraph (2).
            ``(2) Additional remedies.--The remedies described in this 
        paragraph are--
                    ``(A) civil money penalties of not more than 
                $25,000 for each determination under paragraph (1), or, 
                with respect to a determination under subparagraph (C) 
                or (D)(i) of such paragraph, of not more than $100,000 
                for each such determination, plus, with respect to a 
                determination under paragraph (1)(B), double the excess 
                amount charged in violation of such paragraph (and the 
                excess amount charged shall be deducted from the 
                penalty and returned to the individual concerned), and 
                plus, with respect to a determination under paragraph 
                (1)(C), $15,000 for each individual not enrolled as a 
                result of a practice described in such paragraph, or
                    ``(B) denial of payment to the State for medical 
                assistance furnished by a risk contracting entity or a 
                primary care case management entity under this section 
                for individuals enrolled after the date the Secretary 
                notifies the entity of a determination under paragraph 
                (1) and until the Secretary is satisfied that the basis 
                for such determination has been corrected and is not 
                likely to recur.
        The provisions of section 1128A (other than subsections (a) 
        and(b)) shall apply to a civil money penalty under subparagraph 
        (A) in the same manner as such provisions apply to a penalty or 
        proceeding under section 1128A(a).
    ``(j) Termination of Contract by State.--Any State which has a 
contract with a risk contracting entity or a primary care case 
management entity may terminate such contract if such entity fails to 
comply with the terms of such contract or any applicable provision of 
this section.
    ``(k) Fair Hearing.--Nothing in this section shall affect the 
rights of an individual eligible to receive medical assistance under 
the State plan to obtain a fair hearing under section 1902(a)(3) or 
under applicable State law.
    ``(l) Disproportionate Share Hospitals.--Nothing in this section 
shall affect any requirement on a State to comply with section 1923.
    ``(m) Referral Payments.--For 1 year following the date on which 
individuals eligible for medical assistance under the State plan in a 
service area are required to enroll with a risk contracting entity or a 
primary care case management entity, Federally qualified health centers 
and rural health centers located in such service area or providing care 
to such enrollees, shall receive a fee for educating such enrollees 
about the availability of services from the risk contracting entity or 
primary care case management entity with which such enrollees are 
enrolled.
    ``(n) Special Rules.--
            ``(1) Nonapplicability of certain provisions to certain 
        risk contracting entities.--
        In the case of any risk contracting entity which--
                    ``(A)(i) is an individual physician or a physician 
                group practice of less than 50 physicians, and
                    ``(ii) is not described in paragraphs (A) and (B) 
                of subsection (b)(1), and
                    ``(B) is at risk only for the health care items and 
                services directly provided by such entity,
        paragraphs (3)(K), (3)(L), (3)(O), (3)(P), and (4) of 
        subsection (b), and paragraph (3) of subsection (f), shall not 
        apply to such entity.
            ``(2) Exception from definition of risk contracting 
        entity.--For purposes of this section, the term `risk 
        contracting entity' shall not include a health insuring 
        organization which was used by a State before April 1, 1986, to 
        administer a portion of the State plan of such State on a 
        statewide basis.
            ``(3) New jersey.--The rules under section 1903(m)(6) as in 
        effect on the day before the effective date of this section 
        shall apply in the case of an undertaking by the State of New 
        Jersey (as described in such section 1903(m)(6)).
    ``(o) Continuation of Certain Coordinated Care Programs.--The 
Secretary may provide for the continuation of any coordinated care 
program operating under section 1115 or 1915 without requiring 
compliance with any provision of this section which conflicts with the 
continuation of such program and without requiring any additional 
waivers under such sections 1115 and 1915 if the program has been 
successful in assuring quality and containing costs (as determining by 
the Secretary) and is likely to continue to be successful in the 
future.
    ``(p) Guidelines, Regulations, and Model Contract.--
            ``(1) Guidelines and regulations on solvency.--At the 
        earliest practicable time after the date of enactment of this 
        section, the Secretary shall issue guidelines and regulations 
        concerning solvency standards for risk contracting entities and 
        subcontractors of such risk contracting entities. Such 
        guidelines and regulations shall take into account 
        characteristics that may differ among risk contracting entities 
        including whether such an entity is at risk for inpatient 
        hospital services.
            ``(2) Guidelines and regulations on marketing.--At the 
        earliest practicable time after the date of enactment of this 
        section, the Secretary shall issue guidelines and regulations 
        concerning--
                    ``(A) marketing undertaken by any risk contracting 
                entity or any primary care case management program to 
                individuals eligible for medical assistance under the 
                State plan, and
                    ``(B) information that must be provided by States 
                or any such entity to individuals eligible for medical 
                assistance under the State plan with respect to--
                            ``(i) the options and rights of such 
                        individuals to enroll with, and disenroll from, 
                        any such entity, as provided in this section, 
                        and
                            ``(ii) the availability of services from 
                        any such entity (including a list of services 
                        for which such entity is responsible or must 
                        approve and information on how to obtain 
                        services for which such entity is not 
                        responsible).
        In developing the guidelines and regulations under this 
        paragraph, the Secretary shall address the special 
        circumstances of children with special health care needs (as 
        defined in subsection (e)(1)(B)(ii)) and other individuals with 
        special health care needs.
            ``(3) Model contract.--The Secretary shall develop a model 
        contract to reflect the requirements of subsection (b)(3) and 
        such other requirements as the Secretary determines 
        appropriate.''.
    (b) Waivers From Requirements on Coordinated Care Programs.--
Section 1915(b) (42 U.S.C. 1396n) is amended--
            (1) in the matter preceding paragraph (1), by striking ``as 
        may be necessary'' and inserting ``, and section 1933 as may be 
        necessary'';
            (2) in paragraph (1), by striking ``a primary care case 
        management system or'';
            (3) by striking ``and'' at the end of paragraph (3);
            (4) by striking the period at the end of paragraph (4) and 
        inserting ``, and''; and
            (5) by inserting after paragraph (4) the following new 
        paragraph:
            ``(5) to permit a risk contracting entity (as defined in 
        section 1933(a)(3)) to restrict the period in which individuals 
        enrolled with such entity may terminate such enrollment without 
        cause in accordance with section 1933(e)(3)(A).''.
    (c) State Option To Guarantee Medicaid Eligibility.--Section 
1902(e)(2) (42 U.S.C. 1396a(e)(2)) is amended--
            (1) in subparagraph (A), by striking all that precedes 
        ``(but for this paragraph)'' and inserting ``In the case of an 
        individual who is enrolled--
                    ``(i) with a qualified health maintenance 
                organization (as defined in title XIII of the Public 
                Health Service Act) or with a risk contracting entity 
                (as defined in section 1933(a)(3)), or
                    ``(ii) with any risk contracting entity (as defined 
                in section 1933(a)(3)) in a State that, on the 
                effective date of this provision, had in effect a 
                waiver under section 1115 of requirements under this 
                title under which the State could extend eligibility 
                for medical assistance for enrollees of such entity, or
                    ``(iii) with an eligible organization with a 
                contract under section 1876,
        and who would'',
            (2) in subparagraph (B), by striking ``organization or'' 
        each place it appears, and
            (3) by adding at the end the following new subparagraph:
                    ``(C) The State plan may provide, notwithstanding 
                any other provision of this title, that an individual 
                shall be deemed to continue to be eligible for benefits 
                under this title until the end of the month following 
                the month in which such individual would (but for this 
                paragraph) lose such eligibility because of excess 
                income and resources, if the individual is enrolled 
                with a risk contracting entity or primary care case 
                management entity (as those terms are defined in 
                section 1933(a)).''.
    (d) Enhanced Match Related To Quality Review.--Section 
1903(a)(3)(C) (42 U.S.C. 1396b(a)(3)(C)) is amended--
            (1) by striking ``organization or by'' and inserting 
        ``organization, by''; and
            (2) by striking ``section 1152, as determined by the 
        Secretary,'' and inserting ``section 1152, as determined by the 
        Secretary, or by another organization approved by the Secretary 
        which is unaffiliated with the State government or with any 
        risk contracting entity (as defined in section 1933(a)(3)),''.
    (e) Accumulation of Reserves by Certain Entities.--Any organization 
referred to in section 329, 330, or 340, of the Public Health Service 
Act which has contracted with a State agency as a risk contracting 
entity under section 1933(g)(3)(A) of the Social Security Act may 
accumulate reserves with respect to payments made to such organization 
under section 1933(g)(3)(C) of such Act.
    (f) Conforming Amendments.--
            (1) Section 1128(b)(6)(C)(i) (42 U.S.C. 1320a-
        7(b)(6)(C)(i)) is amended by striking ``health maintenance 
        organization'' and inserting ``risk contracting entity''.
            (2) Section 1902(a)(23) (42 U.S.C. 1396a(a)(23)) is amended 
        by striking ``primary care-case management system (described in 
        section 1915(b)(1)), a health maintenance organization,'' and 
        inserting ``primary care case management program (as defined in 
        section 1933(a)(1)), a risk contracting entity (as defined in 
        section 1933(a)(3)),''.
            (3) Section 1902(a)(30)(C) (42 U.S.C. 1396a(a)(30)(C)) is 
        amended by striking ``use a utilization'' and all that follows 
        through ``with the results'' and inserting ``provide for 
        independent review and quality assurance of entities with 
        contracts under section 1933, in accordance with subsection (f) 
        of such section 1933, with the results''.
            (4) Section 1902(a)(57) (42 U.S.C. 1396a(a)(57)) is amended 
        by striking ``or health maintenance organization (as defined in 
        section 1903(m)(1)(A))'' and inserting ``risk contracting 
        entity, or primary care case management entity (as defined in 
        section 1933(a))''.
            (5) Section 1902(a) (42 U.S.C. 1396a), as amended by 
        sections 6001(a) and 6011(b), is amended--
                    (A) by striking ``and'' at the end of paragraph 
                (63);
                    (B) by striking the period at the end of paragraph 
                (64) and inserting ``; and''; and
                    (C) by adding at the end the following new 
                paragraphs:
            ``(65) at State option, provide for a primary care case 
        management program in accordance with section 1933; and
            ``(66) at State option, provide for a program under which 
        the State contracts with risk contracting entities in 
        accordance with section 1933.''.
            (6) Section 1902(p)(2) (42 U.S.C. 1396a(p)(2)) is amended 
        by striking ``health maintenance organization (as defined in 
        section 1903(m))'' and inserting ``risk contracting entity (as 
        defined in section 1933(a)(3))''.
            (7) Section 1902(w) (42 U.S.C. 1396a(w)) is amended--
                    (A) in paragraph (1), by striking ``section 
                1903(m)(1)(A)'' and inserting ``section 1933(a)(3)'', 
                and
                    (B) in paragraph (2)(E)--
                            (i) by striking ``health maintenance 
                        organization'' and inserting ``risk contracting 
                        entity'', and
                            (ii) by striking ``organization'' and 
                        inserting ``entity''.
            (8) Section 1903(k) (42 U.S.C. 1396b(k)) is amended by 
        striking ``health maintenance organization which meets the 
        requirements of subsection (m) of this section'' and inserting 
        ``risk contracting entity which meets the requirements of 
        section 1933''.
            (9) Section 1903(w)(7)(A)(viii) (42 U.S.C. 
        1396b(w)(7)(A)(viii)) is amended by striking ``health 
        maintenance organizations (and other organizations with 
        contracts under section 1903(m))'' and inserting ``risk 
        contracting entities with contracts under section 1933''.
            (10) Section 1905(a) (42 U.S.C. 1396d(a)) is amended, in 
        the matter preceding clause (i), by inserting ``(which may be 
        on a prepaid capitation or other risk basis)'' after 
        ``payment''.
            (11) Section 1916(b)(2)(D) (42 U.S.C. 1396o(b)(2)(D)) is 
        amended by striking ``health maintenance organization (as 
        defined in section 1903(m))'' and inserting ``risk contracting 
        entity (as defined in section 1933(a)(3))''.
            (12) Section 1925(b)(4)(D)(iv) (42 U.S.C. 1396r-
        6(b)(4)(D)(iv)) is amended--
                    (A) in the heading, by striking ``hmo'' and 
                inserting ``risk contracting entity'',
                    (B) by striking ``health maintenance organization 
                (as defined in section 1903(m)(1)(A))'' and inserting 
                ``risk contracting entity (as defined in section 
                1933(a)(3)'', and
                    (C) by striking ``health maintenance organization 
                in accordance with section 1903(m)'' and inserting 
                ``risk contracting entity in accordance with section 
                1933''.
            (13) Paragraphs (1) and (2) of section 1926(a) (42 U.S.C. 
        1396r-7(a)) are each amended by striking ``health maintenance 
        organizations under section 1903(m)'' and inserting ``risk 
        contracting entities under section 1933''.
            (14) Section 1927(j)(1) is amended by striking ``* * * 
        Health Maintenance Organizations, including those organizations 
        that contract under section 1903(m)'' and inserting ``risk 
        contracting entities (as defined in section 1933(a)(3))''.
    (g) Effective Date.--The amendments made by this section shall 
become effective with respect to calendar quarters beginning on or 
after January 1, 1995.

                       PART IV--OTHER PROVISIONS

SEC. 6031. PHASED-IN ELIMINATION OF MEDICAID HOSPITAL DISPROPORTIONATE 
              SHARE ADJUSTMENT PAYMENTS.

    (a) In General.--Section 1923 (42 U.S.C. 1396r-4) is amended by 
adding at the end the following new subsection:
    ``(g) Phased-In Elimination of Federal Financial Participation for 
Disproportionate Share Adjustments.--Notwithstanding any other 
provisions of this section, the amount of payments under section 
1903(a) with respect to any payment adjustment made under this section 
for hospitals in a State for quarters--
            ``(1) in fiscal year 1996, shall not exceed 80 percent of 
        the amount otherwise determined under subsection (f);
            ``(2) in fiscal year 1997, shall not exceed 60 percent of 
        the amount otherwise determined under subsection (f);
            ``(3) in fiscal year 1998, shall not exceed 40 percent of 
        the amount otherwise determined under subsection (f);
            ``(4) in fiscal year 1999, shall not exceed 20 percent of 
        the amount otherwise determined under subsection (f); and
            ``(5) in fiscal year 2000 and each succeeding fiscal year, 
        shall not exceed the amount otherwise determined under 
        subsection (f).''.
    (b) In General.--The amendments made by subsection (a) shall be 
effective on the date of the enactment of this Act.

                          Subtitle B--Medicare

 PART I--ENROLLMENT OF MEDICARE BENEFICIARIES IN QUALIFIED HEALTH PLANS

SEC. 6101. LEGISLATIVE PROPOSAL ON ENROLLING MEDICARE BENEFICIARIES IN 
              QUALIFIED HEALTH PLANS.

    (a) In General.--
            (1) Legislative proposal.--Not later than 1 year after the 
        date of the enactment of this Act, the
        Secretary shall develop and submit to Congress a proposal for 
        legislation which provides for the enrollment of medicare 
        beneficiaries in qualified health plans.
            (2) Medicare beneficiary.--For purposes of this section, 
        the term ``medicare beneficiary'' means an individual who is 
        eligible for benefits under part A of title XVIII of the Social 
        Security Act and is enrolled under part B of such title.
    (b) Contents of the Proposal.--A proposal for legislation submitted 
under subsection (a) shall--
            (1) provide for an appropriate methodology by which the 
        Secretary shall make payment to qualified health plans for the 
        enrollment of medicare beneficiaries;
            (2) provide individuals the opportunity to remain enrolled 
        in a qualified plan without an interruption in coverage upon 
        becoming medicare beneficiaries; and
            (3) provide medicare beneficiaries with the opportunity to 
        enroll in a qualified health plan.

SEC. 6102. INTERIM ENROLLMENT OF MEDICARE BENEFICIARIES IN QUALIFIED 
              HEALTH PLANS.

    (a) Interim Enrollment of Medicare Beneficiaries in Qualified 
Health Plans.--
            (1) In general.--Notwithstanding title XVIII of the Social 
        Security Act, the Secretary shall provide for a monthly payment 
        as provided under subsection (b)(1) to a qualified health plan 
        on behalf of enrolled medicare beneficiaries.
            (2) Medicare beneficiary.--For purposes of this section, 
        the term ``medicare beneficiary'' means an individual who is 
        eligible for benefits under part A of title XVIII of the Social 
        Security Act and is enrolled under part B of such title.
    (b) Payment Specified.--
            (1) Federal payment.--
                    (A) In general.--The amount of payment specified in 
                this paragraph for an individual who is enrolled in a 
                qualified health plan is the lesser of--
                            (i) the applicable rate specified in 
                        section 1876(a)(1)(C) of the Social Security 
                        Act (but at 100 percent, rather than 95 
                        percent, of the applicable amount); or
                            (ii) the monthly premium charged the 
                        individual for coverage under the qualified 
                        health plan.
                    (B) Source of payment.--The payment to a qualified 
                health plan under this paragraph for individuals 
                entitled to benefits under part A and enrolled under 
                part B of title XVIII of the Social Security Act shall 
                be made from the Federal Hospital Insurance Trust Fund 
                and the Federal Supplementary Medical Insurance Trust 
                Fund, with the allocation to be determined by the 
                Secretary.
            (2) Individual's share.--If the monthly premium for the 
        qualified health plan in which the individual is enrolled is 
        greater than the amount specified under paragraph (1)(A)(i), 
        the individual shall be responsible for paying to the qualified 
        health plan the difference between the monthly premium charged 
        the individual for coverage under the qualified health plan and 
        the amount specified in paragraph (1)(A)(i).
    (c) Payments Under this Section as Sole Medicare Benefits.--
Payments made under this section shall be instead of the amounts that 
would otherwise be payable, pursuant to sections 1814(b) and 1833(a) of 
the Social Security Act, for services furnished to medicare 
beneficiaries.

            PART II--ENHANCEMENT OF MEDICARE RISK CONTRACTS

SEC. 6111. REVISIONS IN THE PAYMENT METHODOLOGY FOR RISK CONTRACTORS.

    Section 4204(b) of the Omnibus Budget Reconciliation Act of 1990 is 
amended to read as follows:
    ``(b) Revisions in the Payment Methodology for Risk Contractors.--
(1)(A) Not later than 1 year after the date of the enactment of the 
Health Equity and Access Reform Today Act of 1993, the Secretary of 
Health and Human Services (in this subsection referred to as the 
`Secretary') shall submit a proposal to the Congress that provides for 
revisions to the payment method to be applied in years beginning with 
1996 for organizations with a risk-sharing contract under section 
1876(g) of the Social Security Act.
    ``(B) In proposing the revisions required under subparagraph (A), 
the Secretary shall consider--
            ``(i) the difference in costs associated with medicare 
        beneficiaries with differing health status and demographic 
        characteristics;
            ``(ii) the difference in costs associated with medicare 
        beneficiaries who receive health benefits from a primary payer 
        other than medicare; and
            ``(iii) the effects of using alternative geographic 
        classifications on the determinations of costs associated with 
        beneficiaries residing in different areas.
    ``(2) Not later than 3 months after the date of submittal of the 
proposal under paragraph (1), the Physician Payment Review Commission 
and the Prospective Payment Assessment Commission shall review the 
proposal and shall report to Congress on the appropriateness of the 
proposed modifications.''.

SEC. 6112. ADJUSTMENT IN MEDICARE CAPITATION PAYMENTS TO TAKE INTO 
              ACCOUNT SECONDARY PAYER STATUS.

    (a) In General.--In defining the classes to be used in determining 
the annual per capita rate of payment under section 1876(a)(1)(B) of 
the Social Security Act to an eligible organization with a risk-sharing 
contract under such section (for months beginning after June 1994), the 
Secretary shall treat as a separate class individuals entitled to 
benefits under title XVIII of such Act with respect to whom there is a 
group health plan that is a primary plan (within the meaning of section 
1862(b)(2)(A) of such Act).
    (b) Deadline for Announcement of Rates.--Not later than May 15, 
1994, the Secretary shall announce annual per capita rates of payment 
for eligible organizations described in subsection (a) that take into 
account the separate treatment of individuals with respect to whom 
there is a group health plan that is a primary plan.

SEC. 6113. ESTABLISHMENT OF OUTLIER POOL.

    (a) General Rule.--Section 1876(a)(1) (42 U.S.C. 1395mm(a)(1)) is 
amended by adding at the end the following new subparagraph:
    ``(G)(i) In the case of an eligible organization with a risk-
sharing contract, the Secretary may make additional payments to the 
organization equal to not more than 50 percent of reasonable cost above 
the threshold amount of items and services covered under parts A and B 
and provided (or paid for) in a year by the organization to any 
individual enrolled with the organization under this section.
    ``(ii) For purposes of clause (i), the `threshold amount' is an 
amount determined by the Secretary from time to time, adjusted by the 
geographic factor utilized in determining payments to the organization 
under subparagraph (C) and rounded to the nearest multiple of $100, 
such that the total amount to be paid under this subparagraph for a 
year is estimated to be 5 percent or less of the total amount to be 
paid under risk-sharing contracts for services furnished for that year.
    ``(iii) An eligible organization shall submit a claim for 
additional payments under subsection (i) within such time as the 
Secretary may specify.''.
    (b) Effective Date.--The amendment made by subsection (a) applies 
to services furnished after 1994.

                       PART III--MEDICARE SELECT

SEC. 6121. MEDICARE SELECT.

    (a) Amendments to Provisions Relating to Medicare Select 
Policies.--
            (1) Permitting medicare select policies in all states.--
        Subsection (c) of section 4358 of the Omnibus Budget 
        Reconciliation Act of 1990 is hereby repealed.
            (2) Requirements of medicare select policies.--Section 
        1882(t)(1) (42 U.S.C. 1395ss(t)(1)) is amended to read as 
        follows:
    ``(1)(A) If a medicare supplemental policy meets the requirements 
of the 1991 NAIC Model Regulation or 1991 Federal Regulation and 
otherwise complies with the requirements of this section except that--
            ``(i) the benefits under such policy are restricted to 
        items and services furnished by certain entities (or reduced 
        benefits are provided when items or services are furnished by 
        other entities), and
            ``(ii) in the case of a policy described in subparagraph 
        (C)(i)--
                    ``(I) the benefits under such policy are not one of 
                the groups or packages of benefits described in 
                subsection (p)(2)(A),
                    ``(II) except for nominal copayments imposed for 
                services covered under part B of this title, such 
                benefits include at least the core group of basic 
                benefits described in subsection (p)(2)(B), and
                    ``(III) an enrollee's liability under such policy 
                for physician's services covered under part B of this 
                title is limited to the nominal copayments described in 
                subclause (II),
        the policy shall nevertheless be treated as meeting those 
        requirements if the policy meets the requirements of 
        subparagraph (B).
    ``(B) A policy meets the requirements of this subparagraph if--
            ``(i) full benefits are provided for items and services 
        furnished through a network of entities which have entered into 
        contracts or agreements with the issuer of the policy,
            ``(ii) full benefits are provided for items and services 
        furnished by other entities if the services are medically 
        necessary and immediately required because of an unforeseen 
        illness, injury, or condition and it is not reasonable given 
        the circumstances to obtain the services through the network,
            ``(iii) the network offers sufficient access,
            ``(iv) the issuer of the policy has arrangements for an 
        ongoing quality assurance program for items and services 
        furnished through the network,
            ``(v)(I) the issuer of the policy provides to each enrollee 
        at the time of enrollment an explanation of--
                    ``(aa) the restrictions on payment under the policy 
                for services furnished other than by or through the 
                network,
                    ``(bb) out of area coverage under the policy,
                    ``(cc) the policy's coverage of emergency services 
                and urgently needed care, and
                    ``(dd) the availability of a policy through the 
                entity that meets the 1991 Model NAIC Regulation or 
                1991 Federal Regulation without regard to this 
                subsection and the premium charged for such policy, and
            ``(II) each enrollee prior to enrollment acknowledges 
        receipt of the explanation provided under subclause (I), and
            ``(vi) the issuer of the policy makes available to 
        individuals, in addition to the policy described in this 
        subsection, any policy (otherwise offered by the issuer to 
        individuals in the State) that meets the 1991 Model NAIC 
        Regulation or 1991 Federal Regulation and other requirements of 
        this section without regard to this subsection.
    ``(C)(i) A policy described in this subparagraph--
            ``(I) is offered by an eligible organization (as defined in 
        section 1876(b)),
            ``(II) is not a policy or plan providing benefits pursuant 
        to a contract under section 1876 or an approved demonstration 
        project described in section 603(c) of the Social Security 
        Amendments of 1983, section 2355 of the Deficit Reduction Act 
        of 1984, or section 9412(b) of the Omnibus Budget 
        Reconciliation Act of 1986, and
            ``(III) provides benefits which, when combined with 
        benefits which are available under this title, are 
        substantially similar to benefits under policies offered to 
        individuals who are not entitled to benefits under this title.
    ``(ii) In making a determination under subclause (III) of clause 
(i) as to whether certain benefits are substantially similar, there 
shall not be taken into account, except in the case of preventive 
services, benefits provided under policies offered to individuals who 
are not entitled to benefits under this title which are in addition to 
the benefits covered by this title and which are benefits an entity 
must provide in order to meet the definition of an eligible 
organization under section 1876(b)(1).''.
    (b) Renewability of Medicare Select Policies.--Section 1882(q)(1) 
(42 U.S.C. 1395ss(q)(1)) is amended--
            (1) by striking ``(1) Each'' and inserting ``(1)(A) Except 
        as provided in subparagraph (B), each'';
            (2) by redesignating subparagraphs (A) and (B) as clauses 
        (i) and (ii), respectively; and
            (3) by adding at the end the following new subparagraph:
            ``(B)(i) In the case of a policy that meets the 
        requirements of subsection (t), an issuer may cancel or 
        nonrenew such policy with respect to an individual who leaves 
        the service area of such policy; except that, if such 
        individual moves to a geographic area where such issuer, or 
        where an affiliate of such issuer, is issuing medicare 
        supplemental policies, such individual must be permitted to 
        enroll in any medicare supplemental policy offered by such 
        issuer or affiliate that provides benefits comparable to or 
        less than the benefits provided in the policy being canceled or 
        nonrenewed. An individual whose coverage is canceled or 
        nonrenewed under this subparagraph shall, as part of the notice 
        of termination or nonrenewal, be notified of the right to 
        enroll in other medicare supplemental policies offered by the 
        issuer or its affiliates.
            ``(ii) For purposes of this subparagraph, the term 
        `affiliate' shall have the meaning given such term by the 1991 
        NAIC Model Regulation.''.
    (c) Civil Penalty.--Section 1882(t)(2) (42 U.S.C. 1395ss(t)(2)) is 
amended--
            (1) by striking ``(2)'' and inserting ``(2)(A)'';
            (2) by redesignating subparagraphs (A), (B), (C), and (D) 
        as clauses (i), (ii), (iii), and (iv), respectively;
            (3) in clause (iv), as redesignated--
                    (A) by striking ``paragraph (1)(E)(i)'' and 
                inserting ``paragraph (1)(B)(v)(I); and
                    (B) by striking ``paragraph (1)(E)(ii)'' and 
                inserting ``paragraph (1)(B)(v)(II)'';
            (4) by striking ``the previous sentence'' and inserting 
        ``this subparagraph''; and
            (5) by adding at the end the following new subparagraph:
    ``(B) If the Secretary determines that an issuer of a policy 
approved under paragraph (1) has made a misrepresentation to the 
Secretary or has provided the Secretary with false information 
regarding such policy, the issuer is subject to a civil money penalty 
in an amount not to exceed $100,000 for each such determination. The 
provisions of section 1128A (other than the first sentence of 
subsection (a) and other than subsection (b)) shall apply to a civil 
money penalty under this subparagraph in the same manner as such 
provisions apply to a penalty or proceeding under section 1128A(a).''.
    (d) Effective Dates.--
            (1) NAIC standards.--If, within 6 months after the date of 
        the enactment of this Act, the National Association of 
        Insurance Commissioners (hereafter in this subsection referred 
        to as the ``NAIC'') makes changes in the 1991 NAIC Model 
        Regulation (as defined in section 1882(p)(1)(A) of the Social 
        Security Act) to incorporate the additional requirements 
        imposed by the amendments made by this section, section 
        1882(g)(2)(A) of such Act shall be applied in each State, 
        effective for policies issued to policyholders on and after the 
        date specified in paragraph (3), as if the reference to the 
        Model Regulation adopted on June 6, 1979, were a reference to 
        the 1991 NAIC Model Regulation (as so defined) as changed under 
        this paragraph (such changed Regulation referred to in this 
        subsection as the ``1994 NAIC Model Regulation'').
            (2) Secretary standards.--If the NAIC does not make changes 
        in the 1991 NAIC Model Regulation (as so defined) within the 6-
        month period specified in paragraph (1), the Secretary of 
        Health and Human Services (hereafter in this subsection 
        referred to as the ``Secretary'') shall promulgate a regulation 
        and section 1882(g)(2)(A) of the Social Security Act shall be 
        applied in each State, effective for policies issued to 
        policyholders on and after the date specified in paragraph (3), 
        as if the reference to the Model Regulation adopted on June 6, 
        1979, were a reference to the 1991 NAIC Model Regulation (as so 
        defined) as changed by the Secretary under this paragraph (such 
        changed Regulation referred to in this subsection as the ``1994 
        Federal Regulation'').
            (3) Date specified.--
                    (A) In general.--Subject to subparagraph (B), the 
                date specified in this paragraph for a State is the 
                earlier of--
                            (i) the date the State adopts the 1994 NAIC 
                        Model Regulation or the 1994 Federal 
                        Regulation, or
                            (ii) 1 year after the date the NAIC or the 
                        Secretary first adopts such regulations.
                    (B) Additional legislative action required.--In the 
                case of a State which the Secretary identifies, in 
                consultation with the NAIC, as--
                            (i) requiring State legislation (other than 
                        legislation appropriating funds) in order for 
                        medicare supplemental policies to meet the 1994 
                        NAIC Model Regulation or the 1994 Federal 
                        Regulation, but
                            (ii) having a legislature which is not 
                        scheduled to meet in 1995 in a legislative 
                        session in which such legislation may be 
                        considered,
                the date specified in this paragraph is the first day 
                of the first calendar quarter beginning after the close 
                of the first legislative session of the State 
                legislature that begins on or after January 1, 1995. 
                For purposes of the previous sentence, in the case of a 
                State that has a 2-year legislative session, each year 
                of such session shall be deemed to be a separate 
                regular session of the State legislature.

                       PART IV--OTHER PROVISIONS

SEC. 6131. MEDICARE PART B PREMIUM.

    Section 1839(e) (42 U.S.C. 1395r(e)) is amended--
            (1) in paragraph (1)(A)--
                    (A) by striking ``(A)''; and
                    (B) by striking ``and prior to January 1999'';
            (2) in paragraph (1)(B), by striking ``(B)'' and inserting 
        ``(2)''; and
            (3) by striking paragraph (2).

SEC. 6132. INCREASE IN MEDICARE PART B PREMIUM FOR INDIVIDUALS WITH 
              HIGH INCOME.

    (a) In General.--Subchapter A of chapter 1 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following new part:

   ``PART VIII--MEDICARE PART B PREMIUMS FOR HIGH-INCOME INDIVIDUALS

``Sec. 59B. Medicare part B premium tax.

``SEC. 59B. MEDICARE PART B PREMIUM TAX.

    ``(a) Imposition of Recapture Amount.--In the case of an 
individual, if the modified adjusted gross income of the taxpayer for 
the taxable year exceeds the threshold amount, such taxpayer shall pay 
(in addition to any other amount imposed by this subtitle) a recapture 
amount for such taxable year equal to the sum of the aggregate of the 
medicare part B recapture amounts (if any) for months during such year 
that a premium is paid under part B of title XVIII of the Social 
Security Act for the coverage of the individual under such part.
    ``(b) Medicare Part B Premium Recapture Amount for Month.--For 
purposes of this section, the medicare part B premium recapture amount 
for any month is the amount equal to the excess of--
            ``(1) 150 percent of the monthly actuarial rate for 
        enrollees age 65 and over determined for that calendar year 
        under section 1839(b) of the Social Security Act, over
            ``(2) the total monthly premium under section 1839 of the 
        Social Security Act (determined without regard to subsections 
        (b) and (f) of section 1839 of such Act).
    ``(c) Phase-in of Recapture Amount.--If the modified adjusted gross 
income of the taxpayer for any taxable year exceeds the threshold 
amount by less than $10,000, the recapture amount imposed by this 
section for such taxable year shall be an amount which bears the same 
ratio to the recapture amount which would (but for this subsection) be 
imposed by this section for such taxable year as such excess bears to 
$10,000.
    ``(d) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Threshold amount.--The term `threshold amount' 
        means--
                    ``(A) except as otherwise provided in this 
                paragraph, $90,000,
                    ``(B) $115,000 in the case of a joint return, and
                    ``(C) zero in the case of a taxpayer who--
                            ``(i) is married (as determined under 
                        section 7703) but does not file a joint return 
                        for such year, and
                            ``(ii) does not live apart from his spouse 
                        at all times during the taxable year.
            ``(2) Modified adjusted gross income.--The term `modified 
        adjusted gross income' means adjusted gross income--
                    ``(A) determined without regard to sections 135, 
                911, 931, and 933, and
                    ``(B) increased by the amount of interest received 
                or accrued by the taxpayer during the taxable year 
                which is exempt from tax.
            ``(3) Joint returns.--In the case of a joint return--
                    ``(A) the recapture amount under subsection (a) 
                shall be the sum of the recapture amounts determined 
                separately for each spouse, and
                    ``(B) subsections (a) and (c) shall be applied by 
                taking into account the combined modified adjusted 
                gross income of the spouses.
            ``(4) Coordination with other provisions.--
                    ``(A) Treated as tax for subtitle f.--For purposes 
                of subtitle F, the recapture amount imposed by this 
                section shall be treated as if it were a tax imposed by 
                section 1.
                    ``(B) Not treated as tax for certain purposes.--The 
                recapture amount imposed by this section shall not be 
                treated as a tax imposed by this chapter for purposes 
                of determining--
                            ``(i) the amount of any credit allowable 
                        under this chapter, or
                            ``(ii) the amount of the minimum tax under 
                        section 55.''.
    (b) Transfers To Supplemental Medical Insurance Trust Fund.--
            (1) In general.--There are hereby appropriated to the 
        Supplemental Medical Insurance Trust Fund amounts equivalent to 
        the aggregate increase in liabilities under chapter 1 of the 
        Internal Revenue Code of 1986 that are attributable to the 
        application of section 59B(a) of such Code, as added by this 
        section.
            (2) Transfers.--The amounts appropriated by paragraph (1) 
        to the Supplemental Medical Insurance Trust Fund shall be 
        transferred from time to time (but not less frequently than 
        quarterly) from the general fund of the Treasury on the basis 
        of estimates made by the Secretary of the Treasury of the 
        amounts referred to in paragraph (1). Any quarterly payment 
        shall be made on the first day of such quarter and shall take 
        into account the recapture amounts referred to in such section 
        59B(a) for such quarter. Proper adjustments shall be made in 
        the amounts subsequently transferred to the extent prior 
        estimates were in excess of or less than the amounts required 
        to be transferred.
    (c) Reporting Requirements.--
            (1)(A) Paragraph (1) of section 6050F(a) of the Internal 
        Revenue Code of 1986 (relating to returns relating to social 
        security benefits) is amended by striking ``and'' at the end of 
        subparagraph (B) and by inserting after subparagraph (C) the 
        following new subparagraph:
                    ``(D) the number of months during the calendar year 
                for which a premium was paid under part B of title 
                XVIII of the Social Security Act for the coverage of 
                such individual under such part, and''.
            (B) Paragraph (2) of section 6050F(b) of such Code is 
        amended to read as follows:
            ``(2) the information required to be shown on such return 
        with respect to such individual.''.
            (C) Subparagraph (A) of section 6050(c)(1) of such Code is 
        amended by inserting before the comma ``and in the case of the 
        information specified in subsection (a)(1)(D)''.
            (D) The heading for section 6050F of such Code is amended 
        by inserting ``and medicare part b coverage'' before the 
        period.
            (E) The item relating to section 6050F in the table of 
        sections for subpart B of part III of subchapter A of chapter 
        61 of such Code is amended by inserting ``and medicare part B 
        coverage'' before the period.
    (d) Waiver of Estimated Tax Penalties for 1996.--No addition to tax 
shall be imposed under section 6654 of the Internal Revenue Code of 
1986 (relating to failure to pay estimated income tax) for any period 
before April 16, 1997, with respect to any underpayment to the extent 
that such underpayment resulted from section 59B(a) of the Internal 
Revenue Code of 1986, as added by this section.
    (e) Clerical Amendment.--The table of parts for subchapter A of 
chapter 1 of such Code is amended by adding at the end thereof the 
following new item:

                              ``Part VIII. Medicare Part B Premiums for 
                                        High-Income Individuals.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to periods after December 31, 1994, in taxable years ending after 
such date.

SEC. 6133. PERMANENT 10-PERCENT REDUCTION IN PAYMENTS FOR CAPITAL-
              RELATED COSTS OF OUTPATIENT HOSPITAL SERVICES.

    Section 1861(v)(1)(S)(ii)(I) (42 U.S.C. 1395x(v)(1)(S)(ii)(I)) is 
amended by striking ``fiscal years 1992 through 1998'' and inserting 
``fiscal year 1992, and each subsequent fiscal year,''.

SEC. 6134. PERMANENT REDUCTION IN PAYMENTS FOR OTHER COSTS OF 
              OUTPATIENT HOSPITAL SERVICES.

    Section 1861(v)(1)(S)(ii)(II) (42 U.S.C. 1395x(v)(1)(S)(ii)(II)) is 
amended by striking ``fiscal years 1991 through 1998'' and inserting 
``fiscal year 1991, and each subsequent fiscal year''.

SEC. 6135. IMPOSITION OF COINSURANCE ON LABORATORY SERVICES.

    (a) In General.--Paragraphs (1)(D) and (2)(D) of section 1833(a) 
(42 U.S.C. 1395l(a)) are each amended--
            (1) by striking ``(or 100 percent'' and all that follows 
        through ``the first opinion))''; and
            (2) by striking ``100 percent of such negotiated rate'' and 
        inserting ``80 percent of such negotiated rate''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to tests furnished on or after January 1, 1995.

SEC. 6136. IMPOSITION OF COPAYMENT FOR CERTAIN HOME HEALTH VISITS.

    (a) In General.--
            (1) Part a.--Section 1813(a) (42 U.S.C. 1395e(a)) is 
        amended by adding at the end the following new paragraph:
    ``(5) The amount payable for home health services furnished to an 
individual under this part shall be reduced by a copayment amount equal 
to 20 percent of the average of all per visit costs for home health 
services furnished under this title determined under section 
1861(v)(1)(L) (as determined by the Secretary on a prospective basis 
for services furnished during a calendar year), unless such services 
were furnished to the individual during the 30-day period that begins 
on the date the individual is discharged as an inpatient from a 
hospital.''.
            (2) Part b.--Section 1833(a)(2) (42 U.S.C. 1395l(a)(2)) is 
        amended--
                    (A) in subparagraph (A), by striking ``to home 
                health services,'' and by striking the comma after 
                ``opinion)'';
                    (B) in subparagraph (D), by striking ``and'' at the 
                end;
                    (C) in subparagraph (E), by striking the semicolon 
                at the end and inserting ``; and''; and
                    (D) by adding at the end the following new 
                subparagraph:
                    ``(F) with respect to home health services--
                            ``(i) the lesser of--
                                    ``(I) the reasonable cost of such 
                                services, as determined under section 
                                1861(v), or
                                    ``(II) the customary charges with 
                                respect to such services,
                        less the amount a provider may charge as 
                        described in clause (ii) of section 
                        1866(a)(2)(A),
                            ``(ii) if such services are furnished by a 
                        public provider of services, or by another 
                        provider which demonstrates to the satisfaction 
                        of the Secretary that a significant portion of 
                        its patients are low-income (and requests that 
                        payment be made under this clause), free of 
                        charge or at nominal charges to the public, the 
                        amount determined in accordance with section 
                        1814(b)(2), or
                            ``(iii) if (and for so long as) the 
                        conditions described in section 1814(b)(3) are 
                        met, the amounts determined under the 
                        reimbursement system described in such section,
                less a copayment amount equal to 20 percent of the 
                average of all per visit costs for home health services 
                furnished under this title determined under section 
                1861(v)(1)(L) (as determined by the Secretary on a 
                prospective basis for services furnished during a 
                calendar year), unless such services were furnished to 
                the individual during the 30-day period that begins on 
                the date the individual is discharged as an inpatient 
                from a hospital;''.
            (3) Provider charges.--Section 1866(a)(2)(A)(i) (42 U.S.C. 
        1395cc(a)(2)(A)(i)) is amended--
                    (A) by striking ``deduction or coinsurance'' and 
                inserting, ``deduction, coinsurance, or copayment''; 
                and
                    (B) by striking ``or (a)(4)'' and inserting 
                ``(a)(4), or (a)(5)''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to home health services furnished on or after January 1, 1995.

SEC. 6137. PHASED-IN ELIMINATION OF MEDICARE HOSPITAL DISPROPORTIONATE 
              SHARE ADJUSTMENT PAYMENTS.

    Section 1886(d)(5)(F) of the Social Security Act (42 U.S.C. 
1395ww(d)(5)(F)) is amended--
            (1) in clause (ii), by striking ``The amount of such 
        payment'' and inserting ``Subject to clause (ix), the amount of 
        such payment''; and
            (2) by adding at the end the following new clause:
    ``(ix) The amount of the additional payment made under this 
paragraph for a discharge shall be equal to--
            ``(I) for discharges occurring during fiscal year 1996, 80 
        percent of the amount otherwise determined for the discharge 
        under clause (ii);
            ``(II) for discharges occurring during fiscal year 1997, 60 
        percent of the amount otherwise determined for the discharge 
        under clause (ii);
            ``(III) for discharges occurring during fiscal year 1998, 
        40 percent of the amount otherwise determined for the discharge 
        under clause (ii);
            ``(IV) for discharges occurring during fiscal year 1999, 20 
        percent of the amount otherwise determined for the discharge 
        under clause (ii); and
            ``(V) for discharges occurring during fiscal year 2000, and 
        each subsequent fiscal year, 0 percent of the amount otherwise 
        determined for the discharge under clause (ii).''.

SEC. 6138. ELIMINATION OF BAD DEBT RECOGNITION FOR HOSPITAL SERVICES.

    (a) In General.--Effective October 1, 1995, in making any payment 
to hospitals under title XVIII of the Social Security Act, the 
Secretary shall discontinue payments under title XVIII of such Act to 
providers of service for reasonable costs relating to unrecovered costs 
associated with unpaid deductible and coinsurance amounts incurred 
under such title.
    (b) Conforming Amendments.--
            (1) In general.--(A) Subsection (c) of section 4008 of the 
        Omnibus Budget Reconciliation Act of 1987 is repealed.
            (B) Section 1833 (42 U.S.C. 1395l) is amended--
                    (i) in subsection (l)(5), by striking subparagraph 
                (C); and
                    (ii) in subsection (r), by striking paragraph (4).
            (2) Effective date.--The amendments made by paragraph (1) 
        shall take effect on October 1, 1995.

SEC. 6139. MEDICARE AS SECONDARY PAYER.

    (a) Permanent Extension of Data Match Program.--
            (1) In general.--Section 1862(b)(5)(C) (42 U.S.C. 
        1395y(b)(5)(C)) is amended by striking clause (iii).
            (2) Permanent extension of certain taxpayer identity 
        information disclosure requirements.--Section 6103(l)(12) of 
        the Internal Revenue Code of 1986 is amended by striking 
        subparagraph (F).
    (b) Permanent Extension of Medicare Secondary Payer To Disabled 
Beneficiaries.--Section 1862(b)(1)(B)(iii) (42 U.S.C. 
1395y(b)(1)(B)(iii)), is amended--
            (1) in the heading, by striking ``Sunset'' and inserting 
        ``Effective Date''; and
            (2) by striking ``, and October 1, 1998''.
    (c) Permanent Extension of 18-Month Rule for ESRD Beneficiaries.--
The second sentence of section 1862(b)(1)(C) (42 U.S.C. 1395y(b)(1)(C)) 
is amended by striking ``and on or before October 1, 1998,''.

 TITLE VII--PATIENT'S RIGHT TO SELF-DETERMINATION REGARDING HEALTH CARE

SEC. 7001. TREATMENT OF ADVANCE DIRECTIVES.

    (a) In General.--An advance directive that fails to meet the 
formalities of execution, form, or language required by State law shall 
be given effect to the extent that the treating health care provider in 
good faith believes that such directive constitutes a reliable 
expression of the wishes of the individual executing such directive 
concerning such individual's health care.
    (b) Construction.--Nothing in subsection (a) may be construed to 
authorize the administration, withholding, or withdrawal of health care 
otherwise prohibited by the laws of the State.

SEC. 7002. EFFECT ON OTHER LAWS.

    Written policies and written information adopted by health care 
providers pursuant to sections 4206 and 4751 of the Omnibus Budget 
Reconciliation Act of 1990 (Public Law 101-508), shall be modified 
within 6 months of enactment of this title to conform to the provisions 
of this title.

SEC. 7003. INFORMATION PROVIDED TO CERTAIN INDIVIDUALS.

    The Secretary shall provide on a periodic basis written information 
regarding an individual's right to consent to, or to decline, medical 
treatment as provided in this title to individual's who are 
beneficiaries under titles II, XVI, XVIII, and XIX of the Social 
Security Act.

SEC. 7004. RECOMMENDATIONS TO THE CONGRESS ON ISSUES RELATING TO A 
              PATIENT'S RIGHT OF SELF-DETERMINATION.

    Not later than 180 days after the date of the enactment of this Act 
the Secretary shall study the implementation of sections 4206 and 4751 
of the Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508) 
and provide recommendations to the Congress concerning the results of 
the study and the medical, legal, ethical, social, and educational 
issues related to provisions of this title. In developing 
recommendations under this section the Secretary shall address the 
following issues:
            (1) Issues pertaining to the education of the public 
        regarding their rights to execute advance directives.
            (2) Issues pertaining to the education and training of 
        health care professionals concerning patients' self-
        determination rights.
            (3) Issues pertaining to health care professionals' duties 
        with respect to patients' rights, and health care 
        professionals' roles in identifying, assessing, and presenting 
        for patient consideration medically indicated treatment 
        options.
            (4) Such other issues as the Secretary may identify.

SEC. 7005. EFFECTIVE DATE.

    This title shall take effect on the date that is 6 months after the 
date of enactment of this Act.

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