Text: S.2351 — 103rd Congress (1993-1994)All Information (Except Text)

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Placed on Calendar Senate (08/02/1994)

 
[Congressional Bills 103th Congress]
[From the U.S. Government Printing Office]
[S. 2351 Placed on Calendar Senate (PCS)]

                                                       Calendar No. 539

103d CONGRESS

  2d Session

                                S. 2351

                          [Report No. 103-323]

_______________________________________________________________________

                                 A BILL

To achieve universal health insurance coverage, and for other purposes.

_______________________________________________________________________

               August 2 (legislative day, July 20), 1994

                         Placed on the calendar





                                                       Calendar No. 539
103d CONGRESS
  2d Session
                                S. 2351

                          [Report No. 103-323]

To achieve universal health insurance coverage, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

               August 2 (legislative day, July 20), 1994

  Mr. Moynihan, from the Committee on Finance, reported the following 
     original bill; which was read twice and placed on the calendar

_______________________________________________________________________

                                 A BILL


 
To achieve universal health insurance coverage, 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; PURPOSE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Health Security 
Act''.
    (b) Universal Coverage as Purpose.--It is the purpose of this Act 
to achieve universal health insurance coverage through--
            (1) subsidies for the purchase of health insurance;
            (2) affordable standardized health insurance;
            (3) elimination of exclusionary practices by health 
        insurance companies;
            (4) a permanent National Health Commission which, beginning 
        in 1996, will make recommendations every two years to the 
        Congress on how to increase the number of people covered by 
        health insurance;
            (5) reduction of health costs through more open competitive 
        markets and continued advances in medical education and 
        research; and
            (6) health care provided under the medicare and medicaid 
        programs and health programs of the Department of Defense, 
        Department of Veterans Affairs, and Indian Health Service.
    (c) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; national goal; table of contents.
         TITLE I--HEALTH INSURANCE AND DELIVERY SYSTEMS REFORM

      Subtitle A--Federal Standards for State Regulatory Programs

Sec. 101. State plan for certification and regulation of health 
                            insurance and delivery systems.
         Subtitle B--Coordination With Other Provisions of Law

Sec. 111. McCarran-Ferguson reform.
Sec. 112. Office of Rural Health Policy.
Sec. 113. Amendments to the Employee Retirement Income Security Act of 
                            1974.
                           TITLE II--COVERAGE

Sec. 201. Coverage.
             TITLE III--PREMIUM AND COST-SHARING ASSISTANCE

Sec. 301. Premium and cost-sharing assistance.
          TITLE IV--ADMINISTRATIVE SIMPLIFICATION AND PRIVACY

Sec. 401. Administrative simplification.
Sec. 402. Privacy of health information.
                     TITLE V--MALPRACTICE AND FRAUD

                    Subtitle A--Federal Tort Reform

Sec. 501. Federal tort reform.
  Subtitle B--Expanded Efforts To Combat Health Care Fraud and Abuse 
                   Affecting Federal Outlay Programs

                      Part I--Improved Enforcement

Sec. 511. Health care fraud and abuse affecting Federal outlay 
                            programs.
Sec. 512. Definition of Federal health care offense.
Sec. 513. Use of funds by inspector general.
Sec. 514. Rewards for information leading to prosecution and 
                            conviction.
             Part II--Civil Penalties and Rights of Action

Sec. 521. Civil monetary penalties.
Sec. 522. Permitting parties to bring actions on own behalf.
Sec. 523. Exclusion from program participation.
                  Part III--Amendments to Criminal Law

Sec. 531. Health care fraud.
Sec. 532. Theft or embezzlement.
Sec. 533. False statements.
Sec. 534. Bribery and graft.
Sec. 535. Injunctive relief relating to health care offenses.
Sec. 536. Grand jury disclosure.
Sec. 537. Forfeitures for violations of fraud statutes.
             Part IV--Amendments to Civil False Claims Act

Sec. 541. Amendments to Civil False Claims Act.
                         Part V--Effective Date

Sec. 551. Effective date.
          TITLE VI--MEDICARE, MEDICAL EDUCATION, AND MEDICAID

Sec. 600. References to Social Security Act.
                          Subtitle A--Medicare

                   Part I--Risk Contracting Entities

Sec. 601. Individual election to remain in certain health plans.
Sec. 602. Improvements of risk contracts.
                 Part II--Provisions Related to Part A

Sec. 611. Inpatient hospital services update for PPS hospitals.
Sec. 612. Reduction in payments for capital-related costs for inpatient 
                            hospital services.
Sec. 613. Reductions in disproportionate share payments.
Sec. 614. Revised payment methodology for rehabilitation and long-term 
                            care hospitals.
Sec. 615. Moratorium on designation of new long-term hospitals.
Sec. 616. Extension of freeze on updates to routine service cost limits 
                            for skilled nursing facilities.
Sec. 617. Payments for sole community hospitals with teaching programs 
                            and multihospital campuses.
Sec. 618. Medicare-dependent, small rural hospitals.
Sec. 619. Provisions relating to rural health transition grant program.
Sec. 620. Limited service hospital program.
Sec. 621. Termination of indirect medical education payments.
Sec. 622. Subacute care study.
                Part III--Provisions Relating to Part B

Sec. 631. Updates for physicians' services.
Sec. 632. Substitution of real GDP to adjust for volume and intensity; 
                            repeal of restriction on maximum reduction 
                            permitted in default update.
Sec. 633. Payment for physicians' services relating to inpatient stays 
                            in certain hospitals.
Sec. 634. Changes in underserved area bonus payments.
Sec. 635. Development and implementation of resource-based methodology 
                            for practice expenses.
Sec. 636. Demonstration projects for medicare State-based performance 
                            standard rate of increase.
Sec. 637. Elimination of formula-driven overpayments for certain 
                            outpatient hospital services.
Sec. 638. Eye or eye and ear hospitals.
Sec. 639. Imposition of coinsurance on laboratory services.
Sec. 640. Application of competitive acquisition process for part B 
                            items and services.
Sec. 641. Application of competitive acquisition procedures for 
                            laboratory services.
Sec. 642. Expanded coverage for physician assistants and nurse 
                            practitioners.
Sec. 643. General part B premium.
              Part IV--Provisions Related to Parts A and B

Sec. 651. Medicare secondary payer changes.
Sec. 652. Modification to physician referral exception.
Sec. 653. Expansion of centers of excellence.
Sec. 654. Medicare select.
Sec. 655. Medigap.
Sec. 656. Reduction in routine cost limits for home health services.
Sec. 657. Termination of graduate medical education payments.
Sec. 658. Extension of social health maintenance organization 
                            demonstrations.
Sec. 659. Study on medicare spending.
Sec. 660. Streamlined processing systems.
                     Subtitle B--Medical Education

Sec. 665. Medical education.
             Subtitle C--Home and Community-Based Services

Sec. 667. State programs for home and community-based services for 
                            individuals with disabilities.
                      Subtitle D--Medicaid Program

Part I--Integration of Certain Medicaid Eligibles Into Reformed Health 
                              Care System

Sec. 671. Limiting coverage under medicaid of items and services 
                            covered under standard benefit package.
   Part II--Coordinated Care Services for Disabled Medicaid Eligibles

Sec. 672. Coordinated care services for disabled medicaid eligibles.
     Part III--Payments to Hospitals Serving Vulnerable Populations

Sec. 673. Replacement of DSH payment provisions with provisions 
                            relating to payments to hospitals serving 
                            vulnerable populations.
              Part IV--Medicaid Long-term Care Provisions

Sec. 674. Payments for home or community-based care, personal care 
                            services, and frail elderly services.
Sec. 675. Increased resource disregard for individuals receiving 
                            certain services.
Sec. 676. Frail elderly demonstration project waivers.
Sec. 677. Elimination of requirement of prior institutionalization with 
                            respect to habilitation services furnished 
                            under a waiver for home or community-based 
                            services.
Sec. 678. Elimination of rule regarding availability of beds in certain 
                            institutions.
                         Part V--Miscellaneous

Sec. 679. Medicaid coverage of all certified nurse practitioner and 
                            clinical nurse specialist services.
                     TITLE VII--REVENUE PROVISIONS

Sec. 700. Amendment of 1986 Code.
                    Subtitle A--Financing Provisions

              Part I--Increase in Tax on Tobacco Products

Sec. 701. Increase in excise taxes on tobacco products.
Sec. 702. Modifications of certain tobacco tax provisions.
Sec. 703. Imposition of excise tax on manufacture or importation of 
                            roll-your-own tobacco.
                  Part II--Health Related Assessments

Sec. 705. Assessments on insured and self-insured health plans.
Sec. 706. Tax on high cost health plans.
          Part III--Recapture of Certain Health Care Subsidies

Sec. 711. Recapture of certain health care subsidies received by high-
                            income individuals.
                       Part IV--Other Provisions

Sec. 715. Increase in tax on certain hollow point and large caliber 
                            handgun ammunition.
Sec. 716. Modification to self-employment tax treatment of certain S 
                            corporation shareholders and partners.
Sec. 717. Extending medicare coverage of, and application of hospital 
                            insurance tax to, all State and local 
                            government employees.
       Subtitle B--Tax Treatment of Employer-Provided Health Care

Sec. 721. Tax treatment of voluntary employer health care 
                            contributions.
Sec. 722. Elimination of exclusion of health benefits provided through 
                            a flexible spending arrangement.
Sec. 723. 2-year extension of deduction for health insurance costs of 
                            self-employed individuals.
Sec. 724. Limitation on prepayment of medical insurance premiums.
 Subtitle C--Deduction for Individuals Purchasing Own Health Insurance

Sec. 731. Deduction for health insurance costs of individuals.
                    Subtitle D--Exempt Organizations

                   Part I--Health Care Organizations

Sec. 741. Qualification and disclosure requirements for nonprofit 
                            health care organizations.
Sec. 742. Excise taxes for private inurement by tax-exempt health care 
                            organizations.
Sec. 743. Treatment of health maintenance organizations, parent 
                            organizations, and health insurance 
                            purchasing cooperatives.
Sec. 744. Tax treatment of taxable organizations providing health 
                            insurance and other prepaid health care 
                            services.
Sec. 745. Organizations subject to section 833.
Sec. 746. Tax exemption for high-risk insurance pools.
           Part II--Tax Treatment of Section 501(c)(3) Bonds

Sec. 748. Tax treatment of 501(c)(3) bonds similar to governmental 
                            bonds.
   Subtitle E--Tax Treatment of Long-Term Care Insurance and Services

Sec. 751. Qualified long-term care services treated as medical care.
Sec. 752. Treatment of long-term care insurance.
Sec. 753. Tax treatment of accelerated death benefits under life 
                            insurance contracts.
Sec. 754. Tax treatment of companies issuing qualified accelerated 
                            death benefit riders.
                  Subtitle F--Health Care Trust Funds

Sec. 761. Establishment of health care trust funds.
                  Subtitle G--Other Revenue Provisions

                  Part I--Employment Status Provisions

Sec. 771. Employment status proposal required from Department of the 
                            Treasury.
Sec. 772. Increase in services reporting penalties.
         Part II--Tax Incentives for Health Services Providers

Sec. 775. Nonrefundable credit for certain primary health services 
                            providers.
Sec. 776. Expensing of medical equipment.
                   Part III--Miscellaneous Provisions

Sec. 781. Post-retirement medical and life insurance reserves.
Sec. 782. Coordination with health care continuation provisions.
Sec. 783. Credit for cost of personal assistance services required by 
                            employed individuals.
Sec. 784. Disclosure of return information for administration of 
                            certain programs under the Health Security 
                            Act.
Sec. 785. Special rule for deferred compensation plans of group medical 
                            practices.
               Subtitle H--Ensuring Health Care Financing

Sec. 791. Ensuring health care financing.

         TITLE I--HEALTH INSURANCE AND DELIVERY SYSTEMS REFORM

      Subtitle A--Federal Standards for State Regulatory Programs

SEC. 101. STATE PLAN FOR CERTIFICATION AND REGULATION OF HEALTH 
              INSURANCE AND DELIVERY SYSTEMS.

    (a) Medicaid State Plan Requirement.--Section 1902(a) of the Social 
Security Act (42 U.S.C. 1396a(a)) is amended by striking ``and'' at the 
end of paragraph (61), by striking the period at the end of paragraph 
(62) and inserting ``; and'', and by inserting after paragraph (62) the 
following new paragraph:
            ``(63) provide that the State is a participating State 
        under title XXI.''
    (b) Participating State Plan for Certification and Regulation of 
Health Insurance and Delivery Systems.--The Social Security Act is 
amended by adding at the end the following new title:

  ``TITLE XXI--STATE PLAN FOR CERTIFICATION AND REGULATION OF HEALTH 
                     INSURANCE AND DELIVERY SYSTEMS

                          ``table of contents
               ``Subtitle A--Participating State Program

                   ```subpart a--access to coveragees
``Sec. 21001. Establishment of participating State programs.
``Sec. 21002. Access to standardized health care coverage.
``Sec. 21003. Other State program responsibilities.
``subpart b--accreditation, certification, enforcement, and information
``Sec. 21011. Accreditation and certification of health plans and long-
                            term care policies.
``Sec. 21012. Certification enforcement.
``Sec. 21013. C``subpart c--other state responsibilities
``Sec. 21021. Establishment of community rating areas.
``Sec. 21022. Designation of health plan service areas.
``Sec. 21023. Reinsurance and risk adjustment program.
``Sec. 21024. Specification of annual general enrollment period.
``Sec. 21025. Premium approval process for long-term care policies.
``Sec. 21026. Requirements relating to possessions of the United 
                            States.
         ``Part II--Requirements for State Single-payer Systems

``Sec. 21031. Single-payer system described.
``Sec. 21032. General requirements for single-payer systems.
``Sec. 21033. Special rules for States operating Statewide single-payer 
                            system.
``Sec. 21034. Special rules for community rating area-specific single-
                            payer systems.
              ``Part III--Treatment of Certain State Laws

``Sec. 21041. Preemption of State law restrictions on network plans.
``Sec. 21042. State law restrictions on health professional licensure.
``Sec. 21043. Preemption from State benefit mandates.
``Sec. 21044. Preemption of State law regulating utilization management 
                            and review.
                  ``Part IV--Federal Responsibilities

``Sec. 21051. Federal role with respect to multistate health plans.
``Sec. 21052. Establishment of residency rules.
``Sec. 21053. Workplace wellness program.
``Sec. 21054. Employee leasing rules.
``Sec. 21055. Approval of private accreditation programs.
                    ``Part V--Definitions and Rules

``Sec. 21100. Definitions and rules of general application.
                   ``Subtitle B--Standards for Reform

          ``Part I--Establishment and Application of Standards

``Sec. 21101. Certified standard health plans.
``Sec. 21102. Certified supplemental health benefits plans.
``Sec. 21103. Certified long-term care policies.
``Sec. 21104. General rules.
        ``Part II--S``subpart a--insurance standardsHealth Plans
``Sec. 21111. Guaranteed issue and renewal.
``Sec. 21112. Enrollment.
``Sec. 21113. Rating limitations for community-rated market.
``Sec. 21114. Rating practices and payment of premiums.
``Sec. 21115. Nondiscrimination based on health status.
``Sec. 21116. Ben``subpart b--delivery system standards
``Sec. 21121. Reinsurance and risk adjustment.
``Sec. 21122. Capital requirements.
``Sec. 21123. Collection and provision of standardized information.
``Sec. 21124. Quality improvement and assurance.
``Sec. 21125. Patient protections and provider selection.
``Sec. 21126. Alternative dispute resolution procedures relating to 
                            malpractice claims.
``Sec. 21127. Access to essential community providers.
``Sec. 21128. Health plan service area capacity.
``Sec. 21129. Access to specialized services.
``Sec. 21130. Participating physician program.
``Sec. 21131. Out-of-area coverage.
 ``Part III--Standards Applicable to Supplemental Health Benefits Plans

``Sec. 21141. Imposition of requirements on supplemental health 
                            benefits plans.
``Sec. 21142. Standards for supplemental services plans.
``Sec. 21143. Standards for cost-sharing plans.
``Sec. 21144. Prohibition on offering of multiple packages to 
                            individual.
       ``Part IV--Standards Applicable to Long-term Care Policies

``Sec. 21151. Regulation of sales practices.
``Sec. 21152. Additional responsibilities for carriers.
``Sec. 21153. Renewal standards for issuance, and basis for 
                            cancellation of policies.
``Sec. 21154. Benefit standards.
``Sec. 21155. Nonforfeiture.
``Sec. 21156. Limit of period of contestability and right to return.
``Sec. 21157. Civil money penalty and private actions.
``Sec. 21158. Long-term care policy defined.
                ``Subtitle C--Benefits and Cost-Sharing

                  ``Part I--Standard Benefits Packages

``Sec. 21201. General description of standard benefits packages.
``Sec. 21202. Description of categories of items and services.
``Sec. 21203. Cost-sharing.
               ``Part II--National Health Benefits Board

``Sec. 21211. Creation of National Health Benefits Board; membership.
``Sec. 21212. Qualifications of Board members.
``Sec. 21213. General duties and responsibilities.
``Sec. 21214. Powers.
``Sec. 21215. Funding.
``Sec. 21216. Applicability of Federal Advisory Committee Act.
``Sec. 21217. Congressional consideration of Board recommendations.
   ``Part III--Provisions Relating to Abortion and Religious Beliefs

``Sec. 21221. Regulation of abortion by the States.
``Sec. 21222. No requirement to create or maintain abortion clinics and 
                            providers.
``Sec. 21223. Provisions relating to religious belief or moral 
                            conviction.
             ``Subtitle D--Expanded Access to Health Plans

                   ``Part I--Access Through Employers

``Sec. 21401. General employer responsibilities.
``Sec. 21402. Maintenance of effort for coverage of children.
``Sec. 21403. Development of large employer purchasing groups.
``Sec. 21404. Enforcement.
   ``Part I``subpart a--functions of purchasing cooperativesperatives
``Sec. 21411. Enrollment of community-rated individuals in certified 
                            standard health plans.
``Sec. 21412. Duties of purchasing cooperatives.
``Sec. 21413. Agreements with certified standard health plans.
``Sec. 21414. Provision of information.
``S``subpart b--organization and operation of purchasing cooperatives
``Sec. 21417. Establishment.
``Sec. 21418. Board of directors.
``Sec. 21419. Prohibition against self-dealing and conflicts of 
                            interest.
``Sec. 21420. Coordination among purchasing cooperatives.
              ````subpart a--qualified association plansns
``Sec. 21431. Treatment of qualified association plans.
``Sec. 21432. Modifications of standards applicable to qualified 
                            association plans.
``Sec.``subpart b--special rule for church and multiemployer plans
``Sec. 21435. Special rule for church and multiemployer plans.
   ``Subtitle E--Implementation of Consumer Information Programs and 
                            Quality Research

``Sec. 21501. Consumer information programs.
``Sec. 21502. Health services and quality improvement research.
``Sec. 21503. Implementing quality improvement research.
``Sec. 21504. Annual reports.
     ``Subtitle F--Programs to Improve Access To Underserved Areas

``Part I--Grants for the Development and Operation of Community Health 
                   Groups and for Capital Assistance

``Sec. 21601. Designation of rural and urban underserved areas.
``Sec. 21602. Community health group; certified community health plan; 
                            community health network; eligible 
  ``subpart a--grants for the development and operation of community 
                             health groups
``Sec. 21611. Grants and contracts for development of plans and 
                            networks.
``Sec. 21612. Grants``subpart b--capital assistance plans and networks.
``Sec. 21613. Loans, loan guarantees, and grants for capital 
                            investment.
  ``Part II--Demonstration Projects to Promote Telemedicine and Other 
         Uses of the Telecommunications Network in Rural Areas

``Sec. 21621. Demonstration projects to promote telemedicine and other 
                            uses of the network.
``Sec. 21622. Federal interagency task force.
           ``Part III--Insufficient Amounts in the Trust Fund

``Sec.  21631. Insufficient amounts in the trust fund account.
            ``Subtitle G--Automobile Insurance Coordination

``Sec. 21701. Definitions.
    ``Part I--Requirements Relating to Automobile Insurance Medical 
                                Services

``Sec. 21711. Provision of automobile insurance medical services 
                            through health plans.
``Sec. 21712. Payment for automobile insurance medical services.
                       ``Part II--Administration

``Sec. 21721. Payment facilitation.
                 ``Subtitle H--Remedies and Enforcement

  ``Part I--Review of B``subpart a--general rulesEnrolled Individuals
``Sec. 21801. Health plan claims procedure.
``Sec. 21802. Review in area complaint review offices of grievances 
                            based on acts or practices by health plans.
``Sec. 21803. Initial proceedings in complaint review offices.
``Sec. 21804. Hearings before hearing officers in complaint review 
                            offices.
``Sec. 21805. Review by State Health Plan Review Board.
``Sec. 21806. Civ``subpart b--early resolution programs
``Sec. 21811. Establishment of Early Resolution Programs in complaint 
                            review offices.
``Sec. 21812. Initiation of participation in mediation proceedings.
``Sec. 21813. Mediation proceedings.
``Sec. 21814. Legal effect of participation in mediation proceedings.
``Sec. 21815. Enforcement ``subpart c--fundingents.
``Sec. 21816. Availability of trust fund amounts.
       ``Part II--Additional Remedies and Enforcement Provisions

``Sec. 21821. Civil enforcement.
``Sec. 21822. Facial constitutional challenges.
``Sec. 21823. Treatment of plans as parties in civil actions.
``Sec. 21824. General nonpreemption of rights and remedies.
``Sec. 21825. Nondiscrimination in federally assisted programs.

               ``Subtitle A--Participating State Program

                   ``PART I--GENERAL RESPONSIBILITIES

                    ``Subpart A--Access to Coverage

``SEC. 21001. ESTABLISHMENT OF PARTICIPATING STATE PROGRAMS.

    ``A State shall be a participating State for purposes of this title 
if such State establishes an accreditation, certification, enforcement, 
and information program (in this title referred to as a `State 
program') to carry out participating State responsibilities specified 
in this title.

``SEC. 21002. ACCESS TO STANDARDIZED HEALTH CARE COVERAGE.

    ``(a) Access to Standardized Coverage.--
            ``(1) In general.--A State program shall require that each 
        health plan (whether insured or self-insured) or long-term care 
        policy issued, sold, offered for sale, or operated in the State 
        shall be certified by the appropriate certifying authority as 
        one of the following:
                    ``(A) A certified standard health plan.
                    ``(B) A certified supplemental health benefits 
                plan.
                    ``(C) A certified long-term care policy.
                    ``(D) A certified nonstandard health plan.
            ``(2) Federal certification of multistate self-insured 
        plans.--For Federal certification of multistate self-insured 
        health plans, see section 21051.
            ``(3) Tax qualification.--For favorable Federal income tax 
        treatment which is available only to certified health plans, 
        see sections 213(f) and 4521 of the Internal Revenue Code of 
        1986.
    ``(b) Access to Affordable Coverage.--A State program shall require 
the following:
            ``(1) Community rating.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), all health plans shall be community-
                rated health plans which cover only community-rated 
                individuals.
                    ``(B) Experience-rated health plans.--Subparagraph 
                (A) shall not apply to any health plan which--
                            ``(i) is a self-insured health plan of an 
                        experience-rated employer, or
                            ``(ii) is an insured health plan which is 
                        experience-rated,
                but any such plan may cover only experience-rated 
                individuals.
                    ``(C) Restriction on self-insured health plans.--A 
                self-insured health plan may be established or 
                maintained only by an experience-rated employer.
            ``(2) Subsidized coverage.--Individuals shall be entitled 
        to such premium and cost-sharing assistance as is provided 
        under the program described in part B of title XIX.
    ``(c) Access Through Employers and Purchasing Cooperatives.--
            ``(1) Employers.--
                    ``(A) In general.--Subject to the requirements of 
                part I of subtitle D, a State program shall require 
                each employer--
                            ``(i) to make available to each employee of 
                        the employer the opportunity to enroll through 
                        the employer in one of at least three certified 
                        standard health plans which provide the 
                        standard benefits package established under 
                        subtitle C, including, if available, a fee-for-
                        service plan and a health plan with a point-of-
                        service option, and
                            ``(ii) to provide, upon request, payroll 
                        withholding of the employee's premiums.
                    ``(B) Special rules.--
                            ``(i) Purchasing cooperative.--An employer 
                        other than an experience-rated employer may 
                        meet the requirements of subparagraph (A)(i) 
                        through a purchasing cooperative.
                            ``(ii) Experience-rated employer.--An 
                        experience-rated employer shall meet the 
                        requirements of subparagraph (A)(i) only 
                        through offering self-insured or experience-
                        rated health plans.
            ``(2) Purchasing cooperatives.--A participating State shall 
        meet the requirements of part II of subtitle D with respect to 
        the establishment or sponsorship of purchasing cooperatives.
    ``(d) Access to Enrollment Options.--A State program shall require 
that all certified standard and nonstandard health plans and certified 
supplemental health benefits plans offer the classes of enrollment 
described in section 21113(b)(2)(B)(ii).

``SEC. 21003. OTHER STATE PROGRAM RESPONSIBILITIES.

    ``(a) Summary of Responsibilities.--The participating State 
responsibilities under this title include--
            ``(1) the accreditation and certification of standard 
        health plans and nonstandard health plans, including the 
        enforcement of the insurance and delivery system reform 
        standards for such plans under part II of subtitle B;
            ``(2) the accreditation and certification of supplemental 
        health benefits plans, including the enforcement of standards 
        for such plans under part III of subtitle B;
            ``(3) the accreditation and certification of long-term care 
        policies, including the enforcement of standards for such 
        policies under part IV of subtitle B;
            ``(4) providing for the collection and provision of 
        consumer information regarding health plans as specified under 
        section 21013;
            ``(5) the establishment of community rating areas under 
        section 21021 and State service areas under section 21022;
            ``(6) providing under section 21023 for--
                    ``(A) reinsurance pools,
                    ``(B) a risk adjustment program, and
                    ``(C) a cost-sharing adjustment program;
            ``(7) the specification of an annual general enrollment 
        period under section 21024;
            ``(8) providing for a premium approval process for long-
        term care policies under section 21025;
            ``(9) providing for the certification of workplace wellness 
        programs in accordance with rules established by the Secretary 
        under section 21053, including the receipt of employer self-
        certification forms, enforcement of compliance, and dispute 
        resolution;
            ``(10) enforcing employer responsibilities under part I of 
        subtitle D;
            ``(11) the oversight of purchasing cooperatives under part 
        II of subtitle D;
            ``(12) supporting the program quality assurances under 
        subtitle E;
            ``(13) supporting the development of community health 
        networks and plans to the extent required under subtitle F;
            ``(14) providing coordination between health plans and 
        automobile medical liability policies under subtitle G;
            ``(15) the development of program remedies and enforcement 
        described under subtitle H; and
            ``(16) conforming State laws and procedures to the rules 
        regarding fraud and medical malpractice under title XI.
    ``(b) Deadlines.--
            ``(1) In general.--Except as provided in paragraphs (2) and 
        (3), each participating State shall establish a State program 
        under this section by not later than January 1, 1996.
            ``(2) Supplemental insurance.--Each participating State 
        shall establish such State program with regard to supplemental 
        health benefits plans by not later than January 1, 1997.
            ``(3) Long-term care insurance.--Each participating State 
        shall establish such State program with regard to long-term 
        care policies by not later than April 1, 1997.
    ``(c) Secretarial Approval, Periodic Review, and Funding of State 
Programs.--
            ``(1) In general.--The Secretary--
                    ``(A) shall initially determine and approve the 
                compliance of State programs with the Federal 
                guidelines under this title; and
                    ``(B) shall periodically review such State programs 
                to determine if such programs continue to comply with 
                such guidelines.
            ``(2) Reporting requirements of states.--For purposes of 
        paragraph (1), each participating State shall submit to the 
        Secretary, at intervals established by the Secretary, a report 
        on the compliance of the State with the Federal guidelines 
        under this title.
            ``(3) Funding.--
                    ``(A) Availability of trust fund amounts.--There 
                shall be available to the Secretary, from the Health 
                Security Trust Fund established under section 9551 of 
                the Internal Revenue Code of 1986, $100,000,000 in 
                fiscal 1995 and $300,000,000 in each of the fiscal 
                years 1996 through 2004 to support participating States 
                that have submitted applications in accordance with 
                subparagraph (C) to develop State programs. The 
                Secretary shall develop a formula for determining the 
                appropriate awarding of funds to participating States 
                submitting such applications.
                    ``(B) Payments for independent review.--The 
                Secretary shall develop a supplemental payment schedule 
                for participating States that establish independent 
                review committees to provide recommendations concerning 
                health plans that fail certification.
                    ``(C) Application.--For purposes of subparagraph 
                (A), an application is in accordance with this 
                subparagraph if the applicant submits the application 
                to the Secretary at such time, in such manner, and 
                containing such information and assurances as the 
                Secretary may reasonably require.

``SEC. 21004. GENERAL DEFINITIONS RELATING TO HEALTH PLANS.

    ``(a) Health Plan.--For purposes of this title--
            ``(1) In general.--The term `health plan' means any plan or 
        arrangement which provides, or pays the cost of, health 
        benefits. Such term does not include the following, or any 
        combination thereof:
                    ``(A) Coverage only for accidental death or 
                dismemberment.
                    ``(B) Coverage providing wages or payments in lieu 
                of wages for any period during which the employee is 
                absent from work on account of sickness or injury.
                    ``(C) A medicare supplemental policy (as defined in 
                section 1882(g)(1)).
                    ``(D) Coverage issued as a supplement to liability 
                insurance.
                    ``(E) Worker's compensation or similar insurance.
                    ``(F) Automobile medical-payment insurance.
                    ``(G) A long-term care policy, including a nursing 
                home 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 a health plan).
                    ``(H) An equivalent health care program.
                    ``(I) Such other plan or arrangement as the 
                Secretary determines is not a health plan.
        Such term includes any plan or arrangement not described in any 
        preceding subparagraph which provides for benefit payments, on 
        a periodic basis, for a specified disease or illness or period 
        of hospitalization without regard to the costs incurred or 
        services rendered during the period to which the payments 
        relate.
            ``(2) Insured health plan.--
                    ``(A) In general.--The term `insured health plan' 
                means any health plan which is a hospital or medical 
                service policy or certificate, hospital or medical 
                service plan contract, or health maintenance 
                organization group contract offered by an insurer.
                    ``(B) Insurer.--The term `insurer' means--
                            ``(i) a licensed insurance company,
                            ``(ii) a prepaid hospital or medical 
                        service plan,
                            ``(iii) a health maintenance organization, 
                        or
                            ``(iv) any other similar entity,
                which is engaged in the business of providing a plan of 
                health insurance or health benefits or services.
            ``(3) Self-insured health plan.--The term `self-insured 
        health plan' means an employee welfare benefit plan, church 
        plan, government plan, or other arrangement which--
                    ``(A) provides health benefits 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 subparagraphs (A) through (I) of paragraph 
                (1).
    ``(b) Standard Health Plan.--For purposes of this title, the term 
`standard health plan' means a health plan which provides for the 
standard benefits package or the alternative standard benefits package 
established under subtitle C.
    ``(c) Supplemental Health Benefits Plan.--For purposes of this 
title, the term `supplemental health benefits plan' means an insured or 
self-insured health plan which provides health benefits which consist 
of supplemental services or cost-sharing described in part IV of 
subtitle B. Such term does not include a plan which provides for 
benefit payments, on a periodic basis, for a specified disease or 
illness or period of hospitalization without regard to the costs 
incurred or services rendered during the period to which the payments 
relate.
    ``(d) Long-Term Care Policy.--For purposes of this title, the term 
`long-term care policy' has the meaning given such term by section 
21158.
    ``(e) Terms and Rules Relating to Community and Experience 
Rating.--For purposes of this title--
            ``(1) Community-rated health plan.--The term `community-
        rated health plan' means a health plan which meets the 
        requirements of section 21113.
            ``(2) Community-rated individual.--The term `community-
        rated individual' means an individual--
                    ``(A) who is not an experience-rated individual, or
                    ``(B) who is an experience-rated individual 
                (determined without regard to this subparagraph) who is 
                not a full-time employee of an experience-rated 
                employer and who does not enroll in a certified 
                standard health plan offered by the employer.
            ``(3) Experience-rated individual.--The term `experience-
        rated individual' means an individual who is an employee of an 
        experience-rated employer.
            ``(4) Experience-rated employer.--
                    ``(A) In general.--The term `experience-rated 
                employer' means, with respect to any calendar year, any 
                employer if, on each of 20 days during the preceding 
                calendar year (each day being in a different week), 
                such employer (or any predecessor) employed 100 or more 
                full-time employees for some portion of the day.
                    ``(B) Special rule for leasing businesses.--In the 
                case of an employer the primary trade or business of 
                which is employee leasing--
                            ``(i) all of the employees which such 
                        employer leases to other employers shall be 
                        treated as community-rated individuals unless 
                        treated as employees of an experience-rated 
                        employer other than the leasing trade or 
                        business, and
                            ``(ii) this title shall be applied 
                        separately with respect to its other employees.
            ``(5) Full-time employee.--The term `full-time employee' 
        means, with respect to any month, an employee who normally 
        performs at least 24 hours of service per week for an employer 
        in the month (not including the month which includes the hiring 
        date of such employee).
            ``(6) Special rule for spouses and dependents.--If any 
        individual is offered coverage under a health plan as the 
        spouse or a dependent of a primary enrollee of such plan, such 
        individual shall have the status of such enrollee unless such 
        individual is eligible to elect other coverage and so elects.

``Subpart B--Accreditation, Certification, Enforcement, and Information

``SEC. 21011. ACCREDITATION AND CERTIFICATION OF HEALTH PLANS AND LONG-
              TERM CARE POLICIES.

    ``(a) Certified Health Plans.--
            ``(1) In general.--Each State program shall provide for the 
        accreditation and certification of health plans as certified 
        standard health plans, certified nonstandard health plans, and 
        certified supplemental health benefits plans.
            ``(2) Certified standard health plan.--For purposes of this 
        title, the term `certified standard health plan' means a health 
        plan which--
                    ``(A) provides for the standard benefits package or 
                the alternative standard benefits package established 
                under subtitle C, and
                    ``(B) is certified by the appropriate certifying 
                authority as meeting the other applicable requirements 
                of this title.
        A standard health plan shall not fail to be treated as a 
        certified standard health plan if such plan offers a medicare-
        eligible benefits package to medicare beneficiaries under a 
        medicare risk contract entered into with the Secretary under 
        section 1876.
            ``(3) Certified nonstandard health plan.--For purposes of 
        this title, the term `certified nonstandard health plan' means 
        a health plan which--
                    ``(A) is certified by the appropriate certifying 
                authority as meeting the applicable requirements of 
                this title for a standard health plan, except that a 
                plan does not provide the benefits packages established 
                under subtitle C; and
                    ``(B) is not a certified supplemental health 
                benefits plan.
            ``(4) Certified supplemental health benefits plan.--For 
        purposes of this title, the term `certified supplemental health 
        benefits plan' means a health plan which is certified by the 
        appropriate certifying authority as meeting the applicable 
        requirements of part III of subtitle B.
    ``(b) Certified Long-Term Care Policies.--
            ``(1) In general.--Each State program shall provide for the 
        accreditation and certification of long-term care policies as 
        certified long-term care policies.
            ``(2) Certified long-term care policy.--For purposes of 
        this title, the term `certified long-term care policy' means a 
        long-term care policy which is certified by the applicable 
        certifying authority as meeting the applicable requirements of 
        part IV of subtitle B.
    ``(c) Use of Private Accreditation Entities.--A State program may 
provide for the use of private accreditation entities in carrying out 
all or part of the duties under subsection (a) or (b).
    ``(d) Certification Fees.--A State program may impose appropriate 
certification fees on health plans and long-term care policies seeking 
certification.

``SEC. 21012. CERTIFICATION ENFORCEMENT.

    ``(a) In General.--A State program shall provide for the monitoring 
and enforcement of the certification of health plans and long-term care 
policies.
    ``(b) Complaint Process.--
            ``(1) In general.--A State program shall provide for--
                    ``(A) procedures for individuals and entities to 
                file written, signed complaints with the appropriate 
                certifying authority respecting alleged violations of 
                the standards; and
                    ``(B) responding to and investigating such 
                complaints within 90 days.
            ``(2) Consumer access to compliance information.--
                    ``(A) In general.--A State program shall provide 
                for consumer access to complaints filed with the 
                appropriate certifying authority with respect to health 
                plans and long-term care policies.
                    ``(B) Confidentiality.--The access provided under 
                subparagraph (A) shall be limited to the extent 
                required to protect the confidentiality of individual 
                enrollees and policyholders.
    ``(c) Enforcement Response.--
            ``(1) In general.--In the case of any health plan or long-
        term care policy which fails, in whole or in part, to maintain 
        its certified status, the State program may provide for--
                    ``(A) the imposition of a corrective program;
                    ``(B) State operation of the plan or policy to 
                provide transitional access;
                    ``(C) the suspension of new enrollment of 
                individuals;
                    ``(D) the penalty-free withdrawal of enrollees or 
                policyholders from the plan or policy;
                    ``(E) other intermediate sanctions; and
                    ``(F) withdrawal of certification after the plan or 
                policy has been given a reasonable opportunity to make 
                corrections.
            ``(2) Enforcement through civil money penalties.--In the 
        case of any supplemental health benefits plan or long-term care 
        policy which fails, in whole or in part, to maintain its 
        certified status, the State program shall impose a civil money 
        penalty of not more than 50 percent of gross premiums received 
        for the sale of such plan or policy. The State program shall 
        include rules similar to the rules of section 1128A (other than 
        subsections (a) and (b)) which shall apply to civil money 
        penalties under this subsection in the same manner as such 
        provisions apply to a penalty or proceeding under section 
        1128A(a).

``SEC. 21013. CONSUMER INFORMATION PROGRAM.

    ``(a) Establishment of Program.--
            ``(1) In general.--Each State program shall establish and 
        operate a consumer information program to provide consumers in 
        the State with comparative value information on the performance 
        of all health plans in each community rating area in the State.
            ``(2) Functions described.--The consumer information 
        program established under paragraph (1) shall conduct annual 
        surveys described in subsection (b)(1), annually publish 
        comparative value information described in subsection (b)(2), 
        and perform the additional functions described in subsection 
        (b)(3).
    ``(b) Functions.--
            ``(1) Annual surveys.--The consumer information program 
        shall conduct annual surveys (in accordance with a national 
        standard survey design and sampling strategy to be determined 
        by the Secretary under subtitle E) of health care consumers in 
        the participating State concerning access to care, use of 
        health services, health outcomes, patient satisfaction, and 
        other quality measures of local interest that a State may 
        designate.
            ``(2) Publication of comparative value information.--
                    ``(A) In general.--The consumer information program 
                shall annually publish the following comparative value 
                information collected pursuant to section 21123 on all 
                health plans offered in the participating State, listed 
                by community rating area, in a standard format to be 
                determined by the Secretary:
                            ``(i) Descriptive data, including--
                                    ``(I) the certification status of 
                                the plan;
                                    ``(II) benefits offered under the 
                                plan;
                                    ``(III) premiums, cost-sharing, and 
                                administrative charges under the plan;
                                    ``(IV) risk and referral 
                                arrangements under the plan;
                                    ``(V) health care providers used 
                                under the plan;
                                    ``(VI) the enrollee complaint and 
                                appeals process used under the plan; 
                                and
                                    ``(VII) other appropriate 
                                information as determined by the 
                                Secretary.
                            ``(ii) Data regarding the national measures 
                        of quality performance developed under section 
                        21501(b) and adjusted for case-mix (as the 
                        Secretary determines appropriate).
                            ``(iii) Data from the annual surveys 
                        described in paragraph (1).
                            ``(iv) A subset of quality measures for 
                        each health care provider.
                    ``(B) Interstate comparative value information.--
                The participating State may join with one or more other 
                State programs to prepare comparative value information 
                for a geographic area approved by the Secretary that 
                includes adjoining portions of contiguous participating 
                States.
                    ``(C) Distribution of comparative value 
                information.--Comparative value information prepared by 
                the consumer information program shall be distributed 
                by the program in a manner that ensures access to such 
                information by health care consumers and that is in 
                accordance with standards established by the Secretary. 
                The program shall distribute the comparative value 
                information through various entities, including 
                employers.
            ``(3) Additional functions.--The consumer information 
        program shall--
                    ``(A) educate consumers about comparability of 
                health plan characteristics and quality;
                    ``(B) provide information and make referrals to 
                assist in health plan enrollment and receipt of 
                subsidies, including the availability and specific 
                eligibility schedules regarding pregnant women and 
                children;
                    ``(C) conduct outreach to underserved and at-risk 
                populations to educate such populations on consumer 
                responsibilities and rights to ensure full 
                participation of such populations in the health care 
                system; and
                    ``(D) receive and seek to resolve complaints, and 
                have appropriate access to relevant information to 
                resolve the complaints.
    ``(c) Use of Nonprofit Organizations.--A State program may operate 
the consumer information program through a contract with a nonprofit 
organization selected by the State in a competitive process.
    ``(d) Additional Requirements.--Each State program shall meet the 
requirements specified under subtitles B and C of title XI with respect 
to certified health plans.

               ``Subpart C--Other State Responsibilities

``SEC. 21021. ESTABLISHMENT OF COMMUNITY RATING AREAS.

    ``(a) Establishment.--Each participating State under the State 
program shall, by not later than January 1, 1996, provide for the 
inclusion of all areas of the State into 1 or more community rating 
areas. The program may revise the boundaries of such areas from time to 
time consistent with this section.
    ``(b) Multiple Areas.--With respect to a community rating area--
            ``(1) no metropolitan statistical area or primary 
        metropolitan statistical area in a State may be divided into 
        more than 1 community rating area in such State;
            ``(2) the number of individuals residing within a community 
        rating area may not be less than 250,000; and
            ``(3) no area incorporated into a community rating area may 
        be incorporated into another community rating area.
    ``(c) Boundaries.--In establishing boundaries for community rating 
areas, a participating State may not discriminate on the basis of, or 
otherwise take into account, disability, health status, or perceived 
need for health services of a particular population. Such restrictions 
shall not prohibit participating States from establishing such 
boundaries to ensure that underserved and vulnerable populations are 
better served.
    ``(d) Interstate Areas.--Two or more contiguous participating 
States may provide for the establishment of a community rating area 
that includes adjoining areas of the States so long as all areas of any 
metropolitan statistical area or primary metropolitan statistical area 
within such States are within the same community rating area.

``SEC. 21022. DESIGNATION OF HEALTH PLAN SERVICE AREAS.

    ``(a) State Service Areas.--Pursuant to guidelines developed under 
subsection (b), each participating State under the State program shall 
designate, by not later than January 1, 1996, health plan service areas 
for purposes of sections 21127 and 21128 and subtitle F.
    ``(b) Guidelines.--The Secretary shall establish guidelines for the 
designation of health plan service areas--
            ``(1) which prevent the isolation of low-income and 
        vulnerable populations by preventing the division of 
        governmental boundaries of counties, towns, or cities; and
            ``(2) which include adjacent designated urban or rural 
        underserved areas.

``SEC. 21023. REINSURANCE AND RISK ADJUSTMENT PROGRAM.

    ``Each State program under this part shall provide for--
            ``(1) a reinsurance pool for community-rated standard 
        health plans and a reinsurance pool for self-insured standard 
        health plans (other than multistate self-insured health plans) 
        by January 1, 1996;
            ``(2) a risk adjustment program for community-rated 
        standard health plans by January 1, 1997; and
            ``(3) a cost-sharing adjustment program for all standard 
        health plans, except multistate self-insured health plans, by 
        January 1, 1997,
which meet the standards developed by the Secretary under section 
21101(b)(2).

``SEC. 21024. SPECIFICATION OF ANNUAL GENERAL ENROLLMENT PERIOD.

    ``Each participating State under the State program shall specify 
for the State (or for each community rating area) an annual period, of 
not less than 30 days, during which individuals in the State (or area) 
may enroll in health plans or change the health plans in which the 
individual is enrolled.

``SEC. 21025. PREMIUM APPROVAL PROCESS FOR LONG-TERM CARE POLICIES.

    ``(a) In General.--Each State program shall provide for a process 
for approving or disapproving proposed premium increases or decreases 
with respect to long-term care policies.
    ``(b) Application.--
            ``(1) In general.--Except as provided in paragraph (2), 
        this section shall not apply to a group long-term care policy 
        issued to a group described in section 4(E)(1) of the NAIC Long 
        Term Care Insurance Model Act (effective January 1991), except 
        that such group policy shall, pursuant to guidelines developed 
        by the Secretary, in consultation with the NAIC, provide notice 
        to policyholders and certificate holders of any premium change 
        under such group policy.
            ``(2) Exception.--Paragraph (1) shall not apply to--
                    ``(A) group conversion policies;
                    ``(B) the group continuation feature of a group 
                policy if the carrier separately rates employee and 
                continuation coverages; and
                    ``(C) group policies where the function of the 
                employer is limited solely to collecting premiums 
                (through payroll deductions or dues checkoff) and 
                remitting such premiums to the carrier.
    ``(c) Construction.--Nothing in this section shall be construed as 
preventing the NAIC from promulgating standards, or a State from 
enacting and enforcing laws, with respect to premium rates or loss 
ratios for all, including group, long-term care policies.
    ``(d) Access to Other Information.--The State program shall provide 
for consumer access to actuarial memoranda, including financial 
information, provided under this section.

``SEC. 21026. REQUIREMENTS RELATING TO POSSESSIONS OF THE UNITED 
              STATES.

    ``(a) In General.--A possession of the United States shall be a 
participating State meeting the requirements of this title only if 
there is an agreement in effect between the United States and such 
possession pursuant to which--
            ``(1) the laws of such possession impose a part B premium 
        recapture assessment (as defined in subsection (b));
            ``(2) nothing in any provision of law, including the law of 
        such possession, permits such possession to reduce or remit in 
        any way, directly or indirectly, any liability to such 
        possession by reason of such assessment;
            ``(3) any amount received in the Treasury of such 
        possession by reason of such assessment shall be paid (at such 
        time and in such manner as the Secretary of the Treasury shall 
        prescribe) to the Federal Supplementary Medical Insurance Trust 
        Fund;
            ``(4) such assessment is coordinated with the assessment 
        imposed by section 59B of the Internal Revenue Code of 1986 
        such that, for any period, an individual would be required to 
        pay (in the aggregate) not more than the applicable amount for 
        such period; and
            ``(5) the possession complies with such other requirements 
        as may be prescribed by the Secretary and the Secretary of the 
        Treasury to carry out the purposes of this paragraph, including 
        requirements prescribing the information individuals to whom 
        such assessment may apply shall furnish to the Secretary and 
        the Secretary of the Treasury.
    ``(b) Qualified Part B Premium Recapture Assessment.--In subsection 
(a), the term `qualified medicare part B premium recapture assessment' 
means an assessment imposed and collected by such a possession that 
is--
            ``(1) equivalent to the assessment imposed under section 
        59B of the Internal Revenue Code of 1986; and
            ``(2) imposed on all individuals who are bona fide 
        residents of the possession, to the extent such individuals 
        have not paid the assessment imposed under such section 59B to 
        the United States by reason of subsection (d)(5) of such 
        section.

         ``PART II--REQUIREMENTS FOR STATE SINGLE-PAYER SYSTEMS

``SEC. 21031. SINGLE-PAYER SYSTEM DESCRIBED.

    ``The Secretary shall approve an application of a State to operate 
a single-payer system if the Secretary finds that the system--
            ``(1) meets the requirements of section 21032; and
            ``(2)(A) in the case of a system offered throughout a 
        State, meets the requirements for a Statewide single-payer 
        system under section 21033; or
            ``(B) in the case of a system offered in a single community 
        rating area of a State, meets the requirements for an area 
        specific single-payer system under section 21034.

``SEC. 21032. GENERAL REQUIREMENTS FOR SINGLE-PAYER SYSTEMS.

    ``Each single-payer system shall meet the following requirements:
            ``(1) Establishment by state.--The system is established 
        under State law, and State law provides for mechanisms to 
        enforce the requirements of the system.
            ``(2) Operation by state.--The system is operated by the 
        State or a designated agency of the State.
            ``(3) Enrollment of individuals.--
                    ``(A) Mandatory enrollment of all community-rated 
                individuals.--The system shall provide for the 
                enrollment of all community-rated individuals residing 
                in the State (or, in the case of an area-specific 
                single-payer system, in the community rating area) who 
                are not medicare-eligible individuals.
                    ``(B) Optional enrollment of medicare-eligible 
                individuals.--At the option of the State and if the 
                Secretary has approved an application submitted by the 
                State, the system may provide for the enrollment of 
                medicare-eligible individuals residing in the State 
                (or, in the case of an area-specific single-payer 
                system, in the community rating area).
                    ``(C) Optional enrollment of experience-rated 
                individuals.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), at the option of the State, a 
                        single-payer system may provide for the 
                        enrollment of experience-rated individuals 
                        residing in the State (or,
                        in the case of an area-specific single-payer 
                        system, in the community rating area).
                            ``(ii) Participation by certain multistate 
                        plans.--The system shall not require 
                        participation by any experience-rated 
                        individual who is enrolled in a certified 
                        multistate self-insured standard health plan 
                        which is a multiemployer plan described in 
                        section 21435(c)(2), or which is sponsored by 
                        an experience-rated employer sponsor with at 
                        least 5,000 full-time employees.
            ``(4) Direct payment to providers.--
                    ``(A) In general.--With respect to providers who 
                furnish items and services included in the standard 
                benefits package established under subtitle C to 
                individuals enrolled in the system, the State shall 
                make payments directly, or through fiscal 
                intermediaries, to such providers and assume (subject 
                to subparagraph (B)) all financial risk associated with 
                making such payments.
                    ``(B) Capitated payments permitted.--Nothing in 
                subparagraph (A) shall be construed to prohibit 
                providers furnishing items and services under the 
                system from receiving payments on a capitated, at-risk 
                basis based on prospectively determined rates.
            ``(5) Provision of standard benefits package.--
                    ``(A) In general.--The system shall provide for 
                coverage of the standard benefits package established 
                under subtitle C, including the cost-sharing provided 
                under the package (subject to subparagraph (B)), to all 
                individuals enrolled in the system.
                    ``(B) Imposition of reduced cost-sharing.--The 
                system may decrease the cost-sharing otherwise provided 
                in the standard benefits package established under 
                subtitle C with respect to any individuals enrolled in 
                the system or any class of services included in the 
                package, so long as the system does not increase the 
                cost-sharing otherwise imposed with respect to any 
                other individuals or services.
            ``(6) Federal payments.--The system shall provide for 
        mechanisms to ensure, in a manner satisfactory to the 
        Secretary, that Federal payments to a single-payer State or 
        community rating area shall be limited to the payments that 
        would have been made in the absence of the implementation of 
        the single-payer system.
            ``(7) Increased coverage or improved cost containment.--The 
        system, when fully implemented, shall be expected by the State 
        to--
                    ``(A) reduce the number of residents of the State 
                (or, in the case of an area-specific single-payer 
                system, the community rating area) who are without 
                health insurance coverage (as defined in section 
                2202(b)(2)) by at least 10 percent, or
                    ``(B) decrease the rate of growth of per capita 
                health care spending in the State (or, in the case of 
                an area-specific single-payer system, the community 
                rating area),
        compared to baseline projections developed by the State on the 
        basis of the most recent data, including data provided by the 
        National Health Care Commission established under section 2201.
            ``(8) Requirements generally applicable to standard health 
        plans.--The system shall meet the requirements applicable to a 
        standard health plan, except that--
                    ``(A) the system does not have the authority 
                provided to standard health plans under section 
                21111(e) (relating to permissible limitations on the 
                enrollment of community-rated eligible individuals on 
                the basis of limits on the plan's capacity); and
                    ``(B) the system is not required to meet the 
                requirements of sections 21113 (relating to rating 
                limitations for community-rated market) and 21122 
                (relating to capital requirements).

``SEC. 21033. SPECIAL RULES FOR STATES OPERATING STATEWIDE SINGLE-PAYER 
              SYSTEM.

    ``(a) In General.--In the case of a State operating a Statewide 
single-payer system--
            ``(1) the State shall operate the system throughout the 
        State; and
            ``(2) except as provided in subsection (b), the State shall 
        meet the requirements for participating States under part I.
    ``(b) Exceptions to Certain Requirements for Participating 
States.--In the case of a State operating a Statewide single-payer 
system, the State is not required to meet the following requirements 
otherwise applicable to participating States under part I:
            ``(1) Establishment of community rating and service 
        areas.--The requirements of sections 21021 (relating to the 
        establishment of community rating areas) and 21022 (relating to 
        the designation of health plan service areas).
            ``(2) Other references inapplicable.--Any requirement which 
        the Secretary determines is not appropriate to apply to a State 
        single-payer system.
    ``(c) Single-Payer State Defined.--In this title, the term `single-
payer State' means a State with a Statewide single-payer system in 
effect that has been approved by the Secretary in accordance with this 
part.

``SEC. 21034. SPECIAL RULES FOR COMMUNITY RATING AREA-SPECIFIC SINGLE-
              PAYER SYSTEMS.

    ``(a) In General.--In the case of a State operating a community 
rating area specific single-payer system--
            ``(1) except as provided in subsection (b), the State shall 
        meet the requirements for participating States under part I; 
        and
            ``(2) the community rating area in which the system is 
        operated shall meet the requirements of subsection (c).
    ``(b) Other References Inapplicable.--Any requirement which the 
Secretary determines is not appropriate to apply to a community rating 
area specific single-payer system.
    ``(c) Requirements for Community Rating Area in Which System 
Operates.--A community rating area in which an area-specific single-
payer system is operated shall meet the requirements applicable to 
community rating areas under section 21021.

              ``PART III--TREATMENT OF CERTAIN STATE LAWS

``SEC. 21041. PREEMPTION OF STATE LAW RESTRICTIONS ON NETWORK PLANS.

    ``(a) Limitation on Restrictions on Network Plans.--Effective as of 
January 1, 1996--
            ``(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 
        requiring enrollees to obtain care from participating 
        providers;
            ``(3) a State may not prohibit or limit a network plan from 
        requiring enrollees to obtain referrals for specialty 
        treatment;
            ``(4) a State may not prohibit or limit the establishment 
        of different payment rates for network and non-network 
        providers;
            ``(5) a State may not prohibit or limit a network plan from 
        limiting the number and types of participating providers;
            ``(6) a State may not prohibit or limit a network plan from 
        using single source suppliers for pharmacy services, medical 
        equipment, and other supplies and services; and
            ``(7) 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 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 items 
                        and services provided by persons who are not 
                        participating providers, for cost-sharing which 
                        is greater than that permitted under the 
                        standard benefits package established under 
                        subtitle C for participating providers;
                    ``(B) which has a sufficient number and 
                distribution of participating providers to assure that 
                the standard benefits package--
                            ``(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;
                    ``(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; and
                    ``(D) which provides out-of-area coverage.
            ``(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 benefits package established 
                under subtitle C; and
                    ``(B) any enrollee charges (for covered items or 
                services) in excess of such cost-sharing.

``SEC. 21042. STATE LAW RESTRICTIONS ON HEALTH PROFESSIONAL LICENSURE.

    ``(a) In General.--Except as otherwise provided in this section, 
nothing in this title shall be construed as limiting any State's 
authority to enact and enforce laws with respect to the licensure or 
certification of any class of health professional or the provision of 
any class of health professional services.
    ``(b) Scope of Practice.--Effective as of January 1, 1996, a State 
may not restrict through licensure or otherwise the practice of any 
class of health professionals beyond what is justified by the skills 
and training of such professionals.
    ``(c) Academic Degree.--Effective as of January 1, 1996, a State 
may not restrict the participation, reimbursement, or indemnification 
of a health professional solely on the basis of the academic degree of 
such professional if the professional is acting within the scope of the 
professional's license under applicable State law.

``SEC. 21043. PREEMPTION FROM STATE BENEFIT MANDATES.

    ``Effective as of January 1, 1996, no State shall establish or 
enforce any law or regulation that requires any standard health plan to 
cover items and services that are different from the items and services 
specified pursuant to subtitle C.

``SEC. 21044. PREEMPTION OF STATE LAW REGULATING UTILIZATION MANAGEMENT 
              AND REVIEW.

    ``Effective as of January 1, 1996, a State may not regulate 
utilization management and review programs of any health plan to the 
extent not provided by this title.

                  ``PART IV--FEDERAL RESPONSIBILITIES

``SEC. 21051. FEDERAL ROLE WITH RESPECT TO MULTISTATE SELF-INSURED 
              HEALTH PLANS.

    ``(a) In General.--In the case of a multistate self-insured health 
plan or a multistate self-insured supplemental health benefits plan, 
the Secretary of Labor shall carry out activities under this title in 
the same manner as a participating State program would carry out 
activities under part I with respect to a health plan subject to such 
part.
    ``(b) Determination of Multistate Status.--For purposes of this 
title, a self-insured health plan or a self-insured supplemental health 
benefits plan shall be considered a multistate health plan if 
established or maintained by an experience-rated employer which has a 
substantial number of employees enrolled in such plan in each of 2 or 
more States (as determined by the Secretary of Labor).
    ``(c) Applicability of ERISA Enforcement Mechanisms.--The 
provisions of sections 502 (relating to civil enforcement), 504 
(relating to investigative authority), and 506 (relating to criminal 
enforcement) of the Employee Retirement Income Security Act of 1974 
shall apply to enforcement by the Secretary of Labor of the applicable 
requirements for experience-rated employers described in subsection (b) 
in the same manner and to the same extent as such provisions apply to 
enforcement of title I of such Act.

``SEC. 21052. ESTABLISHMENT OF RESIDENCY RULES.

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

``SEC. 21053. WORKPLACE WELLNESS PROGRAM.

    ``(a) In General.--The Secretary shall develop certification 
criteria for workplace wellness programs.
    ``(b) Application of Section.--Any health plan may offer a uniform 
premium discount, not to exceed 10 percent, to employers maintaining 
certified workplace wellness programs.

``SEC. 21054. EMPLOYEE LEASING RULES.

    ``The Secretary of Labor shall promulgate such regulations as may 
be necessary to prevent the avoidance of any requirements of this title 
through the use of employee leasing businesses.

``SEC. 21055. APPROVAL OF PRIVATE ACCREDITATION PROGRAMS.

    ``The Secretary shall certify the private accreditation entities 
described under section 21011(c).

                    ``PART V--DEFINITIONS AND RULES

``SEC. 21100. DEFINITIONS AND RULES OF GENERAL APPLICATION.

    ``Except as otherwise specifically provided, in this title the 
following definitions and rules apply:
            ``(1) Appropriate certifying authority.--The term 
        `appropriate certifying authority' means--
                    ``(A) except as provided in subparagraph (B), in 
                the case of a standard or nonstandard health plan, a 
                supplemental health benefits plan, or a long-term care 
                policy, the State commissioner or superintendent of 
                insurance or other State authority in the participating 
                State; or
                    ``(B) in the case of a multistate self-insured 
                health plan or a multistate self-insured supplemental 
                health benefits plan, the Secretary of Labor.
            ``(2) Covered items and services.--The term `covered items 
        and services' means items and services included in benefit 
        packages established under subtitle C.
            ``(3) Delivery system.--The term `delivery system' with 
        respect to a health plan includes a fee-for-service, use of 
        preferred providers, staff or group model health maintenance 
        organizations, and such other arrangements as the Secretary may 
        recognize.
            ``(4) Dependent.--The term `dependent' means, with respect 
        to any individual, any person--
                    ``(A) who is a child (within the meaning of section 
                151(c)(3) of the Internal Revenue Code of 1986) of the 
                individual; and
                    ``(B) who is--
                            ``(i) under 25 years of age and unmarried, 
                        or
                            ``(ii) permanently and totally disabled 
                        (within the meaning of section 151(c)(5)(C) of 
                        such Code).
            ``(5) Employer, employee, employment, and wages defined.--
                    ``(A) In general.--Except as otherwise provided in 
                this subtitle--
                            ``(i) the terms `wages' and `employment' 
                        have the meanings given such terms under 
                        section 3121 of the Internal Revenue Code of 
                        1986,
                            ``(ii) the term `employee' has the meaning 
                        given such term under section 3121 of such 
                        Code, subject to the provisions of chapter 25 
                        of such Code, and
                            ``(iii) the term `employer' has the same 
                        meaning as the term ``employer'' as used in 
                        such section 3121.
                    ``(B) Exceptions.--For purposes of subparagraph 
                (A)--
                            ``(i) Employment.--
                                    ``(I) Employment included.--
                                Paragraphs (1), (2), (5), (7) (other 
                                than clauses (i) through (iv) of 
                                subparagraph (C) and clauses (i) 
                                through (v) of subparagraph (F)), (8), 
                                (9), (10), (11), (13), (15), (18), and 
                                (19) of section 3121(b) of the Internal 
                                Revenue Code of 1986 shall not apply.
                                    ``(II) Exclusion of inmates as 
                                employees.--Employment shall not 
                                include services performed in a penal 
                                institution by an inmate thereof or in 
                                a hospital or other health care 
                                institution by a patient thereof.
                                    ``(III) Exclusion of part-time 
                                domestic service.--Employment shall not 
                                include domestic service in a private 
                                home of the employer (within the 
                                meaning section 3121(a)(7)(B), 
                                determined without dollar limitation) 
                                by an individual who is not a full-time 
                                employee.
                                    ``(IV) Exclusion of seasonal or 
                                temporary.--Employment shall not 
                                include seasonal or temporary services 
                                performed for an employer for less than 
                                6 months in a calendar year.
                                    ``(V) Consideration of industry 
                                practice.--As provided under regulation 
                                by the Secretary of Labor, an employee 
                                shall be considered to be employed on a 
                                full-time basis by an employer (and to 
                                be a full-time employee of an employer) 
                                for a month (or for all months in a 12-
                                month period) if the employee is 
                                employed by that employer on a 
                                continuing basis that, taking into 
                                account the structure or nature of 
                                employment in the industry, represents 
                                full-time employment in that industry.
                            ``(ii) Wages.--
                                    ``(I) In general.--Paragraph (1) of 
                                section 3121(a) of the Internal Revenue 
                                Code of 1986 shall not apply.
                                    ``(II) Tips not included.--The term 
                                `wages' does not include cash tips.
                            ``(iii) Employees.--
                                    ``(I) Treatment of self-employed.--
                                The term `employee' includes a self-
                                employed individual.
                                    ``(II) Exclusion of certain foreign 
                                employment.--The term `employee' does 
                                not include an individual with respect 
                                to service, if the individual is not a 
                                citizen or resident of the United 
                                States and the service is performed 
                                outside the United States.
                    ``(C) Aggregation rules for employers.--For 
                purposes of this title--
                            ``(i) all employers treated as a single 
                        employer under subsection (a) or (b) of section 
                        52 of the Internal Revenue Code of 1986 shall 
                        be treated as a single employer, and
                            ``(ii) under regulations of the Secretary 
                        of the Treasury, all employees of organizations 
                        which are under common control with one or more 
                        organizations which are exempt from income tax 
                        under subtitle A of the Internal Revenue Code 
                        of 1986 shall be treated as employed by a 
                        single employer.
                The regulations prescribed under clause (ii) shall be 
                based on principles similar to the principles which 
                apply to taxable organizations under clause (i).
            ``(6) 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) a State single-payer system approved by the 
                Secretary under section 21031.
            ``(7) Family.--The term `family' includes an individual, 
        the individual's spouse, and the individual's dependents (if 
        any), as defined in paragraph (4).
            ``(8) Health plan sponsor.--The term `health plan sponsor' 
        means, with respect to--
                    ``(A) an insured health plan, the insurer, and
                    ``(B) a self-insured health plan, the experience-
                rated employer sponsor.
            ``(9) Health professional.--The term `health professional' 
        means an individual who is legally authorized to provide 
        services in the State in which such services are provided.
            ``(10) Legally authorized.--The term `legally authorized' 
        means, with respect to a provider, authorization under 
        licensing or certification laws of a State.
            ``(11) NAIC.--The term `NAIC' means the National 
        Association of Insurance Commissioners.
            ``(12) Participating state.--The term `participating State' 
        means a State establishing a State program under this title.
            ``(13) Provider.--The term `provider' includes a health 
        professional.
            ``(14) Purchasing cooperative.--The term `purchasing 
        cooperative' means a health insurance purchasing cooperative 
        established under section 21411.
            ``(15) Secretary.--The term `Secretary' means the Secretary 
        of Health and Human Services or the Secretary's delegate.
            ``(16) 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.

                   ``Subtitle B--Standards for Reform

          ``PART I--ESTABLISHMENT AND APPLICATION OF STANDARDS

``SEC. 21101. CERTIFIED STANDARD HEALTH PLANS.

    ``(a) In General.--A standard health plan shall meet the applicable 
reform standards established under subsection (b).
    ``(b) Reform Standards.--
            ``(1) Establishment of general standards.--
                    ``(A) In general.--Except as provided in this 
                paragraph and paragraphs (2), (3), and (4), the 
                Secretary, in consultation with the National Health 
                Plan Standards and Quality Advisory Committee, shall 
                develop and publish specific standards and evaluation 
                criteria to implement the standards specified in part 
                II and guidelines for an accreditation, certification, 
                enforcement, and information program for participating 
                States by not later than July 1, 1995.
                    ``(B) Adaptation to delivery systems.--The 
                Secretary shall adapt the standards specified in 
                subpart B of part II with respect to each particular 
                delivery system.
                    ``(C) Establishment of provisional standards.--With 
                respect to any health plan operating in an underserved 
                area (as designated by the State or the Secretary under 
                section 21601), the Secretary may adopt provisional 
                standards for use for not more than 3 years in lieu of 
                the standards specified in subpart B of part II.
            ``(2) Establishment of standards for reinsurance and risk 
        adjustment programs.--
                    ``(A) In general.--The Secretary shall develop 
                standards under subparagraphs (B), (C), and (D), for 
                participating States to provide reinsurance pools, risk 
                adjustment programs, and subsidy adjustment programs 
                under section 21023 for participation by standard 
                health plans as provided in section 21121.
                    ``(B) Mandatory reinsurance pools.--The standards 
                developed by the Secretary under this subparagraph 
                shall include a system of mandatory reinsurance which--
                            ``(i) specifies the manner of creation, 
                        structure, and operation of the system, 
                        including--
                                    ``(I) the manner (which may be 
                                prospective or retrospective) in which 
                                community-rated and self-insured 
                                standard health plans make payments to 
                                their respective systems, and
                                    ``(II) the type and level of 
                                reinsurance coverage provided;
                            ``(ii) provides for such health plans to 
                        make payments to the State-established 
                        reinsurance program for the purpose of 
                        eliminating incentives for plans to 
                        discriminate against individuals on the basis 
                        of their expected utilization of health 
                        services; and
                            ``(iii) provides such health plans with 
                        incentives to manage the care and health care 
                        costs of individuals with above-average needs 
                        (or expected needs) for health care services.
                    ``(C) Risk adjustment program.--
                            ``(i) In general.--The standards developed 
                        by the Secretary under this subparagraph shall 
                        include a risk adjustment program which--
                                    ``(I) assures that payments to 
                                community-rated standard health plans 
                                reflect the expected relative 
                                utilization and expenditures for health 
                                care services by each plan's enrollees 
                                compared to the average utilization and 
                                expenditures for community-rated 
                                individuals; and
                                    ``(II) protects plans that enroll a 
                                disproportionate share of such 
                                individuals with respect to whom 
                                expected utilization of health care 
                                services and expected health care 
                                expenditures for such services are 
                                greater than the average utilization 
                                and expenditures for such eligible 
                                individuals.
                            ``(ii) Factors to be considered.--In 
                        developing the standards for a risk adjustment 
                        program, the Secretary may take into account 
                        the following factors with respect to 
                        enrollees:
                                    ``(I) Demographic characteristics.
                                    ``(II) Health status.
                                    ``(III) Socio-economic status.
                                    ``(IV) Subsidy status.
                                    ``(V) Other factors determined 
                                appropriate by the Secretary.
                            ``(iii) Zero sum.--The standards for the 
                        risk adjustment program methodology shall 
                        assure that the total payments to all 
                        community-rated standard health plans after 
                        application of the methodology are the same as 
                        the amount of payments that would have been 
                        made without application of the methodology.
                    ``(D) Cost-sharing adjustment program.--The 
                standards developed by the Secretary under this 
                subparagraph shall include a cost-sharing adjustment 
                program which redistributes losses among all standard 
                health plans, except multistate self-insured health 
                plans, resulting from the reduced cost-sharing 
                obligations of individuals receiving assistance as is 
                provided under the program described in part B of title 
                XIX.
            ``(3) Establishment of capital standards.--
                    ``(A) In general.--The Secretary shall develop, in 
                consultation with the NAIC, by not later than July 1, 
                1995, a risk-based capital standards formula for health 
                plans under section 21122.
                    ``(B) No preemption.--Nothing in this title shall 
                preclude or preempt State law on, or regulation of, 
                health plan deposit reserve requirements.
            ``(4) Consultation with secretary of labor.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), in the case of multistate self-
                insured health plans, the Secretary, in consultation 
                with the Secretary of Labor, shall develop and publish 
                the standards for such plans.
                    ``(B) Reinsurance program.--The Secretary of Labor 
                shall develop, by not later than July 1, 1995, 
                standards for a reinsurance program for multistate 
                self-insured health plans under section 21121.
    ``(c) National Health Plan Standards and Quality Advisory 
Committee.--
            ``(1) Establishment.--The Secretary shall establish a 
        National Health Plan Standards and Quality Advisory Committee 
        (hereafter referred to in this subsection as the `Committee') 
        by March 1, 1995, to advise the Secretary on--
                    ``(A) standards and evaluation criteria to be used 
                in the certification of all plans;
                    ``(B) the use and accountability of funds from the 
                Health Security Trust Fund to support State 
                establishment of accreditation, certification, 
                enforcement, and information programs; and
                    ``(C) national measures of quality performance, 
                comparative value information criteria, population 
                health status measures, and other aspects of quality 
                and consumer information.
            ``(2) Number and appointment.--The Committee shall be 
        composed of the Administrator of the Agency for Health Care 
        Policy and Research, the Administrator of the Health Care 
        Financing Administration, and 11 members appointed by the 
        Secretary. The appointed members shall be broadly 
        representative of the population of the United States and shall 
        include--
                    ``(A) a representative of State insurance 
                commissioners or State health departments;
                    ``(B) a representative of health plans;
                    ``(C) a representative of employers purchasing 
                health care;
                    ``(D) a representative of health care providers;
                    ``(E) a representative of consumers of health care;
                    ``(F) a representative of associations of private 
                accreditation entities; and
                    ``(G) individuals distinguished in the fields of 
                law, medicine, economics, public health, and health 
                services research.
            ``(3) Terms.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the appointed members of the 
                Committee shall serve for a term of 4 years.
                    ``(B) Staggered rotation.--Of the members first 
                appointed to the Committee under paragraph (2), the 
                Secretary shall appoint 4 members to serve for a term 
                of 4 years, 4 members to serve for a term of 3 years, 3 
                members to serve for a term of 2 years.
                    ``(C) Service beyond term.--An appointed member of 
                the Committee may continue to serve after the 
                expiration of the term of the member until a successor 
                is appointed.
            ``(4) Vacancies.--If an appointed member of the Committee 
        does not serve the full term applicable under paragraph (3), 
        the individual appointed to fill the resulting vacancy shall be 
        appointed for the remainder of the term of the predecessor of 
        the individual.
            ``(5) Chair.--The Secretary shall designate an individual 
        to serve as the chair of the Committee.
            ``(6) Meetings.--The Committee shall meet not less than 
        once during each 4-month period and shall otherwise meet at the 
        call of the Secretary or the chair.
            ``(7) Compensation and reimbursement of expenses.--Members 
        of the Committee shall receive compensation for each day 
        (including travel time) engaged in carrying out the duties of 
        the Committee. Such compensation may not be in an amount in 
        excess of the maximum rate of basic pay payable for level IV of 
        the Executive Schedule under section 5315 of title 5, United 
        States Code.
            ``(8) Staff.--The Secretary shall provide to the Committee 
        such staff, information, and other assistance as may be 
        necessary to carry out the duties of the Committee.
            ``(9) FACA not applicable.--The Federal Advisory Committee 
        Act (5 U.S.C. App.) shall not apply to the Committee.
    ``(d) Tax Qualification.--For favorable Federal income tax 
treatment which is available only to certified standard health plans, 
see sections 213(f) and 4521 of the Internal Revenue Code of 1986.

``SEC. 21102. CERTIFIED SUPPLEMENTAL HEALTH BENEFITS PLANS.

    ``(a) In General.--A supplemental health benefits plan shall meet 
the applicable reform standards established under subsection (b).
    ``(b) Establishment of Standards.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        Secretary shall develop and publish specific standards to 
        implement the standards specified in part III by not later than 
        January 1, 1996.
            ``(2) Consultation with secretary of labor.--In the case of 
        multistate self-insured supplemental health benefits plans, the 
        Secretary, in consultation with the Secretary of Labor, shall 
        develop and publish the standards described in paragraph (1).
    ``(c) Tax Qualification.--For favorable Federal income tax 
treatment which is available only to certified supplemental health 
benefits plans, see section 4521 of the Internal Revenue Code of 1986.

``SEC. 21103. CERTIFIED LONG-TERM CARE POLICIES.

    ``(a) In General.--A long-term care policy shall meet the 
applicable reform standards established under subsection (b).
    ``(b) Establishment of Standards.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        Secretary, in consultation with the NAIC, shall develop and 
        publish specific standards to implement the standards specified 
        in part IV by not later than September 1, 1996.
            ``(2) State standards.--Nothing in this title shall be 
        construed as preventing a participating State from applying 
        standards that provide greater protection to insured 
        individuals under long-term care policies than the standards 
        promulgated under this section, except that such State 
        standards may not be inconsistent with any of the standards 
        specified in part IV.
    ``(c) Tax Qualification.--For favorable Federal income tax 
treatment which is available only to certified long-term care policies, 
see section 7702B of the Internal Revenue Code of 1986.

``SEC. 21104. GENERAL RULES.

    ``(a) Construction.--Whenever in this subtitle a requirement or 
standard is imposed on a health plan, supplemental health benefits 
plan, or long-term care policy, the requirement or standard is deemed 
to have been imposed on the insurer or sponsor of the plan or policy in 
relation to that plan or policy.
    ``(b) Use of Interim, Final Regulations.--In order to permit the 
timely implementation of the provisions of this title, the Secretary 
and the Secretary of Labor are each authorized to issue regulations 
under this title on an interim basis that become final on the date of 
publication, subject to change based on subsequent public comment.
    ``(c) Reference to Reform Standards.--For purposes of this title, 
the term `reform standards' means the standards developed under this 
subtitle and applicable under parts II, III, and IV.

        ``PART II--STANDARDS APPLICABLE TO STANDARD HEALTH PLANS

                    ``Subpart A--Insurance Standards

``SEC. 21111. GUARANTEED ISSUE AND RENEWAL.

    ``(a) Issue.--
            ``(1) In general.--Except as otherwise provided in this 
        section, a standard health plan sponsor--
                    ``(A) offering a community-rated health plan shall 
                offer such plan to any community-rated individual 
                applying for coverage; and
                    ``(B) offering an experience-rated health plan or a 
                self-insured health plan shall offer such plan to any 
                experience-rated individual eligible for coverage under 
                the plan through the individual's experience-rated 
                employer.
            ``(2) Availability.--
                    ``(A) In general.--A community-rated standard 
                health plan shall be made available throughout the 
                entire community rating area in which such plan is 
                offered, including through any purchasing cooperative 
                choosing to offer such plan.
                    ``(B) Geographic limitations.--A community-rated 
                standard health plan may deny coverage under the plan 
                to a community-rated individual who resides outside the 
                community rating area in which such plan is offered, 
                but only if such denial is applied uniformly, without 
                regard to health status or insurability of individuals.
            ``(3) Application of capacity limits.--
                    ``(A) In general.--Subject to subparagraph (B), an 
                insured standard health plan may apply to the 
                appropriate certifying authority to cease enrolling 
                individuals under the plan if--
                            ``(i) the plan ceases to enroll any new 
                        individuals; and
                            ``(ii) 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 
                        individuals.
                    ``(B) First-come-first-served.--An insured standard 
                health plan is only eligible to exercise the 
                limitations provided for in subparagraph (A) if such 
                plan provides for enrollment of individuals on a first-
                come-first-served basis (except in the case of 
                additional individuals described in subparagraph 
                (A)(ii)).
    ``(b) Renewal.--
            ``(1) In general.--Except as provided in paragraph (2), a 
        standard health plan that is issued to an individual shall be 
        renewed at the option of the individual.
            ``(2) Grounds for refusal to renew.--A health plan sponsor 
        may refuse to renew, or may terminate, a standard health plan 
        under this title only for--
                    ``(A) nonpayment of premiums;
                    ``(B) fraud on the part of the individual; or
                    ``(C) misrepresentation of material facts on the 
                part of the individual relating to an application for 
                coverage or claim for benefits.
    ``(c) FEHBP Plans.--Any standard health plan sponsor participating 
in the Federal Employees Health Benefits Program, and operating a 
standard health plan within a community rating area, shall offer a 
community-rated standard health plan in such area, except that this 
requirement shall not apply to nationwide plans under paragraphs (1), 
(2), and (3) of section 8903 of title 5, United States Code.
    ``(d) Certain Excluded Plans.--The provisions of this section, 
other than subsections (b) and (e)(2)(B), shall not apply to any 
religious fraternal benefit society in existence as of September 1993, 
which bears the risk of providing insurance to its members, and which 
is an organization described in section 501(c)(8) of the Internal 
Revenue Code of 1986 which is exempt from taxation under section 501(a) 
of such Code.
    ``(e) Application of Interim Standards.--
            ``(1) In general.--During the interim standards application 
        period, a health plan sponsor may only offer a health plan in a 
        State if such plan meets the standards specified in paragraph 
        (2).
            ``(2) Specified standards.--
                    ``(A) Issue.--The standards specified in subsection 
                (a) with respect to self-insured health plans.
                    ``(B) Renewal.--The standards specified in 
                subsection (b).
                    ``(C) Exit from market.--
                            ``(i) In general.--An insurer shall renew 
                        an insured health plan through a particular 
                        type of delivery system (as defined in section 
                        21100) with respect to a community-rated 
                        individual, unless such insurer--
                                    ``(I) elects not to renew all of 
                                its insured health plans using such 
                                delivery system issued to all such 
                                individuals in a State; and
                                    ``(II) provides notice to the 
                                appropriate certifying authority and to 
                                each such individual covered under the 
                                plan of such termination at least 180 
                                days before the date of expiration of 
                                the plan.
                            ``(ii) Prohibition on market reentry.--In 
                        the case of such a termination, such insurer 
                        may not provide for the issuance of any insured 
                        health plan using such a delivery system to a 
                        community-rated individual in such State during 
                        the 5-year period beginning on the date of the 
                        termination of the last plan not so renewed.
            ``(3) Interim standards application periods.--The interim 
        standards application period is--
                    ``(A) in the case of the standard specified in 
                paragraph (2)(A), on or after January 1, 1995, and 
                before January 1, 1996;
                    ``(B) in the case of the standards specified in 
                paragraph (2)(B), on or after June 28, 1994, and before 
                January 1, 1996; and
                    ``(C) in the case of the standard specified in 
                paragraph (2)(C), on or after the date of the enactment 
                of this title, and before January 1, 1996.
            ``(4) Preemption.--The requirements of this subsection do 
        not preempt any State law unless State law directly conflicts 
        with such requirements. The provision of additional protections 
        under State law shall not be considered to directly conflict 
        with such requirements. The Secretary may issue letter 
        determinations with respect to whether this subsection preempts 
        a provision of State law.
            ``(5) Construction.--The provisions of this subsection 
        shall be construed in a manner that assures, to the greatest 
        extent practicable, continuity of health benefits under health 
        plans in effect on the effective date of this title.
            ``(6) Special rules for acquisitions and transfers.--The 
        Secretary may issue regulations regarding the application of 
        this subsection in the case of health plans (or groups of such 
        plans) which are transferred from one health plan sponsor to 
        another sponsor through assumption, acquisition, or otherwise.

``SEC. 21112. ENROLLMENT.

    ``(a) Enrollment Process.--
            ``(1) In general.--A standard health plan shall establish 
        an enrollment process consistent with this subsection.
            ``(2) Initial enrollment period.--Each individual shall 
        have an initial enrollment period in which to enroll in a 
        standard health plan--
                    ``(A) except as provided in subparagraph (B), 
                beginning on January 1, 1996, and ending on March 31, 
                1996,
                    ``(B) with respect to premium subsidy eligible 
                individuals described in section 1952(a)(2)(A)(i) in 
                States which have not established a premium subsidy 
                program in 1996, beginning on January 1, 1997, and 
                ending on March 31, 1997.
            ``(3) General enrollment period.--Each standard health plan 
        shall permit eligible individuals to enroll (or change 
        enrollment) in the plan during each general annual enrollment 
        period specified by the appropriate certifying authority under 
        section 21024.
            ``(4) Special enrollment periods.--In the case of an 
        individual who--
                    ``(A) through marriage, separation, divorce, birth 
                or adoption of a child, death, 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 in continuation coverage;
                    ``(C) changes residence to another community rating 
                area;
                    ``(D) disenrolls for cause from a standard health 
                plan; or
                    ``(E) is subject to the decertification of a 
                standard health plan under section 21012,
        each standard health 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 reform standards.
    ``(b) Commencement of Coverage.--
            ``(1) In general.--In the case of an individual who enrolls 
        with a standard health plan during an 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 reform standards 
        specify.
            ``(2) Newborns.--In the event of the birth or adoption of a 
        child of an enrollee, coverage of such child under such 
        enrollee's standard health plan (regardless of the class of 
        enrollment) shall begin on the date of such birth or adoption 
        and shall continue, in the absence of any enrollment of such 
        child during a special enrollment period provided under 
        subsection (a)(4), for at least 45 days.

``SEC. 21113. RATING LIMITATIONS FOR COMMUNITY-RATED MARKET.

    ``(a) Standard Premiums With Respect to Community-Rated Eligible 
Individuals.--Each standard health plan which covers community-rated 
individuals shall establish within each community rating area in which 
the plan is to be offered a standard premium for individual enrollment 
for--
            ``(1) the standard benefits package established under 
        subtitle C, and
            ``(2) the alternative standard benefits package established 
        under subtitle C.
    ``(b) Uniform Premiums Within Community Rating Areas.--
            ``(1) In general.--Subject to paragraphs (2) and (3), the 
        standard premium for each package described in subsection (a) 
        for all community-rated individuals within a community rating 
        area shall be the same and shall not include the costs of 
        premium processing, enrollment, and marketing that would vary 
        depending on whether the method of enrollment is through a 
        purchasing cooperative, or directly through a health plan, an 
        employer, or a broker.
            ``(2) Application to enrollees.--
                    ``(A) In general.--The premium charged for coverage 
                in a standard health plan which covers community-rated 
                individuals shall be the product of--
                            ``(i) the standard premium (established 
                        under paragraph (1));
                            ``(ii) in the case of enrollment other than 
                        individual enrollment, the family adjustment 
                        factor specified under subparagraph (B); and
                            ``(iii) the age adjustment factor 
                        (specified under subparagraph (C)).
                    ``(B) Family adjustment factor.--
                            ``(i) In general.--The reform standards 
                        shall specify family adjustment factors that 
                        reflect the relative actuarial costs of benefit 
                        packages based on family classes of enrollment 
                        (as compared with such costs for individual 
                        enrollment).
                            ``(ii) Classes of enrollment.--For purposes 
                        of this title, there are 6 classes of 
                        enrollment:
                                    ``(I) Coverage only of an 
                                individual (other than an individual 
                                described in subclause (II)) (referred 
                                to in this title as the `individual' 
                                enrollment or class of enrollment).
                                    ``(II) Coverage only of an 
                                individual who has not attained age 18 
                                (referred to in this title as the 
                                `single child' enrollment or class of 
                                enrollment).
                                    ``(III) Coverage only of two or 
                                more children (referred to in this 
                                title as the `multiple children' 
                                enrollment or class of enrollment).
                                    ``(IV) Coverage of a married couple 
                                without children (referred to in this 
                                title as the `couple-only' enrollment 
                                or class of enrollment).
                                    ``(V) Coverage of an individual and 
                                one or more children (referred to in 
                                this title as the `single parent' 
                                enrollment or class of enrollment).
                                    ``(VI) Coverage of a married couple 
                                and one or more children (referred to 
                                in this title as the `dual parent' 
                                enrollment or class of enrollment).
                            ``(iii) References to family and couple 
                        classes of enrollment.--In this title:
                                    ``(I) Family.--The terms `family 
                                enrollment' and `family class of 
                                enrollment' refer to enrollment in a 
                                class of enrollment described in any 
                                subclause of clause (ii) (other than 
                                subclause (I)).
                                    ``(II) Couple.--The term `couple 
                                class of enrollment' refers to 
                                enrollment in a class of enrollment 
                                described in subclause (IV) or (VI) of 
                                clause (ii).
                            ``(iv) Spouse; married; couple.--
                                    ``(I) In general.--In this title, 
                                the terms `spouse' and `married' mean, 
                                with respect to an individual, another 
                                individual who is the spouse of, or is 
                                married to, the individual, as 
                                determined under applicable State law.
                                    ``(II) Couple.--The term `couple' 
                                means an individual and the 
                                individual's spouse.
                    ``(C) Age adjustment factor.--The Secretary, in 
                consultation with the NAIC, shall specify uniform age 
                categories and rating increments for age adjustment 
                factors that reflect the relative actuarial costs of 
                benefit packages among enrollees. For individuals who 
                have attained age 18 but not age 65, the highest age 
                adjustment factor may not exceed twice the lowest age 
                adjustment factor.
            ``(3) Administrative charges.--
                    ``(A) In general.--In accordance with the reform 
                standards, a standard health plan which covers 
                community-rated individuals may add a separately-stated 
                administrative charge which is based on identifiable 
                differences in marketing and other legitimate 
                administrative costs which vary by size of the 
                enrolling group and method of enrollment, including 
                enrollment directly through a health plan, an employer, 
                or a broker (as defined in such standards).
                    ``(B) Application.--The administrative charge for 
                any plan described in subparagraph (A) shall be applied 
                uniformly with respect to group size and method of 
                enrollment and the Secretary shall specify the 
                permitted variation in the administrative charge of a 
                plan.
                    ``(C) Disallowance of separate charge on 
                cooperative.--No standard health plan which covers 
                community-rated individuals may impose a separately-
                stated administrative charge for enrollment through any 
                purchasing cooperative.
    ``(c) Treatment of Negotiated Rate as Community Rate.--
Notwithstanding any other provision of this section, a standard health 
plan which covers community-rated individuals in a community rating 
area may only charge a premium for any coverage which is the same as 
the premium for such coverage when it is offered through a purchasing 
cooperative in such area.

``SEC. 21114. RATING PRACTICES AND PAYMENT OF PREMIUMS.

    ``(a) Full Disclosure of Rating Practices.--
            ``(1) In general.--At the time a health plan sponsor offers 
        a standard health plan, such sponsor shall fully disclose 
        rating practices for such plan to the appropriate certifying 
        authority.
            ``(2) Notice on expiration.--A health plan sponsor 
        providing a standard health 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.
            ``(3) Actuarial certification.--Each health plan sponsor 
        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 such sponsor and methods used by such 
        sponsor in establishing premium rates for insured standard 
        health plans--
                    ``(A) such sponsor is in compliance with the 
                applicable provisions of this section; and
                    ``(B) the rating methods are actuarially sound.
        Each such sponsor shall retain a copy of such statement at its 
        principal place of business for examination by any individual.
    ``(b) Payment of Premiums.--
            ``(1) In general.--With respect to a new enrollee in a 
        standard health plan, the plan may require advanced payment of 
        an amount equal to the monthly applicable premium for the plan 
        at the time such individual is enrolled.
            ``(2) Notification of failure to receive premium.--If a 
        standard health 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.

``SEC. 21115. NONDISCRIMINATION BASED ON HEALTH STATUS.

    ``(a) In General.--Except as provided under subsection (b), a 
standard health plan may not--
            ``(1) deny, limit, or condition the coverage under (or 
        benefits of) the plan;
            ``(2) engage, directly or through contractual arrangements, 
        in any activity, including the selection of a service area; and
            ``(3) in the case of a self-insured standard health plan, 
        vary the premium,
based on the health status, medical condition, claims experience, 
receipt of health care, medical history, anticipated need for health 
care expenses, disability, or lack of evidence of insurability, of an 
individual.
    ``(b) Treatment of Preexisting Condition Exclusions for All 
Services.--
            ``(1) In general.--Subject to paragraph (4), a standard 
        health plan may impose 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 only if--
                    ``(A) the condition was diagnosed or treated during 
                the 3-month period ending on the day before the date of 
                enrollment under the plan;
                    ``(B) the limitation or exclusion extends for a 
                period not more than 6 months after the date of 
                enrollment under the plan;
                    ``(C) the limitation or exclusion does not apply to 
                an individual who, as of the date of birth, was covered 
                under the plan; or
                    ``(D) the limitation or exclusion does not apply to 
                pregnancy.
            ``(2) Crediting of previous coverage.--A standard health 
        plan shall provide that if an individual under such plan is in 
        a period of continuous coverage as of the date of enrollment 
        under such plan, any period of exclusion of coverage with 
        respect to a preexisting condition 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 the period 
                beginning on the date an individual is enrolled under a 
                health plan or health care program which provides 
                benefits equivalent to those provided by the plan in 
                which the individual is seeking to enroll with respect 
                to coverage of a preexisting condition 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 
                standard health plan, a condition which was diagnosed, 
                or which was treated, within the 3-month period ending 
                on the day before the date of enrollment (without 
                regard to any waiting period).
            ``(4) Special rule for 1996.--This subsection shall be 
        applied for calendar year 1996 by substituting `6-month' for 
        `3-month' in paragraph (1)(A).
            ``(5) Prohibition on preexisting condition exclusion during 
        amnesty period.--This subsection shall not apply during an 
        initial enrollment period described in section 21112(a)(2).
    ``(c) Application of Interim Standards.--
            ``(1) In general.--During the interim standards application 
        period, a health plan sponsor may only offer a self-insured 
        health plan in a State if such plan meets the standards 
        specified in paragraph (2).
            ``(2) Specified standards.--
                    ``(A) Issue.--The standards specified in subsection 
                (a) with respect to self-insured health plans.
                    ``(B) Coverage.--A self-insured health plan may not 
                reduce or limit coverage of any condition or course of 
                treatment that is expected to cost not less than $5,000 
                during any 12-month period.
            ``(3) Interim standards application periods.--The interim 
        standards application period is--
                    ``(A) in the case of the standard specified in 
                paragraph (2)(A), on or after January 1, 1995, and 
                before January 1, 1996; and
                    ``(B) in the case of the standards specified in 
                paragraph (2)(B), on or after June 28, 1994, and before 
                January 1, 1996.
            ``(4) Application of rules.--Paragraphs (4), (5), and (6) 
        of section 21111(e) shall apply to this subsection.

``SEC. 21116. BENEFITS OFFERED.

    ``A standard health plan shall offer to all enrollees in the plan 
the standard benefits package or the alternative standard benefits 
package established under subtitle C.

                 ``Subpart B--Delivery System Standards

``SEC. 21121. REINSURANCE, RISK ADJUSTMENT, AND COST-SHARING 
              ADJUSTMENT.

    ``(a) Community-Rated Plans.--Each community-rated standard health 
plan shall participate in a reinsurance pool, risk adjustment program, 
and cost-sharing adjustment program of the State described in section 
21101(b)(2).
    ``(b) Experience-Rated Plans.--Each experience-rated health plan 
shall participate in a cost-sharing adjustment program described in 
section 21101(b)(2).
    ``(c) Self-Insured Plans.--
            ``(1) In general.--Except as provided in paragraph (2), 
        each self-insured standard health plan shall participate in a 
        reinsurance pool and the cost-sharing adjustment program of the 
        State described in section 21101(b)(2).
            ``(2) Multistate plans.--Each multistate self-insured 
        standard health plan shall participate in a reinsurance program 
        developed under section 21101(b)(4)(B).
    ``(d) Hold-Harmless Protections.--Each standard health plan shall 
hold individual providers harmless from the effects of the cost-sharing 
assistance program under section 1953(b).

``SEC. 21122. CAPITAL REQUIREMENTS.

    ``Each standard health plan shall meet the risk-based capital 
standards formula applicable to such plan under the standards 
established under section 21101(b)(3).

``SEC. 21123. COLLECTION AND PROVISION OF STANDARDIZED INFORMATION.

    ``(a) Health Plans Required To Submit Information to Program.--Each 
standard health plan offered or operated in a State shall submit to the 
consumer information program of such State established under section 
21013 the program descriptive information regarding--
            ``(1) certification status of the plan;
            ``(2) benefits offered under the plan;
            ``(3) premiums, cost-sharing, and administrative charges 
        under the plan;
            ``(4) risk and referral arrangements under the plan;
            ``(5) health care providers used under the plan and the 
        availability of such providers;
            ``(6) the enrollee complaint and appeals process used under 
        the plan; and
            ``(7) other appropriate information as determined by the 
        Secretary.
The submission of such information shall be in the form of 
nonidentifiable health information (as defined in section 11702(7)).
    ``(b) Additional Requirements.--Each standard health plan shall 
meet the requirements specified under subtitles B and C of title XI 
with respect to such plans.

``SEC. 21124. QUALITY IMPROVEMENT AND ASSURANCE.

    ``(a) In General.--Each standard health plan shall--
            ``(1) develop and implement an internal quality improvement 
        program designed to measure, assess, and improve enrollee 
        health status, enrollee outcomes, enrollee processes of care, 
        and enrollee satisfaction;
            ``(2) develop and implement quality improvement goals based 
        on the results of population health status measurements 
        conducted under subtitle E; and
            ``(3) maintain a program to assure that the quality of 
        health care services furnished to enrollees meets minimum 
        standards of safety and clinical practice.
    ``(b) Utilization Management.--
            ``(1) In general.--Each standard health plan shall provide 
        that all review determinations shall be made by licensed or 
        certified health professionals with appropriate clinical 
        training.
            ``(2) Additional standards.--Each standard health plan 
        shall base utilization management on current scientific 
        knowledge, stress the efficient delivery of health care and 
        outcomes, rely primarily on evaluating and comparing practice 
        patterns rather than routine case-by-case review, and be 
        consistent and timely in application.
            ``(3) No financial incentives.--Utilization management by 
        each standard health plan may not create direct financial 
        incentives for reviewers to reduce or limit medically necessary 
        or appropriate services.
            ``(4) Consumer disclosure.--Each standard health plan shall 
        disclose, upon request, to enrollees (and prospective 
        enrollees) and to participating providers (and prospective 
        providers) the utilization review protocols used by the plan, 
        while protecting proprietary business information to the extent 
        specified by the Secretary in the reform standards.
    ``(c) Credentialing.--Each standard health plan shall--
            ``(1) credential participating physicians and 
        practitioners; and
            ``(2) ensure that participating providers and facilities 
        are appropriately accredited, certified, and licensed.
    ``(d) Continuity of Care.--Each standard health plan shall develop 
and implement mechanisms for coordinating the delivery of care across 
provider settings.
    ``(e) Medical Recordkeeping.--Each standard health plan shall 
assure that pertinent information is readily available to appropriate 
professionals.

``SEC. 21125. PATIENT PROTECTIONS AND PROVIDER SELECTION.

    ``(a) Patient Information.--Each standard health plan shall provide 
to enrollees clear descriptive information about the rights and 
responsibilities of enrollees.
    ``(b) Information Regarding a Patient's Right to Self-Determination 
in Health Care Services.--Each standard health plan shall--
            ``(1) provide written information to each individual 
        enrolling in such plan of--
                    ``(A) 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)), and
                    ``(B) the written policies of the plan with respect 
                to such right;
            ``(2) provide for educational activities for patients and 
        participating providers; and
            ``(3) require participating primary care physicians to 
        include in their patients' charts the wishes of the patient 
        concerning advance directives.
    ``(c) Confidentiality of Patient Records.--Each standard health 
plan shall have explicit procedures to protect the confidentiality of 
individual patient information consistent with the rules established 
under subtitle C of title XI.
    ``(d) Marketing.--No insurer may engage in selective marketing that 
would have the effect of avoiding high-risk subscribers within a 
community rating area. Marketing materials may not contain false or 
materially misleading information.
    ``(e) No Patient Liability for Unpaid Plan Obligations.--Each 
standard health plan shall hold enrollees harmless with respect to any 
plan obligations for payment to providers.
    ``(f) Remedies and Enforcement.--
            ``(1) In general.--Each standard health plan shall comply 
        with the remedies and enforcement requirements described in 
        subtitle H.
            ``(2) Grievance process.--Each standard health plan shall 
        establish a grievance process for enrollees dissatisfied with 
        matters other than the denial of payment or provision of 
        benefits by the plan.
    ``(g) Provider Selection.--
            ``(1) In general.--In selecting among providers of health 
        services for membership in a provider network, or in 
        establishing the terms and conditions of such membership, a 
        standard health plan may not engage in any practice that 
        discriminates against a provider based on the health status of 
        a patient of the provider.
            ``(2) No discrimination based on academic degree.--No 
        standard health plan may discriminate in participation, 
        reimbursement, or indemnification against a health professional 
        solely on the basis of the academic degree of such professional 
        if the professional is acting within the scope of the 
        professional's license under applicable State law.
            ``(3) Number and type.--Nothing in this title shall--
                    ``(A) prevent a standard health plan from matching 
                the number and type of health care providers to the 
                needs of the plan members;
                    ``(B) require any such plan to contract with any 
                type of provider legally authorized to provide services 
                in the State in which such services are provided; or
                    ``(C) except as specifically provided in this 
                title, establish any other measure designed to maintain 
                quality or to control costs.
    ``(h) Physician Incentive Plans.--A standard health plan may not 
operate a physician incentive plan unless such incentive plan meets the 
requirements of section 1876(i)(8)(A).
    ``(i) Physician Participation.--
            ``(1) In general.--Each standard health plan shall 
        establish mechanisms through which physicians have input into 
        matters affecting patient care and through which patients have 
        the ability to choose any primary care physician from available 
        practitioners.
            ``(2) Contract procedures.--Each standard health plan shall 
        provide not less than 30 days notification to physicians of 
        decisions to cancel or deny renewal of contracts and shall 
        establish an informal, non-binding, and advisory review process 
        for appeals.
    ``(j) Ethical Business Conduct.--Each standard health plan shall 
develop and implement a code of ethical business conduct for its 
activities, including those of its components, and assure proficient 
management and planning functions.
    ``(k) Enrollment.--A standard health plan may not knowingly accept 
the enrollment of an individual who is enrolled in another standard 
health plan.

``SEC. 21126. ALTERNATIVE DISPUTE RESOLUTION PROCEDURES RELATING TO 
              MALPRACTICE CLAIMS.

    ``Each standard health plan shall establish and maintain an 
alternative dispute resolution procedures program that complies with 
the standards developed under section 1129.

``SEC. 21127. ACCESS TO ESSENTIAL COMMUNITY PROVIDERS.

    ``(a) In General.--Each standard health plan sponsor shall, with 
respect to at least one of each category of essential community 
provider (as defined in subsection (c)) located within health plan 
service areas designated under section 21022, offer to enter into a 
written provider participation agreement (described in subsection (b)) 
with the provider covering the 5-year period beginning on January 1, 
1996. The Secretary may require participation agreements to be offered 
to more than one essential community provider in each category if the 
Secretary determines extra capacity is required to serve the needs of 
enrollees in a particular health plan service area.
    ``(b) Participation Agreement.--A participation agreement between a 
standard health plan sponsor and an essential community provider under 
this subsection shall provide that the plan agrees to treat the 
provider in accordance with terms and conditions at least as favorable 
as those that are applicable to other providers with a participation 
agreement with the plan with respect to the scope of services and the 
basis for which payment is made by the plan to the provider.
    ``(c) Essential Community Providers Described.--In this section, an 
`essential community provider' means any of the following entities 
certified by the Secretary:
            ``(1) Migrant health centers.--A recipient or subrecipient 
        of a grant under section 329 of the Public Health Service Act.
            ``(2) Community health centers.--A recipient or 
        subrecipient of a grant under section 330 of such Act.
            ``(3) Homeless program providers.--A recipient or 
        subrecipient of a grant under section 340 of such Act.
            ``(4) Public housing providers.--A recipient or 
        subrecipient of a grant under section 340A of such Act.
            ``(5) Family planning clinics.--A recipient or subrecipient 
        of a grant under title X of such Act.
            ``(6) Indian health programs.--A service unit of the Indian 
        Health Service, a tribal organization, or an urban Indian 
        program, as defined in the Indian Health Care Improvement Act.
            ``(7) HIV providers under ryan white act.--A public or 
        private nonprofit health care provider that is a recipient or 
        subrecipient of a grant under title XXVI of the Public Health 
        Service Act.
            ``(8) Maternal and child health providers.--A public or 
        private nonprofit entity that provides prenatal care, pediatric 
        care, or ambulatory services to children, including children 
        with special health care needs, and that receives funding for 
        such care or services under title V of the Social Security Act.
            ``(9) Federally qualified health centers.--A Federally 
        qualified health center (as defined in section 1861(aa)(4)) or 
        an entity that would be such a center but for its failure to 
        meet the requirement described in section 329(f)(2)(G)(i) of 
        the Public Health Service Act or the requirement described in 
        section 330(e)(3)(G)(i) of such Act (relating to the 
        composition of the entity's governing board).
            ``(10) Rural health clinics.--A rural health clinic (as 
        defined in section 1861(aa)(2)).
            ``(11) Provider of school health services.--A provider of 
        school health services.
            ``(12) Community networks.--A community network receiving 
        development funding in designated urban or rural underserved 
        areas under subtitle F.
            ``(13) Certain hospitals.--A public hospital or non-profit 
        hospital meeting the criteria for public hospitals which are 
        covered entities under section 340B of the Public Health 
        Service Act, with a disproportionate patient percentage (as 
        defined in section 1886(d)(5)(F)(vi)) greater than 11.75 
        percent.
            ``(14) Children's hospitals.--A children's hospital meeting 
        criteria comparable to paragraph (13) as determined appropriate 
        by the Secretary.
During the 5-year period described in subsection (a), the reform 
standards may be modified for the designation of additional health 
professionals and institutions as essential community providers to the 
extent the Secretary determines that standard health plans would not be 
able to assure adequate access to the standard benefits package 
established under subtitle C in a health plan service area without such 
designation.
    ``(d) Subrecipient Defined.--In this section, the term 
`subrecipient' means, with respect to a recipient of a grant under a 
particular authority, an entity that--
            ``(1) is receiving funding from such a grant under a 
        contract with the principal recipient of such a grant, and
            ``(2) meets the requirements established to be a recipient 
        of such a grant.
    ``(e) Study.--During the 5-year period described in subsection (a), 
the Office of Technology Assessment shall conduct a continuing study on 
improving access in underserved areas.

``SEC. 21128. HEALTH PLAN SERVICE AREA CAPACITY.

    ``(a) Availability of Services in Entire Health Plan Service 
Area.--On and after January 1, 2001, each standard health plan shall 
have the capacity within the plan's network, or through contracts with 
a sufficient number, distribution, and variety of providers, to deliver 
to all parts of any health plan service area (designated under section 
21022) in which such plan is offered, with reasonable promptness and in 
a manner which assures continuity, the standard benefits package 
established under subtitle C and any benefits offered by such sponsor 
through certified supplemental health benefits plans. Such capacity 
shall include the provision of emergency services 24 hours a day, 7 
days a week.
    ``(b) Capability.--Each standard health plan shall make available 
and accessible translation, case management, and transportation 
services, if necessary, to deliver the benefits and services described 
in subsection (a).
    ``(c) Diversity.--Each standard health plan shall ensure that 
criteria for the selection of participating providers take into account 
the needs of diverse populations within a health plan service area 
served by the plan.
    ``(d) Application of Standards to Self-Insured Plans.--The 
standards specified in this section shall apply to self-insured 
standard health plans, but only to the extent necessary to deliver 
services to individuals enrolled in such plans.

``SEC. 21129. ACCESS TO SPECIALIZED SERVICES.

    ``(a) In General.--Each standard health plan shall have within the 
plan's network, or contract with, a sufficient number, distribution, 
and variety of providers of specialized services to assure that such 
services are available and accessible to adults, infants, children, and 
persons with disabilities.
    ``(b) Centers of Excellence.--
            ``(1) In general.--A standard health plan may satisfy the 
        standard under subsection (a) by contracting with, and 
        demonstrating sufficient referrals (as determined by standards 
        set by the Secretary) of, adults, infants, children, and 
        persons with disabilities requiring specialized services to 
        centers of excellence designated by the Secretary under 
        subsection (a). For children, such specialized treatment 
        expertise shall be in pediatrics.
            ``(2) Requirements for centers.--The Secretary shall 
        designate centers of excellence in the field of institutional 
        care that meet evaluation criteria established by the Secretary 
        for the delivery of care for complex cases requiring 
        specialized treatment and also meet 2 or more of the following 
        requirements:
                    ``(A) Provide specialized education and training 
                through approved graduate medical education programs 
                with multi-specialty, multi-disciplinary teaching and 
                services in both inpatient and outpatient settings, 
                with medical staff with faculty appointments at an 
                affiliated medical school.
                    ``(B) Attract patients from outside the center's 
                local geographic region.
                    ``(C) Either sponsor or participate in, or have 
                medical staff who participate in, peer-reviewed 
                research.
    ``(c) Other Evaluation Criteria for Specialized Services 
Standards.--Reform standards shall include evaluation criteria 
determined by the Secretary for the standard under subsection (a) for 
standard health plans which choose to provide specialized services 
within a network setting, including requirements for staff credentials 
and experience, and requirements for measured outcomes in the diagnosis 
and treatment of patients. For children, such specialized treatment 
expertise shall be in pediatrics.
    ``(d) Outcomes Criteria.--The Secretary shall develop evaluation 
criteria for outcomes of specialized services as research findings 
become available.

``SEC. 21130. PARTICIPATING PHYSICIAN PROGRAM.

    ``Each standard health plan shall establish a program under which 
participating physicians shall agree to accept the plan's payment 
schedule as payment in full, and agree not to charge patients more than 
the co-insurance required by such plan. Each such plan shall make 
available the list of participating physicians to enrollees. Each plan 
shall have an appropriate number of physicians in each specialty as 
participating physicians.

``SEC. 21131. OUT-OF-AREA COVERAGE.

    ``Each standard health plan shall provide for urgent and emergency 
out-of-area coverage for enrollees of the plan.

 ``PART III--STANDARDS APPLICABLE TO SUPPLEMENTAL HEALTH BENEFITS PLANS

``SEC. 21141. IMPOSITION OF REQUIREMENTS ON SUPPLEMENTAL HEALTH 
              BENEFITS PLANS.

    ``(a) In General.--In the case of a supplemental health benefits 
plan--
            ``(1) which is a supplemental services plan (as defined in 
        subsection (b)(2)), the requirements of section 21142 shall be 
        met with respect to the plan; and
            ``(2) which is a cost-sharing plan (as defined in 
        subsection (b)(3)), the requirements of section 21143 shall be 
        met with respect to the plan.
    ``(b) Plans Defined.--In this title:
            ``(1) Supplemental health benefits plan.--The term 
        `supplemental health benefits plan' means a supplemental 
        services plan or a cost-sharing plan.
            ``(2) Supplemental services plan.--The term `supplemental 
        services plan' means a health plan which provides--
                    ``(A) coverage for services and items not included 
                in the standard benefits package established under 
                subtitle C,
                    ``(B) coverage for items and services included in 
                such package but not covered because of a limitation in 
                amount, duration, or scope of benefits, or
                    ``(C) both.
            ``(3) Cost-sharing plan.--The term `cost-sharing plan' 
        means a health plan which provides coverage for deductibles, 
        coinsurance, and copayments imposed as part of the standard 
        benefits package established under subtitle C.

``SEC. 21142. STANDARDS FOR SUPPLEMENTAL SERVICES PLANS.

    ``(a) Application of Certain Health Plan Standards.--
            ``(1) In general.--Except as provided in paragraph (3), the 
        standards specified in paragraph (2) shall apply with respect 
        to each supplemental services plan in the same manner as such 
        standards apply with respect to a certified standard health 
        plan.
            ``(2) Specified standards.--The standards specified in this 
        paragraph are as follows:
                    ``(A) Section 21111 (relating to guaranteed issue 
                and renewal).
                    ``(B) Section 21112 (relating to enrollment).
                    ``(C) Section 21113 (relating to rating limitations 
                for community-rated market).
                    ``(D) Section 21114 (relating to rating practices 
                and payment of premiums).
                    ``(E) Section 21115 (relating to nondiscrimination 
                based on health status).
                    ``(F) Section 21123 (relating to collection and 
                provision of standardized information).
                    ``(G) Section 21124 (relating to quality 
                improvement and assurance).
                    ``(H) Section 21125 (relating to patient 
                protections and provider selection).
    ``(b) Prohibiting Duplication of Coverage.--No health plan sponsor 
or any other person may offer to any medicare-eligible individual a 
supplemental services plan that duplicates any coverage provided under 
the medicare program under title XVIII.
    ``(c) Restrictions on Marketing Abuses.--Not later than January 1, 
1996, the Secretary shall develop (in consultation with the States) 
minimum standards that prohibit marketing practices by entities 
offering supplemental services plans that involve--
            ``(1) providing monetary incentives for, or tying or 
        otherwise conditioning, the sale of the plan to enrollees in a 
        certified standard health plan of the entity;
            ``(2) using or disclosing to any party information about 
        the health status or claims experience of participants in a 
        certified standard health plan for the purpose of marketing a 
        supplemental services plan; and
            ``(3) providing a supplemental services plan by a managed 
        care plan to an individual not enrolled in such managed care 
        plan.

``SEC. 21143. STANDARDS FOR COST-SHARING PLANS.

    ``(a) Rules for Offering of Plans.--A cost-sharing plan may be 
offered to an individual only if--
            ``(1) the plan is offered by a certified standard health 
        plan with a standard benefits package in which the individual 
        is enrolled;
            ``(2) the certified standard health plan offers the cost-
        sharing plan to all individuals enrolled in the certified 
        standard health plan and only such individuals; and
            ``(3) the cost-sharing plan is offered only during an 
        enrollment period for the applicable certified standard health 
        plan.
Nothing in this subsection shall be construed to require an individual 
to obtain a cost-sharing plan or a certified standard health plan to 
provide a cost-sharing plan.
    ``(b) Equivalent Coverage for All Services.--Each cost-sharing plan 
shall provide coverage for items and services in the standard benefits 
package established under subtitle C to the same extent as the 
applicable certified standard health plan provides coverage for all 
items and services in such package.
    ``(c) Requirements for Pricing.--The price of any cost-sharing plan 
shall--
            ``(1) be the same for each individual to whom the plan is 
        offered; and
            ``(2) take into account any expected increase in 
        utilization resulting from the purchase of the plan by 
        individuals enrolled in the applicable certified standard 
        health plan.

``SEC. 21144. PROHIBITION ON OFFERING OF MULTIPLE PACKAGES TO 
              INDIVIDUAL.

    ``A supplemental health benefits plan may not be offered to an 
individual who is covered under another such plan, unless the 
individual's coverage under the new plan begins only after the 
individual's coverage under the original plan is terminated.

       ``PART IV--STANDARDS APPLICABLE TO LONG-TERM CARE POLICIES

``SEC. 21151. REGULATION OF SALES PRACTICES.

    ``(a) Duty of Good Faith and Fair Dealing.--
            ``(1) In general.--Each carrier that is selling or offering 
        for sale a long-term care policy has the duty of good faith and 
        fair dealing to the purchaser or potential purchaser of such a 
        policy.
            ``(2) Policy replacement form.--With respect to any 
        individual who elects to replace or effect a change in a long-
        term care policy, the carrier that is selling such policy shall 
        ensure that such individual completes a policy replacement form 
        developed as part of the reform standards. A copy of such form 
        shall be provided to such individual and additional copies 
        shall be delivered by the carrier to the old policy carrier and 
        kept on file by the new carrier for inspection by the 
        appropriate certifying authority.
            ``(3) Prohibited practices.--A carrier is considered to 
        have violated paragraph (1) if the carrier engages in any of 
        the following practices:
                    ``(A) Misleading representation.--Knowingly making 
                any misleading representation (including the inaccurate 
                completion of medical histories) or incomplete or 
                fraudulent comparison of any long-term care policy or 
                insurers for the purpose of inducing, or tending to 
                induce, any person to retain or effect a change with 
                respect to a long-term care policy.
                    ``(B) Undue pressure.--Employing any method of 
                marketing having the effect of, or intending to, induce 
                the purchase of long-term care policy through force, 
                fright, threat or undue pressure, whether explicit or 
                implicit.
                    ``(C) Misleading marketing.--Making use directly or 
                indirectly of any method of marketing which fails to 
                disclose in a conspicuous manner that a purpose of the 
                method of marketing is solicitation of insurance and 
                that contact will be made by an insurance agent or 
                insurance company.
                    ``(D) Others.--Engaging in such other practices 
                determined inappropriate under the reform standards.
    ``(b) Financial Needs Standards.--The reform standards shall 
include minimum financial needs standards (including both income and 
asset criteria) for the purpose of advising individuals as to the costs 
and amounts of insurance needed when considering the purchase of a 
long-term care policy.
    ``(c) Prohibition of Sale or Issuance to Medicaid Beneficiaries.--A 
carrier may not knowingly sell or issue a long-term care policy to an 
individual who is eligible for medical assistance under title XIX.
    ``(d) Prohibition of Sale or Issuance of Duplicate Service-Benefit 
Policies.--A carrier may not sell or issue a service-benefit long-term 
care policy to an individual--
            ``(1) knowing that the policy provides for coverage that 
        duplicates coverage already provided in another service-benefit 
        long-term care policy held by such individual (unless the 
        policy is intended to replace such other policy); or
            ``(2) for the benefit of an individual unless the 
        individual (or a representative of the individual) provides a 
        written statement to the effect that the coverage--
                    ``(A) does not duplicate other coverage in effect 
                under a service-benefit long-term care policy; or
                    ``(B) will replace another service-benefit long-
                term care policy.
In this subsection, the term `service-benefit long-term care policy' 
means a long-term care policy which provides for benefits based on the 
type and amount of services furnished.
    ``(e) Prohibition Based on Eligibility for Other Benefits.--A 
carrier may not sell or issue a long-term care policy that reduces, 
limits, or coordinates the benefits provided under the policy on the 
basis that the policyholder has or is eligible for other long-term care 
coverage or benefits.
    ``(f) Provision of Outline of Coverage.--No carrier may sell or 
offer for sale a long-term care policy without providing to every 
individual purchaser or potential purchaser (or representative) an 
outline of coverage that complies with the reform standards.
    ``(g) Agent Training and Certification Requirements.--The reform 
standards shall include requirements for long-term care insurance agent 
training and certification that--
            ``(1) specify requirements for training insurance agents 
        who desire to sell or offer for sale long-term care policies; 
        and
            ``(2) specify procedures for certifying and recertifying 
        agents who have completed such training and who are qualified 
        to sell or offer for sale long-term care policies.

``SEC. 21152. ADDITIONAL RESPONSIBILITIES FOR CARRIERS.

    ``(a) Refund of Premiums.--If an application for a long-term care 
policy (or for a certificate under a group long-term care policy) is 
denied or an applicant returns a policy or certificate within 30 days 
of the date of its issuance pursuant to subsection 21156, the carrier 
shall, not later than 30 days after the date of the denial or return, 
refund directly to the applicant, or in the case of an employer to 
whomever remits the premium, any premiums paid with respect to such a 
policy (or certificate). Any such refund shall not be made by delivery 
by the carrier.
    ``(b) Mailing of Policy.--If an application for a long-term care 
policy (or for a certificate under a group long-term care policy) is 
approved, the carrier shall provide each individual applicant the 
policy (or certificate) of insurance and outline of coverage not later 
than 30 days after the date of the approval.
    ``(c) Information on Denials of Claims.--If a claim under a long-
term care policy is denied, the carrier shall, within 15 days of the 
date of a written request by the policyholder or certificate holder (or 
representative)--
            ``(1) provide a written explanation of the reasons for the 
        denial;
            ``(2) make available all medical and patient records 
        directly relating to such denial; and
            ``(3) provide a written explanation of the manner in which 
        to appeal the denial.
Except as provided in subsection (e) of section 21154, no claim under 
such a policy may be denied on the basis of a failure to disclose a 
condition at the time of issuance of the policy if the application for 
the policy failed to request information respecting the condition.
    ``(d) Reporting of Information.--A carrier that issues one or more 
long-term care policies shall periodically (not less often than 
annually) report, in a form and in a manner specified by the reform 
standards, to the appropriate certifying authority for the State in 
which the policy is delivered, and shall make available to the 
Secretary, upon request, information in a form and manner so specified 
concerning--
            ``(1) the long-term care policies of the carrier that are 
        in force;
            ``(2) the most recent premiums for such policies and the 
        premiums imposed for such policies since the initial issuance 
        of such policies;
            ``(3) the lapse rate, replacement rate, and rescission 
        rates by policy; and
            ``(4) the claims denied (expressed as a number and as a 
        percentage of claims submitted) by policy.
For purposes of paragraph (3), there shall be included (but reported 
separately) data concerning lapses due to the death of the 
policyholder. For purposes of paragraph (4), there shall not be 
included as a claim any claim that is denied solely because of the 
failure to meet a deductible, waiting period, or exclusionary period.
    ``(e) Standards on Compensation for Sale of Policies.--
            ``(1) In general.--Until the Secretary, in consultation 
        with the NAIC, promulgates mandatory standards concerning 
        compensation for the sale of long-term care policies, a carrier 
        that issues one or more long-term care policies may provide a 
        commission or other compensation to an agent or other 
        representative for the sale of such a policy only if the first 
        year commission or other first year compensation to be paid 
        does not exceed the greater of--
                    ``(A) 200 percent of the commission or other 
                compensation paid for selling or servicing the policy 
                in the second year, or
                    ``(B) 50 percent of the premium paid on the first 
                year policy.
            ``(2) Subsequent years.--The commission or other 
        compensation provided for the sale of long-term care policies 
        to an individual during each of the years during the 5-year 
        period subsequent to the first year of the policy shall be the 
        same as that provided in the second subsequent year.
            ``(3) Limitation.--No carrier shall provide compensation to 
        its agents for the sale of a long-term care policy which 
        replaces an existing policy, and no agent shall receive 
        compensation for such sale greater than the renewal 
        compensation payable by the replacing carrier on renewal 
        policies.
            ``(4) Compensation defined.--As used in this subsection, 
        the term `compensation' includes pecuniary or nonpecuniary 
        remuneration of any kind relating to the sale or renewal of the 
        policy, including, but not limited to, deferred compensation, 
        bonuses, gifts, prizes, awards, and finders' fees.

``SEC. 21153. RENEWAL STANDARDS FOR ISSUANCE, AND BASIS FOR 
              CANCELLATION OF POLICIES.

    ``(a) In General.--No long-term care policy may be canceled or 
nonrenewed for any reason other than nonpayment of premium, material 
misrepresentation, or fraud.
    ``(b) Continuation and Conversion Rights for Group Policies.--
            ``(1) In general.--Each group long-term care policy shall 
        provide covered individuals with a basis for continuation or 
        conversion in accordance with this subsection.
            ``(2) Basis for continuation.--For purposes of paragraph 
        (1), a policy provides a basis for continuation of coverage if 
        the policy maintains coverage under the existing group policy 
        when such coverage would otherwise terminate and which is 
        subject only to the continued timely payment of premiums when 
        due. A group policy which restricts provision of benefits and 
        services to, or contains incentives to use certain providers or 
        facility, may provide continuation benefits which are 
        substantially equivalent to the benefits of the existing group 
        policy.
            ``(3) Basis for conversion.--For purposes of paragraph (1), 
        a policy provides a basis for conversion of coverage if the 
        policy entitles each individual--
                    ``(A) whose coverage under the group policy would 
                otherwise be terminated for any reason; and
                    ``(B) who has been continuously insured under the 
                policy (or group policy which was replaced) for at 
                least 6 months before the date of the termination;
        to issuance of a policy providing benefits not less than, 
        substantially equivalent to, or in excess of, those of the 
        policy being terminated, without evidence of insurability.
            ``(4) Treatment of substantial equivalence.--In determining 
        under this subsection whether benefits are substantially 
        equivalent, consideration should be given to the difference 
        between managed care and non-managed care plans.
            ``(5) Group replacement of policies.--If a group long-term 
        care policy is replaced by another long-term care policy 
        purchased by the same policyholder, the succeeding issuer shall 
        offer coverage to all persons covered under the old group 
        policy on its date of termination. Coverage under the new group 
        policy shall not result in any exclusion for preexisting 
        conditions that would have been covered under the group policy 
        being replaced.
    ``(c) Standards for Issuance.--
            ``(1) In general.--
                    ``(A) Guarantee.--A carrier that sells or issues 
                long-term care policies shall guarantee that such 
                policies shall be sold or issued to an individual, or 
                eligible individual in the case of a group plan, if 
                such individual meets the minimum medical underwriting 
                requirements of such policy.
                    ``(B) Premium for converted policy.--If the group 
                policy from which conversion is made replaced previous 
                group coverage, the premium for the converted policy 
                shall be calculated on the basis of the insured's age 
                at inception of coverage under the group policy.
            ``(2) Upgrade for current policies.--The reform standards 
        shall specify standards, including those providing guidance on 
        medical underwriting and age rating, with respect to the access 
        of individuals to policies offering upgraded benefits.
            ``(3) Rate stabilization.--The reform standards shall 
        specify standards for premium rate stabilization.
    ``(d) Effect of Incapacitation.--
            ``(1) In general.--
                    ``(A) Prohibition.--Except as provided in paragraph 
                (2), a long-term care policy in effect as of the 
                effective date of the reform standards may not be 
                canceled for nonpayment if the policy holder is 
                determined by a long-term care provider, physician or 
                other health care provider (independent of the issuer 
                of the policy), to be cognitively or mentally 
                incapacitated so as to not make payments in a timely 
                manner.
                    ``(B) Reinstatement.--A long-term care policy shall 
                include a provision that provides for the reinstatement 
                of such coverage, in the event of lapse, if the carrier 
                is provided with proof of cognitive or mental 
                incapacitation. Such reinstatement option shall remain 
                available for a period of not less than 5 months after 
                termination and shall allow for the collection of past 
                due premium.
            ``(2) Permitted cancellation.--A long-term care policy may 
        be canceled under paragraph (1) for nonpayment if--
                    ``(A) the period of such nonpayment is in excess of 
                30 days; and
                    ``(B) notice of intent to cancel is provided to the 
                policyholder or designated representative of the policy 
                holder not less than 30 days prior to such 
                cancellation, except that notice may not be provided 
                until the expiration of 30 days after a premium is due 
                and unpaid.
        Notice under this paragraph shall be deemed to have been given 
        as of 5 days after the mailing date.

``SEC. 21154. BENEFIT STANDARDS.

    ``(a) Use of Standard Definitions and Terminology, Uniform Format, 
and Standard Benefits.--Pursuant to the reform standards, each long-
term care policy shall, with respect to services, providers or 
facilities--
            ``(1) use uniform language and definitions, except that 
        such language and definitions may take into account the 
        differences between States with respect to definitions and 
        terminology used for long-term care services and providers; and
            ``(2) use a uniform format for presenting the outline of 
        coverage under such a policy.
    ``(b) Disclosure.--
            ``(1) Outline of coverage.--
                    ``(A) Requirement.--Each carrier that sells or 
                offers for sale a long-term care policy shall provide 
                in a uniform format an outline of coverage to each 
                individual policyholder under such policy that meets 
                the reform standards and complies with the requirements 
                of subparagraph (B).
                    ``(B) Contents.--The outline of coverage for each 
                long-term care policy shall substantially and 
                accurately reflect the contents of the policy or the 
                master policy and shall include at least the following:
                            ``(i) A description of the benefits and 
                        coverage under the policy.
                            ``(ii) A statement of the exclusions, 
                        reductions, and limitations contained in the 
                        policy.
                            ``(iii) A statement of the terms under 
                        which the policy (or certificate) may be 
                        continued in force or discontinued, the terms 
                        for continuation or conversion, and any 
                        reservation in the policy of a right to change 
                        premiums.
                            ``(iv) Consumer protection information, 
                        including the manner in which to file a claim 
                        and to register complaints.
                            ``(v) A statement, in bold face type on the 
                        face of the document in language that is 
                        understandable to an average individual, that 
                        the outline of coverage is a summary only and 
                        not a contract of insurance, and that the 
                        policy (or master policy) contains the 
                        contractual provisions that govern.
                            ``(vi) A description of the terms, 
                        specified in section 21156, under which a 
                        policy or certificate may be returned and 
                        premium refunded.
                            ``(vii) Information on--
                                    ``(I) national average costs for 
                                nursing facility and home health care 
                                and information (in graph form) on the 
                                relationship of the value of the 
                                benefits provided under the policy to 
                                such national average costs and State 
                                average costs; and
                                    ``(II) other public and private 
                                long-term care products and long-term 
                                care programs made available by the 
                                Federal Government or by a State 
                                government.
                            ``(viii) A statement of the percentage 
                        limit on annual premium increases that is 
                        provided under the policy pursuant to this 
                        section.
            ``(2) Certificates.--A certificate issued pursuant to a 
        group long-term care policy shall include--
                    ``(A) a description of the principal benefits and 
                coverage provided in the policy;
                    ``(B) a statement of the principal exclusions, 
                reductions, and limitations contained in the policy; 
                and
                    ``(C) a statement that the group master policy 
                determines governing contractual provisions.
            ``(3) Long-term care as part of life insurance.--In the 
        case of a long-term care policy issued as a part of, or a rider 
        on, a life insurance policy, at the time of policy delivery 
        there shall be provided a policy summary that includes--
                    ``(A) an explanation of how the long-term care 
                benefits interact with other components of the policy 
                (including deductions from death benefits);
                    ``(B) an illustration of the amount of benefits, 
                the length of benefits, and the guaranteed lifetime 
                benefits (if any) for each covered person; and
                    ``(C) any exclusions, reductions, and limitations 
                on benefits of long-term care.
    ``(c) Limiting Conditions on Benefits; Minimum Benefits.--
            ``(1) In general.--A long-term care policy may not 
        condition or limit eligibility--
                    ``(A) for benefits for a type of services to the 
                need for or receipt of any other services;
                    ``(B) for any benefit on the medical necessity for 
                such benefit;
                    ``(C) for benefits furnished by licensed or 
                certified providers in compliance with conditions which 
                are in addition to those required for licensure or 
                certification under State law, or if no State licensure 
                or certification laws exists, to those developed by the 
                Secretary, in consultation with the NAIC; or
                    ``(D) for residential care (if covered under the 
                policy) only--
                            ``(i) to care provided in facilities which 
                        provide a higher level of care; or
                            ``(ii) to care provided in facilities which 
                        provide for 24-hour or other nursing care not 
                        required in order to be licensed by the State.
            ``(2) Home health care or community-based services.--If a 
        long-term care policy provides benefits for the payment of 
        specified home health care or community-based services, the 
        policy--
                    ``(A) may not limit such benefits to services 
                provided by registered nurses or licensed practical 
                nurses;
                    ``(B) may not require benefits for such services to 
                be provided by a nurse or therapist that can be 
                provided by a home health aide or a home care worker 
                who is licensed or certified;
                    ``(C) may not limit such benefits to services 
                provided by agencies or providers certified under title 
                XVIII of the Social Security Act; and
                    ``(D) shall provide, at a minimum, benefits for 
                personal care services (including home health aide) and 
                adult day care.
            ``(3) Nursing facility services.--If a long-term care 
        policy provides benefits for the payment of specified nursing 
        facility services, the policy shall provide such benefits with 
        respect to all nursing facilities in the State. Except as 
        provided in the reform standards establishing uniform language 
        and definitions under section 21154(a)(1)), the term `nursing 
        facilities' has the meaning given such term by section 1919(a).
            ``(4) Per diem policies.--
                    ``(A) Definition.--For purposes of this part, the 
                term `per diem long-term care policy' means a long-term 
                care policy (or certificate under a group long-term 
                care policy) that provides for benefit payments on a 
                periodic basis due to cognitive impairment or loss of 
                functional capacity without regard to the expenses 
                incurred or services rendered during the period to 
                which the payments relate.
                    ``(B) Limitation.--No per diem long-term care 
                policy (or certificate) may condition, limit or 
                otherwise exclude benefit payments based on the receipt 
                of any type services from any type providers of long-
                term care service providers.
    ``(d) Prohibition of Discrimination.--A long-term care policy may 
not, with respect to benefits under the policy, treat an individual 
with Alzheimer's disease, with any related progressive degenerative 
dementia of an organic origin, with any organic or inorganic mental 
illness, or with mental retardation or any other cognitive or mental 
impairment, differently from an individual having a functional 
impairment for which such benefits may be made available.
    ``(e) Limitation on Use of Preexisting Condition Limits.--
            ``(1) Initial issuance.--
                    ``(A) In general.--Subject to subparagraph (B), a 
                long-term care policy may not exclude or condition 
                benefits based on a medical condition for which the 
                policyholder received treatment or was otherwise 
                diagnosed before the issuance of the policy.
                    ``(B) 6-month limit.--A long-term care policy or 
                certificate issued under this part may impose 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 policy 
                or certificate with respect to an individual if--
                            ``(i) a condition that was diagnosed or 
                        treated during the 6-month period ending on the 
                        day before the first date of coverage under the 
                        policy or certificate; and
                            ``(ii) the limitation or exclusion extends 
                        for a period not more than 6 months after the 
                        date of coverage under the policy or 
                        certificate.
            ``(2) Replacement policies.--If a long-term care policy 
        replaces another long-term care policy, the issuer of the 
        replacing policy shall waive any time periods applicable to 
        preexisting conditions, waiting periods, elimination periods, 
        and probationary periods in the new policy for similar benefits 
        to the extent such time was spent under the original policy.
    ``(f) Eligibility for Benefits.--
            ``(1) Long-term care policies.--Each long-term care policy 
        shall--
                    ``(A) describe the level of benefits available 
                under the policy; and
                    ``(B) specify in clear, understandable terms, the 
                level (or levels) of physical, cognitive, or mental 
                impairment required in order to receive benefits under 
                the policy.
            ``(2) Functional assessment.--In order to be determined 
        eligible for benefits under any long-term care policy, each 
        claimant shall have a professional functional assessment of the 
        claimant's functional or cognitive abilities. Such initial 
        assessment shall be conducted by an individual or entity, 
        meeting the qualifications established by the Secretary. The 
        individual or entity conducting such assessment may not 
        control, or be controlled by, the issuer of the policy.
            ``(3) Claims review.--Except as provided in paragraph (4), 
        each long-term care policy shall be subject to final claims 
        review by the carrier pursuant to the terms of the long-term 
        care policy.
            ``(4) Appeals process.--
                    ``(A) In general.--Each long-term care policy shall 
                provide for a timely and independent appeals process, 
                meeting the requirements of sections 21802 through 
                21815, for individuals who dispute the results of the 
                claims review conducted under paragraph (3) or the 
                policyholder's functional assessment conducted under 
                paragraph (2).
                    ``(B) Independent assessment.--An appeals process 
                under this paragraph shall include, at the request of 
                the claimant, an independent assessment of the 
                claimant's functional or cognitive abilities.
                    ``(C) Conduct.--An independent assessment under 
                subparagraph (B) shall be conducted by an individual or 
                entity meeting the qualifications established by the 
                Secretary to assure the professional competence and 
                credibility of such individual or entity and any 
                applicable State licensure and certification 
                requirements and may not be conducted--
                            ``(i) by an individual who has a direct or 
                        indirect significant or controlling interest 
                        in, or direct affiliation or relationship with, 
                        the issuer of the policy;
                            ``(ii) by an entity that provides services 
                        to the policyholder or certificate holder for 
                        which benefits are available under the long-
                        term care policy; or
                            ``(iii) by an individual or entity 
                        controlled by the issuer of the policy.
            ``(5) Control defined.--For purposes of paragraphs (2) and 
        (4), the term `control' means the direct or indirect possession 
        of the power to direct the management and policies of a person. 
        Control is presumed to exist if any person directly or 
        indirectly owns, controls, holds with the power to vote, or 
        holds proxies representing at least 10 percent of the voting 
        securities of another person.
    ``(g) Inflation Protection.--
            ``(1) Option to purchase.--A carrier may not offer a long-
        term care policy unless the carrier also offers to the proposed 
        policyholder, including each group policyholder, the option to 
        purchase a long-term care policy that provides for increases in 
        benefit levels, with benefit maximums or reasonable durations 
        that are meaningful, to account for reasonably anticipated 
        increases in the costs of long-term care services covered by 
        the policy. A carrier may not offer to a policyholder an 
        inflation protection feature that is less favorable to the 
        policyholder than one of the following:
                    ``(A) With respect to policies that provide for 
                automatic periodic increases in benefits, the policy 
                provides for an annual increase in benefits in a manner 
                so that such increases are computed annually at a rate 
                of not less than 5 percent.
                    ``(B) With respect to policies that provide for 
                periodic opportunities to elect an increase in 
                benefits, the policy guarantees that the insured 
                individual will have the right to periodically increase 
                the benefit levels under the policy without providing 
                evidence of insurability or health status so long as 
                the option for the previous period was not declined. 
                The amount of any such additional benefit may not be 
                less than the difference between--
                            ``(i) the existing policy benefit; and
                            ``(ii) such existing benefit compounded 
                        annually at a rate of at least 5 percent for 
                        the period beginning on the date on which the 
                        existing benefit is purchased and extending 
                        until the year in which the offer of increase 
                        is made.
                    ``(C) With respect to service-benefit long-term 
                care policies, the policy covers a specified percentage 
                of the actual or reasonable charges and does not 
                include a maximum specified indemnity amount or limit.
            ``(2) Exception.--The requirements of paragraph (1) shall 
        not apply to life insurance policies or riders containing 
        accelerated long-term care benefits.
            ``(3) Required information.--Carriers shall include the 
        following information in or together with the outline of 
        coverage provided under this part:
                    ``(A) A comparison (shown as a graph) of the 
                benefit levels of a policy that increases benefits over 
                the policy period with a policy that does not increase 
                benefits. Such comparison shall show benefit levels 
                over not less than a 20-year period.
                    ``(B) Any expected premium increases or additional 
                premiums required to pay for any automatic or optional 
                benefit increases, whether the individual who purchases 
                the policy obtains the inflation protection initially 
                or whether such individual delays purchasing such 
                protection until a future time.
            ``(4) Continuation of protection.--Benefit increases under 
        a policy described in paragraph (1) shall continue without 
        regard to an insured's age, claim status or claim history, or 
        the length of time the individual has been insured under the 
        policy.
            ``(5) Constant premium.--A policy described in paragraph 
        (1) that provides for automatic benefit increases shall include 
        an offer of a premium that the carrier expects to remain 
        constant. Such offer shall disclose in a conspicuous manner 
        that the premium may change in the future unless the premium is 
        guaranteed to remain constant.
            ``(6) Rejection.--Inflation protection under this 
        subsection shall be included in a long-term care policy unless 
        a carrier obtains a written rejection of such protection signed 
        by the policyholder.

``SEC. 21155. NONFORFEITURE.

    ``(a) In General.--Each long-term care policy (or certificate) 
shall provide that if the policy lapses after the policy has been in 
effect for a minimum period as specified under the reform standards, 
the policy will provide, without payment of any additional premiums, 
nonforfeiture benefits as determined appropriate by such standards.
    ``(b) Establishment of Standards.--The reform standards shall 
provide that the percentage or amount of benefits under subsection (a) 
shall increase based upon the policyholder's equity in the policy.

``SEC. 21156. LIMIT OF PERIOD OF CONTESTABILITY AND RIGHT TO RETURN.

    ``(a) Contestability.--A carrier may not cancel or renew a long-
term care policy or deny a claim under the policy based on fraud or 
intentional misrepresentation relating to the issuance of the policy 
unless notice of such fraud or misrepresentation is provided within a 
time period to be determined by the reform standards.
    ``(b) Right To Return.--Each applicant for a long-term care policy 
shall have the right to return the policy (or certificates) within 30 
days of the date of its delivery (and to have the premium refunded) if, 
after examination of the policy or certificate, the applicant is not 
satisfied for any reason.

``SEC. 21157. CIVIL MONEY PENALTY AND PRIVATE ACTIONS.

    ``(a) Carrier.--Any carrier that sells, or offers for sale, or 
issues a long-term care policy and that--
            ``(1) violates any sales practice under section 21151;
            ``(2) fails to make a refund in accordance with section 
        21152(a);
            ``(3) fails to transmit a policy in accordance with section 
        21152(b);
            ``(4) provides a commission or compensation in violation of 
        section 21152(e);
            ``(5) fails to provide an outline of coverage in violation 
        of section 21154(b)(1); or
            ``(6) issues a policy without obtaining certain information 
        in violation of section 21154(f);
is subject to a civil money penalty of not to exceed $25,000 for each 
such violation.
    ``(b) Agents.--Any agent that sells or offers for sale a long-term 
care policy and that--
            ``(1) violates any sales practice under section 21151;
            ``(2) fails to make a refund in accordance with section 
        21152(a);
            ``(3) fails to transmit a policy in accordance with section 
        21152(b);
            ``(4) fails to provide an outline of coverage in violation 
        of section 21154(b)(1); or
            ``(5) issues a policy without obtaining certain information 
        in violation of section 21154(f);
is subject to a civil money penalty of not to exceed $15,000 for each 
such violation.
    ``(c) Effect on State Law.--Nothing in this section shall be 
construed as preempting or otherwise limiting stricter penalties that 
may be imposed by a State for the types of conduct described in this 
section.
    ``(d) Private Actions.--An individual may commence a civil action 
in an appropriate State or United States district court to enforce the 
provisions of this title with respect to long-term care policies and 
may be awarded appropriate relief and reasonable attorney's fees.

``SEC. 21158. LONG-TERM CARE POLICY DEFINED.

    ``(a) In General.--As used in this part, the term `long-term care 
policy' means any insurance policy, rider, or certificate advertised, 
marketed, offered, or designed to provide coverage for not less than 12 
consecutive months for each covered person on an expense incurred, 
indemnity prepaid or other basis, for one or more necessary diagnostic, 
preventive, therapeutic, rehabilitative, maintenance or personal care 
services, provided in a setting other than an acute care unit of a 
hospital. Such term includes--
            ``(1) group and individual annuities and life insurance 
        policies, riders, or certificates that provide directly, or 
        that supplement, long-term care insurance; and
            ``(2) a policy, rider, or certificates that provides for 
        payment of benefits based on cognitive impairment or the loss 
        of functional capacity.
    ``(b) Issuance.--
            ``(1) In general.--Long-term care policies may be issued by 
        any carrier.
            ``(2) Carrier.--As used in this part, the term `carrier' 
        means--
                    ``(A) an insurer;
                    ``(B) a fraternal benefit society;
                    ``(C) a nonprofit health, hospital, or medical 
                service corporation;
                    ``(D) a prepaid health plan;
                    ``(E) a health maintenance organization; or
                    ``(F) any similar organization to the extent such 
                organization is otherwise authorized to issue life or 
                health insurance.
    ``(c) Policies Excluded.--The term `long-term care policy' shall 
not include any insurance policy, rider, or certificate that is offered 
primarily to provide basic medicare supplement coverage, basic hospital 
expense coverage, basic medical-surgical expense coverage, hospital 
confinement indemnity coverage, major medical expense coverage, 
disability income or related asset-protection coverage, accident only 
coverage, specified disease or specified accident coverage, or limited 
benefit health coverage. With respect to life insurance, such term 
shall not include life insurance policies, riders, or certificates--
            ``(1) that accelerate the death benefit specifically for 
        one or more of the qualifying events of terminal illness, 
        medical conditions requiring extraordinary medical 
        intervention, or permanent institutional confinement,
            ``(2) that provide the option of a lump-sum payment for 
        those benefits, or
            ``(3) with respect to which neither the benefits nor the 
        eligibility for the benefits is conditioned upon the receipt of 
        long-term care.
    ``(d) Applications.--Notwithstanding any other provision of this 
part, this part shall apply to any product advertised, marketed, or 
offered as a long-term insurance policy, rider or certificate.

                ``Subtitle C--Benefits and Cost-Sharing

                  ``PART I--STANDARD BENEFITS PACKAGES

``SEC. 21201. GENERAL DESCRIPTION OF STANDARD BENEFITS PACKAGES.

    ``(a) Standard Benefits Package.--For purposes of this title, a 
standard benefits package is a benefits package that--
            ``(1)(A) provides all of the items and services under the 
        categories of health care items and services described in 
        section 21202 as determined by the Board under section 
        21213(b)(4); and
            ``(B) provides for a cost-sharing schedule described in 
        section 21203(a)(1); and
            ``(2) has an actuarial value that is equivalent to the 
        actuarial value of the benefits package provided by the Blue 
        Cross/Blue Shield Standard Option under the Federal Employees 
        Health Benefits Program, adjusted for an average population and 
        adjusted for the particular cost-sharing schedule provided for 
        in the package (as determined by the National Health Benefits 
        Board established under section 21211 (referred to in this part 
        as the `Board')).
    ``(b) Alternative Standard Benefits Package.--For purposes of this 
title, an alternative standard benefits package is a benefits package 
that--
            ``(1)(A) provides such items and services under the 
        categories of health care items and services described in 
        section 21202 as determined by the Board under section 
        21213(b)(5); and
                    ``(B) the cost-sharing schedule described in 
                section 21203(a)(2); and
            ``(2) has an actuarial value that is less than the 
        actuarial value of the benefits package provided by the Blue 
        Cross/Blue Shield Standard Option under the Federal Employees 
        Health Benefits Program, adjusted for an average population (as 
        determined by the Board).

``SEC. 21202. DESCRIPTION OF CATEGORIES OF ITEMS AND SERVICES.

    ``(a) In General.--The categories of health care items and services 
described in this section are the following:
            ``(1) Inpatient and outpatient care, including hospital and 
        health professional services (as defined in subsection (c)).
            ``(2) Emergency services, including appropriate transport 
        services.
            ``(3) Clinical preventive services, including services for 
        high risk populations, immunizations, tests, and clinician 
        visits.
            ``(4) Mental illness and substance abuse services.
            ``(5) Family planning services and services for pregnant 
        women.
            ``(6) Prescription drugs and biologicals.
            ``(7) Hospice care services.
            ``(8) Home health care services.
            ``(9) Outpatient laboratory, radiology, and diagnostic 
        services and medical equipment.
            ``(10) Outpatient rehabilitation services.
            ``(11) Vision care, dental care, and hearing aids for 
        individuals under 22 years of age.
            ``(12) Patient care costs associated with investigational 
        treatments (excluding the direct costs of an investigational 
        treatment) that are part of a peer-reviewed and approved 
        research program (as defined by the Secretary) or research 
        trials approved by the Secretary, the Directors of the National 
        Institutes of Health, the Commissioner of the Food and Drug 
        Administration, the Secretary of Veterans Affairs, the 
        Secretary of Defense, or a qualified nongovernmental research 
        entity as defined in guidelines of the National Institutes of 
        Health, including guidelines for cancer center support grants 
        designated by the National Cancer Institute.
    ``(b) Limitation.--
            ``(1) In general.--Items and services under the categories 
        described in subsection (a) shall be furnished to health plan 
        enrollees only when medically necessary or appropriate.
            ``(2) Clinical preventive services.--For purposes of 
        paragraph (1), any clinical preventive service furnished in 
        accordance with a periodicity schedule established by the Board 
        under section 21213(b)(2)(B) shall be medically necessary or 
        appropriate.
            ``(3) Emergency services.--For purposes of paragraph (1), 
        any emergency service furnished to an individual with an 
        emergency medical condition (as defined in section 1867(e)(1)) 
        shall be medically necessary or appropriate.
    ``(c) Definition of Health Professional Services.--For purposes of 
this subtitle, the term `health professional services' means 
professional services that are lawfully provided by a physician or 
another health professional who is legally authorized to provide such 
services in the State in which the services are provided.
    ``(d) Definition of Medically Necessary or Appropriate.--For 
purposes of this subtitle, an item or service is medically necessary or 
appropriate--
            ``(1) with respect to an enrollee who is 22 years of age or 
        older, if the item or service is--
                    ``(A) for the treatment or diagnosis of a health 
                condition;
                    ``(B) generally regarded as being safe and 
                effective;
                    ``(C) indicated for the enrollee; and
                    ``(D) intended to maintain or improve the 
                biological, psychological, or functional condition of 
                the enrollee or to prevent or mitigate an adverse 
                health outcome or limitation in functional capacity for 
                the enrollee; and
            ``(2) with respect to an enrollee under 22 years of age, if 
        the item or service--
                    ``(A) is appropriate for the age and health status 
                of the enrollee;
                    ``(B) will prevent or ameliorate the effects of a 
                condition, illness, injury, or disorder;
                    ``(C) will aid the overall physical and mental 
                growth and development of the enrollee; or
                    ``(D) will assist in achieving or maintaining 
                maximum functional capacity in performing daily 
                activities.

``SEC. 21203. COST-SHARING.

    ``(a) In General.--
            ``(1) Standard benefits package.--Except as provided in 
        paragraph (3), each standard benefits package shall include a 
        cost-sharing schedule developed by the Board for such package 
        under section 21213(c).
            ``(2) Alternative standard benefits package.--Except as 
        provided in paragraph (3), each alternative standard benefits 
        package shall include the cost-sharing schedule developed by 
        the Board for such package under section 21213(c).
            ``(3) Increases in out-of-pocket limits based on health 
        spending.--In the case of any calendar year for which an 
        increase in the out-of-pocket limits under any cost-sharing 
        schedule developed by the Board for a benefits package is 
        required under section 801 of the Health Security Act, the out-
        of-pocket limits under such schedule shall be as specified in 
        the Executive Order issued pursuant to section 801(d) of such 
        Act.
    ``(b) Deductibles, Cost-Sharing, and Out-of-Pocket Limits on Cost-
Sharing.--
            ``(1) Application on an annual basis.--The deductibles and 
        out-of-pocket limits on cost-sharing for a year under the 
        schedules referred to in subsection (a) shall be applied based 
        upon expenses incurred for items and services furnished in the 
        year.
            ``(2) Individual and family general deductibles.--
                    ``(A) Individual.--Subject to subparagraph (B), 
                with respect to an individual enrolled under a health 
                plan (regardless of the class of enrollment), any 
                individual general deductible in the cost-sharing 
                schedule offered by the plan represents the amount of 
                countable expenses (as defined in subparagraph (C)) 
                that the individual may be required to incur in a year 
                before the plan incurs liability for expenses for such 
                items and services furnished to the individual.
                    ``(B) Family.--In the case of an individual 
                enrolled under a health plan under a family class of 
                enrollment (as defined in section 
                21113(b)(2)(B)(iii)(I)), the individual general 
                deductible under subparagraph (A) shall not apply to 
                countable expenses incurred by the individual or any 
                member of the individual's family in a year at such 
                time as the family has incurred, in the aggregate, 
                countable expenses in the amount of the family general 
                deductible for the year.
                    ``(C) Countable expense.--In this paragraph, the 
                term `countable expense' means, with respect to an 
                individual for a year, an expense for an item or 
                service covered by the standard benefit package that is 
                subject to the general deductible and for which, but 
                for such deductible and any other cost-sharing under 
                this subtitle, a health plan is liable for payment. The 
                amount of countable expenses for an individual for a 
                year under this paragraph shall not exceed the 
                individual general deductible for the year.
            ``(3) Coinsurance and copayments.--After a general or 
        separate deductible that applies to an item or service covered 
        by the standard benefit package has been satisfied for a year, 
        subject to paragraph (4), coinsurance and copayments are 
        amounts (expressed as a percentage of an amount otherwise 
        payable or as a dollar amount, respectively) that an individual 
        may be required to pay with respect to the item or service.
            ``(4) Individual and family limits on cost-sharing.--
                    ``(A) Individual.--Subject to subparagraph (B), 
                with respect to an individual enrolled under a health 
                plan (regardless of the class of enrollment), the 
                individual out-of-pocket limit on cost-sharing in the 
                cost-sharing schedule offered by the plan represents 
                the amount of expenses that the individual may be 
                required to incur under the plan in a year because of a 
                general deductible, separate deductibles, copayments, 
                and coinsurance before the plan may no longer impose 
                any cost-sharing with respect to items or services 
                covered by the standard benefit package that are 
                provided to the individual.
                    ``(B) Family.--In the case of an individual 
                enrolled under a health plan under a family class of 
                enrollment (as defined in section 
                21113(b)(2)(B)(iii)(I)), the family out-of-pocket limit 
                on cost-sharing in the cost-sharing schedule offered by 
                the plan represents the amount of expenses that members 
                of the individual's family, in the aggregate, may be 
                required to incur under the plan in a year because of a 
                general deductible, separate deductibles, copayments, 
                and coinsurance before the plan may no longer impose 
                any cost-sharing with respect to items or services 
                covered by the standard benefit package that are 
                provided to any member of the individual's family.

               ``PART II--NATIONAL HEALTH BENEFITS BOARD

``SEC. 21211. CREATION OF NATIONAL HEALTH BENEFITS BOARD; MEMBERSHIP.

    ``(a) In General.--There is hereby established in the Department of 
Health and Human Services a National Health Benefits Board.
    ``(b) Composition.--The Board is composed of 7 members appointed by 
the President, by and with the advice and consent of the Senate. No 
more than 4 members of the Board may be affiliated with the same 
political party. Members shall be appointed not later than 90 days 
after the date of the enactment of this title.
    ``(c) Chair.--The President shall designate one of the members of 
the Board as chair.
    ``(d) Terms.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        term of each member of the Board is 6 years and begins when the 
        term of the predecessor of that member ends.
            ``(2) Initial terms.--The initial terms of the members of 
        the Board first taking office after the date of the enactment 
        of this title, shall expire as designated by the President, two 
        at the end of two years, two at the end of four years, and 
        three at the end of six years.
            ``(3) Continuation in office.--Upon the expiration of a 
        term of office, a member shall continue to serve until a 
        successor is appointed and qualified.
    ``(e) Vacancies.--
            ``(1) In general.--If a vacancy occurs, other than by 
        expiration of term, a successor shall be appointed by the 
        President, by and with the consent of the Senate, to fill such 
        vacancy. The appointment shall be for the remainder of the term 
        of the predecessor.
            ``(2) No impairment of function.--A vacancy in the 
        membership of the Board does not impair the authority of the 
        remaining members to exercise all of the powers of the Board.
            ``(3) Acting chair.--The Board may designate a member to 
        act as chair during any period in which there is no chair 
        designated by the President.
    ``(f) Meetings; Quorum.--
            ``(1) Meetings.--The chair shall preside at meetings of the 
        Board, and in the absence of the chair, the Board shall elect a 
        member to act as chair pro tempore.
            ``(2) Quorum.--Four members of the Board shall constitute a 
        quorum thereof.

``SEC. 21212. QUALIFICATIONS OF BOARD MEMBERS.

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

``SEC. 21213. GENERAL DUTIES AND RESPONSIBILITIES.

    ``(a) Criteria for Determining Medical Necessity or 
Appropriateness.--The Board shall define the standards to be used by a 
health plan in determining whether an item or service under the 
categories of health care items and services described in section 21202 
is medically necessary or appropriate for an enrollee in the plan.
    ``(b) Clarification and Refinement of Items and Services.--
            ``(1) In general.--The Board shall promulgate such 
        regulations or establish such guidelines as may be necessary to 
        clarify and refine the items and services under the categories 
        of health care items and services described in section 21202 in 
        accordance with standards of medical necessity or 
        appropriateness. In performing its duties under the preceding 
        sentence, the Board shall--
                    ``(A) develop interim coverage decisions in limited 
                circumstances;
                    ``(B) clarify and refine the items and services in 
                the categories of health care items and services in a 
                manner that prevents adverse risk selection;
                    ``(C) not specify types of providers;
                    ``(D) not specify particular procedures or 
                treatments or classes of procedures or treatments; and
                    ``(E) give priority to--
                            ``(i)(I) parity for mental illness and 
                        substance abuse services with other medical 
                        services using the standards of medical 
                        necessity or appropriateness for the enrollee 
                        receiving the services in order to ensure that 
                        arbitrary day or visit limits or cost-sharing 
                        requirements applied to mental illness and 
                        substance abuse services that are not different 
                        from those applied to medical health services, 
                        and
                            ``(II) encouraging the use of outpatient 
                        treatments in delivering mental illness and 
                        substance abuse services to the greatest extent 
                        possible;
                            ``(ii) the needs of children and vulnerable 
                        populations (including rural and underserved 
                        individuals); and
                            ``(iii) improving the health of individuals 
                        through prevention.
            ``(2) Schedules for items and services.--
                    ``(A) In general.--The Board shall establish and 
                update periodicity schedules for the items and services 
                in the categories of health care items and services 
                described in section 21202.
                    ``(B) Special rule with respect to clinical 
                preventive services.--With respect to clinical 
                preventive services, the Board--
                            ``(i) shall specify and define specific 
                        items and services as clinical preventive 
                        services for high risk populations and shall 
                        establish and update a periodicity schedule for 
                        such items and services;
                            ``(ii) shall establish and update the 
                        periodicity schedules for the age-appropriate 
                        immunizations, tests, and clinician visits;
                            ``(iii) shall establish rules with respect 
                        to coverage for an immunization, test, or 
                        clinician visit that is not provided to an 
                        individual during the age range for such 
                        immunization, test, or clinician visit that is 
                        specified under clause (ii); and
                            ``(iv) may otherwise modify clinical 
                        preventive services taking into account age and 
                        other risk factors.
            ``(3) Investigational treatments.--The Board shall refine 
        policies regarding coverage of patient care costs associated 
        with investigational treatments that are part of approved 
        research trials.
            ``(4) Items and services provided by standard benefits 
        package.--The regulations promulgated by the Board under this 
        subsection shall provide that each standard benefits package 
        shall provide for the same items and services in the categories 
        of health care items and services described in section 21202, 
        as clarified and refined under this subsection, and provide for 
        such items and services in the same amount, duration, or scope.
            ``(5) Items and services provided by alternative standard 
        benefits package.--The regulations promulgated by the Board 
        under this subsection shall specify the items and services in 
        the categories of health care items and services described in 
        section 21202 that an alternative standard benefits package 
        must provide.
    ``(c) Cost-Sharing.--The Board shall establish cost-sharing 
schedules to be provided by a standard benefits package or an 
alternative standard benefits package. In establishing such cost-
sharing schedules, the Board shall meet the following requirements:
            ``(1) Annual basis.--The Board shall establish cost sharing 
        schedules on an annual basis.
            ``(2) Out-of-pocket limits.--Each cost sharing schedule 
        developed by the Board shall include out-of-pocket limits.
            ``(3) Lifetime limits.--No cost-sharing schedule 
        established by the Board may include lifetime limits.
            ``(4) Standard benefits package.--In establishing cost 
        sharing schedules for standard benefits packages, the Board 
        shall ensure that the schedules permit a variety of delivery 
        systems. A standard benefit package that provides for the cost 
        sharing schedule established by the Board under this paragraph 
        that has the lowest actuarial value relative to the actuarial 
        values of all other cost sharing schedules established by the 
        Board under this paragraph, shall have an actuarial value that 
        is equivalent to the actuarial value of the benefits package 
        provided by the Blue Cross/Blue Shield Standard Option under 
        the Federal Employees Health Benefits Program, adjusted for an 
        average population (as determined by the Board).
            ``(5) Alternative standard benefits package.--The Board 
        shall establish only one cost sharing schedule for the 
        alternative standard benefits package. Such cost sharing 
        schedule shall provide for a higher deductible than any 
        deductible under a schedule established by the Board for a 
        standard benefits package.
            ``(6) Clinical preventive services.--No cost sharing 
        schedule established by the Board may include cost sharing for 
        clinical preventive services.
            ``(7) Cost sharing rules.--The cost sharing schedules 
        developed under this subsection shall be consistent with the 
        provisions of section 21203(b).
    ``(d) Cost-Sharing Assistance.--
            ``(1) In general.--For purposes of providing cost-sharing 
        assistance under section 1953, the Board shall determine an 
        appropriate reduction in the cost-sharing applicable to cost-
        sharing subsidy eligible individuals (as defined in section 
        1953(a)(2)) under certified standard health plans.
            ``(2) Considerations.--The Board shall assure that 
        reductions in cost-sharing are determined under paragraph (1) 
        in a manner that reflects--
                    ``(A) the extent to which an individual's family 
                income is below the poverty line (as defined in section 
                1958(5)); and
                    ``(B) whether an individual may enroll in a low-
                cost-sharing plan.
    ``(e) Legislative Recommendations.--
            ``(1) In general.--The Board may submit recommendations to 
        Congress for such modifications to the provisions of this 
        subtitle as the Board determines appropriate in accordance with 
        section 21217(a)(1).
            ``(2) Consultations.--In performing its duties under this 
        subsection, the Board shall consult with the President and 
        Congress.
    ``(f) Other Requirements.--The Board shall satisfy any other 
requirements imposed on the Board under this title.

``SEC. 21214. POWERS.

    ``(a) Staff; Contract Authority.--The Board shall have authority, 
subject to the provisions of the civil-service laws and chapter 51 and 
subchapter III of chapter 53 of title 5, United States Code, to appoint 
such officers and employees as are necessary to carry out its 
functions. The Board may contract with any person (including an agency 
of the Federal Government) for studies and analysis as required to 
execute its functions. Any employee of the Executive Branch may be 
detailed to the Board to assist the Board in carrying out its duties.
    ``(b) Consultations with Experts.--The Board may consult with any 
outside expert individuals or groups that the Board determines 
appropriate in performing its duties under section 21213. The Board may 
establish advisory committees.
    ``(c) Access to Information.--The Board may secure directly from 
any department or agency of the United States information necessary to 
enable it to carry out its functions, to the extent such information is 
otherwise available to a department or agency of the United States. 
Upon request of the chair, the head of that department or agency shall 
furnish that information to the Board.
    ``(d) Delegation of Authority.--Except as otherwise provided, the 
Board may delegate any function to such officers and employees as the 
Board may designate and may authorize such successive redelegations of 
such functions with the Board as the Board deems to be necessary or 
appropriate. No delegation of functions by the Board shall relieve the 
Board of responsibility for the administration of such functions.
    ``(e) Rulemaking.--The National Health Board is authorized to 
establish such rules as may be necessary to carry out this subtitle.

``SEC. 21215. FUNDING.

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

``SEC. 21216. APPLICABILITY OF FEDERAL ADVISORY COMMITTEE ACT.

    ``The Federal Advisory Committee Act (5 U.S.C. App.) shall not 
apply to the Board.

``SEC. 21217. CONGRESSIONAL CONSIDERATION OF BOARD RECOMMENDATIONS.

    ``(a) In General.--
            ``(1) Timing for submission.--The Board shall submit any 
        recommendations to Congress under section 21213(e) by not later 
        than March 1 of any year.
            ``(2) Effectiveness.--Except as provided in subsection (c), 
        the recommendations submitted under paragraph (1) shall take 
        effect unless by September 15 of the year in which such 
        recommendations are submitted Congress enacts a joint 
        resolution disapproving such recommendations in accordance with 
        subsection (b).
    ``(b) Congressional Disapproval Procedures.--
            ``(1) Contents of resolution.--For purposes of subsection 
        (a), `joint resolution' means only a joint resolution 
        introduced after the date on which the recommendations of the 
        Board are received by Congress the matter after the resolving 
        clause of which is as follows: `That Congress disapproves the 
        recommendations of the National Health Benefits Board submitted 
        to the Congress on ____________.' (the blank space being 
        appropriately filled in).
            ``(2) Referral to committee.--A resolution described in 
        paragraph (1) introduced in the House of Representatives shall 
        be referred to the Committee on Ways and Means of the House of 
        Representatives. A resolution described in paragraph (1) 
        introduced in the Senate shall be referred to the Committee on 
        Finance of the Senate.
            ``(3) Discharge of committee.--If the committee to which is 
        referred a resolution described in paragraph (1) has not 
        reported such resolution (or an identical resolution) by July 
        1, such committee shall be deemed to be discharged from further 
        consideration of such resolution and such resolution shall be 
        placed on the appropriate calendar of the House involved.
            ``(4) Floor consideration.--
                    ``(A) In general.--When the committee to which a 
                resolution is referred has reported, or has been deemed 
                to be discharged (under paragraph (3)) from further 
                consideration of, a resolution described in paragraph 
                (1), it is at any time thereafter in order (even though 
                a previous motion to the same effect has been disagreed 
                to) for any Member of the respective House to move to 
                proceed to the consideration of the resolution, and all 
                points of order against the resolution (and against 
                consideration of the resolution) are waived. The motion 
                is highly privileged in the House of Representatives 
                and is privileged in the Senate and is not debatable. 
                The motion is not subject to amendment, or to a motion 
                to postpone, or to a motion to proceed to the 
                consideration of other business. A motion to reconsider 
                the vote by which the motion is agreed to or disagreed 
                to shall not be in order. If a motion to proceed to the 
                consideration of the resolution is agreed to, the 
                respective House shall immediately proceed to 
                consideration of the joint resolution without 
                intervening motion, order, or other business, and the 
                resolution shall remain the unfinished business of the 
                respective House until disposed of.
                    ``(B) Debate.--Debate on the resolution, and on all 
                debatable motions and appeals in connection therewith, 
                shall be limited to not more than 2 hours, which shall 
                be divided equally between those favoring and those 
                opposing the resolution. A motion further to limit 
                debate is in order and not debatable. An amendment to, 
                or a motion to postpone, or a motion to proceed to the 
                consideration of other business, or a motion to 
                recommit the resolution is not in order. A motion to 
                reconsider the vote by which the resolution is agreed 
                to or disagreed to is not in order.
                    ``(C) Vote on final passage.--Immediately following 
                the conclusion of the debate on a resolution described 
                in paragraph (1), and a single quorum call at the 
                conclusion of the debate if requested in accordance 
                with the rules of the appropriate House, the vote on 
                final passage of the resolution shall occur.
                    ``(D) Rulings of the chair on procedure.--Appeals 
                from the decisions of the Chair relating to the 
                application of the rules of the Senate or the House of 
                Representatives, as the case may be, to the procedure 
                relating to a resolution described in paragraph (1) 
                shall be decided without debate.
            ``(5) Coordination with action by other house.--
                    ``(A) In general.--If, before the passage by one 
                House of a resolution of that House described in 
                paragraph (1), that House receives from the other House 
                a resolution described in paragraph (1), then the 
                following procedures shall apply:
                            ``(i) The resolution of the other House 
                        shall not be referred to a committee except in 
                        the case of final passage as provided in clause 
                        (ii)(II).
                            ``(ii) With respect to a resolution 
                        described in paragraph (1) of the House 
                        receiving the resolution--
                                    ``(I) the procedure in that House 
                                shall be the same as if no resolution 
                                had been received from the other House; 
                                but
                                    ``(II) the vote on final passage 
                                shall be on the resolution of the other 
                                House.
                    ``(B) Disposition.--Upon disposition of the 
                resolution received from the other House, it shall no 
                longer be in order to consider the resolution that 
                originated in the receiving House.
            ``(6) Rules of house of representatives and senate.--This 
        subsection is enacted by Congress--
                    ``(A) as an exercise of the rulemaking power of the 
                Senate and House of Representatives, respectively, and 
                as such it 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 a 
                resolution described in paragraph (1), and it 
                supersedes other rules only to the extent that it is 
                inconsistent with such rules; and
                    ``(B) 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) Recommendations in 2002.--Subsection (a)(2) shall not apply 
to any recommendations submitted to Congress by the Board during 2002.

   ``PART III--PROVISIONS RELATING TO ABORTION AND RELIGIOUS BELIEFS

``SEC. 21221. REGULATION OF ABORTION BY THE STATES.

    ``Nothing in this title shall be construed to conflict with any 
constitutionally permissible regulation of abortion by a State.

``SEC. 21222. NO REQUIREMENT TO CREATE OR MAINTAIN ABORTION CLINICS AND 
              PROVIDERS.

    ``Nothing in this title shall be construed to--
            ``(1) require the creation or maintenance of abortion 
        clinics or other abortion providers within a State or any 
        region of a State; or
            ``(2) authorize any Federal agency or State to--
                    ``(A) require the creation or maintenance of 
                abortion clinics or other abortion providers; or
                    ``(B) deny certification, or any other benefit 
                granted by this title, to a health plan based on the 
                number of, or the presence or absence of, abortion 
                clinics or other abortion providers in or affiliated 
                with the plan.

``SEC. 21223. PROVISIONS RELATING TO RELIGIOUS BELIEF OR MORAL 
              CONVICTION.

    ``Nothing in this title shall be construed to--
            ``(1) prevent any individual from purchasing a standard 
        benefits package which excludes coverage of abortion services, 
        if the individual objects to abortion on the basis of a 
        religious belief or moral conviction;
            ``(2) prevent any employer from contributing to the 
        purchase of a standard benefits package which excludes coverage 
        of abortion or other services, if the employer objects to such 
        services on the basis of a religious belief or moral 
        conviction;
            ``(3) require any health professional or health facility to 
        perform or assist in the performance of any health care 
        service, if the health professional or facility objects to 
        performing or assisting in the performance of such a service on 
        the basis of a religious belief or moral conviction; and
            ``(4) require any commercial insurance company, Blue Cross 
        plan, integrated health plan, or any other organization that 
        assumes health insurance risk to offer a package including 
        abortion or other services, if the health plan sponsor objects 
        to covering such services on the basis of a religious belief or 
        moral conviction.

             ``Subtitle D--Expanded Access to Health Plans

                   ``PART I--ACCESS THROUGH EMPLOYERS

``SEC. 21401. GENERAL EMPLOYER RESPONSIBILITIES.

    ``(a) Availability of Coverage.--
            ``(1) In general.--Each employer shall meet the requirement 
        under section 21002(c)(1)(A)(i) to make available to each 
        employee of the employer the opportunity to enroll through the 
        employer in any of the certified standard health plans 
        described in such section.
            ``(2) Waiver of access requirement.--If the Governor of a 
        participating State waives the requirement under section 
        21413(a)(2) that a purchasing cooperative offer at least 3 
        certified plans in certain rural areas of the State, any 
        employer located in such rural area shall not be required to 
        offer 3 certified standard health plans in such area.
    ``(b) Forwarding of Information.--
            ``(1) Information regarding plans.--An employer must 
        provide each employee of such employer--
                    ``(A) with information provided by the State under 
                section 21013 regarding all certified standard health 
                plans offered in the community rating area in which the 
                employer is located, and
                    ``(B) if the employer knows that an employee 
                resides in another community rating area, information 
                regarding how to obtain information on certified 
                standard health plans offered to residents of such 
                other community rating area.
            ``(2) Information regarding employees.--An employer shall 
        forward the name and address (and any other necessary 
        identifying information specified by the Secretary) of each 
        employee enrolling through the employer--
                    ``(A) to the certified standard health plan in 
                which such employee is enrolling, or
                    ``(B) to the purchasing cooperative (if any) 
                through which such employee is enrolling.
    ``(c) Payroll Deduction.--
            ``(1) In general.--If--
                    ``(A) a certified standard plan, or purchasing 
                cooperative on behalf of such a plan, requests an 
                employer under this section to withhold premiums with 
                respect to any employee enrolled in the plan, or
                    ``(B) an employee requests an employer to withhold 
                premiums to a certified standard health plan in which 
                the employee is enrolled or enrolling,
        the employer shall deduct and withhold such premiums (less any 
        employer contribution) through payroll deduction and pay the 
        amounts deducted and withheld to the plan or to the purchasing 
        cooperative.
            ``(2) Payroll deductions.--
                    ``(A) Frequency.--In the case of an employee who is 
                paid wages or other compensation--
                            ``(i) on a monthly or more frequent basis, 
                        the employer shall deduct and withhold, and 
                        pay, such premiums at the same time as the 
                        payment of such wages or other compensation, or
                            ``(ii) less frequently than monthly, the 
                        employer shall pay such premiums on a monthly 
                        basis.
                    ``(B) Employee protections.--
                            ``(i) Withholding constitutes satisfaction 
                        of obligation.--If an employee notifies the 
                        health plan sponsor that the employee has 
                        requested the employer withholding of a certain 
                        amount, the withholding of such an amount by 
                        the employer under subparagraph (A) shall 
                        constitute satisfaction of the employee's 
                        obligation to pay the standard health plan with 
                        respect to such amount.
                            ``(ii) Direct payment allowed in case of 
                        nonpayment.--In the case of the nonpayment to a 
                        standard health 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.
            ``(3) Authority to charge administrative fee.--Any employer 
        providing a payroll deduction for a premium with respect to a 
        health plan may charge a nominal administrative fee to cover 
        the marginal costs of processing such deduction, except that 
        this paragraph shall not apply to any plan offered through the 
        employer (including any plan offered through a purchasing 
        cooperative on behalf of the employer).
    ``(d) Time Period for Employers.--An employer shall meet the 
requirements of this section with respect to any new employee within 
the 30-day period beginning on the date of hire.

``SEC. 21402. MAINTENANCE OF EFFORT FOR COVERAGE OF CHILDREN.

    ``Each employer making an employer contribution toward the coverage 
of the children of the employees of such employer as of July 1, 1994, 
shall continue such contribution to the certified standard health plan 
offering the standard benefits package chosen by the employee.

``SEC. 21403. DEVELOPMENT OF LARGE EMPLOYER PURCHASING GROUPS.

    ``(a) In General.--Nothing in this title shall be construed as 
prohibiting 2 or more experience-rated employers from joining together 
to purchase insurance for their employees, except that each such 
employer shall be responsible for meeting the employer's requirements 
under this title with respect to its employees.
    ``(b) No Use of Purchasing Cooperatives.--An experience-rated 
employer shall be ineligible to purchase health insurance through a 
purchasing cooperative.

``SEC. 21404. ENFORCEMENT.

    ``A State program shall provide for the monitoring and enforcement 
of the requirements of this part. In the case of any employer which 
fails to meet any requirement under this part with respect to any 
employee, the State program shall impose a civil money penalty on such 
employer in an amount not more than 25 percent of the wages of such 
employee during the period of such failure. The State program shall 
provide that provisions similar to the provisions of section 1128A 
(other than subsections (a) and (b)) shall apply to civil money 
penalties imposed under this section in the same manner as they apply 
to a penalty or proceeding under section 1128A(a).

   ``PART II--ACCESS THROUGH HEALTH INSURANCE PURCHASING COOPERATIVES

           ``Subpart A--Functions of Purchasing Cooperatives

``SEC. 21411. ENROLLMENT OF COMMUNITY-RATED INDIVIDUALS IN CERTIFIED 
              STANDARD HEALTH PLANS.

    ``(a) In General.--A purchasing cooperative shall offer, on behalf 
of all certified standard health plans with which an agreement was 
entered into under section 21413 and in accordance with the enrollment 
procedures of such plans, enrollment in the plans only to community-
rated individuals residing or employed in the community rating area 
served by the purchasing cooperative.
    ``(b) Outreach.--In carrying out its responsibilities under 
subsection (a), a purchasing cooperative shall perform such activities, 
including outreach, as may be necessary to actively seek the enrollment 
of community-rated individuals, including children and pregnant women 
who are eligible for subsidies under part B of title XIX or individuals 
who reside in medically underserved areas.

``SEC. 21412. DUTIES OF PURCHASING COOPERATIVES.

    ``(a) In General.--Subject to subsection (b), each purchasing 
cooperative shall--
            ``(1) enroll community-rated individuals in certified 
        standard health plans in accordance with section 21411;
            ``(2) collect premiums from individuals enrolled in 
        certified standard health plans through the purchasing 
        cooperative and forward such premiums to the plans;
            ``(3) enter into agreements only with certified standard 
        health plans under section 21413;
            ``(4) ensure that the services of the purchasing 
        cooperative are accessible throughout the community rating 
        area;
            ``(5) ensure such accessibility by providing information in 
        accordance with section 21414;
            ``(6) establish a process for the receipt and disposition 
        of complaints regarding the performance of its duties;
            ``(7) coordinate activities with other purchasing 
        cooperatives under section 21420;
            ``(8) report to the participating State such information 
        regarding marketing, enrollment, and administrative expenses as 
        the Secretary requires;
            ``(9) comply with such fiduciary responsibilities as the 
        Secretary requires; and
            ``(10) carry out other functions provided for under this 
        title.
    ``(b) Limitation on Activities.--A purchasing cooperative shall 
not--
            ``(1) approve and enforce payment rates for providers;
            ``(2) regulate premium rates for health plans;
            ``(3) certify or enforce compliance of certified standard 
        health plans with the requirements of subtitle B;
            ``(4) assume financial risk in relation to any such plan; 
        or
            ``(5) perform other activities identified by the 
        participating State as being inconsistent with the performance 
        of its duties under subsection (a).
    ``(c) Performance of Duties.--
            ``(1) In general.--If the participating State finds that a 
        purchasing cooperative is not carrying out its duties as 
        required under subsections (a) and (b), the State shall notify 
        the Board of Directors of such finding and permit such Board an 
        opportunity to take such action as may be necessary for the 
        purchasing cooperative to carry out such duties.
            ``(2) Corrective action.--If, after such an opportunity, 
        the deficiency has not been corrected, the participating State 
        may--
                    ``(A) order the purchasing cooperative to hold a 
                new election for members of the Board,
                    ``(B) take such other action as may be appropriate 
                in order to assure the performance of such duties, or
                    ``(C) take actions described in both subparagraphs 
                (A) and (B).
            ``(3) Performance criteria.--The participating State shall 
        develop criteria relating to the performance of duties by 
        purchasing cooperatives.

``SEC. 21413. AGREEMENTS WITH CERTIFIED STANDARD HEALTH PLANS.

    ``(a) Agreements.--
            ``(1) In general.--Except as provided in paragraph (2), 
        each purchasing cooperative for a community rating area may 
        enter into an agreement under this section with any certified 
        standard health plan the purchasing cooperative desires to be 
        made available through such purchasing cooperative.
            ``(2) Minimum requirement.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), each purchasing cooperative--
                            ``(i) shall enter into an agreement under 
                        paragraph (1) with at least 3 community-rated 
                        certified standard health plans which provide 
                        the standard benefit package under subtitle C, 
                        including, if available, a fee-for-service plan 
                        and a health plan with a point-of-service 
                        option, and
                            ``(ii) may enter into an agreement with 
                        community-rated certified standard health plans 
                        which provide the alternative standard benefit 
                        package under subtitle C or with community-
                        rated certified supplemental health benefit 
                        plans.
                    ``(B) Waiver of requirement.--The Governor of a 
                participating State may waive the requirement under 
                subparagraph (A) for any purchasing cooperative in a 
                rural area of such State which demonstrates an 
                insufficient population density to support 3 community-
                rated certified standard health plans.
            ``(3) Termination of agreement.--An agreement under 
        paragraph (1) shall remain in effect for a 12-month period, 
        except that the purchasing cooperative may terminate an 
        agreement under paragraph (1) if the certified standard health 
        plan's certification under section 21101 is terminated or for 
        other good cause shown.
            ``(4) No prohibition on offering of plans.--Nothing in this 
        subsection shall be construed as prohibiting a certified 
        standard health plan with which a purchasing cooperative has 
        declined to enter into an agreement under paragraph (1) from 
        being offered to community-rated individuals within a community 
        rating area.
    ``(b) Receipt of Premiums on Behalf of Plans.--
            ``(1) In general.--An agreement under this section shall 
        provide that--
                    ``(A) payment of premiums to which subparagraph (B) 
                does not apply shall be made by individuals directly to 
                the purchasing cooperative for the benefit of the plan, 
                and
                    ``(B) payments of premiums which an employer is 
                required to make under section 21401(c) shall be made 
                by the employer directly to the purchasing cooperative 
                for the benefit of the plan.
            ``(2) Payment of premiums.--The purchasing cooperative may 
        provide for reasonable penalties and grace periods for late 
        payment.
            ``(3) Certified standard health plans retain risk of 
        nonpayment.--Nothing in this subsection shall be construed as 
        placing upon a purchasing cooperative 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 cooperative administrative fee under section 
        21415).
    ``(c) Forwarding of Premiums.--
            ``(1) In general.--The purchasing cooperative shall forward 
        to a certified standard health plan the amount of any premiums 
        collected by such cooperative on behalf of such plan.
            ``(2) Payments.--Payments shall be made by the purchasing 
        cooperative under this subsection within a period of days 
        (specified by the Secretary and not to exceed 7 days) after 
        receipt of the premium.

``SEC. 21414. PROVISION OF INFORMATION.

    ``Each purchasing cooperative for a community rating area shall 
make available to each employer (other than an experience-rated 
employer) located in the community rating area and each community-rated 
individual residing in such area--
            ``(1) enrollment information, including information 
        provided to the purchasing cooperative under section 21013 by 
        the participating State in which such cooperative is located, 
        and
            ``(2) the opportunity to enter into an agreement with the 
        cooperative for the purchase of a certified standard health 
        plan.
The provision of information described in paragraph (1) may also be 
made at designated public access sites, including public libraries and 
local government offices.

``SEC. 21415. ADMINISTRATIVE FEES.

    ``(a) In General.--A purchasing cooperative may impose an 
administrative fee with respect to a community-rated individual 
enrolled under a certified standard health plan offered through the 
purchasing cooperative.
    ``(b) Fee.--The Secretary shall establish criteria for determining 
the administrative fees charged by cooperatives under subsection (a).

   ``Subpart B--Organization and Operation of Purchasing Cooperatives

``SEC. 21417. ESTABLISHMENT.

    ``(a) Establishment of Cooperatives.--
            ``(1) In general.--Any person meeting the requirements of 
        this part may establish a purchasing cooperative.
            ``(2) State sponsorship.--If a not-for-profit purchasing 
        cooperative has not been organized in a community rating area 
        in a participating State, the State shall, on or before January 
        1, 1996, establish or sponsor, by legislation or otherwise, at 
        least one not-for-profit purchasing cooperative to serve in 
        such community rating area.
    ``(b) Rules of Construction.--
            ``(1) Nonexclusive.--Nothing in this section shall be 
        construed as requiring that there be only one purchasing 
        cooperative serving a community rating area.
            ``(2) Single organization serving multiple community rating 
        areas.--
                    ``(A) In general.--Nothing in this section shall be 
                construed as preventing a single not-for-profit 
                corporation from being a purchasing cooperative for 
                more than one community rating area.
                    ``(B) Reporting.--If a purchasing cooperative 
                serves more than one community rating area and such 
                community rating areas are located in more than one 
                State, the purchasing cooperative shall separately 
                report to each State with respect to the residents of 
                such State.
            ``(3) Role of insurers.--An insurer may not form or 
        underwrite a purchasing cooperative, but may administer such a 
        cooperative.
            ``(4) Role of governmental units.--Units of State or local 
        governments may form purchasing cooperatives.

``SEC. 21418. BOARD OF DIRECTORS.

    ``(a) In General.--A purchasing cooperative shall be governed by a 
Board of Directors (in this part, referred to as the `Board'), 
appointed consistent with the provisions of this section. All powers 
vested in a purchasing cooperative under this title shall be vested in 
the Board.
    ``(b) Membership.--
            ``(1) In general.--The Board shall consist of--
                    ``(A) members who represent individuals who 
                purchase coverage through the cooperative, including 
                employees who purchase such coverage; and
                    ``(B) members who represent employers who purchase 
                coverage through a cooperative.
            ``(2) Equal representation of employers and consumers.--The 
        number of members of the Board described under subparagraph (A) 
        of paragraph (1) shall be the same as the number of members 
        described in subparagraph (B) of such paragraph.
    ``(c) No Conflict of Interest Permitted.--An individual may not 
serve as a member of the Board if the individual is one of the 
following (or an immediate family member of one of the following):
            ``(1) A health care provider.
            ``(2) An individual who is an employee or member of the 
        board of directors of, has a substantial ownership interest in, 
        or derives substantial income from, a health care provider, 
        health plan, pharmaceutical company, or a supplier of medical 
        equipment, devices, or services.
            ``(3) A person who derives substantial income from the 
        provision of health care.
            ``(4) A member or employee of an association, law firm, or 
        other institution or organization that represents the interests 
        of one or more health care providers, health plans, or others 
        involved in the health care field, or an individual who 
        practices as a professional in an area involving health care.
    ``(d) Limitation on Compensation.--A purchasing cooperative shall 
not provide compensation to members of the Board other than 
reimbursement for reasonable and necessary expenses incurred in the 
performance of their duties as members of the Board.
    ``(e) Provider Advisory Board.--The Board shall establish a 
provider advisory board consisting of representatives of health care 
providers and professionals who provide covered items and services 
through certified standard health plans offered by the purchasing 
cooperative.

``SEC. 21419. PROHIBITION AGAINST SELF-DEALING AND CONFLICTS OF 
              INTEREST.

    ``(a) Promulgation of Standards.--Each participating State shall 
promulgate standards of conduct in accordance with subsection (b) for 
any administrator, officer, trustee, fiduciary, custodian, counsel, 
agent, or employee of any purchasing cooperative.
    ``(b) Requirements for Standards.--The standards of conduct 
referred to in subsection (a) shall set forth--
            ``(1) the types of investment interests, ownership 
        interests, affiliations, or other employment that would be 
        improper for an individual described in subsection (a) to hold 
        during the time of the individual's service or employment with 
        the purchasing cooperative; and
            ``(2) the circumstances that will constitute impermissible 
        conflicts of interest or self-dealing by such employees in 
        performing their official duties and functions for a purchasing 
        cooperative.
    ``(c) Specific Prohibitions.--No individual described in subsection 
(a) shall, directly or indirectly--
            ``(1) operate, represent, be employed by, or be affiliated 
        with a health plan participating in the same community rating 
        area; and
            ``(2) use any of the information acquired through the 
        relationship of such person or entity with the purchasing 
        cooperative for purposes unrelated to such person's or entity's 
        duties with such cooperative.

``SEC. 21420. COORDINATION AMONG PURCHASING COOPERATIVES.

    ``The State shall establish rules for coordination among purchasing 
cooperatives in cases in which employers are located in one community 
rating area and their employees who are community-rated individuals 
reside in a different community rating area.

              ``PART III--ACCESS THROUGH ASSOCIATION PLANS

                ``Subpart A--Qualified Association Plans

``SEC. 21431. TREATMENT OF QUALIFIED ASSOCIATION PLANS.

    ``(a) General Rule.--For purposes of this title, in the case of a 
qualified association plan--
            ``(1) except as otherwise provided in this subpart, the 
        plan shall be required to meet all applicable requirements of 
        this title for certified standard health plans providing the 
        standard benefit package under subtitle C which are offered by 
        experience-rated employers,
            ``(2) if such plan is certified as meeting such 
        requirements, such plan shall be treated as a plan established 
        and maintained by an experienced-rated employer and individuals 
        enrolled in such plan shall be treated as experience-rated 
        individuals, and
            ``(3) any individual who is a member of the association not 
        enrolling in the plan shall not be treated as an experience-
        rated individual solely by reason of membership in such 
        association.
    ``(b) Election To Be Treated as Purchasing Cooperative.--Subsection 
(a) shall not apply to a qualified association plan if--
            ``(1) the health plan sponsor makes an irrevocable election 
        to be treated as a purchasing cooperative for purposes of this 
        title, and
            ``(2) such sponsor meets all requirements of this title 
        applicable to a purchasing cooperative.

``SEC. 21432. MODIFICATIONS OF STANDARDS APPLICABLE TO QUALIFIED 
              ASSOCIATION PLANS.

    ``(a) Certifying Authority.--For purposes of this title, the 
Secretary of Labor shall be the appropriate certifying authority with 
respect to a qualified association plan.
    ``(b) Capital Requirements.--
            ``(1) In general.--The solvency requirements established 
        under the regulations under paragraph (2) shall, on and after 
        the effective date of such regulations, apply in lieu of the 
        requirements under section 21122.
            ``(2) Solvency requirements.--
                    ``(A) In general.--The Secretary of Labor shall 
                prescribe by regulation--
                            ``(i) solvency standards for qualified 
                        association plans which will ensure that 
                        benefits under such plans will be provided in 
                        full when due, and
                            ``(ii) rules for monitoring and enforcing 
                        compliance with such standards.
        Such regulations may provide procedures under which the 
        Secretary may enter into an agreement with a State to have the 
        State enforce the Federal standards or State standards not 
        inconsistent with the Federal standards.
                    ``(B) Assets held in trust.--For purposes of 
                complying with regulations prescribing solvency 
                standards pursuant to subparagraph (A), the plan 
                sponsor of each qualified association plan shall, in 
                accordance with such regulations, take such steps as 
                are necessary to ensure that plan assets held for the 
                purpose of complying with such solvency standards are 
                held in trust under the plan and are available solely 
                for such purpose.
    ``(c) Availability.--Except in the case of a qualified association 
plan with respect to which an election is in effect under section 
21431(b), a qualified association plan may only include in coverage any 
individual who is a member of the association establishing or 
maintaining the plan, an employee of such member, or a spouse or 
dependent of either.
    ``(d) Limitation on Growth.--The number of participants enrolled in 
a qualified association plan for any year shall not exceed 110 percent 
of the number of participants enrolled in the plan during the preceding 
year.

``SEC. 21433. QUALIFIED ASSOCIATION PLAN DEFINED.

    ``(a) In General.--The term `qualified association plan' means a 
health plan which--
            ``(1) is (or is a continuation of) an existing plan, and
            ``(2) is established or maintained by a qualified 
        association.
    ``(b) Existing Plan.--For purposes of this section, a health plan 
is an existing plan if such plan--
            ``(1) was in existence and operating at all times as a 
        multiple employer welfare arrangement (or rural electric 
        cooperative or rural telephone cooperative association plan) 
        during the 3-year period ending on the date of the enactment of 
        the Health Security Act, and
            ``(2) covered at least 500 participants in the United 
        States on June 1, 1994.
    ``(c) Qualified Association.--For purposes of this section, the 
term `qualified association' means any organization which--
            ``(1) is organized and maintained in good faith by a trade 
        association, an industry association, a professional 
        association, a chamber of commerce, a religious organization, 
        or public entity association,
            ``(2) is organized and maintained for substantial purposes 
        other than to provide a health plan,
            ``(3) has a constitution, bylaws, or other similar 
        governing document which states its purpose,
            ``(4) receives the active support of its members, and
            ``(5) has been in operation continuously during the 3-year 
        period ending on the date of the enactment of the Health 
        Security Act.
    ``(d) Special Rule for Certain Arrangements.--
            ``(1) In general.--If, as of June 1, 1994, a multiple 
        employer welfare arrangement had been in existence at least 18 
        months and an application with the State insurance commissioner 
        for a certificate of operation as a health plan had been 
        approved or was pending, the requirements of subsections (a)(2) 
        and (b)(1) shall not apply to such arrangement.
            ``(2) Disqualification of certain arrangements.--A multiple 
        employer welfare arrangement shall not be treated as meeting 
        the requirements of paragraph (1) if a State demonstrates 
        that--
                    ``(A) fraudulent or material misrepresentations 
                have been made by the sponsor in the application,
                    ``(B) the arrangement that is the subject of the 
                application, on its face, fails to meet the 
                requirements for a complete application, or
                    ``(C) a financial impairment exists with respect to 
                the applicant that is sufficient to demonstrate the 
                applicant's inability to continue its operations.
    ``(e) Coordination With Subpart B.--The term `qualified association 
plan' shall not include a plan to which subpart B applies.
    ``(f) Definitions.--For purposes of this subchapter, the terms 
`multiple employer welfare arrangement', `rural electric cooperative', 
and `rural telephone cooperative association' have the meanings given 
such terms by section 3(40) of the Employee Retirement Income Security 
Act of 1974 (as in effect before the date of the enactment of the 
Health Security Act).

      ``Subpart B--Special Rule for Church and Multiemployer Plans

``SEC. 21435. SPECIAL RULE FOR CHURCH AND MULTIEMPLOYER PLANS.

    ``(a) General Rule.--For purposes of this title, in the case of a 
health plan to which this section applies--
            ``(1) except as otherwise provided in this part, the plan 
        shall be required to meet all applicable requirements of this 
        title for certified standard health plans providing the 
        standard benefit package under subtitle C which are offered by 
        experience-rated employers,
            ``(2) if such plan is certified as meeting such 
        requirements, such plan shall be treated as a plan established 
        and maintained by an experience-rated employer and individuals 
        enrolled in such plan shall be treated as experience-rated 
        individuals, and
            ``(3) any individual eligible to enroll in the plan who 
        does not enroll in the plan shall not be treated as an 
        experience-rated individual solely by reason of being eligible 
        to enroll in the plan.
    ``(b) Modified Standards.--
            ``(1) Certifying authority.--For purposes of this title, 
        the Secretary of Labor shall be the appropriate certifying 
        authority with respect to a plan to which this section applies.
            ``(2) Solvency and availability.--Rules similar to the 
        rules of subsections (b) and (c) of section 21432 shall apply 
        to a plan to which this section applies.
            ``(3) Access.--An employer which, pursuant to a collective 
        bargaining agreement, offers an employee the opportunity to 
        enroll in a plan described in subsection (c)(2) shall not be 
        required to make any other plan available to the employee.
    ``(c) Plans to Which Section Applies.--This section shall apply to 
a health plan which--
            ``(1) is a church plan (as defined in section 414(e) of the 
        Internal Revenue Code of 1986) which has 100 or more 
        participants in the United States, or
            ``(2) is a multiemployer plan (as defined in section 3(37) 
        of the Employee Retirement Income Security Act of 1974) which 
        is maintained by a health plan sponsor described in section 
        3(16)(B)(iii) of such Act but only if such plan (or a 
        predecessor plan)--
                    ``(A) offered health benefits as of June 1, 1994, 
                and
                    ``(B) as of June 1, 1994--
                            ``(i) covered at least 500 participants in 
                        the United States, or
                            ``(ii) was maintained by one or more 
                        affiliates of the same labor organization, or 
                        one or more affiliates of labor organizations 
                        representing employees in the same industry, 
                        covering at least 500 employees in the United 
                        States.

   ``Subtitle E--Implementation of Consumer Information Programs and 
                            Quality Research

``SEC. 21501. CONSUMER INFORMATION PROGRAMS.

    ``(a) In General.--To support the consumer information program 
established by each participating State under section 21013, the 
Secretary, in consultation with the National Health Plan Standards and 
Quality Advisory Committee (established under section 21101(c)), 
shall--
            ``(1) develop a set of national measures of quality 
        performance under subsection (b);
            ``(2) determine a national standard survey design and 
        sampling strategy;
            ``(3) determine a standard format for comparative value 
        information;
            ``(4) determine appropriate case-mix adjustments for data 
        comparisons;
            ``(5) approve interstate geographic areas with respect to 
        which comparative value information may be prepared;
            ``(6) establish standards for the distribution of such 
        information; and
            ``(7) provide technical assistance and training.
    ``(b) National Measures of Quality Performance.--
            ``(1) In general.--The Secretary shall develop a set of 
        national measures of quality performance in accordance with 
        paragraph (2), which shall be used--
                    ``(A) to provide comparative value information for 
                consumers under section 21013, and
                    ``(B) to assess the provision of health care 
                services and access to such services.
            ``(2) Subject of measures.--National measures of quality 
        performance shall be developed in accordance with criteria to 
        be determined by the Secretary and shall measure information on 
        the following subjects:
                    ``(A) Access to health care services by consumers.
                    ``(B) Appropriateness of health care services 
                provided to consumers.
                    ``(C) Outcomes of health care services and 
                procedures.
                    ``(D) Health promotion.
                    ``(E) Prevention of diseases, disorders, and other 
                health conditions.
                    ``(F) Consumer satisfaction with care.
                    ``(G) Risk assessment factors.
                    ``(H) Population health status.
            ``(3) Modifications to performance measures.--The Secretary 
        shall update the set of national measures of quality 
        performance developed under paragraph (1) as the Secretary 
        determines appropriate.
    ``(c) Population Health Status.--The Secretary, in consultation 
with public health experts and the National Health Plan Standards and 
Quality Advisory Committee (established under section 21101(c)), shall 
develop and define methods to measure population health status, 
including risk factor assessment. The Secretary shall use the methods 
developed for measuring population health status as the basis for 
developing consumer-focused quality improvement goals and the health 
plan standards in section 21124.

``SEC. 21502. HEALTH SERVICES AND QUALITY IMPROVEMENT RESEARCH.

    ``(a) Health Services Research.--
            ``(1) In general.--The Secretary shall direct the Agency 
        for Health Care Policy and Research and the Health Care 
        Financing Administration to support and conduct research on the 
        effects of health care reform on health care delivery systems 
        and methods for risk adjustment.
            ``(2) Quality research.--The Agency for Health Care Policy 
        and Research shall conduct and support research on medical 
        effectiveness including--
                    ``(A) outcomes research;
                    ``(B) clinical practice guidelines;
                    ``(C) technology assessment; and
                    ``(D) dissemination and implementation techniques.
    ``(b) Authorization of Appropriations.--In addition to any other 
amounts appropriated to carry out the provisions of this section from 
the Biomedical and Behavioral Research Trust Fund under section 9553 of 
the Internal Revenue Code of 1986, there are authorized to be 
appropriated $150,000,000 for fiscal year 1995, $400,000,000 for fiscal 
year 1996, $500,000,000 for fiscal year 1997, and $600,000,000 for the 
fiscal years 1998 through 2004.

``SEC. 21503. IMPLEMENTING QUALITY IMPROVEMENT RESEARCH.

    ``(a) In General.--The Secretary shall award grants to States or 
community-based, independent, not-for-profit organizations that have 
submitted applications in accordance with subsection (b) to establish 
demonstration projects that provide certified standard health plans 
with the technical assistance to implement the results of quality 
improvement research into medical practice.
    ``(b) Application.--For purposes of subsection (a), an application 
is in accordance with this subsection if the applicant submits the 
application to the Secretary at such time, in such manner, and 
containing such information and assurances as the Secretary may 
reasonably require.
    ``(c) Availability of Trust Fund Amounts.--There shall be available 
$50,000,000 in each of the fiscal years 1996 through 2004 from the 
Health Security Trust Fund established under section 9551 of the 
Internal Revenue Code of 1986 to make grants under subsection (a).

``SEC. 21504. ANNUAL REPORTS.

    ``The Secretary shall provide an annual report to Congress which--
            ``(1) reviews the results of the quality improvement 
        research grants under section 21503;
            ``(2) evaluates consumer information programs established 
        by participating States;
            ``(3) tracks the evolution of national performance measures 
        and other research; and
            ``(4) evaluates State, regional, and national trends on 
        quality of health care.

     ``Subtitle F--Programs to Improve Access To Underserved Areas

``PART I--GRANTS FOR THE DEVELOPMENT AND OPERATION OF COMMUNITY HEALTH 
                   GROUPS AND FOR CAPITAL ASSISTANCE

``SEC. 21601. DESIGNATION OF RURAL AND URBAN UNDERSERVED AREAS.

    ``(a) State Designation.--
            ``(1) In general.--Subject to paragraph (2), a 
        participating State may designate areas within the State as 
        rural or urban underserved areas in accordance with the 
        criteria developed by the Secretary under subsection (c).
            ``(2) Secretarial approval of state designation.--A State 
        designation of an area within the State as a rural or urban 
        underserved area is subject to approval by the Secretary.
    ``(b) Designation by the Secretary.--In addition to rural and urban 
underserved areas designated by a participating State under subsection 
(a)(1) and approved by the Secretary under subsection (a)(2), the 
Secretary may designate additional areas within participating States as 
rural or urban underserved areas in accordance with the criteria 
developed by the Secretary under subsection (c).
    ``(c) Criteria.--The Secretary shall develop criteria for 
designating an area as a rural or underserved area. Such criteria shall 
take into account--
            ``(1) whether the area is--
                    ``(A) an area in an urban or rural area (which need 
                not conform to the geographic boundaries of a political 
                subdivision and which is a rational area for the 
                delivery of health services) which the Secretary 
                determines has a health manpower shortage,
                    ``(B) a population group which the Secretary 
                determines has such a shortage, or
                    ``(C) a public or nonprofit private medical 
                facility or other public facility which the Secretary 
                determines has such a shortage,
        except that the Secretary shall not remove an area from an area 
        determined to be an area described in subparagraph (A) until 
        the Secretary has afforded interested persons and groups in 
        such area an opportunity to provide data and information in 
        support of the designation as such an area or a population 
        group described in subparagraph (B) or a facility described in 
        subparagraph (C), and has made a determination on the basis of 
        the data and information submitted by such persons and groups 
        and other data and information available to the Secretary;
            ``(2) whether a significant number of individuals who are 
        furnished health care services in the area are members of a 
        population of an urban or rural area designated by the 
        Secretary as an area with a shortage of personal health 
        services or are a population group designated by the Secretary 
        as having a shortage of such services;
            ``(3) the financial and geographic access to certified 
        standard health plans;
            ``(4) the availability, adequacy, and quality of health 
        care providers and health care facilities; and
            ``(5) the health status of residents of the area.

``SEC. 21602. COMMUNITY HEALTH GROUP; CERTIFIED COMMUNITY HEALTH PLAN; 
              COMMUNITY HEALTH NETWORK; ELIGIBLE ENTITIES; ISOLATED 
              RURAL FACILITIES.

    ``(a) Community Health Group.--For purposes of this part, the term 
`community health group' means a certified community health plan or a 
community health network.
    ``(b) Community Health Network.--For purposes of this part, the 
term `community health network' means a consortium of health care 
providers that--
            ``(1) is a public or non-profit private entity;
            ``(2) furnishes at least a portion of the services included 
        in the standard benefit package either directly or indirectly 
        through affiliations with other entities;
            ``(3) has an agreement with one or more certified standard 
        health plans;
            ``(4) has a written agreement with each of the health care 
        providers in the consortium governing the participation of the 
        providers;
            ``(5) has as participating members of the consortium two or 
        more of the categories of eligible entities described in 
        subsection (d);
            ``(6) ensures that the health care services furnished by 
        the consortium are available and accessible to each client with 
        reasonable promptness; and
            ``(7) furnishes a significant volume of health care 
        services in a rural or urban underserved area designated by the 
        State and approved by the Secretary under section 21601(a), or 
        designated by the Secretary under subsection (b) of such 
        section.
    ``(c) Certified Community Health Plan.--For purposes of this part, 
the term `certified community health plan' means a health plan that--
            ``(1) is a public or nonprofit private entity;
            ``(2) furnishes a significant volume of health care 
        services in a rural or urban underserved area designated by the 
        State and approved by the Secretary under section 21601(a), or 
        designated by the Secretary under subsection (b) of such 
        section;
            ``(3) has two or more of the categories of eligible 
        entities described in subsection (d) furnishing health services 
        through the health plan;
            ``(4) ensures that each individual enrolled with the plan 
        has a primary care provider; and
            ``(5) meets all other criteria required of a certified 
        standard health plan, including the offering of a standard 
        benefits package under subtitle C.
    ``(d) Eligible Entities.--For purposes of this part, the term 
`eligible entities' means the following categories of entities:
            ``(1) Physicians, other health professionals, or health 
        care institutions, including public hospitals, that provide a 
        significant amount of health care services in a rural or urban 
        underserved area designated by the State and approved by the 
        Secretary under section 21601(a) or designated by the Secretary 
        under subsection (b) of such section.
            ``(2) Entities providing health services under grants under 
        sections 329 and 330 of the Public Health Service Act.
            ``(3) Entities providing health services under grants under 
        sections 340 and 340A of such Act.
            ``(4) Entities providing health services under grants under 
        section 1001 or title XXVI of such Act.
            ``(5) Entities providing health services under title V of 
        the Social Security Act.
            ``(6) Entities providing health services through rural 
        health clinics (as defined in section 1861(aa)(2)) and other 
        federally qualified health centers (as defined in 1861(aa)(4)).
            ``(7) Entities providing health services in urban areas 
        through programs under title V of the Indian Health Care 
        Improvement Act, and entities providing outpatient health 
        services through programs under the Indian Self-Determination 
        Act.
            ``(8) Programs providing personal health services and 
        operating through State or local public health agencies.
            ``(9) Isolated rural facilities (as defined in subsection 
        (e)).
    ``(e) Isolated Rural Facilities.--The term `isolated rural 
facility' means a facility providing health services that is located in 
a county (or equivalent unit of local government) with fewer than 6 
residents per square mile.

  ``Subpart A--Grants for the Development and Operation of Community 
                             Health Groups

``SEC. 21611. GRANTS AND CONTRACTS FOR DEVELOPMENT OF PLANS AND 
              NETWORKS.

    ``(a) In General.--In the case of a public or private non-profit 
consortium of eligible entities that submits an application in 
accordance with subsection (b), the Secretary may make grants to and 
enter into contracts with such consortium for the development of 
community health groups.
    ``(b) Application.--For purposes of subsection (a), an application 
is in accordance with this subsection if--
            ``(1) the applicant submits an application to the Secretary 
        at such time and in such manner as the Secretary may reasonably 
        require;
            ``(2) the application is accompanied by an assessment of 
        need of the population or populations proposed to be served by 
        the applicant;
            ``(3) the application is accompanied by the following 
        information:
                    ``(A) A description of how the applicant will 
                design the proposed community health group (including 
                the service sites involved) for such populations based 
                on the assessment of need.
                    ``(B) A description of efforts to secure, within 
                the proposed service area of such community health 
                group (including the service sites involved), financial 
                and professional assistance and support for the 
                project.
                    ``(C) Evidence of significant community involvement 
                in the initiation, development and ongoing operation of 
                the project;
            ``(4) the application is accompanied by the assurances 
        described in subsection (c); and
            ``(5) the application is accompanied by such additional 
        assurances, agreements and other information as the Secretary 
        may reasonably require.
    ``(c) Assurances Described.--The assurances described in this 
subsection are the following:
            ``(1) Guaranteed access and continued delivery of health 
        care services in a designated area.--An assurance that the 
        applicant involved will furnish--
                    ``(A) a significant volume of health care services 
                within a rural or urban underserved area designated by 
                the State and approved by the Secretary under section 
                21601(a) or designated by the Secretary under 
                subsection (b) of such section, and
                    ``(B) health care services without regard to the 
                financial or insurance status of an individual.
            ``(2) Accessibility of services.--
                    ``(A) Services for certain individuals.--An 
                assurance that the applicant will ensure that the 
                services of the applicant will be accessible directly 
                or through formal contractual arrangements with its 
                participating providers regardless of whether 
                individuals who seek care from the applicant are 
                eligible individuals (as such term is defined in 
                section 1958(3)).
                    ``(B) Use of third-party payors.--An assurance that 
                the applicant will ensure that the health care 
                providers of the group are all approved by the 
                Secretary as providers under title XVIII and by the 
                appropriate State agency as providers under title XIX, 
                and the applicant has made or will make every 
                reasonable effort to collect appropriate reimbursement 
                for its costs in providing health services to 
                individuals who are enrolled in a private health 
                insurance program or certified standard health plan, or 
                who are entitled to insurance benefits under title 
                XVIII, medical assistance under a State plan approved 
                under title XIX, or to assistance for medical expenses 
                under any other public assistance program.
                    ``(C) Schedule of fees.--An assurance that the 
                applicant will--
                            ``(i) prepare a schedule of fees or 
                        payments for the provision of all health care 
                        services furnished by the applicant that is 
                        consistent with locally prevailing rates or 
                        charges and designed to cover its reasonable 
                        costs of operation and has prepared a 
                        corresponding schedule of discounts to be 
                        applied to the payment of such fees or payments 
                        (or payments of cost sharing amounts owed in 
                        the case of covered benefits), which discounts 
                        are applied on the basis of the patient's 
                        ability to pay; and
                            ``(ii) make every reasonable effort to 
                        secure from patients payment in accordance with 
                        such schedules, and to collect reimbursement 
                        for services to persons entitled to public or 
                        private insurance benefits or other medical 
                        assistance on the basis of full fees without 
                        application of discounts, except that the 
                        applicant will ensure that no person is denied 
                        service based on the person's inability to pay 
                        therefor.
                    ``(D) Barriers within service area.--An assurance 
                that the applicant will ensure that the following 
                conditions are met:
                            ``(i) In the service area of the group, the 
                        applicant will ensure that--
                                    ``(I) the services of the applicant 
                                are accessible to all residents; and
                                    ``(II) to the maximum extent 
                                possible, barriers to access to the 
                                services of the applicant are 
                                eliminated, including barriers 
                                resulting from the area's physical 
                                characteristics, its residential 
                                patterns, its economic, social and 
                                cultural groupings, its available 
                                transportation, and the ability of the 
                                area's residents to speak the English 
                                language.
                            ``(ii) The applicant will periodically 
                        conduct reviews within the service area of the 
                        group to determine whether the conditions 
                        described in clause (i) are being met.
            ``(3) Quality control system.--An assurance that the 
        applicant will maintain a community-oriented, patient 
        responsive, quality control system under which the group, in 
        accordance with regulations prescribed by the Secretary--
                    ``(A) conducts an ongoing quality assurance program 
                for the health services delivered by participating 
                provider entities;
                    ``(B) maintains a continuous community health 
                status improvement process; and
                    ``(C) maintains a system for development, 
                compilation, evaluation, and reporting of information 
                to the public regarding the costs of operation, service 
                utilization patterns, availability, accessibility and 
                acceptability of services, developments in the health 
                status of the populations served, uniform health and 
                clinical performance measures and financial performance 
                of the applicant.
            ``(4) Use of existing resources.--An assurance that the 
        applicant will, in developing the community health group 
        involved, utilize existing resources to the maximum extent 
        practicable.
    ``(d) Development Grants.--
            ``(1) Preference.--In making a grant or entering into a 
        contract under subsection (a), the Secretary shall give a 
        greater degree of preference to applicants--
                    ``(A) according to the extent to which a greater 
                number of categories of eligible entities described in 
                section 21602(d) are members of the consortium, except 
                in areas such as rural areas, where providers are 
                severely limited in number, and
                    ``(B) in which the population to be served by the 
                consortium has a higher degree of unmet need.
            ``(2) Use of financial assistance.--A consortium of 
        eligible entities receiving financial assistance under a grant 
        or contract pursuant to subsection (a) may use such assistance 
        for activities relating to the development of a community 
        health group, including--
                    ``(A) planning such group, including entering into 
                contracts between the recipient of the award and health 
                care providers who are to participate in the group;
                    ``(B) recruitment, compensation, training, and 
                retention of health care professionals and 
                administrative staff;
                    ``(C) acquisition and development of information, 
                billing, and reporting systems;
                    ``(D) providing linkages between providers, 
                including through the use of information systems;
                    ``(E) in the case of a consortium receiving a grant 
                or contract pursuant to subsection (a) for the 
                development of a certified community health plan, the 
                establishment of reserves required for furnishing 
                services on a prepaid or capitated basis; and
                    ``(F) such other expenditures as the Secretary 
                determines to be appropriate to support other 
                activities related to the development of community 
                groups.
    ``(e) Reports and Audits.--A public or private non-profit 
consortium of eligible entities that receives a grant or contract under 
subsection (a) shall--
            ``(1) provide such reports and information on activities 
        carried out under this section in a manner and form required by 
        the Secretary; and
            ``(2) provide an annual organizationwide audit that meets 
        applicable standards of the Secretary.
    ``(f) Availability of Funds From Trust Fund.--Except as provided in 
part III, the following amounts shall be available for a calendar year 
for making payments under subsection (a) from the Infrastructure 
Development Account in the Health Security Trust Fund established under 
section 9551 of the Internal Revenue Code of 1986:
            ``(1) In the case of calendar year 1995, $250,000,000.
            ``(2) In the case of calendar year 1996, $300,000,000.
            ``(3) In the case of calendar year 1997, $300,000,000.
            ``(4) In the case of calendar year 1998, $300,000,000.
            ``(5) In the case of calendar year 1999, $200,000,000.
            ``(6) In the case of subsequent calendar years, the amount 
        made available under this subsection for the previous calendar 
        year (without regard to any reduction in such amount under part 
        III), updated through the midpoint of the year by the estimated 
        percentage change in the Consumer Price Index for All Urban 
        Consumers (United States city average) during the 12-month 
        period ending at that midpoint, with appropriate adjustments to 
        reflect previous underestimations or overestimations under this 
        paragraph in the projected percentage change in such Consumer 
        Price Index.

``SEC. 21612. GRANTS AND CONTRACTS FOR OPERATION OF PLANS AND NETWORKS.

    ``(a) In General.--In the case of a community health group that 
submits an application in accordance with subsection (b), the Secretary 
may make grants to and enter into contracts with such groups for the 
operation of such groups.
    ``(b) Application.--For purposes of subsection (a), an application 
is in accordance with this subsection if--
            ``(1) the applicant submits an application to the Secretary 
        at such time and in such manner as the Secretary may reasonably 
        require;
            ``(2) the application is accompanied by an assessment of 
        need of the population or populations served by the applicant;
            ``(3) the application provides evidence of significant 
        community involvement in the ongoing operation of the community 
        health group;
            ``(4) the application is accompanied by the assurances 
        described in section 21611(c); and
            ``(5) the application is accompanied by such additional 
        assurances, agreements, and other information as the Secretary 
        may reasonably require.
    ``(c) Operation Grants.--
            ``(1) Preference.--In making a grant or entering into a 
        contract under subsection (a), the Secretary shall give a 
        greater degree of preference to applicants in accordance with 
        subparagraphs (A) and (B) of section 21611(d)(1).
            ``(2) Use of financial assistance.--A community health 
        group receiving financial assistance for the operation of the 
        group under a grant or contract pursuant to subsection (a) may 
        use such assistance to address geographic, financial, and other 
        barriers to access health care services including--
                    ``(A) transportation, including rural and frontier 
                emergency transportation systems;
                    ``(B) patient outreach;
                    ``(C) patient education;
                    ``(D) translation services;
                    ``(E) consumer information that would improve 
                access to care; and
                    ``(F) other services related to the provision of 
                health care services.
    ``(d) Reports and Audits.--A community health group that receives a 
grant or contract under subsection (a) shall--
            ``(1) provide such reports and information on activities 
        carried out under this section in a manner and form required by 
        the Secretary; and
            ``(2) provide an annual organization-wide audit that meets 
        applicable standards of the Secretary.
    ``(e) Availability of Funds From Trust Fund.--Except as provided in 
part III, the following amounts shall be available for a calendar year 
for making payments under subsection (a) from the Infrastructure 
Development Account in the Health Security Trust Fund established under 
section 9551 of the Internal Revenue Code of 1986:
            ``(1) In the case of calendar year 1995, $230,000,000.
            ``(2) In the case of calendar year 1996, $380,000,000.
            ``(3) In the case of calendar year 1997, $380,000,000.
            ``(4) In the case of calendar year 1998, $400,000,000.
            ``(5) In the case of calendar year 1999, $400,000,000.
            ``(6) In the case of subsequent calendar years, the amount 
        made available under this subsection for the previous calendar 
        year (without regard to any reduction in such amount under part 
        III), updated through the midpoint of the year by the estimated 
        percentage change in the Consumer Price Index for All Urban 
        Consumers (United States city average) during the 12-month 
        period ending at that midpoint, with appropriate adjustments to 
        reflect previous underestimations or overestimations under this 
        paragraph in the projected percentage change in such Consumer 
        Price Index.

                    ``Subpart B--Capital Assistance

``SEC. 21613. LOANS, LOAN GUARANTEES, AND GRANTS FOR CAPITAL 
              INVESTMENT.

    ``(a) In General.--In the case of a community health group or 
isolated rural facility that submits an application in accordance with 
subsection (b), the Secretary may make the financial assistance 
described in subsection (c) available to such group or facility for the 
provision of capital assistance.
    ``(b) Application.--For purposes of subsection (a), an application 
is in accordance with this subsection if--
            ``(1) the applicant submits an application to the Secretary 
        at such time and in such manner as the Secretary may reasonably 
        require;
            ``(2) in the case of an isolated rural facility, such 
        facility submits its application prior to January 1, 1999;
            ``(3) in the case of a project for construction, 
        conversion, expansion or modernization of a facility, the 
        applicant submits to the Secretary the following:
                    ``(A) A description of the site.
                    ``(B) Plans and specifications which meet 
                requirements prescribed by the Secretary.
                    ``(C) Information reasonably demonstrating that 
                title to such site is vested in one or more of the 
                entities filing the application (unless the agreement 
                described in paragraph (4)(A) is made).
                    ``(D) A specification of the type of financial 
                assistance being requested under subsection (a);
            ``(4) in the case of a project for construction, 
        conversion, expansion or modernization of a facility, the 
        application is accompanied by the following agreements:
                    ``(A) Title to such site will be vested in one or 
                more of the entities filing the application (unless the 
                assurance described in paragraph (3)(C) has been 
                submitted under such paragraph).
                    ``(B) Adequate financial support will be available 
                for completion of the project and for its maintenance 
                and operation when completed.
                    ``(C) The facility will be made available to all 
                persons seeking service regardless of their ability to 
                pay;
            ``(5) the application is accompanied by the assurances 
        described in paragraphs section 21611(c) to the same extent and 
        in the same manner as such provisions apply to awards of grants 
        and contracts under such paragraphs, except that if the 
        applicant is an isolated rural facility described in section 
        21602(d)(9) only the assurances described in paragraph (1) and 
        subparagraphs (A), (B), (C), and (D) (if translation services 
        are appropriate) of paragraph (2) of section 21611(c) shall 
        apply; and
            ``(6) the application is accompanied by such additional 
        assurances, agreements and other information as the Secretary 
        may reasonably require.
    ``(c) Financial Assistance Described.--The financial assistance 
that the Secretary may provide under subsection (a) consists of--
            ``(1) loans;
            ``(2) guarantees on the payment of principal and interest 
        to Federal and non-Federal lenders on behalf of community 
        health groups and isolated rural facilities; and
            ``(3) grants for urgent capital needs (in accordance with 
        criteria for determining such needs to be developed by the 
        Secretary).
    ``(d) Priorities Regarding Availability of Financial Assistance.--
            ``(1) Amounts reserved for facilities in rural designated 
        areas.--At least 10 percent of the dollar value of financial 
        assistance made under subsection (a) during any given year 
        shall be allocated to entities described in subsection (a) that 
        serve rural underserved areas designated by the State and 
        approved by the Secretary under section 21601(a) or designated 
        by the Secretary under subsection (b) of such section, to the 
        extent the Secretary receives a sufficient number of qualified 
        applications made by such entities.
            ``(2) Preferences.--In making financial assistance 
        available under subsection (a), the Secretary shall give a 
        greater degree of preference to applicants proposing to use 
        such assistance--
                    ``(A) for projects for the renovation and 
                modernization of medical facilities necessary to 
                prevent or eliminate safety hazards;
                    ``(B) to avoid noncompliance with licensure or 
                accreditation standards; or
                    ``(C) to provide essential services.
            ``(3) Limitation.--The Secretary may authorize the use of 
        amounts under subsection (a) for the construction of new 
        buildings only if--
                    ``(A) the Secretary determines that appropriate 
                facilities are not available through acquiring, 
                modernizing, expanding or converting existing 
                buildings, or that construction of new buildings will 
                cost less; and
                    ``(B) the applicant demonstrates that it has 
                secured assurances of State, local, or other non-
                Federal support of the project.
    ``(e) Amount of Assistance.--The principal amount of loans or loan 
guarantees under subsection (a) may, when added to any other assistance 
under this section, cover up to 100 percent of the costs involved.
    ``(f) Use of Assistance.--
            ``(1) In general.--An entity described in subsection (a) 
        shall use the financial assistance described in such subsection 
        for--
                    ``(A) the acquisition, modernization, conversion, 
                and expansion of facilities that will enhance the 
                provision and accessibility of health care; and
                    ``(B) except as provided in paragraph (2), for the 
                purchase of major equipment, including hardware for 
                information systems.
            ``(2) Isolated rural facilities.--In the case of an 
        isolated rural facility that receives financial assistance to 
        purchase major equipment for the furnishing of telemedicine 
        services, such facility may not use such assistance to purchase 
        high-cost telemedicine technologies that--
                    ``(A) incur high cost per minute of usage charges; 
                or
                    ``(B) require consultants to be available at the 
                same time as the patient and the referring physician.
    ``(g) Terms and Conditions.--
            ``(1) Loans.--Any loan made under subsection (a) shall, 
        subject to the Federal Credit Reform Act of 1990, meet such 
        terms and conditions (including provisions for recovery in case 
        of default) as the Secretary, in consultation with the 
        Secretary of the Treasury, determines to be necessary to carry 
        out the purposes of such section while protecting the financial 
        interests of the United States. Terms and conditions for such 
        loans shall include provisions regarding the following:
                    ``(A) Security.
                    ``(B) Maturity date.
                    ``(C) Amount and frequency of installments.
                    ``(D) Rate of interest, which shall be at a rate 
                comparable to the rate of interest prevailing on the 
                date the loan is made.
        Notwithstanding the provisions of subparagraph (D), the 
        Secretary shall have the discretion to provide for a rate of 
        interest that is lesser than the rate of interest described in 
        such subparagraph.
            ``(2) Loan guarantees.--The Secretary may not approve a 
        loan guarantee under this section unless the Secretary 
        determines that the terms, conditions, security (if any), and 
        schedule and amount of repayments with respect to the loan are 
        sufficient to protect the financial interests of the United 
        States and are otherwise reasonable. Such loan guarantees shall 
        be subject to such further terms and conditions as the 
        Secretary determines, in consultation with the Secretary of the 
        Treasury, and subject to the Federal Credit Reform Act of 1990, 
        to be necessary to ensure that the purposes of this section 
        will be achieved.
    ``(h) Defaults; Right of Recovery.--
            ``(1) Defaults.--
                    ``(A) In general.--The Secretary may take such 
                action as may be necessary to prevent a default on 
                loans or loan guarantees under this section including 
                the waiver of regulatory conditions, deferral of loan 
                payments, renegotiation of loans, and the expenditure 
                of funds for technical and consultative assistance, for 
                the temporary payment of the interest and principal on 
                such a loan, and for other purposes.
                    ``(B) Foreclosure.--The Secretary may take such 
                action, consistent with State law respecting 
                foreclosure procedures, as the Secretary deems 
                appropriate to protect the interest of the United 
                States in the event of a default on a loan made 
                pursuant to this section, including selling real 
                property pledged as security for such a loan or loan 
                guarantee and for a reasonable period of time taking 
                possession of, holding, and using real property pledged 
                as security for such a loan or loan guarantee.
                    ``(C) Waivers.--The Secretary may, for good cause, 
                but with due regard to the financial interests of the 
                United States, waive any right of recovery which the 
                Secretary has by reason of the failure of a borrower to 
                make payments of principal of and interest on a loan 
                made pursuant to this section except that if such loan 
                is sold and guaranteed, any such waiver shall have no 
                effect upon the Secretary's guarantee of timely payment 
                of principal and interest.
            ``(2) Twenty-year obligation; right of recovery.--
                    ``(A) In general.--
                            ``(i) Loans and loan guarantees.--With 
                        respect to a facility for which a loan, or loan 
                        guarantee is to be made pursuant to this 
                        section, the Secretary may provide the loan or 
                        loan guarantee only if the applicant involved 
                        agrees that the applicant will be liable to the 
                        United States for the amount of the loan or 
                        loan guarantee, together with an amount 
                        representing interest, if at any time during 
                        the 20-year period beginning on the date of 
                        completion of the activities involved, the 
                        facility--
                                    ``(I) ceases to be a facility 
                                utilized by a community health group, 
                                or by another public or nonprofit 
                                private entity that provides health 
                                services in one or more areas that are 
                                rural or urban underserved areas 
                                designated by the State and approved by 
                                the Secretary under section 21601(a), 
                                or designated by the Secretary under 
                                subsection (b) of such section; or
                                    ``(II) is sold or transferred to 
                                any entity other than an entity that 
                                is--
                                            ``(aa) a community health 
                                        group or other entity described 
                                        in subclause (I); and
                                            ``(bb) approved by the 
                                        Secretary as a purchaser or 
                                        transferee regarding the 
                                        facility.
                            ``(ii) Direct grants.--With respect to a 
                        facility for which substantial capital costs 
                        are to be paid from a grant made pursuant to 
                        this section, an assurance that the applicant 
                        will be liable to the United States for the 
                        amount of the award expended for such costs, 
                        together with an amount representing interest, 
                        if at any time during the 20-year period 
                        beginning on the date of completion of the 
                        activities involved, the facility--
                                    ``(I) ceases to be a facility 
                                utilized by a community health group, 
                                isolated rural facility, or by another 
                                public or nonprofit private entity that 
                                provides health services in one or more 
                                rural or urban underserved areas 
                                designated by the State and approved by 
                                the Secretary under section 21601(a) or 
                                designated by the Secretary under 
                                subsection (b) of such section; or
                                    ``(II) is sold or transferred to 
                                any entity other than an entity that 
                                is--
                                            ``(aa) a community health 
                                        group or other entity described 
                                        in clause (i); and
                                            ``(bb) approved by the 
                                        Secretary as a purchaser or 
                                        transferee regarding the 
                                        facility.
                    ``(B) Subordination; waivers.--The Secretary may 
                subordinate or waive the right of recovery under clause 
                (i) or (ii) of subparagraph (A), and any other Federal 
                interest that may be derived by virtue of a loan, loan 
                guarantee, or grant under subsection (a), if the 
                Secretary determines that subordination or waiver will 
                further the objectives of this section.
    ``(i) Reports and Audits.--A community health group or isolated 
rural facility that receives a loan, loan guarantee, or grant under 
subsection (a) shall--
            ``(1) provide such reports and information on activities 
        carried out under this section in a manner and form required by 
        the Secretary; and
            ``(2) provide an annual organization-wide audit that meets 
        applicable standards of the Secretary.
    ``(j) Availability of Funds From Trust Fund.--Except as provided in 
part III, the following amounts shall be available for a calendar year 
for making payments under subsection (a) from the Infrastructure 
Development Account in the Health Security Trust Fund established under 
section 9551 of the Internal Revenue Code of 1986:
            ``(1) In the case of calendar year 1995, $500,000,000.
            ``(2) In the case of calendar year 1996, $700,000,000.
            ``(3) In the case of calendar year 1997, $700,000,000.
            ``(4) In the case of calendar year 1998, $700,000,000.
            ``(5) In the case of calendar year 1999, $700,000,000.
            ``(6) In the case of subsequent calendar years, the amount 
        made available under this subsection for the previous calendar 
        year (without regard to any reduction in such amount under part 
        III), updated through the midpoint of the year by the estimated 
        percentage change in the Consumer Price Index for All Urban 
        Consumers (United States city average) during the 12-month 
        period ending at that midpoint, with appropriate adjustments to 
        reflect previous underestimations or overestimations under this 
        paragraph in the projected percentage change in such Consumer 
        Price Index.
    ``(k) Administration of Programs.--This subpart, and any other 
program of the Secretary that provides loans or loan guarantees, shall 
be carried out by a centralized loan unit established within the 
Department of Health and Human Services.

  ``PART II--DEMONSTRATION PROJECTS TO PROMOTE TELEMEDICINE AND OTHER 
         USES OF THE TELECOMMUNICATIONS NETWORK IN RURAL AREAS

``SEC. 21621. DEMONSTRATION PROJECTS TO PROMOTE TELEMEDICINE AND OTHER 
              USES OF THE NETWORK.

    ``(a) Definitions.--For purposes of this section:
            ``(1) Rural health care provider.--The term `rural health 
        care provider' means any health care provider located in a 
        rural area (as defined in section 1886(d)(2)(D)), including a 
        rural referral center, rural clinic, area health center, 
        migrant health center, rural community health center, local 
        health department, and isolated rural facility (as defined in 
        section 21602(e)).
            ``(2) Health resource partner.--The term `health resource 
        partner' means a tertiary care center that is available for 
        consultations 24-hours a day and for follow up care.
            ``(3) Nonhealth care entity.--The term `nonhealth care 
        entity' means any entity that is not involved in the provision 
        of health care, including a business, educational institution, 
        library, and prison.
    ``(b) Establishment.--The Secretary shall award grants to eligible 
entities to establish demonstration projects under which an eligible 
entity establishes a rural-based consortium that enables members of the 
consortium to utilize the telecommunications network--
            ``(1) to strengthen the delivery of health care services in 
        the rural area through the use of telemedicine;
            ``(2) to provide for consultations involving transmissions 
        of detailed data about the patient that serves as a reasonable 
        substitute for face-to-face interaction between the patient and 
        consultant; and
            ``(3) to make outside resources or business interaction 
        more available to the rural area.
    ``(c) Eligible Entity.--An entity eligible to receive a grant under 
this section shall include as members at least--
            ``(1) one rural health care provider and a health resource 
        partner; and
            ``(2) one nonhealth care entity located in the same rural 
        area as the rural health care provider described in paragraph 
        (1) and one other nonhealth care entity.
The Secretary may waive the membership requirement under paragraph (2) 
if the members described in paragraph (1) are unable to locate a 
nonhealth care entity located in the same rural area to participate in 
the demonstration project.
    ``(d) Preferences.--The Secretary shall give greater preference in 
awarding grants under this section to--
            ``(1) applicants that are seeking to serve rural 
        underserved areas designated by the State and approved by the 
        Secretary under section 21601(a) or designated by the Secretary 
        under subsection (b) of such section;
            ``(2) applicants that have integrated health care resources 
        or plan to integrate such resources within the rural area to 
        the maximum extent practicable in order to avoid redundancy of 
        scarce technology; and
            ``(3) applicants that have coordinated usage of the 
        telecommunications infrastructure with other potential 
        telecommunications users in the area to take advantage of 
        economies-of-scale pricing of telecommunications services.
    ``(e) Application.--To be eligible to receive a grant under this 
section, an eligible entity described in subsection (c) shall prepare 
and submit to the Secretary an application at such time, in such 
manner, and containing such information as the Secretary may require, 
including a description of the use to which the eligible entity would 
apply any amounts received under such grant, the source and amount of 
non-Federal funds the entity would pledge for the project, and a 
showing of the long-term sustainability of the project.
    ``(f) Grants.--Grants under this section shall be distributed in 
accordance with the following requirements:
            ``(1) Grant limit.--The Secretary may not make a grant to 
        an eligible entity under this section in excess of $500,000 for 
        each fiscal year in which an eligible entity conducts a project 
        under this section.
            ``(2) Matching funds.--
                    ``(A) In general.--The Secretary may not make a 
                grant to an eligible entity under this section unless 
                the eligible entity agrees to provide non-Federal funds 
                in an amount equal to not less than 20 percent of the 
                total amount to be expended by the eligible entity in 
                any fiscal year for the purpose of conducting the 
                project under this section.
                    ``(B) Adjustments.--The Secretary shall make 
                necessary adjustments to the amount that an eligible 
                entity may receive in a subsequent fiscal year if the 
                eligible entity does not meet the requirements of 
                subparagraph (A) in the preceding fiscal year.
    ``(g) Use of Grant Amounts.--
            ``(1) In general.--Amounts received under a grant awarded 
        under this section shall be utilized for the development and 
        operation of telemedicine systems that serve rural areas. All 
        such grant funds must be used to further the provision of 
        health services to rural areas.
            ``(2) Rules of use.--
                    ``(A) Permissible usages.--Grant funds awarded 
                under this section--
                            ``(i) shall primarily be used to support 
                        the costs of establishing and operating a 
                        telemedicine system that provides specialty 
                        consultations to rural communities;
                            ``(ii) may be used to demonstrate the 
                        application of telemedicine for preceptorship 
                        of medical students, residents, and other 
                        health professions students in rural training 
                        sites;
                            ``(iii) may be used for transmission costs, 
                        salaries, maintenance of equipment, and 
                        compensation of specialists and referring 
                        practitioners; and
                            ``(iv) may be used to demonstrate the use 
                        of telemedicine to facilitate collaboration 
                        between non-physician primary care 
                        practitioners (including physician assistants, 
                        nurse practitioners, certified nurse-midwives, 
                        and clinical nurse specialists) and physicians.
                    ``(B) Prohibited use of funds.--Grant funds shall 
                not be used by members of a rural-based consortium for 
                any of the following:
                            ``(i) Expenditures to purchase or lease 
                        equipment to the extent the expenditures would 
                        exceed more than 40 percent of the total grant 
                        funds.
                            ``(ii) In the case of a member of a 
                        consortium that is an isolated rural facility 
                        (as defined in section 21602(e)), purchase of 
                        high-cost telecommunications technologies for 
                        the furnishing of telemedicine services that--
                                    ``(I) incur high cost per minute of 
                                usage charges; or
                                    ``(II) require consultants to be 
                                available at the same time as the 
                                patient and the referring physician.
                            ``(iii) Purchase or installation of 
                        transmission equipment or establishment or 
                        operation of a telecommunications common 
                        carrier network.
                            ``(iv) Expenditures for indirect costs (as 
                        determined by the Secretary) to the extent the 
                        expenditures would exceed more than 20 percent 
                        of the total grant funds.
                            ``(v) Construction (except for minor 
                        renovations related to the installation of 
                        equipment), or the acquisition or building of 
                        real property.
    ``(h) Reimbursement for Telemedicine Services Under the Medicare 
Program.--
            ``(1) In general.--In consultation with the Office of Rural 
        Health Policy, the Secretary shall designate 4 demonstration 
        projects that have been awarded grants under subsection (b) as 
        projects in which the Health Care Financing Administration 
        shall, in accordance with paragraph (2), reimburse providers 
        for telemedicine services furnished to--
                    ``(A) individuals who are eligible for benefits 
                under part A of title XVIII; and
                    ``(B) individuals who are eligible for benefits 
                under part A and enrolled under part B of title XVIII.
            ``(2) Development of payment methodology and payment 
        provided.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the Health Care Financing Administration shall 
                reimburse a provider of telemedicine services from 
                funds made available under subsection (k) in accordance 
                with one or more methodologies to be developed by the 
                Secretary.
                    ``(B) Criteria for developing payment 
                methodologies.--In developing payment methodologies 
                under subparagraph (A), the Secretary shall--
                            ``(i) limit payment to services that would 
                        otherwise be paid for under the medicare 
                        program under title XVIII if such services were 
                        not telemedicine services;
                            ``(ii) have the discretion to develop 
                        conditions for payment that protect the health 
                        and safety of the individuals described in 
                        paragraph (1), including limiting payment for 
                        services that cannot be furnished safely as 
                        telemedicine services;
                            ``(iii) have the discretion to include 
                        appropriate payments for transmission costs in 
                        the payment methodology; and
                            ``(iv) limit payment for telemedicine 
                        consultation services to consultation services 
                        specified by the Secretary that would otherwise 
                        be paid for under the medicare program under 
                        title XVIII if the patient and practitioner had 
                        a face-to-face consultation.
    ``(i) Maintenance of Effort.--Any funds available for the 
activities covered by a demonstration project conducted under this 
section shall supplement, and shall not supplant, funds that are 
expended for similar purposes under any State, regional, or local 
program.
    ``(j) Evaluations.--Each eligible entity that conducts a 
demonstration project under this section shall submit to the Secretary 
such information and interim evaluations as the Secretary may require. 
The Secretary shall provide the Interagency Task Force on Rural 
Telemedicine with such evaluations and information submitted under the 
previous sentence as the Task Force may require to carry out its duties 
under section 21622(b).
    ``(k) Availability of Funds From Trust Fund.--Except as provided in 
part III, $20,000,000 in each of the calendar years 1995 through 1997 
shall be available for making payments under subsection (a) from the 
Infrastructure Development Account in the Health Security Trust Fund 
established under section 9551 of the Internal Revenue Code of 1986.

``SEC. 21622. FEDERAL INTERAGENCY TASK FORCE.

    ``(a) Establishment.--Not later than 90 days after the date of the 
enactment of this section, the Secretary of Health and Human Services 
shall establish a Federal interagency task force to be known as the 
`Interagency Task Force on Rural Telemedicine' (hereafter in this 
section referred to as the `Task Force').
    ``(b) Duties.--
            ``(1) In general.--The Task Force shall--
                    ``(A) identify specific uses for telemedicine that 
                have been proven to be effective to be used in the 
                evaluation of applications for federally funded 
                telemedicine demonstration projects, including any 
                application submitted under this part;
                    ``(B) review and coordinate evaluations of all 
                federally funded telemedicine and telecommunications 
                infrastructure demonstration projects, including any 
                demonstration project established under this part;
                    ``(C) establish mechanisms to facilitate a local 
                area needs assessment and consortium development 
                process to assist entities conducting federally funded 
                telemedicine demonstration projects, including 
                demonstration projects under this part; and
                    ``(D) review the policy of the Health Care 
                Financing Administration relating to reimbursement for 
                telemedicine services under the demonstration projects 
                established under section 21622(b) and designated under 
                subsection (g)(1) of such section.
            ``(2) Publication of results.--Not later than 3 years after 
        the Task Force is established, and every 3 years thereafter, 
        the Task Force shall analyze and publish a report of its 
        findings under subparagraphs (A) through (D) of paragraph (1) 
        and shall make such publications available to the Congress and 
        the general public.
    ``(c) Membership.--
            ``(1) In general.--The Task Force shall consist of 
        representatives of--
                    ``(A) the Department of Health and Human Services;
                    ``(B) the Rural Electrification Administration;
                    ``(C) the National Telecommunications Information 
                Agency;
                    ``(D) the National Institutes of Health; and
                    ``(E) other agencies and departments that have 
                responsibility for overseeing telemedicine projects.
            ``(2) Chairperson.--A representative of the Department of 
        Health and Human Services shall serve as the chairperson of the 
        Task Force.
    ``(d) Basic Pay.--Each member of the Task Force shall serve without 
pay.
    ``(e) Meetings.--The Task Force shall meet at the call of the 
chairperson.
    ``(f) Quorum.--A majority of the members shall constitute a quorum 
for the transaction of business.
    ``(g) Report on Termination of Commission.--Not later than 5 years 
after the date on which the Task Force is established, the Task Force 
shall submit to the Congress a report that evaluates the penetration of 
telemedicine in the United States and recommends whether the Task Force 
should be terminated.

           ``PART III--INSUFFICIENT AMOUNTS IN THE TRUST FUND

``SEC. 21631. INSUFFICIENT AMOUNTS IN THE TRUST FUND ACCOUNT.

    ``If the sum of the amounts specified under sections 21611(f), 
21612(e), 21613(j), and 21621(k) for a calendar year exceeds the 
amounts available for such calendar year in the Infrastructure 
Development Account in the Health Security Trust Fund established under 
section 9551 of the Internal Revenue Code of 1986, then each such 
amount shall be reduced by the amount which bears the same ratio to 
such amount as the amounts available bears to the sum of such amounts.

            ``Subtitle G--Automobile Insurance Coordination

``SEC. 21701. DEFINITIONS.

    ``In this subtitle:
            ``(1) Injured individual.--The term `injured individual' 
        means an individual who has a bodily injury or illness 
        sustained in an automobile accident and who is entitled to 
        receive automobile insurance medical services from a certified 
        standard health plan.
            ``(2) Automobile insurance medical services.--The term 
        `automobile insurance medical services' means services and 
        items covered by automobile insurance that are medically 
        necessary or appropriate for treatment of bodily injuries or 
        illnesses sustained in automobile accidents and that are within 
        the scope of the benefits to which an injured individual who is 
        enrolled in a certified standard health plan is entitled under 
        such health plan.
            ``(3) Automobile insurance carrier.--The term `automobile 
        insurance carrier' means an insurance company, employer, or 
        fund that is liable for payment for automobile insurance 
        medical services based either on a direct contractual 
        obligation to an injured individual or an obligation on behalf 
        of a person responsible for causation of an injured 
        individual's bodily injury or illness.
            ``(4) Certified standard health plan.--The term `certified 
        standard health plan' has the meaning given to such term by 
        section 21111(a)(2).

    ``PART I--REQUIREMENTS RELATING TO AUTOMOBILE INSURANCE MEDICAL 
                                SERVICES

``SEC. 21711. PROVISION OF AUTOMOBILE INSURANCE MEDICAL SERVICES 
              THROUGH HEALTH PLANS.

    ``(a) In General.--
            ``(1) Health plans.--An individual enrolled in a certified 
        standard health plan shall receive automobile insurance medical 
        services under the terms generally applicable to the provision 
        (or arrangement for the provision) of such services by such 
        health plan.
            ``(2) Medicare and medicaid.--Paragraph (1) shall not 
        prevent a participating State from requiring automobile 
        insurance carriers to make direct payment to health care 
        providers for automobile insurance medical services that are 
        covered both by (i) medicare under title XVIII or a State 
        medicaid program under title XIX, and (ii) an automobile 
        insurance contract that is required by law and provides for 
        direct payment of medical services regardless of fault. Payment 
        for automobile insurance medical services in such circumstances 
        shall be made to the extent of the automobile insurance 
        carrier's liability under the applicable contract.
    ``(b) Alternative Permitted.--Subsection (a) shall not prevent an 
individual and an automobile insurance carrier from agreeing that 
treatment for bodily injury or illness sustained in an automobile 
accident shall be provided other than by or through the certified 
standard health plan in which the individual is enrolled.

``SEC. 21712. PAYMENT FOR AUTOMOBILE INSURANCE MEDICAL SERVICES.

    ``(a) Payment to Health Plans.--Each automobile insurance carrier 
that is liable for payment for automobile insurance medical services 
provided to an injured individual by a certified standard health plan 
shall make payment to such health plan for such services to the extent 
of its obligations under the applicable automobile insurance contract.
    ``(b) Reimbursement for Cost-Sharing.--Each automobile insurance 
carrier shall be liable for the reimbursement or payment of any 
deductibles, copayments, or coinsurance paid or owed by an injured 
individual for automobile insurance medical services to the extent of 
the applicable automobile insurance contract.
    ``(c) Limitation of Liability.--Except as provided in subsections 
(a) and (b), nothing in this subtitle or any other provision of law 
shall require an automobile insurance carrier or any person insured by 
such a carrier to make any payment to a health plan, health care 
provider, or any other person for (1) automobile insurance medical 
services, or (2) other health care services or items used to treat an 
injury or illness sustained in an automobile accident that are not 
medically necessary or appropriate.
    ``(d) Use of Fee Schedules.--
            ``(1) In general.--Irrespective of the type of health plan 
        providing automobile insurance medical services, payment by 
        automobile insurance carriers for such services shall be made 
        to the plan exclusively in accordance with any fee schedule or 
        schedules established by the plan or the participating State 
        for health care services generally.
            ``(2) Medicare fee schedules.--If the injured individual is 
        a medicare beneficiary under title XVIII, an automobile 
        insurance carrier may use the appropriate fee schedule for 
        health care services established under such title.
            ``(3) Alternative payment methodologies.--Fee schedules 
        shall not be required in any case in which an automobile 
        insurance carrier and a health plan have agreed on an 
        alternative payment arrangement.
    ``(e) Reimbursement for Payments Made.--Nothing in this subtitle or 
any other provision of law shall impair the right of a certified 
standard health plan or automobile insurance carrier to seek 
reimbursement from any individual liable for a bodily injury or illness 
sustained in an automobile accident for payments made for automobile 
insurance medical services to treat such injury or illness.
    ``(f) Rights to Coverage for Additional Treatment.--Subject to the 
provisions of subsection (c), nothing in this subtitle shall impair any 
rights with respect to medically necessary or appropriate services and 
items to which an individual injured in an automobile accident is 
entitled that are not automobile insurance medical services as defined 
in this subtitle.

                       ``PART II--ADMINISTRATION

``SEC. 21721. PAYMENT FACILITATION.

    ``(a) In General.--Each participating State shall establish a 
system for payment of automobile insurance medical services by 
automobile insurance carriers to certified standard health plans, 
including mechanisms for prompt resolution of any issues or disputes 
that may arise in connection with such payment. Such systems shall 
require that automobile insurance carriers have an affirmative 
obligation to identify to such health plans the automobile insurance 
carrier or carriers liable for payment for automobile insurance medical 
services, through the use of computer data programs where appropriate 
and cost effective.
    ``(b) Sanctions.--Each participating State shall authorize 
appropriate sanctions for the failure of a health plan, automobile 
insurance carrier, or any other person to comply with the requirements 
established pursuant to subsection (a).

                 ``Subtitle H--Remedies and Enforcement

  ``PART I--REVIEW OF BENEFIT DETERMINATIONS FOR ENROLLED INDIVIDUALS

                       ``Subpart A--General Rules

``SEC. 21801. HEALTH PLAN CLAIMS PROCEDURE.

    ``(a) Definitions.--For purposes of this section:
            ``(1) Claim.--The term `claim' means a claim for payment or 
        provision of benefits under a health plan, a request for 
        preauthorization of items or services which is submitted to a 
        health plan prior to receipt of the items or services, or the 
        denial, reduction, or termination of any service or request for 
        a referral or reimbursement.
            ``(2) Individual claimant.--The term `individual claimant' 
        means, with respect to a claim, any individual who submits the 
        claim to a health plan in connection with the individual's 
        enrollment under the plan, or on whose behalf the claim is 
        submitted to the plan by a provider.
            ``(3) Provider claimant.--The term `provider claimant' 
        means, with respect to a claim, any provider who submits the 
        claim to a health plan with respect to items or services 
        provided to an individual enrolled under the plan.
    ``(b) General Rules Governing Treatment of Claims.--
            ``(1) Adequate notice of disposition of claim.--
                    ``(A) In general.--In any case in which a claim is 
                submitted in complete form to a health plan, the plan 
                shall provide to the individual claimant and any 
                provider claimant with respect to the claim a written 
                notice of the plan's approval or denial of the claim 
                within 15 days after the date of the submission of the 
                claim. The notice to the individual claimant shall be 
                written in plain and easily understood language.
                    ``(B) Denials.--In the case of a denial of the 
                claim, the notice shall--
                            ``(i) be provided within 5 days after the 
                        date of the determination to deny the claim;
                            ``(ii) set forth the specific reasons for 
                        the denial, including an explanation of such 
                        reasons and the facts underlying the decision 
                        to reduce or fail to provide services or pay 
                        the claim; and
                            ``(iii) clearly explain the right to appeal 
                        the denial under paragraph (2) and contain a 
                        description of the process for appealing such 
                        decision sufficient to allow the claimant to 
                        initiate an appeal and submit evidence to the 
                        decision maker in support of the position of 
                        the claimant.
                    ``(C) Failure to deny treated as approval.--Failure 
                by any plan to comply with the requirements of this 
                paragraph with respect to any claim submitted to the 
                plan shall be treated as approval by the plan of the 
                claim.
            ``(2) Plan's duty to review denials upon timely request.--
        The plan shall review its denial of the claim if an individual 
        claimant or provider claimant with respect to the claim submits 
        to the plan a written request for reconsideration of the claim 
        after receipt of written notice from the plan of the denial. 
        The plan shall allow any such claimant not less than 60 days, 
        after receipt of written notice from the plan of the denial, to 
        submit the claimant's request for reconsideration of the claim.
            ``(3) Time limit for review.--The plan shall complete any 
        review required under paragraph (2), and shall provide the 
        individual claimant and any provider claimant with respect to 
        the claim written notice of the plan's decision on the claim 
        after reconsideration pursuant to the review, within 30 days 
        after the date of the receipt of the request for 
        reconsideration.
            ``(4) De novo reviews.--Any review required under paragraph 
        (2)--
                    ``(A) shall be de novo,
                    ``(B) shall be conducted by an individual who did 
                not make the initial decision denying the claim and who 
                is authorized to approve the claim, and
                    ``(C) shall include review by a qualified physician 
                in the same speciality as the treating physician if the 
                resolution of any issues involved requires medical 
                expertise.
    ``(c) Treatment of Urgent Requests to Plans for Preauthorization.--
            ``(1) In general.--This subsection applies in the case of 
        any claim submitted by an individual claimant or a provider 
        claimant consisting of a request for preauthorization of items 
        or services which is accompanied by an attestation that--
                    ``(A) failure to immediately provide the items or 
                services could reasonably be expected to result in--
                            ``(i) placing the health of the individual 
                        claimant (or, with respect to an individual 
                        claimant who is a pregnant woman, the health of 
                        the woman or her unborn child) in serious 
                        jeopardy,
                            ``(ii) serious impairment to bodily 
                        functions, or
                            ``(iii) serious dysfunction of any bodily 
                        organ or part,
                or
                    ``(B) immediate provision of the items or services 
                is necessary because the individual claimant has made 
                or is at serious risk of making an attempt to harm such 
                individual claimant or another individual.
            ``(2) Shortened time limit for consideration of requests 
        for preauthorization.--Notwithstanding subsection (b)(1), a 
        health plan shall approve or deny any claim described in 
        paragraph (1) within 12 hours after submission of the claim to 
        the plan. Failure by the plan to comply with the requirements 
        of this paragraph with respect to the claim shall be treated as 
        approval by the plan of the claim.
            ``(3) Expedited exhaustion of plan remedies.--Any claim 
        described in paragraph (1) which is denied by the plan shall be 
        treated as a claim with respect to which all remedies under the 
        plan provided pursuant to this section are exhausted, 
        irrespective of any review provided under subsection (b)(2).
            ``(4) Denial of previously authorized claims not 
        permitted.--In any case in which a health plan approves a claim 
        described in paragraph (1)--
                    ``(A) the plan may not subsequently deny payment or 
                provision of benefits pursuant to the claim, unless the 
                plan makes a showing of an intentional 
                misrepresentation of a material fact by the individual 
                claimant, and
                    ``(B) in the case of a violation of subparagraph 
                (A) in connection with the claim, all remedies under 
                the plan provided pursuant to this section with respect 
                to the claim shall be treated as exhausted.
    ``(d) Time Limit for Determination of Incompleteness of Claim.--For 
purposes of this section--
            ``(1) any claim submitted by an individual claimant and 
        accepted by a provider serving under contract with a health 
        plan and any claim described in subsection (b)(1) shall be 
        treated with respect to the individual claimant as submitted in 
        complete form, and
            ``(2) any other claim for benefits under the plan shall be 
        treated as filed in complete form as of 10 days after the date 
        of the submission of the claim, unless the plan provides to the 
        individual claimant and any provider claimant, within such 
        period, a written notice of any required matter remaining to be 
        filed in order to complete the claim.
Any filing by the individual claimant or the provider claimant of 
additional matter requested by the plan pursuant to paragraph (2) shall 
be treated for purposes of this section as an initial filing of the 
claim.
    ``(e) Additional Notice and Disclosure Requirements for Health 
Plans.--In the case of a denial of a claim for benefits under a health 
plan, the plan shall include, together with the specific reasons 
provided to the individual claimant and any provider claimant under 
subsection (b)(1)--
            ``(1) if the denial is based in whole or in part on a 
        determination that the claim is for an item or service which is 
        not covered by a benefits package established under subtitle C 
        or exceeds payment rates under the plan, the factual basis for 
        the determination,
            ``(2) if the denial is based in whole or in part on 
        exclusion of coverage with respect to services because the 
        services are determined to comprise an experimental treatment 
        or investigatory procedure, the medical basis for the 
        determination and a description of the process used in making 
        the determination, and
            ``(3) if the denial is based in whole or in part on a 
        determination that the treatment is not medically necessary or 
        appropriate or is inconsistent with the plan's practice 
        guidelines, the medical basis for the determination, the 
        guidelines used in making the determination, and a description 
        of the process used in making the determination.
    ``(f) Waiver of Rights Prohibited.--A health plan may not require 
any party to waive any right under the plan or this title as a 
condition for approval of any claim under the plan, except to the 
extent otherwise specified in a formal settlement agreement.

``SEC. 21802. REVIEW IN AREA COMPLAINT REVIEW OFFICES OF GRIEVANCES 
              BASED ON ACTS OR PRACTICES BY HEALTH PLANS.

    ``(a) Complaint Review Offices.--
            ``(1) In general.--Except as provided in paragraph (2), in 
        accordance with rules which shall be prescribed by the 
        Secretary, each participating State shall establish and 
        maintain a complaint review office for each community rating 
        area established by such State to serve all enrollees of health 
        plans serving such area.
            ``(2) Multistate plans.--Under regulations of the Secretary 
        of Labor, in consultation with the Secretary, the complaint 
        review office for a community rating area established by such 
        State shall also serve as the complaint review office for 
        multistate self-insured health plans operating in the State 
        with respect to individuals who are enrolled under such plans 
        and who reside within the community rating area.
    ``(b) Filings of Complaints by Aggrieved Persons.--In the case of 
any person who is aggrieved by any act or practice engaged in by any 
health plan which consists of, or results in, denial of payment or 
provision of benefits under the plan or delay in the payment or 
provision of benefits, if the denial or delay is alleged to consist of 
a failure to comply with the terms of the plan (including the provision 
of benefits in full when due in accordance with the terms of the plan), 
or with the applicable requirements of this title, such person may file 
a complaint with the appropriate complaint review office.
    ``(c) Exhaustion of Plan Remedies.--Any complaint to which this 
section applies, including a claim to which section 21801 applies, may 
not be filed until the complainant has exhausted all remedies provided 
under the plan with respect to the claim.
    ``(d) Form of Complaint.--Any complaint to which this section 
applies shall be in writing under oath or affirmation, shall set forth 
the complaint in a manner calculated to give notice of the nature of 
the complaint, and shall contain such information as may be prescribed 
in regulations of the Secretary.
    ``(e) Notice of Filing.--The complaint review office shall serve by 
certified mail a notice of the complaint (including the date, place, 
and circumstances of the alleged violation) on the person or persons 
alleged in the complaint to have committed the violation within 10 days 
after the filing of the complaint.
    ``(f) Time Limitation.--A complaint may not be brought under this 
section with respect to any violation later than one year after the 
date on which the complaining party knows, or reasonably should have 
known, that a violation has occurred. This subsection shall not prevent 
the subsequent amending of a complaint.

``SEC. 21803. INITIAL PROCEEDINGS IN COMPLAINT REVIEW OFFICES.

    ``(a) Elections.--Whenever a complaint is brought to the complaint 
review office under section 21802(b), the complaint review office shall 
provide the complainant with an opportunity, in such form and manner as 
shall be prescribed in regulations of the Secretary, to make an 
irrevocable election:
            ``(1) To forego further proceedings in the complaint review 
        office and rely on remedies available in a court of competent 
        jurisdiction with respect to any matter in the complaint.
            ``(2) To submit the complaint as a dispute under the Early 
        Resolution Program established under subpart B and thereby 
        suspend further review proceedings under this section pending 
        termination of proceedings under the Program.
            ``(3) In any case in which an election under paragraph (1) 
        or (2) is not made, or an election under paragraph (2) was made 
        but resolution of all matters in the complaint was not obtained 
        upon termination of proceedings pursuant to the election by 
        settlement agreement or otherwise, to proceed, with the consent 
        of the plan, with the complaint to a hearing in the complaint 
        review office under section 21804 regarding the unresolved 
        matters.
    ``(b) Duty of Complaint Review Office.--The complaint review office 
shall provide (in a linguistically and culturally appropriate manner) 
an explanation to complainants bringing complaints to the office 
concerning the legal and other ramifications of each option available 
under this section.
    ``(c) Effect of Participation in Early Resolution Program.--Any 
matter in a complaint brought to the complaint review office which is 
included in a dispute which is timely submitted to the Early Resolution 
Program established under subpart B shall not be assigned to a hearing 
under section 21804 unless the proceedings under the Program with 
respect to the dispute are terminated without settlement or resolution 
of the dispute with respect to such matter. Upon termination of any 
proceedings regarding a dispute submitted to the Program, the 
applicability of this section to any matter in a complaint which was 
included in the dispute shall not be affected by participation in the 
proceedings, except to the extent otherwise required under the terms of 
any settlement agreement or other formal resolution obtained in the 
proceedings.

``SEC. 21804. HEARINGS BEFORE HEARING OFFICERS IN COMPLAINT REVIEW 
              OFFICES.

    ``(a) Hearing Process.--
            ``(1) Assignment of complaints to hearing officers and 
        notice to parties.--
                    ``(A) In general.--In the case of an election under 
                section 21803(a)(3)--
                            ``(i) the complaint review office shall 
                        assign the complaint, and each motion in 
                        connection with the complaint, to a hearing 
                        officer employed by the participating State in 
                        the office; and
                            ``(ii) the hearing officer shall have the 
                        power to issue and cause to be served upon the 
                        plan named in the complaint a copy of the 
                        complaint and a notice of hearing before the 
                        hearing officer at a place fixed in the notice, 
                        not less than 5 days after the serving of the 
                        complaint.
                    ``(B) Qualifications for hearing officers.--No 
                individual may serve in a complaint review office as a 
                hearing officer unless the individual meets standards 
                which shall be prescribed by the Secretary. Such 
                standards shall include experience, training, ability 
                to communicate with the enrollee, affiliations, 
                diligence, absence of actual or potential conflicts of 
                interest, and other qualifications deemed relevant by 
                the Secretary. At no time shall a hearing officer have 
                any official, financial, or personal conflict of 
                interest with respect to issues in controversy before 
                the hearing officer.
            ``(2) Amendment of complaints.--Upon the motion of the 
        complainant, any complaint may, at the discretion of the 
        hearing officer conducting the hearing, be amended at any time 
        prior to the issuance of an order based thereon.
            ``(3) Answers.--The party against whom the complaint is 
        filed shall have the right to file an answer to the original or 
        amended complaint and to appear in person or otherwise and give 
        testimony at the place and time fixed in the complaint.
    ``(b) Additional Parties.--In the discretion of the hearing officer 
conducting the hearing, any other person may be allowed to intervene in 
the proceeding and to present testimony.
    ``(c) Hearings.--
            ``(1) De novo hearing.--Each hearing officer shall hear 
        complaints and motions de novo.
            ``(2) Testimony.--The testimony taken by the hearing 
        officer shall be reduced to writing. Thereafter, the hearing 
        officer, in the officer's discretion, may (after notice to the 
        parties) provide for the taking of further testimony or the 
        hearing of arguments.
            ``(3) Authority of hearing officers.--
                    ``(A) In general.--The hearing officer may compel 
                by subpoena the attendance of witnesses and the 
                production of evidence at any designated place or 
                hearing. In case of contumacy or refusal to obey a 
                subpoena lawfully issued under this paragraph and upon 
                application of the hearing officer, an appropriate 
                district court of the United States may issue an order 
                requiring compliance with the subpoena and any failure 
                to obey the order may be punished by the court as a 
                contempt thereof. The hearing officer may also seek 
                enforcement of the subpoena in a State court of 
                competent jurisdiction.
                    ``(B) Expert witnesses.--The hearing officer may 
                use independent medical experts.
            ``(4) Rules of evidence.--Formal rules of evidence shall 
        apply to any hearing under this section.
            ``(5) Expedited hearings.--Notwithstanding section 21803 
        and the preceding provisions of this section, upon receipt of a 
        complaint containing a claim described in section 21801(c)(1), 
        the complaint review office shall promptly provide the 
        complainant with the opportunity to make an election under 
        section 21803(a)(3) and assignment to a hearing on the 
        complaint before a hearing officer. The complaint review office 
        shall ensure that such a hearing commences not later than 24 
        hours after receipt of the complaint by the complaint hearing 
        office and not later than 3 days after the receipt of a 
        complaint, the complaint review office shall provide a 
        decision.
    ``(d) Decision of Hearing Officer.--
            ``(1) In general.--Except as provided in subsection (c)(4), 
        not later than 120 days after the date on which a complaint is 
        assigned under this section, the hearing officer shall decide 
        if the preponderance of the evidence justifies the denial of 
        services and whether to decide in favor of the complainant with 
        respect to each alleged act or practice. Each such decision--
                    ``(A) shall include the hearing officer's findings 
                of fact, and
                    ``(B) shall constitute the hearing officer's final 
                disposition of the proceedings.
            ``(2) Decisions finding in favor of complainant.--If the 
        hearing officer's decision includes a determination that any 
        party named in the complaint has engaged in or is engaged in an 
        act or practice which consists of, or results in, a denial or 
        delay described in section 21802(b), the hearing officer shall 
        issue and cause to be served on such party an order which 
        requires such party--
                    ``(A) to cease and desist from such act or 
                practice,
                    ``(B) to provide the benefits due under the terms 
                of the plan and to otherwise comply with the terms of 
                the plan and the applicable requirements of this title,
                    ``(C) to pay to the complainant prejudgment 
                interest on the actual costs incurred in obtaining the 
                items and services at issue in the complaint,
                    ``(D) to pay to the prevailing complainant a 
                reasonable attorney's fee, reasonable expert witness 
                fees, and other reasonable costs and expenses relating 
                to the hearing on the charges on which the complainant 
                prevails, and
                    ``(E) to provide other appropriate relief.
            ``(3) Decisions not in favor of complainant.--If the 
        hearing officer's decision includes a determination that the 
        party named in the complaint has not engaged in or is not 
        engaged in an act or practice referred to in section 21802(b), 
        the hearing officer--
                    ``(A) shall include in the decision a dismissal of 
                the charge in the complaint relating to the act or 
                practice, and
                    ``(B) upon a finding that such charge is frivolous, 
                shall issue and cause to be served on the complainant 
                an order which requires the complainant to pay to such 
                party a reasonable attorney's fee, reasonable expert 
                witness fees, and other reasonable costs and expenses 
                relating to the proceedings on such charge.
            ``(4) Submission and service of decisions.--The hearing 
        officer shall submit each decision to the complaint review 
        office at the conclusion of the proceedings and the office 
        shall cause a copy of the decision to be served on the parties 
        to the proceedings.
    ``(e) Review.--
            ``(1) In general.--The decision of the hearing officer 
        shall be final and binding upon all parties. Except as provided 
        in paragraph (2), any party to the complaint may, within 30 
        days after service of the decision by the complaint review 
        office, file an appeal of the decision with the State Health 
        Plan Review Board established under section 21805 in such form 
        and manner as may be prescribed by such Board.
            ``(2) Exception.--A decision in favor of the complainant in 
        the case of an expedited hearing under subsection (c)(4) shall 
        not be subject to review.
    ``(f) Court Enforcement of Orders.--
            ``(1) In general.--If a decision of the hearing officer in 
        favor of the complainant is not appealed under section 21805, 
        the complainant may petition any court of competent 
        jurisdiction for enforcement of the order. In any such 
        proceeding, the order of the hearing officer shall not be 
        subject to review.
            ``(2) Awarding of costs.--In any action for court 
        enforcement under this subsection, a prevailing complainant 
        shall be entitled to a reasonable attorney's fee, reasonable 
        expert witness fees, and other reasonable costs and expenses 
        relating to such action.

``SEC. 21805. REVIEW BY STATE HEALTH PLAN REVIEW BOARD.

    ``(a) Establishment and Membership.--Each participating State shall 
establish a State Health Plan Review Board (hereafter in this subtitle 
referred to as the `Review Board'). The Review Board shall be composed 
of individuals who by reason of training, education, or experience are 
qualified to carry out the functions of the Review Board under this 
subtitle, and who fairly represent all interested parties. The State 
shall prescribe such rules as are necessary for the orderly transaction 
of proceedings by the Review Board. Every official act of the Review 
Board shall be entered of record, and its hearings and records shall be 
open to the public consistent with State law regarding individual 
privacy rights and the confidentiality of medical records subject to 
the proceedings.
    ``(b) Review Process.--The Review Board shall ensure that 
reasonable notice is provided for each appeal before the Review Board 
of a hearing officer's decision under section 21804, and shall provide 
for the orderly consideration of arguments by any party to the hearing 
upon which the hearing officer's decision is based. In the discretion 
of the Review Board, any other person may be allowed to intervene in 
the proceeding and to present written argument. The Secretary (or in 
the case of multistate self-insured health plans, the Secretary of 
Labor) may intervene in the proceeding as a matter of right.
    ``(c) Scope of Review.--The Review Board shall review the decision 
of the hearing officer from which the appeal is made, except that the 
review shall be only for the purposes of determining--
            ``(1) whether the determination is supported by substantial 
        evidence on the record considered as a whole,
            ``(2) in the case of any interpretation by the hearing 
        officer of contractual terms (irrespective of the extent to 
        which extrinsic evidence was considered), whether the 
        determination is supported by a preponderance of the evidence,
            ``(3) whether the determination is in excess of statutory 
        jurisdiction, authority, or limitations, or is in violation of 
        a statutory right, or
            ``(4) whether the determination is without observance of 
        procedure required by law.
    ``(d) Decision of Review Board.--The decision of the hearing 
officer as affirmed or modified by the Review Board (or any reversal by 
the Review Board of the hearing officer's final disposition of the 
proceedings) shall become the final order of the Review Board and 
binding on all parties, subject to review under subsection (e). The 
Review Board shall cause a copy of its decision to be served on the 
parties to the proceedings not later than 5 days after the date of the 
decision.
    ``(e) Review of Final Orders.--
            ``(1) In general.--Not later than 60 days after the entry 
        of the final order, any person aggrieved by any such final 
        order may seek a review of the order under State procedures.
            ``(2) Enforcement decree in original review.--If, upon 
        appeal of an order under paragraph (1), the order is not 
        reversed, the court shall have the jurisdiction to make and 
        enter a decree enforcing the order of the Review Board.
    ``(f) Awarding of Attorneys' Fees and Other Costs and Expenses.--In 
any proceeding before the Review Board under this section or any 
judicial proceeding under subsection (e), the Review Board or the court 
(as the case may be) shall award to a prevailing complainant a 
reasonable attorney's fee, reasonable expert witness fees, and other 
reasonable costs and expenses relating to the causes on which the 
complainant prevails.

``SEC. 21806. CIVIL MONEY PENALTIES.

    ``(a) Denial or Delay in Payment or Provision of Benefits.--The 
Secretary (or in the case of a multistate self-insured health plan, the 
Secretary of Labor) may assess a civil penalty against any health plan 
for unreasonable denial or delay in the payment or provision of 
benefits thereunder, in an amount not to exceed--
            ``(1) $25,000 per violation, or $75,000 per violation in 
        the case of a finding of bad faith on the part of the plan, and
            ``(2) in the case of a finding of a pattern or practice of 
        such violations engaged in by the plan, $1,000,000 in addition 
        to the total amount of penalties assessed under paragraph (1) 
        with respect to such violations.
For purposes of paragraph (1), each violation with respect to any 
single individual shall be treated as a separate violation.
    ``(b) Civil Action To Enforce Civil Penalty.--The Secretary may 
commence a civil action in any court of competent jurisdiction to 
enforce a civil penalty assessed under subsection (a).
    ``(c) Supplemental Plans.--Nothing in this section shall be 
construed to limit the rights and remedies available under State law 
with respect to supplemental health benefits plans.

                 ``Subpart B--Early Resolution Programs

``SEC. 21811. ESTABLISHMENT OF EARLY RESOLUTION PROGRAMS IN COMPLAINT 
              REVIEW OFFICES.

    ``(a) Establishment of Programs.--Each participating State shall 
establish and maintain an Early Resolution Program in each complaint 
review office in such State. The Program shall include--
            ``(1) the establishment and maintenance of forums for 
        mediation of disputes in accordance with this subpart, and
            ``(2) the establishment and maintenance of such forums for 
        other forms of alternative dispute resolution (including 
        binding arbitration) as may be prescribed in regulations of the 
        Secretary.
Each State shall ensure that the standards applied in Early Resolution 
Programs administered in such State which apply to any form of 
alternative dispute resolution described in paragraph (2), and which 
relate to time requirements, qualifications of facilitators, 
arbitrators, or other mediators, and confidentiality, are at least 
equivalent to the standards which apply to mediation proceedings under 
this subpart.
    ``(b) Duties of Complaint Review Offices.--Each complaint review 
office in a participating State--
            ``(1) shall administer its Early Resolution Program in 
        accordance with regulations of the Secretary,
            ``(2) shall, pursuant to subsection (a)(1)--
                    ``(A) recruit and train individuals to serve as 
                facilitators for mediation proceedings under the Early 
                Resolution Program from attorneys who have the 
                requisite expertise for such service, which shall be 
                specified in regulations of the Secretary,
                    ``(B) provide meeting sites, maintain records, and 
                provide facilitators with administrative support staff, 
                and
                    ``(C) establish and maintain attorney referral 
                panels,
            ``(3) shall ensure that, upon the filing of a complaint 
        with the office, the complainant is adequately apprised of the 
        complainant's options for review under this part, and
            ``(4) shall monitor and evaluate the Program on an ongoing 
        basis.

``SEC. 21812. INITIATION OF PARTICIPATION IN MEDIATION PROCEEDINGS.

    ``(a) Eligibility of Cases for Submission to Early Resolution 
Program.--A dispute may be submitted to the Early Resolution Program 
only if the following requirements are met with respect to the dispute:
            ``(1) Nature of dispute.--The dispute consists of--
                    ``(A) an assertion by an individual enrolled under 
                a health plan of one or more claims against the health 
                plan for payment or provision of benefits, based on 
                alleged coverage under the plan; and
                    ``(B) a denial by the plan of the claims or 
                appropriate reimbursement based on the claims.
            ``(2) Nature of disputed claim.--Each claim consists of--
                    ``(A) a claim for payment or provision of benefits 
                under the plan; or
                    ``(B) a request for information or documents the 
                disclosure of which is required under this title 
                (including claims of entitlement to disclosure based on 
                colorable claims to rights to benefits under the plan).
    ``(b) Filing of Election.--A complainant with a dispute which is 
eligible for submission to the Early Resolution Program may make the 
election under section 21803(a)(2) to submit the dispute to mediation 
proceedings under the Program not later than 15 days after the date the 
complaint is filed with the complaint review office under section 
21802(b).
    ``(c) Agreement To Participate.--
            ``(1) Election by claimant.--A complainant may elect 
        participation in the mediation proceedings only by entering 
        into a written participation agreement (including an agreement 
        to comply with the rules of the Program and consent for the 
        complaint review office to contact the health plan regarding 
        the agreement), and by releasing plan records to the Program 
        for the exclusive use of the facilitator assigned to the 
        dispute.
            ``(2) Participation by plans or health benefits 
        contractors.--Each party whose participation in the mediation 
        proceedings has been elected by a claimant pursuant to 
        paragraph (1) shall participate in, and cooperate fully with, 
        the proceedings. The claims review office shall provide such 
        party with a copy of the participation agreement described in 
        paragraph (1), together with a written description of the 
        Program. Such party shall submit the copy of the agreement, 
        together with its authorized signature signifying receipt of 
        notice of the agreement, to the claims review office, and shall 
        include in the submission to the claims review office a copy of 
        the written record of the plan claims procedure completed 
        pursuant to section 21801 with respect to the dispute and all 
        relevant plan documents. The relevant documents shall include 
        all documents under which the plan is or was administered or 
        operated, including copies of any insurance contracts under 
        which benefits are or were provided and any fee or 
        reimbursement schedules for health care providers.

``SEC. 21813. MEDIATION PROCEEDINGS.

    ``(a) Role of Facilitator.--In the course of mediation proceedings 
under the Early Resolution Program, the facilitator assigned to the 
dispute shall prepare the parties for a conference regarding the 
dispute and serve as a neutral mediator at such conference, with the 
goal of achieving settlement of the dispute.
    ``(b) Preparations for Conference.--In advance of convening the 
conference, the facilitator shall, after identifying the necessary 
parties and confirming that the case is eligible for the Program, 
analyze the record of the claims procedure conducted pursuant to 
section 21801 and any position papers submitted by the parties to 
determine if further case development is needed to clarify the legal 
and factual issues in dispute, and whether there is any need for 
additional information and documents.
    ``(c) Conference.--Upon convening the conference, the facilitator 
shall assist the parties in identifying undisputed issues and exploring 
settlement. If settlement is reached, the facilitator shall assist in 
the preparation of a written settlement agreement. If no settlement is 
reached, the facilitator shall present the facilitator's evaluation, 
including an assessment of the parties' positions, the likely outcome 
of further administrative action or litigation, and suggestions for 
narrowing the issues in dispute.
    ``(d) Time Limit.--The facilitator shall ensure that mediation 
proceedings with respect to any dispute under the Early Resolution 
Program shall be completed within 120 days after the election to 
participate. The parties may agree to one extension of the proceedings 
by not more than 30 days if the proceedings are suspended to obtain an 
agency ruling or to reconvene the conference in a subsequent session.
    ``(e) Inapplicability of Formal Rules.--Formal rules of evidence 
shall not apply to mediation proceedings under the Early Resolution 
Program. All statements made and evidence presented in the proceedings 
shall be admissible in the proceedings. The facilitator shall be the 
sole judge of the proper weight to be afforded to each submission. The 
parties to mediation proceedings under the Program shall not be 
required to make statements or present evidence under oath.
    ``(f) Representation.--Parties may participate pro se or be 
represented by attorneys throughout the proceedings of the Early 
Resolution Program.
    ``(g) Confidentiality.--
            ``(1) In general.--Under regulations of the Secretary, 
        rules similar to the rules under section 574 of title 5, United 
        States Code (relating to confidentiality in dispute resolution 
        proceedings), shall apply to the mediation proceedings under 
        the Early Resolution Program.
            ``(2) Civil remedies.--The Secretary may assess a civil 
        penalty against any person who discloses information in 
        violation of the regulations prescribed pursuant to paragraph 
        (1) in the amount of three times the amount of the claim 
        involved. The Secretary may bring a civil action to enforce 
        such civil penalty in any court of competent jurisdiction.

``SEC. 21814. LEGAL EFFECT OF PARTICIPATION IN MEDIATION PROCEEDINGS.

    ``(a) Process Nonbinding.--Findings and conclusions made in the 
mediation proceedings of the Early Resolution Program shall be treated 
as advisory in nature and nonbinding. Except as provided in subsection 
(b), the rights of the parties under subpart A shall not be affected by 
participation in the Program.
    ``(b) Resolution Through Settlement Agreement.--If a case is 
settled through participation in mediation proceedings under the 
Program, the facilitator shall assist the parties in drawing up an 
agreement which shall constitute, upon signature of the parties, a 
binding contract between the parties which is enforceable under section 
21815.
    ``(c) Preservation of Rights of Non-Parties.--The settlement 
agreement shall not have the effect of waiving or otherwise affecting 
any rights to review under subpart A, or any other right under this 
subtitle or the plan, with respect to any person who is not a party to 
the settlement agreement.

``SEC. 21815. ENFORCEMENT OF SETTLEMENT AGREEMENTS.

    ``(a) Enforcement.--Any party to a settlement agreement entered 
pursuant to mediation proceedings under this subpart may petition any 
court of competent jurisdiction for the enforcement of the agreement, 
by filing in the court a written petition praying that the agreement be 
enforced. In such a proceeding, the order of the hearing officer shall 
not be subject to review.
    ``(b) Court Review.--It shall be the duty of the court to advance 
on the docket, and to expedite to the greatest extent possible, the 
disposition of any petition filed under this section, with due 
deference to the role of settlement agreements under this subpart in 
achieving prompt resolution of disputes involving health plans.
    ``(c) Awarding of Attorney's Fees and Other Costs and Expenses.--In 
any action by an individual enrolled under a health plan for court 
enforcement under this section, a prevailing plaintiff shall be 
entitled to a reasonable attorney's fee, reasonable expert witness 
fees, and other reasonable costs and expenses relating to the charges 
on which the plaintiff prevails.

                          ``Subpart C--Funding

``SEC. 21816. AVAILABILITY OF TRUST FUND AMOUNTS.

    ``(a) In General.--There shall be available $100,000,000 in fiscal 
1995, $150,000,000 in each of the fiscal years 1996 through 1998, and 
$100,000,000 in each of the fiscal years 1999 through 2004 from the 
Health Security Trust Fund established under section 9551 of the 
Internal Revenue Code of 1986 to the Secretary to support participating 
States that have submitted applications in accordance with subsection 
(b) to establish and maintain complaint review systems and early 
resolution programs. The Secretary shall develop a formula for 
determining the appropriate awarding of funds to participating States 
submitting such applications.
    ``(b) Application.--For purposes of subsection (a), an application 
is in accordance with this subsection if the applicant submits the 
application to the Secretary at such time, in such manner, and 
containing such information and assurances as the Secretary may 
reasonably require.

       ``PART II--ADDITIONAL REMEDIES AND ENFORCEMENT PROVISIONS

``SEC. 21821. CIVIL ENFORCEMENT.

    ``Unless otherwise provided in this title, the district courts of 
the United States shall have jurisdiction of civil actions brought by--
            ``(1) the Secretary to enforce any final order of such 
        Secretary or to collect any civil monetary penalty assessed by 
        such Secretary under this title; and
            ``(2) the Secretary of Labor, in consultation with the 
        Secretary, to enforce any final order of such Secretary or to 
        collect any civil monetary penalty assessed by such Secretary 
        under this title.

``SEC. 21822. FACIAL CONSTITUTIONAL CHALLENGES.

    ``(a) Jurisdiction.--The United States District Court for the 
District of Columbia shall have original and exclusive jurisdiction of 
any civil action brought to invalidate any provision of, or amendment 
made by, the Health Security Act on the ground of its being repugnant 
to the Constitution of the United States on its face and for every 
purpose. In any action described in this subsection, the district court 
may not grant any temporary order or preliminary injunction restraining 
the enforcement, operation, or execution of any provision of, or 
amendment made by, the Health Security Act.
    ``(b) Convening of Three-Judge Court.--An action described in 
subsection (a) shall be heard and determined by a district court of 
three judges in accordance with section 2284 of title 28, United States 
Code.
    ``(c) Consolidation.--When actions described in subsection (a) 
involving a common question of law or fact are pending before a 
district court, the court shall order all the actions consolidated.
    ``(d) Direct Appeal to Supreme Court.--In any action described in 
subsection (a), an appeal may be taken directly to the Supreme Court of 
the United States from any final judgment, decree, or order in which 
the district court--
            ``(1) holds any provision of, or amendment made by, the 
        Health Security Act invalid; and
            ``(2) makes a determination that its holding will 
        materially undermine the application of such Act as a whole.
    ``(e) Construction.--This section does not limit--
            ``(1) the right of any person--
                    ``(A) to litigation concerning any provision of, or 
                amendment made by, the Health Security Act; or
                    ``(B) to petition the Supreme Court for review of 
                any holding of a district court by writ of certiorari 
                at any time before the rendition of judgment in a court 
                of appeals; or
            ``(2) the authority of the Supreme Court to grant a writ of 
        certiorari for the review described in paragraph (1)(B).

``SEC. 21823. TREATMENT OF PLANS AS PARTIES IN CIVIL ACTIONS.

    ``A health plan may sue or be sued under this title as an entity.

``SEC. 21824. GENERAL NONPREEMPTION OF RIGHTS AND REMEDIES.

    ``Nothing in this subtitle shall be construed to deny, impair, or 
otherwise adversely affect a right or remedy available under law to any 
person, except to the extent the right or remedy is inconsistent with 
this subtitle.

``SEC. 21825. NONDISCRIMINATION IN FEDERALLY ASSISTED PROGRAMS.

    ``Federal payments under this title shall be treated as Federal 
financial assistance for purposes of section 504 of the Rehabilitation 
Act of 1973 (29 U.S.C. 794), section 303 of the Age Discrimination Act 
of 1975 (42 U.S.C. 6102), and section 601 of the Civil Rights Act of 
1964 (42 U.S.C. 2000d).

         Subtitle B--Coordination With Other Provisions of Law

SEC. 111. MCCARRAN-FERGUSON REFORM.

    (a) In General.--Section 3 of the Act of March 9, 1945 (15 U.S.C. 
1013), known as the McCarran-Ferguson Act, is amended by adding at the 
end the following:
    ``(c) Notwithstanding that the business of insurance is regulated 
by State law, nothing in this Act shall limit the applicability of the 
following Acts to the business of insurance to the extent that such 
business relates to the provision of health benefits:
            ``(1) The Sherman Act (15 U.S.C. 1 et seq.).
            ``(2) The Clayton Act (15 U.S.C. 12 et seq.).
            ``(3) Federal Trade Commission Act (15 U.S.C. 41 et seq.).
            ``(4) The Act of June 19, 1936 (49 Stat. 1526; 15 U.S.C. 
        21a et seq.), known as the Robinson-Patman Antidiscrimination 
        Act.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect with respect to causes of action arising on or after 
January 1, 1996.

SEC. 112. OFFICE OF RURAL HEALTH POLICY.

    (a) Appointment of Assistant Secretary.--
            (1) In general.--Section 711(a) of the Social Security Act 
        (42 U.S.C. 912(a)) is amended--
                    (A) by striking ``by a Director, who shall advise 
                the Secretary'' and inserting ``by an Assistant 
                Secretary for Rural Health (in this section referred to 
                as the `Assistant Secretary'), who shall report 
                directly to the Secretary''; and
                    (B) by adding at the end the following new 
                sentence: ``The Office shall not be a component of any 
                other office, service, or component of the 
                Department.''.
            (2) Conforming amendments.--(A) Section 711(b) of the 
        Social Security Act (42 U.S.C. 912(b)) is amended by striking 
        ``the Director'' and inserting ``the Assistant Secretary''.
            (B) Section 338J(a) of the Public Health Service Act (42 
        U.S.C. 254r(a)) is amended by striking ``Director of the Office 
        of Rural Health Policy'' and inserting ``Assistant Secretary 
        for Rural Health''.
            (C) Section 464T(b) of the Public Health Service Act (42 
        U.S.C. 285p-2(b)) is amended in the matter preceding paragraph 
        (1) by striking ``Director of the Office of Rural Health 
        Policy'' and inserting ``Assistant Secretary for Rural 
        Health''.
            (D) Section 6213 of the Omnibus Budget Reconciliation Act 
        of 1989 (42 U.S.C. 1395x note) is amended in subsection (e)(1) 
        by striking ``Director of the Office of Rural Health Policy'' 
        and inserting ``Assistant Secretary for Rural Health''.
            (E) Section 403 of the Ryan White Comprehensive AIDS 
        Resources Emergency Act of 1990 (42 U.S.C. 300ff-11 note) is 
        amended in the matter preceding paragraph (1) of subsection (a) 
        by striking ``Director of the Office of Rural Health Policy'' 
        and inserting ``Assistant Secretary for Rural Health''.
            (3) Amendment to the executive schedule.--Section 5315 of 
        title 5, United States Code, is amended by striking ``Assistant 
        Secretaries of Health and Human Services (5)'' and inserting 
        ``Assistant Secretaries of Health and Human Services (6)''.
    (b) Expansion of Duties.--Section 711(a) of the Social Security Act 
(42 U.S.C. 912(a)) is amended by striking ``and access to (and the 
quality of) health care in rural areas'' and inserting ``access to, and 
quality of, health care in rural areas, and reforms to the health care 
system and the implications of such reforms for rural areas''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on January 1, 1996.

SEC. 113. AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
              1974.

    (a) 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. (a) 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 Security Act 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 
Security Act as they relate to group health plans.
    ``(c) Group Health Plan.--For purposes of this section, the term 
`group health plan' means an employee welfare benefit plan which 
provides medical care (as defined in section 213(d) of the Internal 
Revenue Code of 1986) to participants or beneficiaries directly or 
through insurance, reimbursement, or otherwise.''
            (2) 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.''
    (b) Coordination With Health Security Act.--
            (1) Enforcement.--Section 502(a)(1)(B) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 
        1132(a)(1)(B)) is amended by inserting ``except in the case of 
        an action by any participant, beneficiary, or fiduciary to 
        which subtitle H of title XXI of the Social Security Act 
        applies,'' before ``to recover''.
            (2) Preemption of state laws.--Section 514(b) of such Act 
        (29 U.S.C. 1144(b)) is amended by adding at the end the 
        following new paragraph:
            ``(9) Subsection (a) shall not apply to any law of any 
        State which implements a State single-payer system under part 
        II of subtitle A of title XXI of the Social Security Act.''
    (c) Repeal of Multiple Employer Welfare Arrangements.--
            (1) In general.--Paragraph (40) of section 3 of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1002(40)) is repealed.
            (2) Conforming amendment.--Paragraph (6) of section 514(b) 
        of such Act (29 U.S.C. 1144(b)(6)) is repealed.
    (d) Effective Date.--The amendments made by this section shall take 
effect on January 1, 1996.

                           TITLE II--COVERAGE

SEC. 201. COVERAGE.

    The Social Security Act, as amended by section 101, is amended by 
adding at the end the following new title:

                         ``TITLE XXII--COVERAGE

                          ``table of contents

``Sec. 2201. National Health Care Commission.
``Sec. 2202. Duties of Commission.
``Sec. 2203. Congressional consideration of Commission recommendations.
``Sec. 2204. Operation of the Commission.

``SEC. 2201. NATIONAL HEALTH CARE COMMISSION.

    ``There is established a commission to be known as the National 
Health Care Commission (in this title referred to as the `Commission').

``SEC. 2202. DUTIES OF COMMISSION.

    ``(a) In General.--The general duties of the Commission are to 
monitor and respond to--
            ``(1) trends in health insurance coverage; and
            ``(2) changes in per-capita premiums and other indicators 
        of health care inflation.
The Commission may be advised by individuals with expertise concerning 
the economic, demographic, and insurance market factors that affect the 
cost and availability of health insurance.
    ``(b) Biennial Reports.--
            ``(1) In general.--The Commission shall report to Congress 
        biennially on January 1 (beginning in 1996) on the status of 
        health insurance coverage in the nation and the national goal 
        of universal coverage.
            ``(2) Health insurance coverage.--For purposes of this 
        title, the term `health insurance coverage' means coverage 
        under--
                    ``(A) a certified standard health plan providing a 
                standard benefits package or an alternative standard 
                benefits package;
                    ``(B) the medicare program under title XVIII;
                    ``(C) the medicaid program under title XIX;
                    ``(D) the health care program for active military 
                personnel under title 10, United States Code;
                    ``(E) the veterans health care program under 
                chapter 17 of title 38, United States Code;
                    ``(F) the Civilian Health and Medical Program of 
                the Uniformed Services (CHAMPUS), as defined in section 
                1073(4) of title 10, United States Code;
                    ``(G) the Indian health service program under the 
                Indian Health Care Improvement Act (25 U.S.C. 1601 et 
                seq.);
                    ``(H) a State single-payer system approved by the 
                Secretary under section 21031; or
                    ``(I) any governmental health care program for 
                institutionalized individuals.
            ``(3) Contents of report.--Each biennial report shall 
        include the structure and performance measures of every 
        community rating area, including the following:
                    ``(A) Demographics of the uninsured individuals, 
                and findings on why such individuals are uninsured.
                    ``(B) Structure of delivery systems.
                    ``(C) Number and organizational form of certified 
                standard health plans described in paragraph (2)(A).
                    ``(D) Level of enrollment in such certified 
                standard health plans.
                    ``(E) State implementation of responsibilities, 
                including establishment of community rating areas, 
                under title XXI.
                    ``(F) Status of insurance reforms.
                    ``(G) Development of purchasing cooperatives and 
                other buyer reforms.
                    ``(H) Success of market and other mechanisms of 
                controlling health expenditures and premium costs in 
                the community rating areas and nationally.
                    ``(I) Status of medicaid-eligible individuals under 
                the medicaid program under title XIX, the integration 
                of such individuals into coverage by certified standard 
                health plans providing standard benefits packages, and 
                the transition of such program toward managed care.
                    ``(J) Adequacy of subsidies for individuals under 
                part B of title XIX.
                    ``(K) Status of medicare-eligible individuals under 
                the medicare program under title XVIII, the integration 
                of such individuals into coverage by certified standard 
                health plans providing standard benefits packages, and 
                the transition of such program into medicare risk 
                contracts.
                    ``(L) Coverage progress among individuals who are 
                employed, including status and level of voluntary 
                employer contributions and participation rates in 
                purchasing cooperatives and among large employers.
                    ``(M) Percentage of individuals who are enrolled in 
                certified standard health plans described in paragraph 
                (2)(A), separated into categories of medicare-eligible 
                individuals, medicaid-eligible individuals, employed 
                individuals, and individuals eligible for subsidies.
                    ``(N) Recommendations, specific to each community 
                rating area, on how the area might increase coverage 
                among the residents and further moderate growth in 
                premiums.
            ``(4) Prohibited activity.--In carrying out its duties, 
        including the preparation of any biennial report, the 
        Commission may not address issues related to defining an 
        employee for tax purposes, including discussing such issues 
        with the Internal Revenue Service or the Department of the 
        Treasury.
    ``(c) Coverage Trigger.--
            ``(1) In general.--In the event the Commission determines 
        that health insurance coverage of at least 95 percent of the 
        resident population in the United States will not be attained 
        by 2002, the Commission shall submit recommendations in its 
        biennial report to Congress on January 1, 2002.
            ``(2) Recommendation requirements.--
                    ``(A) In general.--The recommendations of the 
                Commission shall include methods to reach 95 percent 
                health insurance coverage in community rating areas 
                that have failed to meet that target. Such 
                recommendations shall address all relevant parties, 
                including States, employers, employees, unemployed and 
                low-income individuals, and public program 
                participants.
                    ``(B) Required separate recommendations.--In 
                addition to any other recommendations the Commission 
                submits, the Commission shall make separate 
                recommendations on the following:
                            ``(i) A schedule of assessments or 
                        contribaaaaaaaautions to encourage employers 
                        who are not doing so to purchase coverage for 
                        their employees.
                            ``(ii) A method of encouraging full 
                        coverage which does not require any assessments 
                        on or contributions from employers.
                            ``(iii) Possible adjustments to the 
                        actuarial value of any of the benefits packages 
                        described in subsection (b)(2)(A).
                            ``(iv) Possible adjustments to subsidies 
                        under part B of title XIX.
                            ``(v) Possible adjustments to the tax 
                        treatment of health benefits.
                The Commission shall inform the National Health 
                Benefits Board of any recommendations relating to 
                clause (iii).
            ``(3) Implementing bill.--The Commission shall submit to 
        the Congress an implementing bill which contains such statutory 
        provisions as the Commission determines are necessary or 
        appropriate to implement the recommendations developed under 
        this subsection.
    ``(d) Definitions.--For purposes of aythis title--
            ``(1) Alternative standard benefits package.--The term 
        `alternative standard benefits package' means the alternative 
        standard benefits package established under subtitle C of title 
        XXI.
            ``(2) Certified standard health plan.--The term `certified 
        standard health plan' has the meaning given such term by 
        section 21011(a)(2).
            ``(3) Community rating area.--The term `community rating 
        area' means an area established under section 21021.
            ``(4) Purchasing cooperative.--The term `purchasing 
        cooperative' has the meaning given such term by section 
        21100(14).
            ``(5) Resident population.--The term `resident population' 
        includes any individual who is residing in the United States 
        and who is--
                    ``(A) a citizen or national of the United States; 
                or
                    ``(B) an alien permanently residing in the United 
                States under color of law (as defined in section 
                1958(4)(C)).
            ``(6) Standard benefits package.--The term `standard 
        benefits package' means the standard benefits package 
        established under subtitle C of title XXI.
            ``(7) United states.--The term `United States' means the 
        various States (as defined in section 21100(16)).

``SEC. 2203. CONGRESSIONAL CONSIDERATION OF COMMISSION RECOMMENDATIONS.

    ``(a) In General.--An implementing qbill described in section 
2202(c)(3) shall be considered by Congress under the procedures for 
consideration described in subsection (b).
    ``(b) Congressional Consideration.--
            ``(1) Rules of house of representatives and senate.--This 
        subsection is enacted by Congress--
                    ``(A) 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 an implementing bill described in subsection 
                (a), and supersedes other rules only to the extent that 
                such rules are inconsistent therewith; and
                    ``(B) 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.
            ``(2) Introduction and referral.--On the day on which the 
        implementing bill described in subsection (as) is transmitted 
        to the House of Representatives and the Senate, such bill shall 
        be introduced (by request) in the House of Representatives by 
        the majority leaderyay 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 
        the implementing bill is transmitted, the bill shall be 
        introduced in that House, as provided in the preceding 
        sentence, on the first day thereafter on which that House is in 
        session. If the implementing bill is not introduced within 5 
        days of its transmission, any Member of the House and of the 
        Senate may introduce such bill. The implementing bill 
        introduced in the House of Representatives and the Senate shall 
        be referred to the appropriate committees of each House.
            ``(3) Period for committee consideration.--If the committee 
        or committees of either House to which an implementing bill has 
        been referred have not reported the bill at the close of July 
        1, 2002 (or if such House is not in session, the next day such 
        House is in session), such committee or committees shall be 
        automatically discharged from further consideration of the 
        implementing bill and it shall be placed on the appropriate 
        calendar.
            ``(4) Floor consideration in the senate.--
                    ``(A) In general.--Within 5 days after the 
                implementing bill is placed on the calendar, the 
                majority leader, at a time to be determined by the 
                majority leader in consultation with the minority 
                leader, shall proceed to the consideration of the bill. 
                If on the sixth day after the bill is placed on the 
                calendar, the Senate has not proceeded to consideration 
                of the bill, then the presiding officer shall 
                automatically place the bill before the Senate for 
                consideration. A motion in the Senate to proceed to the 
                consideration of an implementing bill 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.
                    ``(B) Time limitation on consideration of bill.--
                            ``(i) In general.--Debate in the Senate on 
                        an implementing bill, and all amendments and 
                        debatable motions and appeals in connection 
                        therewith, shall be limited to not more than 30 
                        hours. The time shall be equally divided 
                        between, and controlled by, the majority leader 
                        and the minority leader or their designees.
                            ``(ii) Debate of amendments, motions, 
                        points of order, and appeals.--In the Senate, 
                        no amendment which is not relevant to the bill 
                        shall be in order. Debate in the Senate on any 
                        amendment, debatable motion or appeal, or point 
                        of order in connection with an implementing 
                        bill shall be limited to--
                                    ``(I) not more than 2 hours for 
                                each first degree relevant amendment,
                                    ``(II) one hour for each second 
                                degree relevant amendment, and
                                    ``(III) 30 minutes for each 
                                debatable motion or appeal, or point of 
                                order submitted to the Senate,
                        to be equally divided between, and controlled 
                        by, the mover and the manager of the 
                        implementing bill, except that in the event the 
                        manager of the implementing bill is in favor of 
                        any such amendment, motion, appeal, or point of 
                        order, the time in opposition thereto, shall be 
                        controlled by the minority leader or designee 
                        of the minority leader. The majority leader and 
                        minority leader, or either of them, may, from 
                        time under their control on the passage of an 
                        implementing bill, allot additional time to any 
                        Senator during the consideration of any 
                        amendment, debatable motion or appeal, or point 
                        of order.
                    ``(C) Other motions.--A motion to recommit an 
                implementing bill is not in order.
                    ``(D) Final passage.--Upon the expiration of the 30 
                hours available for consideration of the implementing 
                bill, it shall not be in order to offer or vote on any 
                amendment to, or motion with respect to, such bill. 
                Immediately following the conclusion of debate in the 
                Senate on an implementing bill that was introduced in 
                the Senate, such bill shall be deemed to have been read 
                a third time and the vote on final passage of such bill 
                shall occur without any intervening action or debate.
                    ``(E) Debate on differences between the houses.--
                Debate in the Senate on motions and amendments 
                appropriate to resolve the differences between the 
                Houses, at any particular stage of the proceedings, 
                shall be limited to not more than 5 hours.
                    ``(F) Debate on conference report.--Debate in the 
                Senate on the conference report shall be limited to not 
                more than 10 hours.
            ``(5) Floor consideration in the house of 
        representatives.--
                    ``(A)  Proceed to consideration.--On the sixth day 
                after the implementing bill is placed on the calendar, 
                it shall be privileged for any Member to move without 
                debate that the House resolve itself into the Committee 
                of the Whole House on the state of the Union, for the 
                consideration of the bill, and the first reading of the 
                bill shall be dispensed with.
                    ``(B) General debate.--After general debate, which 
                shall be confined to the implementing bill and which 
                shall not exceed 4 hours, to be equally divided and 
                controlled by the chairman and ranking minority member 
                of the Committee or Committees to which the bill had 
                been referred, the bill shall be considered for 
                amendment by title under the 5-minute rule and each 
                title shall be considered as having been read. The 
                total time for considering all amendments shall be 
                limited to 26 hours of which the total time for 
                debating each amendment under the 5-minute rule shall 
                not exceed one hour.
                    ``(C) Rise and report.--At the conclusion of the 
                consideration of the implementing bill for amendment, 
                the Committee of the Whole on the state of the Union 
                shall rise and report the bill to the House with such 
                amendments as may have been adopted, and the previous 
                question shall be considered as ordered on the bill and 
                the amendments thereto, and the House shall proceed to 
                vote on final passage without intervening motion except 
                one motion to recommit.
            ``(6) Computation of days.--For purposes of this 
        subsection, in computing a number of days in either House, 
        there shall be excluded--
                    ``(A) the days on which either House is not in 
                session because of an adjournment of more than 3 days 
                to a day certain, or an adjournment of the Congress 
                sine die, and
                    ``(B) any Saturday and Sunday not excluded under 
                subparagraph (A) when either House is not in session.

``SEC. 2204. OPERATION OF THE COMMISSION.

    ``(a) Membership.--
            ``(1) In general.--The Commission shall be composed of 7 
        members appointed by the President and confirmed by the Senate. 
        Members shall be appointed not later than 90 days after the 
        date of the enactment of this title.
            ``(2) 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 
markets. In appointing members of the Commission, the President shall 
ensure that no more than 4 members of the Commission are affiliated 
with the same political party.
    ``(c) Terms.--
            ``(1) In general.--The terms of members of the Commission 
        shall be for 6 years, except that of the members first 
        appointed, 2 shall be appointed for an initial term of 4 years 
        and 2 shall be appointed for an initial term of 2 years.
            ``(2) Continuation in office.--Upon the expiration of a 
        term of office, a member shall continue to serve until a 
        successor is appointed and qualified.
    ``(d) Vacancies.--
            ``(1) In general.--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.
            ``(2) No impairment of function.--A vacancy in the 
        membership of the Commission does not impair the authority of 
        the remaining members to exercise all of the powers of the 
        Commission.
            ``(3) Acting chairperson.--The Commission may designate a 
        member to act as Chairperson during any period in which there 
        is no Chairperson designated by the President.
    ``(e) Meetings; Quorum.--
            ``(1) Meetings.--The Chairperson shall preside at meetings 
        of the Commission, and in the absence of the Chairperson, the 
        Commission shall elect a member to act as Chairperson pro 
        tempore.
            ``(2) Quorum.--Four members of the Commission shall 
        constitute a quorum thereof.
    ``(f) Administrative Provisions.--
            ``(1) FACA not applicable.--The Federal Advisory Committee 
        Act (5 U.S.C. App.) shall not apply to the Commission.
            ``(2) Pay and travel expenses.--
                    ``(A) Pay.--Each member 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) 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) Executive director.--
                    ``(A) In general.--The Commission shall, without 
                regard to section 5311(b) of title 5, United States 
                Code, appoint an Executive Director.
                    ``(B) Pay.--The Executive Director shall be paid at 
                a rate equivalent to a rate for the Senior Executive 
                Service.
            ``(4) Staff.--
                    ``(A) In general.--Subject to subparagraphs (B) and 
                (C), the Executive Director, with the approval of the 
                Commission, may appoint and fix the pay of additional 
                personnel.
                    ``(B) Pay.--The Executive 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.--Upon request of the 
                Executive 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.
            ``(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.
    ``(f) Authorization of appropriations.--There are authorized to be 
appropriated such sums as are necessary for the operation of the 
Commission.

             TITLE III--PREMIUM AND COST-SHARING ASSISTANCE

SEC. 301. PREMIUM AND COST-SHARING ASSISTANCE.

    (a) Medicaid State Plan Requirement.--Section 1902(a) of the Social 
Security Act (42 U.S.C. 1396a(a)), as amended by section 101(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) provide for a State program furnishing premium and 
        cost-sharing assistance in accordance with part B.''.
    (b) State Programs for Premium and Cost-Sharing Assistance.--Title 
XIX of the Social Security Act (42 U.S.C. 1396 et seq.) is amended by 
adding at the end the following new part:

    ``PART B--STATE PROGRAMS FOR PREMIUM AND COST-SHARING ASSISTANCE

``SEC. 1951. REQUIREMENT TO OPERATE STATE PROGRAM.

    ``(a) In General.--A State with a State plan approved under part A 
shall have in effect a program--
            ``(1) for furnishing premium assistance under section 
        1952--
                    ``(A) to individuals with incomes below certain 
                income thresholds described in section 1952(a)(2)(A)(i) 
                in calendar years beginning after 1996; and
                    ``(B) to children and pregnant women described in 
                section 1952(a)(2)(A)(ii) in calendar years beginning 
                after 1995; and
            ``(2) for determining eligibility for cost-sharing 
        assistance under section 1953 in calendar years beginning after 
        1996.
    ``(b) State Option.--A State may have in effect a program--
            ``(1) for furnishing premium assistance under section 1952 
        to individuals with incomes below certain income thresholds 
        described in section 1952(a)(2)(A)(i) during 1996; and
            ``(2) for determining eligibility for cost-sharing 
        assistance under section 1953 during 1996.
    ``(c) Designation of State Agency.--A State may designate any 
appropriate State agency to administer the program under this part.

``SEC. 1952. ASSISTANCE WITH CERTIFIED STANDARD HEALTH PLAN PREMIUMS.

    ``(a) Eligibility.--
            ``(1) In general.--An eligible individual (as defined in 
        section 1958(3)) who has been determined by a State under 
        section 1954 to be a premium subsidy eligible individual (as 
        defined in paragraph (2)) shall be entitled to premium 
        assistance in the amount determined under subsection (b).
            ``(2) Premium subsidy eligible individual.--
                    ``(A) In general.--For purposes of this part, the 
                term `premium subsidy eligible individual' means any of 
                the following individuals:
                            ``(i) Individuals with incomes below 
                        certain income thresholds.--An eligible 
                        individual who has a family income determined 
                        under section 1958(2) which does not exceed the 
                        eligibility percentage specified in 
                        subparagraph (B) of the poverty line (as 
                        defined in section 1958(5)).
                            ``(ii) Children and pregnant women.--An 
                        eligible individual who is a child under 18 
                        years of age or a pregnant woman (as defined in 
                        section 1958(6)) and has a family income 
                        determined under section 1958(2) which does not 
                        exceed 240 percent of the poverty line.
                            ``(iii) Reduction in eligibility 
                        percentages.--For requirement that the 
                        President reduce the percentage of the poverty 
                        line applicable to an individual's family 
                        income for purposes of determining eligibility 
                        for premium assistance under this section, see 
                        section 801 of the Health Security Act.
                    ``(B) Eligibility percentage.--
                            ``(i) In general.--The eligibility 
                        percentage shall be determined under the 
                        following table:
                                                             Applicable
``Calendar year:
                                                eligibility percentage:
        1996.........................................           100    
        1997.........................................           125    
        1998.........................................           150    
        1999.........................................           175    
        2000.........................................           200    
    ``(b) Amount of Assistance.--
            ``(1) In general.--
                    ``(A) Determination of amount.--Except as provided 
                in paragraph (4), the amount of premium assistance for 
                a month for a premium subsidy eligible individual is 
                the lesser of--
                            ``(i) the premium assistance amount 
                        determined under paragraph (2); or
                            ``(ii) the amount of the premium for 
                        coverage under the certified standard health 
                        plan (as defined in section 1958(1)) in which 
                        the individual is enrolled that is not paid (or 
                        offered to be paid) on behalf of such 
                        individual by an employer.
                    ``(B) Special rule for determining amount of 
                employer payments.--If an employer makes a payment 
                toward the premium for coverage under a certified 
                standard health plan on behalf of a family (rather than 
                any particular individual) such contribution shall be 
                allocated ratably among the individuals in the family.
            ``(2) Premium assistance amount determined.--
                    ``(A) In general.--The premium assistance amount 
                determined under this paragraph is an amount equal to 
                the lesser of--
                            ``(i) the subsidy percentage specified in 
                        paragraph (3) multiplied by \1/12\th of the 
                        annual premium for coverage under the certified 
                        standard health plan in which the individual is 
                        enrolled, or
                            ``(ii) the subsidy percentage specified in 
                        paragraph (3) multiplied by \1/12\th of the 
                        weighted average annual premium for the 
                        individual's class of enrollment (determined in 
                        accordance with subparagraph (B)) for all 
                        community-rated certified standard health plans 
                        offered in the community rating area in which 
                        the individual resides.
                    ``(B) Determination of weighted average annual 
                premium.--For purposes of subparagraph (A)(ii), the 
                weighted average annual premium for a class of 
                enrollment under community-rated certified standard 
                health plans offered in a community rating area shall 
                be based on the number of primary enrollees in such 
                class enrolled in each of the plans.
            ``(3) Subsidy percentage.--For purposes of paragraph 
        (2)(A), the term `subsidy percentage' means the following:
                    ``(A) Individuals with incomes below certain income 
                thresholds.--
                            ``(i) Percentage determined.--For a premium 
                        subsidy eligible individual described in 
                        subsection (a)(2)(A)(i)--
                                    ``(I) for 1997, 100 percent reduced 
                                (but not below zero) by the product of 
                                the applicable factor determined under 
                                clause (ii) multiplied by the number of 
                                percentage points (rounded to the 
                                nearest whole number) by which such 
                                individual's family income exceeds 100 
                                percent of the poverty line; and
                                    ``(II) for succeeding years, 100 
                                percent reduced (but not below zero) by 
                                1 percentage point for each 1 
                                percentage point by which such 
                                individual's family income exceeds 100 
                                percent of the poverty line.
                            ``(ii) Applicable factor.--The applicable 
                        factor determined under this clause for a 
                        calendar year is the number equal to the 
                        quotient of--
                                    ``(I) 100, divided by
                                    ``(II) the eligibility percentage 
                                for the year determined under 
                                subsection (a)(2)(B) (expressed as a 
                                whole number) minus 100.
                    ``(B) Children and pregnant women.--For a premium 
                subsidy eligible individual described in subsection 
                (a)(2)(A)(ii)--
                            ``(i) 100 percent if the individual's 
                        family income does not exceed 185 percent of 
                        the poverty line;
                            ``(ii) 80 percent if the individual's 
                        family income exceeds 185 percent of the 
                        poverty line but does not exceed 200 percent of 
                        the poverty line;
                            ``(iii) 60 percent if the individual's 
                        family income exceeds 200 percent of the 
                        poverty line but does not exceed 215 percent of 
                        the poverty line;
                            ``(iv) 40 percent if the individual's 
                        family income exceeds 215 percent of the 
                        poverty line but does not exceed 230 percent of 
                        the poverty line; and
                            ``(v) 20 percent if the individual's family 
                        income exceeds 230 percent of the poverty line 
                        but does not exceed 240 percent of the poverty 
                        line.
            ``(4) Minimum amount.--
                    ``(A) In general.--If the total amount determined 
                under paragraph (1) with respect to all premium subsidy 
                eligible individuals in a family for a year (determined 
                as if the individuals were eligible for subsidies for 
                the entire year) does not exceed the amount determined 
                under subparagraph (B) the individuals shall not be 
                eligible to receive premium assistance under this 
                section.
                    ``(B) Amount determined.--The amount determined 
                under this subparagraph shall be--
                            ``(i) for 1996, $150; and
                            ``(ii) for 1997 and succeeding years, an 
                        amount equal to the amount determined under 
                        this subparagraph for the previous year updated 
                        through the midpoint of the year by the 
                        estimated percentage change in the medical 
                        consumer price index (as defined in section 
                        1958(4)) during the 12-month period ending at 
                        that midpoint, with appropriate adjustments to 
                        reflect previous underestimations or 
                        overestimations under this subparagraph in the 
                        projected percentage change in the medical 
                        consumer price index.
                    ``(C) Rounding.--Any amount determined under 
                subparagraph (B)(ii) for a year shall be rounded to the 
                nearest multiple of $5.
    ``(c) Payments.--
            ``(1) In general.--The amount of the premium assistance 
        available to a premium subsidy eligible individual under 
        subsection (b) shall be paid by the State in which the 
        individual resides directly to the certified standard health 
        plan in which the individual is enrolled. Payments under the 
        preceding sentence shall commence in the first month during 
        which the individual is enrolled in a certified standard health 
        plan and determined under section 1954 to be a premium subsidy 
        eligible individual.
            ``(2) Administrative errors.--A State is financially 
        responsible for premium assistance paid based on an eligibility 
        determination error to the extent the State's error rate for 
        eligibility determinations exceeds a maximum permissible error 
        rate to be specified by the Secretary.

``SEC. 1953. ASSISTANCE WITH CERTIFIED STANDARD HEALTH PLAN COST-
              SHARING.

    ``(a) Eligibility.--
            ``(1) In general.--An eligible individual who has been 
        determined by a State under section 1954 to be a cost-sharing 
        subsidy eligible individual (as defined in paragraph (2)) shall 
        be eligible for cost-sharing assistance as described in 
        subsection (b). If a State determines that an individual is a 
        cost-sharing eligible individual, the State shall notify the 
        certified standard health plan in which such individual is 
        enrolled of such determination in a timely manner.
            ``(2) Cost-sharing subsidy eligible individual.--For 
        purposes of this part, the term `cost-sharing subsidy eligible 
        individual' means an eligible individual who has a family 
        income determined under section 1958(2) which does not exceed 
        100 percent of the poverty line.
    ``(b) Cost-sharing assistance.--In the case of a cost-sharing 
subsidy eligible individual who is enrolled in a certified standard 
health plan, the cost-sharing assistance under this subsection shall 
consist of the plan's reduction in the cost-sharing otherwise imposed 
under the plan to amounts that are determined appropriate by the 
National Health Benefits Board under section 21213(d).
    ``(c) Termination of Cost-Sharing Assistance.--An individual's 
eligibility for cost-sharing assistance under this section shall 
terminate the month immediately following a month in which the State 
determines that the individual is no longer a cost-sharing subsidy 
eligible individual.

``SEC. 1954. ELIGIBILITY DETERMINATIONS.

    ``(a) In General.--The Secretary shall promulgate regulations 
specifying requirements for State programs under this part with respect 
to determining eligibility for premium and cost-sharing assistance, 
including requirements with respect to--
            ``(1) application procedures;
            ``(2) information verification procedures;
            ``(3) timeliness of eligibility determinations;
            ``(4) procedures for applicants to appeal adverse 
        decisions; and
            ``(5) any other matters determined appropriate by the 
        Secretary.
    ``(b) Specifications for Regulations.--The regulations promulgated 
by the Secretary under subsection (a) shall include the following 
requirements:
            ``(1) Frequency of applications.--A State program shall 
        provide that an individual may file an application for 
        assistance with an agency designated by the State at any time, 
        in person or by mail.
            ``(2) Application form.--A State program shall provide for 
        the use of an application form developed by the Secretary under 
        subsection (c).
            ``(3) Distribution of Applications.--A State program shall 
        distribute applications for assistance through employers and 
        appropriate public agencies.
            ``(4) Requirement to submit revised application.--A State 
        program shall, in accordance with regulations promulgated by 
        the Secretary, require individuals to submit revised 
        applications during a year to reflect changes in estimated 
        family incomes, including changes in employment status of 
        family members, during the year. The State shall revise the 
        amount of any premium assistance based on such a revised 
        application.
            ``(5) Presumptive eligibility for pregnant women.--A State 
        program shall, in accordance with regulations promulgated by 
        the Secretary, establish a system under which pregnant women 
        may be determined presumptively eligible for assistance under 
        this part for a period determined appropriate by the Secretary.
            ``(6) AFDC applicants.--A State program shall include a 
        procedure under which individuals applying for benefits under 
        title IV shall have an opportunity to apply for assistance 
        under this part in connection with such application.
            ``(7) Verification.--A State program shall provide for 
        verification of the information supplied in applications under 
        this part. Such verification may include examining return 
        information disclosed to the State for such purpose under 
        section 6103(l)(15) of the Internal Revenue Code of 1986.
    ``(c) Administration of State Programs.--
            ``(1) In general.--The Secretary shall establish standards 
        for States operating programs under this part which ensure that 
        such programs are operated in a uniform manner with respect to 
        application procedures, data processing systems, and such other 
        administrative activities as the Secretary determines to be 
        necessary.
            ``(2) Application forms.--The Secretary shall develop an 
        application form for assistance which shall--
                    ``(A) be simple in form and understandable to the 
                average individual;
                    ``(B) require the provision of information 
                necessary to make a determination as to whether an 
                individual is a premium or cost-sharing subsidy 
                eligible individual including a declaration of 
                estimated income by the individual based, at the 
                election of the individual--
                            ``(i) on multiplying by a factor of 4 the 
                        individual's family income for the 3-month 
                        period immediately preceding the month in which 
                        the application is made, or
                            ``(ii) on estimated income for the entire 
                        year for which the application is submitted; 
                        and
                    ``(C) require attachment of such documentation as 
                deemed necessary by the Secretary in order to ensure 
                eligibility for assistance.
            ``(3) Outreach activities.--A State operating a program 
        under this part shall conduct such outreach activities as the 
        Secretary determines appropriate.
    ``(d) Effectiveness of Eligibility for Premium Subsidies.--A 
determination by a State that an individual is a premium subsidy 
eligible individual shall be effective for the calendar year for which 
such determination is made unless a revised application submitted under 
subsection (b)(4) indicates that an individual is no longer eligible 
for premium assistance.
    ``(e) Penalties for Material Misrepresentations.--
            ``(1) In general.--Any individual who knowingly makes a 
        material misrepresentation of information in an application for 
        assistance under this part shall be liable to the Federal 
        Government for the amount any premium assistance and cost-
        sharing assistance received by individual on the basis of a 
        misrepresentation and interest on such amount at a rate 
        specified by the Secretary, and shall, in addition, be liable 
        to the Federal Government for $2,000 or, if greater, 3 times 
        the amount any premium assistance and cost-sharing assistance 
        received by individual on the basis of a misrepresentation.
            ``(2) Collection of penalty amounts.--A State which 
        receives an application for assistance with respect to which a 
        material misrepresentation has been made shall collect the 
        penalty amount required under paragraph (1) and submit 50 
        percent of such amount to the Secretary in a timely manner.

``SEC. 1955. END-OF-YEAR RECONCILIATION FOR PREMIUM ASSISTANCE.

    ``(a) In General.--
            ``(1) Requirement to file statement.--An individual who 
        received premium assistance under this part from a State for 
        any month in a calendar year shall file with the State an 
        income reconciliation statement to verify the individual's 
        family income for the year. Such a statement shall be filed at 
        such time, and contain such information, as the State may 
        specify in accordance with regulations promulgated by the 
        Secretary.
            ``(2) Notice of requirement.--A State shall provide a 
        written notice of the requirement under paragraph (1) at the 
        end of the year to an individual who received premium 
        assistance under this part from such State in any month during 
        the year.
    ``(b) Reconciliation of Premium Assistance Based on Actual 
Income.--
            ``(1) In general.--Based on and using the income reported 
        in the reconciliation statement filed under subsection (a) with 
        respect to an individual, the State shall compute the amount of 
        premium assistance that should have been provided under this 
        part with respect to the individual for the year involved.
            ``(2) Overpayment of assistance.--If the total amount of 
        the premium assistance provided was greater than the amount 
        computed under paragraph (1), the individual is liable to the 
        State to pay an amount equal to the amount of the excess 
        payment. Any amount collected by a State under this paragraph 
        shall be submitted to the Secretary in a timely manner.
            ``(3) Underpayment of assistance.--If the total amount of 
        the premium assistance provided was less than the amount 
        computed under paragraph (1), the State shall pay to the 
        individual an amount equal to the amount of the deficit.
            ``(4) State option.--A State may, in accordance with 
        regulations promulgated by the Secretary, establish a procedure 
        under which any overpayments or underpayments of premium 
        assistance determined under paragraphs (2) and (3) with respect 
        to an individual for a year may be collected or paid, as 
        appropriate, through adjustments to the premium assistance 
        furnished to such individual in the succeeding year.
    ``(c) Verification.--Each State may use such information as it has 
available to verify income of individuals with applications filed under 
this part, including return information disclosed to the State for such 
purpose under section 6103(l)(15) of the Internal Revenue Code of 1986.
    ``(d) Penalties for Failure to File.--In the case of an individual 
who is required to file a statement under this section in a year who 
fails to file such a statement by such date as the Secretary shall 
specify in regulations, the entire amount of the premium assistance 
provided in such year shall be considered an excess amount under 
subsection (b)(2) and such individual shall not be eligible for premium 
assistance under this part until such statement is filed. A State, 
using rules established by the Secretary, shall waive the application 
of this subsection if the individual establishes, to the satisfaction 
of the State under such rules, good cause for the failure to file the 
statement on a timely basis.
    ``(e) Penalties for False Information.--Any individual who provides 
false information in a statement filed under subsection (a) is subject 
to the same penalties as are provided under section 1954(e) for a 
misrepresentation of material fact described in such section.
    ``(f) No Reconciliation for Cost-Sharing Reductions.--No 
reconciliation statement is required under this section with respect to 
cost-sharing assistance provided under section 1953.

``SEC. 1956. PAYMENTS TO STATES.

    ``(a) In General.--
            ``(1) Payments for premium assistance.--A State operating a 
        program for furnishing premium assistance under section 1952 
        shall be entitled to receive payments in an amount equal to the 
        amount of premium assistance paid on behalf of premium subsidy 
        eligible individuals. Such payments shall be made at such time 
        and in such form as provided in regulations promulgated by the 
        Secretary.
            ``(2) Matching payments for administrative expenses.--The 
        Secretary shall pay to each State operating a program for 
        furnishing premium assistance under section 1952 and 
        determining eligibility for cost-sharing assistance under 
        section 1953, for each quarter beginning with the quarter 
        commencing January 1, 1996, an amount equal to 75 percent of 
        the total amount expended by the State during the quarter as 
        found necessary by the Secretary for the proper and efficient 
        administration of the program.
            ``(3) State entitlement.--This subsection constitutes 
        budget authority in advance of appropriations Acts, and 
        represents the obligation of the Federal Government to provide 
        payments to States operating programs under this part in 
        accordance with this subsection.
    ``(b) Funding.--The amount paid to States under subsection (a) 
shall be paid by the Secretary from--
            ``(1) amounts made available under the Health Security 
        Trust Fund established under section 9551 of the Internal 
        Revenue Code of 1986, or
            ``(2) if such amounts are insufficient, out of any funds in 
        the Treasury of the United States not otherwise appropriated.
    ``(c) Audits.--The Secretary shall conduct regular audits of the 
activities under the State programs conducted under this part.

``SEC. 1957. GRANT PROGRAM FOR PROVIDING COST-SHARING ASSISTANCE FOR 
              CERTAIN INDIVIDUALS WITH INCOMES ABOVE 100 PERCENT OF THE 
              POVERTY LINE.

    ``(a) Establishment.--The Secretary shall pay to a State which 
elects to operate a cost-sharing assistance program under this section 
beginning on or after January 1, 1997, the amount determined under 
subsection (c).
    ``(b) Program Described.--
            ``(1) In general.--A program described in this subsection 
        consists of a State providing cost-sharing assistance to 
        individuals enrolled in certified standard health plans whose 
        family income determined under section 1958(2) exceeds 100 
        percent but does not exceed 200 percent of the poverty line.
            ``(2) Eligibility and administration.--A State operating a 
        program under this subsection shall be responsible for 
        administering the program, including--
                    ``(A) establishing eligibility requirements for 
                individuals applying for assistance under the program; 
                and
                    ``(B) with respect to an eligible individual, 
                determining the appropriate amount of cost-sharing that 
                will be paid by the program.
            ``(3) Payments for cost-sharing.--The amount of cost-
        sharing assistance available to an eligible individual under 
        this section (as determined in accordance with paragraph 
        (2)(B)) shall be paid by the State directly to the certified 
        standard health plan in which the individual is enrolled.
    ``(c) Federal Payment Amount.--
            ``(1) In general.--The Secretary shall pay a State 
        operating a program under this section during a quarter an 
        amount equal to 50 percent of the sum of--
                    ``(A) the amount demonstrated by the State to have 
                been expended during the quarter for furnishing cost-
                sharing assistance under this section to eligible 
                individuals; and
                    ``(B) the amount expended during the quarter as 
                found necessary by the Secretary for the proper and 
                efficient administration of the program.
            ``(2) Limitation on federal payments.--
                    ``(A) In general.--The total amount paid to a State 
                under paragraph (1) for a fiscal year shall not exceed 
                the amount determined under subparagraph (B).
                    ``(B) Amount determined.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), the amount determined under this 
                        subparagraph for a State for a fiscal year is 
                        the product of--
                                    ``(I) $2,000,000,000; multiplied by
                                    ``(II) the ratio of the average 
                                population of the State during the 
                                fiscal year as estimated by the 
                                Secretary to the average population of 
                                all States during the fiscal year as 
                                estimated by the Secretary.
                            ``(ii) Special rule for fiscal year 1998.--
                        The amount determined under this subparagraph 
                        for a State for fiscal year 1998 shall be an 
                        amount equal to 75 percent of the amount 
                        determined under clause (i) for such fiscal 
                        year.
                            ``(iii) Funding.--The amount paid to a 
                        State under this subsection shall be paid by 
                        the Secretary from amounts made available under 
                        the Health Security Trust Fund established 
                        under section 9551 of the Internal Revenue Code 
                        of 1986.
            ``(3) Additional limitation on payments.--For requirement 
        that the President reduce the payments to States under this 
        subsection, see section 801 of the Health Security Act.
            ``(4) Audits.--The Secretary shall conduct regular audits 
        of the activities under the State programs conducted under this 
        section.

``SEC. 1958. DEFINITIONS AND DETERMINATIONS OF INCOME.

    ``For purposes of this part:
            ``(1) Certified standard health plan.--The term `certified 
        standard health plan' means a certified health plan (within the 
        meaning of section 21011(a)(1)) providing the standard benefits 
        package as described in section 21201(a).
            ``(2) Determinations of income.--
                    ``(A) Family income.--The term `family income' 
                means, with respect to an individual who--
                            ``(i) is not a dependent (as defined in 
                        subparagraph (B)) of another individual, the 
                        sum of the modified adjusted gross incomes (as 
                        defined in subparagraph (D)) for the 
                        individual, the individual's spouse, and 
                        dependents of the individual; or
                            ``(ii) is a dependent of another 
                        individual, the sum of the modified adjusted 
                        gross incomes for the other individual, the 
                        other individual's spouse, and dependents of 
                        the other individual.
                    ``(B) Dependent.--The term `dependent' shall have 
                the meaning given such term under paragraphs (1) or (2) 
                of section 152(a) of the Internal Revenue Code of 1986.
                    ``(C) Special rule for foster children.--For 
                purposes of subparagraph (A), a child who is placed in 
                foster care by a State agency shall not be considered a 
                dependent of another individual.
                    ``(D) Modified adjusted gross income.--The term 
                `modified adjusted gross income' means adjusted gross 
                income (as defined in section 62(a) of the Internal 
                Revenue Code of 1986)--
                            ``(i) determined without regard to sections 
                        135, 162(l), 911, 931, and 933 of such Code, 
                        and
                            ``(ii) increased by--
                                    ``(I) the amount of interest 
                                received or accrued by the individual 
                                during the taxable year which is exempt 
                                from tax,
                                    ``(II) the amount of the social 
                                security benefits (as defined in 
                                section 86(d) of such Code) received 
                                during the taxable year to the extent 
                                not included in gross income under 
                                section 86 of such Code, and
                                    ``(III) the amount of aid to 
                                families with dependent children 
                                received during the taxable year under 
                                part A of title IV to the extent not 
                                included in gross income under such 
                                Code.
                The determination under the preceding sentence shall be 
                made without regard to any carryover or carryback.
            ``(3) Eligible Individual.--
                    ``(A) In general.--The term `eligible individual' 
                means an individual who is residing in the United 
                States and who is--
                            ``(i) a citizen or national of the United 
                        States; or
                            ``(ii) an alien permanently residing in the 
                        United States under color of law (as defined in 
                        subparagraph (C)).
                    ``(B) Exclusion.--The term `eligible individual' 
                shall not include an individual who is an inmate of a 
                public institution (except as a patient of a medical 
                institution).
                    ``(C) Alien permanently residing in the united 
                states under color of law.--The term `alien permanently 
                residing in the United States under color of law' means 
                an alien lawfully admitted for permanent residence 
                (within the meaning of section 101(a)(20) of the 
                Immigration and Nationality Act), and includes any of 
                the following:
                            ``(i) An alien who is admitted as a refugee 
                        under section 207 of the Immigration and 
                        Nationality Act.
                            ``(ii) An alien who is granted asylum under 
                        section 208 of such Act.
                            ``(iii) An alien whose deportation is 
                        withheld under section 243(h) of such Act.
                            ``(iv) An alien who is admitted for 
                        temporary residence under section 210, 210A, or 
                        245A of such Act.
                            ``(v) An alien who has been paroled into 
                        the United States under section 212(d)(5) of 
                        such Act for an indefinite period or who has 
                        been granted extended voluntary departure as a 
                        member of a nationality group.
                            ``(vi) An alien who is the spouse or 
                        unmarried child under 21 years of age of a 
                        citizen of the United States, or the parent of 
                        such a citizen if the citizen is over 21 years 
                        of age, and with respect to whom an application 
                        for adjustment to lawful permanent residence is 
                        pending.
            ``(4) Medical consumer price index.--The term `medical 
        consumer price index' means the medical care services component 
        of the consumer price index (for urban consumers) as determined 
        by the Bureau of Labor Statistics.
            ``(5) Poverty line.--The term `poverty line' means the 
        income official poverty line (as defined by the Office of 
        Management and Budget, and revised annually in accordance with 
        section 673(2) of the Omnibus Budget Reconciliation Act of 
        1981) that--
                    ``(A) in the case of a family of less than five 
                individuals, is applicable to a family of the size 
                involved; and
                    ``(B) in the case of a family of more than four 
                individuals, is applicable to a family of four persons.
            ``(6) Pregnant woman.--The term `pregnant woman' means a 
        woman described in section 1902(l)(1)(A).
            ``(7) Premium.--Any reference to the term `premium' 
        includes a reference to premium equivalence for self-insured 
        plans.''.
    (c) Conforming Amendments.--(1) Title XIX of the Social Security 
Act (42 U.S.C. 1396 et seq.) is amended by striking the title and 
inserting the following:

``TITLE XIX--MEDICAL ASSISTANCE PROGRAMS AND STATE PROGRAMS FOR PREMIUM 
                      AND COST-SHARING ASSISTANCE

     ``PART A--GRANTS TO STATES FOR MEDICAL ASSISTANCE PROGRAMS''.

    (2) Title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) 
is amended by striking each reference to ``this title'' and inserting 
``this part''.

          TITLE IV--ADMINISTRATIVE SIMPLIFICATION AND PRIVACY

SEC. 401. ADMINISTRATIVE SIMPLIFICATION.

    (a) Medicare and Medicaid Coverage Data Bank and Related 
Identification Processes.--
            (1) Delay of employer reporting requirement.--
                    (A) In general.--Section 1144(c)(1)(A) of the 
                Social Security Act (42 U.S.C. 1320-14(c)(1)(A)) is 
                amended by striking ``January 1, 1994'' and inserting 
                ``January 1, 1996''.
                    (B) Effective date.--The amendment made by this 
                paragraph shall be effective on the date of the 
                enactment of this Act.
            (2) Repeal of data bank.--
                    (A) In general.--Effective January 1, 1996, section 
                1144 of the Social Security Act (42 U.S.C. 1320b-14) 
                and section 101(f) of the Employee Retirement Income 
                Security Act of 1974 (29 U.S.C. 1021(f)) are repealed.
                    (B) Internal revenue code provision.--Section 
                6103(l) of the Internal Revenue Code of 1986 is amended 
                by striking paragraph (12).
                    (C) Identification of medicare secondary payer 
                situations.--Section 1862(b) of the Social Security Act 
                (42 U.S.C. 1395y(b)) is amended by striking paragraph 
                (5).
                    (D) Conforming amendments.--(i) Section 
                1902(a)(25)(A)(i) of the Social Security Act (42 U.S.C. 
                1396a(a)(25)(A)(i)) is amended by striking ``including 
                the use of information collected by the Medicare and 
                Medicaid Coverage Data Bank under section 1144 and any 
                additional measures''.
                    (ii) Subsection (a)(8)(B) of section 552a of title 
                5, United States Code, is amended--
                            (I) in clause (v), by inserting ``; or'' at 
                        the end;
                            (II) in clause (vi), by striking ``or'' at 
                        the end; and
                            (III) by striking clause (vii).
                    (E) Effective date.--The amendments made by this 
                paragraph shall be effective on and after January 1, 
                1996.
    (b) Health Information Network.--
            (1) In general.--Title XI of the Social Security Act (42 
        U.S.C. 1301 et seq.) is amended by adding at the end the 
        following new subtitle:

              ``Subtitle B--Administrative Simplification

                    ``table of contents of subtitle

              ``Subtitle B--Administrative Simplification

                   ``Part I--Purpose and Definitions

        ``Sec. 11701. Purpose.
        ``Sec. 11702. Definitions.
  ``Part II--Standards for Data Elements and Information Transactions

        ``Sec. 11711. General requirements on Secretary.
        ``Sec. 11712. Standards for data elements of health 
                            information.
        ``Sec. 11713. Information transaction standards.
        ``Sec. 11714. Timetables for adoption of standards.
   ``Part III--Requirements With Respect to Certain Transactions and 
                              Information

        ``Sec. 11721. Requirements with respect to certain transactions 
                            and information.
        ``Sec. 11722. Timetables for compliance with requirements.
                ``Part IV--Accessing Health Information

        ``Sec. 11731. Accessing health information for authorized 
                            purposes.
        ``Sec. 11732. Responding to access requests.
        ``Sec. 11733. Length of time information should be accessible.
        ``Sec. 11734. Timetables for adoption of standards and 
                            compliance.
  ``Part V--Standards and Certification for Health Information Network

        ``Sec. 11741. Standards and certification for health 
                            information network services.
        ``Sec. 11742. Ensuring availability of information.
                          ``Part VI--Penalties

        ``Sec. 11751. General penalty for failure to comply with 
                            requirements and standards.
                  ``Part VII--Miscellaneous Provisions

        ``Sec. 11761. Imposition of additional requirements.
        ``Sec. 11762. Effect on State law.
        ``Sec. 11764. Health information continuity.
        ``Sec. 11765. Protection of commercial information.
        ``Sec. 11766. Payment for health care services or health plan 
                            premiums.
        ``Sec. 11767. Health security cards.
        ``Sec. 11768. Misuse of health security card or personal health 
                            identifier.
        ``Sec. 11769. Direct billing for clinical laboratory services.
        ``Sec. 11770. Authorization of appropriations.
                ``Part VIII--Assistance to the Secretary

        ``Sec. 11771. General requirement on Secretary.
        ``Sec. 11772. Health information advisory committee.
    ``Part IX--Demonstration Projects for Community-based Clinical 
                          Information Systems

        ``Sec. 11781. Grants for demonstration projects.

                   ``PART I--PURPOSE AND DEFINITIONS

``SEC. 11701. PURPOSE.

    ``It is the purpose of this subtitle to improve the efficiency and 
effectiveness of the health care system, including the medicare program 
under title XVIII and the medicaid program under title XIX, by 
encouraging the development of a health information network through the 
establishment of standards and requirements for the electronic 
transmission of certain health information.

``SEC. 11702. DEFINITIONS.

    ``For purposes of this subtitle:
            ``(1) Code set.--The term `code set' means any set of codes 
        used for encoding data elements, such as tables of terms, 
        medical concepts, medical diagnostic codes, or medical 
        procedure codes.
            ``(2) Coordination of benefits.--The term `coordination of 
        benefits' means determining and coordinating the financial 
        obligations of health plans when health care benefits are 
        payable under 2 or more health plans.
            ``(3) Health care provider.--The term `health care 
        provider' includes a provider of services (as defined in 
        section 1861(u)), a provider of medical or other health 
        services (as defined in section 1861(s)), and any other person 
        furnishing health care services or supplies.
            ``(4) Health information.--The term `health information' 
        means any information, whether oral or recorded in any form or 
        medium that--
                    ``(A) is created or received by a health care 
                provider, health plan, health oversight agency (as 
                defined in section 11802), health researcher, public 
                health authority (as defined in section 11802), 
                employer, life insurer, school or university, or health 
                information network service certified under section 
                11741; and
                    ``(B) relates to the past, present, or future 
                physical or mental health or condition of an 
                individual, the provision of health care to an 
                individual, or the past, present, or future payment for 
                the provision of health care to an individual.
            ``(5) Health information network.--The term `health 
        information network' means the health information system that 
        is formed through the application of the requirements and 
        standards established under this subtitle.
            ``(6) Health information protection organization.--The term 
        `health information protection organization' means a private 
        entity or an entity operated by a State that accesses standard 
        data elements of health information through the health 
        information network, processes such information into non-
        identifiable health information, and may store such 
        information.
            ``(7) Health information network service.--The term `health 
        information network service'--
                    ``(A) means a private entity or an entity operated 
                by a State that enters into contracts to--
                            ``(i) process or facilitate the processing 
                        of nonstandard data elements of health 
                        information into standard data elements;
                            ``(ii) provide the means by which persons 
                        are connected to the health information network 
                        for purposes of meeting the requirements of 
                        this subtitle, including the holding of 
                        standard data elements of health information;
                            ``(iii) provide authorized access to health 
                        information through the health information 
                        network; or
                            ``(iv) provide specific information 
                        processing services, such as automated 
                        coordination of benefits and claims transaction 
                        routing; and
                    ``(B) includes a health information protection 
                organization.
            ``(8) Health plan.--The term `health plan' has the meaning 
        given such term in section 21004(a)(1) except that such term 
        shall include subparagraphs (C), (D), (E), (F), and (H) of such 
        section.
            ``(9) Non-identifiable health information.--The term `non-
        identifiable health information' means health information that 
        is not protected health information as defined in section 
        11802.
            ``(10) Health researcher.--The term `health researcher' 
        shall have the meaning given such term under section 11802.
            ``(11) Patient medical record information.--The term 
        `patient medical record information' means health information 
        derived from a clinical encounter that relates to the physical 
        or mental condition of an individual.
            ``(12) Standard.--The term `standard' when referring to an 
        information transaction or to data elements of health 
        information means the transaction or data elements meet any 
        standard adopted by the Secretary under part II that applies to 
        such information transaction or data elements.

  ``PART II--STANDARDS FOR DATA ELEMENTS AND INFORMATION TRANSACTIONS

``SEC. 11711. GENERAL REQUIREMENTS ON SECRETARY.

    ``(a) In General.--The Secretary shall adopt standards and 
modifications to standards under this subtitle that are--
            ``(1) consistent with the objective of reducing the costs 
        of providing and paying for health care; and
            ``(2) in use and generally accepted or developed or 
        modified by the standards setting organizations accredited by 
        the American National Standard Institute (ANSI).
    ``(b) Initial Standards.--The Secretary may develop an expedited 
process for the adoption of initial standards under this subtitle.
    ``(c) Failsafe.--If the Secretary is unable to adopt standards or 
modified standards in accordance with subsection (a) that meet the 
requirements of this subtitle--
            ``(1) the Secretary may develop or modify such standards 
        and, after providing public notice and after an adequate period 
        for public comment, adopt such standards; and
            ``(2) if the Secretary adopts standards under paragraph 
        (1), the Secretary shall submit a report to the appropriate 
        committees of Congress on the actions taken by the Secretary 
        under this subsection.
    ``(d) Paper formats.--The Secretary may develop methods by which a 
person may use the standards adopted by the Secretary under this 
subtitle with respect to health information that is in written rather 
than electronic form.

``SEC. 11712. STANDARDS FOR DATA ELEMENTS OF HEALTH INFORMATION.

    ``(a) In General.--The Secretary shall adopt standards necessary to 
make data elements of the following health information uniform and 
compatible for electronic transmission through the health information 
network:
            ``(1) the health information that is appropriate for 
        transmission in connection with transactions described in 
        subsections (a), (b), and (d) of section 11721;
            ``(2) the information required to be submitted by a health 
        plan to a State under section 21013; and
            ``(3) patient medical record information.
    ``(b) Additions.--The Secretary may make additions to the sets of 
data elements adopted under subsection (a) as the Secretary determines 
appropriate in a manner that minimizes the disruption and cost of 
compliance with such additions.
    ``(c) Certain Data Elements.--
            ``(1) Unique health identifiers.--The Secretary shall 
        establish a system to provide for a standard unique health 
        identifier for each individual, employer, health plan, and 
        health care provider for use in the health care system. The 
        personal health identifier for an individual shall be an 
        encrypted form of the social security account number assigned 
        to the individual by the Secretary under section 205(c)(2).
            ``(2) Code sets.--
                    ``(A) In general.--The Secretary, in consultation 
                with experts from the private sector and Federal 
                agencies, shall--
                            ``(i) select code sets for appropriate data 
                        elements from among the code sets that have 
                        been developed by private and public entities; 
                        or
                            ``(ii) establish code sets for such data 
                        elements if no code sets for the data elements 
                        have been developed.
                    ``(B) Distribution.--The Secretary shall establish 
                efficient and low-cost procedures for distribution of 
                code sets and modifications to such code sets under 
                section 11714(c).

``SEC. 11713. INFORMATION TRANSACTION STANDARDS.

    ``(a) In General.--The Secretary shall adopt technical standards 
relating to the method by which data elements of health information 
that have been standardized under section 11712 may be transmitted 
electronically, including standards with respect to the format in which 
such data elements shall be transmitted.
    ``(b) Special Rule for Coordination of Benefits.--Any standards 
adopted by the Secretary under paragraph (1) that relate to 
coordination of benefits shall provide that a claim for reimbursement 
for medical services furnished is tested by an algorithm specified by 
the Secretary against all records of enrollment and eligibility for the 
individual who received such services to determine any primary and 
secondary obligors for payment.
    ``(c) Electronic Signature.--The Secretary, in coordination with 
the Secretary of Commerce, shall promulgate regulations specifying 
procedures for the electronic transmission and authentication of 
signatures, compliance with which will be deemed to satisfy State and 
Federal statutory requirements for written signatures with respect to 
information transactions required by this Act and written signatures on 
medical records and prescriptions.

``SEC. 11714. TIMETABLES FOR ADOPTION OF STANDARDS.

    ``(a) Initial Standards for Data Elements.--The Secretary shall 
adopt standards relating to--
            ``(1) the data elements for the information described in 
        section 11712(a)(1) not later than 9 months after the date of 
        the enactment of this subtitle (except in the case of standards 
        with respect to data elements for claims attachments which 
        shall be adopted not later than 24 months after the date of the 
        enactment of this subtitle);
            ``(2) the data elements for the information described in 
        section 11712(a)(2) not later than 9 months after the date of 
        the enactment of this subtitle;
            ``(3) data elements for patient medical record information 
        not earlier than 24 months and not later than 7 years after the 
        date of the enactment of this subtitle; and
            ``(4) any addition to a set of data elements, in 
        conjunction with making such an addition.
    ``(b) Initial Standards for Information Transactions.--The 
Secretary shall adopt standards relating to information transactions 
under section 11713 not later than 9 months after the date of the 
enactment of this subtitle (except in the case of standards for claims 
attachments which shall be adopted not later than 24 months after the 
date of the enactment of this subtitle).
    ``(c) Modifications to Standards.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        Secretary shall review the standards adopted under this 
        subtitle and shall adopt modified standards as determined 
        appropriate, but no more frequently than once every 6 months. 
        Any modification to standards shall be completed in a manner 
        which minimizes the disruption and cost of compliance.
            ``(2) Special rules.--
                    ``(A) Modifications during first 12-month period.--
                Except with respect to additions and modifications to 
                code sets under subparagraph (B), the Secretary shall 
                not adopt any modifications to standards adopted under 
                this subtitle during the 12-month period beginning on 
                the date such standards are adopted unless the 
                Secretary determines that a modification is necessary 
                in order to permit compliance with requirements 
                relating to the standards.
                    ``(B) Additions and modifications to code sets.--
                            ``(i) In general.--The Secretary shall 
                        ensure that procedures exist for the routine 
                        maintenance, testing, enhancement, and 
                        expansion of code sets to accommodate changes 
                        in biomedical science and health care delivery.
                            ``(ii) Additional rules.--If a code set is 
                        modified under this subsection, the modified 
                        code set shall include instructions on how data 
                        elements that were encoded prior to the 
                        modification are to be converted or translated 
                        so as to preserve the value of the data 
                        elements. Any modification to a code set under 
                        this subsection shall be implemented in a 
                        manner that minimizes the disruption and cost 
                        of complying with such modification.
    ``(d) Evaluation of Standards.--The Secretary may establish a 
process to measure or verify the consistency of standards adopted or 
modified under this subtitle. Such process may include demonstration 
projects and analysis of the cost of implementing such standards and 
modifications.

   ``PART III--REQUIREMENTS WITH RESPECT TO CERTAIN TRANSACTIONS AND 
                              INFORMATION

``SEC. 11721. REQUIREMENTS WITH RESPECT TO CERTAIN TRANSACTIONS AND 
              INFORMATION.

    ``(a) Requirements on Plans and Providers Relating to Financial and 
Administrative Transactions.--If a health care provider or a health 
plan conducts any of the following transactions, such transactions 
shall be standard transactions and the information transmitted or 
received in connection with such transaction shall be in the form of 
standard data elements:
            ``(1) Claims (including coordination of benefits).
            ``(2) Claims attachments.
            ``(3) Responses to research inquiries by a health 
        researcher.
            ``(4) Other transactions determined appropriate by the 
        Secretary consistent with the goal of reducing administrative 
        costs.
    ``(b) Requirement Only on Plans Relating to Financial and 
Administrative Transactions.--If a person desires to conduct any of the 
following transactions with a health plan as a standard transaction, 
the health plan shall conduct such standard transaction and the 
information transmitted or received in connection with such transaction 
shall be in the form of standard data elements:
            ``(1) Enrollment and disenrollment.
            ``(2) Eligibility.
            ``(3) Payment and remittance advice.
            ``(4) Premium payments.
            ``(5) First report of injury.
            ``(6) Claims status.
            ``(7) Referral certification and authorization.
            ``(8) Other transactions determined appropriate by the 
        Secretary consistent with the goal of reducing administrative 
        costs.
    ``(c) Requirement on Plans Relating to Quality Information.--Any 
information required to be submitted by a health plan to a State under 
section 21013 shall be in the form of standard data elements and the 
transmission of such data shall be in the form of a standard 
transaction.
    ``(d) Requirement Only on Purchasing Cooperatives.--If a person 
desires to conduct any of the following transactions with a purchasing 
cooperative (as defined in section 21100(14)) as a standard 
transaction, the cooperative shall conduct such standard transaction 
and the information transmitted or received in connection with such 
transaction shall be in the form of standard data elements:
            ``(1) Enrollment and disenrollment.
            ``(2) Premium payments.
    ``(e) Requirement With Respect to Disclosure of Information.--
            ``(1) In general.--A health plan or health care provider 
        shall make the standard data elements transmitted or received 
        by such plan or provider in connection with the transactions 
        described in subsections (a), (b), and (c) or acquired under 
        section 11764(a) available for disclosure as authorized by this 
        subtitle.
            ``(2) Special rule.--In the case of a health care provider 
        that does not file claims, such provider shall be responsible 
        for making standard data elements for encounter information 
        available for disclosure as authorized by this subtitle.
    ``(f) Satisfaction of Requirements.--A health care provider, health 
plan, or consumer purchasing cooperative may satisfy the requirement 
imposed on such provider, plan, or cooperative under subsection (a), 
(b), (c), (d), or (e) by--
            ``(1) directly transmitting standard data elements;
            ``(2) submitting nonstandard data elements to a health 
        information network service certified under section 11741 for 
        processing into standard data elements and transmission; or
            ``(3) in the case of a provider, submitting data elements 
        to a plan which satisfies the requirements imposed on such 
        provider on the provider's behalf.
    ``(g) Timeliness.--A health care provider or health plan shall be 
determined to have satisfied a requirement imposed under this section 
only if the action required is completed in a timely manner, as 
determined by the Secretary. In setting standards for timeliness, the 
Secretary shall take into consideration the age and the amount of 
information being requested.

``SEC. 11722. TIMETABLES FOR COMPLIANCE WITH REQUIREMENTS.

    ``(a) Initial Compliance.--
            ``(1) In general.--Not later than 12 months after the date 
        on which standards are adopted under part II with respect to a 
        type of transaction or data elements for a type of health 
        information, a health plan, health care provider, or purchasing 
        cooperative shall comply with the requirements of this subtitle 
        with respect to such transaction or information.
            ``(2) Additional data elements.--Not later than 12 months 
        after the date on which the Secretary adopts an addition to a 
        set of data elements for health information under part II, a 
        health plan, health care provider, or purchasing cooperative 
        shall comply with the requirements of this subtitle using such 
        data elements.
    ``(b) Compliance with Modified Standards.--
            ``(1) In general.--If the Secretary adopts a modified 
        standard under part II, a health plan, health care provider, or 
        purchasing cooperative shall be required to comply with the 
        modified standard at such time as the Secretary determines 
        appropriate taking into account the time needed to comply due 
        to the nature and extent of the modification.
            ``(2) Special rule.--In the case of modifications to 
        standards that do not occur within the 12-month period 
        beginning on the date such standards are adopted, the time 
        determined appropriate by the Secretary under paragraph (1) 
        shall be no sooner than the last day of the 90-day period 
        beginning on the date such modified standard is adopted and no 
        later than the last day of the 12 month period beginning on the 
        date such modified standard is adopted.

                ``PART IV--ACCESSING HEALTH INFORMATION

``SEC. 11731. ACCESSING HEALTH INFORMATION FOR AUTHORIZED PURPOSES.

    ``(a) In General.--The Secretary shall adopt technical standards 
for appropriate persons, including health plans, health care providers, 
health information network services certified under section 11741, 
health researchers, and Federal and State agencies, to locate and 
access the health information that is available through the health 
information network due to the requirements of this subtitle. Such 
technical standards shall ensure that any request to locate or access 
information shall be authorized under subtitle C.
    ``(b) Procurement Rule for Government Agencies.--
            ``(1) In general.--Health information protection 
        organizations certified under section 11741 shall make 
        available to a Federal or State agency pursuant to a Federal 
        Acquisition Regulation (or an equivalent State system), any 
        non-identifiable health information that is requested by such 
        agency.
            ``(2) Certain information available at low cost.--If a 
        health information protection organization described in 
        paragraph (1) needs information from a health plan or health 
        care provider in order to comply with a request of a Federal or 
        State agency that is necessary to comply with a requirement 
        under this Act, such plan or provider shall make such 
        information available to such organization for a charge that 
        does not exceed the reasonable cost of transmitting the 
        information. If requested, a health information protection 
        organization that receives information under the preceding 
        sentence must make such information available to any other such 
        organization that is certified under section 11741 for a charge 
        that does not exceed the reasonable cost of transmitting the 
        information.
    ``(c) Functional Separation.--The standards adopted by the 
Secretary under subsection (a) shall ensure that any health information 
disclosed under such subsection shall not, after such disclosure, be 
used or released for an administrative, regulatory, or law enforcement 
purpose unless such disclosure was made for such purpose.
    ``(d) Public Use Functions.--Nothing in this subtitle shall be 
construed to limit the authority of a Federal or State agency to make 
non-identifiable health information available for public use functions.

``SEC. 11732. RESPONDING TO ACCESS REQUESTS.

    ``(a) In General.--The Secretary may adopt, and modify as 
appropriate, standards under which a health care provider or health 
plan shall respond to requests for access to health information 
consistent with this subtitle and subtitle C.
    ``(b) Standards Described.--The standards under subsection (a) 
shall provide--
            ``(1) for a standard format under which a provider or plan 
        will respond to each request either by satisfying the request 
        or responding with an explanation of the specific restriction 
        which results in a failure to satisfy the request; and
            ``(2) that any restrictions will not prevent a plan or 
        provider from responding to a request in a timely manner taking 
        into account the age and amount of the information being 
        requested.
    ``(c) Construction.--Nothing in this section shall be construed as 
permitting a health care provider or health plan to refuse to disclose 
any health information that is required to be disclosed by law.

``SEC. 11733. LENGTH OF TIME INFORMATION SHOULD BE ACCESSIBLE.

    ``The Secretary shall adopt standards with respect to the length of 
time any standard data elements for a type of health information should 
be accessible through the health information network.

``SEC. 11734. TIMETABLES FOR ADOPTION OF STANDARDS AND COMPLIANCE.

    ``(a) Initial Standards.--The Secretary shall adopt standards under 
this part not later than 9 months after the date of the enactment of 
this subtitle and such standards shall be effective upon adoption.
    ``(b) Modifications to Standards.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        Secretary shall review the standards adopted under this part 
        and shall adopt modified standards as determined appropriate, 
        but no more frequently than once every 6 months. Any 
        modification to standards shall be completed in a manner which 
        minimizes the disruption and cost of compliance. Any 
        modifications to standards adopted under this part shall be 
        effective upon adoption.
            ``(2) Special rule.--The Secretary shall not adopt 
        modifications to any standards adopted under this part during 
        the 12-month period beginning on the date such standards are 
        adopted unless the Secretary determines that a modification is 
        necessary in order to permit compliance with the requirements 
        of this part.

  ``PART V--STANDARDS AND CERTIFICATION FOR HEALTH INFORMATION NETWORK

``SEC. 11741. STANDARDS AND CERTIFICATION FOR HEALTH INFORMATION 
              NETWORK SERVICES.

    ``(a) Standards for Operation.--The Secretary shall establish 
standards with respect to the operation of health information network 
services, including standards ensuring that--
            ``(1) such services develop, operate, and cooperate with 
        one another to form the health information network;
            ``(2) such services meet all of the requirements under 
        subtitle C that are applicable to such services;
            ``(3) such services make public information concerning 
        their performance, as measured by uniform indicators such as 
        accessibility, transaction responsiveness, administrative 
        efficiency, reliability, dependability, and any other indicator 
        determined appropriate by the Secretary;
            ``(4) such services have security procedures that are 
        consistent with the privacy requirements under subtitle C, 
        including secure methods of access to and transmission of data;
            ``(5) such services, if they are part of a larger 
        organization, have policies and procedures in place which 
        isolate their activities with respect to processing information 
        in a manner that prevents access to such information by such 
        larger organization.
    ``(b) Certification by the Secretary.--
            ``(1) Establishment.--Not later than 12 months after the 
        date of the enactment of this subtitle, the Secretary shall 
        establish a certification procedure for health information 
        network services which ensures that certified services are 
        qualified to meet the requirements of this subtitle and the 
        standards established by the Secretary under this section. Such 
        certification procedure shall be implemented in a manner that 
        minimizes the costs and delays of operations for such services.
            ``(2) Application.--Each entity desiring to be certified as 
        a health information network service shall apply to the 
        Secretary for certification in a form and manner determined 
        appropriate by the Secretary.
            ``(3) Audits and reports.--The procedure established under 
        paragraph (1) shall provide for audits by the Secretary and 
        reports by an entity certified under this section as the 
        Secretary determines appropriate in order to monitor such 
        entity's compliance with the requirements of this subtitle, 
        subtitle C, and the standards established by the Secretary 
        under this section.
            ``(4) Recertification.--A health information network 
        service must be recertified under this subsection at least 
        every 3 years.
    ``(c) Loss of Certification.--
            ``(1) Mandatory termination.--Except as provided in 
        paragraph (3), if a health information network service violates 
        a requirement imposed on such service under subtitle C, its 
        certification under this section shall be terminated unless the 
        Secretary determines that appropriate corrective action has 
        been taken.
            ``(2) Discretionary termination.--If a health information 
        network service violates a requirement or standard imposed 
        under this subtitle and a penalty has been imposed under 
        section 11751, the Secretary shall review the certification of 
        such service and may terminate such certification.
            ``(3) Conditional certification.--The Secretary may 
        establish a procedure under which a health information network 
        service may remain certified on a conditional basis if the 
        service is operating consistently with a plan intended to 
        correct any violations described in paragraphs (1) or (2). Such 
        procedure may provide for the appointment of a trustee to 
        continue operation of the service until the requirements for 
        full certification are met.
    ``(d) Certification by Private Entities.--The Secretary may 
designate private entities to conduct the certification procedures 
established by the Secretary under this section. A health information 
network service certified by such an entity in accordance with such 
designation shall be considered to be certified by the Secretary.

``SEC. 11742. ENSURING AVAILABILITY OF INFORMATION.

    ``The Secretary shall establish a procedure under which a health 
plan or health care provider which does not have the ability to 
transmit standard data elements directly or does not have access to a 
health information network service certified under section 11741 shall 
be able to make health information available for disclosure as 
authorized by this subtitle.

                          ``PART VI--PENALTIES

``SEC. 11751. GENERAL PENALTY FOR FAILURE TO COMPLY WITH REQUIREMENTS 
              AND STANDARDS.

    ``(a) In General.--Except as provided in subsection (b), the 
Secretary shall impose on any person that violates a requirement or 
standard imposed under this subtitle a penalty of not more than $1,000 
for each violation. The provisions of section 1128A (other than 
subsections (a) and (b) and the second sentence of subsection (f)) 
shall apply to the imposition of a civil money penalty under this 
subsection in the same manner as such provisions apply to the 
imposition of a penalty under section 1128A.
    ``(b) Limitations.--
            ``(1) Noncompliance not discovered exercising reasonable 
        diligence.--A penalty may not be imposed under subsection (a) 
        if it is established to the satisfaction of the Secretary that 
        the person liable for the penalty did not know, and by 
        exercising reasonable diligence would not have known, that such 
        person failed to comply with the requirement or standard 
        described in subsection (a).
            ``(2) Failures due to reasonable cause.--
                    ``(A) In general.--Except as provided in 
                subparagraphs (B) and (C), a penalty may not be imposed 
                under subsection (a) 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 penalty knew, or 
                        by exercising reasonable diligence would have 
                        known, that the failure to comply occurred.
                    ``(B) Extension of period.--
                            ``(i) No penalty.--The period referred to 
                        in subparagraph (A)(ii) may be extended as 
                        determined appropriate by the Secretary based 
                        on the nature and extent of the failure to 
                        comply.
                            ``(ii) Assistance.--If the Secretary 
                        determines that a health plan, health care 
                        provider, or purchasing cooperative failed to 
                        comply because such person was unable to 
                        comply, the Secretary may provide technical 
                        assistance to such person. Such assistance 
                        shall be provided in any manner determined 
                        appropriate by the Secretary.
            ``(3) Reduction.--In the case of a failure to comply which 
        is due to reasonable cause and not to willful neglect, any 
        penalty under subsection (a) that is not entirely waived under 
        paragraph (2) may be waived to the extent that the payment of 
        such penalty would be excessive relative to the compliance 
        failure involved.

                  ``PART VII--MISCELLANEOUS PROVISIONS

``SEC. 11761. IMPOSITION OF ADDITIONAL REQUIREMENTS.

    ``(a) Data Element Standards.--A person may not impose a standard 
on another person that is in addition to the standards adopted by the 
Secretary under section 11712 unless--
            ``(1) such person voluntarily agrees to such standard; or
            ``(2) a waiver is granted under subsection (c) to impose 
        such standard.
    ``(b) Transactions and Access Standards.--A person may not impose a 
standard on another person that is in addition to the standards adopted 
by the Secretary under section 11713 or 11731 unless such person 
voluntarily agrees to such standard.
    ``(c) Conditions for Waivers.--
            ``(1) In general.--A person may request a waiver from the 
        Secretary in order to require another person to comply with a 
        standard that is in addition to the standards adopted by the 
        Secretary under section 11712.
            ``(2) Consideration of waiver requests.--No waiver may be 
        granted unless the Secretary determines that the value of the 
        data to be exchanged for research or other purposes 
        significantly outweighs the administrative cost of the 
        additional standard taking into consideration the burden of the 
        timing of the imposition of the additional standard.
            ``(3) Anonymous reporting.--If a person attempts to impose 
        a standard in addition to the standards adopted by the 
        Secretary under section 11712, the person on whom such 
        additional standard is being imposed may contact the Secretary. 
        The Secretary shall develop a procedure under which the 
        contacting person shall remain anonymous. The Secretary shall 
        notify the person imposing the additional standard that the 
        additional standard may not be imposed unless the other person 
        voluntarily agrees to such standard or a waiver is obtained 
        under this subsection.

``SEC. 11762. EFFECT ON STATE LAW.

    ``(a) In General.--A provision, requirement, or standard under this 
subtitle shall supersede any contrary provision of State law, 
including--
            ``(1) a provision of State law that requires medical or 
        health plan records (including billing information) to be 
        maintained or transmitted in written rather than electronic 
        form, and
            ``(2) a provision of State law which provides for 
        requirements or standards that are more stringent than the 
        requirements or standards under this subtitle;
except where the Secretary determines that the provision is necessary 
to prevent fraud and abuse, with respect to controlled substances, or 
for other purposes.
    ``(b) Public Health Reporting.--Nothing in this subtitle shall be 
construed to invalidate or limit the authority, power, or procedures 
established under any law providing for the reporting of disease or 
injury, child abuse, birth, or death, public health surveillance, or 
public health investigation or intervention.

``SEC. 11764. HEALTH INFORMATION CONTINUITY.

    ``(a) Information Held by Health Plans and Providers.--If a health 
plan or health care provider takes any action that would threaten the 
continued availability of the standard data elements of health 
information held by such plan or provider, such data elements shall be 
obtained by the State in which such plan or provider is located. The 
State shall ensure that such data elements are transferred to a health 
plan or health care provider in accordance with procedures established 
by the Secretary.
    ``(b) Information Held by Health Information Network Services.--If 
a health information network service certified under section 11741 
loses its certified status or takes any action that would threaten the 
continued availability of the standard data elements of health 
information held by such service, such data elements shall be 
transferred to another health information network service certified 
under section 11741, as designated by the Secretary.

``SEC. 11765. PROTECTION OF COMMERCIAL INFORMATION.

    ``In adopting standards under this subtitle, the Secretary shall 
not require disclosure of trade secrets and confidential commercial 
information by entities operating in the health information network 
except as required by law.

``SEC. 11766. PAYMENT FOR HEALTH CARE SERVICES OR HEALTH PLAN PREMIUMS.

    ``Nothing in this subtitle shall be construed to prohibit payments 
for health care services or health plan premiums from being made by 
debit, credit, or other payment cards or numbers or other electronic 
payment means.

``SEC. 11767. HEALTH SECURITY CARDS.

    ``(a) In General.--The Secretary shall establish standards relating 
to the form of health security cards issued by health plans and the 
information to be encoded electronically on such cards.
    ``(b) Form Described.--The standard form for a health security card 
shall be a card which--
            ``(1) is made of plastic or a similar durable material with 
        a useful life of at least 5 years;
            ``(2) is resistant to counterfeiting;
            ``(3) can store information that can be encoded and 
        retrieved electronically;
            ``(4) can be produced in a cost-effective manner and used 
        in all types of health care locations; and
            ``(5) specifies on its face the social security account 
        number assigned to the individual who is the cardholder by the 
        Secretary under section 205(c)(2).
    ``(c) Information Described.--The information electronically 
encoded on a health security card shall include the identity of the 
individual to whom the card was issued, including such individual's 
personal health identifier specified under section 11712(c)(1), and may 
include any other information that the Secretary determines may be 
useful in order for the card to serve the purpose of easing access to 
and paying for health care services. A health plan shall make available 
to an individual cardholder, upon demand by such individual, a printed 
copy of all information electronically encoded on such individual's 
health security card.

``SEC. 11768. MISUSE OF HEALTH SECURITY CARD OR PERSONAL HEALTH 
              IDENTIFIER.

    ``(a) Health Security Card.--A person who--
            ``(1) requires the display of, requires the use of, or uses 
        a health security card for any purpose other than obtaining or 
        paying for health care;
            ``(2) falsely makes, forges, counterfeits or alters a 
        health security card;
            ``(3) without lawful authority prints, photographs, or 
        makes any impression in the likeness of any health security 
        card; or
            ``(4) sells, transfers, or otherwise delivers a false, 
        forged, counterfeited, or altered health security card knowing 
        that the card is false, forged, counterfeited, or altered;
shall be fined not more than $25,000, imprisoned not more than 2 years, 
or both.
    ``(b) Personal Health Identifier.--A person who requires the 
disclosure of, requires the use of, or uses an individual's personal 
health identifier for any purpose that is not authorized by the 
Secretary, shall be fined not more than $25,000, imprisoned not more 
than 2 years, or both.

``SEC. 11769. DIRECT BILLING FOR CLINICAL LABORATORY SERVICES.

    ``(a) In General.--
            ``(1) Requirement.--Except as provided in paragraph (2), in 
        the case of a claim for payment for a clinical diagnostic 
        laboratory test for which payment may otherwise be made, 
        payment may be made only to the person who, or entity which, 
        performed or supervised the test.
            ``(2) Exceptions.--Payment for a clinical diagnostic 
        laboratory test may be made to a physician with whom the 
        physician who performed the test shares a practice.
    ``(b) Additional Exceptions.--The Secretary may, by regulation, 
establish exceptions to the requirement under subsection (a)(1) that 
are in addition to the exceptions under subsection (a)(2). In 
establishing such exceptions the Secretary shall take into account--
            ``(1) circumstances in which an individual's privacy might 
        be violated; or
            ``(2) the need for confidentiality on the part of the 
        person furnishing the test.

``SEC. 11770. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated such sums as may be 
necessary to carry out the purposes of this subtitle.

                ``PART VIII--ASSISTANCE TO THE SECRETARY

``SEC. 11771. GENERAL REQUIREMENT ON SECRETARY.

    ``In complying with any requirements imposed under this subtitle, 
the Secretary shall rely on recommendations of the Health Information 
Advisory Committee established under section 11772 and shall consult 
with appropriate Federal agencies.

``SEC. 11772. HEALTH INFORMATION ADVISORY COMMITTEE.

    ``(a) Establishment.--There is established a committee to be known 
as the Health Care Information Advisory Committee.
    ``(b) Duty.--
            ``(1) In general.--The committee shall--
                    ``(A) provide assistance to the Secretary in 
                complying with the requirements imposed on the 
                Secretary under this subtitle and subtitle C;
                    ``(B) be generally responsible for advising the 
                Secretary and the Congress on the status of the health 
                information network; and
                    ``(C) make recommendations to correct any problems 
                that may occur in the network's implementation and 
                ongoing operations and to refine and improve the 
                network.
            ``(2) Technical assistance.--In performing its duties under 
        this subsection, the committee shall receive technical 
        assistance from appropriate Federal agencies.
    ``(c) Membership.--
            ``(1) In general.--The committee shall consist of 15 
        members to be appointed by the President not later than 60 days 
        after the date of the enactment of this subtitle. The President 
        shall designate 1 member as the Chair.
            ``(2) Expertise.--The membership of the committee shall 
        consist of individuals who are of recognized standing and 
        distinction and who possess the demonstrated capacity to 
        discharge the duties imposed on the committee.
            ``(3) Terms.--Each member of the committee shall be 
        appointed for a term of 5 years, except that the members first 
        appointed shall serve staggered terms such that the terms of no 
        more than 3 members expire at one time.
            ``(4) Vacancies.--
                    ``(A) In general.--A vacancy on the committee shall 
                be filled in the manner in which the original 
                appointment was made and shall be subject to any 
                conditions which applied with respect to the original 
                appointment.
                    ``(B) Filling unexpired term.--An individual chosen 
                to fill a vacancy shall be appointed for the unexpired 
                term of the member replaced.
                    ``(C) Expiration of terms.--The term of any member 
                shall not expire before the date on which the member's 
                successor takes office.
            ``(5) Conflicts of interest.--Members of the committee 
        shall disclose upon appointment to the committee or at any 
        subsequent time that it may occur, conflicts of interest.
    ``(d) Meetings.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        committee shall meet at the call of the Chair.
            ``(2) Initial meeting.--Not later than 30 days after the 
        date on which all members of the committee have been appointed, 
        the committee shall hold its first meeting.
            ``(3) Quorum.--A majority of the members of the committee 
        shall constitute a quorum, but a lesser number of members may 
        hold hearings.
    ``(e) Power to Hold Hearings.--The committee may hold such 
hearings, sit and act at such times and places, take such testimony, 
and receive such evidence as the committee considers advisable to carry 
out the purposes of this section.
    ``(f) Other Administrative Provisions.--Subparagraphs (C), (D), and 
(H) of section 1886(e)(6) shall apply to the committee in the same 
manner as they apply to the Prospective Payment Assessment Commission.
    ``(g) Reports.--
            ``(1) In general.--The committee shall annually prepare and 
        submit to Congress and the Secretary a report including at 
        least an analysis of--
                    ``(A) the status of the health information network 
                established under this subtitle, including whether the 
                network is fulfilling the purpose described in section 
                11701;
                    ``(B) the savings and costs of the network;
                    ``(C) the activities of health information network 
                services certified under section 11741, health care 
                providers, health plans, and other entities using the 
                network to exchange health information;
                    ``(D) the extent to which entities described in 
                subparagraph (C) are meeting the standards adopted 
                under this subtitle and working together to form an 
                integrated network that meets the needs of its users;
                    ``(E) the extent to which entities described in 
                subparagraph (C) are meeting the privacy and security 
                protections of subtitle C;
                    ``(F) the number and types of penalties assessed 
                for noncompliance with the standards adopted under this 
                subtitle;
                    ``(G) whether the Federal Government and State 
                Governments are receiving information of sufficient 
                quality to meet their responsibilities under the Health 
                Security Act;
                    ``(H) any problems with respect to implementation 
                of the network;
                    ``(I) the extent to which timetables under this 
                subtitle for the adoption and implementation of 
                standards are being met; and
                    ``(J) any legislative recommendations related to 
                the health information network.
            ``(2) Availability to the public.--Any information in the 
        report submitted to Congress under paragraph (1) shall be made 
        available to the public unless such information may not be 
        disclosed by law.
    ``(h) Duration.--Notwithstanding section 14(a) of the Federal 
Advisory Committee Act, the committee shall continue in existence until 
otherwise provided by law.
    ``(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.

    ``PART IX--DEMONSTRATION PROJECTS FOR COMMUNITY-BASED CLINICAL 
                          INFORMATION SYSTEMS

``SEC. 11781. GRANTS FOR DEMONSTRATION PROJECTS.

    ``(a) In General.--The Secretary may make grants for demonstration 
projects to promote the development and use of electronically 
integrated community-based clinical information systems and 
computerized patient medical records.
    ``(b) Applications.--
            ``(1) Submission.--To apply for a grant under this part for 
        any fiscal year, an applicant shall submit an application to 
        the Secretary in accordance with the procedures established by 
        the Secretary.
            ``(2) Criteria for approval.--The Secretary may not approve 
        an application submitted under paragraph (1) unless the 
        application includes assurances satisfactory to the Secretary 
        regarding the following:
                    ``(A) Use of existing technology.--Funds received 
                under this part will be used to apply 
                telecommunications and information systems technology 
                that is in existence on the date the application is 
                submitted in a manner that improves the quality of 
                health care, reduces the costs of such care, and 
                protects the privacy and confidentiality of information 
                relating to the physical or mental condition of an 
                individual.
                    ``(B) Use of existing information systems.--Funds 
                received under this part will be used--
                            ``(i) to enhance telecommunications or 
                        information systems that are operating on the 
                        date the application is submitted;
                            ``(ii) to integrate telecommunications or 
                        information systems that are operating on the 
                        date the application is submitted; or
                            ``(iii) to connect additional users to 
                        telecommunications or information networks or 
                        systems that are operating on the date the 
                        application is submitted.
                    ``(C) Matching funds.--The applicant shall make 
                available funds for the demonstration project in an 
                amount that equals at least 20 percent of the cost of 
                the project.
    ``(c) Geographic Diversity.--In making any grants under this part, 
the Secretary shall, to the extent practicable, make grants to persons 
representing different geographic areas of the United States, including 
urban and rural areas.
    ``(d) Review and Sanctions.--The Secretary shall review at least 
annually the compliance of a person receiving a grant under this part 
with the provisions of this part. The Secretary shall establish a 
procedure for determining whether such a person has failed to comply 
substantially within the provisions of this part and the sanctions to 
be imposed for any such noncompliance.
    ``(e) Annual Report.--The Secretary shall submit an annual report 
to the President for transmittal to Congress containing a description 
of the activities carried out under this part.
    ``(f) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary to carry out the purposes of 
this section.''.
            (2) Conforming amendments.--(A) Title XI of the Social 
        Security Act (42 U.S.C. 1301 et seq.) is amended by striking 
        the title and inserting the following:

    ``TITLE XI--GENERAL PROVISIONS, PEER REVIEW, AND ADMINISTRATIVE 
                             SIMPLIFICATION

           ``Subtitle A--General Provisions and Peer Review''

            (B) Title XI of the Social Security Act (42 U.S.C. 1301 et 
        seq.) is amended by striking each reference to ``this title'' 
        and inserting ``this subtitle''.

SEC. 402. PRIVACY OF HEALTH INFORMATION UNDER THE SOCIAL SECURITY ACT.

    (a) In General.--Title XI of the Social Security Act (42 U.S.C. 
1301 et seq.), as amended by section 401, is amended by adding at the 
end the following new subtitle:

              ``Subtitle C--Privacy of Health Information

                    ``table of contents of subtitle

              ``Subtitle C--Privacy of Health Information

                   ``Part I--Findings and Definitions

        ``Sec. 11801. Findings and purposes.
        ``Sec. 11802. Definitions.
                   ```subpart a--general provisionss
        ``Sec. 11811. General rules regarding disclosure.
        ``Sec. 11812. Authorizations for disclosure of protected health 
                            information.
        ```subpart b--specific disclosures relating to patientvices.
        ``Sec. 11821. Disclosures for treatment and financial and 
                            administrative transactions.
        ``Sec. 11822. Next of kin and directory information.
  ``subpart c--disclosure for oversight, public health, and research 
                                purposes
        ``Sec. 11831. Oversight.
        ``Sec. 11832. Public health.
     ``subpart d--disclosure for judicial, administrative, and law 
                          enforcement purposes
        ``Sec. 11841. Judicial and administrative purposes.
   ``subpart e--disclosure pursuant to government subpoena or warrant
        ``Sec. 11851. Government subpoenas and warrants.
        ``Sec. 11852. Access procedures for law enforcement subpoenas 
                            and warrants.
        ``Sec. 11853. Challenge procedures for law enforcement warrants 
       ``subpart f--disclosure pursuant to private party subpoena
        ``Sec. 11854. Private party subpoenas.
        ``Sec. 11855. Access procedures for private party subpoenas.
        ``Sec. 11856. Challenge procedures for private party subpoenas.
   ``Part III--Procedures for Ensuring Security of Protected Health 
                ``subpart a--establishment of safeguards
        ``Sec. 11861. Establishment of safeguards.
``subpart b--review of protected health information by subjects of the 
                              information
        ``Sec. 11871. Inspection of protected health information.
        ``Sec. 11872. Amendment of protected health information.
        ``S``subpart c--standards for electronic disclosures
        ``Sec. 11882. Standards for electronic disclosures.
           ``subpart a--no sanctions for permissible actions
        ``Sec. 11891. No liability for permissible disclosures.
        ``Sec. 11892. No liability for institutional review board 
                            determinations.
        ``Sec. 11893. ``subpart b--civil sanctions.
        ``Sec. 11901. Civil penalty.
        ``Sec. 11902``subpart c--criminal sanctions
        ``Sec. 11911. Wrongful disclosure of protected health 
                            information.
                  ``Part V--Administrative Provisions

        ``Sec. 11921. Relationship to other laws.
        ``Sec. 11922. Rights of incompetents.
        ``Sec. 11923. Exercise of rights.

                   ``PART I--FINDINGS AND DEFINITIONS

``SEC. 11801. FINDINGS AND PURPOSES.

    ``(a) Findings.--The Congress finds as follows:
            ``(1) The improper disclosure of individually identifiable 
        health care information may cause significant harm to an 
        individual's interests in privacy, health care, and reputation 
        and may unfairly affect the ability of an individual to obtain 
        employment, education, insurance, and credit.
            ``(2) The movement of people and health care related 
        information across State lines, the availability of, access to, 
        and exchange of health care related information with Federally 
        funded health care systems, the medicare program under title 
        XVIII, and the medicaid program under title XIX, through 
        automated data banks and networks, and the emergence of other 
        multistate health care providers and payors create a need for a 
        uniform Federal law governing the disclosure of health care 
        information.
    ``(b) Purpose.--The purpose of this subtitle is to establish 
effective mechanisms to protect the privacy of individuals with respect 
to individually identifiable health care information that is created or 
maintained as part of health treatment, enrollment, payment, testing, 
or research processes.

``SEC. 11802. DEFINITIONS.

    ``(a) Terms Relating to Protected Health Information.--In this 
subtitle:
            ``(1) Protected health information.--The term `protected 
        health information' means any information, including 
        demographic information collected from an individual, whether 
        oral or recorded in any form or medium, that--
                    ``(A) is created or received by a health care 
                provider, health plan, health oversight agency, health 
                researcher, public health authority, employer, life 
                insurer, school or university, or certified health 
                information network service; and
                    ``(B) relates to the past, present, or future 
                physical or mental health or condition of an 
                individual, the provision of health care to an 
                individual, or the past, present, or future payment for 
                the provision of health care to an individual, and--
                            ``(i) identifies an individual; or
                            ``(ii) with respect to which there is a 
                        reasonable basis to believe that the 
                        information can be used to identify an 
                        individual.
            ``(2) Disclose.--The term `disclose', when used with 
        respect to protected health information, means to provide 
        access to the information, but only if such access is provided 
        to a person other than the individual who is the subject of the 
        information.
    ``(b) Terms Relating to Health Care System Participants.--In this 
subtitle:
            ``(1) Health information trustee.--The term `health 
        information trustee' means--
                    ``(A) a health care provider, health plan, health 
                oversight agency, certified health information network 
                service, employer, life insurer, or school or 
                university insofar as it creates, receives, maintains, 
                uses, or transmits protected health information;
                    ``(B) any person who obtains protected health 
                information under section 11823, 11832, 11833, 11841, 
                11842, 11851, or 11854; and
                    ``(C) any employee or agent of a person covered 
                under subparagraphs (A) or (B).
            ``(2) Health care.--The term `health care'--
                    ``(A) means--
                            ``(i) a preventative, diagnostic, 
                        therapeutic, rehabilitative, maintenance, or 
                        palliative care, counseling, service, or 
                        procedure--
                                    ``(I) with respect to the physical 
                                or mental condition of an individual; 
                                or
                                    ``(II) affecting the structure or 
                                function of the human body or any part 
                                of the human body; or
                            ``(ii) any sale or dispensing of a drug, 
                        device, equipment, or other item to an 
                        individual, or for the use of an individual, 
                        pursuant to a prescription; but
                    ``(B) does not include any item or service that is 
                not furnished for the purpose of examining, 
                maintaining, or improving the health of an individual.
            ``(3) Health care provider.--The term `health care 
        provider' means a person who is licensed, certified, 
        registered, or otherwise authorized by law to provide an item 
        or service that constitutes health care in the ordinary course 
        of business or practice of a profession.
            ``(4) Health oversight agency.--The term `health oversight 
        agency' means a person who--
                    ``(A) performs or oversees the performance of an 
                assessment, evaluation, determination, or investigation 
                relating to the licensing, accreditation, or 
                certification of health care providers; or
                    ``(B)(i) performs or oversees the performance of an 
                assessment, evaluation, determination, or investigation 
                relating to the effectiveness of, compliance with, or 
                applicability of legal, fiscal, medical, or scientific 
                standards or aspects of performance related to the 
                delivery of, or payment for, health care or relating to 
                health care fraud or fraudulent claims for payment 
                regarding health; and
                    ``(ii) is a public agency, acting on behalf of a 
                public agency, acting pursuant to a requirement of a 
                public agency, or carrying out activities under a 
                Federal or State law governing the assessment, 
                evaluation, determination, or investigation described 
                in clause (i).
            ``(5) Health plan.--The term `health plan' shall have the 
        meaning given such term under section 11702.
            ``(6) Health researcher.--The term `health researcher' 
        means a person who conducts a biomedical, public health, 
        epidemiological, health services, or health statistics research 
        project or a research project on social and behavioral factors 
        relating to health.
            ``(7) Institutional review board.--The term `institutional 
        review board' means--
                    ``(A) a board established in accordance with 
                regulations of the Secretary under section 491(a) of 
                the Public Health Service Act;
                    ``(B) a similar board established by the Secretary 
                for the protection of human subjects in research 
                conducted by the Secretary; or
                    ``(C) a similar board established under regulations 
                of a Federal Government authority other than the 
                Secretary.
            ``(8) Public health authority.--The term `public health 
        authority' means an authority or instrumentality of the United 
        States, a State, or a political subdivision of a State that is 
        (A) responsible for public health matters; and (B) engaged in 
        such activities as injury reporting, public health 
        surveillance, and public health investigation or intervention.
    ``(c) References to Certified Entities.--In this subtitle:
            ``(1) Certified health information network service.--The 
        term `certified health information network service' means a 
        health information service (as defined under section 11702) 
        that is certified under section 11741.
            ``(2) Certified health information protection 
        organization.--The term `certified health information 
        protection organization' means a health information protection 
        organization (as defined in section 11702) that is certified 
        under section 11741.
    ``(d) Other Terms.--In this subtitle:
            ``(1) Individual representative.--The term `individual 
        representative' means any individual legally empowered to make 
        decisions concerning the provision of health care to an 
        individual (where the individual lacks the legal capacity under 
        State law to make such decisions) or the administrator or 
        executor of the estate of a deceased individual.
            ``(2) Law enforcement inquiry.--The term `law enforcement 
        inquiry' means an investigation or official proceeding 
        inquiring into whether there is a violation of, or failure to 
        comply with, any criminal or civil statute or any regulation, 
        rule, or order issued pursuant to such a statute.
            ``(3) Person.--The term `person' includes an authority of 
        the United States, a State, or a political subdivision of a 
        State.

                   ``PART II--AUTHORIZED DISCLOSURES

                    ``Subpart A--General Provisions

``SEC. 11811. GENERAL RULES REGARDING DISCLOSURE.

    ``(a) General Rule.--A health information trustee may disclose 
protected health information only for a purpose that is authorized 
under this subtitle.
    ``(b) Disclosure within a trustee.--A health information trustee 
may disclose protected health information to an officer, employee, or 
agent of the trustee, but only for a purpose that is compatible with 
and related to the purpose for which the information was collected or 
received by that trustee.
    ``(c) Scope of disclosure.--
            ``(1) In general.--Every disclosure of protected health 
        information by a health information trustee shall be limited to 
        the minimum amount of information necessary to accomplish the 
        purpose for which the information is disclosed.
            ``(2) Regulations.--The Secretary, after notice and 
        opportunity for public comment, may issue regulations under 
        paragraph (1), which shall take into account the technical 
        capabilities of the record systems used to maintain protected 
        health information and the costs of limiting disclosure.
    ``(d) No General Requirement to Disclose.--Nothing in this subtitle 
that permits a disclosure of health information shall be construed to 
require such disclosure.
    ``(e) Use and Redisclosure of Information.--The protected health 
information received under a disclosure permitted by the subtitle may 
not be used or disclosed unless the use or disclosure is necessary to 
fulfill the purpose for which the information was obtained and is not 
otherwise prohibited by law. Protected health information about an 
individual that is disclosed under this subtitle may not be used in, or 
disclosed to any person for use in, any administrative, civil, or 
criminal action or investigation directed against the individual unless 
specifically permitted by this subtitle.
    ``(f) Identification of Disclosed Information as Protected 
Information.--
            ``(1) In general.--Except with respect to protected health 
        information that is disclosed under section 11823 and except as 
        provided in paragraph (2), a health information trustee may not 
        disclose protected health information unless such information 
        is clearly identified as protected health information that is 
        subject to this subtitle.
            ``(2) Routine disclosures subject to written agreement.--A 
        health information trustee who routinely discloses protected 
        health information to a person may satisfy the identification 
        requirement in paragraph (1) through a written agreement 
        between the trustee and the person with respect to the 
        protected health information.
    ``(g) Construction.--Nothing in this subtitle shall be construed to 
limit the ability of a health information trustee to charge a 
reasonable fee for the disclosure or reproduction of health 
information.
    ``(h) Information in Which Providers are Identified.--The 
Secretary, after notice and opportunity for public comment, may issue 
regulations protecting information identifying providers in order to 
promote the availability of health care services.

``SEC. 11812. AUTHORIZATIONS FOR DISCLOSURE OF PROTECTED HEALTH 
              INFORMATION.

    ``(a) Written Authorizations.--A health information trustee may 
disclose protected health information pursuant to an authorization 
executed by the individual who is the subject of the information, if 
each of the following requirements is met:
            ``(1) Writing.--The authorization is in writing, signed by 
        the individual who is the subject of the information, and dated 
        on the date of such signature.
            ``(2) Separate form.--The authorization is not on a form 
        used to authorize or facilitate the provision of, or payment 
        for, health care.
            ``(3) Trustee described.--The trustee is specifically named 
        or generically described in the authorization as authorized to 
        disclose such information.
            ``(4) Recipient described.--The person to whom the 
        information is to be disclosed is specifically named or 
        generically described in the authorization as a person to whom 
        such information may be disclosed.
            ``(5) Statement of intended disclosures.--The authorization 
        contains an acknowledgment that the individual who is the 
        subject of the information has read a statement of the 
        disclosures that the person to receive the protected health 
        information intends to make, which statement shall be in 
        writing, on a form that is distinct from the authorization for 
        disclosure, and which statement must be received by the 
        individual authorizing the disclosure on or before such 
        authorization is executed.
            ``(6) Information described.--The information to be 
        disclosed is described in the authorization.
            ``(7) Expiration date specified.--The authorization 
        specifies a date or event upon which the authorization expires, 
        which shall not exceed 2 years from the date of the execution 
        of the authorization.
            ``(8) Authorization timely received.--The authorization is 
        received by the trustee during a period described in subsection 
        (c)(1).
            ``(9) Disclosure timely made.--The disclosure occurs during 
        a period described in subsection (c)(2).
    ``(b) Authorizations Requested in Connection With Provision of 
Health Care.--
            ``(1) In general.--A health information trustee may not 
        request that an individual provide to any other person an 
        authorization described in subsection (a) on a day on which--
                    ``(A) the trustee provides health care to the 
                individual requested to provide the authorization; or
                    ``(B) in the case of a trustee that is a health 
                facility, the individual is admitted into the facility 
                as a resident or inpatient in order to receive health 
                care.
            ``(2) Exception.--Paragraph (1) does not apply if a health 
        information trustee requests that an individual provide an 
        authorization described in subsection (a) for the purpose of 
        assisting the individual in obtaining counseling or social 
        services from a person other than the trustee.
    ``(c) Time Limitations on Authorizations.--
            ``(1) Receipt by trustee.--For purposes of subsection 
        (a)(8), an authorization is timely received if it is received 
        by the trustee during--
                    ``(A) the 1-year period beginning on the date on 
                which the authorization is signed under subsection 
                (a)(1), if the authorization permits the disclosure of 
                protected health information to a person who provides 
                health counseling or social services to individuals; or
                    ``(B) the 30-day period beginning on the date on 
                which the authorization is signed under subsection 
                (a)(1), if the authorization permits the disclosure of 
                protected health information to a person other than a 
                person described in subparagraph (A).
            ``(2) Disclosure by trustee.--For purposes of subsection 
        (a)(9), a disclosure is timely made if it occurs before the 
        date or event specified in the authorization upon which the 
        authorization expires.
    ``(d) Revocation or Amendment of Authorization.--
            ``(1) In general.--An individual may in writing revoke or 
        amend an authorization described in subsection (a), in whole or 
        in part, at any time, except when--
                    ``(A) disclosure of protected health information 
                has been authorized to permit validation of 
                expenditures for health care; or
                    ``(B) action has been taken in reliance on the 
                authorization.
            ``(2) Notice of revocation.--A health information trustee 
        who discloses protected health information pursuant to an 
        authorization that has been revoked shall not be subject to any 
        liability or penalty under this subtitle if--
                    ``(A) the reliance was in good faith;
                    ``(B) the trustee had no notice of the revocation; 
                and
                    ``(C) the disclosure was otherwise in accordance 
                with the requirements of this subtitle.
    ``(e) Deceased Individual.--The Secretary shall develop and 
establish through regulation a procedure for obtaining protected health 
information relating to a deceased individual when there is no 
individual representative for such individual.
    ``(f) Model Authorizations.--The Secretary, after notice and 
opportunity for public comment, shall develop and disseminate model 
written authorizations of the type described in subsection (a) and 
model statements of intended disclosures of the type described in 
subsection (a)(5).
    ``(g) Copy.--A health information trustee who discloses protected 
health information pursuant to an authorization under this section 
shall maintain a copy of the authorization.

``SEC. 11813. CERTIFIED HEALTH INFORMATION NETWORK SERVICES.

    ``(a) In General.--A health information trustee may disclose 
protected health information to a certified health information network 
service acting as an agent of the trustee for any purpose permitted by 
this subtitle. Such a service, acting as an agent of a trustee, may 
disclose protected health information to another person as permitted 
under this subtitle to facilitate the completion of the purpose for 
which such information was disclosed to the service.
    ``(b) Certified Health Information Protection Organizations.--A 
health information trustee may disclose protected health information to 
a certified health information protection organization for the purpose 
of creating non-identifiable health information (as defined in section 
11702).

         ``Subpart B--Specific Disclosures Relating to Patient

``SEC. 11821. DISCLOSURES FOR TREATMENT AND FINANCIAL AND 
              ADMINISTRATIVE TRANSACTIONS.

    ``(a) Health Care Treatment.--A health care provider, health plan, 
employer, or person who receives protected health information under 
section 11823, may disclose protected health information to a health 
care provider for the purpose of providing health care to an individual 
if the individual who is the subject of the information has not 
previously objected in writing to the disclosure.
    ``(b) Disclosure to Health Plans for Financial and Administrative 
Purposes.--A health care provider or employer may disclose protected 
health information to a health plan for the purpose of providing for 
the payment for, or reviewing the payment of, health care furnished to 
an individual.
    ``(c) Disclosure by Health Plans for Financial and Administrative 
Purposes.--A health plan may disclose protected health information to a 
health care provider or a health plan for the purpose of providing for 
the payment for, or reviewing the payment of, health care furnished to 
an individual.

``SEC. 11822. NEXT OF KIN AND DIRECTORY INFORMATION.

    ``(a) Next of Kin.--A health care provider or person who receives 
protected health information under section 11823 may disclose protected 
health information to the next of kin, an individual representative of 
the individual who is the subject of the information, or an individual 
with whom that individual has a close personal relationship if--
            ``(1) the individual who is the subject of the 
        information--
                    ``(A) has been notified of the individual's right 
                to object and has not objected to the disclosure;
                    ``(B) is not competent to be notified about the 
                right to object; or
                    ``(C) exigent circumstances exist such that it 
                would not be practicable to notify the individual of 
                the right to object; and
            ``(2) the information disclosed relates to health care 
        currently being provided to that individual.
    ``(b) Directory Information.--A health care provider and a person 
receiving protected health information under section 11823 may disclose 
protected health information to any person if--
            ``(1) the information does not reveal specific information 
        about the physical or mental condition of the individual who is 
        the subject of the information or health care provided to that 
        person;
            ``(2) the individual who is the subject of the 
        information--
                    ``(A) has been notified of the individual's right 
                to object and has not objected to the disclosure;
                    ``(B) is not competent to be notified about the 
                right to object; or
                    ``(C) exigent circumstances exist such that it 
                would not be practicable to notify the individual of 
                the right to object; and
            ``(3) the information consists only of 1 or more of the 
        following items:
                    ``(A) The name of the individual who is the subject 
                of the information.
                    ``(B) If the individual who is the subject of the 
                information is receiving health care from a health care 
                provider on a premises controlled by the provider--
                            ``(i) the location of the individual on the 
                        premises; and
                            ``(ii) the general health status of the 
                        individual, described as critical, poor, fair, 
                        stable, or satisfactory or in terms denoting 
                        similar conditions.
    ``(d) Identification of Deceased Individual.--A health care 
provider, health plan, employer, or life insurer, may disclose 
protected health information if necessary to assist in the 
identification of a deceased individual.

``SEC. 11823. EMERGENCY CIRCUMSTANCES.

    ``(a) In General.--A health care provider, health plan, employer, 
or person who receives protected health information under this section 
may disclose protected health information in emergency circumstances 
when necessary to protect the health or safety of an individual from 
imminent harm.
    ``(b) Scope of Disclosure.--The disclosure of protected health 
information under this section shall be limited to persons who need the 
information to take action to protect the health or safety of the 
individual.

  ``Subpart C--Disclosure for Oversight, Public Health, and Research 
                                Purposes

``SEC. 11831. OVERSIGHT.

    ``(a) In General.--A health information trustee may disclose 
protected health information to a health oversight agency for an 
oversight function authorized by law.
    ``(b) Use in Action Against Individuals.--Notwithstanding section 
11811(e), protected health information about an individual that is 
disclosed under this section may be used in, or disclosed to any person 
for use in, any administrative, civil, or criminal action or 
investigation directed against the individual who is the subject of the 
information if the action or investigation arises out of and is 
directly related to receipt of health care or payment for health care 
or an action involving a fraudulent claim related to health.

``SEC. 11832. PUBLIC HEALTH.

    ``A health care provider, health plan, public health authority, 
employer, or person who receives protected health information under 
section 11823 may disclose protected health information to a public 
health authority or other person authorized by law for use in a legally 
authorized--
            ``(1) disease or injury reporting;
            ``(2) public health surveillance; or
            ``(3) public health investigation or intervention.

``SEC. 11833. HEALTH RESEARCH.

    ``(a) In General.--A health information trustee may disclose 
protected health information to a health researcher if an institutional 
review board determines that the research project engaged in by the 
health researcher--
            ``(1) requires use of the protected health information for 
        the effectiveness of the project; and
            ``(2) is of sufficient importance to outweigh the intrusion 
        into the privacy of the individual who is the subject of the 
        information that would result from the disclosure.
    ``(b) Research Requiring Direct Contact.--A health information 
trustee may disclose protected health information to a health 
researcher for a research project that includes direct contact with an 
individual who is the subject of protected health information if an 
institutional review board determines that--
            ``(1) the research project meets the requirements of 
        paragraphs (1) and (2) of subsection (a);
            ``(2) direct contact is necessary to accomplish the 
        research purpose; and
            ``(3) the direct contact will be made in a manner that 
        minimizes the risk of harm, embarrassment, or other adverse 
        consequences to the individual.
    ``(c) Use of Health Information Network.--
            ``(1) In general.--A health information trustee may 
        disclose protected health information to a health researcher 
        using the health information network (as defined in section 
        11702) only if an institutional review board certified by the 
        Secretary under paragraph (2) determines that the research 
        project engaged in by the health researcher meets the 
        requirements of this section.
            ``(2) Certification of institutional review boards.--
                    ``(A) Regulations.--The Secretary, after notice and 
                opportunity for public comment, shall issue regulations 
                establishing certification requirements for 
                institutional review boards under this subtitle. Such 
                regulations shall be based on regulations issued under 
                section 491(a) of the Public Health Service Act and 
                shall ensure that institutional review boards certified 
                under this paragraph have the qualifications to access 
                and protect the confidentiality of research subjects.
                    ``(B) Certification.--The Secretary shall certify 
                an institutional review board that meets the 
                certification requirements established by the Secretary 
                under subparagraph (A).
    ``(d) Obligations of Recipient.--A person who receives protected 
health information pursuant to subsection (a)--
            ``(1) shall remove or destroy, at the earliest opportunity 
        consistent with the purposes of the project, information that 
        would enable an individual to be identified, unless--
                    ``(A) an institutional review board has determined 
                that there is a health or research justification for 
                retention of such identifiers; and
                    ``(B) there is an adequate plan to protect the 
                identifiers from disclosure that is inconsistent with 
                this section; and
            ``(2) shall use protected health information solely for 
        purposes of the health research project for which disclosure 
        was authorized under this section.

     ``Subpart D--Disclosure For Judicial, Administrative, and Law 
                          Enforcement Purposes

``SEC. 11841. JUDICIAL AND ADMINISTRATIVE PURPOSES.

    A health care provider, health plan, health oversight agency, or 
employer may disclose protected health information--
            ``(1) pursuant to the Federal Rules of Civil Procedure, the 
        Federal Rules of Criminal Procedure, or comparable rules of 
        other courts or administrative agencies in connection with 
        litigation or proceedings to which the individual who is the 
        subject of the information is a party and in which the 
        individual has placed the individual's physical or mental 
        condition in issue;
            ``(2) to a court, and to others ordered by a court, if the 
        protected health information is developed in response to a 
        court-ordered physical or mental examination; or
            ``(3) pursuant to a law requiring the reporting of specific 
        medical information to law enforcement authorities.

``SEC. 11842. LAW ENFORCEMENT.

    ``(a) In General.--A health care provider, health plan, health 
oversight agency, employer, or person who receives protected health 
information under section 11823 may disclose protected health 
information to a law enforcement agency (other than a health oversight 
agency governed by section 11831) if the information is requested for 
use--
            ``(1) in an investigation or prosecution of a health 
        information trustee;
            ``(2) in the identification of a victim or witness in a law 
        enforcement inquiry; or
            ``(3) in connection with the investigation of criminal 
        activity committed against the trustee or on premises 
        controlled by the trustee.
    ``(b) Certification.--When a law enforcement agency (other than a 
health oversight agency) requests that a health information trustee 
disclose protected health information under this section, the law 
enforcement agency shall provide the trustee with a written 
certification that--
            ``(1) specifies the information requested;
            ``(2) states that the information is needed for a lawful 
        purpose under this section; and
            ``(3) is signed by a supervisory official of a rank 
        designated by the head of the agency.
  ``(c) Restrictions on Additional Disclosure.--Notwithstanding section 
11811(e), protected health information about an individual that is 
disclosed to a law enforcement agency under this section may be used 
in, or disclosed for, an administrative, civil, or criminal action or 
investigation against the individual if the action or investigation 
arises out of and is directly related to the action or investigation 
for which the information was obtained.

   ``Subpart E--Disclosure Pursuant to Government Subpoena or Warrant

``SEC. 11851. GOVERNMENT SUBPOENAS AND WARRANTS.

    ``(a) In General.--A health care provider, health plan, health 
oversight agency, employer, or person who receives protected health 
information under section 11823 may disclose protected health 
information under this section if the disclosure is pursuant to--
            ``(1) a subpoena issued under the authority of a grand 
        jury, and the trustee is provided a written certification by 
        the grand jury seeking the information that the grand jury has 
        complied with the applicable access provisions of section 
        11852;
            ``(2) an administrative subpoena or a judicial subpoena or 
        warrant, and the trustee is provided a written certification by 
        the person seeking the information that the person has complied 
        with the applicable access provisions of section 11852; or
            ``(3) an administrative subpoena or a judicial subpoena or 
        warrant, and the disclosure otherwise meets the conditions of 
        section 11831, 11832, 11841, or 11842.
    ``(b) Restrictions on Additional Disclosure.--
            ``(1) Actions or investigations.--Notwithstanding section 
        11811(c), protected health information about an individual that 
        is received under subsection (a) may be disclosed for, or used 
        in, any administrative, civil, or criminal action or 
        investigation against the individual if the action or 
        investigation arises out of and is directly related to the 
        inquiry for which the information was obtained.
            ``(2) Special rule.--Protected health information about an 
        individual that is received under subsection (a)(3) may not be 
        disclosed by the recipient unless the recipient complies with 
        the conditions and restrictions on disclosure with which the 
        recipient would have been required to comply if the disclosure 
        had been made under section 11831, 11832, 11841, or 11842.

``SEC. 11852. ACCESS PROCEDURES FOR LAW ENFORCEMENT SUBPOENAS AND 
              WARRANTS.

    ``(a) Probable Cause Requirement.--A government authority may not 
obtain protected health information about an individual under paragraph 
(1) or (2) of section 11851(a) for use in a law enforcement inquiry 
unless there is probable cause to believe that the information is 
relevant to a legitimate law enforcement inquiry being conducted by the 
government authority.
    ``(b) Warrants.--A government authority that obtains protected 
health information about an individual under circumstances described in 
subsection (a) and pursuant to a warrant shall, not later than 30 days 
after the date the warrant was executed, serve the individual with, or 
mail to the last known address of the individual, a notice that 
protected health information about the individual was so obtained, 
together with a notice of the individual's right to challenge the 
warrant in accordance with section 11853.
    ``(c) Subpoenas.--Except as provided in subsection (d), a 
government authority may not obtain protected health information about 
an individual under circumstances described in subsection (a) and 
pursuant to a subpoena unless a copy of the subpoena has been served on 
the individual on or before the date of return of the subpoena, 
together with a notice of the individual's right to challenge the 
subpoena in accordance with section 11853, and--
            ``(1) 15 days have passed since the date of service on the 
        individual and within that time period the individual has not 
        initiated a challenge in accordance with section 11853; or
            ``(2) disclosure is ordered by a court after challenge 
        under section 11853.
    ``(d) Application for Delay.--
            ``(1) In general.--A government authority may apply ex 
        parte and under seal to an appropriate court to delay (for an 
        initial period of not longer than 90 days) serving a notice or 
        copy of a subpoena required under subsection (b) or (c) with 
        respect to a law enforcement inquiry. The government authority 
        may apply to the court for extensions of the delay.
            ``(2) Reasons for delay.--An application for a delay, or 
        extension of a delay, under this subsection shall state, with 
        reasonable specificity, the reasons why the delay or extension 
        is being sought.
            ``(3) Ex parte order.--The court shall enter an ex parte 
        order delaying or extending the delay of notice, an order 
        prohibiting the disclosure of the request for, or disclosure 
        of, the protected health information, and an order requiring 
        the disclosure of the protected health information if the court 
        finds that--
                    ``(A) the inquiry being conducted is within the 
                lawful jurisdiction of the government authority seeking 
                the protected health information;
                    ``(B) there is probable cause to believe that the 
                protected health information being sought is relevant 
                to a legitimate law enforcement inquiry;
                    ``(C) the government authority's need for the 
                information outweighs the privacy interest of the 
                individual who is the subject of the information; and
                    ``(D) there is reasonable ground to believe that 
                receipt of notice by the individual will result in--
                            ``(i) endangering the life or physical 
                        safety of any individual;
                            ``(ii) flight from prosecution;
                            ``(iii) destruction of or tampering with 
                        evidence or the information being sought; or
                            ``(iv) intimidation of potential witnesses.

``SEC. 11853. CHALLENGE PROCEDURES FOR LAW ENFORCEMENT WARRANTS AND 
              SUBPOENAS.

    ``(a) Motion To Quash.--Within 15 days after the date of service of 
a notice of execution or a copy of a subpoena of a government authority 
seeking protected health information about an individual under 
paragraph (1) or (2) of section 11851(a), the individual may file a 
motion to quash--
            ``(1) in the case of a State judicial warrant or subpoena, 
        in the court which issued the warrant or subpoena;
            ``(2) in the case of a warrant or subpoena issued under the 
        authority of a State that is not a State judicial warrant or 
        subpoena, in a court of competent jurisdiction; or
            ``(3) in the case of any other warrant or subpoena issued 
        under the authority of a Federal court or the United States, in 
        the United States district court for the district in which the 
        individual resides or in which the warrant or subpoena was 
        issued.
    ``(b) Copy.--A copy of the motion shall be served by the individual 
upon the government authority by registered or certified mail.
    ``(c) Proceedings.--The government authority may file with the 
court such papers, including affidavits and other sworn documents, as 
sustain the validity of the warrant or subpoena. The individual may 
file with the court reply papers in response to the government 
authority's filing. The court, upon the request of the individual or 
the government authority or both, may proceed in camera. The court may 
conduct such proceedings as it deems appropriate to rule on the motion, 
but shall endeavor to expedite its determination.
    ``(d) Standard for Decision.--A court may deny a motion under 
subsection (a) if it finds there is probable cause to believe the 
protected health information is relevant to a legitimate law 
enforcement inquiry being conducted by the government authority, unless 
the court finds the individual's privacy interest outweighs the 
government authority's need for the information. The individual shall 
have the burden of demonstrating that the individual's privacy interest 
outweighs the need by the government authority for the information.
    ``(e) Specific Considerations With Respect to Privacy Interest.--In 
reaching its determination, the court shall consider--
            ``(1) the particular purpose for which the information was 
        collected;
            ``(2) the degree to which disclosure of the information 
        will embarrass, injure, or invade the privacy of the 
        individual;
            ``(3) the effect of the disclosure on the individual's 
        future health care;
            ``(4) the importance of the inquiry being conducted by the 
        government authority, and the importance of the information to 
        that inquiry; and
            ``(5) any other factor deemed relevant by the court.
    ``(f) Attorney's Fees.--In the case of a motion brought under 
subsection (a) in which the individual has substantially prevailed, the 
court may assess against the government authority a reasonable 
attorney's fee and other litigation costs (including expert's fees) 
reasonably incurred.
    ``(g) No Interlocutory Appeal.--A ruling denying a motion to quash 
under this section shall not be deemed to be a final order, and no 
interlocutory appeal may be taken therefrom by the individual. An 
appeal of such a ruling may be taken by the individual within such 
period of time as is provided by law as part of any appeal from a final 
order in any legal proceeding initiated against the individual arising 
out of or based upon the protected health information disclosed.

       ``Subpart F--Disclosure Pursuant to Private Party Subpoena

``SEC. 11854. PRIVATE PARTY SUBPOENAS.

    ``A health care provider, health plan, employer, or person who 
receives protected health information under section 11823 may disclose 
protected health information under this section if the disclosure is 
pursuant to a subpoena issued on behalf of a private party who has 
complied with the access provisions of section 11855.

``SEC. 11855. ACCESS PROCEDURES FOR PRIVATE PARTY SUBPOENAS.

    ``A private party may not obtain protected health information about 
an individual pursuant to a subpoena unless a copy of the subpoena 
together with a notice of the individual's right to challenge the 
subpoena in accordance with section 11856 has been served upon the 
individual on or before the date of return of the subpoena, and--
            ``(1) 15 days have passed since the date of service on the 
        individual, and within that time period the individual has not 
        initiated a challenge in accordance with section 11856; or
            ``(2) disclosure is ordered by a court under section 11856.

``SEC. 11856. CHALLENGE PROCEDURES FOR PRIVATE PARTY SUBPOENAS.

    ``(a) Motion To Quash Subpoena.--Within 15 days after service of a 
copy of the subpoena seeking protected health information under section 
11854, the individual who is the subject of the protected health 
information may file in any court of competent jurisdiction a motion to 
quash the subpoena and serve a copy of the motion on the person seeking 
the information.
    ``(b) Standard for Decision.--The court shall grant a motion under 
subsection (a) unless the respondent demonstrates that--
            ``(1) there is reasonable ground to believe the information 
        is relevant to a lawsuit or other judicial or administrative 
        proceeding; and
            ``(2) the need of the respondent for the information 
        outweighs the privacy interest of the individual.
    ``(c) Specific Considerations With Respect to Privacy Interest.--In 
determining under subsection (b) whether the need of the respondent for 
the information outweighs the privacy interest of the individual, the 
court shall consider--
            ``(1) the particular purpose for which the information was 
        collected;
            ``(2) the degree to which disclosure of the information 
        would embarrass, injure, or invade the privacy of the 
        individual;
            ``(3) the effect of the disclosure on the individual's 
        future health care;
            ``(4) the importance of the information to the lawsuit or 
        proceeding; and
            ``(5) any other relevant factor.
    ``(d) Attorney's Fees.--In the case of a motion brought under 
subsection (a) in which the individual has substantially prevailed, the 
court may assess against the respondent a reasonable attorney's fee and 
other litigation costs and expenses (including expert's fees) 
reasonably incurred.

   ``PART III--PROCEDURES FOR ENSURING SECURITY OF PROTECTED HEALTH 
                              INFORMATION

                ``Subpart A--Establishment of Safeguards

``SEC. 11861. ESTABLISHMENT OF SAFEGUARDS.

    ``(a) In General.--A health information trustee shall establish and 
maintain appropriate administrative, technical, and physical 
safeguards--
            ``(1) to ensure the integrity and confidentiality of 
        protected health information created or received by the 
        trustee; and
            ``(2) to protect against any anticipated threats or hazards 
        to the security or integrity of such information.
    ``(b) Regulations.--The Secretary shall promulgate regulations 
regarding security measures for protected health information.

``SEC. 11862. ACCOUNTING FOR DISCLOSURES.

    ``(a) In General.--
            ``(1) Requirement to create or maintain record.--A health 
        information trustee shall create and maintain, with respect to 
        any protected health information disclosed in exceptional 
        circumstances (as described in paragraph (2)), a record of--
                    ``(A) the date and purpose of the disclosure;
                    ``(B) the name of the person to whom or to which 
                the disclosure was made;
                    ``(C) the address of the person to whom or to which 
                the disclosure was made or the location to which the 
                disclosure was made; and
                    ``(D) the information disclosed, if the recording 
                of the information disclosed is practicable, taking 
                into account the technical capabilities of the system 
                used to maintain the record and the costs of such 
                maintenance.
            ``(2) Exceptional circumstances described.--For purposes of 
        paragraph (1) protected health information is disclosed in 
        exceptional circumstances if the disclosure--
                    ``(A) is not a routine part of doing business, as 
                determined in accordance with guidelines promulgated by 
                the Secretary; or
                    ``(B) is permitted under sections 11823 and 11832.
    ``(b) Disclosure record part of information.--A record created and 
maintained under paragraph (a) shall be maintained as part of the 
protected health information to which the record pertains.

``Subpart B--Review of Protected Health Information By Subjects of the 
                              Information

``SEC. 11871. INSPECTION OF PROTECTED HEALTH INFORMATION.

    ``(a) In General.--Except as provided in subsection (c), a health 
care provider or health plan--
            ``(1) shall permit an individual who is the subject of 
        protected health information to inspect any such information 
        that the provider or plan maintains;
            ``(2) shall permit the individual to have a copy of the 
        information;
            ``(3) shall permit a person who has been designated in 
        writing by the individual who is the subject of the information 
        to inspect, or to have a copy of, the information on behalf of 
        the individual or to accompany the individual during the 
        inspection; and
            ``(4) may offer to explain or interpret information that is 
        inspected or copied under this subsection.
    ``(b) Additional Requests.--Except as provided in subsection (c), a 
health plan or health care provider shall, upon written request of an 
individual--
            ``(1) determine the identity of previous providers to the 
        individual; and
            ``(2) obtain protected health information regarding the 
        individual.
    ``(c) Exceptions.--A health care provider or health plan is not 
required by this section to permit inspection or copying of protected 
health information if any of the following conditions apply:
            ``(1) Mental health treatment notes.--The information 
        consists of psychiatric, psychological, or mental health 
        treatment notes, and the provider or plan determines, based on 
        reasonable medical judgment, that inspection or copying of the 
        notes would cause sufficient harm to the individual who is the 
        subject of the notes so as to outweigh the desirability of 
        permitting access, and the provider or plan has not disclosed 
        the notes to any person not directly engaged in treating the 
        individual, except with the authorization of the individual or 
        under compulsion of law.
            ``(2) Information about others.--The information relates to 
        an individual other than the individual seeking to inspect or 
        have a copy of the information and the provider or plan 
        determines, based on reasonable medical judgment, that 
        inspection or copying of the information would cause sufficient 
        harm to 1 or both of the individuals so as to outweigh the 
        desirability of permitting access.
            ``(3) Endangerment to life or safety.--The provider or plan 
        determines that disclosure of the information could reasonably 
        be expected to endanger the life or physical safety of any 
        individual.
            ``(4) Confidential source.--The information identifies or 
        could reasonably lead to the identification of a person (other 
        than a health care provider) who provided information under a 
        promise of confidentiality to a health care provider concerning 
        the individual who is the subject of the information.
            ``(5) Administrative purposes.--The information--
                    ``(A) is used by the provider or plan solely for 
                administrative purposes and not in the provision of 
                health care to the individual who is the subject of the 
                information; and
                    ``(B) has not been disclosed by the provider or 
                plan to any other person.
    ``(d) Inspection and Copying of Segregable Portion.--A health care 
provider or health plan shall permit inspection and copying under 
subsection (a) of any reasonably segregable portion of a record after 
deletion of any portion that is exempt under subsection (c).
    ``(e) Conditions.--A health care provider or health plan may 
require a written request for the inspection and copying of protected 
health information under this subsection. The health care provider or 
health plan may require a cost reimbursement for such inspection and 
copying.
    ``(f) Statement of reasons for denial.--If a health care provider 
or health plan denies a request for inspection or copying under this 
section, the provider or plan shall provide the individual who made the 
request (or the individual's designated representative) with a written 
statement of the reasons for the denial.
    ``(g) Deadline.--A health care provider or health plan shall comply 
with or deny a request for inspection or copying of protected health 
information under this section within the 30-day period beginning on 
the date on which the provider or plan receives the request.

``SEC. 11872. AMENDMENT OF PROTECTED HEALTH INFORMATION.

    ``(a) In General.--A health care provider or health plan shall, 
within the 45-day period beginning on the date on which the provider or 
plan receives from an individual a written request that the provider or 
plan correct or amend the information--
            ``(1) make the correction or amendment requested;
            ``(2) inform the individual of the correction or amendment 
        that has been made; and
            ``(3) inform any person who is identified by the 
        individual, who is not an officer, employee or agent of the 
        provider or plan, and to whom the uncorrected or unamended 
        portion of the information was previously disclosed, of the 
        correction or amendment that has been made.
    ``(b) Refusal to Correct.--If the provider or plan refuses to make 
the corrections, the provider or plan shall inform the individual of--
            ``(1) the reasons for the refusal of the provider or plan 
        to make the correction or amendment;
            ``(2) any procedures for further review of the refusal; and
            ``(3) the individual's right to file with the provider or 
        plan a concise statement setting forth the requested correction 
        or amendment and the individual's reasons for disagreeing with 
        the refusal of the provider or plan.
    ``(c) Bases for Request To Correct or Amend.--An individual may 
request correction or amendment of protected health information about 
the individual under paragraph (a) if the information is not timely, 
accurate, relevant to the system of records, or complete.
    ``(d) Statement of Disagreement.--After an individual has filed a 
statement of disagreement under paragraph (b)(3), the provider or plan, 
in any subsequent disclosure of the disputed portion of the 
information--
            ``(1) shall include a copy of the individual's statement; 
        and
            ``(2) may include a concise statement of the reasons of the 
        provider or plan for not making the requested correction or 
        amendment.
    ``(e) Rule of Construction.--This section shall not be construed to 
require a health care provider or health plan to conduct a formal, 
informal, or other hearing or proceeding concerning a request for a 
correction or amendment to protected health information the provider or 
plan maintains.
    ``(f) Correction.--For purposes of paragraph (a), a correction is 
deemed to have been made to protected health information when 
information that is not timely, accurate, relevant to the system of 
records, or complete is clearly marked as incorrect or when 
supplementary correct information is made part of the information.

``SEC. 11873. NOTICE OF INFORMATION PRACTICES.

    ``(a) Preparation of Written Notice.--A health care provider or 
health plan shall prepare a written notice of information practices 
describing the following:
            ``(1) Personal rights of an individual.--The rights under 
        this subpart of an individual who is the subject of protected 
        health information, including the right to inspect and copy 
        such information and the right to seek amendments to such 
        information, and the procedures for authorizing disclosures of 
        protected health information and for revoking such 
        authorizations.
            ``(2) Procedures of provider or plan.--The procedures 
        established by the provider or plan for the exercise of the 
        rights of individuals about whom protected health information 
        is maintained.
            ``(3) Authorized disclosures.--The disclosures of protected 
        health information that are authorized.
    ``(b) Dissemination of Notice.--A health care provider or health 
plan--
            ``(1) shall, upon request, provide any individual with a 
        copy of the notice of information practices described in 
        subsection (a); and
            ``(2) shall make reasonable efforts to inform individuals 
        in a clear and conspicuous manner of the existence and 
        availability of the notice.
    ``(c) Model Notice.--The Secretary, after notice and opportunity 
for public comment, shall develop and disseminate a model notice of 
information practices for use by health care providers and health plans 
under this section.

           ``Subpart C--Standards for Electronic Disclosures

``SEC. 11882. STANDARDS FOR ELECTRONIC DISCLOSURES.

    ``The Secretary shall promulgate standards for disclosing protected 
health information in accordance with this subtitle in electronic form. 
Such standards shall include standards relating to the creation, 
transmission, receipt, and maintenance, of any written document 
required or authorized under this subtitle.

                          ``PART IV--SANCTIONS

           ``Subpart A--No Sanctions for Permissible Actions

``SEC. 11891. NO LIABILITY FOR PERMISSIBLE DISCLOSURES.

    ``A health information trustee who makes a disclosure of protected 
health information about an individual that is permitted by this 
subtitle shall not be liable to the individual for the disclosure under 
common law.

``SEC. 11892. NO LIABILITY FOR INSTITUTIONAL REVIEW BOARD 
              DETERMINATIONS.

    ``If the members of an institutional review board make a 
determination in good faith that--
            ``(1) a health research project is of sufficient importance 
        to outweigh the intrusion into the privacy of an individual; 
        and
            ``(2) the effectiveness of the project requires use of 
        protected health information,
the members, the board, and the parent institution of the board shall 
not be liable to the individual as a result of the determination.

``SEC. 11893. RELIANCE ON CERTIFIED ENTITY.

    ``If a health information trustee contracts with a certified health 
information network service to make a disclosure of any protected 
health information on behalf of such trustee in accordance with this 
subtitle and such service makes a disclosure of such information that 
is in violation of this subtitle, the trustee shall not be liable for 
to the individual who is the subject of the information for such 
unlawful disclosure.

                      ``Subpart B--Civil Sanctions

``SEC. 11901. CIVIL PENALTY.

    ``(a) Violation.--Any health information trustee who the Secretary 
determines has substantially failed to comply with this subtitle shall 
be subject, in addition to any other penalties that may be prescribed 
by law, to a civil penalty of not more than $10,000 for each such 
violation.
    ``(b) Procedures for Imposition of Penalties.--Section 1128A, other 
than subsections (a) and (b) and the second sentence of subsection (f) 
of that section, shall apply to the imposition of a civil monetary 
penalty under this section in the same manner as such provisions apply 
with respect to the imposition of a penalty under section 1128A.

``SEC. 11902. CIVIL ACTION.

    ``(a) In General.--An individual who is aggrieved by conduct in 
violation of this subtitle may bring a civil action to recover--
            ``(1) the greater of actual damages or liquidated damages 
        of $5,000;
            ``(2) punitive damages;
            ``(3) a reasonable attorney's fee and expenses of 
        litigation;
            ``(4) costs of litigation; and
            ``(5) such preliminary and equitable relief as the court 
        determines to be appropriate.
    ``(b) Limitation.--No action may be commenced under this section 
more than 3 years after the date on which the violation was or should 
reasonably have been discovered.

                    ``Subpart C--Criminal Sanctions

``SEC. 11911. WRONGFUL DISCLOSURE OF PROTECTED HEALTH INFORMATION.

    ``(a) Offense.--A person who knowingly--
            ``(1) obtains protected health information relating to an 
        individual in violation of this subtitle; or
            ``(2) discloses protected health information to another 
        person in violation of this subtitle,
shall be punished as provided in subsection (b).
    ``(b) Penalties.--A person described in subsection (a) shall--
            ``(1) be fined not more than $50,000, imprisoned not more 
        than 1 year, or both;
            ``(2) if the offense is committed under false pretenses, be 
        fined not more than $100,000, imprisoned not more than 5 years, 
        or both; and
            ``(3) if the offense is committed with intent to sell, 
        transfer, or use protected health information for commercial 
        advantage, personal gain, or malicious harm, fined not more 
        than $250,000, imprisoned not more than 10 years, or both.

                  ``PART V--ADMINISTRATIVE PROVISIONS

``SEC. 11921. RELATIONSHIP TO OTHER LAWS.

    ``(a) State Law.--Except as provided in subsections (b), (c), and 
(d), this subtitle preempts State law.
    ``(b) Laws Relating to Public or Mental Health.--Nothing in this 
subtitle shall be construed to preempt or operate to the exclusion of 
any State law relating to public health or mental health that prevents 
or regulates disclosure of protected health information otherwise 
allowed under this subtitle.
    ``(c) Privileges.--Nothing in this subtitle is intended to preempt 
or modify State common or statutory law to the extent such law concerns 
a privilege of a witness or person in a court of the State. This 
subtitle does not supersede or modify Federal common or statutory law 
to the extent such law concerns a privilege of a witness or person in a 
court of the United States. Authorizations pursuant to section 11812 
shall not be construed as a waiver of any such privilege.
    ``(d) Certain Duties Under State or Federal Law.--This subtitle 
shall not be construed to preempt, supersede, or modify the operation 
of--
            ``(1) any law that provides for the reporting of vital 
        statistics such as birth or death information;
            ``(2) any law requiring the reporting of abuse or neglect 
        information about any individual;
            ``(3) subpart II of part E of title XXVI of the Public 
        Health Service Act (relating to notifications of emergency 
        response employees of possible exposure to infectious 
        diseases); or
            ``(4) any Federal law or regulation governing 
        confidentiality of alcohol and drug patient records.

``SEC. 11922. RIGHTS OF INCOMPETENTS.

    ``(a) Effect of Declaration of Incompetence.--Except as provided in 
section 11923, if an individual has been declared to be incompetent by 
a court of competent jurisdiction, the rights of the individual under 
this subtitle shall be exercised and discharged in the best interests 
of the individual through the individual's representative.
    ``(b) No Court Declaration.--Except as provided in section 11923, 
if a health care provider determines that an individual, who has not 
been declared to be incompetent by a court of competent jurisdiction, 
suffers from a medical condition that prevents the individual from 
acting knowingly or effectively on the individual's own behalf, the 
right of the individual to authorize disclosure may be exercised and 
discharged in the best interest of the individual by the individual's 
representative.

``SEC. 11923. EXERCISE OF RIGHTS.

    ``(a) Individuals Who Are 18 or Legally Capable.--In the case of an 
individual--
            ``(1) who is 18 years of age or older, all rights of the 
        individual shall be exercised by the individual; or
            ``(2) who, acting alone, has the legal right, as determined 
        by State law, to apply for and obtain a type of medical 
        examination, care, or treatment and who has sought such 
        examination, care, or treatment, the individual shall exercise 
        all rights of an individual under this subtitle with respect to 
        protected health information relating to such examination, 
        care, or treatment.
    ``(b) Individuals Under 18.--Except as provided in subsection 
(a)(2), in the case of an individual who is--
            ``(1) under 14 years of age, all the individual's rights 
        under this subtitle shall be exercised through the parent or 
        legal guardian of the individual; or
            ``(2) 14, 15, 16, or 17 years of age, the rights of 
        inspection and amendment, and the right to authorize disclosure 
        of protected health information of the individual may be 
        exercised either by the individual or by the parent or legal 
        guardian of the individual.''.
    (b) Conforming Amendment.--Title XI of the Social Security Act (42 
U.S.C. 1301 et seq.), as amended by section 401, is amended by striking 
the title and inserting the following:

      ``TITLE XI--GENERAL PROVISIONS, PEER REVIEW, ADMINISTRATIVE 
                     SIMPLIFICATION, AND PRIVACY''

                     TITLE V--MALPRACTICE AND FRAUD

                    Subtitle A--Federal Tort Reform

SEC. 501. FEDERAL TORT REFORM.

    (a) In General.--Part A of subtitle A of title XI of the Social 
Security Act (42 U.S.C. 1301 et seq.), as amended by section 401, is 
amended by inserting after section 1128B the following new section:

``SEC. 1129. FEDERAL TORT REFORM.

    ``(a) Applicability.--
            ``(1) In general.--Except as provided in paragraph (3), 
        this section shall apply with respect to any medical 
        malpractice claim or medical malpractice liability action 
        brought in any Federal or State court, except that this section 
        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.
            ``(2) Preemption.--The provisions of this section shall 
        preempt any State law to the extent such law is inconsistent 
        with the limitations contained in such provisions. The 
        provisions of this section shall not preempt any State law that 
        provides for defenses in addition to those contained in this 
        section, places greater limitations on the amount of attorneys' 
        fees that can be collected, or otherwise imposes greater 
        restrictions on non-economic or punitive damages than those 
        provided in this section.
            ``(3) Effect on sovereign immunity and choice of law or 
        venue.--Nothing in this section shall be construed to--
                    ``(A) waive or affect any defense of sovereign 
                immunity asserted by any State under any provision of 
                law;
                    ``(B) waive or affect any defense of sovereign 
                immunity asserted by the United States;
                    ``(C) affect the applicability of any provision of 
                the Foreign Sovereign Immunities Act of 1976;
                    ``(D) preempt State choice-of-law rules with 
                respect to claims brought by a foreign nation or a 
                citizen of a foreign nation; or
                    ``(E) 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.
            ``(4) Federal court jurisdiction not established on federal 
        question grounds.--Nothing in this section shall be construed 
        to establish any jurisdiction in the district courts of the 
        United States over medical malpractice liability actions on the 
        basis of section 1331 or 1337 of title 28, United States Code.
    ``(b) Definitions.--In this section, the following definitions 
apply:
            ``(1) Alternative dispute resolution system; adr.--The term 
        `alternative dispute resolution system' or `ADR' means a system 
        that provides for the resolution of medical malpractice claims 
        in a manner other than through medical malpractice liability 
        actions.
            ``(2) Claimant.--The term `claimant' means any person who 
        alleges a medical 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) Health care professional.--The term `health care 
        professional' means any individual who provides health care 
        services in a State and who is required by the laws or 
        regulations of the State to be licensed or certified by the 
        State to provide such services in the State.
            ``(4) Health care provider.--The term `health care 
        provider' means any organization or institution that is engaged 
        in the delivery of health care services in a State and that is 
        required by the laws or regulations of the State to be licensed 
        or certified by the State to engage in the delivery of such 
        services in the State.
            ``(5) Injury.--The term `injury' means any illness, 
        disease, or other harm that is the subject of a medical 
        malpractice liability action or a medical malpractice claim.
            ``(6) Medical malpractice liability action.--The term 
        `medical malpractice liability action' means a civil action 
        brought in a State or Federal court against a health care 
        provider or health care professional (regardless of the theory 
        of liability on which the claim is based) in which the 
        plaintiff alleges a medical malpractice claim.
            ``(7) Medical malpractice claim.--
                    ``(A) In general.--The term `medical malpractice 
                claim' means a claim brought against a health care 
                provider or health care professional in which a 
                claimant alleges that injury was caused by the 
                provision of (or the failure to provide) health care 
                services, including health care services provided under 
                a health care plan described in subparagraph (B), 
                except that such term does not include--
                            ``(i) any claim based on an allegation of 
                        an intentional tort; or
                            ``(ii) any claim based on an allegation 
                        that a product is defective that is brought 
                        against any individual or entity that is not a 
                        health care professional or health care 
                        provider.
                    ``(B) Health care plan described.--A health care 
                plan described in this subparagraph includes--
                            ``(i) a certified standard or nonstandard 
                        health plan;
                            ``(ii) a certified supplemental health 
                        benefits plan;
                            ``(iii) a certified long-term care policy;
                            ``(iv) a State health care program (as 
                        defined in section 1128(h)); and
                            ``(v) the medicare program under title 
                        XVIII.
            ``(8) Participating state.--The term `participating State' 
        means a participating State under title XXI.
    ``(c) Alternative Dispute Resolution.--
            ``(1) ADR in participating states.--Each participating 
        State shall--
                    ``(A) establish an alternative dispute resolution 
                system for the determination of medical malpractice 
                claims (including the tolling of any applicable statute 
                of limitations during any action under such system); 
                and
                    ``(B) require that State health care programs and 
                certified standard and nonstandard health plans 
                disclose to enrollees (and potential enrollees), in 
                accordance with standards established by the 
                Secretary--
                            ``(i) the availability of procedures for 
                        consumer grievances under the program or plan;
                            ``(ii) the alternative dispute resolution 
                        method or methods adopted by the State under 
                        this subsection for its alternative dispute 
                        resolution system and the procedures for filing 
                        actions under such system;
                            ``(iii) the consequences of, and 
                        alternatives to, participation in such system.
            ``(2) Application to medical malpractice claims.--In the 
        case of any medical malpractice claim, no medical malpractice 
        liability action may be brought with respect to such claim in a 
        participating State until the final resolution of the claim 
        under the alternative dispute resolution system established by 
        the State under paragraph (1).
            ``(3) Adoption of mechanism by participating states.--Each 
        participating State shall adopt at least one of the methods of 
        alternative dispute resolution specified under paragraph (4) or 
        (5) for the resolution of medical malpractice claims.
            ``(4) Specification of permissible adr methods.--
                    ``(A) In general.--The Secretary shall, by 
                regulation, develop alternative dispute resolution 
                methods for use by participating States in resolving 
                medical malpractice claims under paragraph (1). Such 
                methods shall include at least the following:
                            ``(i) Binding arbitration.--The use of 
                        binding arbitration.
                            ``(ii) Fault-based systems.--The use of 
                        fault-based administrative systems, expedited 
                        review, and dismissal of claims when not 
                        adequately supported.
                            ``(iii) Early offers of settlement.--The 
                        use of a process under which parties have the 
                        option to make early offers of settlement.
                            ``(iv) Catastrophic systems.--The use of 
                        catastrophic injury compensation systems.
                    ``(B) Standards for establishing methods.--In 
                developing alternative dispute resolution methods under 
                subparagraph (A), the Secretary shall assure that the 
                methods promote the resolution of medical malpractice 
                claims in a manner that--
                            ``(i) is affordable for the parties 
                        involved;
                            ``(ii) provides for timely resolution of 
                        claims;
                            ``(iii) provides for the consistent and 
                        fair resolution of claims; and
                            ``(iv) provides for reasonably convenient 
                        access to the alternative dispute resolution 
                        system for individuals enrolled in certified 
                        standard and nonstandard health plans.
            ``(5) State initiated alternative.--A participating State 
        will be permitted to operate a method of alternative dispute 
        resolution (other than a method described in paragraph (4)) 
        that otherwise complies with this section if such system--
                    ``(A) is determined by the Secretary to accomplish 
                the purposes and otherwise meet the requirements of 
                this section; and
                    ``(B) is certified by the Secretary as an 
                appropriate alternative dispute resolution method.
    ``(d) Procedures for Filing Actions.--
            ``(1) Contesting of adr decision.--If either party to a 
        decision issued with respect to an alternative dispute 
        resolution method applied under subsection (c) is dissatisfied 
        with such decision, such party may (to the extent otherwise 
        permitted by State law) contest such decision after it is 
        issued and seek a rehearing of the medical malpractice claim 
        involved in a court of competent jurisdiction.
            ``(2) Notice of intent to contest decision.--Not later than 
        60 days after a decision is issued with respect to a medical 
        malpractice claim under an alternative dispute resolution 
        system established by a participating State under subsection 
        (c), each party affected by the decision shall submit a sealed 
        statement to a court of competent jurisdiction indicating 
        whether or not the party intends to contest the decision.
            ``(3) Court of competent jurisdiction.--For purposes of 
        this subsection, the term `court of competent jurisdiction' 
        means--
                    ``(A) with respect to actions filed in a State 
                court, the appropriate State trial court; and
                    ``(B) with respect to actions filed in a Federal 
                court, the appropriate United States district court.
            ``(4) Legal effect of uncontested alternative dispute 
        resolution system decision.--The decision reached under an 
        alternative dispute resolution system shall, for purposes of 
        enforcement by a court of competent jurisdiction, have the same 
        status in the court as the verdict of a medical malpractice 
        liability action adjudicated in a State or Federal trial court. 
        The previous sentence shall not apply to a decision that is 
        contested by a party affected by the decision pursuant to 
        paragraph (1).
    ``(e) Treatment of Attorneys' Fees and Other Costs.--
            ``(1) Limitation on amount of contingency fees.--
                    ``(A) In general.--An attorney who represents, on a 
                contingency fee basis, a claimant in a medical 
                malpractice claim or medical malpractice liability 
                action may not charge, demand, receive, or collect for 
                services rendered in connection with such claim or 
                action in excess of the following amount recovered by 
                judgment or settlement under such claim or action:
                            ``(i) 33\1/3\ percent of the first $150,000 
                        (or portion thereof) recovered, based on after-
                        tax recovery, plus
                            ``(ii) 25 percent of any amount in excess 
                        of $150,000 recovered, based on after-tax 
                        recovery.
                    ``(B) Calculation of periodic payments.--In the 
                event that a judgment or settlement includes periodic 
                or future payments of damages, the amount recovered for 
                purposes of computing the limitation on the contingency 
                fee under subparagraph (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.
            ``(2) Requiring party contesting adr ruling to pay 
        attorneys' fees and other costs.--
                    ``(A) In general.--The court in a medical 
                malpractice liability action shall require a party that 
                (pursuant to subsection (d)(1)) contests the ruling of 
                the alternative dispute resolution system of a 
                participating State with respect to the medical 
                malpractice claim that is the subject of the action to 
                pay to the opposing party the costs incurred by the 
                opposing party under the action, including attorneys' 
                fees, fees paid to expert witnesses, and other 
                litigation expenses (but not including court costs, 
                filing fees, or other expenses paid directly by the 
                party to the court, or any fees or costs associated 
                with the resolution of the claim under the alternative 
                dispute resolution system), but only if--
                            ``(i) in the case of an action in which the 
                        party that contested the ruling is the 
                        claimant, the amount of damages awarded to the 
                        party under the action is less than 66\2/3\ 
                        percent of the amount of damages awarded to the 
                        party under the alternative dispute resolution 
                        system; and
                            ``(ii) in the case of an action in which 
                        the party that contested the ruling is the 
                        defendant, the amount of damages assessed 
                        against the party under the action is greater 
                        than the amount of damages assessed under the 
                        alternative dispute resolution system.
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                if the court finds that the application of such 
                subparagraph to a party would constitute an undue 
                hardship, and issues an order waiving or modifying the 
                application of such subparagraph that specifies the 
                grounds for the court's decision.
                    ``(C) Limit on attorneys' fees paid.--Attorneys' 
                fees that are required to be paid under subparagraph 
                (A) by the contesting party shall not exceed the amount 
                of the attorneys' fees incurred by the contesting party 
                in the action. If the attorneys' fees of the contesting 
                party are based on a contingency fee agreement, the 
                amount of attorneys' fees for purposes of the preceding 
                sentence shall not exceed the reasonable value of those 
                services.
            ``(3) Contingency fee defined.--As used in this subsection, 
        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.
    ``(f) Scope of Liability.--
            ``(1) In general.--With respect to punitive and noneconomic 
        damages, the liability of each defendant in a medical 
        malpractice claim or medical malpractice liability action shall 
        be several only and may not be joint. Such a defendant shall be 
        liable only for the amount of punitive or noneconomic damages 
        allocated to the defendant in direct proportion to such 
        defendant's percentage of fault or responsibility for the 
        injury suffered by the claimant.
            ``(2) Determination of percentage of liability.--The trier 
        of fact in a medical malpractice claim or medical malpractice 
        liability action shall determine the extent of each defendant's 
        fault or responsibility for injury suffered by the claimant, 
        and shall assign a percentage of responsibility for such injury 
        to each such defendant.
    ``(g) Reform of Damages.--
            ``(1) Limitation on noneconomic damages.--
                    ``(A) In general.--With respect to a medical 
                malpractice claim or medical malpractice liability 
                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 the amount determined 
                under subparagraph (B), 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 the limitation contained in 
                this paragraph. If the jury's damage award exceeds such 
                limitation, a reduction in such award shall be made by 
                the court.
                    ``(B) Limitation amount.--The amount determined 
                under this subparagraph shall be equal to--
                            ``(i) in 1995, $250,000; and
                            ``(ii) in subsequent years, the amount 
                        determined under this subparagraph in the 
                        previous year, updated by the estimated 
                        percentage change in the Consumer Price Index 
                        for All Urban Consumers (United States city 
                        average) during the previous calendar year, 
                        adjusted by any previous over estimations or 
                        under estimations under this subparagraph.
            ``(2) Punitive damages.--
                    ``(A) Fund.--Each participating State shall 
                establish a health care safety and policy program, to 
                be approved by the Secretary, and a fund consisting of 
                such amounts as are transferred to the fund under 
                subparagraph (B).
                    ``(B) Transfer of amounts.--Each participating 
                State shall require that 75 percent of all awards of 
                punitive damages resulting from all medical malpractice 
                claims or medical malpractice liability actions in that 
                State be transferred to the fund established under 
                subparagraph (A) in the State.
                    ``(C) Obligations from fund.--The chief executive 
                officer of a participating State shall obligate such 
                sums as are available in the fund established in that 
                State under subparagraph (A) to--
                            ``(i) license and certify health care 
                        professionals in the State;
                            ``(ii) implement health care quality 
                        assurance programs;
                            ``(iii) carry out public education programs 
                        to increase awareness of the availability of 
                        comparative value information on certified 
                        standard health plans distributed in accordance 
                        with the State consumer information program 
                        established under section 21025; and
                            ``(iv) carry out programs to reduce 
                        malpractice-related costs for health care 
                        providers volunteering to provide health care 
                        services in medically underserved areas.
    ``(h) No-Fault Liability Demonstration Projects.--
            ``(1) In general.--The Secretary may provide funds (in such 
        amount as the Secretary considers appropriate) to one or more 
        eligible participating States to establish no-fault medical 
        liability system demonstration projects to replace the common 
        law tort liability system for medical injuries.
            ``(2) Eligibility of state.--A participating State is 
        eligible to participate in the demonstration project 
        established under paragraph (1) if the State submits an 
        application to the Secretary at such time, in such manner, and 
        containing such information and assurances as the Secretary may 
        require.
            ``(3) Waivers.--The Secretary may waive any provision of 
        this section that the Secretary determines is necessary for a 
        State to conduct a demonstration project established under 
        paragraph (1).
            ``(4) Authorization of appropriations.--There are 
        authorized to be appropriated such sums as may be necessary to 
        carry out the demonstration projects under this subsection.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to medical malpractice claims arising on or after January 1, 
1995.

  Subtitle B--Expanded Efforts To Control Health Care Fraud and Abuse 
                   Affecting Federal Outlay Programs

                      PART I--IMPROVED ENFORCEMENT

SEC. 511. HEALTH CARE FRAUD AND ABUSE AFFECTING FEDERAL OUTLAY 
              PROGRAMS.

    (a) In General.--Part A of subtitle A of title XI of the Social 
Security Act, as amended by section 501, is amended by inserting after 
section 1128B (42 U.S.C. 1320a-7b) the following new sections:

    ``health care fraud and abuse affecting federal outlay programs

    ``Sec. 1128C. (a) In General.--Not later than January 1, 1996, the 
Secretary and the Attorney General of the United States shall establish 
a joint program--
            ``(1) to coordinate Federal, State, and local law 
        enforcement programs to control fraud and abuse affecting 
        Federal outlay programs,
            ``(2) to prosecute health care matters (through criminal, 
        civil, and administrative proceedings);
            ``(3) to conduct investigations (including consumer 
        complaint investigations), audits, evaluations, and inspections 
        relating to the delivery of and payment for health care in the 
        United States,
            ``(4) to conduct financial and performance audits of health 
        care programs and operations;
            ``(5) to conduct inspections and other evaluations;
            ``(6) to provide rewards paid under section 1128F;
            ``(7) to facilitate the enforcement of sections 1128 
        through 1128G and other statutes applicable to health care 
        fraud and abuse.
            ``(8) to provide health care provider and consumer 
        education (including the provision of advisory opinions) 
        regarding compliance with the provisions of sections 1128 
        through 1128G.
Not more than 20 percent of the amounts available in the Federal Outlay 
Program Fraud and Abuse Control Account for any fiscal year shall be 
used for the purposes described in paragraph (8).
    ``(b) Coordination With Law Enforcement Agencies.--In carrying out 
the program under subsection (a), the Secretary and the Attorney 
General shall consult with, and arrange for the sharing of data and 
resources with, Federal, State, and local law enforcement agencies, 
State Medicaid Fraud Control Units, and State agencies responsible for 
the licensing and certification of health care providers.
    ``(c) Coordination With Purchasing Cooperatives and Certified 
Health Plans.--In carrying out the program under subsection (a), the 
Secretary and the Attorney General shall consult with, and arrange for 
the sharing of data with representatives of purchasing cooperatives and 
certified health plans.
    ``(d) Authorities of Attorney General and Secretary.--In carrying 
out duties under subsection (a), the Attorney General and the Secretary 
are authorized--
            ``(1) to conduct, supervise, and coordinate audits, civil 
        and criminal investigations, inspections, and evaluations 
        relating to the program established under such subsection;
            ``(2) to have access (including on-line access as requested 
        and available) to all records available to purchasing 
        cooperatives and certified health plans relating to the 
        activities described in paragraph (1) (subject to restrictions 
        based on the confidentiality of certain information under part 
        II of subtitle B of this title); and
            ``(3) to issue advisory opinions, fraud alerts, and other 
        appropriate educational material to assist in compliance with 
        the provisions of sections 1128 through 1128G.
    ``(e) Qualified Immunity for Providing Information.--The provisions 
of section 1157(a) (relating to limitation on liability) shall apply to 
a person providing information or communications to the Secretary or 
the Attorney General in conjunction with their performance of duties 
under this section, in the same manner as such section applies to 
information provided to organizations with a contract under part B of 
this subtitle.
    ``(f) Use of Powers Under Inspector General Act of 1978.--In 
carrying out duties and responsibilities under the program established 
under subsection (a), the Inspector General is authorized to exercise 
all powers granted under the Inspector General Act of 1978 to the same 
manner and extent as provided in that Act.
    ``(g) Definitions.--In this subtitle:
            ``(1) Certified health plans; purchasing cooperatives.--The 
        terms `certified health plan' and `purchasing cooperative' have 
        the meanings given such terms by sections 21011(a)(1) and 
        21100(14), respectively.
            ``(2) Federal outlay programs.--The term `Federal outlay 
        programs' means--
                    ``(A) any program under title XVIII, and
                    ``(B) any State health care program (as defined in 
                section 1128(h).
            ``(3) Inspector general.--The term `Inspector General' 
        means the Inspector General of the Department of Health and 
        Human Services.''.
    (b) State Health Care Program Defined.--Section 1128(h) of the 
Social Security Act (42 U.S.C. 1320a-7(h)) is amended by redesignating 
paragraphs (2) and (3) as paragraphs (3) and (4), respectively, and by 
inserting after paragraph (1) the following new paragraph:
            ``(2) any participating State program approved under title 
        XXI (including any program established by the Secretary of 
        Labor with respect to multistate self-insured health plans) and 
        any standard or nonstandard health plan, supplemental health 
        benefits plan, or long-term care policy certified under such 
        program,''.

SEC. 512. DEFINITION OF FEDERAL HEALTH CARE OFFENSE.

    Subtitle A of title XI of the Social Security Act, as amended by 
section 511, is amended by inserting after section 1128C the following 
new section:

                 ``federal health care offense defined

    ``Sec. 1128D. For purposes of this title, the term `Federal health 
care offense' means a violation of, or a criminal conspiracy to 
violate--
            ``(1) sections 226, 668, 1033, or 1347 of title 18, United 
        States Code;
            ``(2) section 1128B;
            ``(3) sections 287, 371, 664, 666, 1001, 1027, 1341, 1343, 
        or 1954 of title 18, United States Code, if the violation or 
        conspiracy relates to health care fraud;
            ``(4) sections 501 or 511 of the Employee Retirement Income 
        Security Act of 1974, if the violation or conspiracy relates to 
        health care fraud; or
            ``(5) sections 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. 513. USE OF FUNDS BY INSPECTOR GENERAL.

    Subtitle A of title XI of the Social Security Act, as amended by 
section 512, is amended by inserting after section 1128D the following 
new section:

                  ``use of funds by inspector general

    ``Sec. 1128E. (a) Reimbursements for Investigations.--
            ``(1) In general.--The Inspector General is authorized to 
        receive and retain for current use reimbursement for the costs 
        of conducting investigations, when such restitution is ordered 
        by a court, voluntarily agreed to by the payer, or otherwise.
            ``(2) Crediting.--Funds received by the Inspector General 
        as reimbursement for costs of conducting investigations shall 
        be deposited to the credit of the appropriation from which 
        initially paid, or to appropriations for similar purposes 
        currently available at the time of deposit, and shall remain 
        available for obligation for 1 year from the date of their 
        deposit.
            ``(3) Exception for forfeitures.--This subsection does not 
        apply to investigative costs paid to the Inspector General from 
        the Department of Justice Asset Forfeiture Fund, which monies 
        shall be deposited and expended in accordance with subsection 
        (b).
    ``(b) HHS Office of Inspector General Asset Forfeiture Proceeds 
Fund.--
            ``(1) In general.--There is hereby established the `HHS 
        Office of Inspector General Asset Forfeiture Proceeds Fund,' to 
        be administered by the Inspector General, which shall be 
        available to the Inspector General without fiscal year 
        limitation for expenses relating to the investigation of 
        matters within the jurisdiction of the Inspector General.
            ``(2) Deposits.--There shall be deposited in the Fund all 
        proceeds from forfeitures that have been transferred to the 
        Inspector General from the Department of Justice Asset 
        Forfeiture Fund under section 524 of title 28, United States 
        Code.''.

SEC. 514. REWARDS FOR INFORMATION LEADING TO PROSECUTION AND 
              CONVICTION.

    Subtitle A of title XI of the Social Security Act, as amended by 
section 513, is amended by inserting after section 1128E the following 
new section:

    ``rewards for information leading to prosecution and conviction

    ``Sec. 1128F. (a) In General.--In special circumstances, the 
Secretary and the Attorney General of the United States may jointly 
make a payment of up to $10,000 to a person who furnishes information 
unknown to the Government relating to a possible prosecution of a 
Federal health care offense (as defined in section 1128D).
    ``(b) Ineligible Persons.--A person is not eligible for a payment 
under subsection (a) if--
            ``(1) the person is a current or former officer or employee 
        of a Federal or State government agency or instrumentality who 
        furnishes information discovered or gathered in the course of 
        government employment;
            ``(2) the person knowingly participated in the offense;
            ``(3) the information furnished by the person consists of 
        allegations or transactions that have been disclosed to the 
        public--
                    ``(A) in a criminal, civil, or administrative 
                proceeding;
                    ``(B) in a congressional, administrative, or 
                General Accounting Office report, hearing, audit, or 
                investigation; or
                    ``(C) by the news media, unless the person is the 
                original source of the information; or
            ``(4) when, in the judgment of the Attorney General, it 
        appears that a person whose illegal activities are being 
        prosecuted or investigated could benefit from the award.
    ``(c) Definition.--For the purposes of subsection (b)(3)(C), the 
term `original source' means a person who has direct and independent 
knowledge of the information that is furnished and has voluntarily 
provided the information to the Government prior to disclosure by the 
news media.
    ``(d) No Judicial Review.--Neither the failure of the Secretary and 
the Attorney General to authorize a payment under subsection (a) nor 
the amount authorized shall be subject to judicial review.''.

             PART II--CIVIL PENALTIES AND RIGHTS OF ACTION

SEC. 521. CIVIL MONETARY PENALTIES.

    (a) In General.--Section 1128A(a) of the Social Security Act (42 
U.S.C. 1320a-7a(a)) is amended by adding at the end the following new 
sentence: ``Any amounts recovered under this subsection with respect to 
a certified health plan (as defined in section 21011(a)) or certified 
long-term care policy (as defined in section 21013(a)(2)) shall be paid 
to the Secretary and such portions of the amounts recovered as is 
determined to have been improperly paid from a certified health plan or 
certified long-term care policy for the delivery of or payment for 
health care items or services shall be repaid to such plan or policy 
(and enrollees of such plan or policy as appropriate) and the remainder 
of the amounts recovered shall be deposited in the Federal Outlays 
Program Fraud and Abuse Control Account established under section 9551 
of the Internal Revenue Code of 1986.''.
    (b) Additional Offenses.--
            (1) In general.--Section 1128A(a) of the Social Security 
        Act (42 U.S.C. 1320a-7a(a)) is amended--
                    (A) by striking ``or'' at the end of paragraphs (1) 
                and (2);
                    (B) by striking the comma at the end of paragraph 
                (2) and inserting a semicolon; and
                    (C) by inserting after paragraph (3) the following 
                new paragraphs:
            ``(4) offers, pays, 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;
            ``(5) in the case of a person who is not an organization, 
        agency, or other entity, who is excluded from participating in 
        a program under title XVIII or a State health care program in 
        accordance with this section, section 1128, or section 1156 and 
        who, during the period of exclusion, retains either a direct or 
        indirect ownership or control interest of 5 percent or more in, 
        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;
            ``(6) engages in a practice that circumvents a payment 
        methodology intended to reimburse for two or more discreet 
        medical items or services at a single or fixed amount, 
        including but not limited to, multiple admissions or 
        readmission to hospitals and other institutions reimbursed on a 
        diagnosis reimbursement grouping basis;
            ``(7) engages in a practice which has the effect of 
        limiting or discouraging (as compared to other plan enrollees) 
        the utilization of health care services covered by law or under 
        the service contract by title XIX or other publicly subsidized 
        patients, including but not limited to differential standards 
        for the location and hours of service offered by providers 
        participating in the plan;
            ``(8) substantially fails to cooperate with a quality 
        assurance program or a utilization review activity;
            ``(9) fails substantially to provide or authorize medically 
        necessary items and services that are required to be provided 
        to an individual covered under a certified health plan (as 
        defined in section 21011(a)) or public program for the delivery 
        of or payment for health care items or services, if the failure 
        has adversely affected (or had a substantial likelihood of 
        adversely affecting) the individual;
            ``(10) employs or contracts with any individual or entity 
        who is excluded from participating in a program under title 
        XVIII or a State health care program in accordance with this 
        section, section 1128, or section 1156, for the provision of 
        any services (including but not limited to health care, 
        utilization review, medical social work, or administrative), or 
        employs or contracts with any entity for the direct or indirect 
        provision of such services, through such an excluded individual 
        or entity; or
            ``(11) submits false or fraudulent statements, data or 
        information, or claims to the Secretary, the Secretary of 
        Labor, any other Federal agency, a State health care agency, a 
        purchasing cooperative (under subtitle D of title XXI), or any 
        other Federal, State or local agency charged with 
        implementation or oversight of a certifed health plan under 
        this Act or a public program that the person knows or should 
        know is fraudulent;''.
            (2) Remuneration defined.--Section 1128A(i) of such Act (42 
        U.S.C. 1320a-7a(i)) is amended by adding at the end 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, except that such term does not include the waiver 
        of coinsurance or deductible amounts by a person or entity, 
        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 indigent;
                            ``(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.''.
            (3) 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--
                    (A) 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 which includes a procedure or 
                diagnosis code that the person knows or should know 
                will result in a greater payment to the person than the 
                code applicable to the item or service actually 
                provided or actual patient medical condition,'';
                    (B) in subparagraph (C), by striking ``or'' at the 
                end;
                    (C) in subparagraph (D), by striking ``; or'' and 
                inserting ``, or''; and
                    (D) 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 appropriate; or''.
    (c) Penalties Increased.--
            (1) General rule.--Section 1128A(a) of the Social Security 
        Act (42 U.S.C. 1320a-7a(a)) is amended--
                    (A) by striking ``$2,000'' and inserting 
                ``$10,000''; and
                    (B) by striking ``twice the amount claimed'' and 
                inserting ``3 times the amount claimed''.
            (2) Interest on penalties.--Section 1128A(f) of such Act 
        (42 U.S.C. 1320a-7a(f)) is amended by adding after the first 
        sentence the following: ``Interest shall accrue on the 
        penalties and assessments imposed by a final determination of 
        the Secretary in accordance with an annual rate established by 
        the Secretary under the Federal Claims Collection Act. The rate 
        of interest charged shall be the rate in effect on the date the 
        determination becomes final and shall remain fixed at that rate 
        until the entire amount due is paid. In addition, the Secretary 
        is authorized to recover the costs of collection in any case 
        where such penalties and assessments are not paid within 30 
        days after the determination becomes final, or in the case of a 
        compromised amount, where payments are more than 90 days past 
        due. In lieu of actual costs, the Secretary is authorized to 
        impose a charge of up to 10 percent of the amount of such 
        penalties and assessments owed to cover the costs of 
        collection.''.
    (d) Authority of Secretary of Labor to Impose Penalties, 
Assessments, and Exclusions.--Section 1128A of the Social Security Act 
(42 U.S.C. 1320a-7a) is amended by adding at the end the following new 
subsection:
    ``(m)(1) The Secretary of Labor may initiate an action to impose a 
civil monetary penalty, assessment, or exclusion under this section 
with respect to actions relating to a certified multistate self-insured 
health plan (as defined on section 21051(b)) pursuant to regulations 
promulgated by the Secretary of Health and Human Services, in 
consultation with the Attorney General.
    ``(2) Under the regulations promulgated under paragraph (1), the 
Attorney General and the Secretary shall review an action proposed by 
the Secretary of Labor, and not later than 60 days after receiving 
notice of the proposed action from the Secretary of Labor, shall--
            ``(A) approve the proposed action to be taken by the 
        Secretary of Labor;
            ``(B) disapprove the proposed action; or
            ``(C) assume responsibility for initiating a criminal, 
        civil, or administrative action based on the information 
        provided in the notice.
    ``(3) If the Attorney General and the Secretary fail to respond to 
a proposed action by the Secretary of Labor within the period described 
in paragraph (2), the Attorney General and the Secretary shall be 
deemed to have approved the proposed action to be taken by the 
Secretary of Labor.''.
    (e) Notification of Licensing Authorities.--Section 1128A of the 
Social Security Act (42 U.S.C. 1320a-7a), as amended by subsection (d), 
is amended by adding at the end the following new subsection:
    ``(n) Whenever the Secretary's determination to impose a penalty, 
assessment, or exclusion under this section becomes final, the 
Secretary shall notify the appropriate State or local licensing agency 
or organization (including the agency specified in section 1864(a) and 
1902(a)(33)) that such a penalty, assessment, or exclusion has become 
final and the reasons therefor.''.

SEC. 522. PERMITTING PARTIES TO BRING ACTIONS ON OWN BEHALF.

    Subtitle A of title XI of the Social Security Act, as amended by 
section 514, is amended by inserting after section 1128F the following 
new section:

                       ``private rights of action

    ``Sec. 1128G. (a) In General.--Subject to subsections (b) and (c), 
a certified health plan (as defined in section 21011(b)) or experience-
rated employer (as defined in section 21004(d)(4)) that suffers harm or 
monetary loss exceeding the sum or value of $10,000 (excluding 
interest) as a result of any activity of an individual or entity which 
makes the individual or entity subject to a civil monetary penalty 
under section 1128A 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.
    ``(b) Requirements for Bringing Action.--A person may bring a civil 
action under this section only if--
            ``(1) the person provides the Secretary with written notice 
        of--
                    ``(A) the person's intent to bring an action under 
                this section,
                    ``(B) the identities of the individuals or entities 
                the person intends to name as defendants to the action, 
                and
                    ``(C) 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 section 1128A against the 
                defendants, and
            ``(2) one of the following conditions is met:
                    ``(A) During the 60-day period that begins on the 
                date the Secretary receives the written notice 
                described in paragraph (1), 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 section 1128A 
                against the defendants.
                    ``(B) The Secretary notifies the person during the 
                60-day period described in subparagraph (A) that the 
                Secretary intends to initiate an investigation to 
                determine whether to impose a civil monetary penalty 
                under such 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.
                    ``(C) After the expiration of the 1-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.
    ``(c) Treatment of Excess Awards.--If a person is awarded any 
amounts in an action brought under this section 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 Federal Outlays Program Fraud and Abuse 
Control Account established under section 1128C(a).
    ``(d) Statute of Limitations.--No action may be brought under this 
section more than 6 years after the date of the activity with respect 
to which the action is brought.
    ``(e) No Limitation on Other Actions.--Nothing in this section 
shall limit the right of any person to pursue any other right of action 
or remedy available under the law.
    ``(f) Pendant Jurisdiction.--Nothing in this section shall be 
construed, by reason of a claim arising under this section, to confer 
on the Courts of the United States jurisdiction over any State law 
claim.''.

SEC. 523. EXCLUSION FROM PROGRAM PARTICIPATION.

    (a) Mandatory Exclusion.--Section 1128(a) of the Social Security 
Act (42 U.S.C. 1320a-7) is amended--
            (1) by inserting ``(1)'' before ``The'';
            (2) by redesignating paragraphs (1) and (2) as 
        subparagraphs (A) and (B), respectively; and
            (3) by adding at the end the following:
            ``(C) Conviction of criminal offense.--Any individual or 
        entity that has been convicted after the date of the enactment 
        of this subparagraph, under Federal or State law, in connection 
        with the delivery of a health care item or service of a 
        criminal offense consisting of a felony relating to fraud, 
        theft, embezzlement, breach of fiduciary responsibility, or 
        other financial misconduct.
            ``(D) Conviction relating to controlled substance.--Any 
        individual or entity has been convicted after such date, 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) Waiver permitted.--
            ``(A) In general.--When, in the opinion of the Secretary, 
        mandatory exclusion under paragraph (1) of an individual or 
        entity would significantly harm the public health or pose a 
        significant risk to the public health, the Secretary may waive 
        such exclusion and shall apply such other appropriate penalties 
        as authorized under this subtitle.
            ``(B) Application for waiver of exclusion.--
                    ``(i) In general.--An individual or entity subject 
                to mandatory exclusion under this subsection may apply 
                to the Secretary, in a manner specified by the 
                Secretary in regulations, for waiver of the exclusion.
                    ``(ii) Secretarial response.--The Secretary may 
                waive the exclusion for the reasons described in 
                subparagraph (A).''.
    (b) Permissive Exclusion.--Section 1128(b) of the Social Security 
Act (42 U.S.C. 1320a-7) is amended--
            (1) in paragraph (1), by inserting ``consisting of a 
        misdemeanor'' after ``offense''; and
            (2) in paragraph (3), by inserting ``consisting of a 
        misdemeanor'' after ``offense''.
    (c) Period of Exclusion.--
            (1) Minimum period for mandatory exclusions.--Section 
        1128(c)(3)(B) of the Social Security Act (42 U.S.C. 1320a-
        7(c)(3)(B)) is amended by striking ``five years'' and inserting 
        ``two years''.
            (2) Minimum period for certain permissive exclusions.--
        Section 1128(c)(3) of such Act (42 U.S.C. 1320a-7(c)(3)) is 
        amended by adding the following new subparagraph:
    ``(D)(i) In the case of an exclusion of an individual excluded from 
participation in a public program under, or is otherwise described in, 
paragraph (1), (2), or (3) of subsection (b), the period of exclusion 
shall be a minimum of 1 year, unless the Secretary determines that a 
longer period is necessary because of aggravating circumstances.
    ``(ii) In the case of an exclusion of an individual or entity 
excluded from participation in a public program under, or is otherwise 
described in, paragraph (4), (5)(A), or (5)(B) of subsection (b), 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.
    ``(iii) In the case of an exclusion of an individual or entity 
described in paragraph (6)(B) of subsection (b), the period of the 
exclusion shall be not less than 1 year.''.
    (d) Notice to Entities Administering Public Programs for the 
Delivery of or Payment for Health Care Items or Services.--Section 
1128(d) of the Social Security Act (42 U.S.C. 1320a-7(d)) is amended--
            (1) in paragraph (1), by inserting ``and all certified 
        health plans certified under such program for the delivery of 
        or payment for health care items or services'' after 
        ``participate'';
            (2) in paragraph (2), by inserting ``and each sponsor of a 
        certified health plan'' after ``program''.
    (e) Expanded Opportunity for Administrative Hearings.--Section 
1128(f)(2) of the Social Security Act (42 U.S.C. 1320a-7(f)(2)) is 
amended by striking ``subsection (b)(7)'' and inserting ``paragraphs 
(6)(B), (7), (8), (9), (11), (12), or (14) of subsection (b)''.
    (f) Notification of Termination of Exclusion.--Section 1128(g)(3)) 
of the Social Security Act (42 U.S.C. 1320a-7(g)(3)) is amended by 
inserting ``and each sponsor of a certified health plan'' after 
``program''.
    (g) Request for Exclusion.--Section 1128(d) of the Social Security 
Act (42 U.S.C. 1320a-7(d)) is amended by adding at the end the 
following new paragraph:
    ``(4)(A) The sponsor of any certified health plan, the board of any 
purchasing cooperative, and the Secretary of Labor in the case of a 
multistate self-insured health plan may request that the Secretary of 
Health and Human Services exclude an individual or entity with respect 
to actions under a certified health plan in accordance with this 
section.
    ``(B) Notwithstanding any other provision of this title and title 
XXI, no payment may be made under a certified health plan for the 
delivery of or payment for any item or service (other than an emergency 
item or service, not including items or services furnished in an 
emergency room of a hospital) furnished--
            ``(i) by an individual or entity during the period when 
        such individual or entity is excluded pursuant to this section 
        from participation in a certified health plan; or
            ``(ii) at the medical direction or on the prescription of a 
        physician during the period when the physician is excluded 
        pursuant to this section from participation in a certified 
        health plan and the person furnishing the item or service knew 
        or had reason to know of the exclusion (after a reasonable time 
        period after reasonable notice has been furnished to the 
        person).''.

                  PART III--AMENDMENTS TO CRIMINAL LAW

SEC. 531. HEALTH CARE FRAUD.

    (a) In General.--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 purchasing cooperative, certified 
        health plan, certified long-term care policy, 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 purchasing 
        cooperative, certified health plan, certified long-term care 
        policy, 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 of this title) such person shall be imprisoned for any 
term of years.
    ``(b) As used in this section--
            ``(1) the terms `purchasing cooperative', `certified health 
        plan', and `certified long-term care policy' have the meanings 
        given those terms in sections 21100(14), 21011(a)(1), and 
        21011(b)(2) of the Social Security Act, respectively.''.
    (b) 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. 532. THEFT OR EMBEZZLEMENT.

    (a) In General.--Chapter 31 of title 18, United States Code, is 
amended by adding at the end the following:
``Sec. 668. Theft or embezzlement in connection with health care
    ``(a) Whoever embezzles, steals, willfully and unlawfully converts 
to the use of any person other than the rightful owner, or 
intentionally misapplies any of the moneys, securities, premiums, 
credits, property, or other assets of a purchasing cooperative, 
certified health plan, certified long-term care policy, or of any fund 
connected with such a cooperative, plan, or policy, shall be fined 
under this title or imprisoned not more than 10 years, or both.
    ``(b) As used in this section, the terms `purchasing cooperative', 
`certified health plan', and `certified long-term care policy' have the 
meanings given those terms in sections 21100(14), 21011(a)(1), and 
21011(b)(2) of the Social Security Act, respectively.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 31 of title 18, United States Code, is amended by adding at the 
end the following:

``668. Theft or embezzlement in connection with health care.''.

SEC. 533. FALSE STATEMENTS.

    (a) In General.--Chapter 47 of title 18, United States Code, is 
amended by adding at the end the following:
``Sec. 1033. False statements relating to health care matters
    ``(a) Whoever, in any matter involving a purchasing cooperative, 
certified health plan, or certified long-term care policy, knowingly 
and willfully falsifies, conceals, or covers up by any trick, scheme, 
or device a material fact, or makes any false, fictitious, or 
fraudulent statements or representations, or makes or uses any false 
writing or document knowing the same to contain any false, fictitious, 
or fraudulent statement or entry, shall be fined under this title or 
imprisoned not more than 5 years, or both.
    ``(b) As used in this section, the terms `purchasing cooperative', 
`certified health plan', and `certified long-term care policy' have the 
meanings given those terms in sections 21100(14), 21011(a)(1), and 
21011(b)(2) of the Social Security Act, respectively.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 47 of title 18, United States Code, is amended by adding at the 
end the following:

``1033. False statements relating to health care matters.''.

SEC. 534. BRIBERY AND GRAFT.

    (a) In General.--Chapter 11 of title 18, United States Code, is 
amended by adding at the end the following:
``Sec. 226. Bribery and graft in connection with health care
    ``(a) Whoever--
            ``(1) directly or indirectly, corruptly gives, offers, or 
        promises anything of value to a health care official, or offers 
        or promises a health care official to give anything of value to 
        any other person, with intent--
                    ``(A) to influence any of the health care 
                official's actions, decisions, or duties relating to a 
                purchasing cooperative, certified health plan, or 
                certified long-term care policy;
                    ``(B) to influence such an official to commit or 
                aid in the committing, or collude in or allow, any 
                fraud, or make opportunity for the commission of any 
                fraud, on a purchasing cooperative, certified health 
                plan, or certified long-term care policy; or
                    ``(C) to induce such an official to engage in any 
                conduct in violation of the lawful duty of such 
                official; or
            ``(2) being a health care official, directly or indirectly, 
        corruptly demands, seeks, receives, accepts, or agrees to 
        accept anything of value personally or for any other person or 
        entity, the giving of which violates paragraph (1) of this 
        subsection;
shall be fined under this title or imprisoned not more than 15 years, 
or both.
    ``(b) Whoever, otherwise than as provided by law for the proper 
discharge of any duty, directly or indirectly gives, offers, or 
promises anything of value to a health care official, for or because of 
any of the health care official's actions, decisions, or duties 
relating to a purchasing cooperative, certified health plan, or 
certified long-term care policy, shall be fined under this title or 
imprisoned not more than two years, or both.
    ``(c) As used in this section--
            ``(1) the term `health care official' means--
                    ``(A) an administrator, officer, trustee, 
                fiduciary, custodian, counsel, agent, or employee of 
                any purchasing cooperative, certified health plan, or 
                certified long-term care policy;
                    ``(B) an officer, counsel, agent, or employee, of 
                an organization that provides services under contract 
                to any purchasing cooperative, certified health plan, 
                or certified long-term care policy;
                    ``(C) an official or employee of a State agency 
                having regulatory authority over any purchasing 
                cooperative, certified health plan, or certified long-
                term care policy;
                    ``(D) an officer, counsel, agent, or employee of a 
                health care sponsor;
            ``(2) the term `health care sponsor' means any individual 
        or entity serving as the sponsor of a certified health plan for 
        purposes of title XXI of the Social Security Act, and includes 
        the joint board of trustees or other similar body used by two 
        or more employers to administer a certified health plan for 
        purposes of such Act; and
            ``(3) the terms `purchasing cooperative', `certified health 
        plan', and `certified long-term care policy' have the meanings 
        given those terms in sections 21100(14), 21011(a)(1), and 
        21011(b)(2) of the Social Security Act, respectively.''.
    (b) Clerical Amendment.--The table of chapters at the beginning of 
chapter 11 of title 18, United States Code, is amended by adding at the 
end the following:

``226. Bribery and graft in connection with health care.''.

SEC. 535. INJUNCTIVE RELIEF RELATING TO 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 1128D of the Social Security 
        Act);''.

SEC. 536. GRAND JURY DISCLOSURE.

    Section 3322 of title 18, United States Code, is amended--
            (1) by redesignating subsections (c) and (d) as subsections 
        (d) and (e), respectively; and
            (2) by inserting after subsection (b) the following:
    ``(c) A person who is privy to grand jury information concerning a 
health law violation--
            ``(1) received in the course of duty as an attorney for the 
        Government; or
            ``(2) disclosed under rule 6(e)(3)(A)(ii) of the Federal 
        Rules of Criminal Procedure;
may disclose that information to an attorney for the Government to use 
in any civil proceeding related to a Federal health care offense (as 
defined in section 1128D of the Social Security Act).''.

SEC. 537. FORFEITURES FOR VIOLATIONS OF FRAUD STATUTES.

    Section 982(a) of title 18, United States Code, is amended by 
inserting after paragraph (5) the following:
    ``(6) The court, in imposing sentence on a person convicted of a 
Federal health care offense (as defined in section 1128D of the Social 
Security Act) that results in serious bodily injury (as defined in 
section 1365 of this title), shall order such person to forfeit to the 
United States any property, real or personal, constituting or traceable 
to the gross proceeds obtained, directly or indirectly, as a result of 
the commission of the offense.''.

             PART IV--AMENDMENTS TO CIVIL FALSE CLAIMS ACT

SEC. 541. 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 certified 
        health plan or certified long-term care policy'' after 
        ``property to the Government'';
            (2) in the matter following subsection (a)(7), by inserting 
        ``or certified health plan or certified long-term care policy'' 
        before ``sustains because of the act of that person,'';
            (3) at the end of the first sentence of subsection (a), by 
        inserting ``or certified health plan or certified long-term 
        care policy'' 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 of otherwise, for money or property which is 
                made or presented to a certified health plan or 
                certified long-term care policy.''; and
            (5) by adding at the end the following:
    ``(f) Certified Health Plan and Certified Long-Term Care Policy 
Defined.--For purposes of this section, the terms `purchasing 
cooperative', `certified health plan', and `certified long-term care 
policy' have the meanings given those terms in sections 21100(14), 
21011(a)(1), and 21011(b)(2) of the Social Security Act, 
respectively.''.

                         PART V--EFFECTIVE DATE

SEC. 551. EFFECTIVE DATE.

    Except as otherwise provided in this subtitle, the provisions of, 
and amendments made by, this subtitle shall be effective on and after 
January 1, 1996.

          TITLE VI--MEDICARE, MEDICAL EDUCATION, AND MEDICAID

SEC. 600. REFERENCES TO SOCIAL SECURITY ACT.

    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--Medicare

                   PART I--RISK CONTRACTING ENTITIES

SEC. 601. IMPROVEMENTS OF RISK CONTRACTS.

    (a) In General.--Section 1876 (42 U.S.C. 1395mm) is amended to read 
as follows:

          ``payments to certain certified standard heath plans

    ``Sec. 1876. (a) In General.--
            ``(1) General permission to contract.--
                    ``(A) Risk contracts.--The Secretary may enter into 
                a risk contract with any certified standard health plan 
                (as defined in paragraph (4)(A)) in a service area (as 
                defined in paragraph (4)(B)) if--
                            ``(i) the plan has at least 5,000 enrollees 
                        (except that the Secretary may enter into such 
                        a contract with a certified standard health 
                        plan that has fewer enrollees if the plan 
                        primarily serves members residing outside of 
                        urbanized areas); and
                            ``(ii) the plan--
                                    ``(I) meets the requirements of 
                                this section with respect to 
                                individuals enrolled under this 
                                section; and
                                    ``(II) meets the requirements 
                                necessary to maintain its status as a 
                                certified standard health plan with 
                                respect to individuals enrolled under 
                                this section that do not conflict with 
                                any of the requirements under this 
                                section.
                    ``(B) Reasonable cost reimbursement contracts.--The 
                Secretary may enter into a reasonable cost 
                reimbursement contract (as defined in paragraph (4)(C)) 
                with any certified standard health plan in a service 
                area if--
                            ``(i)(I) the plan so elects;
                            ``(II) the Secretary is not satisfied that 
                        the plan has the capacity to bear the risk of 
                        potential losses under a risk contract under 
                        this section, or
                            ``(III) the plan has an insufficient number 
                        of individuals enrolled to be eligible to enter 
                        into a risk contract; and
                            ``(ii) the Secretary is otherwise satisfied 
                        that the plan is able to perform its 
                        contractual obligations effectively and 
                        efficiently.
            ``(2) Availability of plans.--
                    ``(A) In general.--Subject to the provisions of 
                subsection (e), every individual entitled to benefits 
                under part A and enrolled under part B shall be 
                eligible to enroll under this section with any 
                certified standard health plan with a contract under 
                this section which serves the service area in which the 
                individual resides, except that an employer-sponsored 
                plan may limit its enrollment to certain classes of 
                individuals, as designated by the Secretary in 
                regulations.
                    ``(B) Enrollment by an individual.--An individual 
                may enroll under this section with a certified standard 
                health plan with a contract under this section in such 
                manner as may be prescribed in regulations (including 
                enrollment through a third party) and the individual 
                may terminate enrollment--
                            ``(i) during an annual period as prescribed 
                        by the Secretary, and
                            ``(ii) as specified by the Secretary if the 
                        plan is financially insolvent, if the 
                        individual moves from the service area served 
                        by the plan, or if other special circumstances 
                        exist, as prescribed by the Secretary.
                    ``(C) Information.--
                            ``(i) Distribution by plans.--The Secretary 
                        may prescribe the procedures and conditions 
                        under which a certified standard health plan 
                        with a contract under this section may provide 
                        individuals eligible to enroll under this 
                        section with information about the plan. No 
                        brochures, application forms, or other 
                        promotional or informational material may be 
                        distributed by a plan to (or for the use of) 
                        individuals eligible to enroll with the plan 
                        under this section unless--
                                    ``(I) at least 45 days before its 
                                distribution, the plan has submitted 
                                the material to the Secretary for 
                                review, and
                                    ``(II) the Secretary has not 
                                disapproved the distribution of the 
                                material.
                        The Secretary shall review all such material 
                        submitted and shall disapprove such material if 
                        the Secretary determines, in the Secretary's 
                        discretion, that the material is materially 
                        inaccurate or misleading or otherwise makes a 
                        material misrepresentation.
                            ``(ii) Distribution by the secretary.--The 
                        Secretary shall develop and distribute 
                        comparative materials to individuals eligible 
                        to enroll under this section regarding all 
                        certified standard health plans with contracts 
                        under this section.
            ``(3) Payments.--
                    ``(A) Payments in lieu of normal payments.--Subject 
                to subsection (i)(3), payments under a contract to a 
                certified standard health plan under this section shall 
                be instead of the amounts which (in the absence of the 
                contract) would be otherwise payable, pursuant to 
                sections 1814(b) and 1833(a), for services furnished by 
                or through the plan to individuals enrolled with the 
                plan under this section.
                    ``(B) Source of payment.--The payment to a 
                certified standard health plan under this section for 
                individuals enrolled under this section with the plan 
                and entitled to benefits under part A and enrolled 
                under part B shall be made from the Federal Hospital 
                Insurance Trust Fund and the Federal Supplementary 
                Medical Insurance Trust Fund. The portion of that 
                payment to the plan for a month to be paid by each 
                trust fund shall be determined as follows:
                            ``(i) With respect to expenditures by 
                        certified standard health plans with risk 
                        contracts under this section, the allocation 
                        shall be determined each year by the Secretary 
                        based on the ratio of expenditures from each 
                        trust fund for the preceding year to the 
                        expenditures from both trust funds for the 
                        preceding year.
                            ``(ii) With respect to expenditures by a 
                        certified standard health plan with a 
                        reasonable cost reimbursement contract under 
                        this section, the initial allocation shall be 
                        based on the plan's most recent budget, such 
                        allocation to be adjusted, as needed, after 
                        cost settlement to reflect the distribution of 
                        actual expenditures.
            ``(4) Definitions.--For purposes of this section:
                    ``(A) Certified standard health plan.--The term 
                `certified standard health plan' shall have the meaning 
                given such term in section 21011(a)(2).
                    ``(B) Service area.--The term `service area' means 
                the service areas designated by a State under section 
                21128.
                    ``(C) Reasonable cost reimbursement contract.--The 
                term `reasonable cost reimbursement contract' means a 
                contract with a certified standard health plan pursuant 
                to which such plan is reimbursed on the basis of its 
                reasonable cost (as defined in section 1861(v)) in the 
                manner prescribed in subsection (c)(2).
    ``(b) Payment Rules under Risk Contracts.--
            ``(1) In General.--
                    ``(A) Payments.--Except as provided in subparagraph 
                (C), with respect to any calendar year, each certified 
                standard health plan with a risk contract under this 
                section shall receive a payment under this title with 
                respect to each individual enrolled with the plan for 
                each month such individual is enrolled equal to the 
                average medicare per capita rate determined under 
                paragraph (2) for the plan's service area adjusted by 
                the rate factor determined under subparagraph (B) for 
                the class of such individual.
                    ``(B) Determination of classes of individuals and 
                rate factors for such classes.--
                            ``(i) Determination of classes.--For 
                        purposes of this section, the Secretary shall 
                        define appropriate classes of individuals, 
                        based on age, disability status, and such other 
                        factors as the Secretary determines to be 
                        appropriate.
                            ``(ii) Rate factors.--The Secretary shall 
                        annually determine the rate factors for each 
                        class of individuals defined in clause (i) 
                        reflecting the differences in the average per 
                        capita spending for benefits under parts A and 
                        B among individuals in such classes. The 
                        Secretary shall announce such rate factors (in 
                        a manner intended to provide notice to 
                        interested parties) not later than July 1 
                        before the calendar year concerned.
                    ``(C) Budget neutrality.--The Secretary shall 
                reduce the amount of payments to be made to certified 
                standard health plans under subparagraph (A) for a year 
                by an amount the Secretary determines necessary so that 
                such payments do not exceed an amount equal to the 
                total amount that would have been paid under this 
                section for the year if section 601 of the Health 
                Security Act had not been enacted.
            ``(2) Determination of average medicare per capita rate.--
                    ``(A) Determination by Secretary.--
                            ``(i) In general.--The Secretary shall 
                        annually determine under subparagraph (B), and 
                        shall announce (in a manner intended to provide 
                        notice to interested parties) not later than 
                        October 1 before the calendar year concerned, 
                        the average medicare per capita rate of payment 
                        for each service area.
                    ``(B) Formula for average medicare per capita 
                rate.--
                            ``(i) In general.--The monthly average 
                        medicare per capita rate of payment for a 
                        service area served by a certified standard 
                        health plan shall be equal to the sum of--
                                    ``(I) the plan component determined 
                                under clause (ii); and
                                    ``(II) the fee-for-service 
                                component determined under clause 
                                (iii).
                            ``(ii) Plan component.--The amount 
                        determined under this clause is the sum of the 
                        following amounts determined with respect to 
                        each certified standard health plan--
                                    ``(I) the amount of the uniform 
                                monthly premium submitted by the plan 
                                to the Secretary under subparagraph 
                                (C), adjusted by a factor determined by 
                                the Secretary to normalize the 
                                difference in the distribution of 
                                individuals projected to be enrolled in 
                                the plan among the various classes of 
                                individuals defined by the Secretary to 
                                the national distribution of all 
                                individuals in the program under this 
                                title among such classes; multiplied by
                                    ``(II) a fraction (expressed as a 
                                percentage), the numerator of which is 
                                the number of all individuals enrolled 
                                in the plan (as projected by the plan 
                                using either historical experience or 
                                some other methodology developed by the 
                                Secretary), and the denominator of 
                                which is the number of all medicare 
                                eligible individuals in the service 
                                area.
                            ``(iii) Fee-for-service component.--The 
                        amount determined under this clause is--
                                    ``(I) the projected average monthly 
                                per capita fee-for-service costs (as 
                                defined in subparagraph (D)) for the 
                                service area for individuals not 
                                enrolled in certified standard health 
                                plans with contracts under this 
                                section, adjusted by the factor 
                                described in clause (ii)(I); multiplied 
                                by
                                    ``(II) a fraction (expressed as a 
                                percentage), the numerator of which is 
                                equal to the number of all medicare 
                                eligible individuals in the service 
                                area minus the number of individuals 
                                who are enrolled in certified standard 
                                health plans with risk contracts under 
                                this section (as determined in 
                                accordance with subclause (I)), and the 
                                denominator of which is the number of 
                                all medicare eligible individuals in 
                                the service area.
                    ``(C) Uniform monthly premiums; premium for 
                additional services.--
                            ``(i) In general.--Each certified standard 
                        health plan with a risk contract under this 
                        section shall, not later than August 1 of each 
                        year, submit to the Secretary a bid for the 
                        next calendar year for each service area with 
                        respect to which the plan has a risk contract. 
                        A bid with respect to a service area shall 
                        include the following:
                                    ``(I) Uniform monthly premium.--A 
                                statement of the uniform monthly 
                                premium amount that the plan intends to 
                                charge for individuals enrolled under 
                                this section with the plan and entitled 
                                to benefits under part A and enrolled 
                                in part B and a projection of the 
                                plan's enrollment by class for such 
                                services in the service area.
                                    ``(II) Premium for additional 
                                services.--A statement of the premium 
                                amount that the plan intends to charge 
                                for each class of individuals enrolled 
                                under this section with the plan for 
                                the additional mandatory services 
                                described in subparagraphs (A)(ii) and 
                                (B) of subsection (d)(1).
                                    ``(III) Premium for additional 
                                health care services.--A statement of 
                                the premium amount that the plan 
                                intends to charge for each package of 
                                additional health care services offered 
                                by the plan.
                            ``(ii) Notice before bid submissions.--At 
                        least 45 days before the date for submitting 
                        bids under clause (ii) for a year, the 
                        Secretary shall provide for notice to certified 
                        standard health plans with risk contracts of 
                        proposed changes to be made in the methodology 
                        or benefit coverage assumptions from the 
                        methodology and assumptions used in the 
                        previous calendar year and shall provide such 
                        plans an opportunity to comment on such 
                        proposed changes.
                    ``(D) Projected average monthly per capita fee-for-
                service costs.--
                            ``(i) In general.--For purposes of 
                        subparagraph (B), the term `projected average 
                        monthly per capita fee-for-service costs' 
                        means, with respect to a service area, the 
                        amount, prorated to be expressed as a monthly 
                        amount, that the Secretary estimates in advance 
                        would be payable in any contract year for 
                        services covered under parts A and B and types 
                        of expenses otherwise reimbursable under parts 
                        A and B (including administrative costs 
                        incurred by organizations described in sections 
                        1816 and 1842), if the services were to be 
                        furnished by other than a certified standard 
                        health plan with a risk contract under this 
                        section.
                            ``(ii) Basis for estimates.--The estimate 
                        made by the Secretary under clause (i) shall be 
                        made on the basis of actual experience of the 
                        service area or, if the Secretary determines 
                        that the data in that service area are 
                        inadequate to make an accurate estimate, the 
                        Secretary may use the actual experience of a 
                        similar area, with appropriate adjustments to 
                        assure actuarial equivalence, including 
                        adjustments the Secretary may determine 
                        appropriate to adjust for demographics, health 
                        status, and the presence of specific medical 
                        conditions.
            ``(3) Payment rules.--
                    ``(A) Amount of premium.--Each certified standard 
                health plan with a contract under this section must 
                provide to individuals enrolled with the plan under 
                this section, for the duration of such enrollment 
                during each contract period, a fixed monthly premium 
                equal to the sum of the uniform monthly premium amount 
                determined by the plan with respect to the individual 
                under paragraph (2)(C) and the premium amount 
                determined under such paragraph for the additional 
                mandatory services described in subparagraphs (A)(ii) 
                and (B) of subsection (d)(1). An individual enrolled in 
                the plan shall be responsible for paying to the plan 
                the difference between the fixed monthly premium amount 
                described in the preceding sentence and the average 
                medicare per capita rate paid to the plan in accordance 
                with subparagraph (B).
                    ``(B) Average medicare per capita rate.--
                            ``(i) In general.--The Secretary shall make 
                        monthly payments in advance and in accordance 
                        with the rate determined under paragraph (2) to 
                        each certified standard health plan with a risk 
                        contract under this section for each individual 
                        enrolled with the plan under this section.
                            ``(ii) Adjustments.--
                                    ``(I) In general.--The amount of 
                                payment under this paragraph may be 
                                retroactively adjusted to take into 
                                account any difference between the 
                                actual number of individuals enrolled 
                                in the plan under this section and the 
                                number of such individuals estimated to 
                                be so enrolled in determining the 
                                amount of the advance payment.
                                    ``(II) Special rule.--The Secretary 
                                may make retroactive adjustments under 
                                subclause (I) to take into account 
                                individuals enrolled during the period 
                                beginning on the date on which the 
                                individual enrolls with a certified 
                                standard health plan with a risk 
                                contract under this section under a 
                                health benefit plan operated, 
                                sponsored, or contributed to, by the 
                                individual's employer or former 
                                employer (or the employer or former 
                                employer of the individual's spouse) 
                                and ending on the date on which the 
                                individual is enrolled in the plan 
                                under this section, except that for 
                                purposes of making such retroactive 
                                adjustments under this clause, such 
                                period may not exceed 90 days. No 
                                adjustment may be made under the 
                                preceding sentence with respect to any 
                                individual who does not certify that 
                                the plan provided the individual with 
                                the explanation described in subsection 
                                (e)(6) at the time the individual 
                                enrolled with the plan.
                            ``(iii) Payment to plan only.--Subject to 
                        subsection (i)(3), if an individual is enrolled 
                        under this section with a certified standard 
                        health plan with a risk contract under this 
                        section, only the plan shall be entitled to 
                        receive payments from the Secretary under this 
                        title for services furnished to the individual.
                    ``(C) Payment greater than fixed monthly premium.--
                If, with respect to any individual enrolled in a 
                certified standard health plan with a risk contract 
                under this section, the average medicare per capita 
                rate paid under this section to the plan exceeds the 
                fixed monthly premium amount described in subparagraph 
                (A), the plan shall pay such excess to the individual, 
                at the election of the plan, in the form of cash or as 
                a contribution to a premium for any policy for 
                additional health care services.
    ``(c) Payment rules for reasonable cost reimbursement contracts.--
            ``(1) Reimbursement.--
                    ``(A) In general.--A certified standard health plan 
                with a reasonable cost reimbursement contract under 
                this section may, at the option of such plan, provide 
                that the Secretary--
                            ``(i) will reimburse hospitals and skilled 
                        nursing facilities either for the reasonable 
                        cost (as determined under section 1861(v)) or 
                        for payment amounts determined in accordance 
                        with section 1886, as applicable, of services 
                        furnished to individuals enrolled with such 
                        plan, and
                            ``(ii) will deduct the amount of such 
                        reimbursement from payment which would 
                        otherwise be made to such plan.
                    ``(B) Direct payments.--If a certified standard 
                health plan with a reasonable cost reimbursement 
                contract under this section pays a hospital or skilled 
                nursing facility directly, the amount paid shall not 
                exceed the reasonable cost of the services (as 
                determined under section 1861(v)) or the amount 
                determined under section 1886, as applicable, unless 
                such plan demonstrates to the satisfaction of the 
                Secretary that such excess payments are justified on 
                the basis of advantages gained by the plan.
            ``(2) Payments to plans.--Payments made to a certified 
        standard health plan with a reasonable cost reimbursement 
        contract under this section shall be subject to appropriate 
        retroactive corrective adjustment at the end of each contract 
        year so as to assure that such plan is paid for the reasonable 
        cost actually incurred (excluding any part of incurred cost 
        found to be unnecessary in the efficient delivery of health 
        services) or the amounts otherwise determined under section 
        1886 for the types of expenses otherwise reimbursable under 
        this title for providing services covered under this title to 
        individuals enrolled in the plan.
            ``(3) Reports by plans.--A certified standard health plan 
        with a reasonable cost reimbursement contract under this 
        subsection shall provide that the Secretary shall require, at 
        such time following the expiration of each accounting period of 
        the plan (and in such form and in such detail) as the Secretary 
        may prescribe--
                    ``(A) that the plan report to the Secretary in an 
                independently certified financial statement its per 
                capita incurred cost based on the types of components 
                of expenses otherwise reimbursable under this title for 
                providing services under parts A and B, including 
                therein, in accordance with accounting procedures 
                prescribed by the Secretary, its methods of allocating 
                costs between individuals enrolled under this section 
                and other individuals enrolled with such plan;
                    ``(B) that failure to report such information as 
                may be required may be deemed to constitute evidence of 
                likely overpayment on the basis of which appropriate 
                collection action may be taken;
                    ``(C) that in any case in which a plan is related 
                to another plan by common ownership or control, a 
                consolidated financial statement shall be filed and 
                that the allowable costs for such organization may not 
                include costs for the types of expense otherwise 
                reimbursable under this title, in excess of those which 
                would be determined to be reasonable in accordance with 
                regulations (providing for limiting reimbursement to 
                costs rather than charges to the plan by related plans 
                and owners) issued by the Secretary; and
                    ``(D) that in any case in which compensation is 
                paid by a plan substantially in excess of what is 
                normally paid for similar services by similar 
                practitioners (regardless of method of compensation), 
                such compensation may as appropriate be considered to 
                constitute a distribution of profits.
    ``(d) Coverage of Benefits.--
            ``(1)In general.--
                    ``(A) Services provided.--A certified standard 
                health plan with a contract under this section must 
                provide to individuals enrolled in the plan under this 
                section, through providers and other persons that meet 
                the applicable requirements of this title and part A of 
                title XI--
                            ``(i) except as provided in subparagraph 
                        (B), the services covered under parts A and B 
                        of this title; and
                            ``(ii) preventive care services, as defined 
                        by the Secretary.
                    ``(B) Additions to part a coverage.--For purposes 
                of subparagraph (A)(i)--
                            ``(i) inpatient hospital services shall not 
                        be limited to 150 days pursuant to section 
                        1812(a)(1); and
                            ``(ii) the requirement that an individual 
                        be an inpatient in a hospital for 3 consecutive 
                        days prior to the individual's receipt of post-
                        hospital extended care services pursuant to 
                        section 1861(i) shall not apply.
            ``(2) Provision of medically necessary care.--Each 
        certified standard health plan with a contract under this 
        section must--
                    ``(A) make the services described in paragraph (1) 
                (and such other health care services as enrolled 
                individuals have contracted for)--
                            ``(i) available and accessible to enrolled 
                        individuals within the service area with 
                        reasonable promptness and in a manner which 
                        assures continuity, and
                            ``(ii) when medically necessary, available 
                        and accessible twenty-four hours a day and 
                        seven days a week, and
                    ``(B) provide for reimbursement with respect to 
                services which are described in subparagraph (A) and 
                which are provided to such an individual other than 
                through the plan, if--
                            ``(i) the services were medically necessary 
                        and immediately required because of an 
                        unforeseen illness, injury, or condition, and
                            ``(ii) it was not reasonable given the 
                        circumstances to obtain the services through 
                        the plan.
            ``(3) Special exception.--If there is a national coverage 
        determination made in the period beginning on the date for the 
        submission of bids under subsection (b)(2)(C) and ending on the 
        next such date of submission that the Secretary projects will 
        result in a significant change in the costs to a certified 
        standard health plan with a risk contract under this section of 
        providing the benefits that are the subject of such national 
        coverage determination and that was not incorporated in the 
        determination of the bid for such period, and if such coverage 
        determination provides for coverage of additional benefits or 
        under additional circumstances, subsection (a)(3)(A) shall not 
        apply to payment for such additional benefits or benefits 
        provided under such additional circumstances until the first 
        contract year that begins after the end of such period, unless 
        otherwise required by law.
            ``(4) Cost sharing.--
                    ``(A) In general.--Each certified standard health 
                plan with a contract under this section must provide to 
                individuals enrolled under this section with respect to 
                the services described in paragraph (1), cost sharing 
                requirements that are no greater than the cost sharing 
                requirements for such services under the plan for 
                individuals not enrolled in the plan under this 
                section.
                    ``(B) Cost sharing fixed during contract period.--
                Each certified standard plan must provide to 
                individuals enrolled under this section, for the 
                duration of such enrollment during each contract 
                period, cost sharing that is fixed during the duration 
                of the contract period.
    ``(e) Enrollment Periods.--
            ``(1) In general.--Each certified standard health plan with 
        a contract under this section must have an open enrollment 
        period (which may be specified by the Secretary), for the 
        enrollment of individuals under this section, of at least 30 
        days duration every year and for the additional periods 
        specified under paragraphs (2) through (4), and must provide 
        that at any time during which enrollments are accepted, the 
        plan will accept up to the limits of its capacity (as 
        determined by the Secretary) and without restrictions, except 
        as may be authorized in regulations, individuals who are 
        eligible to enroll in the plan in the order in which they apply 
        for enrollment, unless to do so would result in failure to meet 
        the requirements of subsection (f) or would result in the 
        enrollment of enrollees substantially nonrepresentative, as 
        determined in accordance with regulations of the Secretary, of 
        the population in the service area served by the plan.
            ``(2) Nonrenewal or termination.--
                    ``(A) In general.--If a contract under this section 
                is not renewed or is otherwise terminated, certified 
                standard health plans with contracts under this section 
                and serving the same service area as under the 
                terminated contract are required to have an open 
                enrollment period for individuals who were enrolled 
                under the terminated contract as of the date of notice 
                of such termination.
                    ``(B) Open enrollment period.--The open enrollment 
                periods required under subparagraph (A) shall be for 30 
                days and shall begin 30 days after the date that the 
                Secretary provides notice of such requirement.
                    ``(C) Effectiveness of enrollment.--Enrollment 
                under this paragraph shall be effective 30 days after 
                the end of the open enrollment period, or, if the 
                Secretary determines that such date is not feasible, 
                such other date as the Secretary specifies.
            ``(3) Special rule.--Each certified standard health plan 
        with a contract under this section shall have an open 
        enrollment period for each individual who enrolls in a plan 
        during any enrollment period specified by section 1837 that 
        applies to that individual. Enrollment under this clause shall 
        be effective as specified by section 1838.
            ``(4) Residents outside service area.--Each certified 
        standard health plan with a contract under this section shall 
        have an open enrollment period for each individual eligible to 
        enroll in such a plan who has previously resided outside the 
        service area. The enrollment period shall begin with the 
        beginning of the month that precedes the month in which the 
        individual becomes a resident of that service area and shall 
        end at the end of the following month. Enrollment under this 
        subparagraph shall be effective as of the first of the month 
        following the month in which the individual enrolls.
            ``(5) Continued enrollment protected.--Each certified 
        standard health plan with a contract under this section must 
        provide assurances to the Secretary that it will not expel or 
        refuse to re-enroll any enrolled individual because of the 
        individual's health status or requirements for health care 
        services, and that it will notify each such individual of such 
        fact at the time of the individual's enrollment.
            ``(6) Notice of rights, etc.--Each certified standard 
        health plan with a contract under this section shall provide 
        each enrollee, at the time of enrollment and not less 
        frequently than annually thereafter, an explanation of the 
        enrollee's rights under this section, including an explanation 
        of--
                    ``(A) the enrollee's rights to benefits from the 
                plan,
                    ``(B) the restrictions on payments under this title 
                for services furnished other than by or through the 
                plan,
                    ``(C) out-of-area coverage provided by the plan,
                    ``(D) the plan's coverage of emergency services and 
                urgently needed care,
                    ``(E) appeal rights of enrollees, and
                    ``(F) the health care providers with whom the plan 
                has entered into contracts for the provision of 
                services.
            ``(7) Continuation of coverage.--Each certified standard 
        plan that provides items and services pursuant to a contract 
        under this section shall provide assurances to the Secretary 
        that in the event the plan ceases to provide such items and 
        services, the plan shall provide or arrange for supplemental 
        coverage of benefits under this title related to a pre-existing 
        condition with respect to any exclusion period, to all 
        individuals enrolled with the plan who receive benefits under 
        this title, for the lesser of six months or the duration of 
        such period.
            ``(8) Notice of right of termination.--
                    ``(A) In general.--Each certified standard health 
                plan with a risk contract under this section shall 
                notify individuals eligible to enroll with the plan 
                under this section and individuals enrolled with the 
                plan under this section that--
                            ``(i) the plan is authorized by law to 
                        terminate or refuse to renew the contract, and
                            ``(ii) termination or nonrenewal of the 
                        contract may result in termination of the 
                        enrollments of individuals enrolled with the 
                        plan under this section.
                    ``(B) Placement of notice.--The notice required by 
                subparagraph (A) shall be included in--
                            ``(i) any marketing materials described in 
                        subsection (a)(2)(C) that are distributed by a 
                        plan to individuals eligible to enroll under 
                        this section with the plan, and
                            ``(ii) any explanation provided to 
                        enrollees by the plan pursuant to paragraph 
                        (6).
    ``(f) Membership Enrollment Requirements.--
            ``(1) In general.--Each certified standard health plan with 
        a contract under this section shall have, for the duration of 
        such contract, an enrolled membership at least one-half of 
        which consists of individuals who are not entitled to benefits 
        under this title or under a State plan approved under title 
        XIX.
            ``(2) Waiver.--
                    ``(A) In general.--The Secretary may modify or 
                waive the requirement imposed by paragraph (1) if the 
                plan demonstrates that it provides for an adequate 
                quality of care for beneficiaries by--
                            ``(i) meeting the quality standards for 
                        plans with contracts under this section;
                            ``(ii) meeting the fiscal soundness 
                        requirements under title XIII of the Public 
                        Health Service Act and any such requirements 
                        necessary to remain a certified standard health 
                        plan for at least the 3 years immediately 
                        preceding an application for a waiver under 
                        this paragraph;
                            ``(iii) demonstrating successful 
                        operational experience as a certified standard 
                        health plan with a contract under this section 
                        for at least the 3 years immediately preceding 
                        an application for a waiver under this 
                        paragraph; and
                            ``(iv) demonstrating that the number of 
                        individuals enrolled in the plan or its parent 
                        organization is at least 50,000 at the time of 
                        application for a waiver under this paragraph.
                    ``(B) Standards.--In reviewing a plan's quality 
                performance, the Secretary may accept quality 
                performance standards as measured by private 
                organizations acceptable to the Secretary or 
                organizations designated by the Secretary, including 
                peer review organizations.
            ``(3) Suspension of enrollment.--If the Secretary 
        determines that a certified standard health plan with a 
        contract under this section has failed to comply with the 
        requirements of this subsection, the Secretary may provide for 
        the suspension of enrollment of individuals under this section 
        or of payment to the plan under this section for individuals 
        newly enrolled with the plan, after the date the Secretary 
        notifies the plan of such noncompliance.
            ``(4) Termination of requirement.--The Secretary may 
        terminate the requirement under paragraph (1) when the 
        Secretary determines that health plans have established 
        alternative quality assurance mechanisms that effectively 
        provide sufficient quality safeguards.
    ``(g) Payment Rules for Plans.--
            ``(1) Subrogation rights.--Notwithstanding any other 
        provision of law, each certified standard health plan with a 
        contract under this section may (in the case of the provision 
        of services to an individual enrolled under this section by a 
        primary plan under section 1862(b)(2)) charge or authorize the 
        provider of such services to charge, in accordance with the 
        charges allowed under such law or policy--
                    ``(A) the insurance carrier, employer, or other 
                entity which under such law, plan, or policy is to pay 
                for the provision of such services, or
                    ``(B) such individual to the extent that the 
                individual has been paid under such law, plan, or 
                policy for such services.
            ``(2) Prompt payment requirement.--
                    ``(A) In general.--A risk contract under this 
                section shall require the certified standard health 
                plan to provide prompt payment (consistent with the 
                provisions of sections 1816(c)(2) and 1842(c)(2)) of 
                claims submitted for services and supplies furnished to 
                individuals pursuant to such contract, if the services 
                or supplies are not furnished under a contract between 
                the plan and the provider or supplier.
                    ``(B) Failure.--In the case of a plan which the 
                Secretary determines, after notice and opportunity for 
                a hearing, has failed to make payments of amounts in 
                compliance with subparagraph (A), the Secretary may 
                provide for direct payment of the amounts owed to 
                providers and suppliers for such covered services 
                furnished to individuals enrolled under this section 
                under the contract. If the Secretary provides for such 
                direct payments, the Secretary shall provide for an 
                appropriate reduction in the amount of payments 
                otherwise made to the plan under this section to 
                reflect the amount of the Secretary's payments (and 
                costs incurred by the Secretary in making such 
                payments).
    ``(h) Duration, Termination, Effective Date, and Terms of Contract; 
Powers and Duties of Secretary.--
            ``(1) Duration and termination.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), each contract under this section 
                shall be for a term of at least one year, as determined 
                by the Secretary, and may be made automatically 
                renewable from term to term in the absence of notice by 
                either party of intention to terminate at the end of 
                the current term.
                    ``(B) Exception.--The Secretary may terminate a 
                contract at any time (after such reasonable notice and 
                opportunity for hearing to the certified standard 
                health plan involved as the Secretary may provide in 
                regulations), if the Secretary finds that the plan--
                            ``(i) has failed substantially to carry out 
                        the contract,
                            ``(ii) is carrying out the contract in a 
                        manner inconsistent with the efficient and 
                        effective administration of this section, or
                            ``(iii) no longer substantially complies 
                        with the requirements of this section.
            ``(2) Effective date.--The effective date of any contract 
        executed pursuant to this section shall be specified in the 
        contract.
            ``(3) Terms.--Each contract under this section--
                    ``(A) shall provide that the Secretary, or any 
                person or organization designated by the Secretary--
                            ``(i) shall have the right to inspect or 
                        otherwise evaluate--
                                    ``(I) the quality, appropriateness, 
                                and timeliness of services performed 
                                under the contract, and
                                    ``(II) the facilities of the 
                                organization when there is reasonable 
                                evidence of some need for such 
                                inspection, and
                            ``(ii) shall have the right to audit and 
                        inspect any books and records of the certified 
                        standard health plan that pertain--
                                    ``(I) to the ability of the plan to 
                                bear the risk of potential financial 
                                losses, or
                                    ``(II) to services performed or 
                                determinations of amounts payable under 
                                the contract;
                    ``(B) shall require the plan with a contract to 
                provide (and pay for) written notice in advance of the 
                contract's termination, as well as a description of 
                alternatives for obtaining benefits under this title, 
                to each individual enrolled under this section with the 
                plan; and
                    ``(C)(i) shall require the plan to comply with 
                subsections (a) and (c) of section 1318 of the Public 
                Health Service Act (relating to disclosure of certain 
                financial information) and with the requirement of 
                section 1301(c)(8) of such Act (relating to liability 
                arrangements to protect members);
                    ``(ii) shall require the plan to provide and supply 
                information determined appropriate by the Secretary in 
                the manner determined appropriate by the Secretary;
                    ``(iii) shall require the plan to notify the 
                Secretary of loans and other special financial 
                arrangements which are made between the plan and 
                subcontractors, affiliates, and related parties; and
                    ``(D) shall contain such other terms and conditions 
                not inconsistent with this section (including requiring 
                the organization to provide the Secretary with such 
                information) as the Secretary may find necessary and 
                appropriate.
            ``(4) Period of disqualification.--The Secretary may not 
        enter into a risk contract with a certified standard health 
        plan if a previous risk contract with that plan under this 
        section was terminated at the request of the plan within the 
        preceding five-year period, except in circumstances which 
        warrant special consideration, as determined by the Secretary.
            ``(5) Disregard of certain inconsistent laws, etc.--The 
        authority vested in the Secretary by this section may be 
        performed without regard to such provisions of law or 
        regulations relating to the making, performance, amendment, or 
        modification of contracts of the United States as the Secretary 
        may determine to be inconsistent with the furtherance of the 
        purpose of this title.
            ``(6) Findings of failure.--
                    ``(A) In general.--If the Secretary determines that 
                a certified standard health plan with a contract under 
                this section--
                            ``(i) fails substantially to provide 
                        medically necessary items and services that are 
                        required (under law or under the contract) to 
                        be provided to an individual covered under the 
                        contract, if the failure has adversely affected 
                        (or has substantial likelihood of adversely 
                        affecting) the individual;
                            ``(ii) imposes premiums on individuals 
                        enrolled under this section in excess of the 
                        premiums permitted;
                            ``(iii) acts to expel or to refuse to re-
                        enroll an individual in violation of the 
                        provisions of this section;
                            ``(iv) engages 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 plan whose medical 
                        condition or history indicates a need for 
                        substantial future medical services;
                            ``(v) misrepresents or falsifies 
                        information that is furnished--
                                    ``(I) to the Secretary under this 
                                section, or
                                    ``(II) to an individual or to any 
                                other entity under this section;
                            ``(vi) fails to comply with the 
                        requirements of subsection (g)(2)(A) or 
                        paragraph (8);
                            ``(vii) employs or contracts with any 
                        individual or entity that is excluded from 
                        participation under this title under section 
                        1128 or 1128A for the provision of health care, 
                        utilization review, medical social work, or 
                        administrative services or employs or contracts 
                        with any entity for the provision (directly or 
                        indirectly) through such an excluded individual 
                        or entity of such services; or
                            ``(viii) substantially fails to cooperate 
                        with the utilization and quality control peer 
                        review organization;
                the Secretary may provide, in addition to any other 
                remedies authorized by law, for any of the remedies 
                described in subparagraph (B).
                    ``(B) Remedies.--The remedies described in this 
                subparagraph are--
                            ``(i) civil money penalties of not more 
                        than $ 25,000 for each determination under 
                        subparagraph (A) or, with respect to a 
                        determination under clause (iv) or (v)(I) of 
                        such subparagraph, of not more than $ 100,000 
                        for each such determination, plus, with respect 
                        to a determination under subparagraph (A)(ii), 
                        double the excess amount charged in violation 
                        of such subparagraph (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 
                        subparagraph (A)(iv), $ 15,000 for each 
                        individual not enrolled as a result of the 
                        practice involved,
                            ``(ii) suspension of enrollment of 
                        individuals under this section after the date 
                        the Secretary notifies the plan of a 
                        determination under subparagraph (A) and until 
                        the Secretary is satisfied that the basis for 
                        such determination has been corrected and is 
                        not likely to recur, or
                            ``(iii) suspension of payment to the plan 
                        under this section for individuals enrolled 
                        after the date the Secretary notifies the plan 
                        of a determination under subparagraph (A) 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 
                clause (i) in the same manner as they apply to a civil 
                money penalty or proceeding under section 1128A(a).
            ``(7) Agreement with utilization and quality control peer 
        review organization.--
                    ``(A) In general.--Each risk contract with a 
                certified standard health plan under this section shall 
                provide that the plan will maintain an agreement with a 
                utilization and quality control peer review 
                organization (which has a contract with the Secretary 
                under part B of title XI for the area in which the 
                eligible organization is located) or with an entity 
                selected by the Secretary under section 1154(a)(4)(C) 
                under which the review organization will perform 
                functions under section 1154(a)(4)(B) and section 
                1154(a)(14) (other than those performed under contracts 
                described in section 1866(a)(1)(F)) with respect to 
                services, furnished by the plan, for which payment may 
                be made under this title.
                    ``(B) Cost of services.--For purposes of payment 
                under this title, the cost of such agreement to the 
                plan shall be considered a cost incurred by a provider 
                of services in providing covered services under this 
                title and shall be paid directly by the Secretary to 
                the review organization on behalf of such plan in 
                accordance with a schedule established by the 
                Secretary.
                    ``(C) Source of payments.--Such payments--
                            ``(i) shall be transferred in appropriate 
                        proportions from the Federal Hospital Insurance 
                        Trust Fund and from the Supplementary Medical 
                        Insurance Trust Fund, without regard to amounts 
                        appropriated in advance in appropriation Acts, 
                        in the same manner as transfers are made for 
                        payment for services provided directly to 
                        beneficiaries, and
                            ``(ii) shall not be less in the aggregate 
                        for such plans for a fiscal year than the 
                        amounts the Secretary determines to be 
                        sufficient to cover the costs of such plans' 
                        conducting activities described in subparagraph 
                        (A) with respect to such plans under part B of 
                        title XI.
    ``(i) Other General Requirements on Plans.--
            ``(1) Grievance procedures.--Each certified standard health 
        plan with a contract under this section must provide meaningful 
        procedures for hearing and resolving grievances between the 
        plan (including any entity or individual through which the plan 
        provides health care services) and individuals enrolled with 
        the plan under this section.
            ``(2) Appeals.--An individual enrolled with a certified 
        standard health plan under this section who is dissatisfied by 
        reason of the individual's failure to receive any health 
        service to which the individual believes the individual is 
        entitled and at no greater charge than the individual believes 
        the individual is required to pay is entitled, if the amount in 
        controversy is $100 or more, to a hearing before the Secretary 
        to the same extent as is provided in section 205(b), and in any 
        such hearing the Secretary shall make the plan a party. If the 
        amount in controversy is $1,000 or more, the individual or plan 
        shall, upon notifying the other party, be entitled to judicial 
        review of the Secretary's final decision as provided in section 
        205(g), and both the individual and the plan shall be entitled 
        to be parties to that judicial review.
            ``(3) Advance directives.--A contract under this section 
        shall provide that the certified standard health plan shall 
        meet the requirement of section 1866(f) (relating to 
        maintaining written policies and procedures respecting advance 
        directives).
            ``4) Special requirement relating to subsection (d) 
        hospitals.--A risk contract under this section shall provide 
        that in the case of an individual who is receiving inpatient 
        hospital services from a subsection (d) hospital (as defined in 
        section 1886(d)(1)(B)) as of the effective date of the 
        individual's--
                    ``(A) enrollment with such plan under this 
                section--
                            ``(i) payment for such services until the 
                        date of the individual's discharge shall be 
                        made under this title as if the individual were 
                        not enrolled with the plan,
                            ``(ii) the plan shall not be financially 
                        responsible for payment for such services until 
                        the date after the date of the individual's 
                        discharge, and
                            ``(iii) the plan shall nonetheless be paid 
                        the full amount otherwise payable to the plan 
                        under this section; or
                    ``(B) termination of enrollment with a plan under 
                this section--
                            ``(i) the plan shall be financially 
                        responsible for payment for such services after 
                        such date and until the date of the 
                        individual's discharge,
                            ``(ii) payment for such services during the 
                        stay shall not be made under section 1886(d), 
                        and
                            ``(iii) the plan shall not receive any 
                        payment with respect to the individual under 
                        this section during the period the individual 
                        is not enrolled.
    ``(j) Limit on charges for certain services.--
            ``(1) In general.--(A) In the case of physicians' services 
        or renal dialysis services described in paragraph (2) which are 
        furnished by a participating physician to an individual 
        enrolled with a certified standard health plan under this 
        section and enrolled under part B, the applicable participation 
        agreement is deemed to provide that the physician or provider 
        of services or renal dialysis facility will accept as payment 
        in full from the eligible plan the amount that would be payable 
        to the physician or provider of services or renal dialysis 
        facility under part B and from the individual under such part, 
        if the individual were not enrolled with a plan under this 
        section.
            ``(B) In the case of physicians' services described in 
        paragraph (2) which are furnished by a nonparticipating 
        physician, the limitations on actual charges for such services 
        otherwise applicable under part B (to services furnished by 
        individuals not enrolled with an eligible organization under 
        this section) shall apply in the same manner as such 
        limitations apply to services furnished to individuals not 
        enrolled with such an organization.
            ``(2) Services described.--The `physicians' services 
        described in this paragraph are physicians' services which are 
        furnished to an enrollee of a certified standard health plan 
        under this section by a physician, provider of services, or 
        renal dialysis facility who is not under a contract with the 
        plan.
    ``(k) Study on Certified Standard Health Plans.--
            ``(1) In general.--The Prospective Payment Assessment 
        Commission (established under section 1886(e)(2)) and the 
        Physician Payment Review Commission (established under section 
        1845) shall study and make recommendations to Congress on the 
        matters described in paragraph (2).
            ``(2) Matters described.--The matters described in this 
        paragraph include--
                    ``(A) ways in which enrollment in certified 
                standard health plans with risk contracts under this 
                section could be increased;
                    ``(B) alternatives to the current payment 
                methodology that might encourage more health plans to 
                enter into certified standard health plans with risk 
                contracts under this section and encourage more 
                individuals to enroll in such plans;
                    ``(C) whether the demographic characteristics and 
                health status of beneficiaries enrolled in certified 
                standard health plans with risk contracts under this 
                section differs from other individuals entitled to 
                benefits under part A and enrolled under part B; and
                    ``(D) whether the volume and quality of care 
                rendered to individuals enrolled in certified standard 
                health plans with risk contracts under this section 
                differs from that rendered to other individuals 
                entitled to benefits under part A and enrolled under 
                part B.''.
    (b) Technical and Conforming Amendments.--The Secretary of Health 
and Human Services shall, within 90 days of the date of the enactment 
of this section, submit to the appropriate committees of Congress, a 
legislative proposal providing for such technical and conforming 
amendments in the law as are required by the provisions of this 
section.
    (c) Effective Date.--The amendments made by this section shall be 
effective with respect to contracts entered into on or after January 1, 
1996.

                 PART II--PROVISIONS RELATED TO PART A

SEC. 611. INPATIENT HOSPITAL SERVICES UPDATE FOR PPS HOSPITALS.

    Section 1886(b)(3)(B)(i) (42 U.S.C. 1395ww(b)(3)(B)(i)) is 
amended--
            (1) by amending subclause (XII) to read as follows:
            ``(XII) for fiscal years 1997 through 2000, the market 
        basket percentage minus 2.0 percentage points for hospitals in 
        all areas, and''; and
            (2) in subclause (XIII), by striking ``1998'' and inserting 
        ``2001''.

SEC. 612. REDUCTION IN PAYMENTS FOR CAPITAL-RELATED COSTS FOR INPATIENT 
              HOSPITAL SERVICES.

    (a) Reduction in Base Payment Rates for PPS Hospitals.--Section 
1886(g)(1)(A) (42 U.S.C. 1395ww(g)(1)(A)) is amended by adding at the 
end the following new sentence: ``In addition to the reduction 
described in the preceding sentence, for discharges occurring after 
September 30, 1995, the Secretary shall reduce by 7.31 percent the 
unadjusted standard Federal capital payment rate (as described in 42 
CFR 412.308(c), as in effect on the date of the enactment of the Health 
Security Act) and shall reduce by 10.41 percent the unadjusted 
hospital-specific rate (as described in 42 CFR 412.328(e)(1), as in 
effect on the date of the enactment of the Health Security Act).''.
    (b) Reduction in Payments for PPS-Exempt Hospitals.--Section 
1861(v)(1) (42 U.S.C. 1395x(v)(1)) is amended by adding at the end the 
following new subparagraph:
    ``(T) Such regulations shall provide that, in determining the 
amount of the payments that may be made under this title with respect 
to the capital-related costs of inpatient hospital services furnished 
by a hospital that is not a subsection (d) hospital (as defined in 
section 1886(d)(1)(B)) or a subsection (d) Puerto Rico hospital (as 
defined in section 1886(d)(9)(A)), the Secretary shall reduce the 
amounts of such payments otherwise established under this title by 15 
percent for payments attributable to portions of cost reporting periods 
occurring during each of the fiscal years 1996 through 2003.''.

SEC. 613. REDUCTIONS IN DISPROPORTIONATE SHARE PAYMENTS.

    (a) In General.--Section 1886(d)(5)(F) (42 U.S.C. 1395ww(d)(5)(F)) 
is amended--
            (1) in clause (ii), by striking ``The amount'' and 
        inserting ``Subject to clause (ix), the amount''; and
            (2) by adding at the end the following new clauses:
    ``(ix) Notwithstanding any other provision of this subparagraph, 
the Secretary shall reduce the amount of any additional payment made to 
a hospital under this subparagraph for discharges occurring on or after 
October 1, 1997, by 25 percent.
    ``(x) Not later than July 1, 1996, the Secretary and the 
Prospective Payment Assessment Commission shall submit to the Congress 
a recommendation on a methodology for measuring and allocating funds 
for hospitals that receive an additional payment under this paragraph 
including a replacement for the fraction described in clause 
(vi)(II).''.

SEC. 614. REVISED PAYMENT METHODOLOGY FOR REHABILITATION AND LONG-TERM 
              CARE HOSPITALS.

    (a) Rehabilitation Hospitals and Distinct Part Units.--
            (1) Definition.--Section 1886(d)(1)(B) (42 U.S.C. 
        1395ww(d)(1)(B)) is amended by adding at the end the following 
        new sentence: ``In defining a rehabilitation hospital and a 
        rehabilitation unit of a hospital which is a distinct part of a 
        hospital, the Secretary shall take into account the impact of 
        new technologies, survival rates, and changes in the practice 
        of rehabilitation medicine.''.
            (2) Target amount calculation for rehabilitation hospitals 
        and distinct part units.--
                    (A) In general.--Section 1886(b)(3) (42 U.S.C. 
                1395ww(b)(3)) is amended--
                            (i) in subparagraph (A), by striking ``(D), 
                        and (E)'' and inserting ``(D), (E), and (F)'';
                            (ii) in subparagraph (B)(ii), by striking 
                        ``and (E)'' and inserting ``(E), and (F)''; and
                            (iii) by adding at the end the following 
                        new subparagraph:
                    ``(F)(i) Subject to clause (ii), for cost reporting 
                periods beginning on or after October 1, 1994, in the 
                case of a hospital described in subsection 
                (d)(1)(B)(ii) or a rehabilitation unit described in 
                such subparagraph, the term `target amount' means--
                            ``(I) with respect to the first 12-month 
                        cost reporting period in which this 
                        subparagraph is applied to the hospital or 
                        unit--
                                    ``(aa) the allowable operating 
                                costs of inpatient hospital services 
                                (as defined in subsection (a)(4)) 
                                recognized under this title for the 
                                hospital or unit for the 12-month cost 
                                reporting period (in this subparagraph 
                                referred to as the `base cost reporting 
                                period') preceding the first cost 
                                reporting period for which this 
                                subparagraph was in effect with respect 
                                to such hospital, increased (in a 
                                compounded manner), by
                                    ``(bb) the applicable percentage 
                                increases applied to such hospital or 
                                unit under this paragraph for cost 
                                reporting periods after the base cost 
                                reporting period and up to and 
                                including such first 12-month cost 
                                reporting period, or
                            ``(II) with respect to a later cost 
                        reporting period, the target amount for the 
                        preceding 12-month cost reporting period, 
                        increased by the applicable percentage increase 
                        under subparagraph (B).
                There shall be substituted for the allowable average 
                costs of inpatient hospital services determined under 
                subclause (I)(aa), the average of the allowable average 
                costs of inpatient hospital services (as so defined) 
                recognized under this title for the hospital or unit 
                for cost reporting periods beginning during fiscal 
                years 1990 and 1991 (if any).
                    ``(ii)(I) Notwithstanding the provisions of clause 
                (i), in the case of a hospital or unit to which the 
                last sentence of clause (i) applies, the hospital or 
                unit's target amount under such clause for a cost 
                reporting period shall be--
                            ``(aa) not less than 70 percent of the 
                        national weighted average of all target amounts 
                        calculated under such clause for all hospitals 
                        and units described in such clause (as 
                        determined by the Secretary), and
                            ``(bb) not less than the allowable 
                        operating costs of inpatient hospital services 
                        (as defined in subsection (a)(4) for such 
                        hospital or unit in the base cost reporting 
                        period (including any payments made to such 
                        hospital or unit pursuant to paragraph (1)(A)), 
                        multiplied by the applicable percentage 
                        increase for such cost reporting period under 
                        subparagraph (B).
                    ``(II) Notwithstanding the provisions of clause 
                (i), in the case of a hospital or unit that is not 
                described in subclause (I), the hospital or unit's 
                target amount under such clause for a cost reporting 
                period shall be--
                            ``(aa) not less than the amount described 
                        in subclause (I)(aa), and
                            ``(bb) not greater than 110 percent of the 
                        national weighted average of all target amounts 
                        calculated under clause (i) for all hospitals 
                        and units described in such clause (as 
                        determined by the Secretary).''.
                    (B) Effective date.--The amendments made by 
                subparagraph (A) shall apply with respect to cost 
                reporting periods beginning on or after October 1, 
                1994.
            (3) Development of national prospective rates for 
        rehabilitation hospitals and distinct part units.--
                    (A) Development of proposal.--The Secretary of 
                Health and Human Services (hereafter in this section 
                referred to as the ``Secretary'') shall develop a 
                proposal to replace the current system under which 
                rehabilitation hospitals and rehabilitation units of a 
                hospital which are a distinct part of a hospital (as 
                described in section 1886(d)(1)(B) of the Social 
                Security Act (42 U.S.C. 1395ww(d)(1)(B))) receive 
                payment for the operating and capital-related costs of 
                inpatient hospital services under part A of title XVIII 
                of such Act with a prospective payment system. In 
                developing any proposal under this paragraph to replace 
                the current system with a prospective payment system, 
                the Secretary shall develop a system that provides 
                for--
                            (i) a payment on a per-discharge basis, and
                            (ii) an appropriate weighting of such 
                        payment amount as it relates to the 
                        classification of the discharge.
                    (B) Reports.--Not later than October 1, 1996, the 
                Secretary shall submit the proposal developed under 
                subparagraph (A) to the Congress.
    (b) Assignment of New Base Year for Certified Long-Stay Hospitals 
That Also Serve a Significant Proportion of Low-Income Patients.--
            (1) Rebasing for long-term hospitals.--
                    (A) In general.--Section 1886(b)(3) (42 U.S.C. 
                1395ww(b)(3)), as amended by subsection (a), is further 
                amended--
                            (i) in subparagraph (A), by striking ``(E), 
                        and (F)'' and inserting ``(E), (F), and (G)'';
                            (ii) in subparagraph (B)(ii), by striking 
                        ``(E), and (F)'' and inserting ``(E), (F), and 
                        (G)''; and
                            (iii) by inserting after subparagraph (F) 
                        the following new subparagraph:
                    ``(G)(i) For cost reporting periods beginning on or 
                after October 1, 1994, in the case of a hospital 
                described in subsection (d)(1)(B)(iv) that--
                            ``(I) has not received the additional 
                        payment amount described in paragraph (1)(A) 
                        for at least the preceding 2 consecutive 12-
                        month cost reporting periods; and
                            ``(II) for which the sum of the amounts 
                        described in subclauses (I) and (II) of 
                        subsection (d)(5)(F)(vi) during the period 
                        described in clause (I) exceeds 25 percent,
                the term `target amount' has the meaning given such 
                term by clause (ii).
                    ``(ii) In the case of a hospital described in 
                clause (i), the term `target amount' means--
                            ``(I) with respect to the first 12-month 
                        cost reporting period in which this 
                        subparagraph is applied to the hospital--
                                    ``(aa) the average allowable 
                                operating costs of inpatient hospital 
                                services (as defined in subsection 
                                (a)(4)) recognized under this title for 
                                the hospital during cost reporting 
                                periods of the hospital beginning 
                                during fiscal years 1990 and 1991 for 
                                such hospital (in this subparagraph 
                                referred to as the `base cost reporting 
                                period'), increased (in a compounded 
                                manner), by
                                    ``(bb) the applicable percentage 
                                increases applied to such hospital or 
                                under this paragraph for cost reporting 
                                periods after the base cost reporting 
                                period and up to and including such 
                                first 12-month cost reporting periods, 
                                or
                            ``(II) with respect to a subsequent 12-
                        month cost reporting period, the target amount 
                        for the preceding 12-month cost reporting 
                        period, increased by the applicable percentage 
                        increase under subparagraph (B).
                    ``(iii) Notwithstanding clause (ii)(II), if, after 
                2 consecutive 12-month cost reporting periods, a 
                hospital continues to be described in subclauses (I) 
                and (II) of clause (i), there shall be substituted for 
                the base cost reporting period described in clause 
                (ii)(I)(aa) the most recent preceding 2 12-month cost 
                reporting periods of the hospital for which data is 
                available (as determined by the Secretary), but only if 
                such substituting results in an increase in the target 
                amount for the hospital. The substitution under the 
                preceding sentence may not occur more often than every 
                2 years.
                    ``(iv) Effective October 1, 1994, the Secretary 
                shall take into account the enactment of this 
                subparagraph in making available to the hospital the 
                payments described in section 1815(e)(2), and, shall 
                increase such payments as if the target amount of the 
                hospital had been established pursuant to this 
                subparagraph as of such date.''.
            (2) Effective date.--The amendments made by this subsection 
        shall be effective with respect to cost reporting periods 
        beginning on or after October 1, 1994.

SEC. 615. MORATORIUM ON DESIGNATION OF NEW LONG-TERM HOSPITALS.

    Effective October 1, 1994, notwithstanding clause (iv) of section 
1886(d)(1)(B) of the Social Security Act (42 U.S.C. 1395ww(d)(1)(B)), a 
hospital which has an average inpatient length of stay (as determined 
by the Secretary of Health and Human Services) of greater than 25 days 
shall not be treated as a hospital described in such clause for 
purposes of such title unless such hospital was treated as a hospital 
described in such clause for purposes of such title as of the date of 
the enactment of this Act.

SEC. 616. EXTENSION OF FREEZE ON UPDATES TO ROUTINE SERVICE COST LIMITS 
              FOR SKILLED NURSING FACILITIES.

    (a) Payments Based on Cost Limits.--Section 1888(a) (42 U.S.C. 
1395yy(a)) is amended by striking ``112 percent'' each place it appears 
and inserting ``100 percent (adjusted by such amount as the Secretary 
determines to be necessary to preserve the savings resulting from the 
enactment of section 13503(a)(1) of the Omnibus Budget Reconciliation 
Act of 1993)''.
    (b) Adjustments to Limits.--Section 1888(c) (42 U.S.C. 1395yy(c)) 
is amended by inserting the following sentence at the end: ``The effect 
of the amendment made by section 616(a) of the Health Security Act 
shall not be considered by the Secretary in making adjustments pursuant 
to this subsection.''
    (c) Payments Determined on Prospective Basis.--Section 
1888(d)(2)(B) (42 U.S.C. 1395yy(d)(2)(B)) is amended by striking ``105 
percent'' and inserting ``100 percent (adjusted by such amount as the 
Secretary determines to be necessary to preserve the savings resulting 
from the enactment of section 13503(b) of the Omnibus Budget 
Reconciliation Act of 1993)''.
    (d) Effective Date.--The amendments made by subsections (a), (b), 
and (c) shall apply to cost reporting periods beginning on or after 
October 1, 1995.

SEC. 617. PAYMENTS FOR SOLE COMMUNITY HOSPITALS WITH TEACHING PROGRAMS 
              AND MULTIHOSPITAL CAMPUSES.

    (a) In General.--Section 1886(d)(5)(D) (42 U.S.C. 1395ww(d)(5)(D)) 
is amended by adding at the end the following new clause:
    ``(vi) The Secretary shall determine payment under clause (i) for a 
sole-community hospital that is a part of a multi-campus hospital by 
making the determination under such clause for each facility of the 
multi-campus hospital if any facility of the hospital would have a 
value of `r' greater than 0, as `r' is defined in subparagraph (B)(ii). 
In making a determination for each such facility, the Secretary shall 
determine the DRG-specific rate applicable to the facility based on its 
location in accordance with paragraph (3)(D).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to discharges occurring on or after October 1, 1993, from multi-
campus hospitals that merged facilities on or after October 1, 1987.

SEC. 618. MEDICARE-DEPENDENT, SMALL RURAL HOSPITALS.

    (a) Clarification of Additional Payment.--Section 
1886(d)(5)(G)(ii)(I) (42 U.S.C. 1395ww(d)(5)(G)(ii)(I)) is amended by 
striking ``the first 3 12-month cost reporting periods that begin'' and 
inserting ``the 36-month period beginning with the first day of the 
cost reporting period that begins''.
    (b) Special Treatment Extended.--Section 1886(d)(5)(G) (42 U.S.C. 
1395ww(d)(5)(G)) is amended--
            (1) in clause (i), by striking ``October 1, 1994'' and 
        inserting ``October 1, 1999''; and
            (2) in clause (ii)(II), by striking ``October 1, 1994'' and 
        inserting ``October 1, 1999''.
    (c) Extension of Target Amount.--Section 1886(b)(3)(D) (42 U.S.C. 
1395ww(b)(3)(D)) is amended--
            (1) in the matter preceding clause (i), by striking ``March 
        31, 1993'' and inserting ``September 30, 1999''; and
            (2) by amending clause (iii) to read as follows:
            ``(iii) with respect to discharges occurring in fiscal 
        years 1994 through 1999, the target amount for the cost 
        reporting period beginning in the previous fiscal year 
        increased by the applicable percentage increase under 
        subparagraph (B)(iv).''.

SEC. 619. PROVISIONS RELATING TO RURAL HEALTH TRANSITION GRANT PROGRAM.

    (a) Eligibility of Rural Primary Care Hospitals for Grants.--
            (1) In general.--Section 4005(e)(2) of the Omnibus Budget 
        Reconciliation Act of 1987 is amended in the matter preceding 
        subparagraph (A) by inserting ``any rural primary care hospital 
        as defined in section 1861(mm)(1), or'' after ``means''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to grants made on or after October 1, 1993.
    (b) Extension of Authorization of Appropriations.--Section 
4005(e)(9) of Omnibus Budget Reconciliation Act of 1987 is amended--
            (1) by striking ``1989 and'' and inserting ``1989,''; and
            (2) by striking ``1992'' and inserting ``1992 and 
        $30,000,000 for each of the fiscal years 1993 through 1999''.
    (c) Frequency of Required Reports.--Section 4008(e)(8)(B) of the 
Omnibus Budget Reconciliation Act of 1987 is amended by striking 
``every 6 months'' and inserting ``every 12 months''.

SEC. 620. LIMITED SERVICE HOSPITAL PROGRAM.

    (a) Limited Service Hospital Program.--Section 1820 (42 U.S.C. 
13951-4) is amended to read as follows:

                   ``limited service hospital program

    ``Sec. 1820. (a) Purpose.--The purpose of this section is to--
            ``(1) make available alternative hospital models to small 
        rural or isolated rural communities in which facilities are 
        relieved of the burden of selected regulatory requirements by 
        limiting the scope of inpatient acute services required to be 
        offered;
            ``(2) alter medicare reimbursement policy to support the 
        financial viability of alternative facilities by limiting the 
        financial risk faced by such small hospitals through the use of 
        reasonable cost reimbursement; and
            ``(3) promote linkages between facilities designated by the 
        State under this section and broader programs supporting the 
        development of and transition to integrated provider networks.
    ``(b) In General.--Any State that submits an application in 
accordance with subsection (c) may establish a limited hospital program 
described in subsection (d).
    ``(c) Application.--A State may establish a limited hospital 
program described in subsection (d) if the State submits to the 
Secretary at such time and in such form as the Secretary may require an 
application containing--
            ``(1) assurances that the State--
                    ``(A) has developed, or is in the process of 
                developing, a State rural health care plan that--
                            ``(i) in the case of a State applying to 
                        establish a rural primary care hospital program 
                        (described in subsection (d)(1)(A)), provides 
                        for the creation of one or more rural health 
                        networks (as defined in subsection (e)) in the 
                        State,
                            ``(ii) promotes regionalization of rural 
                        health services in the State, and
                            ``(iii) improves access to hospital and 
                        other health services for rural residents of 
                        the State;
                    ``(B) has developed the rural health care plan 
                described in subparagraph (A) in consultation with the 
                hospital association of the State, rural hospitals 
                located in the State, and the State Office of Rural 
                Health (or, in the case of a State in the process of 
                developing such plan, that assures the Secretary that 
                it will consult with its State hospital association, 
                rural hospitals located in the State, and the State 
                Office of Rural Health in developing such plan); and
            ``(2) assurances that the State has designated (consistent 
        with the rural health care plan described in paragraph (1)(A)), 
        or is in the process of designating, rural nonprofit or public 
        hospitals or facilities located in the State as rural primary 
        care hospitals facilities or medical assistance facilities; and
            ``(3) such other information and assurances as the 
        Secretary may require.
    ``(d) Limited Hospital Program Described.--
            ``(1) In general.--A State that has submitted an 
        application in accordance with subsection (c), may establish a 
        limited hospital program that includes--
                    ``(A) a rural primary care hospital program under 
                which--
                            ``(i) at least one facility in the State 
                        shall be designated as a rural primary care 
                        hospital in accordance with paragraph (2), and
                            ``(ii) the State shall develop at least one 
                        rural health network (as defined in subsection 
                        (e)) in the State;
                    ``(B) a medical assistance facility program under 
                which at least one facility in the State shall be 
                designated as a medical assistance facility in 
                accordance with paragraph (2); or
                    ``(C) both.
            ``(2) State designation of facilities.--A State may 
        designate one or more facilities as a rural primary care 
        hospital or medical assistance facility in accordance with 
        subparagraph (A) or (B).
                    ``(A) Criteria for designation as rural primary 
                care hospital.--A State may designate a facility as a 
                rural primary care hospital only if the facility--
                            ``(i) is located in a rural area (as 
                        defined in section 1886(d)(2)(D)), or is 
                        located in a county whose geographic area is 
                        substantially larger than the average 
                        geographic area for urban counties in the 
                        United States and whose hospital service area 
                        is characteristic of service areas of hospitals 
                        located in rural areas;
                            ``(ii) at the time such facility applies to 
                        the State for designation as a rural primary 
                        care hospital, is a hospital (or, in the case 
                        of a facility that closed during the 12-month 
                        period that ends on the date the facility 
                        applies for such designation, at the time the 
                        facility closed), with a participation 
                        agreement in effect under section 1866(a);
                            ``(iii) has in effect an agreement to 
                        participate with other hospitals and facilities 
                        in a rural health network;
                            ``(iv) provides 24-hour emergency services 
                        to ill or injured persons prior to admission to 
                        the facility or prior to their transportation 
                        to a full-service hospital;
                            ``(v) provides not more than 15 inpatient 
                        beds (meeting such conditions as the Secretary 
                        may establish) for providing acute inpatient 
                        care;
                            ``(vi) provides inpatient care for a period 
                        not to exceed an average length of 96 hours 
                        (unless a longer period is required because 
                        transfer to a hospital is precluded because of 
                        inclement weather or other emergency 
                        conditions);
                            ``(vii) 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 and fully staffed, except 
                                insofar as the facility is required to 
                                provide emergency care on a 24-hour 
                                basis under clause (v) and must have 
                                nursing services available on a 24-hour 
                                basis, but need not otherwise staff the 
                                facility except when an inpatient is 
                                present,
                                    ``(II) the facility may provide any 
                                services otherwise required to be 
                                provided by a full-time, onsite 
                                dietician, pharmacist, laboratory 
                                technician, medical technologist, and 
                                radiological technologist on a part-
                                time, offsite basis under arrangements 
                                as defined in section 1861(w)(1), and
                                    ``(III) the inpatient care 
                                described in clause (vii) may be 
                                provided by a physician's assistant, 
                                nurse practitioner, or clinical nurse 
                                specialist subject to the oversight of 
                                a physician who need not be present in 
                                the facility; and
                            ``(viii) meets the requirements of 
                        subparagraphs (C) through (I) of paragraph (2) 
                        of section 1861(aa), and of clauses (ii) and 
                        (iv) of the second sentence of that paragraph, 
                        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 
                        `physician' is a reference to a physician as 
                        defined in section 1861(r)(1).
                    ``(B) Criteria for designation as medical 
                assistance facility.--A State may designate a facility 
                as a medical assistance facility only if the facility--
                            ``(i) is located in a county (or equivalent 
                        unit of local government)--
                                    ``(I) with fewer than 6 residents 
                                per square mile, or
                                    ``(II) in a rural area (as defined 
                                in section 1886(d)(2)(D)) that is 
                                located more than a 35-mile or 45-
                                minute drive from a hospital, a rural 
                                primary care hospital, or another 
                                facility described in this subsection;
                            ``(ii) at the time such facility applies to 
                        the State for designation as a medical 
                        assistance facility--
                                    ``(I) is a hospital (or in the case 
                                of a facility that closed during the 
                                12-month period that ends on the date 
                                the facility applies for such 
                                designation, at the time the facility 
                                closed), with a participation agreement 
                                in effect under section 1866(a); or
                                    ``(II) is licensed in accordance 
                                with applicable State and local laws 
                                and regulations;
                            ``(iii) meets the requirements of clauses 
                        (iv), (vi), and (vii) of subparagraph (A); and
                            ``(iv) meets the requirements of 
                        subparagraph (I) of paragraph (2) of section 
                        1861(aa).
    ``(e) Rural Health Network Defined.--For purposes of this section, 
the term `rural health network' means, with respect to a State, an 
organization--
            ``(1) consisting of--
                    ``(A) at least 1 facility that the State has 
                designated or plans to designate as a rural primary 
                care hospital, and
                    ``(B) at least 1 hospital that furnishes services 
                that a rural primary care hospital cannot furnish, and
            ``(2) the members of which have entered into agreements 
        regarding--
                    ``(A) patient referral and transfer,
                    ``(B) the development and use of communications 
                systems, including (where feasible) telemetry systems 
                and systems for electronic sharing of patient data,
                    ``(C) the provision of emergency and non-emergency 
                transportation among the members, and
                    ``(D) credentialing and quality assurance.
    ``(f) Certification by the Secretary.--The Secretary shall certify 
a facility as a rural primary care hospital or medical assistance 
facility (as the case may be) if the facility--
            ``(1) is located in a State that has established a limited 
        hospital program in accordance with subsection (d);
            ``(2) is designated as a rural primary care hospital or 
        medical assistance facility by the State in which it is 
        located; and
            ``(3) meets such other criteria as the Secretary may 
        require.
    ``(g) Permitting Maintenance of Swing Beds.--Nothing in this 
section shall be construed to prohibit a State from designating or the 
Secretary from certifying a facility as a rural primary care hospital 
or medical assistance facility solely because, at the time the facility 
applies to the State for designation as a rural primary care hospital 
or medical assistance facility, there is in effect an agreement between 
the facility and the Secretary under section 1883 under which the 
facility's inpatient hospital facilities are used for the furnishing of 
extended care services, except that the number of beds used for the 
furnishing of such services may not exceed the total number of licensed 
inpatient beds at the time the facility applies to the State for such 
designation (minus the number of inpatient beds used for providing 
inpatient care in a rural primary care facility pursuant to subsection 
(d)(2)(A)(vi)). The Secretary may establish additional conditions of 
participation for rural primary care hospitals with a substantial 
number of such beds. For purposes of the first sentence, the number of 
beds of the facility used for the furnishing of extended care services 
shall not include any beds of a unit of the facility that is licensed 
as a distinct-part skilled nursing facility at the time the facility 
applies to the State for designation as a rural primary care hospital 
or medical assistance facility.
    ``(h) Grants.--
            ``(1) Limited hospital program.--The Secretary may award 
        grants to States that have submitted applications in accordance 
        with subsection (c) for--
                    ``(A) engaging in activities relating to planning 
                and implementing a rural health care plan;
                    ``(B) in the case of a rural primary care hospital 
                program described in subsection (d)(1)(A), engaging in 
                activities relating to planning and implementing rural 
                health networks; and
                    ``(C) designation of facilities as rural primary 
                care hospitals or medical assistance facilities.
            ``(2) Rural emergency medical services.--
                    ``(A) In general.--The Secretary may award grants 
                to States that have submitted applications in 
                accordance with subparagraph (B) for the establishment 
                or expansion of a program for the provision of rural 
                emergency medical services.
                    ``(B) Application.--An application is in accordance 
                with this subparagraph if the State submits to the 
                Secretary at such time and in such form as the 
                Secretary may require an application containing the 
                assurances described in subparagraphs (A)(ii), 
                (A)(iii), and (B) of subsection (c)(1) and paragraph 
                (3) of such subsection.
    ``(i) Study on Clinically Based Alternative to 96-Hour Rule.--The 
Secretary shall conduct a study on the feasibility of admitting 
patients to rural primary care hospitals and medical assistance 
facilities on a limited DRG basis instead of using the 96-hour average 
length of stay criteria described in subsection (d)(2)(A)(vii).
    ``(j) Waiver of Conflicting Part A Provisions.--The Secretary is 
authorized to waive such provisions of this part and part C as are 
necessary to conduct the program established under this section.
    ``(k) Authorization of Appropriations.--There are authorized to be 
appropriated from the Federal Hospital Insurance Trust Fund--
            ``(1) for making grants under subsection (h)(1) to States 
        that have established a rural primary care hospital program in 
        the State under subsection (d)(1)(A), $15,000,000 for each of 
        fiscal years 1993 through 1995; and
            ``(2) for making grants to all States under subsection (h), 
        $25,000,000 in each of the fiscal years 1996 through 1999.''.
    (b) Part A Amendments Relating to Rural Primary Care Hospitals and 
Medical Assistance Facilities.--
            (1) Definitions.--Section 1861 (42 U.S.C. 1395x) is amended 
        by adding at the end the following new subsection:

  ``medical assistance facility; medical assistance facility services

    ``(oo)(1) The term `medical assistance facility' means a facility 
certified by the Secretary as a medical assistance facility under 
section 1820(f).
    ``(2) The term `medical assistance facility services' means items 
and services, furnished to an inpatient for a medical assistance 
facility by such facility, that would be inpatient hospital services if 
furnished to an inpatient of a hospital by a hospital.''.
            (2) Coverage and payment.--(A)(i) Section 1812(a)(1) (42 
        U.S.C. 1395d(a)(1)) is amended by striking ``inpatient hospital 
        services'' the first place it appears and inserting ``, 
        inpatient hospital services and inpatient medical assistance 
        facility services''; and
            (ii) by striking ``inpatient hospital services'' the second 
        place it appears and inserting ``such services''.
            (B) Section 1814 (42 U.S.C. 1395f) is amended--
                    (i) in subsection (b), by striking ``inpatient 
                rural primary care hospital services,'' and inserting 
                ``inpatient rural primary care hospital services, other 
                than a medical assistance facility providing inpatient 
                medical assistance facility services,''; and
                    (ii) by amending subsection (l) to read as follows:
    ``(l) Payment for Inpatient Rural Primary Care Services and 
Inpatient Medical Assistance Facility Services.--The amount of payment 
under this part for inpatient rural primary care services and inpatient 
medical assistance facility services is the reasonable costs of the 
rural primary care hospital or medical assistance facility in providing 
such services.''.
            (3) Treatment of medical assistance facilities as providers 
        of services.--(A) Section 1861(u) (42 U.S.C. 1395x(u)) is 
        amended by inserting ``medical assistance facility,''after 
        ``rural primary care hospital,''.
            (B) The first sentence of section 1864(a) (42 U.S.C. 
        1395aa(a)) is amended by inserting ``a medical assistance 
        facility, as defined in section 1861(oo)(1),'' after 
        ``1861(mm)(1),''.
            (C) The third sentence of section 1865(a) of such Act (42 
        U.S.C. 1395bb(a)) is amended by striking ``or 1861(mm)(1)'' and 
        inserting ``1861(mm)(1), or 1861(oo)(1),''.
            (4) Conforming amendments.--(A) Section 1128A(b)(1) (42 
        U.S.C. 1320a-7a(b)(1)) is amended--
                    (i) by striking ``or a rural primary care 
                hospital'' the first place it appears and inserting ``, 
                a rural primary care hospital, or a medical assistance 
                facility''; and
                    (ii) by striking ``or a rural primary care 
                hospital'' the second place it appears and inserting 
                ``, the rural primary care hospital, or the medical 
                assistance facility''.
            (B) Section 1128B(c) (42 U.S.C. 1320a-7b(c)) is amended by 
        inserting ``medical assistance facility,'' after ``rural 
        primary care hospital,''.
            (C) Section 1134 (42 U.S.C. 1320b-4) is amended by striking 
        ``or rural primary care hospitals'' each place it appears and 
        inserting ``, rural primary care hospitals, or medical 
        assistance facilities''.
            (D) Section 1138(a)(1) (42 U.S.C. 1320b-8(a)(1)) is 
        amended--
                    (i) in the matter preceding subparagraph (A), by 
                striking ``or rural primary care hospital'' and 
                inserting ``, rural primary care hospital, or medical 
                assistance facility'', and
                    (ii) in the matter preceding clause (i) of 
                subparagraph (A), by striking ``or rural primary care 
                hospital'' and inserting ``, rural primary care 
                hospital, or medical assistance facility''.
            (E) Section 1164(e) (42 U.S.C. 1320c-13(e)) is amended by 
        inserting ``medical assistance facilities,'' after ``rural 
        primary care hospitals,''.
            (F) Section 1816(c)(2)(C) (42 U.S.C. 1395h(c)(2)(C)) is 
        amended by inserting ``medical assistance facility,'' after 
        ``rural primary care hospital,''.
            (G) Section 1833 (42 U.S.C. 1395l) is amended--
                    (i) in subsection (h)(5)(A)(iii)--
                            (I) by striking ``or rural primary care 
                        hospital'' and inserting ``rural primary care 
                        hospital, or medical assistance facility''; and
                            (II) by striking ``to the hospital'' and 
                        inserting ``to the hospital or the facility'';
                    (ii) in subsection (i)(1)(A), by inserting 
                ``medical assistance facility,'' after ``rural primary 
                care hospital,'';
                    (iii) in subsection (i)(3)(A), by striking ``or 
                rural primary care hospital services'' and inserting 
                ``rural primary care hospital services, or medical 
                assistance facility services'';
                    (iv) in subsection (l)(5)(A), by inserting 
                ``medical assistance facility,'' after ``rural primary 
                care hospital,'' each place it appears; and
                    (v) in subsection (l)(5)(C), by striking ``or rural 
                primary care hospital'' each place it appears and 
                inserting ``, rural primary care hospital, or medical 
                assistance facility''.
            (H) Section 1835(c) (42 U.S.C. 1395n(c)) is amended by 
        adding at the end the following: ``A medical assistance 
        facility shall be considered a hospital for purposes of this 
        subsection.''.
            (I) Section 1842(b)(6)(A)(ii) (42 U.S.C. 
        1395u(b)(6)(A)(ii)) is amended by inserting ``medical 
        assistance facility,'' after ``rural primary care hospital,''.
            (J) Section 1861 (42 U.S.C. 1395x) is amended--
                    (i) in the last sentence of subsection (e), by 
                striking ``1861(mm)(1))'' and inserting ``1861(mm)(1)) 
                or a medical assistance facility (as defined in section 
                1861(oo)(1)).'',
                    (ii) in subsection (w)(1) by inserting ``medical 
                assistance facility,'' after ``rural primary care 
                hospital,'', and
                    (iii) in subsection (w)(2), by striking ``or rural 
                primary care hospital'' each place it appears and 
                inserting ``, rural primary care hospital, or medical 
                assistance facility''.
            (K) Section 1862(a)(14) (42 U.S.C. 1395y(a)(14)) is amended 
        by striking ``or rural primary care hospital'' each place it 
        appears and inserting ``, rural primary care hospital, or 
        medical assistance facility''.
            (L) Section 1866(a)(1) (42 U.S.C 1395cc(a)(1)) is amended--
                    (i) in subparagraph (F)(ii), by inserting ``medical 
                assistance facilities,'' after ``rural primary care 
                hospitals,'';
                    (ii) in subparagraph (H)--
                            (I) in the matter preceding clause (i), by 
                        inserting ``and in the case of medical 
                        assistance facilities which provide inpatient 
                        medical assistance facility services'' after 
                        ``rural primary care hospital services''; and
                            (II) in clauses (i) and (ii), by striking 
                        ``hospital'' each place it appears and 
                        inserting ``hospital or facility'';
                    (iii) in subparagraph (I)--
                            (I) in the matter preceding clause (i), by 
                        striking ``or rural primary care hospital'' and 
                        inserting ``, a rural primary care hospital, or 
                        a medical assistance facility''; and
                            (II) in clause (ii), by striking ``the 
                        hospital'' and inserting ``the hospital or the 
                        facility''; and
                    (iv) in subparagraph (N)--
                            (I) in the matter preceding clause (i), by 
                        striking ``and rural primary hospitals'' and 
                        inserting ``, rural primary care hospitals, and 
                        medical assistance facilities'';
                            (II) in clause (i), by striking ``or rural 
                        primary care hospital,'' and inserting ``, 
                        rural primary care hospital, or medical 
                        assistance facility,''; and
                            (III) in clause (ii), by striking 
                        ``hospital'' and inserting ``hospital or 
                        facility''.
            (M) Section 1866(a)(3) (42 U.S.C 1395cc(a)(3)) is amended--
                    (i) by striking ``rural primary care hospital,'' 
                each place it appears in subparagraphs (A) and (B) and 
                inserting ``rural primary care hospital, medical 
                assistance facility,'', and
                    (ii) in subparagraph (C)(ii)(II), by striking 
                ``rural primary care hospitals,'' each place it appears 
                and inserting ``rural primary care hospitals, medical 
                assistance facilities''.
            (N) Section 1867(e)(5) (42 U.S.C. 1395dd(e)(5)) is amended 
        by striking ``1861(mm)(1))'' and inserting ``1861(mm)(1)) or a 
        medical assistance facility (as defined in section 
        1861(oo)(1)).''.
    (c) Part B Amendments Relating to Rural Primary Care Hospitals and 
Medical Assistance Facilities.--
            (1) Coverage.--(A) Section 1861(oo) (42 U.S.C. 1395x(oo)) 
        as added by subsection (b)(1), is amended by adding at the end 
        the following new paragraph:
    ``(3) The term `outpatient medical assistance facility services' 
means medical and other health services furnished by a medical 
assistance facility on an outpatient basis.''.
            (B) Section 1832(a)(2) (42 U.S.C. 1395k(a)(2)) is amended--
                    (i) in subparagraph (I), by striking ``and'' at the 
                end;
                    (ii) in subparagraph (J), by striking the period at 
                the end and inserting ``; and''; and
                    (iii) by adding at the end the following new 
                subparagraph:
                    ``(K) outpatient medical assistance facility 
                services (as defined in section 1861(oo)(3)).''.
            (2) Payment.--(A) Section 1833(a) (42 U.S.C. 1395l(a)) is 
        amended--
                    (i) in paragraph (2), in the matter preceding 
                subparagraph (A), by striking ``and (I)'' and inserting 
                ``(I), and (K)'';
                    (ii) in paragraph (6), by striking ``and'' at the 
                end;
                    (iii) in paragraph (7), by striking the period at 
                the end and inserting ``; and''; and
                    (iv) by adding at the end the following new 
                paragraph:
            ``(8) in the case of outpatient medical assistance facility 
        services, the amounts described in section 1834(g).''.
            (B) Section 1834(g) (42 U.S.C. 1395m(g)) is amended--
                    (i) in the subsection heading by inserting ``and 
                Outpatient Medical Assistance Facility Services'' after 
                ``Services'';
                    (ii) in paragraph (1), by striking ``provided 
                during a year before 1993 in a rural primary care 
                hospital under this part shall be determined by one of 
                the following methods as elected by the rural primary 
                care hospital'' and inserting ``in a rural primary care 
                hospital or medical assistance facility under this part 
                shall be determined by one of the following methods as 
                elected by the rural primary care hospital or medical 
                assistance facility'';
                    (iii) in paragraph (1)(A)(ii), by striking 
                ``outpatient rural primary care hospital services'' 
                each place it appears and inserting ``outpatient rural 
                primary care hospital services or outpatient medical 
                assistance facility services''; and
                    (iv) in paragraph (1)(B), by striking ``hospital'' 
                and inserting ``hospital or facility''.
    (d) Payment Continued to Designated EACHs.--
            (1) Termination of each designation.--Section 1820(i)(1)(A) 
        (42 U.S.C. 1395l(4)(i)(1)(A)) is amended by inserting at the 
        end the following new flush sentence:
        ``The Secretary shall not designate any hospital as an 
        essential access community hospital on or after July 1, 
        1994.''.
            (2) Permitting payment to prior designated eachs.--Section 
        1886(d)(5)(D) (42 U.S.C. 1395ww(d)(5)(D)) is amended--
                    (A) in clause (iii)(III), by inserting ``as such 
                section was in effect as of July 1, 1994'' before the 
                period at the end; and
                    (B) in clause (v), by inserting ``as such section 
                was in effect as of July 1, 1994'' after 
                ``1820(i)(1).''
            (3) Effective date.--The amendments made by this subsection 
        shall take effect on July 1, 1994.
    (e) Technical Amendment Relating to Part A Deductible, Coinsurance 
and Spell of Illness.--(1) Section 1812(a)(1) (42 U.S.C. 1395d(a)(1)), 
as amended by subsection (b)(2)(A), is amended--
            (A) by striking ``inpatient medical assistance facility 
        services'' and inserting ``inpatient medical assistance 
        facility services, inpatient rural primary care hospital 
        services, or inpatient medical assistance facility services''; 
        and
            (B) by striking ``and inpatient rural primary care hospital 
        services''.
    (2) Sections 1813(a) and 1813(b)(3)(A) (42 U.S.C. 1395e(a), 
1395e(b)(3)(A)) are each amended by striking ``inpatient hospital 
services'' each place it appears and inserting ``inpatient hospital 
services, inpatient rural primary care hospital services, or inpatient 
medical assistance facility services,''.
    (3) Section 1813(b)(3)(B) (42 U.S.C. 1395e(b)(3)(B)) is amended by 
striking ``inpatient hospital services'' and inserting ``inpatient 
hospital services, inpatient rural primary care hospital services, 
inpatient medical assistance facility services,''.
    (4) Section 1861(a) (42 U.S.C. 1395x(a)) is amended--
            (A) in paragraph (1), by striking ``inpatient hospital 
        services'' and inserting ``inpatient hospital services, 
        inpatient rural primary care hospital services, inpatient 
        medical assistance facility services,''; and
            (B) in paragraph (2), by striking ``hospital'' and 
        inserting ``hospital, rural primary care hospital, or medical 
        assistance facility''.
    (f) Repeal of Development of PPS System For Inpatient Rural Primary 
Care Hospital Services.--
            (1) In general.--Section 1814(l) (42 U.S.C. 1395f(l)) is 
        amended by striking paragraph (2).
            (2) Conforming amendments.--Section 1814(l)(1) (42 U.S.C. 
        1395F(l)(1)) is amended--
                    (A) by striking ``(l)(1)'' and inserting ``(l)'';
                    (B) by redesignating subparagraphs (A) and (B) as 
                paragraphs (1) and (2), respectively;
                    (C) in paragraph (2), as redesignated, by striking 
                ``paragraph'' and inserting ``subsection''; and
                    (D) in the last sentence, by striking ``paragraph'' 
                and inserting ``subsection''.
    (g) Repeal of Development and Implementation of All Inclusive PPS 
System for Outpatient Rural Primary Care Services.--
            (1) In general.--Section 1834(g) (42 U.S.C. 1395m(g)), as 
        amended by subsection (c)(2)(B), is amended by striking 
        paragraph (2).
            (2) Conforming amendments.--Section 1834(g)(1) (42 U.S.C. 
        1395m(g)(1)) is amended--
                    (A) by striking ``(1) In general.--''
                    (B) by redesignating subparagraph (A) and clauses 
                (i) and (ii) of such subparagraph as paragraph (1) and 
                subparagraphs (A) and (B) of such paragraph, 
                respectively;
                    (C) by redesignating subparagraph (B) as paragraph 
                (2);
                    (D) in paragraph (1)(A), as redesignated, by 
                striking ``subparagraph (B)''; and
                    (E) in paragraph (1)(B), as so redesignated, by 
                striking ``subparagraph'' and inserting ``paragraph''.
    (h) Effective Date.--Except as otherwise provided, the amendments 
made by this section shall apply to services furnished on or after 
October 1, 1994.

SEC. 621. TERMINATION OF INDIRECT MEDICAL EDUCATION PAYMENTS.

    (a) In General.--Section 1886(d)(5)(B) (42 U.S.C. 1395ww(d)(5)(B)) 
is amended in the matter preceding clause (i) by striking ``The 
Secretary'' and inserting ``For discharges occurring before January 1, 
1996, the Secretary''.
    (b) Adjustment to Standardized Amounts.--Section 1886(d)(2)(C)(i) 
(42 U.S.C. 1395ww(d)(2)(C)(i)) is amended by striking ``excluding'' and 
inserting ``for discharges occurring before January 1, 1996, 
excluding''.

SEC. 622. SUBACUTE CARE STUDY.

    (a) Study.--The Secretary of Health and Human Services (hereafter 
in this section referred to as the ``Secretary'') shall--
            (1) define the level and type of care that should 
        constitute subacute care;
            (2) determine the appropriateness of furnishing subacute 
        care in different settings by evaluating the quality of care 
        and patient outcomes;
            (3) determine the cost and effectiveness of providing 
        subacute care under the medicare program under title XVIII of 
        such Act to individuals who are eligible for benefits under 
        part A of such title;
            (4) determine the extent to which hospital DRG prospective 
        payment rates under section 1886(d) of such Act (42 U.S.C. 
        1395ww(d)) are appropriate for the less restrictive 
        institutional settings that provide subacute care; and
            (5) study the relationships between institutions and their 
        payment methodologies in order to develop ways in which to 
        maximize the continuity of care for each patient episode in 
        which subacute care is furnished.
    (b) Report.--Not later than October 1, 1996, the Secretary shall 
submit to the Congress a report on the matters studied under subsection 
(a).

                PART III--PROVISIONS RELATING TO PART B

SEC. 631. UPDATES FOR PHYSICIANS' SERVICES.

    Section 1848(d)(1) (42 U.S.C. 1395w-4(d)(1)) is amended--
            (1) in subparagraph (A), by inserting after ``subparagraph 
        (B)'' the following: ``and, in the case of 1995, specified in 
        subparagraph (C)'';
            (2) by redesignating subparagraph (C) as subparagraph (D); 
        and
            (3) by inserting after subparagraph (B) the following new 
        subparagraph:
                    ``(C) Special provision for 1995.--For purposes of 
                subparagraph (A), the conversion factor specified in 
                this subparagraph for 1995 is--
                            ``(i) in the case of physicians' services 
                        included in the category of primary care 
                        services (as defined for purposes of subsection 
                        (j)(1)), the conversion factor established 
                        under this subsection for 1994 reduced by 1 
                        percent and adjusted by the update established 
                        under paragraph (3) for 1995; and
                            ``(ii) in the case of any other physicians' 
                        services, the conversion factor established 
                        under this subsection for 1994 reduced by 4.0 
                        percent and adjusted by the update established 
                        under paragraph (3) for 1995.''.

SEC. 632. SUBSTITUTION OF REAL GDP TO ADJUST FOR VOLUME AND INTENSITY; 
              REPEAL OF RESTRICTION ON MAXIMUM REDUCTION PERMITTED IN 
              DEFAULT UPDATE.

    (a) Use of Real GDP To Adjust for Volume and Intensity.--Section 
1848(f)(2)(A)(iii) (42 U.S.C. 1395w-4(f)(2)(A)(iii)) is amended to read 
as follows:
                            ``(iii) 1 plus the average per capita 
                        growth in the real gross domestic product 
                        (divided by 100) for the 5-fiscal-year period 
                        ending with the previous fiscal year (increased 
                        by 1.5 percentage points for the category of 
                        services consisting of primary care services), 
                        and''.
    (b) Repeal of Restriction on Maximum Reduction.--Section 
1848(d)(3)(B)(ii) (42 U.S.C. 1395w-4(d)(3)(B)(ii)) is amended--
            (1) in the heading, by inserting ``in certain years'' after 
        ``adjustment'';
            (2) in the matter preceding subclause (I), by striking 
        ``for a year'';
            (3) in subclause (I), by adding ``and'' at the end;
            (4) in subclause (II), by striking ``, and'' and inserting 
        a period; and
            (5) by striking subclause (III).
    (c) Repeal of Performance Standard Factor.--
            (1) In general.--Section 1848(f)(2) is amended by striking 
        subparagraph (B) and redesignating subparagraph (C) as 
        subparagraph (B).
            (2) Conforming amendment.--Section 1848(f)(2)(A) is amended 
        in the matter following clause (iv) by striking ``1, multiplied 
        by 100'' and all that follows through ``subparagraph (B))'' and 
        inserting ``1 and multiplied by 100''.
    (d) Effective Date.--
            (1) Volume performance standards.--The amendments made by 
        subsections (a) and (c) shall apply with respect to volume 
        performance standards established beginning with fiscal year 
        1995.
            (2) Repeal of restriction on maximum reduction.--The 
        amendments made by subsection (b) shall apply to services 
        furnished on or after January 1, 1997.

SEC. 633. PAYMENT FOR PHYSICIANS' SERVICES RELATING TO INPATIENT STAYS 
              IN CERTAIN HOSPITALS.

    (a) In General.--
            (1) Limitations described.--Part B of title XVIII (42 
        U.S.C. 1831 et seq.) is amended by inserting after section 1848 
        the following new section:

``limitations on payment for physicians' services relating to inpatient 
                       stays in certain hospitals

    ``Sec. 1849. (a) Definitions.--In this section, the following 
definitions apply:
            ``(1) Hospital.--The term `hospital' means a subsection (d) 
        hospital as defined in section 1886(d)(1)(B).
            ``(2) Medical staff.--An individual furnishing a 
        physician's service is considered to be on the medical staff of 
        a hospital--
                    ``(A) if (in accordance with requirements for 
                hospitals established by the Joint Commission on 
                Accreditation of Health Organizations)--
                            ``(i) the individual is subject to bylaws, 
                        rules, and regulations established by the 
                        hospital to provide a framework for the self-
                        governance of medical staff activities;
                            ``(ii) subject to such bylaws, rules, and 
                        regulations, the individual has clinical 
                        privileges granted by the hospital's governing 
                        body; and
                            ``(iii) under such clinical privileges, the 
                        individual may provide physicians' services 
                        independently within the scope of the 
                        individual's clinical privileges, or
                    ``(B) if such physician provides at least one 
                service to a medicare beneficiary in such hospital.
            ``(3) Rural area; urban area.--The terms `rural area' and 
        `urban area' have the meaning given such terms under section 
        1886(d)(2)(D).
            ``(4) Teaching hospital.--The term `teaching hospital' 
        means a hospital which has a teaching program approved as 
        specified in section 1861(b)(6).
    ``(b) Services Subject to Reduction.--
            ``(1) Determination of hospital-specific per admission 
        relative value.--Not later than October 1 of each year 
        (beginning with 1997), the Secretary shall determine for each 
        hospital--
                    ``(A) the hospital-specific per admission relative 
                value under subsection (c)(2) for the following year; 
                and
                    ``(B) whether such hospital-specific relative value 
                is projected to exceed the allowable average per 
                admission relative value applicable to the hospital for 
                the following year under subsection (c)(1).
            ``(2) Reduction for services at hospitals exceeding 
        allowable average per admission relative value.--If the 
        Secretary determines (under paragraph (1)) that a medical 
        staff's hospital-specific per admission relative value for a 
        year (beginning with 1998) is projected to exceed the allowable 
        average per admission relative value applicable to the medical 
        staff for the year, the Secretary shall reduce (in accordance 
        with subsection (d)) the amount of payment otherwise determined 
        under this part for each physician's service furnished during 
        the year to an inpatient of the hospital by an individual who 
        is a member of the hospital's medical staff.
            ``(3) Timing of determination; notice to hospitals and 
        carriers.--Not later than October 1 of each year (beginning 
        with 1997), the Secretary shall notify the medical executive 
        committee of each hospital (as set forth in the Standards of 
        the Joint Commission on the Accreditation of Health 
        Organizations) of the determinations made with respect to the 
        medical staff of such hospital under paragraph (1).
    ``(c) Determination of Allowable Average per Admission Relative 
Value and Hospital-Specific per Admission Relative Values.--
            ``(1) Allowable average per admission relative value.--
                    ``(A) Urban hospitals.--In the case of a hospital 
                located in an urban area, the allowable average per 
                admission relative value established under this 
                subsection for a year is equal to 125 percent (or 120 
                percent for years after 1999) of the median of 1996 
                hospital-specific per admission relative values 
                determined under paragraph (2) for all hospital medical 
                staffs.
                    ``(B) Rural hospitals.--In the case of a hospital 
                located in a rural area, the allowable average per 
                admission relative value established under this 
                subsection for 1998 and each succeeding year, is equal 
                to 140 percent of the median of the 1996 hospital-
                specific per admission relative values determined under 
                paragraph (2) for all hospital medical staffs.
            ``(2) Hospital-specific per admission relative value.--
                    ``(A) In general.--The hospital-specific per 
                admission relative value projected for a hospital 
                (other than a teaching hospital) for a calendar year 
                shall be equal to the average per admission relative 
                value (as determined under section 1848(c)(2)) for 
                physicians' services furnished to inpatients of the 
                hospital by the hospital's medical staff (excluding 
                interns and residents) during the second year preceding 
                such calendar year, adjusted for variations in case-mix 
                and disproportionate share status among hospitals (as 
                determined by the Secretary under subparagraph (C)).
                    ``(B) Special rule for teaching hospitals.--The 
                hospital-specific per admission relative value 
                projected for a teaching hospital in a calendar year 
                shall be equal to the sum of--
                            ``(i) the average per admission relative 
                        value (as determined under section 1848(c)(2)) 
                        for physicians' services furnished to 
                        inpatients of the hospital by the hospital's 
                        medical staff (excluding interns and residents) 
                        during the second year preceding such calendar 
                        year adjusted for variations in case-mix, 
                        disproportionate share status, and teaching 
                        status among hospitals (as determined by the 
                        Secretary under subparagraph (C)); and
                            ``(ii) the equivalent per admission 
                        relative value (as determined under section 
                        1848(c)(2)) for physicians' services furnished 
                        to inpatients of the hospital by interns and 
                        residents of the hospital during the second 
                        calendar year preceding such calendar year, 
                        adjusted for variations in case-mix, 
                        disproportionate share status, and teaching 
                        status among hospitals (as determined by the 
                        Secretary under subparagraph (C)). The 
                        Secretary shall determine such equivalent 
                        relative value unit per admission for interns 
                        and residents based on the best available data 
                        for teaching hospitals and may make such 
                        adjustment in the aggregate.
                    ``(C) Adjustment for teaching and disproportionate 
                share hospitals.--The Secretary shall adjust the 
                allowable per admission relative values otherwise 
                determined under this paragraph to take into account 
                the needs of teaching hospitals and hospitals receiving 
                additional payments under subparagraphs (F) and (G) of 
                section 1886(d)(5). The adjustment for teaching status 
                or disproportionate share shall not be less than zero.
    ``(d) Amount of Reduction.--The amount of payment otherwise made 
under this part for a physician's service that is subject to a 
reduction under subsection (b) during a year shall be reduced by 15 
percent, in the case of a service furnished by a member of the medical 
staff of the hospital for which the Secretary determines under 
subsection (b)(1) that the hospital medical staff's projected relative 
value per admission exceeds the allowable average per admission 
relative value.
    ``(e) Reconciliation of Reductions Based on Hospital-Specific 
Relative Value per Admission With Actual Relative Values.--
            ``(1) Determination of actual average per admission 
        relative value.--Not later than October 1 of each year 
        (beginning with 1999), the Secretary shall determine the actual 
        average per admission relative value (as determined pursuant to 
        section 1848(c)(2)) for the physicians' services furnished by 
        members of a hospital's medical staff to inpatients of the 
        hospital during the previous year, on the basis of claims for 
        payment for such services that are submitted to the Secretary 
        not later than 90 days after the last day of such previous 
        year. The actual average per admission relative value shall be 
        adjusted by the appropriate case-mix, disproportionate share 
        factor, and teaching factor for the hospital medical staff (as 
        determined by the Secretary under subsection (c)(2)(C)).
            ``(2) Reconciliation with reductions taken.--
                    ``(A) Reimbursement.--In the case of a hospital for 
                which the payment amounts for physicians' services 
                furnished by members of the hospital's medical staff to 
                inpatients of the hospital were reduced under this 
                section for a year--
                            ``(i) if the actual average per admission 
                        relative value for such hospital's medical 
                        staff during the year (as determined by the 
                        Secretary under paragraph (1)) did not exceed 
                        the allowable average per admission relative 
                        value applicable to the hospital's medical 
                        staff under subsection (c)(1) for the year, the 
                        Secretary shall reimburse the fiduciary agent 
                        for the medical staff by the amount by which 
                        payments for such services were reduced for the 
                        year under subsection (d), including interest 
                        at an appropriate rate determined by the 
                        Secretary; and
                            ``(ii) if the actual average per admission 
                        relative value for such hospital's medical 
                        staff during the year (as determined by the 
                        Secretary under paragraph (1)) exceeded the 
                        allowable average per admission relative value 
                        applicable to the hospital's medical staff 
                        under subsection (c)(1) for the year, the 
                        Secretary shall reimburse the fiduciary agent 
                        for the medical staff, as a percent of the 
                        total amount of payment otherwise determined 
                        under this part for physicians' services 
                        furnished during the year to inpatients of the 
                        hospital by the hospital's medical staff (prior 
                        to the reduction under subsection (d)), the 
                        difference between 15 percentage points and the 
                        actual number of percentage points that the 
                        medical staff exceeded the allowable average 
                        per admission relative value, including 
                        interest at any appropriate rate determined by 
                        the Secretary.
                    ``(B) No reimbursement.--The Secretary shall not 
                pay the fiduciary agent for the medical staff of a 
                hospital any amounts by which payments for physicians' 
                services provided by the medical staff were reduced for 
                a year under this section if the actual average per 
                admission relative value for such hospital's medical 
                staff during the year (as determined by the Secretary 
                under paragraph (1)) exceeded the allowable average per 
                admission relative value applicable to the hospital's 
                medical staff under subsection (c)(1) for the year by 
                15 percentage points or more.
            ``(3) Medical executive committee of a hospital.--Each 
        medical executive committee of a hospital whose medical staff 
        is projected to exceed the allowable relative value per 
        admission for a year, shall have 1 year from the date of 
        notification that such medical staff is projected to exceed the 
        allowable relative value per admission to designate a fiduciary 
        agent for the medical staff to receive and disburse any 
        appropriate amounts withheld made by the carrier.
            ``(4) Alternative reimbursement to members of staff.--At 
        the request of a fiduciary agent for the medical staff, if the 
        fiduciary agent for the medical staff is owed the reimbursement 
        described in paragraph (2)(A)(ii) for excess reductions in 
        payments during a year, the Secretary shall make such 
        reimbursement to the members of the hospital's medical staff, 
        on a pro-rata basis according to the proportion of physicians' 
        services furnished to inpatients of the hospital during the 
        year that were furnished by each member of the medical staff.
    ``(f) Claims To Be Submitted Not Later Than 90 Days After End of 
Year.--Notwithstanding any other provision of law, no payment may be 
made under this part for any physician's service furnished by a member 
of the medical staff of a hospital to an inpatient of the hospital 
during a year unless the hospital submits a claim to the Secretary for 
the payment for such service not later than 90 days after the last day 
of the year.''.
            (2) Conforming amendments.--(A) Section 1833(a)(1)(N) (42 
        U.S.C. 1395l(a)(1)(N)) is amended by inserting ``(subject to 
        reduction under section 1849)'' after ``1848(a)(1)''.
            (B) Section 1848(a)(1)(B) (42 U.S.C. 1395w-4(a)(1)(B)) is 
        amended by striking ``this subsection,'' and inserting ``this 
        subsection and section 1849,''.
    (b) Requiring Physicians To Identify Hospital at Which Service 
Furnished.--Section 1848(g)(4)(A)(i) (42 U.S.C. 1395w-4(g)(4)(A)(i)) is 
amended by striking ``beneficiary,'' and inserting ``beneficiary (and, 
in the case of a service furnished to an inpatient of a hospital, 
report the hospital identification number on such claim form),''.
    (c) Effective Date.--The amendments made by this section shall 
apply to services furnished on or after January 1, 1998.

SEC. 634. CHANGES IN UNDERSERVED AREA BONUS PAYMENTS.

    (a) In General.--Section 1833(m) (42 U.S.C. 1395l(m)) is amended--
            (1) by inserting ``(1)'' after ``(m)'',
            (2) by inserting ``described in paragraph (2)'' after 
        ``physicians' services'',
            (3) by striking ``10 percent'' and inserting ``the 
        applicable percent'',
            (4) by striking ``service'' the last place it appears and 
        inserting ``services'', and
            (5) by adding at the end the following new paragraph:
    ``(2)(A) The applicable percent referred to in paragraph (1) is 20 
percent in the case of primary care services, as defined in section 
1842(i)(4), and 10 percent for services other than primary care 
services furnished in health professional shortage areas located in 
rural areas as defined in section 1886(d)(2)(D).
    ``(B) The Secretary shall reduce payments for all services (other 
than primary care services) for which payment may be made under this 
section by such percentage as the Secretary determines necessary so 
that, beginning on the date of the enactment of the Health Security 
Act, the amendments made by section 634(a) of such Act would not result 
in expenditures under this section that exceed the amount of such 
expenditures that would have been made if such amendment had not been 
made.''.
    (b) Effective Date.--The amendments made by subsection (a) are 
effective for services furnished on or after January 1, 1995.

SEC. 635. DEVELOPMENT AND IMPLEMENTATION OF RESOURCE-BASED METHODOLOGY 
              FOR PRACTICE EXPENSES.

    (a) Development.--
            (1) In general.--The Secretary of Health and Human Services 
        shall develop a methodology for implementing in 1997 a 
        resource-based system for determining practice expense relative 
        value units for each physician's service. The methodology 
        utilized shall recognize the staff, equipment, and supplies 
        used in the provision of various medical and surgical services 
        in various settings.
            (2) Report.--The Secretary shall transmit a report by 
        January 1, 1996, on the methodology developed under paragraph 
        (1) to the Committee on Ways and Means and the Committee on 
        Energy and Commerce of the House of Representatives and the 
        Committee on Finance of the Senate. The report shall include a 
        presentation of data utilized in developing the methodology and 
        an explanation of the methodology.
    (b) Implementation.--
            (1) In general.--Section 1848(c)(2)(C)(ii) (42 U.S.C. 
        1395w-4(c)(2)(C)(ii)) is amended--
                    (A) by inserting ``for the service for years before 
                1997'' before ``equal to'',
                    (B) by striking the period at the end of subclause 
                (II) and inserting a comma, and
                    (C) by adding after and below subclause (II) the 
                following:
                        ``and for years beginning with 1997 based on 
                        the relative practice expense resources 
                        involved in furnishing the service.''.
            (2) Conforming amendment.--Section 1848(c)(3)(C)(ii) (42 
        U.S.C. 1395w-4(c)(3)(C)(ii)) is amended by striking ``The 
        practice'' and inserting ``For years before 1997, the 
        practice''.
            (3) Application of certain provisions.--In implementing the 
        amendment made by paragraph (1)(C), the provisions of clauses 
        (ii)(II) and (iii) of section 1848(c)(2)(B) of the Social 
        Security Act shall apply in the same manner as they apply to 
        adjustments under clause (ii)(I) of such section.

SEC. 636. DEMONSTRATION PROJECTS FOR MEDICARE STATE-BASED PERFORMANCE 
              STANDARD RATE OF INCREASE.

    Section 1848(f) (42 U.S.C. 1395w-4(f)) is amended by adding at the 
end the following new paragraph:
            ``(6) State-based performance standard rates of increase 
        demonstration projects.--The Secretary shall establish 
        demonstration projects in not more than 3 States under which a 
        State elects State-based performance standard rates of increase 
        to substitute for the national performance standard rates of 
        increase established for the year under paragraph (2). The 
        Secretary shall develop criteria for the establishment of such 
        demonstration projects which shall include the requirement of 
        budget-neutrality for payments made under this part with 
        respect to physicians' services furnished in a State 
        participating in the demonstration project.''.

SEC. 637. ELIMINATION OF FORMULA-DRIVEN OVERPAYMENTS FOR CERTAIN 
              OUTPATIENT HOSPITAL SERVICES.

    (a) Ambulatory Surgical Center Procedures.--Section 
1833(i)(3)(B)(i)(II) (42 U.S.C. 1395l(i)(3)(B)(i)(II)) is amended--
            (1) by striking ``of 80 percent''; and
            (2) by striking the period at the end and inserting the 
        following: ``, less the amount a provider may charge as 
        described in clause (ii) of section 1866(a)(2)(A).''.
    (b) Radiology Services and Diagnostic Procedures.--Section 
1833(n)(1)(B)(i)(II) (42 U.S.C. 1395l(n)(1)(B)(i)(II)) is amended--
            (1) by striking ``of 80 percent''; and
            (2) by striking the period at the end and inserting the 
        following: ``, less the amount a provider may charge as 
        described in clause (ii) of section 1866(a)(2)(A).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to services furnished during portions of cost reporting periods 
occurring on or after January 1, 1995.

SEC. 638. EYE OR EYE AND EAR HOSPITALS.

    Section 1833(i)(4)(A) (42 U.S.C. 1395l(i)(4)(A)) is amended in the 
matter following clause (iii) by striking ``January 1, 1995'' and 
inserting ``September 30, 1997''.

SEC. 639. 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. 640. APPLICATION OF COMPETITIVE ACQUISITION PROCESS FOR PART B 
              ITEMS AND SERVICES.

    (a) General Rule.--Part B of title XVIII is amended by inserting 
after section 1846 the following:

            ``competition acquisition for items and services

    ``Sec. 1847. (a) Establishment of Bidding Areas.--
            ``(1) In general.--The Secretary shall establish 
        competitive acquisition areas for the purpose of awarding a 
        contract or contracts for the furnishing under this part of the 
        items and services described in subsection (c) on or after 
        January 1, 1995. The Secretary may establish different 
        competitive acquisition areas under this subsection for 
        different classes of items and services under this part.
            ``(2) Criteria for establishment.--The competitive 
        acquisition areas established under paragraph (1) shall--
                    ``(A) initially be, or be within, metropolitan 
                statistical areas; and
                    ``(B) be chosen based on the availability and 
                accessibility of suppliers and the probable savings to 
                be realized by the use of competitive bidding in the 
                furnishing of items and services in the area.
    ``(b) Awarding of Contracts in Areas.--
            ``(1) In general.--The Secretary shall conduct a 
        competition among individuals and entities supplying items and 
        services under this part for each competitive acquisition area 
        established under subsection (a) for each class of items and 
        services.
            ``(2) Conditions for awarding contract.--The Secretary may 
        not award a contract to any individual or entity under the 
        competition conducted pursuant to paragraph (1) to furnish an 
        item or service under this part unless the Secretary finds that 
        the individual or entity meets quality standards specified by 
        the Secretary for the furnishing of such item or service.
            ``(3) Contents of contract.--A contract entered into with 
        an individual or entity under the competition conducted 
        pursuant to paragraph (1) shall specify (for all of the items 
        and services within a class)--
                    ``(A) the quantity of items and services the entity 
                shall provide; and
                    ``(B) such other terms and conditions as the 
                Secretary may require.
    ``(c) Services Described.--The items and services to which the 
provisions of this section shall apply are as follows:
            ``(1) Magnetic resonance imaging tests and computerized 
        axial tomography scans, including a physician's interpretation 
        of the results of such tests and scans.
            ``(2) Oxygen and oxygen equipment.''.
    (b) Items and Services To Be Furnished Only Through Competitive 
Acquisition.--Section 1862(a) (42 U.S.C. 1395y(a)) is amended--
            (1) by striking ``or'' at the end of paragraph (15);
            (2) by striking the period at the end of paragraph (16) and 
        inserting ``; or''; and
            (3) by inserting after paragraph (16) the following new 
        paragraph:
            ``(17) where such expenses are for an item or service 
        furnished in a competitive acquisition area (as established by 
        the Secretary under section 1847(a)) by an individual or entity 
        other than the supplier with whom the Secretary has entered 
        into a contract under section 1847(b) for the furnishing of 
        such item or service in that area, unless the Secretary finds 
        that such expenses were incurred in a case of urgent need.''.
    (c) Reduction in Payment Amounts if Competitive Acquisition Fails 
To Achieve Minimum Reduction in Payments.--Notwithstanding any other 
provision of title XVIII of the Social Security Act, if the 
establishment of competitive acquisition areas under section 1847 of 
such Act (as added by subsection (a)) and the limitation of coverage 
for items and services under part B of such title to items and services 
furnished by providers with competitive acquisition contracts under 
such section does not result in a reduction of at least 10 percent in 
the projected payment amount that would have applied to the item or 
service under part B if the item or service had not been furnished 
through competitive acquisition under such section, the Secretary shall 
reduce the payment amount by such percentage as the Secretary 
determines necessary to result in such a reduction.
    (d) Effective Date.--The amendments made by this section shall 
apply to items and services furnished under part B of title XVIII of 
the Social Security Act on or after January 1, 1995.

SEC. 641. APPLICATION OF COMPETITIVE ACQUISITION PROCEDURES FOR 
              LABORATORY SERVICES.

    (a) In General.--Section 1847(c), as added by section 640, is 
amended by inserting after paragraph (2) the following new paragraph:
            ``(3) Clinical diagnostic laboratory tests.''.
    (b) Reduction in Fee Schedule Amounts if Competitive Acquisition 
Fails To Achieve Savings.--Section 1833(h) (42 U.S.C. 1395l(h)) is 
amended by adding at the end the following new paragraph:
    ``(7) Notwithstanding any other provision of this subsection, if 
the Secretary applies the authority provided under section 1847 to 
establish competitive acquisition areas for the furnishing of clinical 
diagnostic laboratory tests in a year and the application of such 
authority does not result in a reduction of at least 10 percent in the 
projected payment amount that would have applied to such tests under 
this section if the tests had not been furnished through competitive 
acquisition under section 1847, the Secretary shall reduce each payment 
amount otherwise determined under the fee schedules and negotiated 
rates established under this subsection by such percentage as the 
Secretary determines necessary to result in such a reduction.''.

SEC. 642. EXPANDED COVERAGE FOR PHYSICIAN ASSISTANTS AND NURSE 
              PRACTITIONERS.

    (a) Coverage in Outpatient Settings.--Section 1861(s)(2)(K) (42 
U.S.C. 1395x(s)(2)(K)) is amended--
            (1) in clause (i)--
                    (A) by striking ``or'' at the end of subclause 
                (II); and
                    (B) by inserting ``or (IV) in an outpatient setting 
                as defined by the Secretary'' following ``shortage 
                area,''; and
            (2) in clause (ii), by striking ``section 1919(a)'' and 
        inserting ``section 1919(a) or in an outpatient setting as 
        defined by the Secretary''.
    (b) Payment Based on Physician Fee Schedule.--
            (1) Section 1833(a)(1)(O) (42 U.S.C. 1395l(a)(1)(O)) is 
        amended--
                    (A) by striking ``section 1861(s)(2)(K)(iii) 
                (relating to nurse practitioner and clinical nurse 
                specialist services provided in a rural area)'' and 
                inserting ``section 1861(s)(2)(K)'';
                    (B) by striking ``for services furnished on or 
                after January 1, 1992,'' and inserting ``for services 
                described in section 1861(s)(2)(K)(iii) furnished on or 
                after January 1, 1992, and for services described in 
                clauses (i), (ii), and (iv) of section 1861(s)(2)(K) 
                furnished on or after January 1, 1997,''; and
                    (C) by striking ``subsection (r)(2)'' and inserting 
                ``subsection (r)(2) or subparagraph (A) or (B) of 
                section 1842(b)(12)''.
            (2) Section 1842(b)(12)(A) (42 U.S.C. 1395u(b)(12)(A)) is 
        amended--
                    (A) by striking ``and'' at the end of clause (i);
                    (B) in clause (ii) in the matter preceding 
                subclause (I), by striking ``the prevailing'' and 
                inserting ``for services furnished before January 1, 
                1997, the prevailing'';
                    (C) by striking the period at the end of clause 
                (ii)(II) and inserting ``; and''; and



                    (D) by inserting at the end the following clause:
                            ``(iii) in the case of services furnished 
                        on or after January 1, 1997, the fee schedule 
                        amount shall be equal to--
                                    ``(I) in the case of services 
                                performed as an assistant at surgery, 
                                65 percent of the amount that would 
                                otherwise be recognized if performed by 
                                a physician who is serving as an 
                                assistance at surgery,
                                    ``(II) in the case of services 
                                performed (other than as an assistant 
                                at surgery) in a hospital, 75 percent 
                                of the fee schedule amount specified 
                                under section 1848, and
                                    ``(III) in the case of other 
                                services, 85 percent of the fee 
                                schedule amount specified under section 
                                1848.
    (c) Rural Nurse Practitioners as Assistants at Surgery in Urban 
Areas.--Section 1861(s)(2)(K)(ii) (42 U.S.C. 1395x(s)(2)(K)(ii)), as 
amended by subsection (a)(2), is further amended by adding ``or 
services as an assistant at surgery furnished by a nurse practitioner 
whose primary practice location (as defined by the Secretary) is in a 
rural area (as defined in section 1886(d)(2)(D)) to an individual who 
resides in a rural area when the service is furnished to such 
individual in an urban area by such practitioner when such practitioner 
refers such individual to an urban area for the furnishing of 
services'' after ``as defined by the Secretary''.
    (d) Conforming Amendments.--
            (1) Section 1861(b)(4) (42 U.S.C. 1395x(b)(4)) is amended 
        by striking ``subsection (s)(2)(K)(i)'' and inserting 
        ``subsection (s)(2)(K)''.
            (2) Section 1862(a)(14) (42 U.S.C. 1395y(a)(14)), as 
        amended by section 620(b)(4)(K), is amended by striking 
        ``section 1861(s)(2)(K)(i)'' and inserting ``section 
        1861(s)(2)(K)''.
            (3) Section 1866(a)(1)(H) (42 U.S.C. 1395cc(a)(1)(H)), as 
        amended by section 620(b)(4)(L)(ii), is further amended by 
        striking ``section 1861(s)(2)(K)(i)'' and inserting ``section 
        1861(s)(2)(K)''.
    (e) Effective Date.--The amendments made by this section shall 
apply to services furnished on or after January 1, 1997.

SEC. 643. GENERAL PART B PREMIUM.

    Section 1839(e) (42 U.S.C. 1395r(e)) is amended--
            (1) in paragraph (1)(A), by striking ``and prior to January 
        1999''; and
            (2) in paragraph (2), by striking ``prior to January 
        1998''.

              PART IV--PROVISIONS RELATED TO PARTS A AND B

SEC. 651. MEDICARE SECONDARY PAYER CHANGES.

    (a) Extension of Data Match.--
            (1) Section 1862(b)(5)(C) (42 U.S.C. 1395y(b)(5)(C)) is 
        amended by striking clause (iii).
            (2) Section 6103(l)(12) of the Internal Revenue Code of 
        1986 is amended by striking subparagraph (F).
    (b) Repeal of Sunset on Application to Disabled Employees of 
Employers With More Than 100 Employees.--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 before October 1, 1998''.
    (c) Extension of Period for End Stage Renal Disease 
Beneficiaries.--Section 1862(b)(1)(C) (42 U.S.C. 1395y(b)(1)(C)) is 
amended in the second sentence by striking ``and on or before October 
1, 1998,''.

SEC. 652. MODIFICATION TO PHYSICIAN REFERRAL EXCEPTION.

    Section 1877(d) (42 U.S.C. 1395nn(d)) is amended by adding the 
following new paragraph:
            ``(4) Frontier providers.--In the case of a designated 
        health service furnished in an urban area (as defined in 
        section 1886(d)(2)(D)) by an entity if--
                    ``(A) the entity is located more than 100 miles 
                from other like entities;
                    ``(B) no less than 50 percent of the patient-users 
                in the entity's service area utilize the entity; or
                    ``(C) because of the area's local topography or 
                periods of prolonged severe weather conditions, other 
                entities providing like services are not readily 
                accessible for at least 30 days in 2 out of 3 years.''.

SEC. 653. EXPANSION OF CENTERS OF EXCELLENCE.

    (a) In General.--The Secretary of Health and Human Services shall 
use a competitive process to contract with centers of excellence for 
cataract surgery and coronary artery by-pass surgery. Payment under 
title XVIII of the Social Security Act will be made for services 
subject to such contracts on the basis of negotiated or all-inclusive 
rates as follows:
            (1) The center shall cover services provided in an urban 
        area (as defined in section 1886(d)(2)(D) of the Social 
        Security Act) for years beginning with fiscal year 1995.
            (2) The amount of payment made by the Secretary to the 
        center under title XVIII of the Social Security Act for 
        services covered under the contract shall be less than the 
        aggregate amount of the payments that the Secretary would have 
        made to the center for such services had the contract not been 
        in effect.
            (3) The Secretary shall make payments to the center on such 
        a basis for the following services furnished to individuals 
        entitled to benefits under such title:
                    (A) Facility, professional, and related services 
                relating to cataract surgery.
                    (B) Coronary artery bypass surgery and related 
                services.
    (b) Rebate of Portion of Savings.--In the case of any services 
provided under a contract conducted under subsection (a), the Secretary 
shall make a payment to each individual to whom such services are 
furnished (at such time and in such manner as the Secretary may 
provide) in an amount equal to 10 percent of the amount by which--
            (1) the amount of payment that would have been made by the 
        Secretary under title XVIII of the Social Security Act to the 
        center for such services if the services had not been provided 
        under the contract, exceeds
            (2) the amount of payment made by the Secretary under such 
        title to the center for such services.

SEC. 654. 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 9 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 ``1995 NAIC Model Regulation'').
            (2) Secretary standards.--If the NAIC does not make changes 
        in the 1991 NAIC Model Regulation (as so defined) within the 9-
        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 ``1995 
        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 1995 NAIC 
                        Model Regulation or the 1995 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 1995 
                        NAIC Model Regulation or the 1995 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, 1996. 
                For purposes of the previous sentence, in the case of a 
                State that has a 2-year legislative session, each year 
                of such session shall be deemed to be a separate 
                regular session of the State legislature.

SEC. 655. MEDIGAP.

    (a) 30-Day Open Enrollment Period.--Section 1882(s) (42 U.S.C. 
1395ss(s)) is amended--
            (1) in paragraph (3), by striking ``paragraphs (1) and 
        (2)'' and inserting ``paragraph (1), (2), or (3)'',
            (2) by redesignating paragraph (3) as paragraph (4), and
            (3) by inserting after paragraph (2) the following new 
        paragraph:
    ``(3) Each issuer of a medicare supplemental policy shall have an 
open enrollment period of at least 30 days duration every year (which 
shall be the period specified by the Secretary under section 
1876(e)(1)), during which the issuer may not deny or condition the 
issuance or effectiveness of a medicare supplemental policy, or 
discriminate in the pricing of the policy, because of age, health 
status, claims experience, receipt of health care, or medical 
condition. The policy may not provide any time period applicable to 
pre-existing conditions, waiting periods, elimination periods, and 
probationary periods (except as provided by paragraph (2)(B)).''.
    (b) Effective Dates.--
            (1) NAIC standards.--If, within 9 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 ``1995 NAIC Model Regulation'').
            (2) Secretary standards.--If the NAIC does not make changes 
        in the 1991 NAIC Model Regulation (as so defined) within the 9-
        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 ``1995 
        Federal Regulation'').

SEC. 656. REDUCTION IN ROUTINE COST LIMITS FOR HOME HEALTH SERVICES.

    (a) Reduction in Update To Maintain Freeze in 1996.--
            (1) In general.--Section 1861(v)(1)(L)(i) (42 U.S.C. 
        1395x(v)(1)(L)(i)) is amended--
                    (A) in subclause (II), by striking ``or'' at the 
                end;
                    (B) in subclause (III), by striking ``112 
                percent,'' and inserting ``and before July 1, 1996, 112 
                percent, or''; and
                    (C) by inserting after subclause (III) the 
                following new subclause:
            ``(IV) July 1, 1996, 100 percent (adjusted by such amount 
        as the Secretary determines to be necessary to preserve the 
        savings resulting from the enactment of section 13564(a)(1) of 
        the Omnibus Budget Reconciliation Act of 1993),''.
            (2) Adjustment to limits.--Section 1861(v)(1)(L)(ii) (42 
        U.S.C. 1395x(v)(1)(L)(ii)) is amended by adding at the end the 
        following new sentence: ``The effect of the amendments made by 
        656(a) of the Health Security Act shall not be considered by 
        the Secretary in making adjustments pursuant to this clause.''.
    (b) Basing Limits in Subsequent Years on Median of Costs.--
            (1) In general.--Section 1861(v)(1)(L)(i) (42 U.S.C. 
        1395x(v)(1)(L)(i)), as amended by subsection (a), is amended in 
        the matter following subclause (IV) by striking ``the mean'' 
        and inserting ``the median''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to cost reporting periods beginning on or after 
        July 1, 1997.

SEC. 657. TERMINATION OF GRADUATE MEDICAL EDUCATION PAYMENTS.

    (a) In General.--Section 1886(h) (42 U.S.C. 1395ww(h)) is amended 
by adding at the end the following new paragraph:
            ``(6) Termination of payments attributable to costs of 
        training physicians.--Notwithstanding any other provision of 
        this section or section 1861(v), no payment may be made under 
        this title for direct graduate medical education costs 
        attributable to an approved medical residency training program 
        for any cost reporting period (or portion thereof) beginning on 
        or after January 1, 1996.''.
    (b) Prohibition Against Recognition of Costs.--Section 1861(v)(1) 
(42 U.S.C. 1395x(v)(1)), as amended by section 612(b), is amended by 
adding at the end the following new subparagraph:
    ``(U) Such regulations shall not include any provision for specific 
recognition of the costs of graduate medical education for hospitals 
for any cost reporting period (or portion thereof) beginning on or 
after January 1, 1996. Nothing in the previous sentence shall be 
construed to affect in any way payments to hospitals for the costs of 
any approved educational activities that are not described in such 
sentence.''.

SEC. 658. EXTENSION OF SOCIAL HEALTH MAINTENANCE ORGANIZATION 
              DEMONSTRATIONS.

    Section 4018(b) of the Omnibus Budget Reconciliation Act of 1987, 
as amended by section 4207(b)(4)(B) of the Omnibus Budget 
Reconciliation Act of 1990 and section 13567(a) of the Omnibus Budget 
Reconciliation Act of 1993, is amended--
            (1) in paragraph (1), by striking ``December 31, 1997'' and 
        inserting ``December 31, 1999''; and
            (2) in paragraph (4), by striking ``March 31, 1998'' and 
        inserting ``March 31, 2000''.

SEC. 659. STUDY ON MEDICARE SPENDING.

    The Prospective Payment Assessment Commission (established under 
section 1886(e)(2) of the Social Security Act (42 U.S.C. 1395ww(e)(2))) 
and the Physician Payment Review Commission (established under section 
1845 of such Act (42 U.S.C. 1395w-1)) shall each conduct a study of the 
rate of increase in spending under title XVIII of such Act and make 
recommendations to Congress on strategies to slow the rate of growth. 
Such studies shall include--
            (1) an examination of ways to slow both the national rate 
        of growth and the rate of growth in community-rating areas; and
            (2) an assessment of whether setting local expenditure 
        targets or local volume performance standards would be 
        successful as part of this effort.

SEC. 660. STREAMLINED PROCESSING SYSTEMS.

    (a) In General.--The Secretary of Health and Human Services may 
develop a process to ensure that claims for services under title XVIII 
of the such Act are submitted first by the medicare program under such 
title, medicare supplemental policies (described in section 1886(g)(1) 
of such Act (42 U.S.C. 1395ww(g)(1)), and other policies that provide 
supplemental benefits under such title before providers can submit 
claims to medicare beneficiaries.
    (b) Superseding Conflicting Requirements.--The provisions of 
sections 1816 and 1842 of the Social Security Act (42 U.S.C. 1395h and 
1395u) (including provider nominating provisions in such section 1816 
of such Act) are superseded to the extent required to carry out this 
section.

                     Subtitle B--Medical Education

SEC. 665. MEDICAL EDUCATION.

    Title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) is 
amended by adding at the end the following new part:

                      ``PART D--MEDICAL EDUCATION

      ``Subpart I--Approved Physician and Dental Training Programs

``SEC. 1893. APPROVED PHYSICIAN AND DENTAL TRAINING PROGRAMS.

    ``(a) Federal Payments to Qualified Applicants.--
            ``(1) In general.--In the case of a qualified applicant 
        that in accordance with paragraph (2) submits to the Secretary 
        an application for calendar year 1996 or any subsequent 
        calendar year, the Secretary shall make payments for such year 
        to the applicant for the purpose specified in paragraph (3). 
        The Secretary shall make the payments in an amount determined 
        in accordance with subsection (b) and may administer the 
        payments as a contract, grant, or cooperative agreement.
            ``(2) Application for payments.--For purposes of paragraph 
        (1), an application for payments under such paragraph for a 
        calendar year is in accordance with this paragraph if--
                    ``(A) the qualified applicant submits the 
                application not later than the date specified by the 
                Secretary;
                    ``(B) the application provides such assurances as 
                the Secretary may require that the qualified applicant 
                will expend payments only for the purpose described in 
                paragraph (3); and
                    ``(C) the application is in such form, is made in 
                such manner, and contains such agreements, assurances, 
                and information as the Secretary determines to be 
                necessary to carry out this section.
            ``(3) Payments for operation of approved medical training 
        programs.--The purpose of payments under paragraph (1) is to 
        assist each approved medical training program operated by the 
        qualified applicant with the costs of operation of such 
        programs.
    ``(b) Availability of Trust Fund for Payments; Annual Amount of 
Payments.--
            ``(1) Availability of funds from trust fund.--Except as 
        provided in section 1896, the following amounts shall be 
        available for a calendar year for making payments under 
        subsection (a) from the Graduate Medical and Nursing Education 
        Trust Fund established under section 9552(a)(2)(A) of the 
        Internal Revenue Code of 1986:
                    ``(A) In the case of calendar year 1996, 
                $3,200,000,000.
                    ``(B) In the case of calendar year 1997, 
                $3,550,000,000.
                    ``(C) In the case of calendar year 1998, 
                $5,800,000,000.
                    ``(D) In the case of each subsequent calendar year, 
                the amount specified in this paragraph in the previous 
                calendar year (without regard to any reduction of such 
                amount under section 1896) updated through the midpoint 
                of the year by the estimated percentage change in the 
                general health care inflation factor during the 12-
                month period ending at that midpoint, with appropriate 
                adjustments to reflect previous underestimations or 
                overestimations under this subparagraph in the 
                projected health care inflation factor.
            ``(2) Amount of payments for qualified applicants.--
                    ``(A) In general.--Subject to the annual amount 
                available under paragraph (1) for a calendar year, the 
                amount of payments required under subsection (a) to be 
                made to a qualified applicant that submits to the 
                Secretary an application for such year in accordance 
                with subsection (a)(2) is an amount equal to the 
                product of--
                            ``(i) the number of full-time equivalent 
                        training participants in the approved medical 
                        training program operated by the qualified 
                        applicant (as determined under subsection (c)); 
                        and
                            ``(ii) the average costs of the qualified 
                        applicant in training such a participant in a 
                        calendar year for the base period, updated 
                        through the midpoint of the year by the 
                        estimated percentage change in the health care 
                        inflation factor after the base period and up 
                        to and including the calendar year involved.
                For purposes of clause (ii), the term `base period' 
                means the most recent 2-year period for which the 
                Secretary can determine the training costs of the 
                qualified applicant. If the qualified applicant has not 
                been in operation for sufficient time to have a base 
                period, the amount determined under clause (ii) for 
                such applicant shall be the national average costs of 
                all qualified applicants operating the approved medical 
                training program for the most recent 2-year period (as 
                determined by the Secretary), updated in accordance 
                with clause (ii).
            ``(3) Limitation.--If the annual amount available under 
        paragraph (1) for a calendar year is insufficient for providing 
        each qualified applicant that submits to the Secretary an 
        application for such year in accordance with subsection (a)(2) 
        with the amount of payments determined under paragraph (2) for 
        the program for such year, the Secretary shall make such pro 
        rata reductions in the amounts so determined as may be 
        necessary to ensure that the total of payments made under 
        subsection (a) for such year equals the total of such amount.
    ``(c) Determination of Full-Time-Equivalent Training 
Participants.--
            ``(1) Rules.--The Secretary shall establish rules 
        consistent with this subsection for the computation of the 
        number of full-time-equivalent training participants in 
        approved medical training programs.
            ``(2) Adjustment for part-year or part-time training 
        participants.--Such rules shall take into account individuals 
        who serve as training participants for only a portion of a 
        period in an approved medical training program or 
        simultaneously with more than one such program.
            ``(3) Weighting factors for certain training 
        participants.--Subject to paragraph (4), such rules shall 
        provide, in calculating the number of full-time-equivalent 
        training participants in an approved medical training program--
                    ``(A) for a training participant who is in the 
                participant's initial training period, the weighting 
                factor is 1.00, and
                    ``(B) for a training participant who is not in the 
                participant's initial training period, the weighting 
                factor is .50.
            ``(4) Foreign medical graduates required to pass fmgems 
        examination.--Such rules shall provide that, in the case of an 
        individual who is a foreign medical graduate, the individual 
        shall not be counted as a training participant unless--
                    ``(A) the individual has passed the FMGEMS 
                examination, or
                    ``(B) the individual has previously received 
                certification from, or has previously passed the 
                examination of, the Educational Commission for Foreign 
                Medical Graduates.
            ``(5) Counting time spent in outpatient settings.--Such 
        rules shall provide that only time spent in activities relating 
        to patient care shall be counted and that all the time so spent 
        by a training participant under an approved physician training 
        program or approved dental training program shall be counted 
        toward the determination of full-time equivalency, without 
        regard to the setting in which the activities are performed.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Approved dental training program.--The term `approved 
        dental training program' means--
                    ``(A) an internship, residency, or fellowship 
                program that is accredited by the Commission on Dental 
                Accreditation, or
                    ``(B) a post-doctoral dental training program in 
                oral medicine, oral radiology, dental anesthesia, or 
                geriatric dentistry, that is determined by the 
                Secretary to meet appropriate standards.
            ``(2) Approved medical training program.--the term 
        `approved medical training program' means an approved physician 
        training program, an approved dental training program, or an 
        approved podiatric training program.
            ``(3) Approved physician training program.--
                    ``(A) In general.--The term `approved physician 
                training program', with respect to the medical 
                speciality involved, means a residency or other 
                postgraduate program that trains physicians and meets 
                the following conditions:
                            ``(i) Participation in the program may be 
                        counted toward certification in the medical 
                        specialty.
                            ``(ii) The program is accredited by the 
                        Accreditation Council on Graduate Medical 
                        Education, or approved by the Council on 
                        Postgraduate Training of the American 
                        Osteopathic Association.
                    ``(B) Training in outpatient facilities.--The term 
                `approved physician training program' includes any 
                postgraduate program described in subparagraph (A) that 
                provides health services in an ambulatory setting, 
                without regard to whether the program provides 
                inpatient hospital services.
                    ``(C) Nonhospital training entities included.--The 
                term `approved physician training program' includes any 
                postgraduate program described in subparagraph (A), 
                whether operated by academic health centers, teaching 
                hospitals, multispecialty group practices, ambulatory 
                care providers, prepaid health plans, or other 
                entities.
            ``(4) Approved podiatric training program.--The term 
        `approved podiatric training program' includes a training 
        program approved by the Council of Podiatric Medical Education 
        of the American Podiatric Medical Association.
            ``(5) Foreign medical graduate.--The term `foreign medical 
        graduate' means a training participant who is a graduate of a 
        school of medicine, school of osteopathy, school of dentistry, 
        or school of podiatry that is not--
                    ``(A) a school of medicine accredited by the 
                Liaison Committee on Medical Education of the American 
                Medical Association and the Association of American 
                Medical Colleges (or approved by such Committee as 
                meeting the standards necessary for such 
                accreditation),
                    ``(B) a school of osteopathy accredited by the 
                American Osteopathic Association, or approved by such 
                Association as meeting the standards necessary for such 
                accreditation, or
                    ``(C) a school of dentistry or podiatry which is 
                accredited (or meets the standards for accreditation) 
                by an organization recognized by the Secretary for such 
                purpose.
            ``(6) FMGEMS examination.--The term `FMGEMS examination' 
        means parts I and II of the