103d CONGRESS
2d Session
S. 2357
To achieve universal health insurance coverage, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
August 3 (legislative day, July 20), 1994
Mr. Mitchell introduced the following bill; which was read the first
time
_______________________________________________________________________
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; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Health Security
Act''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--IMPROVED ACCESS TO STANDARDIZED AND AFFORDABLE HEALTH PLANS
Subtitle A--Rules and Definitions of General Applicability
Part 1--Rules of General Applicability
Sec. 1001. Access to standardized coverage.
Sec. 1002. Standard health plan principles.
Sec. 1003. Protection of consumer choice.
Part 2--Definitions
Sec. 1011. Definitions relating to health plans.
Sec. 1012. Definitions relating to employment and income.
Sec. 1013. Other general definitions.
Subtitle B--Health Plan Standards
Part 1--Establishment and Application of Standards
Sec. 1101. Establishment of National standards.
Sec. 1102. General rules.
Part 2--Insurance Market Reform
Sec. 1111. Guaranteed issue, availability, and renewability.
Sec. 1112. Enrollment.
Sec. 1113. Coverage of dependents.
Sec. 1114. Nondiscrimination based on health status.
Sec. 1115. Benefits.
Sec. 1116. Community rating requirements.
Sec. 1117. Risk adjustment and reinsurance.
Sec. 1118. Financial solvency requirements and consumer protection
against provider claims.
Part 3--Delivery System Reform
Sec. 1121. Prohibition of discrimination.
Sec. 1122. Quality assurance standards.
Sec. 1123. Consumer grievance process.
Sec. 1124. Health security cards.
Sec. 1125. Information and marketing standards.
Sec. 1126. Information regarding a patient's right to self-
determination in health care services.
Sec. 1127. Contracts with purchasing cooperatives.
Sec. 1128. Health plan arrangements with providers.
Sec. 1129. Utilization management protocols and physician incentive
plans.
Part 4--Supplemental Health Benefits Plans
Sec. 1141. Supplemental health benefits plans.
Subtitle C--Benefits and Cost-Sharing
Part 1--Standard Benefits Packages
Sec. 1201. General description of standard benefits packages.
Sec. 1202. Description of categories of items and services.
Sec. 1203. Definitions.
Part 2--National Health Benefits Board
Sec. 1211. Creation of National health benefits board; membership.
Sec. 1212. Qualifications of board members.
Sec. 1213. General duties and responsibilities.
Sec. 1214. Powers.
Sec. 1215. Funding.
Sec. 1216. Applicability of Federal Advisory Committee Act.
Sec. 1217. Congressional consideration of Board proposals.
Subtitle D--Access to Health Plans
Part 1--Access Through Employers
Sec. 1301. General employer responsibilities.
Sec. 1302. Auditing of records.
Sec. 1303. Prohibition of certain employer discrimination.
Sec. 1304. Prohibition on self-insuring cost-sharing benefits.
Sec. 1305. Responsibilities in single-payer States.
Sec. 1306. Development of large employer purchasing groups.
Sec. 1307. Rules governing litigation involving retiree health
benefits.
Sec. 1308. Enforcement.
Part 2--Access Tsubpart a--general requirementsing Cooperatives
Sec. 1321. Organization and operation.
Sec. 1322. Membership.
Sec. 1323. Agreements with standard health plans.
Sec. 1324. Memberssubpart b--community-rated employers
Sec. 1331.subpart c--federal employees health benefits program
Sec. 1341. Requirements applicable to FEHBP.
Sec. 1342. Special rules for FEHBP supplemental plans.
Sec. 1343. Definitions.
Part 3--Treatment of Association Plans
Sec. 1351. Rules relating to multiple employer welfare arrangements.
Sec. 1352. Association plans.
Subtitle E--Federal Responsibilities
Part 1--Sesubpart a--general dutiesan Services
Sec. 1401. General duties and responsibilities.
Sec. 1402. Annual report.
Sec. 1403. Assistance with family collections.
Sec. 1404. Advisory opinions.
Ssubpart b--responsibilities relating to review and approval of state
systems
Sec. 1411. Federal review and action on State systems.
Sec. 1412. Failure of participating States to meet conditions for
compliance.
Sec. 1413. Reduction in payments for health programs by Secretary of
Health and Human Services.
Sec. 1414. Review of Federal determinations.
Sec. 141subpart c--responsibilities in absence of state systems
Sec. 1421. Application of subpart.
Sec. 1422. Federal assumption of responsibilities in non-participating
States.
Sec. 1423. Imposition of surcharge on premiums under federally-operated
system.
Sec.subpart d--establishment of class factors for charging premiums
Ssubpart e--risk adjustment and reinsurance methodology for payment of
plans
Sec. 1435. Development of a risk adjustment and reinsurance
subpart f--responsibilities for financial requirements
Sec. 1441. Capital standards for community-rated plans.
Sec. 1442. Standard forsubpart g--open enrollment
Sec. 1445. Periods of authorized changes in enrollment.
Sec. 1446. Distribution of comparative information.
Sec. 1455. Reports.
Part 2--Essential Community Providers
Sec. 1461. Certification.
Sec. 1462. Categories of providers automatically certified.
Sec. 1463. Standards for additional providers.
Sec. 1464. Certification process; review; termination of
certifications.
Sec. 1465. Notification of participating States.
Sec. 1466. Health plan requirement.
Sec. 1467. Recommendation on continuation of requirement.
Sec. 1468. Definitions.
Part 3--Specific Responsibilities of Secretary of Labor
Sec. 1481. Responsibilities of Secretary of Labor.
Sec. 1482. Federal role with respect to multi-State self-insured health
plans.
Sec. 1483. Assistance with employer collections.
Sec. 1484. Penalties for failure of large employer purchasing groups to
meet requirements.
Sec. 1485. Applicability of ERISA enforcement mechanisms for
enforcement of certain requirements.
Sec. 1486. Workplace wellness program.
Part 4--Office of Rural Health Policy
Sec. 1491. Office of rural health policy.
Subtitle F--Participating State Responsibilities
Part 1--General Responsibilities
Sec. 1501. State plan and certification of standard health plans and
supplemental health benefits plans.
Sec. 1502. Community rating areas and health plan service areas.
Sec. 1503. Open enrollment periods.
Sec. 1504. Risk adjustment program.
Sec. 1505. Guaranty funds.
Sec. 1506. Enrollment activities.
Sec. 1507. Rural and medically underserved areas.
Sec. 1508. Public access sites.
Sec. 1509. Requirements relating to possessions of the United States.
Sec. 1510. Right of recovery of certain taxes against providers.
Part 2--Treatment of State Laws
Sec. 1511. Preemption of certain State laws relating to health plans.
Sec. 1512. Override of restrictive State practice laws.
subpart a--existing state laws
Sec. 1521. Continuance of existing Federal law waivers.
Sec. 1522. Hawaii prepaid Health Care Act.
Sec. 1523. Alternative State provider payment systems.
Sec. 1524subpart b--requirements for state single-payer systems
Sec. 1531. Single-payer system described.
Sec. 1532. General requirements for single-payer systems.
Sec. 1533. Special rules for States operating statewide single-payer
system.
Sec. 1534. Special rules for community rating area-specific single-
subpart c--early implementation of comprehensive state programs
Sec. 1541. Early implementation of comprehensive State programs.
Subtitle G--Miscellaneous Provisions
Sec. 1601. Provision of items or services contrary to religious belief
or moral conviction.
Sec. 1602. Antidiscrimination.
TITLE II--NEW BENEFITS
Subtitle A--Coverage of Outpatient Prescription Drugs in Medicare
Sec. 2000. References in subtitle.
Part 1--Coverage of Outpatient Prescription Drugs
Sec. 2001. Coverage of outpatient prescription drugs.
Sec. 2002. Payment rules and related requirements for covered
outpatient drugs.
Sec. 2003. Medicare rebates for covered outpatient drugs.
Sec. 2004. Prescription drug payment review commission.
Sec. 2005. Coverage of home infusion drug therapy services.
Sec. 2006. Medicare drug benefit plans.
Sec. 2007. Payment for covered outpatient drug benefit under medicare
contracts with HMOs and CMPS.
Sec. 2008. Maintenance of effort.
Subtitle B--Home and Community-Based Services
Part 1--Home and Community-based Services for Individuals With
Disabilities
Sec. 2101. State programs for home and community-based services for
individuals with disabilities.
Sec. 2102. State plans.
Sec. 2103. Individuals with disabilities defined.
Sec. 2104. Home and community-based services covered under State plan.
Sec. 2105. Cost sharing.
Sec. 2106. Quality assurance and safeguards.
Sec. 2107. Advisory groups.
Sec. 2108. Payments to States.
Sec. 2109. Appropriations; allotments to States.
Sec. 2110. Federal evaluations.
Part 2--Grants Relating to the Development of Hospital Linkage Programs
Sec. 2111. Information and technical assistance grants relating to
development of hospital linkage programs.
Subtitle C--Long-Term Care Insurance Improvement and Accountability
Sec. 2200. Short title.
Part 1--Promulgation of Standards and Model Benefits
Sec. 2201. Standards.
Part 2--Establishment and Implementation of Long-term Care Insurance
Policy Standards
Sec. 2211. Implementation of policy standards.
Sec. 2212. Regulation of sales practices.
Sec. 2213. Additional responsibilities for carriers.
Sec. 2214. Renewability standards for issuance, and basic for
cancellation of policies.
Sec. 2215. Benefit standards.
Sec. 2216. Nonforfeiture.
Sec. 2217. Limit of period of contestability and right to return.
Sec. 2218. Civil money penalty.
Part 3--Long-term Care Insurance Policies, Definition and Endorsements
Sec. 2221. Long-term care insurance policy defined.
Sec. 2222. Code of conduct with respect to endorsements.
Subtitle D--Life Care
Sec. 2301. Short title.
Sec. 2302. Life care: public insurance program for nursing home care.
Subtitle E--Study and Report
Sec. 2401. Study of issues related to end of life care.
TITLE III--HEALTH PROFESSIONS WORKFORCE
Subtitle A--Workforce Priorities Under Federal Payments
Sec. 3000. Definitions.
Part 1--Institutional Costs of Graduate Medical Education; Workforce
subpart a--national council regarding workforce priorities
Sec. 3001subpart b--authorized positions in specialty training
Sec. 3011. Cooperation regarding approved physician training programs.
Sec. 3012. Annual authorization of total number of graduate medical
education positions.
Sec. 3013. Annual authorization of number of specialty positions;
requirements regarding primary health care.
Sec. 3014. National Council recommendation of number of graduate
medical education positions.
Sec. 3015. Alsubpart c--costs of graduate medical education
Chapter 1--Operation Of Approved Physician Training Programs
Sec. 3031. Federal formula payments to qualified entities for the costs
of the operation of approved physician
training programs.
Sec. 3032. Application for payments.
Sec. 3033. Availability of funds for payments; annual amount of
payments.
Sec. 3034. Payments for dental and podiatric positions.
Chapter 2--Academic Health Centers and Other Eligible Institutions
Sec. 3051. Federal formula payments to academic health centers and
other eligible institutions.
Sec. 3052. Request for payments.
Sec. 3053. Availability of funds for payments; annual amount of
subpart d--transitional provisions
Sec. 3055. Transitional payments to institutions.
Sec. 3056. Waiver of foreign country residence requirement with respect
to international medical graduates.
Parsubpart a--payments to medical schoolsts
Sec. 3061. Federal payments to medical schools.
Sec. 3062. Application for payments.
Sec. 3063. Authosubpart b--payments to nursing programsnt of payments.
Sec. 3071. Federal payments to graduate nurse training programs.
Sec. 3072. Nationsubpart c--payments to dental schools.
Sec. 3073. Dsubpart d--payments to schools of public health
Sec. 3074. Schools of public health.
subpart a--workforce development
Sec. 3081. Programs of the Secretary of Health and Human Services.
Sec. 3082. Programs of the Secretary of Labor.
Sec. 3083. Requirement for certain programs regarding redeployment of
subpart b--transitional provisions for workforce stability
Sec. 3091. Application.
Sec. 3092. Definitions.
Sec. 3093. Obligations of displacing employer and affiliated
enterprises in event of displacement.
Sec. 3094. Employment with successors.
Sec. 3095. Collective bargaining obligations during transition period.
Sec. 3096. General provisions.
Subtitle B--Academic Health Centers
Sec. 3131. Discretionary grants regarding access to centers.
Subtitle C--Health Research Initiatives
Part 1--Programs for Certain Agencies
Sec. 3201. Biomedical, behavioral and health services research.
Sec. 3202. Health services research.
Sec. 3203. AHCPR guidelines and standards.
Part 2--Funding for Program
Sec. 3211. Authorizations of appropriations.
Part 3--Medical Technology Impact Study
Sec. 3221. Medical technology impact study.
Subtitle D--Core Functions of Public Health Programs; National
Initiatives Regarding Preventive Health
Part 1--Funding
Sec. 3301. Authorizations of appropriations.
Part 2--Core Functions of Public Health Programs
Sec. 3311. Purposes.
Sec. 3312. Grants to States for core functions of public health.
Sec. 3313. Submission of information.
Sec. 3314. Reports.
Sec. 3315. Application for grant.
Sec. 3316. Allocations for certain activities.
Sec. 3317. Definitions.
Sec. 3318. Single application and uniform reporting systems for core
functions of public health and public
health categorical grant programs
administered by the centers for disease
control and prevention.
Part 3--National Initiatives Regarding Health Promotion and Disease
subpart a--general grants
Sec. 3331. Grants for national prevention initiatives.
Sec. 3332. Priorities.
Sec. 3333. Submission of information.
Secsubpart b--development of telemedicine in rural underserved areas
Sec. 3341. Grants for development of rural telemedicine.
Sec. 3342. Report and evaluation of telemedicine.
Sec. 3343. Regulations on reimbursement of telemedicine.
Sec. 3344. Authorization of appropriations.
Sec. 3345. Definitions.
Subtitle E--Health Services for Medically Underserved Populations
Pasubpart a--authorization of appropriationse
subpart b--development of community health groups and health care sites
and services
Sec. 3421. Grants and contracts for development of plans and networks
and the expansion and development of health
care sites and services.
Sec. 3422. Certain uses of awards.
Sec. 3423. Application.
Ssubpart c--capital cost of development of community health groups and
other purposes
Sec. 3441. Direct loans and grants.
Sec. 3442. Certain requirements.
Sec. 3443. Defaults; right of recovery.
Sec. 3444. Provisions regarding construction or expansion of
facilities.
Sec. 3445. Application for assistance.
Sec. 3446. Adsubpart d--enabling and supplemental services
Sec. 3461. Grants and contracts for enabling and supplemental services.
Sec. 3462. Authorizations of appropriations.
Part 2--National Health Service Corps
Sec. 3471. Authorizations of appropriations.
Sec. 3472. Allocation for participation of nurses in scholarship and
loan repayment programs.
Sec. 3473. Allocation for participation of psychiatrists,
psychologists, and clinical social workers
in scholarship and loan repayment programs.
Part 3--Payments to Hospitals Serving Vulnerable Populations
Sec. 3481. Payments to hospitals.
Sec. 3482. Identification of eligible hospitals.
Sec. 3483. Amount of payments.
Sec. 3484. Base year.
Subtitle F--Mental Health; Substance Abuse
Part 1--Authorities Regarding Participating States
Sec. 3510. Integration of mental health and substance abuse systems.
Sec. 3511. Report on integration of mental health systems.
Part 2--Assistance for State Managed Mental Health and Substance Abuse
Programs
Sec. 3531. Availability of assistance.
Sec. 3532. Plan requirements.
Sec. 3533. Additional Federal responsibilities.
Sec. 3534. Authorization of appropriations.
Subtitle G--Comprehensive School Health Education; School-Related
Health Services
Part 1--Healthy Students-Healthy Schools Grants for School Health
Education
Sec. 3601. Purposes.
Sec. 3602. Healthy students-healthy schools grants.
Sec. 3603. Healthy Students-Healthy Schools Interagency Task Force.
Sec. 3604. Duties of the Secretary.
Psubpart a--development and operations
Sec. 3681. Authorization of appropriations.
Sec. 3682. Eligibility for grants.
Sec. 3683. Preferences.
Sec. 3684. Planning and development grants.
Sec. 3685. Gsubpart b--capital costs of developing projects
Sec. 3691. Funding.
Subtitle H--Public Health Service Initiative
Sec. 3695. Public health service initiative.
Subtitle I--Additional Provisions Regarding Public Health
Sec. 3901. Curriculum development and implementation regarding domestic
violence and women's health.
Sec. 3902. Community scholarship programs.
Subtitle J--Occupational Safety and Health
Sec. 3903. Occupational injury and illness prevention.
Subtitle K--Full Funding for WIC
Sec. 3905. Full funding for WIC.
Subtitle L--Border Health Improvement
Sec. 3908. Border Health Commission.
TITLE IV--MEDICARE AND MEDICAID
Sec. 4000. References in title.
Subtitle A--Medicare
Part 1--Integration of Medicare Beneficiaries
Sec. 4001. Individual election to remain in certain health plans.
Sec. 4002. Enrollment and termination of enrollment.
Part 2--Provisions Relating to Part A
Sec. 4101. Inpatient hospital services update for PPS hospitals.
Sec. 4102. Reduction in payments for capital-related costs for
inpatient hospital services.
Sec. 4103. Reductions in disproportionate share payments.
Sec. 4104. Extension of freeze on updates to routine service cost
limits for skilled nursing facilities.
Sec. 4105. Medicare-dependent, small rural hospitals.
Sec. 4106. Provisions relating to rural health transition grant
program.
Sec. 4107. Payments for sole community hospitals with teaching programs
and multihospital campuses.
Sec. 4108. Moratorium on designation of new long-term hospitals.
Sec. 4109. Revised payment methodology for rehabilitation and long-term
care hospitals.
Sec. 4110. Termination of indirect medical education payments.
Sec. 4111. Limited service hospital program.
Sec. 4112. Subacute care study.
Part 3--Provisions Relating to Part B
Sec. 4201. Updates for physicians' services.
Sec. 4202. Substitution of real GDP to adjust for volume and intensity;
repeal of restriction on maximum reduction
permitted in default update.
Sec. 4203. Payment for physicians' services relating to inpatient stays
in certain hospitals.
Sec. 4204. Changes in underserved area bonus payments.
Sec. 4205. Correction of MVPS upward bias.
Sec. 4206. Demonstration projects for medicare State-based performance
standard rate of increase.
Sec. 4207. Elimination of formula-driven overpayments for certain
outpatient hospital services.
Sec. 4208. Eye or eye and ear hospitals.
Sec. 4209. Imposition of coinsurance on laboratory services.
Sec. 4210. Application of competitive acquisition process for part B
items and services.
Sec. 4211. Application of competitive acquisition procedures for
laboratory services.
Sec. 4212. Expanded coverage for physician assistants and nurse
practitioners.
Sec. 4213. Elimination of balance billing.
Sec. 4214. Development and implementation of resource-based methodology
for practice expenses.
Sec. 4215. Payments for durable medical equipment.
Sec. 4216. General part B premium.
Part 4--Provisions Relating to Parts A and B
Sec. 4301. Medicare secondary payer changes.
Sec. 4302. Increase in medicare secondary payer coverage for end stage
renal disease services to 24 months.
Sec. 4303. Expansion of centers of excellence.
Sec. 4304. Reduction in routine cost limits for home health services.
Sec. 4305. Imposition of 20 percent coinsurance on home health services
under medicare.
Sec. 4306. Termination of graduate medical education payments.
Sec. 4307. Medicare select.
Subtitle B--Medicaid Program
Part 1--Integration of Certain Medicaid Eligibles Into Reformed Health
Care System
Sec. 4601. Limiting coverage under medicaid of items and services
covered under standard benefit package.
Part 2--Coordinated Care Services for Disabled Medicaid Eligibles
Sec. 4605. Coordinated care services for disabled medicaid eligibles.
Part 3--Payments to Hospitals Serving Vulnerable Populations
Sec. 4611. Replacement of DSH payment provisions with provisions
relating to payments to hospitals serving
vulnerable populations.
Part 4--Medicaid Long-term Care Provisions
Sec. 4615. Increased resource disregard for individuals receiving
certain services.
Sec. 4616. Frail elderly demonstration project waivers.
Sec. 4617. Elimination of requirement of prior institutionalization
with respect to habilitation services
furnished under a waiver for home or
community-based services.
Sec. 4618. Elimination of rule regarding availability of beds in
certain institutions.
Sec. 4619. Preadmission screening for mentally retarded individuals.
Part 5--Miscellaneous
Sec. 4621. Medicaid coverage of all certified nurse practitioner and
clinical nurse specialist services.
Sec. 4622. Relief from third party liability requirements when cost-
effective.
TITLE V--QUALITY AND CONSUMER PROTECTION
Subtitle A--Quality Management and Improvement
Sec. 5001. National quality council.
Sec. 5002. National goals and performance measures of quality.
Sec. 5003. Standards and performance measures for health plans.
Sec. 5004. Plan data analysis and consumer surveys.
Sec. 5005. Evaluation and reporting of quality performance.
Sec. 5006. Development and dissemination of practice guidelines.
Sec. 5007. Research on health care quality.
Sec. 5008. Quality improvement foundations.
Sec. 5009. Consumer information and advocacy.
Sec. 5010. Authorization of appropriations.
Sec. 5011. Role of health plans in quality management.
Sec. 5012. Information on health care providers.
Sec. 5013. Conforming amendments to Public Health Service Act.
Subtitle B--Administrative Simplification
Part 1--Purpose and Definitions
Sec. 5101. Purpose.
Sec. 5102. Definitions.
Part 2--Standards for Data Elements and Information Transactions
Sec. 5111. General requirements on secretary.
Sec. 5112. Standards for data elements of health information.
Sec. 5113. Information transaction standards.
Sec. 5114. Standards relating to written claims submitted by
individuals and written explanations of
benefits.
Sec. 5115. Timetables for adoption of standards.
Part 3--Requirements With Respect to Certain Transactions and
Information
Sec. 5121. Requirements with respect to certain transactions and
information.
Sec. 5122. Timetables for compliance with requirements.
Part 4--Accessing Health Information
Sec. 5131. Accessing health information for authorized purposes.
Sec. 5132. Responding to access requests.
Sec. 5133. Length of time information should be accessible.
Sec. 5134. Timetables for adoption of standards and compliance.
Part 5--Standards and Certification for Health Information Network
Sec. 5141. Standards and certification for health information network
services.
Sec. 5142. Ensuring availability of information.
Part 6--Penalties
Sec. 5151. General penalty for failure to comply with requirements and
standards.
Part 7--Miscellaneous Provisions
Sec. 5161. Imposition of additional requirements.
Sec. 5162. Effect on State law.
Sec. 5164. Health information continuity.
Sec. 5165. Protection of commercial information.
Sec. 5166. Payment for health care services or health plan premiums.
Sec. 5167. Health security cards.
Sec. 5168. Misuse of health security card or personal health
identifier.
Sec. 5169. Direct billing for clinical laboratory services.
Sec. 5170. Authorization of appropriations.
Part 8--Assistance to the Secretary
Sec. 5171. General requirement on secretary.
Sec. 5172. Health information advisory committee.
Part 9--Demonstration Projects for Community-based Clinical Information
Systems
Sec. 5181. Grants for demonstration projects.
Part 10--Medicare and Medicaid Coverage Data Bank
Sec. 5191. Repeal of medicare and medicaid coverage data bank.
Subtitle C--Privacy of Health Information
Part 1--Findings and Definitions
Sec. 5201. Findings and purposes.
Sec. 5202. Definitions.
subpart a--general provisionss
Sec. 5206. General rules regarding disclosure.
Sec. 5207. Authorizations for disclosure of protected health
information.
Sec. 5208.subpart b--specific disclosures relating to patient
Sec. 5211. Disclosures for treatment and financial and administrative
transactions.
Sec. 5212. Next of kin and directory information.
Secsubpart c--disclosure for oversight, public health, and research
purposes
Sec. 5216. Oversight.
Sec. 5217. Public health.
subpart d--disclosure for judicial, administrative, and law enforcement
purposes
Sec. 5221. Judicial and administrative purposes.
Sec.subpart e--disclosure pursuant to government subpoena or warrant
Sec. 5226. Government subpoenas and warrants.
Sec. 5227. Access procedures for law enforcement subpoenas and
warrants.
Sec. 5228. Challenge procedures for law enforcement warrants and
subpart f--disclosure pursuant to private party subpoena
Sec. 5231. Private party subpoenas.
Sec. 5232. Access procedures for private party subpoenas.
Sec. 5233. Challenge procedures for private party subpoenas.
Part 3--Procedures for Ensuring Security of Protected Health
subpart a--establishment of safeguards
Sec. 5236. Establishment of safeguards.
Ssubpart b--review of protected health information by subjects of the
information
Sec. 5241. Inspection of protected health information.
Sec. 5242. Amendment of protected health information.
Sec. 5243. Nsubpart c--standards for electronic disclosures
Sec. 5246. Standards for electronic disclosures.
subpart a--no sanctions for permissible actions
Sec. 5251. No liability for permissible disclosures.
Sec. 5252. No liability for institutional review board determinations.
Sec. 5253. Reliance on subpart b--civil sanctions
Sec. 5256. Civil penalty.
Sec. 5257. Civil actisubpart c--criminal sanctions
Sec. 5261. Wrongful disclosure of protected health information.
Part 5--Administrative Provisions
Sec. 5266. Relationship to other laws.
Sec. 5267. Rights of incompetents.
Sec. 5268. Exercise of rights.
Subtitle D--Expanded Efforts To Combat Health Care Fraud and Abuse
Affecting Federal Outlay Programs
Part 1--Improved Enforcement
Sec. 5301. Health care fraud and abuse affecting Federal outlay
programs.
Sec. 5302. Establishment of Federal outlay program fraud and abuse
control account.
Sec. 5303. Use of funds by Inspector General.
Sec. 5304. Rewards for information leading to prosecution and
conviction.
Part 2--Civil Penalties and Rights of Action
Sec. 5311. Civil monetary penalties.
Sec. 5312. Permitting parties to bring actions on own behalf.
Sec. 5313. Exclusion from program participation.
Part 3--Amendments to Criminal Law
Sec. 5321. Health care fraud.
Sec. 5322. Theft or embezzlement.
Sec. 5323. False Statements.
Sec. 5324. Bribery and graft.
Sec. 5325. Injunctive relief relating to health care offenses.
Sec. 5326. Grand jury disclosure.
Sec. 5327. Forfeitures for violations of fraud statutes.
Part 4--Amendments to Civil False Claims Act
Sec. 5331. Amendments to Civil False claims Act.
Part 5--Effective Date
Sec. 5341. Effective date.
Subtitle E--Medical Liability Reform
Part 1--System Reforms
Sec. 5401. Federal tort reform.
Sec. 5402. State-based alternative dispute resolution mechanisms.
Sec. 5403. Requirement of certificate of merit.
Sec. 5404. Limitation on amount of attorney's contingency fees.
Sec. 5405. Periodic payment of awards.
Sec. 5406. Federal study on medical negligence.
Part 2--Demonstration Project Relating to Medical Malpractice Liability
Sec. 5411. Pilot program applying practice guidelines to medical
malpractice liability actions.
Sec. 5412. Enterprise liability demonstration project.
Subtitle F--Remedies and Enforcement
Part 1--Review of Bensubpart a--general rulesEnrolled Individuals
Sec. 5501. Health plan claims procedure.
Sec. 5502. Review in area complaint review offices of grievances based
on acts or practices by health plans.
Sec. 5503. Initial proceedings in complaint review offices.
Sec. 5504. Hearings before hearing officers in complaint review
offices.
Sec. 5505. Civil msubpart b--early resolution programs
Sec. 5511. Establishment of early resolution programs in complaint
review offices.
Sec. 5512. Initiation of participation in mediation proceedings.
Sec. 5513. Mediation proceedings.
Sec. 5514. Legal effect of participation in mediation proceedings.
Sec. 5515. Enforcement of settlement agreements.
Sec. 5516. Due process for health care providers.
Part 2--Additional Remedies and Enforcement Provisions
Sec. 5531. Judicial review of Federal action on State systems.
Sec. 5532. Civil enforcement.
Sec. 5533. Priority of certain bankruptcy claims.
Sec. 5534. Private right to enforce State responsibilities.
Sec. 5535. Private right to enforce Federal responsibilities in
operating a system in a State.
Sec. 5536. Enforcement of consumer protections.
Sec. 5537. Discrimination claims.
Sec. 5538. Nondiscrimination in federally assisted programs.
Sec. 5539. Civil and administration action by essential community
provider.
Sec. 5540. Facial constitutional challenges.
Sec. 5541. Treatment of plans as parties in civil actions.
Sec. 5542. Whistleblower protections.
Sec. 5543. General nonpreemption of rights and remedies.
Subtitle G--Repeal of Exemption
Sec. 5601. Repeal of exemption for health insurance.
TITLE VI--INDIVIDUAL AND EMPLOYER SUBSIDIES
Subtitle A--Individual Premium and Cost-Sharing Assistance
Sec. 6001. Requirement to operate State program.
Sec. 6002. Assistance with standard health plan premiums.
Sec. 6003. Assistance with cost-sharing for standard health plans.
Sec. 6004. Eligibility determinations.
Sec. 6005. End-of-year reconciliation for premium assistance.
Sec. 6006. Enrollment outreach.
Sec. 6007. Payments to States.
Sec. 6008. Definitions and determinations of income.
Subtitle B--Employer Subsidies
Sec. 6101. Purpose.
Sec. 6102. Eligible employers.
Sec. 6103. Employer certification.
Sec. 6104. Amount of subsidy.
Sec. 6105. Definition.
TITLE VII--REVENUE PROVISIONS
Sec. 7000. Amendment of 1986 Code.
Subtitle A--Financing Provisions
Part 1--Increase in Tax on Tobacco Products
Sec. 7101. Increase in excise taxes on tobacco products.
Sec. 7102. Modifications of certain tobacco tax provisions.
Sec. 7103. Imposition of excise tax on manufacture or importation of
roll-your-own tobacco.
Part 2--Health Related Assessments
Sec. 7111. Assessments on insured and self-insured health plans.
Sec. 7112. High cost health plan assessment.
Part 3--Recapture of Certain Health Care Subsidies
Sec. 7121. Recapture of certain health care subsidies received by high-
income individuals.
Part 4--Other Provisions
Sec. 7131. Increase in tax on certain hollow point and large caliber
handgun ammunition.
Sec. 7132. Modification to self-employment tax treatment of certain S
corporation shareholders and partners.
Sec. 7133. 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
Part 1--General Provisions
Sec. 7201. Limitation on exclusion for employer-provided health
benefits.
Sec. 7202. Health benefits may not be provided under cafeteria plans.
Sec. 7203. Increase in deduction for health insurance costs of self-
employed individuals.
Sec. 7204. Limitation on prepayment of medical insurance premiums.
Part 2--Voluntary Employer Health Care Contributions
Sec. 7111. Tax treatment of voluntary employer health care
contributions.
Subtitle C--Exempt Health Care Organizations
Part 1--General Provisions
Sec. 7301. Qualification and disclosure requirements for nonprofit
health care organizations.
Sec. 7302. Excise taxes for private inurement by tax-exempt health care
organizations.
Sec. 7303. Treatment of health maintenance organizations, parent
organizations, and health insurance
purchasing cooperatives.
Sec. 7304. Tax treatment of taxable organizations providing health
insurance and other prepaid health care
services.
Sec. 7305. Repeal of section 833.
Sec. 7306. Tax exemption for high-risk insurance pools.
Part 2--Tax Treatment of Section 501(c)(3) Bonds
Sec. 748. Tax treatment of 501(c)(3) bonds similar to governmental
bonds.
Subtitle D--Tax Treatment of Long-Term Care Insurance and Services
Sec. 7401. Qualified long-term care services treated as medical care.
Sec. 7402. Treatment of long-term care insurance.
Sec. 7403. Tax treatment of accelerated death benefits under life
insurance contracts.
Sec. 7404. Tax treatment of companies issuing qualified accelerated
death benefit riders.
Subtitle E--Other Revenue Provisions
Part 1--Employment Status Provisions
Sec. 7501. Employment status proposal required from Department of the
Treasury.
Sec. 7502. Increase in services reporting penalties.
Part 2--Tax Incentives for Health Services Providers
Sec. 7511. Nonrefundable credit for certain primary health services
providers.
Sec. 7512. Expensing of medical equipment.
Part 3--Miscellaneous Provisions
Sec. 7521. Post-retirement medical and life insurance reserves.
Sec. 7522. Credit for cost of personal assistance services required by
employed individuals.
Sec. 7523. Disclosure of return information for administration of
certain programs under the Health Security
Act.
Subtitle F--Graduate Medical Education and Academic Health Centers
Trust Fund
Sec. 7601. Establishment of Graduate Medical Education and Academic
Health Centers Trust Fund.
TITLE VIII--OTHER FEDERAL PROGRAMS
Subtitle A--Indian Health Service
Sec. 8101. Purposes.
Sec. 8102. Definitions.
Sec. 8103. Eligibility and health service coverage of Indians.
Sec. 8104. Supplemental Indian health care benefits.
Sec. 8105. Provision of health services to non-Indians.
Sec. 8106. Essential community providers.
Sec. 8107. Payment by other providers.
Sec. 8108. Contracting authority.
Sec. 8109. Consultation.
Sec. 8110. Transitional studies.
Sec. 8111. Loans and loan guarantees.
Sec. 8112. Simplification of billing.
Sec. 8113. Long-term care demonstrations.
Sec. 8114. Technical assistance.
Sec. 8115. Public health programs.
Sec. 8116. Survey of health services available to Indian veterans.
Sec. 8117. Rule of construction.
Sec. 8118. Authorization of appropriations.
Sec. 8119. Funding methodology.
TITLE IX--WORKERS COMPENSATION MEDICAL SERVICES
Sec. 9000. Application of information requirements.
Sec. 9001. Provision of care in disputed cases.
Sec. 9002. Demonstration projects.
Sec. 9003. Commission on Workers Compensation Medical Services.
TITLE X--PREMIUM FINANCING
Subtitle A--National Health Care Cost and Coverage Commission
Sec. 10001. National Health Care Cost And Coverage Commission.
Sec. 10002. Composition.
Sec. 10003. Duties of Commission.
Sec. 10004. Congressional consideration of Commission recommendations.
Sec. 10005. Operation of the Commission.
Subtitle B--Employer and Individual Premium Requirements and Assistance
Sec. 10101. Application of subtitle.
Sec. 10102. Definitions.
Part 1--Employer Premium Payments
Sec. 10111. Obligation.
Sec. 10112. Community-rated employers.
Sec. 10113. Experience rated employers.
Part 2--subpart a--family sharebilities
Sec. 10131. Enrollment and premium payments.
Sec. 10132. Family share of premiums.
Sec. 10133. Amount of premium.
Sec. 10134. Collection shortfall add-on.
Sec. 10135. Family credit.
Sec. 10136. Premium subsidy.
Sec. 101subpart b--payment of family credit by certain families
Sec. 10141. Payment of family credit by nonworking and part-time
certain families.
Sec. 10142. Limitation of liability based on income.
TITLE XI--ENSURING HEALTH CARE REFORM FINANCING
Sec. 11001. Ensuring health care reform financing.
TITLE I--IMPROVED ACCESS TO STANDARDIZED AND AFFORDABLE HEALTH PLANS
Subtitle A--Rules and Definitions of General Applicability
PART 1--RULES OF GENERAL APPLICABILITY
SEC. 1001. ACCESS TO STANDARDIZED COVERAGE.
(a) In General.--A participating State system 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:
(1) A certified standard health plan.
(2) A certified supplemental health benefits plan.
(3) A certified long-term care policy under part 2 of
subtitle B of title II.
(b) Federal Certification of Multistate Self-Insured Plans.--For
Federal certification of multistate self-insured health plans, see
section 1482.
SEC. 1002. STANDARD HEALTH PLAN PRINCIPLES.
In accordance with this Act, the following principles shall apply
to all standard health plans:
(1) No standard health plan may discriminate on the basis
of medical history, health status, pre-existing medical
conditions, or genetic predisposition to medical conditions.
(2) A standard health plan--
(A) shall offer an annual open enrollment period
and accept all eligible individuals for coverage;
(B) shall not impose a rider that serves to exclude
coverage to an individual; and
(C) shall not impose waiting periods before
coverage begins.
(3) A standard health plan shall ensure that all medically
necessary or appropriate services, as defined in the benefits
package, are provided.
(4) Health benefits coverage shall be portable from one
standard health plan to another.
Nothing in this section shall be construed so as to relieve a standard
health plan of any obligation or requirement imposed under this Act.
SEC. 1003. PROTECTION OF CONSUMER CHOICE.
Nothing in this Act shall be construed as prohibiting the
following:
(1) An individual from purchasing any health care services.
(2) An individual from purchasing supplemental insurance
(offered consistent with this Act) to cover health care
services not included within the standard benefits package
established under subtitle C.
(3) An individual who is not an eligible individual from
purchasing health insurance.
(4) Employers from providing coverage for benefits in
addition to such standard benefits package (subject to part 1
of subtitle D).
(5) An individual from obtaining (at the expense of such
individual) health care from any health care provider of such
individual's choice.
PART 2--DEFINITIONS
SEC. 1011. DEFINITIONS RELATING TO HEALTH PLANS.
Except as otherwise specifically provided, in this Act the
following definitions and rules apply:
(1) Health plan.--
(A) 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:
(i) Coverage only for accidental death or
dismemberment.
(ii) 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.
(iii) A medicare supplemental policy (as
defined in section 1882(g)(1) of the Social
Security Act).
(iv) Coverage issued as a supplement to
liability insurance.
(v) Worker's compensation or similar
insurance.
(vi) Automobile medical-payment insurance.
(vii) 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).
(viii) An equivalent health care program.
(ix) 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.
(B) Insured health plan.--
(i) 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 a carrier.
(ii) Carrier.--The term ``carrier'' means a
licensed insurance company, a hospital or
medical service corporation (including an
existing Blue Cross or Blue Shield
organization, within the meaning of section
833(c)(2) of Internal Revenue Code of 1986 as
in effect before the date of the enactment of
this Act), a health maintenance organization,
or other entity licensed or certified by the
State to provide health insurance or health
benefits. The Secretary may issue regulations
that provide for affiliated carriers to be
treated as a single carrier where appropriate
under this Act.
(C) Self-insured health plan.--The term `self-
insured health plan' means an employee welfare benefit
plan, church plan, or other arrangement which--
(i) provides health benefits funded in a
manner other than through the purchase of one
or more insured health plans, but
(ii) does not include any coverage or
insurance described in clauses (i) through (ix)
of subparagraph (A).
(2) Certified standard health plan.--
(A) In general.--The term ``certified standard
health plan'' means a standard health plan which is
certified by the appropriate certifying authority as
meeting the other applicable requirements of this
title.
(B) Standard health plan.--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.
(3) Certified supplemental health benefits plan.--
(A) In general.--The term ``certified supplemental
health benefits plan'' means a supplemental health
benefits plan which is certified by the appropriate
certifying authority as meeting the applicable
requirements of part 4 of subtitle B.
(B) Supplemental health benefits plan.--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 4 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.
(4) Certified long-term care insurance policy.--
(A) In general.--The term ``certified long-term
care insurance policy'' means a long-term care
insurance policy which is certified by the applicable
certifying authority as meeting the applicable
requirements of part 2 of subtitle B of title II.
(B) Long-term care insurance policy.--The term
``long-term care insurance policy'' has the meaning
given such term by section 2721.
(5) Terms and rules relating to community and experience
rating.--
(A) Community-rated plan.--The term ``community-
rated plan'' means a health plan provided to community-
rated individuals which meets the requirements of
section 1116.
(B) Community-rated employer.--The term
``community-rated employer'' means, with respect to an
employee, an employer that is not an experience-rated
employer with respect to such employee.
(C) Community-rated individual.--The term
``community-rated individual'' means an individual who
is not an experience-rated individual.
(D) Experience-rated plan.--
(i) In general.--The term ``experience-
rated plan'' means a 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.
(ii) Community rating of government
plans.--Such term shall not include a
government plan of a State or local government.
(E) Experience-rated employer.--
(i) In general.--The term ``experience-
rated employer'' means, with respect to any
calendar year--
(I) 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 more than 500 employees for
some portion of the day; or
(II) a multiemployer plan or rural
electric cooperative or rural telephone
cooperative association plan that
covers 500 or more individuals.
(ii) 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, and
(II) this Act shall be applied
separately with respect to its other
employees.
(iii) U.S. postal service.--Such term
includes the United States Postal Service.
(F) Experience-rated individual.--The term
``experience-rated individual'' means an individual who
is an employee of an experience-rated employer or a
member of a plan described in subparagraph (E)(i)(II).
(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.
SEC. 1012. DEFINITIONS RELATING TO EMPLOYMENT AND INCOME.
Except as otherwise specifically provided, in this Act the
following definitions and rules apply:
(1) Employer, employee, employment, and wages defined.--
Except as provided in this section--
(A) the terms ``wages'' and ``employment'' have the
meanings given such terms under section 3121 of the
Internal Revenue Code of 1986,
(B) the term ``employee'' has the meaning given
such term under section 3121 of such Code, subject to
the provisions of chapter 25 of such Code, and
(C) the term ``employer'' has the same meaning as
the term ``employer'' as used in such section 3121.
(2) Exceptions.--For purposes of paragraph (1)--
(A) Employment.--
(i) Employment included.--Paragraphs (1),
(2), (5), (7) (other than clauses (i) through
(iv) of subparagraph (C) and clauses (i)
through (v) of subparagraph (F)), (8), (9),
(10), (11), (13), (15), (18), and (19) of
section 3121(b) of the Internal Revenue Code of
1986 shall not apply.
(ii) Exclusion of inmates as employees.--
Employment shall not include services performed
in a penal institution by an inmate thereof or
in a hospital or other health care institution
by a patient thereof.
(B) Wages.--Paragraph (1) of section 3121(a) of the
Internal Revenue Code of 1986 shall not apply.
(C) 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.
(3) Aggregation rules for employers.--For purposes of this
Act--
(A) all employers treated as a single employer
under subsection (a) or (b) of section 52 of the
Internal Revenue Code of 1986 shall be treated as a
single employer, and
(B) under regulations of the Secretary of Labor,
all employees of organizations which are under common
control with one or more organizations which are exempt
from income tax under subtitle A of the Internal
Revenue Code of 1986 shall be treated as employed by a
single employer.
The regulations prescribed under subparagraph (B) shall be
based on principles similar to the principles which apply to
taxable organizations under subparagraph (A).
SEC. 1013. OTHER GENERAL DEFINITIONS.
Except as otherwise specifically provided, in this Act the
following definitions apply:
(1) Appropriate certifying authority.--The term
``appropriate certifying authority'' means--
(A) except as provided in subparagraph (B), in the
case of a standard health plan, a supplemental health
benefits plan, or a long-term care insurance plan, 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) Community rating area.--The term ``community rating
area'' means an area specified by a State under section
1502(a).
(3) 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 subpart B of part 3 of subtitle F.
(4) Essential community provider.--The term ``essential
community provider'' means an entity certified as such a
provider under subpart B of part 2 of subtitle E.
(5) Health plan sponsor.--The term ``health plan sponsor''
means--
(A) with respect to a community-rated plan, the
carrier providing the plan,
(B) with respect to an insured experience-rated
plan, the carrier providing the plan, and
(C) with respect to a self-insured experience-rated
plan, the experience-rated employer providing the plan.
(6) Medicare program.--The term ``medicare program'' means
the health insurance program under title XVIII of the Social
Security Act.
(7) Medicare-eligible individual.--The term ``medicare-
eligible individual'' means an individual who is entitled to
benefits under part A of the medicare program.
(8) Multiemployer plan.--The term ``multiemployer plan''
has the meaning given such term in section 3(37) of the
Employee Retirement Income Security Act of 1974, and includes
any plan that is treated as such a plan under title I of such
Act.
(9) NAIC.--The term ``NAIC'' means the National Association
of Insurance Commissioners.
(10) Participating provider.--The term ``participating
provider'' means, with respect to a health plan, a provider of
health care services who is a member of a provider network of
the plan.
(11) Participating state.--The term ``participating State''
means a State establishing a State program under this title.
(12) Purchasing cooperative.--The term ``purchasing
cooperative'' means a health insurance cooperative established
under part 2 of subtitle D.
(13) Residence.--
(A) In general.--An individual is considered to
reside in the location in which the individual
maintains a primary residence (as established under
rules of the Secretary).
(B) Multiple residences.--Under such rules and
subject to section 1112, in the case of an individual
who maintains more than one residence, the primary
residence of the individual shall be determined taking
into account the proportion of time spent at each
residence.
(C) Couple.--In the case of a couple only one
spouse of which is a qualifying employee, except as the
Secretary may provide, the residence of the employee
shall be the residence of the couple.
(14) Rural electric cooperative.--The term ``rural electric
cooperative'' has the meaning given such term in section
3(40)(A)(iv) of the Employee Retirement Income Security Act of
1974.
(15) Rural telephone cooperative associations.--The term
``rural telephone cooperative association'' has the meaning
given such term in section 3(40)(A)(v) of the Employee
Retirement Income Security Act of 1974.
(16) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(17) State.--The term ``State'' includes the District of
Columbia, Puerto Rico, the Virgin Islands, Guam, American
Samoa, and the Northern Mariana Islands.
(18) United States.--The term ``United States'' means the
50 States, the District of Columbia, Puerto Rico, the Virgin
Islands, Guam, American Samoa, and Northern Mariana Islands.
Subtitle B--Health Plan Standards
PART 1--ESTABLISHMENT AND APPLICATION OF STANDARDS
SEC. 1101. ESTABLISHMENT OF NATIONAL STANDARDS.
In order for a standard health plan to be eligible to be certified
as a standard health plan by a participating State, the standard health
plan shall meet the requirements of this Act, including the following
uniform national standards established in this subtitle and described
in regulations promulgated by the Secretary:
(1) The insurance market reform standards of part 2.
(2) The delivery system reform standards of part 3.
(3) Standards for participation in a guaranty fund
established by the State under section 1505 (established by the
Secretary of Labor in the case of multistate self-insured
standard health plans).
(4) Standards for the collection and reporting of data in
accordance with subtitle B of title V.
(5) Standards for effective grievance procedures that
enrollees may utilize in pursuing complaints in accordance with
subtitle C of title V.
SEC. 1102. GENERAL RULES.
(a) Construction.--Whenever in this subtitle a requirement or
standard is imposed on a standard health plan, 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 subtitle, the Secretary
and the Secretary of Labor are each authorized to issue regulations
under this subtitle on an interim basis that become final on the date
of publication, subject to change based on subsequent public comment.
PART 2--INSURANCE MARKET REFORM
SEC. 1111. GUARANTEED ISSUE, AVAILABILITY, AND RENEWABILITY.
(a) Guaranteed Issue.--Except as otherwise provided in this
section, a standard health plan sponsor--
(1) offering a community-rated standard health plan shall
offer such plan to any community-rated individual applying for
coverage (either directly with the plan or through an employer
or a purchasing cooperative); and
(2) offering an experience-rated standard health plan shall
offer such plan to any experience-rated individual eligible for
coverage under the plan through such individual's experience-
rated employer.
No plan may engage in any practice that has the effect of attracting or
limiting enrollees on the basis of personal characteristics, such as
occupation or affiliation with any person or entity, or those
characteristics described in section 1602.
(b) Availability.--
(1) In general.--A community-rated standard health plan
shall be made available to community-rated individuals
throughout the entire community rating area in which such plan
is offered, including through any employer purchasing
cooperative choosing to offer such plan.
(2) Geographic limitations.--
(A) Nonnetwork plans.--A community-rated nonnetwork
plan (as defined in section 1127(d(2)(A)) may deny
coverage under the plan to a community-rated individual
who resides outside the community rating area in which
such plan is offered.
(B) Network plans.--A community-rated network plan
(as defined in section 1127(e)(5)(A)) may deny coverage
under the plan to a community-rated individual who
resides outside the health plan service area in which
such plan is offered.
(C) Rules regarding denials.--No denial may be made
under subparagraph (A) or (B) unless such denial is
applied uniformly, without regard to health status,
insurability of individuals, or other characteristics
described in section 1602.
(3) Capacity limitations.--
(A) In general.--With the approval of the
appropriate regulatory authority, a standard health
plan may limit enrollment because of the plan's
capacity to deliver services or to maintain financial
stability. If such a limitation is imposed, the
limitation may not be imposed on a basis of personal
characteristics, such as occupation or affiliation with
any person or entity, or those characteristics
described in section 1602.
(B) Restrictions.--If such a limitation is
imposed--
(i) the plan may only enroll individuals
under the plan consistent with rules
established by the State consistent with
subparagraph (C); and
(ii) the plan may not discriminate based on
the method through which a family seeks
enrollment under the plan.
(C) State oversight.--Each State shall, in
accordance with rules promulgated by the Secretary,
establish procedures and methods to assure equal
opportunity of enrollment for all families, regardless
of when during the open enrollment period, or the
method by which, the enrollment has been sought.
(c) Renewability; Limitation on Termination.--
(1) In general.--Except as provided in paragraphs (2) and
(3), 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 or terminate.--A standard
health plan sponsor may refuse to renew, or may terminate, a
standard health plan under this title only for--
(A) in the case of plan in a participating State
and any community rating area in such State with
respect to which the requirements of title X have not
become effective, nonpayment of premiums;
(B) fraud on the part of the individual relating to
such plan; or
(C) misrepresentation of material facts on the part
of the individual relating to an application for
coverage or claim for benefits.
(3) Termination of plans.--A standard health plan may elect
not to renew or make available the standard health plan through
a particular type of delivery system in a community rating
area, but only if the standard health plan--
(A) elects not to renew all of its standard health
plans using such delivery system in such community
rating area; and
(B) provides notice to the appropriate certifying
authority and each individual covered under the plan of
such termination at least 180 days before the date of
expiration of the plan.
In such case, a standard health plan sponsor may not provide for the
issuance of any standard health plan using such a delivery system in
such community rating area during a 5-year period beginning on the date
of the termination of the last plan not so renewed. For purposes of
this paragraph, the term ``delivery system'' means a delivery system
used by a network plan (as defined in section 1128(e)(5)(A)) or a
nonnetwork plan.
(d) Certain Excluded Plans.--The provisions of this section, other
than subsections (c) 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 sponsor publicly discloses the health plans
such sponsor offers in the State and each offered plan meets
the standards specified in paragraph (2).
(2) Specified standards.--
(A) Issue and availability.--The standards
specified in subsections (a) and (b) if the individual
or group applies for coverage during the open
enrollment period required under section 1112(h).
(B) Renewal.--The standards specified in subsection
(c), except paragraph (3) shall be applied by
substituting ``State'' for ``community rating area''.
(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, 1997; and
(B) in the case of the standard specified in
paragraph (2)(B), on or after August 1, 1994, and
before January 1, 1997.
(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. 1112. ENROLLMENT.
(a) In General.--Each standard health plan shall establish an
enrollment process consistent with this section.
(b) Annual Open Enrollment Period.--Each standard health plan shall
permit eligible individuals to enroll (or change enrollment) in the
plan during each annual open enrollment period for each community
rating area specified by the appropriate certifying authority under
section 1503.
(c) Additional Periods of Authorized Changes in Enrollment.--
(1) In general.--Each standard health plan shall provide
for changes in enrollment with respect to such other periods
and occurrences (including changes in residence, appropriate
changes in employment, and the insolvency of carriers or
experience-rated employers) for which an individual is
authorized to change enrollment in standard health plans, as
the Secretary shall specify.
(2) Disenrollment for Cause.--
(A) In general.--The Secretary shall establish
procedures by which individuals enrolled in a standard
health plan may disenroll from such plan for good cause
(as defined by Secretary) at any time during a year and
enroll in another standard health plan. Such procedures
shall be implemented by participating States in a
manner that ensures continuity of coverage for the
standard benefits package or the alternative standard
benefits package for such individuals during the year.
(B) Additional remedies.--In the case of an
individual who changes enrollment from a plan for good
cause due to a pattern of underservice under a plan,
the Secretary may provide rules under which the carrier
providing the standard health plan is liable, to the
subsequent standard health plan in which the individual
is enrolled, for excess costs (as identified in
accordance with such rules) during the period for which
it may be reasonably anticipated that the individual
would (but for such cause) have continued enrollment
with the original standard health plan.
(d) Effectiveness of Change of Enrollment.--Except as the Secretary
may provide, changes in enrollment during an annual open enrollment
period under subsection (a) shall take effect as determined by the
appropriate certifying authority. The Secretary shall also provide when
a change of enrollment under subsection (c) becomes effective.
(e) Direct Enrollment.--
(1) In general.--Subject to paragraph (2), each community-
rated standard health plan shall provide for the direct
enrollment of community-rated individuals in the plan under
methods and procedures established by the Secretary.
(2) Enrollment processes.--The Secretary shall provide
standards for States to ensure the broad availability and
processing of enrollment forms, including direct enrollment
through the mail, and other such processes as the Secretary may
designate.
(f) Marketing Fees.--A community-rated standard health plan may
impose a marketing fee surcharge for community-rated individuals
enrolling in the plan through an agent, broker, or other authorized
sales method, or through a direct enrollment process. Such surcharge
shall be in addition to the highest marketing fee of such plan for
community-rated individuals enrolled in such a plan through any
purchasing cooperative in the community rating area.
(g) Change of Enrollment.--As used in this section, the term
``change of enrollment'' includes, with respect to an individual--
(1) a change in the standard health plan in which the
individual is enrolled,
(2) a change in the type of family enrollment, and
(3) the enrollment of the individual at the time the
individual's status changes to a community-rated individual,
experience-rated individual, or a premium subsidy-eligible
individual under section 6002.
(h) Application of Interim Standard.--
(1) In general.--During the interim standard application
period, a health plan sponsor may only offer a health plan in a
State if such plan sponsor publicly discloses the health plans
such sponsor offers in the State and each offered plan provides
for an annual open enrollment period of at least 30 days.
(2) Interim standard application periods.--The interim
standard application period is on or after January 1, 1995, and
before January 1, 1997.
(3) Application of rules.--Paragraphs (4), (5), and (6) of
section 1111(d) shall apply to this subsection.
SEC. 1113. COVERAGE OF DEPENDENTS.
(a) In General.--Except as otherwise provided in this Act, a
standard health plan shall enroll all members of the same family (as
defined in subsection (b)).
(b) Family Defined.--In this Act, unless otherwise provided, the
term ``family''--
(1) means, with respect to an individual who is not a child
(as defined in subsection (c)), the individual; and
(2) includes the following persons (if any):
(A) The individual's spouse.
(B) The individual's children (and, if applicable,
the children of the individual's spouse).
(c) Classes of Enrollment; Terminology.--
(1) In general.--In this Act, each of the following is a
separate class of enrollment:
(A) Coverage only of an individual (referred to in
this Act as the ``individual'' enrollment or class of
enrollment).
(B) Coverage only of a child (referred to in this
Act as the `single child' enrollment or class of
enrollment).
(C) Coverage only of one or more children (referred
to in this Act as the `multiple children' enrollment or
class of enrollment).
(D) Coverage of a married couple without children
(referred to in this Act as the ``couple-only''
enrollment or class of enrollment).
(E) Coverage of an individual and one or more
children (referred to in this Act as the ``single
parent'' enrollment or class of enrollment).
(F) Coverage of a married couple and one or more
children (referred to in this Act as the ``dual
parent'' enrollment or class of enrollment).
(2) References to family and couple classes of
enrollment.--In this Act:
(A) Family.--The terms ``family enrollment'' and
``family class of enrollment'', refer to enrollment in
a class of enrollment described in any subparagraph of
paragraph (1) (other than subparagraph (A)).
(B) Couple.--The term ``couple class of
enrollment'' refers to enrollment in a class of
enrollment described in subparagraph (D) or (F) of
paragraph (1).
(d) Spouse; Married; Couple.--
(1) In general.--In this Act, the terms ``spouse'' and
``married'' mean, with respect to a person, another individual
who is the spouse of the person or married to the person, as
determined under applicable State law.
(2) Couple.--The term ``couple'' means an individual and
the individual's spouse.
(e) Child Defined.--
(1) In general.--In this Act, except as otherwise provided,
the term ``child'' means an individual who is a child (as
determined under paragraph (3)) who--
(A) is under 25 years of age or is disabled, and
(B) is unmarried.
The Secretary may adjust the age limitation in subparagraph (A)
with respect to part-time or full-time students.
(2) Application of state law.--Subject to paragraph (3),
determinations of whether a person is the child of another
person shall be made in accordance with applicable State law.
(3) National rules.--The Secretary may establish such
national rules respecting individuals who will be treated as
children under this Act as the Secretary determines to be
necessary. Such rules shall be consistent with the following
principles:
(A) Step child.--A child includes a step child who
is an individual living with an adult in a parent-child
relationship.
(B) Disabled child.--A child includes an unmarried
dependent individual regardless of age who is incapable
of self-support because of mental or physical
disability which existed before age 25.
(C) Certain intergenerational families.--A child
includes the grandchild of an individual if--
(i) the parent of the grandchild is a child
and the parent and grandchild are living with
the grandparent; or
(ii) the grandparent has legal custody of
the grandchild.
(D) Treatment of emancipated minors.--An
emancipated minor shall not be treated as a child.
(E) Children placed for adoption.--
(i) In general.--A child includes a child
who is placed for adoption with an individual,
except when the child is a child in State-
supervised care.
(ii) Placed for adoption.--The term
``placed for adoption'' in connection with any
placement for adoption of a child with any
individual, means the assumption and retention
by such individual of a legal obligation for
total or partial support of such child in
anticipation of the adoption of such child.
(f) Additional Rules.--
(1) In general.--The Secretary shall provide for such
additional exceptions and special rules, including rules
relating to--
(A) families in which members are not residing in
the same area or in which children are not residing
with their parents,
(B) changes in family composition occurring during
a year,
(C) treatment of children in State-supervised care,
and
(D) treatment of children of parents who are
separated or divorced,
as the Secretary finds appropriate.
(2) Children in state-supervised care.--
(A) In general.--In the case of a child in State-
supervised care (as described in subparagraph (B)), the
child shall be considered as a family of one and
enrolled by the State agency who has been awarded
temporary or permanent custody of the child (or which
has legal responsibility for the child) in a high cost-
sharing plan unless the State agency has established a
special health service delivery system designated to
customize and more efficiently provide health services
to children in State-supervised care, in which case the
State agency will enroll the child in the plan
appropriate to ensure access to such a special health
service delivery system.
(B) Children in state-supervised care.--For
purposes of subparagraph (A), the term ``child in
State-supervised care'' means any child who is residing
away from the child's parents and is temporarily or
permanently, on a voluntary or involuntary basis, under
the responsibility of a public child welfare or
juvenile services agency or court. Such term includes
any child who is not yet made a ward of the court or
adjudicated as a delinquent residing in emergency
shelter care, any child in the physical custody of
public or private agencies, and any child who is with
foster parents, or other group or residential care
providers. Such term also includes any child who is
legally adopted and for whom the Federal or State
government is providing adoption assistance payments.
(g) 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 this
section.
(2) Interim standards application periods.--The interim
standards application period is on or after January 1, 1995,
and before January 1, 1997.
(3) Application of rules.--Paragraphs (4), (5), and (6) of
section 1111(d) shall apply to this subsection.
SEC. 1114. NONDISCRIMINATION BASED ON HEALTH STATUS.
(a) No Limits on Coverage; No Pre-Existing Condition Limits.--
Except as provided in subsection (b), a standard health plan may not--
(1) terminate, restrict, or limit coverage or establish
premiums based on the health status, medical condition, claims
experience, receipt of health care, medical history,
anticipated need for health care services, disability, or lack
of evidence of insurability of an individual;
(2) terminate, restrict, or limit coverage in any portion
of the plan's community rating area, except as provided in
section 1111(b)(2);
(3) except as provided in section 1111(c)(2), cancel
coverage for any community-rated individual until that
individual is enrolled in another applicable standard health
plan;
(4) impose waiting periods before coverage begins; or
(5) impose a rider that serves to exclude coverage of
particular individuals or particular health conditions.
(b) Treatment of Preexisting Condition Exclusions.--
(1) In general.--Subject to paragraph (4), before January
1, 2002, 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 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 relate to
pregnancy.
(2) Continuous coverage.--A standard health plan shall
provide that if an individual under such plan is in a period of
continuous coverage with respect to particular services as of
the date of enrollment under such plan, any period of exclusion
of coverage with respect to a preexisting condition as
permitted under paragraph (1) shall be prohibited.
(3) Definitions.--As used in this subsection:
(A) Period of continuous coverage.--The term
``period of continuous coverage'' means, with respect
to particular services, the period beginning on the
date an individual is enrolled under a standard health
plan or an equivalent health care program which
provides benefits with respect to such services and
ends on the date the individual is not so enrolled for
a continuous period of more than 3 months.
(B) Preexisting condition.--The term ``preexisting
condition'' means, with respect to coverage under a
standard health plan, a condition which was diagnosed,
or which was treated, within the 3-month period ending
on the day before the first date of such coverage
(without regard to any waiting period).
(4) No exclusion during amnesty period or with respect to a
subsidy-eligible individual.--This subsection shall not apply--
(A) during the first annual open enrollment period
specified by the appropriate certifying authority under
section 1503, and
(B) with respect to the enrollment of an individual
eligible for a premium subsidy under subtitle A of
title VI.
(c) Application of Interim Standard.--
(1) In general.--During the interim standard application
period, a health plan sponsor may only offer a health plan in a
State if such plan meets the standard specified in paragraph
(2).
(2) Specified standards.--
(A) Exclusion.--The standards specified in
subsection (b) by substituting--
(i) ``6-month'' for ``3-month'' in
paragraph (1)(A), and
(ii) ``major medical insurance plan or
other plan offering coverage similar to the
benefits included in the standard benefits
package as established under subtitle C'' for
``standard health plan''.
(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 more than $2,500
during any 12-month period.
(3) Interim standards application period.--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, 1997, and
(B) in the case of the standard specified in
paragraph (2)(B), on or after August 1, 1994, and
before January 1, 1997.
(4) Application of rules.--Paragraphs (4), (5), and (6) of
section 1111(e) shall apply to this subsection.
SEC. 1115. BENEFITS.
(a) In General.--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.
(b) Alternative Standard Benefits Package.--
(1) In general.--A carrier may only offer a standard health
plan with an alternative standard benefits package in a
community rating area if such carrier also offers a standard
health plan with a standard benefits package in such area.
(2) Inclusion in risk adjustment and reinsurance
programs.--Any standard health plan with an alternative
standard benefits packages shall be included in any reinsurance
or risk adjustment program under section 1117 operating in the
community rating area in which such plan is offered.
(3) Offer prohibited if mandates required.--A carrier may
not offer an alternative benefits package in a participating
State and any community rating area in such State with respect
to which the requirements of title X have become effective.
SEC. 1116. COMMUNITY RATING REQUIREMENTS.
(a) Applicability.--Except as provided in subsection (e), the
provisions of this section shall apply to community-rated standard
health plans.
(b) Standard Premiums With Respect to Community-Rated
Individuals.--Subject to subsection (d), each community-rated standard
health plan shall establish within each community rating area in which
the plan is to be offered a standard premium for individual enrollment
for the standard benefits package and the alternative standard benefits
package established under subtitle C.
(c) Uniform Premiums Within Community Rating Areas.--
(1) In general.--Subject to paragraph (2), the standard
premium described in subsection (b) for all community-rated
individuals within a community rating area shall be the same.
(2) Application to enrollees.--
(A) In general.--The premium charged for coverage
in a standard health plan 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.--The Secretary, in
consultation with the NAIC, shall develop a family
adjustment factor that reflects the relative actuarial
costs of benefit packages based on the applicable
family enrollment (as compared with such costs for
individual enrollment).
(C) Age adjustment factor.--The Secretary, in
consultation with the NAIC, shall specify, within 6
months of the date of the enactment of this Act,
uniform age categories and rating increments for age
adjustment factors that reflect the relative actuarial
costs of benefit packages among enrollees. The highest
age adjustment factor may not exceed twice the lowest
age adjustment factor for individuals 18 to 65 years of
age. The Secretary shall also provide for the gradual
phaseout of age adjustment factors by January 1, 2002.
(d) Lower Premium Through Purchasing Cooperatives.--Notwithstanding
any other provision of this section, no premium may be charged to a
community-rated individual by a community-rated standard health plan in
a community rating area which is not the same premium negotiated for
such plan offered through any purchasing cooperative in such area.
(e) Experience Rating.--
(1) Applicability.--The provisions of this subsection shall
apply to experience-rated standard health plans.
(2) Rating.--For purposes of applying this section to
experience-rated employers, the employees of the employer
involved shall constitute the community with respect to the
determination of the premium.
(3) Premiums.--An experience-rated standard health plan may
not vary the premium imposed with respect to experience-rated
individuals enrolled in the plan, except as may be allowed
under this section with respect to geographic and family
coverage factors (as determined by the Secretary of Labor)
under the plan.
SEC. 1117. RISK ADJUSTMENT AND REINSURANCE.
(a) In General.--Except as provided in subsection (b), each
standard health plan shall participate in a standard health plan risk
adjustment program and a reinsurance program implemented by the State
in accordance with section 1504.
(b) Multistate Plans.--Each multistate self-insured standard health
plan shall participate in a reinsurance program developed by the
Secretary of Labor under section 1482.
SEC. 1118. FINANCIAL SOLVENCY REQUIREMENTS AND CONSUMER PROTECTION
AGAINST PROVIDER CLAIMS.
(a) Solvency Protection.--Each standard health plan shall meet
financial solvency requirements to assure protection of enrollees with
respect to potential insolvency. Each standard health plan shall meet
requirements relating to capital and solvency established by the
Secretary under section 1401(h).
(b) Protection Against Provider Claims.--In the case of a failure
of a standard health plan to make payments with respect to the standard
benefits covered under the plan for any reason, an individual who is
enrolled under the plan is not liable to any health care provider with
respect to the provision of health services within such set of benefits
for payments in excess of the amount for which the enrollee would have
been liable if the plan were to have made payments in a timely manner.
PART 3--DELIVERY SYSTEM REFORM
SEC. 1121. PROHIBITION OF DISCRIMINATION.
(a) In General.--Each standard health plan shall comply with the
antidiscrimination requirements of section 1602.
(b) Additional Antidiscrimination Requirements.--
(1) In general.--No standard health plan may discriminate
on the basis of the provider's status as a member of a health
care profession for the purposes of selecting among providers
of health services for participation in a provider network, but
only if the State authorizes members of that profession to
render the services in question and such services are covered
in the standard benefits package established under subtitle C.
(2) Rule of construction.--Nothing in paragraph (1)(B)
shall be construed as requiring any standard health plan to:
(A) include in a network any individual provider;
(B) establish any defined ratio of different
categories of health professionals; or
(C) establish any specific utilization review or
internal quality standards other than that required in
other provisions of this Act.
SEC. 1122. QUALITY ASSURANCE STANDARDS.
(a) In General.--Each standard health plan shall comply with the
plan performance standards in accordance with subtitle A of title V.
Each standard health plan shall establish procedures, including ongoing
quality improvement procedures, to ensure that the health care services
provided to enrollees under the plan will be provided under reasonable
standards of quality of care consistent with prevailing professionally
recognized standards of medical practice and the quality standards
established under subtitle A of title V.
(b) Internal Quality Assurance Program.--Each standard health plan
shall establish, and communicate to its enrollees and its providers, an
ongoing internal program, including periodic reporting, to monitor and
evaluate the quality and cost effectiveness of its health care
services, pursuant to standards established by the National Quality
Council.
SEC. 1123. CONSUMER GRIEVANCE PROCESS.
Each standard health plan shall demonstrate to the appropriate
certifying authority the capability to administer the plan in a manner
which ensures due process for all enrollees under rules established by
the Secretary.
SEC. 1124. HEALTH SECURITY CARDS.
Each standard health plan shall issue a health security card to
each individual enrolled in such plan in accordance with subtitle B of
title V and regulations promulgated by the Secretary.
SEC. 1125. INFORMATION AND MARKETING STANDARDS.
(a) In General.--Each standard health plan shall provide
information to the participating State and each purchasing cooperative
through which such plan is offered in accordance with sections 1401(d)
and 5009, other applicable information requirements of this Act, and
rules promulgated by the Secretary.
(b) Marketing Methods; Advertising Materials.--A standard health
plan may utilize direct marketing, agency, or other arrangements to
distribute health plan information, subject to applicable fair
marketing practices laws and standards established by the State or by
the Secretary, including standards to prevent selective marketing. All
advertising, promotional materials, and other communications with
health plan members and the general public must be factually accurate
and responsive to the needs of served populations. A standard health
plan may not distribute marketing materials to an area smaller than the
entire community rating area of the plan.
(c) Payment of Agent Commissions.--A standard health plan--
(1) may pay a commission or other remuneration to an agent
or broker in marketing the plan to individuals or groups, but
(2) may not vary such remuneration based, directly or
indirectly, on the anticipated or actual claims experience
associated with the group or individuals to which the plan was
sold.
(d) Materials in Appropriate Languages.--In the case of a community
rating area that includes a significant number or proportion of
residents with limited English proficiency, each standard health plan
in such area shall provide all materials under this Act at an
appropriate reading level and in the native languages of such
residents, as appropriate.
SEC. 1126. INFORMATION REGARDING A PATIENT'S RIGHT TO SELF-
DETERMINATION IN HEALTH CARE SERVICES.
(a) In General.--Each standard health plan shall provide written
information to each individual enrolling in such plan of such
individual's right under State law (whether statutory or as recognized
by the courts of the State) to make decisions concerning medical care,
including the right to accept or refuse medical treatment and the right
to formulate advance directives (as defined in section 1866(f)(3) of
the Social Security Act (42 U.S.C. 1395cc(f)(3))), and the written
policies of the standard health plan with respect to such right.
(b) Promotion of Shared Decision Making.--Each standard health plan
shall promote shared decision making by assuring that patients are
appropriately informed about health care treatment options.
SEC. 1127. CONTRACTS WITH PURCHASING COOPERATIVES.
(a) Contracts with Cooperatives.--A community-rated standard health
plan provided by a carrier shall enter into contracts with each
purchasing cooperative seeking such a contract in the community rating
area served by the plan.
(b) Pricing.--No community-rated standard health plan shall offer a
rate to a purchasing cooperative in the community rating area served by
the plan that is more than the premium rate determined under section
1116. Such a plan may charge a marketing fee as specified under section
1324(b)(1).
SEC. 1128. HEALTH PLAN ARRANGEMENTS WITH PROVIDERS.
(a) Providers Outside Area.--A State may not limit the ability of
any plan to contract with a provider of health services located outside
of the geographic boundaries of a community rating area or the State.
(b) Treatment of Cost-Sharing.--Each standard health plan which
provides the standard benefits package shall include in its payments to
providers such additional reimbursements as may be necessary to reflect
cost-sharing reductions to which individuals are entitled under
subtitle A of title VI.
(c) Provider Verification.--Each standard health plan shall ensure
that all health care providers reimbursed by the plan are authorized
under State law to provide applicable services. Each standard health
plan shall--
(1) verify the credentials of practitioners and facilities;
(2) ensure that all providers meet applicable State
licensing and certification standards;
(3) ensure that each health care provider participating in
the plan annually discloses information regarding operations,
ownership, finances, and workforce necessary to evaluate the
providers compliance with this Act;
(4) oversee the quality and performance of participating
providers, consistent with section 1122; and
(5) investigate and resolve consumer complaints against
participating providers.
(d) Requirements for Nonnetwork Plans.--
(1) In general.--Each standard health plan shall
demonstrate, based on standards established by the Secretary,
arrangements with a sufficient number, distribution, and
variety of qualified health professionals that will accept the
plan's payment rates in full to ensure that all nonnetwork
items and services covered by the standard benefits package
established under subtitle C are available and accessible to
all enrollees throughout the community rating area with
reasonable promptness and in a manner which assures continuity.
(2) Definitions relating to nonnetwork plans.--For purposes
of this Act:
(A) Nonnetwork plan defined.--The term ``nonnetwork
plan'' means a standard health plan that does not
utilize a provider network (as defined in subsection
(e)(5)(B)).
(B) Nonnetwork items and services.--The term
``nonnetwork items and services'' means items or
services provided to an individual enrolled under a
standard health plan by a health care provider who is
not a member of a provider network of the plan.
(e) Requirements for Network Plans.--
(1) Agreements.--Each standard health plan shall enter into
agreements or have such other arrangements with a sufficient
number, distribution, and variety of qualified health
professionals within the network that will accept the plan's
payment rates as payments in full to ensure that all services
covered by the standard benefit package established under
subtitle C are available and accessible to all enrollees
throughout the health plan service area (established under
section 1502(d)) with reasonable promptness and in a manner
which assure continuity.
(2) Gatekeeper.--With respect to each standard health plan
that utilizes a gatekeeper or similar process to approve health
care services, such plan shall ensure that such gatekeeper or
process does not create an undue burden for enrollees with
complex or chronic health conditions and shall ensure access to
relevant specialists for the continued care of such enrollees
when medically indicated. In cases of a patient with a severe,
complex, or chronic health condition, such plan shall
determine, in conjunction with the enrollee and the enrollee's
primary care provider, whether it is medically necessary or
appropriate to use a specialist or a care coordinator from an
interdisciplinary team as the gatekeeper or in the health care
approval process.
(3) Continued care.--Each standard health plan shall
develop and implement mechanisms for coordinating the delivery
of care among different providers so as to enhance continuity
of care for the patient.
(4) Eligible centers of specialized treatment expertise.--
(A) In general.--Each standard health plan must
demonstrate that adults, children, and individuals with
disabilities have access to specialized treatment
expertise when medically indicated by meeting
evaluation criteria established by the Secretary. In
establishing such criteria, the Secretary may consider
a process by which a standard health plan could be
deemed to meet such evaluation criteria if such plan
demonstrates referrals to designated centers of
specialized care when medically necessary or
appropriate, informs enrollees of the availability of
referral care, and ensures compliance with section
1123.
(B) Eligible centers.--The Secretary shall
establish criteria for designating centers of
specialized care and shall designate eligible centers
based on such criteria. The criteria shall include
requirements for staff credentials and experience, and
requirements for measured outcomes in the diagnosis and
treatment of patients. The Secretary shall develop
additional criteria for outcomes of specialized
treatment as research findings become available. To be
designated as a center of specialized care, a center
shall--
(i) attract patients from outside the
center's local geographic region, from across
the State or the Nation; and
(ii) either sponsor, participate in, or
have medical staff who participate in peer-
reviewed research.
(C) Limitation.--A State may not establish rules or
policies that require or encourage standard health
plans to give preference to centers of specialized
treatment expertise within the State or within the
community rating area. A standard health plan shall not
prohibit an academic health center, teaching hospital,
or other center for specialized care with which it
contracts from contracting with one or more other
plans.
(D) Specialized treatment expertise.--For purposes
of this paragraph, the term ``specialized treatment
expertise'', with respect to the treatment of a health
condition by an eligible center, means expertise in
diagnosing and treating unusual diseases or conditions,
diagnosing and treating diseases or conditions which
are unusually difficult to diagnose or treat, and
providing other specialized health care.
(5) Definitions relating to network plans.--For purposes of
this Act:
(A) Network plan defined.--The term ``network
plan'' means a standard health plan that utilizes a
provider network.
(B) Provider network defined.--The term ``provider
network'' means, with respect to a standard health
plan, providers that have entered into an agreement
with the plan under which such providers are obligated
to provide items and services in the standard benefits
package established under subtitle C to individuals
enrolled in the plan, or have an agreement to provide
services on a fee-for-service basis.
(C) Network items and services.--The term ``network
items and services'' means items or services provided
to an individual enrolled under a standard health plan
by a health care provider who is a member of a provider
network of the plan.
(f) Emergency and Urgent Care Services.--
(1) In general.--Each standard health plan shall cover
emergency and urgent care services provided to enrollees,
without regard to whether or not the provider furnishing such
services has a contractual (or other) arrangement with the plan
to provide items or services to enrollees of the plan and in
the case of emergency services without regard to prior
authorization.
(2) Payment amounts.--In the case of emergency and urgent
care provided to an enrollee outside of a standard health
plan's community rating area, the payment amounts of the plan
shall be based on the applicable fee schedule described in
subsection (g).
(g) Application of Plan Fee Schedule.--
(1) In general.--Subject to paragraph (2), each standard
health plan that provides for payment for services on a fee-
for-service basis and has not established an agreement or
contractual arrangement with providers specifying a basis for
payment shall make such payment to such providers under a fee
schedule established by the plan.
(2) Rule of construction.--Nothing in the paragraph (1)
shall be construed to prevent a standard health plan from
providing for a different basis or level of payment than the
fee schedule established under such paragraph as part of a
contractual agreement with participating providers under the
plan.
(h) Physician Participation Program; Requirement of Direct
Billing.--
(1) Physician participation program.--
(A) In general.--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 cost-sharing required by such
plan. Each such plan shall make available the list of
participating physicians to enrollees and prospective
enrollees.
(B) Coverage under agreements with plans.--The
agreements or other arrangements entered into under
subsection (e)(1) between a standard health plan and
the health care providers providing the standard
benefits package established under subtitle C to
individuals enrolled with the plan shall prohibit a
provider from engaging in balance billing described in
subparagraph (A).
(2) Direct billing.--
(A) In general.--A provider may not charge or
collect from an enrollee amounts that are payable by
the standard health plan (including any cost-sharing
reduction assistance payable by the plan) and shall
submit charges to such plan in accordance with any
applicable requirements of subtitle B of title V
(relating to health information systems).
(B) Prohibition.--An individual or entity that
performs clinical laboratory services may not present
or cause to be presented, a claim, bill, or demand for
payment to any person other than the individual
receiving such services, or to the standard health plan
of the individual, except that the Secretary may by
regulation establish appropriate exceptions to the
requirement of this subparagraph.
(3) Prohibition of balance billing of taxes.--Any agreement
entered into between a standard health plan and a provider
shall prohibit the provider from charging patients the amount
of any tax recovered from the provider under section 4518 of
the Internal Revenue Code of 1986.
(4) Rule of construction.--Nothing in this Act shall be
construed to--
(A) require or force an individual to receive
health care solely through the individual's standard
health plan; or
(B) prohibit any individual from privately
contracting with any health care provider and paying
for the treatment or service provider by such provider
on a cash basis or any other basis as agreed to between
the individual and the provider.
(i) Relation to Detention.--A standard health plan is not required
to provide any reimbursement to any detention facility for services
performed in that facility for detainees in the facility.
SEC. 1129. UTILIZATION MANAGEMENT PROTOCOLS AND PHYSICIAN INCENTIVE
PLANS.
(a) Requiring Consumer Disclosure.--Each standard health plan shall
disclose upon request to enrollees (and prospective enrollees) and to
participating providers (and prospective providers), the protocols and
financial incentives used by the plan, including utilization management
protocols and physician incentive plans for controlling utilization and
costs, while protecting proprietary business information to the extent
specified by the Secretary.
(b) Utilization Management.--The utilization review and management
activities of each standard health plan, provided either directly or
through contract, shall meet the following standards as defined by the
Secretary:
(1) Personnel.--All review determinations shall be made by
health professionals who are licensed, certified, or otherwise
credentialed and who are qualified to review utilization of the
treatment being sought.
(2) Review process.--Each standard health plan shall base
utilization management on current scientific knowledge, stress
the efficient delivery of health care and quality outcomes,
rely primarily on evaluating and comparing practice patterns
rather than routine case-by-case review, be consistent and
timely in application, and have a process for making review
determinations for urgent and emergency care 24 hours a day.
(3) No financial incentive.--Utilization management by each
standard health plan may not create financial incentives for
reviewers or providers to reduce or limit medically necessary
or appropriate services.
(c) 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) of the Social Security Act (42
U.S.C. 1395mm(i)(8)(A)).
PART 4--SUPPLEMENTAL HEALTH BENEFITS PLANS
SEC. 1141. SUPPLEMENTAL HEALTH BENEFITS PLANS.
(a) Treatment of Supplemental Health Benefits Plans.--
(1) In general.--Nothing in this Act may be construed as
preventing a standard health plan sponsor from offering and
pricing (in a manner that is separate from the offering and
pricing of the standard health plans offered by such sponsor in
the community rating area) supplemental health benefits plans
pursuant to the State certification plan, the requirements of
this section, and regulations promulgated by the Secretary.
(2) Plans defined.--In this Act:
(A) Supplemental health benefits plan.--The term
``supplemental health benefits plan'' means a
supplemental services plan or a cost-sharing plan.
(B) Supplemental services plan.--The term
``supplemental services plan'' means a health plan
which provides--
(i) coverage for services and items not
included in the standard benefits package
established under subtitle C,
(ii) coverage for items and services
included in such package but not covered
because of a limitation in amount, duration, or
scope of benefits, or
(iii) both.
(C) Cost-sharing plan.--The term ``cost-sharing
plan'' means a health plan which provides coverage for
deductibles and coinsurance imposed as part of the
standard benefits package established under subtitle C.
(b) Requirements for Supplemental Services Plans.--
(1) Application of certain health plan standards.--
(A) In general.--The standards specified in
subparagraph (B) 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.
(B) Specified standards.--The standards specified
in this subparagraph are as follows:
(i) Section 1111 (relating to guaranteed
issue, availability, and renewability).
(ii) Section 1112 (relating to enrollment).
(iii) Section 1114 (relating to
nondiscrimination based on health status).
(iv) Section 1116 (relating to rating
limitations for community-rated market).
(2) No duplicative health benefits.--A standard health plan
sponsor or any other entity may not offer any supplemental
services plan that--
(A) duplicates the standard benefits package
established under subtitle C, or
(B) duplicates any coverage provided under the
medicare program to any medicare-eligible individual.
(3) Restrictions on marketing abuses.--Not later than May
1, 1995, the Secretary shall develop minimum standards that
prohibit marketing practices by standard health plan sponsors
and other entities offering supplemental services plans that
involve--
(A) providing monetary incentives for, or tying or
otherwise conditioning, the sale of the plan to
enrollees in a certified standard health plan of the
sponsor or entity;
(B) linking in any manner to the plan's standard
benefits package; or
(C) 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.
(c) Requirements for Cost-Sharing Plans.--
(1) Rules for offering of policies.--A cost-sharing plan
may be offered to an individual only if--
(A) the plan is offered by the standard health plan
in which the individual is enrolled;
(B) the standard health plan offers the plan to all
individuals enrolled in the standard health plan;
(C) the individual is not enrolled in an
alternative benefits package; and
(D) the plan is offered only during the enrollment
periods for standard health plans specified in section
1112.
(2) Prohibition of coverage of copayments.--A cost-sharing
plan may not provide any benefits relating to any copayments
established under subtitle C.
(3) Equivalent coverage for all services.--A cost-sharing
plan shall provide coverage for items and services in the
standard benefits package to the same extent as the plan
provides coverage for all items and services in the package.
(4) Requirements for pricing.--
(A) In general.--The price of any cost-sharing plan
shall--
(i) be the same for each individual or
class of family to whom the plan is offered;
(ii) include any expected increase in
utilization resulting from the purchase of the
plan by individuals enrolled in the standard
health plan; and
(iii) not result in a loss-ratio of less
than 90 percent.
(B) Loss-ratio defined.--In subparagraph (A)(iii),
a ``loss-ratio'' is the ratio of the premium returned
to the consumer in payout relative to the total premium
collected.
Subtitle C--Benefits and Cost-Sharing
PART 1--STANDARD BENEFITS PACKAGES
SEC. 1201. 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 1202; and
(B) provides for at least one of the 3 cost-sharing
schedules established under section 1213(c)(2) by the National
Health Benefits Board established under section 1211 (referred
to in this part as the ``Board'') for such a package; 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 as in effect during 1994, adjusted for
an average population and adjusted for the particular cost-
sharing schedule provided for in the package.
(b) Alternative Standard Benefits Package.--For purposes of this
title, an alternative 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 1202; and
(B) provides for the very high deductible cost-sharing
schedule established under section 1213(c)(3) by the Board for
such a package; 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 as in effect during 1994, adjusted for an
average population.
(c) Actuarial Values.--The Board shall determine the actuarial
values referred to in subsections (a)(2) and (b)(2).
SEC. 1202. 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, as defined by the Board
under section 1213(a):
(1) Hospital services.--The hospital (as defined in section
1203(7)) services described in this paragraph include the
following:
(A) Inpatient hospital services.
(B) Outpatient hospital services.
(C) 24-hour a day hospital emergency services.
(2) Health professional services.--The items and services
described in this paragraph are--
(A) health professional services (as defined in
section 1203(3)), including consultations, that are
provided in a home, office, or other ambulatory care
setting, or an institutional setting; and
(B) services and supplies (including drugs and
biologicals which cannot be self-administered)
furnished as incident to such health professional
services.
(3) Emergency and ambulatory medical and surgical
services.--The items and services described in this paragraph
are 24-hour a day emergency services and ambulatory medical or
surgical services provided in a facility that is legally
authorized to provide such services in the State in which such
services are provided.
(4) Clinical preventive services.--The items and services
described in this paragraph are clinical preventive services,
including services for high risk populations, age-appropriate
immunizations, tests, and clinician visits furnished consistent
with any periodicity schedule specified by the Board under
section 1213(a)(2)(B).
(5) Mental illness and substance abuse services.--The items
and services described in this paragraph are mental illness and
substance abuse services, including inpatient, outpatient,
residential non-hospital, and intensive non-residential
services, for the treatment of mental illness and substance
abuse disorders (as defined in section 1203(9)).
(6) Family planning services and services for pregnant
women.--The services described in this section include the
following items and services:
(A) Voluntary comprehensive family planning
services, including counseling and education.
(B) Contraceptive drugs and devices that are
subject to approval by the Secretary under the Federal
Food, Drug, and Cosmetic Act.
(C) Services for pregnant women.
(7) Hospice care.--The hospice care described in this
paragraph is items and services provided for end of life care
(as defined in section 1203(6)).
(8) Home health care.--
(A) In general.--The home health care described in
this paragraph is home health care (as defined in
section 1203(4)) and home infusion drug therapy
services (as defined in section 1203(5)).
(B) Limitations.--Coverage for home health care is
subject to the following limitations:
(i) Inpatient treatment alternative.--Such
care is covered only as an alternative to
inpatient treatment in a hospital, skilled
nursing facility (as defined in section
1203(15)), or rehabilitation facility (as
defined in section 1203(14)) after an illness,
injury, disorder, or other health condition.
(ii) Reevaluation.--At the end of each 60-
day period of home health care, the need for
continued care shall be reevaluated by the
person who is primarily responsible for
providing the home health care. Additional
periods of care are covered only if such person
determines that the requirement in clause (i)
is satisfied.
(9) Extended care services--
(A) In general.--The extended care services
described in this section are the items and services
described in section 1861(h) of the Social Security
Act, when provided to an inpatient of a skilled nursing
facility or a rehabilitation facility.
(B) Limitations.--Extended care services are
covered only as an alternative to receiving inpatient
hospital services as a result of an illness, injury,
disorder, or other health condition.
(10) Ambulance services.--
(A) In general.--The ambulance services described
in this paragraph are covered only when indicated by
the medical condition of the individual receiving such
services. Such services include the following:
(i) Ground transportation by ambulance.
(ii) Air or water transportation by an
aircraft or vessel equipped for transporting an
injured or sick individual in cases in which
there is no other method of transportation or
where use of another method of transportation
is contra-indicated by the medical condition of
such individual.
(11) Outpatient laboratory, radiology, and diagnostic
services.--The items and services described in this paragraph
are laboratory, radiology, and diagnostic services provided
upon prescription to individuals who are not inpatients of a
hospital, hospice, skilled nursing facility, or rehabilitation
facility.
(12) Outpatient prescription drugs.--The items described in
this paragraph are the following used for a medically accepted
indication (as defined in section 1203(8)):
(A) Outpatient prescription drugs.
(B) Blood clotting factors (as defined in section
1203(1)).
(C) Drugs used for home infusion therapy.
(D) Biologicals.
(E) Accessories and supplies used directly with the
items described in subparagraphs (A) through (D).
(13) Outpatient rehabilitation services.--
(A) In general.--The outpatient rehabilitation
services described in this paragraph are--
(i) outpatient occupational therapy;
(ii) outpatient physical therapy;
(iii) outpatient respiratory therapy; and
(iv) outpatient speech-language pathology
services and outpatient audiology services.
(B) Limitations.--Coverage for outpatient
rehabilitation services is subject to the following
limitations:
(i) Service limitation.--Such services
include only items or services used to restore
or maintain functional capacity or prevent or
minimize limitations on physical and cognitive
functions as a result of an illness, injury,
disorder, or other health condition, including
attaining new functional abilities at an age-
appropriate rate.
(ii) Reevaluation.--At the end of each 60-
day period of outpatient rehabilitation
services, the need for continued services shall
be reevaluated by the person who is primarily
responsible for providing the services.
Additional periods of services are covered only
if such person determines that the requirement
of paragraph (1) is satisfied.
(14) Durable medical equipment and prosthetic and orthotic
devices.--
(A) In general.--The items and services described
in this paragraph are--
(i) durable medical equipment (as defined
in section 1203(2);
(ii) prosthetic devices (as defined in
section 1203(12);
(iii) orthotics (as defined in section
1203(10)) and prosthetics (as defined in
section 1203(11)); and
(iv) accessories and supplies used directly
with the equipment or devices described in
clauses (i) through (iv).
(B) Repair, maintenance, etc.--The items and
services described in this paragraph include the
following with respect to the equipment and devices
described in subparagraph (A):
(i) Repair and maintenance of such
equipment or devices.
(ii) Replacement of such equipment or
devices when required due to loss, irreparable
damage, wear, or because of a change in the
patient's condition.
(iii) Fitting and training for the use of
such equipment or devices.
(15) Vision care, hearing aids, and dental care.--
(A) In general.--The items described in this
paragraph are the vision care described in subparagraph
(B), dental care described in subparagraph (C), and
hearing care described in subparagraph (D).
(B) Vision care.--The vision care described in this
subparagraph is routine eye examinations, diagnosis,
and treatment for defects in vision furnished to
individuals who are under 22 years of age, including
eyeglasses and contact lenses furnished according to a
periodicity schedule established by the Board.
(C) Dental care.--
(i) Individuals under 22.--The dental care
described in this subparagraph shall include
the following, as specified by the Board,
furnished to individuals who are under 22 years
of age:
(I) Emergency dental treatment.
(II) Prevention and diagnosis of
dental disease.
(III) Treatment of dental disease.
(IV) Space maintenance procedures
to prevent orthodontic complications.
(V) Interceptive orthodontic
treatment to prevent severe
malocclusion.
(ii) Individuals over 22.--The dental care
described in this subparagraph for individuals
who are over 22 years of age is emergency
dental treatment, as specified by the Board.
(D) Hearing care.--The hearing care items and
services described in this paragraph are the following
when furnished to an individual who is under 22 years
of age:
(i) Routine ear examinations and diagnosis
for defects in hearing as part of a physician
visit.
(ii) Hearing aids when recommended by a
physician or audiologist.
(16) Investigational treatments.--The items and services
described in this paragraph are items and services required to
provide patient care pursuant to the design of a qualified
investigational treatment (as defined in section 1203(13)).
(b) Limitation.--
(1) In general.--Items and services under the categories
described in subsection (a) shall be furnished to health plan
enrollees when medically necessary or appropriate.
(2) Definition.--For purposes of this subtitle, the term
``medically necessary or appropriate'' when referring to an
item or service means an item or service intended to maintain
or improve the biological, psychological, or functional
condition of a health plan enrollee or to prevent or mitigate
an adverse health outcome to an enrollee.
SEC. 1203. DEFINITIONS.
For purposes of this subtitle:
(1) Blood clotting factors.--The term ``blood clotting
factors'' has the meaning given such term in section
1861(s)(2)(I) of the Social Security Act.
(2) Durable medical equipment.--The term ``durable medical
equipment'' has the meaning given such term in section 1861(n)
of the Social Security Act.
(3) Health professional services.--The term ``health
professional services'' means professional services that--
(A) are lawfully provided by a physician; or
(B) would be described in subparagraph (A) if
provided by a physician, but are provided by another
person who is legally authorized to provide such
services in the State in which the services are
provided.
(4) Home health care.--The term ``home health care'' means
the items and services described in section 1861(m) of the
Social Security Act.
(5) Home infusion drug therapy services.--The term ``home
infusion drug therapy services'' means the home infusion drug
therapy services described in section 1861(ll) of the Social
Security Act.
(6) Hospice care.--The term ``hospice care'' means the
items and services described in paragraph (1) of section
1861(dd) of the Social Security Act, except that in applying
such section for purposes of this paragraph--
(A) paragraphs (4)(B) and (5) shall be disregarded;
and
(B) all references to the Secretary of Health and
Human Services shall be treated as references to the
Board.
(7) Hospital.--The term ``hospital'' has the meaning given
such term in section 1861(e) of the Social Security Act, except
that such term shall include a facility operated by the
uniformed services, the Department of Veterans Affairs, and the
Indian Health Service that is primarily engaged in providing
services to inpatients that are equivalent to the services
provided by a hospital defined in such section 1861(e).
(8) Medically accepted indication.--The term ``medically
accepted indication'' means with respect to the use of a drug,
any use which has been approved by the Food and Drug
Administration for the drug, and includes another use of the
drug if--
(A) the drug has been approved by the Food and Drug
Administration; and
(B) such use is supported by one or more citations
which are included (or approved for inclusion) in one
or more of the following compendia: the American
Hospital Formulary Service-Drug Information, the
American Medical Association Drug Evaluations, the
United States Pharmacopoeia-Drug Information, and other
authoritative compendia as identified by the Secretary.
(9) Mental illness and substance abuse disorders.--The term
``mental illness and substance abuse disorder'' means a mental
or substance abuse disorder listed in the Diagnostic and
Statistical Manual of Mental Disorders, Fourth Edition, or the
International Classification of Diseases, 9th Revision, the
Clinical Modification, Third Edition, or revised versions of
such manuals or texts.
(10) Orthotics.--The term ``orthotics'' includes--
(A) an accessory or supply used directly with a
prosthetic device to achieve therapeutic benefits and
proper functioning; and
(B) leg, arm, back, and neck braces.
(11) Prosthetics.--The term ``prosthetics'' includes
artificial legs, arms, and eyes.
(12) Prosthetic devices.--The term ``prosthetic devices''
means devices that replace all or part of the function of a
body organ.
(13) Qualified investigational treatment.--The term
``qualified investigational treatment'' means an
investigational treatment that is 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.
(14) Rehabilitation facility.--The term ``rehabilitation
facility'' means an institution (or a distinct part of an
institution) which is established and operated for the purpose
of providing diagnostic, therapeutic, and rehabilitation
services to individuals for rehabilitation from illness,
injury, disorder, or other health condition. An entity
qualifying as a hospital for as defined in paragraph (7) may
also qualify as a rehabilitation facility for the purposes of
section 1202(a)(9).
(15) Skilled nursing facility.--The term ``skilled nursing
facility'' means an institution (or a distinct part of an
institution) which is primarily engaged in providing to
residents--
(A) skilled nursing care and related services for
residents who require medical or nursing care; or
(B) rehabilitation services to residents for
rehabilitation from illness, injury, disorder, or other
health condition.
PART 2--NATIONAL HEALTH BENEFITS BOARD
SEC. 1211. CREATION OF NATIONAL HEALTH BENEFITS BOARD; MEMBERSHIP.
(a) In General.--There is hereby established a National Health
Benefits Board (referred to in this part as the ``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) Frequency.--The Board shall meet not less frequently
than 4 times each year.
(3) Quorum.--Four members of the Board shall constitute a
quorum thereof.
SEC. 1212. 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) Pay and Travel Expenses.--
(1) Pay.--
(A) Chair.--The chair of the Board shall be paid at
a rate equal to the daily equivalent of the minimum
annual rate of basic pay payable for level II of the
Executive Schedule under section 5315 of title 5,
United States Code, for each day (including travel
time) during which the chair is engaged in the actual
performance of duties vested in the Board.
(B) Members.--Each member of the Board shall be
paid at a rate equal to the daily equivalent of the
minimum annual rate of basic pay payable for level III
of the Executive Schedule under section 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 Board.
(2) Travel expenses.--Members of the Board shall receive
travel expenses, including per diem in lieu of subsistence, in
accordance with sections 5702 and 5703 of title 5, United
States Code.
SEC. 1213. GENERAL DUTIES AND RESPONSIBILITIES.
(a) 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 1202 in
accordance with the requirements of subsections (a)(2) and
(b)(2) of section 1201.
(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 1202.
(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
and shall establish and update a periodicity
schedule for such items and services; and
(ii) in specifying clinical preventive
services and establishing and updating
periodicity schedules under clause (i), the
Board shall consult with experts in clinical
preventive services, including the U.S.
Preventive Services Task Force, the Advisory
Committee on Immunization Practices, the
American College of Obstetricians and
Gynecologists, and the American Academy of
Pediatrics.
(3) Mental illness and substance abuse services.--
(A) Parity.--
(i) In general.--The Board shall design
mental illness and substance abuse services so
as to achieve parity with services for other
medical conditions. Except as provided in
clause (iii), day or visit limits or cost-
sharing requirements may not be applied to
mental illness and substance abuse services
that are not applied to services for other
medical conditions.
(ii) Parity defined.--For purposes of this
subparagraph, the term ``parity'' means
comprehensive, coverage for all medically
necessary or appropriate mental illness and
substance abuse services in inpatient,
outpatient, residential, and intensive non-
residential settings.
(iii) Special rule.--
(I) Effect on other benefits.--If
the Board determines that parity of
mental illness and substance abuse
services with services for other
medical conditions cannot be achieved
without imposing unduly burdensome
cost-sharing requirements on other
services, the Board may design mental
illness and substance abuse services
such that they include the following
limits:
(aa) Inpatient hospital
care may be limited, but in the
case of mental illness the
limit may not be set at a level
below 30 days per year, and in
the case of substance abuse
services the limit may not be
set at a level below the level
sufficient to provide
detoxification services.
(bb) After the first 5
visits for outpatient adult
psychotherapy, the coinsurance
for such services may be set at
a level higher than the
coinsurance for other services,
but no higher than a 50 percent
coinsurance level.
(cc) Consistent with the
process described in section
3510, the Board shall ensure
that parity for mental illness
and substance abuse services
with services for other medical
conditions is established no
later than January 1, 2001.
(II) Legislative proposal.--If the
Board finds that establishing parity
for mental illness and substance abuse
services with services for other
medical conditions cannot be achieved
by January 1, 2001, without imposing
unduly burdensome cost-sharing on all
services, the Board shall develop a
legislative proposal for an extension
of such date. Not later than January 1,
2000, the Board shall submit to the
Congress an implementing bill which
contains such statutory provisions as
are necessary or appropriate to
implement the legislative proposal
developed under the preceding sentence.
(B) Management of services.--
(i) In general.--The Board shall develop
standards for the appropriate management of
mental illness and substance abuse services.
Such standards shall include quality managed
care techniques.
(ii) Quality managed care.--For purposes of
clause (i), the term ``quality managed care''
refers to the administration of benefits
through methods of central intake,
preauthorization, and utilization review under
circumstances that protect individuals from
unwarranted denial of services.
(C) Settings.--The Board shall give priority to
ensuring that mental illness and substance abuse
services are provided in the least restrictive setting
that is clinically appropriate and encouraging the use
of outpatient and intensive nonresidential treatments
to the greatest extent possible.
(b) Determining Medical Necessity or Appropriateness.--
(1) In general.--The Board shall be authorized to
establish--
(A) criteria for determinations of medical
necessity or appropriateness;
(B) procedures for determinations of medical
necessity or appropriateness; and
(C) regulations or guidelines to be used in
determining whether an item or service under the
categories of health care items and services described
in section 1202 is medically necessary or appropriate.
(2) Requirements.--The Board shall include the following in
establishing criteria, procedures, and regulations under this
subsection:
(A) Special rules with respect to enrollees under
22 years of age.--In making any determination with
respect to medical necessity or appropriateness with
respect to an enrollee under 22 years of age, the Board
shall consider whether the item or service is--
(i) is appropriate for the age and health
status of the enrollee;
(ii) will prevent or ameliorate the effects
of a condition, illness, injury, or disorder;
(iii) will aid the overall physical and
mental growth and development of the enrollee;
or
(iv) will assist in achieving or
maintaining maximum functional capacity in
performing daily activities.
This subparagraph shall apply to all items and services
under the categories of health care items and services
described in section 1202 as clarified and refined by
the Board under subsection (a).
(B) Consultations with expert authorities.--The
Board shall consider the opinions of experts from
academia, medical specialty groups, industry, and
government in establishing criteria, procedures, and
regulations with regard to medical necessity or
appropriateness.
(C) Recommendations to secretary.--In the absence
of sufficient evidence to develop regulations with
respect to any particular coverage determination, the
Board shall recommend to the Secretary specific areas
for which priorities should be given to undertake
clinical trials or establish practice guidelines.
(3) Health plan requirements.--The regulations established
by the Board under this subsection shall provide that health
plans shall--
(A) in making any determination with respect to
medical necessity or appropriateness, consider the
criteria and procedures established by the Board under
this subsection;
(B) be guided by--
(i) the initial determination of medical
necessity or appropriateness with respect to an
item or service made by an enrollee and the
health professional furnishing such item or
service; and
(ii) available scientific evidence; and
(C) if a health plan has developed a treatment
guideline or utilization protocol, or has made a
general coverage determination, the plan shall--
(i) provide a copy of, and a written
statement of the basis for, the guideline,
protocol, or determination at least 60 days
prior to the effective date of such guideline,
protocol, or determination, to each affected
provider with which the plan has a contract and
the government entity which certifies the plan;
(ii) provide any or all of such information
upon request to enrollees, potential enrollees,
or other interested parties, including provider
groups and specialty organizations; and
(iii) revise such guidelines, protocols, or
determinations periodically, or, if new
scientific evidence becomes available, as soon
as possible after such evidence is available.
(c) Cost-Sharing.--The Board shall establish cost-sharing schedules
to be provided by health plans providing 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 review and update cost-
sharing schedules as determined appropriate by the Board, but
on at least an annual basis.
(2) Plans providing standard benefits package.--
(A) In general.--The Board shall establish 3 cost-
sharing schedules for health plans providing the
standard benefits package which permit a variety of
delivery system options, including fee-for-service,
preferred provider organizations, point of service, and
managed care. Such cost-sharing schedules shall consist
of--
(i) a low cost-sharing schedule;
(ii) a high cost-sharing schedule; and
(iii) a combination cost-sharing schedule.
(B) Actuarial value of high cost-sharing
schedule.--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 as in effect during 1994, adjusted for an
average population (as determined by the Board).
(3) Plans providing alternative standard benefits
package.--The Board shall establish only one very high
deductible cost-sharing schedule for health plans providing the
alternative standard benefits package. Such cost-sharing
schedule shall provide for a higher deductible than any
deductible under a schedule established for health plans
providing a standard benefits package.
(4) Clinical preventive services.--No cost-sharing schedule
established by the Board may include cost-sharing for clinical
preventive services and prenatal care.
(5) Cost-sharing rules.--Cost-sharing schedules established
by the Board may include copayments, coinsurance, deductibles,
and out-of-pocket limits. The copayments, coinsurance,
deductibles and out-of-pocket limits on cost-sharing for a year
under the schedules shall be applied based upon expenses
incurred for covered items and services furnished in the year.
(6) Lifetime limits.--No cost-sharing schedule established
by the Board may include lifetime limits.
(d) Legislative Proposals on Actuarial Equivalence and Health
Service Categories.--
(1) In general.--The Board may develop legislative
proposals for modifications to the actuarial equivalence
provisions of section 1201 and the categories of health care
items and services under section 1202.
(2) Implementing bill.--The Board shall submit to the
Congress an implementing bill which contains such statutory
provisions as are necessary or appropriate to implement the
legislative proposals developed under paragraph (1).
(e) Reports.--
(1) Dental care.--The Board shall undertake a study to
determine the costs of providing--
(A) preventive dental care to all adults;
(B) restorative dental care to all adults; and
(C) preventive dental care to adults with
developmental, cognitive, and other mental
disabilities.
Not later than July 1, 1996, the Board shall prepare and submit
to the Secretary and the Congress, a report concerning such
study.
(2) In vitro fertilization.--The Board shall undertake a
study to determine the costs of providing coverage for in vitro
fertilization in the standard benefits package. Not later than
July 1, 1996, the Board shall prepare and submit to the
Secretary and the Congress, a report concerning such study.
(f) Other Requirements.--The Board shall satisfy any other
requirements imposed on the Board under this title.
SEC. 1214. POWERS.
(a) Executive Director; Staff.--
(1) Executive director.--
(A) In general.--The Board 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.
(2) Staff.--
(A) In general.--Subject to subparagraphs (B) and
(C), the Executive Director, with the approval of the
Board, 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 Board to assist the Board
in carrying out its duties under this Act.
(b) Contract Authority.--To the extent provided in advance in
appropriations Acts, the Board may contract with any person (including
an agency of the Federal Government) for studies and analysis as
required to execute its functions. Any employee of the Executive Branch
may be detailed to the Board to assist the Board in carrying out its
duties.
(c) 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 1213. The Board may
establish advisory committees.
(d) 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.
(e) 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.
(f) Rulemaking.--The Board is authorized to establish such rules as
may be necessary to carry out this subtitle.
SEC. 1215. FUNDING.
(a) Authorization of Appropriations.--There are authorized to be
appropriated to the Board $5,000,000 for each year and such additional
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. 1216. APPLICABILITY OF FEDERAL ADVISORY COMMITTEE ACT.
The Federal Advisory Committee Act (5 U.S.C. App.) shall not apply
to the Board.
SEC. 1217. CONGRESSIONAL CONSIDERATION OF BOARD PROPOSALS.
(a) In General.--Any implementing bill described in section 1213
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 (a) 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 Leader of the House, for himself or herself and the
Minority Leader of the House, or by Members of the House
designated by the Majority Leader and Minority Leader of the
House and shall be introduced (by request) in the Senate by the
Majority Leader of the Senate, for himself or herself and the
Minority Leader of the Senate, or by Members of the Senate
designated by the Majority Leader and Minority Leader of the
Senate. If either House is not in session on the day on which
the implementing bill is transmitted, the bill shall be
introduced in the House, as provided in the preceding sentence,
on the first day thereafter on which the House is in session.
The implementing bill introduced in the House of
Representatives and the Senate shall be referred to the
appropriate committees of each House.
(3) Amendments prohibited.--No amendment to an implementing
bill shall be in order in either the House of Representatives
or the Senate and no motion to suspend the application of this
subsection shall be in order in either House, nor shall it be
in order in either House for the Presiding Officer to entertain
a request to suspend the application of this subsection by
unanimous consent.
(4) Period for committee and floor consideration.--
(A) In general.--Except as provided in subparagraph
(B), if the committee or committees of either House to
which an implementing bill has been referred have not
reported it at the close of the 45th day after its
introduction, such committee or committees shall be
automatically discharged from further consideration of
the implementing bill and it shall be placed on the
appropriate calendar. A vote on final passage of the
implementing bill shall be taken in each House on or
before the close of the 45th day after the implementing
bill is reported by the committees or committee of that
House to which it was referred, or after such committee
or committees have been discharged from further
consideration of the implementing bill. If prior to the
passage by one House of an implementing bill of that
House, that House receives the same implementing bill
from the other House then--
(i) the procedure in that House shall be
the same as if no implementing bill had been
received from the other House; but
(ii) the vote on final passage shall be on
the implementing bill of the other House.
(B) Computation of days.--For purposes of
subparagraph (A), in computing a number of days in
either House, there shall be excluded--
(i) 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
(ii) any Saturday and Sunday not excluded
under clause (i) when either House is not in
session.
(5) Floor consideration in the house of representatives.--
(A) Motion to proceed.--A motion in the House of
Representatives to proceed to the consideration of an
implementing bill shall be highly privileged and not
debatable. An amendment to the motion shall not be in
order, nor shall it be in order to move to reconsider
the vote by which the motion is agreed to or disagreed
to.
(B) Debate.--Debate in the House of
Representatives on an implementing bill shall be
limited to not more than 20 hours, which shall be
divided equally between those favoring and those
opposing the bill. A motion further to limit debate
shall not be debatable. It shall not be in order to
move to recommit an implementing bill or to move to
reconsider the vote by which an implementing bill is
agreed to or disagreed to.
(C) Motion to postpone.--Motions to postpone, made
in the House of Representatives with respect to the
consideration of an implementing bill, and motions to
proceed to the consideration of other business, shall
be decided without debate.
(D) Appeals.--All appeals from the decisions of the
Chair relating to the application of the Rules of the
House of Representatives to the procedure relating to
an implementing bill shall be decided without debate.
(E) General rules apply.--Except to the extent
specifically provided in the preceding provisions of
this paragraph, consideration of an implementing bill
shall be governed by the Rules of the House of
Representatives applicable to other bills and
resolutions in similar circumstances.
(6) Floor consideration in the senate.--
(A) Motion to proceed.--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) General debate.--Debate in the Senate on an
implementing bill, and all debatable motions and
appeals in connection therewith, shall be limited to
not more than 20 hours. The time shall be equally
divided between, and controlled by, the Majority Leader
and the Minority Leader or their designees.
(C) Debate of motions and appeals.--Debate in the
Senate on any debatable motion or appeal in connection
with an implementing bill shall be limited to not more
than one hour, 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 motion
or appeal, the time in opposition thereto, shall be
controlled by the Minority Leader or his designee. Such
leaders, or either of them, may, from time under their
control on the passage of an implementing bill, allot
additional time to any Senator during the consideration
of any debatable motion or appeal.
(D) Other motions.--A motion in the Senate to
further limit debate is not debatable. A motion to
recommit an implementing bill is not in order.
Subtitle D--Access to Health Plans
PART 1--ACCESS THROUGH EMPLOYERS
SEC. 1301. GENERAL EMPLOYER RESPONSIBILITIES.
(a) Offer of Plans.--
(1) In general.--Each employer--
(A) shall make available to each employee of the
employer the opportunity--
(i) in the case of an experienced-rated
employer, to enroll through the employer in one
of at least 3 certified experience-rated
standard health plans which provide the
standard benefits package established under
subtitle C, including, if available, a high
cost-sharing plan, a combination cost-sharing
plan, and a low cost-sharing plan as
established under such subtitle; or
(ii) in the case of a community-rated
employer--
(I) to enroll in any community-
rated plan offered through a purchasing
cooperative operating in the community
rating area in which such employer is
located, and if such cooperative is not
a purchasing cooperative described in
section 1341, then also through a
cooperative so described; and
(II) at the option of the employer,
to enroll through the employer in one
of at least 3 certified community-rated
standard health plans which provide the
standard benefits package established
under subtitle C, including, if
available, a high cost-sharing plan, a
combination cost-sharing plan, and a
low cost-sharing plan as established
under such subtitle; and
(B) shall provide, upon request, payroll
withholding of the employee's premiums.
(2) Waiver of requirement.--The Governor of a participating
State (or, the Secretary of Labor, in the case of sponsors of
multistate self-insured health plans) may waive the requirement
under paragraph (1) for any employer in a rural area of such
State which demonstrates an insufficient population density to
support 3 types of certified standard health plans. Such an
employer shall at least offer a high cost-sharing plan as
established under subtitle C.
(3) Prohibition on offering of alternative package.--No
employer may offer an alternative standard benefits package
established under subtitle C.
(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 1508 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.
SEC. 1302. AUDITING OF RECORDS.
Each employer shall maintain such records, and provide the
participating State for the area in which the employer maintains its
principal place of employment (as specified by the Secretary of Labor)
with access to such records, as may be necessary to verify and audit
the information reported under this Act.
SEC. 1303. PROHIBITION OF CERTAIN EMPLOYER DISCRIMINATION.
(a) In General.--No employer may discriminate with respect to an
employee on the basis of the family status of the employee or on the
basis of the class of family enrollment selected with respect to the
employee.
(b) Other Prohibitions.--For the prohibition of other employer
discriminatory practices, see section 4522 of the Internal Revenue Code
of 1986.
SEC. 1304. PROHIBITION ON SELF-INSURING COST-SHARING BENEFITS.
A community-rated employer (and an experience-rated employer with
respect to employees who are community-rated eligible individuals) may
provide benefits to employees that consist of the benefits included in
a cost-sharing plan (as defined in section 1141(a)(2)(C)) only through
a contribution toward the purchase of a cost-sharing plan which is
funded primarily through insurance.
SEC. 1305. RESPONSIBILITIES IN SINGLE-PAYER STATES.
In the case of an individual who resides in a single-payer State
and an employer with respect to employees who reside in such a State,
the responsibilities of such individual and employer under such system
shall supersede the obligations of the individual and employer under
this subtitle.
SEC. 1306. 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) Rules by Secretary.--The Secretary of Labor shall provide rules
for large employer purchasing groups similar to the rules applicable to
purchasing cooperatives, including rules regarding fiduciary
responsibilities and financial management.
(c) No Use of Purchasing Cooperatives.--An experience-rated
employer shall be ineligible to purchase health insurance through a
purchasing cooperative, except with respect to health insurance for
individuals described in paragraphs (1) and (2) of section 1307(d).
SEC. 1307. RULES GOVERNING LITIGATION INVOLVING RETIREE HEALTH
BENEFITS.
(a) Maintenance of Benefits.--
(1) In general.--If--
(A) retiree health benefits or plan or plan sponsor
payments in connection with such benefits are to be or
have been terminated or reduced under an employee
welfare benefit plan; and
(B) an action is brought by any participant or
beneficiary to enjoin or otherwise modify such
termination or reduction,
the court without requirement of any additional showing shall
promptly order the plan and plan sponsor to maintain the
retiree health benefits and payments at the level in effect
immediately before the termination or reduction while the
action is pending in any court. No security or other
undertaking shall be required of any participant or beneficiary
as a condition for issuance of such relief. An order requiring
such maintenance of benefits may be refused or dissolved only
upon determination by the court, on the basis of clear and
convincing evidence, that the action is clearly without merit.
(2) Modifications.--Nothing in this section shall preclude
a court from modifying the obligation of a plan or plan sponsor
to the extent retiree benefits are otherwise being paid.
(b) Burden of Proof.--In addition to the relief authorized in
subsection (a) or otherwise available, if, in any action described in
subsection (a), the terms of the employee welfare benefit plan summary
plan description or other materials distributed to employees at the
time of a participant's retirement or disability are silent or are
ambiguous, either on their face or after consideration of extrinsic
evidence, as to whether retiree health benefits and payments may be
terminated or reduced for a participant and his or her beneficiaries
after the participant's retirement or disability, then the benefits and
payments shall not be terminated or reduced for the participant and his
or her beneficiaries unless the plan or plan sponsor establishes by a
preponderance of the evidence that the summary plan description and
other materials about retiree benefits--
(1) were distributed to the participant at least 90 days in
advance of retirement or disability;
(2) did not promise retiree health benefits for the
lifetime of the participant and his or her spouse; and
(3) clearly and specifically disclosed that the plan
allowed such termination or reduction as to the participant
after the time of his or her retirement or disability.
The disclosure described in paragraph (3) must have been made
prominently and in language which can be understood by the average plan
participant.
(c) Representation.--Notwithstanding any other provision of law, an
employee representative of any retired employee or the employee's
spouse or dependents may--
(1) bring an action described in this section on behalf of
such employee, spouse, or dependents; or
(2) appear in such an action on behalf of such employee,
spouse or dependents.
(d) Retiree Health Benefits.--For the purposes of this section, the
term ``retiree health benefits'' means health benefits (including
coverage) which are provided to--
(1) retired or disabled employees who, immediately before
the termination or reduction, are entitled to receive such
benefits upon retirement or becoming disabled; and
(2) their spouses and dependents.
(e) Effective Date.--The amendments made by this section shall
apply to actions relating to terminations or reductions of retiree
health benefits which are pending or brought, on or after July 20,
1993.
SEC. 1308. ENFORCEMENT.
In the case of a person that violates a requirement of this
subtitle, the Secretary of Labor may impose a civil money penalty, in
an amount not to exceed $10,000, for each violation with respect to
each individual.
PART 2--ACCESS THROUGH HEALTH INSURANCE PURCHASING COOPERATIVES
Subpart A--General Requirements
SEC. 1321. ORGANIZATION AND OPERATION.
(a) Designation of Cooperatives.--A State shall certify health
insurance purchasing cooperatives (in this Act referred to as
``purchasing cooperatives'') in accordance with this part. Each
cooperative shall be chartered under State law and operated as a not-
for-profit corporation.
(b) Board of Directors.--
(1) In general.--Each cooperative shall be governed by a
Board of Directors to be composed of representatives of
community-rated employers, community-rated employees, and
community-rated individuals as elected by the members of the
purchasing cooperative.
(2) Initial board.--The initial Board of Directors of a
purchasing cooperative shall be composed of members selected by
the sponsoring entity of the cooperative. Subsequent members of
the Board of Directors shall be elected as provided for under
paragraph (1) after being nominated by a nominating committee
appointed by the preceding Board of Directors.
(c) Establishment by State or Local Government.--A State or local
government may establish or sponsor a purchasing cooperative to serve a
community rating area. The Secretary shall establish special rules
concerning the legal and governing structure of a State or local
government purchasing cooperative.
(d) Membership.--A purchasing cooperative shall accept all
community-rated employers, community-rated employees, and community-
rated individuals residing within the area served by the cooperative as
members if such employers, employees, or individuals request such
membership. Members of a cooperative shall have voting rights to select
members of the Board of Directors consistent with rules established by
the State.
(e) Prohibition.--An insurer may not form or underwrite a
purchasing cooperative but may administer such a cooperative.
(f) Duties of Cooperatives.--Each purchasing cooperative shall--
(1) negotiate (regarding premiums and marketing fees) with
and enter into agreements with standard health plans under
section 1323;
(2) enter into agreements with community-rated employers;
(3) enroll community-rated employees and community-rated
individuals in standard health plans;
(4) collect premiums and make payments to standard health
plans on behalf of community-rated employers and community-
rated individuals;
(5) provide for coordination with other purchasing
cooperatives;
(6) provide comparative information to the public and the
participating State on standard health plans offered through
the purchasing cooperative from information provided by the
plans under section 1125;
(7) have the capability of accepting data from standard
health plans as required under subtitle B of title V;
(8) comply with such fiduciary responsibility, financial
management, and administrative requirements as the Secretary
may establish; and
(9) carry out other functions provided for under this
title.
(g) Limitation on Activities.--A cooperative shall not--
(1) perform any activity (including review, approval, or
enforcement) relating to payment rates for providers;
(2) perform any activity (including certification or
enforcement) relating to compliance of standard health plans
with the requirements of this Act;
(3) assume insurance risk; or
(4) perform other activities identified by the State as
being inconsistent with the performance of its duties under
this Act.
(h) Rules of Construction.--
(1) Multiple cooperatives.--Noting in this section shall be
construed to prevent a State from certifying or establishing
more than one purchasing cooperative in a community rating
area.
(2) Exclusive cooperative.--
(A) In general.--Nothing in this section shall be
construed as requiring a State to certify or establish
more than one purchasing cooperative serving a
community rating area.
(B) Special rules.--If a State chooses to certify
only one purchasing cooperative in a community rating
area, then such cooperative (other than a cooperative
established under section 1341) may not negotiate
regarding premiums as described in subsection (f)(1)
and, notwithstanding section 1323(a)(1), shall enter
into an agreement with each standard health plan
operating in the area which desires such an agreement.
(3) Single organization serving multiple community rating
areas.--Nothing in this section shall be construed as
preventing a single not-for-profit corporation from being the
purchasing cooperative for more than one community rating area.
(4) Voluntary participation.--Nothing in this section shall
be construed as requiring any community-rated individual,
community-rated employee, or community-rated employer to
purchase a standard health plan exclusively through a
cooperative.
SEC. 1322. MEMBERSHIP.
(a) In General.--A purchasing cooperative shall offer all
community-rated individuals and community-rated employees residing
within the community rating area served by the cooperative the
opportunity to enroll in any standard health plan that has entered into
an agreement with the cooperative under section 1323.
(b) Enrollment Process.--A purchasing cooperative shall establish
an enrollment process in accordance with rules established by the
Secretary.
(c) Coordination Among Purchasing Cooperatives.--Each participating
State shall establish rules consistent with this section for
coordination among purchasing cooperatives in cases in which community-
rated employers are located in one community rating area and their
community-rated employees reside in a different community rating area.
SEC. 1323. AGREEMENTS WITH 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 standard health
plan that 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 shall enter into an
agreement under paragraph (1) with at least 3 types of
standard health plans which provide the standard
benefits package established under subtitle C,
including, if available, a high cost-sharing plan, a
combination cost-sharing plan, and a low cost-sharing
plan as established under such subtitle.
(B) Waiver of requirement.--The Governor of a
participating State may waive the requirement under
subparagraph (A), in a manner consistent with section
1301(a)(2)), for any purchasing cooperative in a rural
area of such State which demonstrates an insufficient
population density to support 3 types of standard
health plans. Such a purchasing cooperative shall at
least offer a high cost-sharing plan as established
under such subtitle.
(3) Limitation.--A purchasing cooperative may not enter
into an agreement under this section with a standard health
plan unless such plan is certified by the State under subtitle
E.
(4) Termination of agreement.--An agreement under paragraph
(1) shall remain in effect for a 12-month period. The State
shall establish a process for the termination of agreements
entered into under this section and a process for appealing
such termination under this paragraph. In accordance with rules
established by the State--
(A) a cooperative may terminate an agreement with a
standard health plan if the health plan's certification
for the community rating area involved is terminated or
if the health plan fails to fulfill the requirements of
the agreement; and
(B) a standard health plan may appeal the
termination of an agreement with a cooperative under
this paragraph to the State in accordance with rules
and procedures established by the State.
(b) Receipt of Gross Premiums.--
(1) In general.--A purchasing cooperative may require that
a standard health plan with which such cooperative has an
agreement under this section provide for the payment of
premiums directly to the cooperative in accordance with rules
promulgated by the Secretary.
(2) Forwarding of premiums.--A purchasing cooperative that
requires direct payment of premiums under paragraph (1) shall
forward to the standard health plan the amounts collected on
the behalf of the enrollees in such plan in accordance with the
State program of reinsurance and risk adjustment.
(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
1324(a)).
SEC. 1324. MEMBERSHIP AND MARKETING FEES.
(a) Cooperative Fees.--A purchasing cooperative shall charge
members a uniform membership fee to cover the cost of activities
undertaken by the cooperative (including all administrative costs
incurred by the cooperative).
(b) Marketing Fees.--
(1) In general.--A purchasing cooperative shall charge
members a separate marketing fee which a standard health plan
may charge to cover the cost of marketing and administrative
activities undertaken by such plan in such cooperative.
(2) Negotiation.--A purchasing cooperative and a standard
health plan shall negotiate the marketing fee. Such negotiated
fee shall not be binding on such health plan with respect to
other purchasing cooperatives through which the plan is
offered.
(3) Limitation.--In no case shall a marketing fee assessed
by a standard health plan offered outside of a purchasing
cooperative be lower than the weighted average of the marketing
fees negotiated with all purchasing cooperatives for the
community rating area involved.
(c) Disclosure and Multiple Cooperatives.--
(1) Disclosure.--A purchasing cooperative shall, prior to
the time of enrollment, publish the membership fee of such
cooperative and the marketing fees for each standard health
plan offered through the cooperative. Such fees shall be
calculated and identified as separate charges from the premium
charged by the standard health plans offered by the purchasing
cooperative.
(2) Submissions to state.--
(A) In general.--Each purchasing cooperative in a
community rating area shall provide the State with
information on the fees described in paragraph (1)
under rules developed by the State.
(B) Documentation.--Pursuant to regulations issued
by the Secretary, standard health plans shall submit
actuarial data and such other documentation as the
State may require in order to verify the basis for
variation in marketing fees across cooperatives and
other insurance distribution sources. States shall use
such information in order to make a determination that
each plan's marketing fees are based on legitimate
variation in marketing and distribution costs across
alternative distribution sources.
(3) Multiple cooperatives.--In community rating areas in
which States have certified multiple purchasing cooperatives,
such cooperatives may compete for members on the basis of the
fees described in this section.
Subpart B--Community-Rated Employers
SEC. 1331. DUTIES OF PURCHASING COOPERATIVES.
(a) In General.--A purchasing cooperative for a community rating
area shall offer to enter into an agreement under this section with
each community-rated employer that employs individuals in the community
rating area and that desires to join the cooperative. An agreement
between such an employer and a cooperative shall include provisions
consistent with the requirements of this subtitle.
(b) Election of Enrollment.--
(1) In general.--An employee of a community-rated employer
may select coverage under any of the standard health plans
offered through a purchasing cooperative of which the employer
is a member.
(2) Enrollment outside the cooperative.--An employee of a
community-rated employer may elect to enroll in a plan offered
through the purchasing cooperative with which the employer has
entered into an agreement or directly with a standard health
plan selected by the employer (if such plan is not offered by
the cooperative selected by the employer). A community-rated
employee not residing in the community rating area served by
the purchasing cooperative selected by the employer shall
enroll in a standard health plan consistent with rules
promulgated by the Secretary. The purchasing cooperative
selected by the employer shall be responsible for forwarding
premium payments to the appropriate plan or cooperative for
each community-rated employee in accordance with the State
program of reinsurance and risk adjustment.
(3) Voluntary employer contribution.--If an employer
voluntarily contributes to the cost of health insurance
coverage for its employees, the employer shall not be required
to make a contibution on behalf of an employee who elects to
obtain coverage directly from a standard health plan not chosen
by such employer or from a purchasing cooperative not chosen by
such employer, unless such cooperative is one established under
section 1341.
(c) Forwarding Information on Eligible Employees.--Under an
agreement between an employer and a cooperative, the employer must
forward to the appropriate cooperative such information as may be
required by the Secretary.
Subpart C--Federal Employees Health Benefits Program
SEC. 1341. REQUIREMENTS APPLICABLE TO FEHBP.
(a) Availability of Plans.--
(1) Community-rated individuals.--All standard health plans
offered by FEHBP through a purchasing cooperative joined or
established by FEHBP in a community rating area under
subsection (b) shall be made available to all community-rated
individuals residing within that area at the community-rated
premium established under section 1116.
(2) Federal employees and annuitants.--Until the date of
universal coverage, any Federal employee or annuitant shall
obtain coverage under any FEHBP plan offered through such a
purchasing cooperative in the community rating area in which
such employee or annuitant resides at the rate established
under chapter 89 of title 5, United States Code, for such plan.
(3) Offer of national plans.--Each purchasing cooperative
joined or established under paragraph (1) shall, not later than
January 1, 1998, offer to community-rated individuals covered
by such cooperative all national FEHBP plans (including
employee organization plans) under rules established by the
Office of Personnel Management.
(b) Agreements With Purchasing Cooperatives.--
(1) In general.--The Office of Personnel Management shall
make every effort to enter into an agreement with a purchasing
cooperative in each community rating area in the United States
to carry out its responsibilities under this section.
(2) Establishment by opm.--If no purchasing cooperative
exists in an area or if the Office of Personnel Management is
unsuccessful in reaching such an agreement, the Office of
Personnel Management shall establish and administer a
purchasing cooperative in such area. Such cooperative shall
meet all the requirements of this part except rules regarding
governance and fiduciary responsibility.
(3) Designation as purchasing cooperative.--All FEHBP
eligible employees residing in the community rating area served
by a cooperative described in paragraph 1 or (2) shall enroll
in a standard health plan through such cooperative.
(c) Requirement of OPM.--
(1) In general.--The Office of Personnel Management is
hereby authorized to take such actions as are appropriate to
fulfill its responsibilities under this subpart.
(2) Rate blending.--The Office of Personnel Management
shall implement rules to blend during the period before the
date of universal coverage the premiums for FEHBP plans offered
through purchasing cooperatives to Federal employees and
community-rated individuals in each community rating area.
(d) Amendments to Title 5.--
(1) In general.--Chapter 89 of title 5, United States Code,
is amended by adding at the end the following new section:
``Sec. 8915. Relationship to the Health Security Act
``(a) The provisions of this chapter shall be subject to the
provisions of the Health Security Act, to the extent of any
inconsistency between such provisions.
``(b) Individuals who are not Federal employees or annuitants and
who are enrolled in a health benefits plan pursuant to section 1341 of
the Health Security Act shall for all administrative purposes be
treated separately from Federal employees and annuitants enrolled under
this chapter.
``(c) No provision of the Health Security Act shall be construed to
authorize the payment or deposit of any monies from or into the
Employees Health Benefits Fund.''.
(2) Conforming amendment.--Section 8914 of title 5, United
States Code, is amended by striking out ``Any provision of
law'' and inserting in lieu thereof ``Except for the provisions
of the Health Security Act, any provision of law''.
(3) Technical amendment.--The table of sections for chapter
89 of title 5, United States Code, is amended by adding after
the item relating to section 8914 the following new item:
``8915. Relationship to the Health Security Act.''.
SEC. 1342. SPECIAL RULES FOR FEHBP SUPPLEMENTAL PLANS.
(a) Development.--The Office of Personnel Management shall develop
FEHBP supplemental health benefit plans. The Office of Personnel
Management shall meet and confer with representatives of Federal
employees and annuitants regarding the supplemental services plans and
the cost-sharing plans to be offered (including premium contributions,
if any, to be made by the Federal Government with respect to such plans
for Federal employees and annuitants) through a process to be
established by the National Partnership Council.
(b) Offering.--The Federal Government shall offer FEHBP
supplemental health benefit plans developed in accordance with
subsection (a) and cost-sharing plans as provided in section 1141 to
Federal employees, annuitants, and any other community-rated
individual.
SEC. 1343. DEFINITIONS.
For purposes of this subpart:
(1) Annuitant.--The term ``annuitant'' means an
``annuitant'' as defined by section 8901 of title 5, United
States Code.
(2) FEHBP.--The term ``FEHBP'' means the health insurance
program under chapter 89 of title 5, United States Code.
(3) Federal employee.--The term ``Federal employee'' means
an ``employee'' as defined by section 8901 of title 5, United
States Code.
PART 3--TREATMENT OF ASSOCIATION PLANS
SEC. 1351. RULES RELATING TO MULTIPLE EMPLOYER WELFARE ARRANGEMENTS.
(a) General Rule.--A multiple employer welfare arrangement--
(1) shall meet all requirements of this Act applicable to
standard health plans, and
(2) may elect to be treated as a health insurance
purchasing cooperative if it meets the requirements of part 2
and other applicable requirements of this Act.
(b) Treatment for Rating Purpose.--
(1) In general.--Except as provided in paragraph (2), a
plan to which subsection (a) applies shall be treated as a
community-rated plan and shall meet all requirements of this
Act applicable to a community-rated plan.
(2) Experience-rated plan.--A plan shall be treated as an
experience-rated plan only if the only participants in the plan
are experience-rated individuals.
(c) Coordination With ERISA.--Section 514(b) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1144(b)) is amended
by striking paragraph (6).
(d) Multiple Employer Welfare Arrangement.--For purposes of this
section, the term ``multiple employer welfare arrangement'' has the
meaning given such term by section 3(40) of the Employer Retirement
Income Security Act of 1974.
SEC. 1352. ASSOCIATION PLANS.
(a) General Rule.--Any health plan to which section 1351 does not
apply which is maintained by an association or similar entity shall
meet all requirements of this Act applicable to standard health plans.
(b) Treatment for Rating Purposes.--
(1) In general.--Except as provided in paragraph (2), a
plan to which subsection (a) applies shall be treated as a
community-rated plan and shall meet all requirements of this
Act applicable to a community-rated plan.
(2) Experience-rated plan.--A plan shall be treated as an
experience-rated plan only if the only participants in the plan
are experience-rated individuals.
Subtitle E--Federal Responsibilities
PART 1--SECRETARY OF HEALTH AND HUMAN SERVICES
Subpart A--General Duties
SEC. 1401. GENERAL DUTIES AND RESPONSIBILITIES.
(a) In General.--Except as otherwise specifically provided in this
Act (or with respect to the administration of provisions in the
Internal Revenue Code of 1986 or in the Employee Retirement Income
Security Act of 1974), the Secretary of Health and Human Services shall
administer and implement all of the provisions of this Act.
(b) Coverage and Families.--The Secretary shall develop and
implement standards relating to the eligibility of individuals for
coverage in applicable health plans under subtitle B and may provide
such additional exceptions and special rules relating to the treatment
of family members under section 1113 as the Secretary finds
appropriate.
(c) Quality Management and Improvement.--The Secretary shall
establish and have ultimate responsibility for a performance-based
system of quality management and improvement as required by section
5001.
(d) Information System and Information Related Functions.--
(1) In general.--The Secretary shall--
(A) develop and implement standards to establish a
national health information system to measure quality
as required by title V;
(B) provide model format and content requirements
for summary plan descriptions;
(C) provide model format and content requirements
for comparative plan brochures under section 1125; and
(D) provide model format and content requirements
for comparative purchasing cooperative brochures under
section 1321.
(2) Information related functions.--
(A) Designation.--The Secretary shall provide for
the use of entities in the national health data network
to perform information related functions under this
section with respect to employers, States, contracting
entities, and purchasing cooperatives.
(B) Functions.--The functions referred to in
subparagraph (A) shall include--
(i) receipt of information submitted by
employers under section 1301,
(ii) with respect to the information
received, transmittal to the States, and
(iii) such other functions as the Secretary
specifies.
(e) Participating State Requirements.--Consistent with the
provisions of subtitle F, the Secretary shall--
(1) establish requirements for participating States,
(2) monitor State compliance with those requirements, and
(3) provide technical assistance,
in a manner that ensures access to the standard benefit package for all
eligible individuals.
(f) Development of Premium and Age Class Factors.--The Secretary
shall establish premium class and age class factors under subpart D.
(g) Development of Reinsurance and Risk-Adjustment Methodology.--
The Secretary shall develop a methodology for the reinsurance and risk-
adjustment of premium payments to community-rated and experience-rated
health plans in accordance with section 1504.
(h) Financial Requirements.--
(1) In general.--The Secretary shall establish minimum
capital requirements and requirements for guaranty funds and
financial reporting and auditing standards under subpart F.
(2) Financial management standards.--The Secretary, in
consultation with the Secretary of Labor, shall establish, for
purposes of section 1118, standards relating to the management
of finances, maintenance of records, accounting practices,
auditing procedures, and financial reporting for States,
consumer purchasing cooperatives and health plans. Such
standards shall take into account current Federal laws and
regulations relating to fiduciary responsibilities and
financial management of funds.
(3) Auditing state performance.--The Secretary shall
perform periodic financial and other audits of States to assure
that such States are carrying out their responsibilities under
this Act consistent with this Act. Such audits shall include
audits of State performance in the areas of--
(A) assuring enrollment of all community-rated
individuals in health plans;
(B) management of premium and cost sharing
discounts and reductions provided;
(C) financial management (including the financial
activities of cooperatives and State-designated
contracting entities); and
(D) assuring enforcement of the antidiscrimination
provisions of this Act.
(i) Standards for Health Plan Grievance Procedures.--The Secretary
shall establish standards for health plan grievance procedures that are
used by enrollees in pursuing complaints.
(j) Fiduciary Requirements.--The Secretary shall, in consultation
with the Secretary of Labor, develop and promulgate fiduciary
requirements for the management of funds by States, plans,
cooperatives, and employers.
(k) Guaranty Funds.--The Secretary shall establish standards for
guaranty funds as provided for in section 1442.
(l) Standards for Utilization Management Programs.--
(1) In general.--Not later than 12 months after the date of
enactment of this Act, the Secretary, in consultation with
interested parties which may include one or more accrediting
organizations, shall promulgate uniform Federal standards for
utilization management programs, to include the activities
described in section 1129.
(2) Compliance.--States shall ensure compliance with the
Federal standards established under paragraph (1), consistent
with their role in certifying health plans.
(3) Review and update.--The Secretary shall periodically
review and update utilization management standards to reflect
appropriate policies and practices in health care delivery.
(m) Collection Activities.--The Secretary may provide (through
contract or otherwise) for collection activities for the collection of
amounts owed to States and purchasing cooperatives for health insurance
coverage subject to the provisions of this title.
SEC. 1402. ANNUAL REPORT.
(a) In General.--The Secretary, in consultation with the National
Health Benefits Board and the Health Care Cost and Coverage Commission,
shall prepare and submit to the President and the Congress an annual
report concerning the overall implementation of the new health care
system under this Act.
(b) Matters To Be Included.--The Secretary shall include in each
annual report under this section the following:
(1) Information on Federal and State implementation.
(2) Data related to quality improvement.
(3) Recommendations or changes in the administration and
regulation of laws related to health care financing, delivery,
and coverage.
SEC. 1403. ASSISTANCE WITH FAMILY COLLECTIONS.
The Secretary shall provide States with such technical and other
assistance as may promote the efficient collection of other amounts
owed by families under this Act.
SEC. 1404. ADVISORY OPINIONS.
(a) In General.--Community- and provider-based plans, and
individuals and organizations seeking to establish such plans, shall be
eligible to receive advisory opinions from appropriate Federal
entities, including opinions concerning whether their arrangement
complies with Federal self-referral, fraud and abuse, and anti-trust
laws.
(b) Regulations.--The Secretary shall issue regulations setting
forth the procedures for obtaining advisory opinions described in
subsection (a).
(c) Timing of Opinions.--An advisory opinions shall be issued not
later than 90 days after receipt of a request for such opinion from a
plan.
(d) Fees.--Applicants under this section shall pay a fee, the
amount of which to be determined by the Secretary, to cover the costs
of providing an opinion under this section.
SEC. 1405. FUNDING.
There are authorized to be appropriated to the Secretary, such sums
as may be necessary to carry out this subpart for each of the fiscal
years 1995 through 1999.
Subpart B--Responsibilities Relating to Review and Approval of State
Systems
SEC. 1411. FEDERAL REVIEW AND ACTION ON STATE SYSTEMS.
(a) Approval of State Systems by Secretary.--
(1) In general.--The Secretary shall approve a State health
care system for which a plan is submitted under section 1501(a)
unless the Secretary determines that the system (as set forth
in the plan) does not (or will not) meet the responsibilities
for a participating State under this Act.
(2) Regulations.--Not later than July 1, 1995, the
Secretary shall issue regulations, prescribing the requirements
for State health care systems under this title, except that in
the case of a plan submitted under section 1501(a) before the
date of issuance of such regulations, the Secretary shall take
action on such document notwithstanding the fact that such
regulations have not been issued.
(3) No approval permitted for years prior to 1996.--Except
as otherwise specifically provided in this Act, the Secretary
may not approve a State health care system under this subpart
for any year prior to 1996.
(b) Review of Completeness of Plans.--
(1) In general.--If a State submits a plan under subsection
(a)(1), the Secretary shall notify the State, not later than 7
working days after the date of submission, whether or not the
plan is complete and provides the Secretary with sufficient
information to approve or disapprove the document.
(2) Additional information on incomplete plan.--If the
Secretary notifies a State that the State's plan is not
complete, the State shall be provided such additional period
(not to exceed 45 days) as the Secretary may by regulation
establish in which to submit such additional information as the
Secretary may require. Not later than 7 working days after the
State submits the additional information, the Secretary shall
notify the State respecting the completeness of the plan.
(c) Action on Completed Documents.--
(1) In general.--The Secretary shall make a determination
(and notify the State) on whether the State's plan provides for
the implementation of a State system that meets the applicable
requirements of this title--
(A) in the case of a State that did not require an
additional period described in subsection (b)(2) to
file a complete plan, not later than 90 days after
notifying a State under subsection (b) that the State's
plan is complete, or
(B) in the case of a State that required an
additional period described in subsection (b)(2) to
file a complete plan, not later than 90 days after
notifying a State under subsection (b) that the State's
plan is complete.
(2) Review of coverage area.--The Secretary shall review
the State designation of community rating area boundaries to
determine whether such boundaries comply with sections 1502 and
1602, and in particular, the requirements of such sections
concerning non-discrimination in the establishment of coverage
area boundaries.
(3) Plans deemed approved.--If the Secretary does not meet
the applicable deadline for making a determination and
providing notice under paragraph (1) with respect to a State's
plan, the Secretary shall be deemed to have approved the
State's plan for purposes of this Act.
(d) Opportunity To Respond to Rejected Plan.--
(1) In general.--If (within the applicable deadline under
subsection (c)(1)) the Secretary notifies a State that its plan
does not provide for the implementation of a State system that
meets the applicable requirements of this title, the Secretary
shall provide the State with a period of 60 days in which to
submit such additional information and assurances as the
Secretary may require.
(2) Deadline for response.--Not later than 30 days after
receiving additional information and assurances under paragraph
(1), the Secretary shall make a determination (and notify the
State) on whether the State's plan provides for the
implementation of a State system that meets the applicable
requirements of this title.
(3) Plan deemed approved.--If the Secretary does not meet
the deadline established under paragraph (2) with respect to a
State, the Secretary shall be deemed to have approved the
State's plan for purposes of this Act.
(e) Approval of Previously Terminated States.--If the Secretary has
approved a State system under this part for a year but subsequently
terminated the approval of the system under section 1412(b)(2), the
Secretary shall approve the system for a succeeding year if the State--
(1) demonstrates to the satisfaction of the Secretary that
the failure that formed the basis for the termination no longer
exists, and
(2) provides reasonable assurances that the types of
actions (or inactions) which formed the basis for such
termination will not recur.
(f) Revisions to State System.--
(1) Submission.--A State may revise a system approved for a
year under this section, except that such revision shall not
take effect unless the State has submitted to the Secretary a
document describing such revision and the Secretary has
approved such revision.
(2) Actions on revisions.--Not later than 60 days after a
document is submitted under paragraph (1), the Secretary shall
make a determination (and notify the State) on whether the
implementation of the State system, as proposed to be revised,
meets the applicable requirements of this title. If the
Secretary fails to meet the requirement of the preceding
sentence, the Secretary shall be deemed to have approved the
implementation of the State system as proposed to be revised.
(3) Rejection of revisions.--Subsection (d) shall apply to
an amendment submitted under this subsection in the same manner
as it applies to a completed plan submitted under subsection
(b).
SEC. 1412. FAILURE OF PARTICIPATING STATES TO MEET CONDITIONS FOR
COMPLIANCE.
(a) In General.--In the case of a participating State, if the
Secretary determines that the operation of the State system under this
title fails to meet the applicable requirements of this Act, the
Secretary shall apply against the State in accordance with subsection
(b).
(b) Type of Sanction Applicable.--The sanctions applicable under
this section are as follows:
(1) If the Secretary determines that the State's failure
does not substantially jeopardize the ability of eligible
individuals in the State to obtain coverage for the standard
benefit package, the Secretary shall reduce payments with
respect to the State in accordance with section 1413.
(2) If the Secretary determines that the failure
substantially jeopardizes the ability of eligible individuals
in the State to obtain coverage for the standard benefit
package--
(A) the Secretary shall terminate its approval of
the State system; and
(B) the Secretary shall assume the responsibilities
described in section 1422.
(c) Termination of Sanction.--A State against which a sanction is
imposed under this section may submit information at any time to the
Secretary to demonstrate that the failure that led to the imposition of
the sanction has been corrected.
(d) Protection of Access to Benefits.--The Secretary shall take
actions under this section with respect to a State only in a manner
that assures the continuous coverage of eligible individuals enrolled
in community-rated health plans.
SEC. 1413. REDUCTION IN PAYMENTS FOR HEALTH PROGRAMS BY SECRETARY OF
HEALTH AND HUMAN SERVICES.
(a) In General.--Upon a determination by the Secretary under
section 1412(b)(1), the Secretary shall reduce the amount of any of the
payments described in subsection (b) that would otherwise be made to
individuals and entities in the State by such amount as the Secretary
determines to be appropriate.
(b) Payments Described.--The payments described in this subsection
are as follows:
(1) Payments to academic health centers in the State under
subtitle B of title III.
(2) Payments to individuals and entities in the State for
health research activities under section 301 and title IV of
the Public Health Service Act.
(3) Payments to hospitals in the State under part 4 of
subtitle E of title III (relating to payments to hospitals
serving vulnerable populations).
SEC. 1414. REVIEW OF FEDERAL DETERMINATIONS.
Any State affected by a determination by the Secretary under this
subpart may appeal such determination in accordance with section 5531.
SEC. 1415. FEDERAL SUPPORT FOR STATE IMPLEMENTATION.
(a) Planning Grants.--
(1) In general.--Not later than 90 days after the date of
enactment of this Act, the Secretary shall, to the extent
amounts are appropriated, make available to each State a
planning grant to assist the State in the development of a
health care system necessary to enable the State to become a
participating State under this title.
(2) Formula.--The Secretary shall establish a formula for
the distribution of funds made available under this subsection.
(3) Authorization of appropriations.--There are authorized
to be appropriated $50,000,000 for each of the fiscal years
1995 and 1996 for grants under this subsection.
(b) Grants for Start-up Support.--
(1) In general.--The Secretary shall, to the extent amounts
are appropriated, make available to States, upon their becoming
participating States, grants to assist in the establishment of
purchasing cooperatives.
(2) Formula.--The Secretary shall establish a formula for
the distribution of funds made available under this subsection.
(3) State matching funds required.--Funds are payable to a
State under this subsection only if the State provides
assurances, satisfactory to the Secretary, that amounts of
State funds (at least equal to the amount made available under
this subsection) will be expended for the purposes described in
paragraph (1).
(4) Authorization of appropriations.--There are authorized
to be appropriated $313,000,000 for fiscal year 1996,
$625,000,000 for fiscal year 1997, and $313,000,000 for fiscal
year 1998, for grants under this subsection.
Subpart C--Responsibilities in Absence of State Systems
SEC. 1421. APPLICATION OF SUBPART.
(a) Initial Application.--This subpart shall apply with respect to
a State as of January 1, 1997, unless--
(1) the State submits a plan for a State system under
section 1411(a)(1) by July 1, 1996, and
(2) the Secretary determines under section 1411 that such
system meets the requirements of subtitle F.
(b) Termination of Approval of System of Participating State.--In
the case of a participating State for which the Secretary terminates
approval of the State system under section 1412(b)(2), this subpart
shall apply with respect to the State as of such date as is appropriate
to assure the continuity of coverage for the standard benefit package
for eligible individuals in the State.
SEC. 1422. FEDERAL ASSUMPTION OF RESPONSIBILITIES IN NON-PARTICIPATING
STATES.
Upon determining that this subpart will apply to a State for a
calendar year, the Secretary shall take such steps as are necessary to
ensure that the standard benefit package is provided to eligible
individuals in the State during the year, including the establishment
of community-rating areas within such State as appropriate.
SEC. 1423. IMPOSITION OF SURCHARGE ON PREMIUMS UNDER FEDERALLY-OPERATED
SYSTEM.
If this subpart applies to a State for a calendar year, the
premiums charged by community-rated health plans in the State shall be
equal to premiums that would otherwise be charged, increased by 15
percent. Such 15 percent increase shall be used to reimburse the
Secretary for any administrative or other expenses incurred as a result
of establishing and operating the system in that State.
SEC. 1424. RETURN TO STATE OPERATION.
(a) Application Process.--After the establishment and operation of
a system by the Secretary in a State under section 1422, the State may
at any time apply to the Secretary for the approval of a State system
in accordance with the procedures described in section 1411.
(b) Timing.--If the Secretary approves the system of a State for
which the Secretary has operated a system under this subpart during a
year, the Secretary shall terminate the operation of the system, and
the State shall establish and operate its approved system, as of
January 1 of the first year beginning after the Secretary approves the
State system. The termination of the Secretary's system and the
operation of the State's system shall be conducted in a manner that
assures the continuous coverage of eligible individuals in the State
under community-rated health plans.
Subpart D--Establishment of Class Factors for Charging Premiums
SEC. 1431. PREMIUM CLASS AND AGE CLASS FACTORS.
(a) In General.--For purposes of this title and title X, the
Secretary shall establish premium class and age class factors in
accordance with section 1113(c).
(b) Conditions.--In establishing such factors, the factor for the
class of individual enrollment shall be 1 and the factor for the
couple-only class of family enrollment shall be 2.
Subpart E--Risk Adjustment and Reinsurance Methodology for Payment of
Plans
SEC. 1435. DEVELOPMENT OF A RISK ADJUSTMENT AND REINSURANCE
METHODOLOGY.
(a) Establishment.--The Secretary shall develop a risk adjustment
and reinsurance methodology in accordance with section 1504.
(b) Research and Demonstration.--The Secretary shall conduct and
support research and demonstration projects to develop and improve, on
a continuing basis, the risk adjustment and reinsurance methodology
under this subpart.
(c) Technical Assistance.--The Secretary shall provide technical
assistance to States in implementing the methodology developed under
this subpart.
Subpart F--Responsibilities for Financial Requirements
SEC. 1441. CAPITAL STANDARDS FOR COMMUNITY-RATED PLANS.
(a) In General.--The Secretary shall establish, in consultation
with the States, minimum capital requirements for carriers, for
purposes of section 1118.
(b) $500,000 Minimum.--Subject to subsection (c), under such
requirements there shall be not less than $500,000 of capital
maintained for each carrier.
(c) Additional Capital Requirements.--The Secretary shall establish
standards that provide for additional capital for purposes of this
section. The amount of such additional capital required shall reflect
factors likely to affect the financial stability of a carrier,
including the following:
(1) Projected plan enrollment and number of providers
participating in plans of the carrier.
(2) Market share and strength of competition.
(3) Extent and nature of risk-sharing with participating
providers and the financial stability of risk-sharing
providers.
(4) Prior performance of the carrier, risk history, and
liquidity of assets.
(d) Community- and Provider-Based Plans.--
(1) In general.--States shall consider alternative
financial instruments and methods for community- and provider-
based plans (as defined in paragraph (2)) to meet the capital
and solvency standards developed in accordance with this
section. Provisions made for such plans shall ensure the fiscal
integrity and financial solvency of such plans.
(2) Eligible plans.--Plans eligible for special
consideration by States must be offered by public or not-for-
profit entities that are owned, or in which a majority share of
the plan's investment is held by--
(A) health care providers who practice in the plan;
(B) individuals who live in the area, or not-for-
profit organizations located in the area serviced by
the plan;
(C) a combination of individuals and organizations
described in subparagraphs (A) and (B); or
(D) organizations located outside the service area
which provide for control over local operations by
individuals described in subparagraphs (A) or (B).
(e) Development of Standards by NAIC.--The Secretary may request
the National Association of Insurance Commissioners to develop model
standards for the additional capital requirements described in
subsection (c) and to present such standards to the Secretary not later
than July 1, 1995. The Secretary may accept such standards as the
standards to be applied under subsection (c) or modify the standards in
any appropriate manner.
SEC. 1442. STANDARD FOR GUARANTY FUNDS.
(a) In General.--In consultation with the States, the Secretary
shall establish standards for guaranty funds established by States for
community-rated health plans.
(b) Guaranty Fund Standards.--The standards established under
subsection (a) for a guaranty fund shall include the following:
(1) Each fund must have a method to generate sufficient
resources to pay health providers and others in the case of a
failure of a health plan in order to meet obligations with
respect to--
(A) services rendered by the health plan for the
standard benefit package, including any supplemental
coverage for cost sharing provided by the health plan,
and
(B) services rendered prior to health plan
insolvency and services to patients after the
insolvency but prior to their enrollment in other
health plans.
(2) Each fund shall be liable for all claims against the
plan by health care providers with respect to their provision
of items and services covered under the standard benefit
package to enrollees of the failed plan. Such claims, in full,
shall take priority over all other claims. The fund is liable,
to the extent and in the manner provided in accordance with
rules established by the Secretary, for other claims, including
other claims of such providers and the claims of contractors,
employees, governments, or any other claimants.
(3) The fund stands as a creditor for any payments owed the
plan to the extent of the payments made by the fund for
obligations of the plan.
(4) The fund has authority to borrow against future
assessments in order to meet the obligations of failed plans
participating in the fund.
Subpart G--Open Enrollment
SEC. 1445. PERIODS OF AUTHORIZED CHANGES IN ENROLLMENT.
The Secretary shall specify periods of enrollment in accordance
with section 1112(c).
SEC. 1446. DISTRIBUTION OF COMPARATIVE INFORMATION.
The Secretary shall specify a period of time prior to open
enrollment during which States must provide for the distribution to
community-rated individuals enrollment materials and comparative
information on health plans and purchasing cooperatives.
PART 2--ESSENTIAL COMMUNITY PROVIDERS
SEC. 1461. CERTIFICATION.
For purposes of this Act, the Secretary shall certify as an
``essential community provider'' any health care provider or
organization that--
(1) is within any of the categories of providers and
organizations specified in section 1462(a), or
(2) meets the standards for certification under section
1463(a).
SEC. 1462. CATEGORIES OF PROVIDERS AUTOMATICALLY CERTIFIED.
(a) In General.--The categories of providers and organizations,
including subrecipients, specified in this subsection are as follows:
(1) Category 1 entities.--The following entities shall be
considered category 1 entities:
(A) Covered entities as defined in section
340B(a)(4) of the Public Health Service Act (42 U.S.C.
256b(a)(4)), except that subsections (a)(4)(L)(iii) and
(a)(7) of such section shall not apply.
(B) School health services centers under title III.
(C) Public or nonprofit hospitals--
(i) that meet the criteria for public
hospitals which are eligible entities under
section 340B of the Public Health Service Act
in any cost reporting period in the 3-year
period prior to the date of enactment of this
Act, except that subsection (a)(4)(L)(iii) of
such section shall not apply; or
(ii) meeting alternative criteria developed
by the Secretary after the date of enactment of
this Act which are comparable to the criteria
utilized in determining eligibility under such
section 340B;
(D) Public and private, nonprofit mental health and
substance abuse providers receiving funds under title V
or XIX of the Public Health Service Act.
(E) Runaway homeless youth centers or transitional
living programs for homeless youth providing health
services under the Runaway Homeless Youth Act of 1974
(42 U.S.C. 5701 et seq.).
(F) Public or nonprofit maternal and child health
providers that receive funding under title V of the
Social Security Act.
(G) Rural health clinics as defined under section
1861(aa)(2) of the Social Security Act.
(H) Programs of the Indian Health Service (as
defined in section 8302(3)).
(2) Category 2 entities.--The following entities shall be
considered category 2 entities:
(A) Medicare dependent small rural hospitals under
section 1886(d)(8)(iii) of the Social Security Act.
(B) Children's hospitals meeting comparable
criteria determined appropriate by the Secretary.
(b) Study of Federally Certified Rural Health Clinics.--The
Secretary shall conduct an evaluation of the Rural Health Clinics
program as defined in section 1861(aa)(2) of the Social Security Act to
examine the causes of the growth in the program and the characteristics
of providers certified as rural health clinics and the characteristics
of the population served by rural health clinics to ensure that the
program meets the needs of rural underserved communities. The Secretary
shall report the findings of such evaluation, together with any
recommended changes in the rural health clinics program, to the
Congress not later than January 1, 1996.
SEC. 1463. STANDARDS FOR ADDITIONAL PROVIDERS.
(a) Standards.--The Secretary shall publish standards for the
certification of additional categories of health care providers and
organizations as essential community providers, including the
categories described in subsection (b). Such a health care provider or
organization shall not be certified unless the Secretary determines,
under such standards, that health plans operating in the area served by
the applicant would not otherwise be able to assure adequate access to
items and services included in the standard benefit package if such a
provider was not so certified.
(b) Categories To Be Included.--The categories described in this
subsection are as follows:
(1) Certain health professionals.--A health professional
who--
(A) for at least 20 hours per week--
(i) is located in an area (or areas)
designated as a health professional shortage
area (under section 332 of the Public Health
Service Act) or serves a population (or
populations) designated as a medically
underserved population (under section 330 of
the Public Health Service Act); or
(ii)(I) is located or provides services in
a neighborhood or community whose residents are
at risk of underservice; and
(II) is available to patients at such
location on evenings and weekends; and
(B) if the health professional is a physician--
(i) is licensed to practice in the
jurisdiction; and
(ii) is either--
(I) granted privileges to practice
at one or more hospitals; or
(II) has a consultation and
referral arrangement with one or more
physicians who are granted privileges
to practice at one or more hospitals.
(2) Institutional providers.--Public and private nonprofit
hospitals and other public and nonprofit institutional health
care providers, including family planning clinics, located in
health professional shortage areas (as defined under section
332 of the Public Health Service Act) or receiving funding
under subtitle E of title III of this Act).
(3) Other providers.--
(A) In general.--Other public and private nonprofit
agencies and organizations that--
(i) are located in such an area or
providing health services to such a population,
and
(ii) provide health care and services
essential to residents of such an area or such
populations.
(B) Nonprofit hospitals.--Nonprofit hospitals with
a minimum of 200 beds, located in urban areas where--
(i) the cumulative total of its services
provided to individuals who are entitled to
benefits under title XVIII of the Social
Security Act or under a State plan under title
XIX of such Act equals a minimum of 65 percent;
and
(ii) a minimum of 20 percent of its
services are provided to individuals eligible
for assistance under such title XIX.
SEC. 1464. CERTIFICATION PROCESS; REVIEW; TERMINATION OF
CERTIFICATIONS.
(a) Certification Process.--
(1) Publication of procedures.--The Secretary shall
publish, not later than 6 months after the date of the
enactment of this Act, the procedures to be used by health care
professionals, providers, agencies, and organizations seeking
certification under this subpart, including the form and manner
in which an application for such certification is to be made.
(2) Timely determination.--The Secretary shall make a
determination upon such an application not later than 60 days
(or 15 days in the case of a certification for an entity
described in section 1462) after the date the complete
application has been submitted. The determination on an
application for certification of an entity described in section
1462 shall only involve the verification that the entity is an
entity described in such section.
(b) Review of Certifications.--The Secretary shall periodically
review whether professionals, providers, agencies, and organizations
certified under this subpart continue to meet the requirements for such
certification.
(c) Termination or Denial of Certification.--
(1) Preliminary finding.--If the Secretary preliminarily
finds that an entity seeking certification under this section
does not meet the requirements for such certification or such
an entity certified under this subpart fails to continue to
meet the requirements for such certification, the Secretary
shall notify the entity of such preliminary finding and permit
the entity an opportunity, under subtitle C of title V, to
rebut such findings.
(2) Final determination.--If, after such opportunity, the
Secretary continues to find that such an entity continues to
fail to meet such requirements, the Secretary shall terminate
the certification and shall notify the entity and the State of
such termination and the effective date of the termination.
SEC. 1465. NOTIFICATION OF PARTICIPATING STATES.
(a) In General.--Not less often than annually the Secretary shall
notify each participating State of essential community providers that
have been certified under this subpart.
(b) Contents.--Such notice shall include sufficient information to
permit each State to notify health plans of the identity of each entity
certified as an essential community provider, including--
(1) the location of the provider within each plan's service
area,
(2) the health services furnished by the provider, and
(3) other information necessary for health plans to carry
out this subpart.
SEC. 1466. HEALTH PLAN REQUIREMENT.
(a) In General.--
(1) Category 1 entities.--With respect to each essential
community provider described in section 1462(a)(1) (other than
a provider of school health services) that makes an election
under subsection (d), that serves the health plan service area
of such health plan, and that requests participation under this
section, a health plan shall either--
(A) enter into a written provider participation
agreement (described in subsection (b)) with such
providers, or
(B) enter into a written agreement under which the
plan shall make payments to such provider in accordance
with subsection (c).
(2) Category 2 entities.--
(A) In general.--With respect to at least one
essential community provider described in subparagraph
(A) and at least one essential community provider
described in subparagraph (B) of section 1462(a)(2),
that makes an election under subsection (d), that
serves the health plan service area of such health
plan, and that requests participation under this
section, a health plan shall either--
(i) enter into a written provider
participation agreement (described in
subsection (b)) with such providers, or
(ii) enter into a written agreement under
which the plan shall make payments to such
provider in accordance with subsection (c).
(B) Exception.--A State, as part of the State plan
under section 1501(a), may submit to the Secretary for
approval a request that the Secretary permit the State
to--
(i) require health plans operating in
certain community rating areas in the State to
contract with more than one essential community
provider of each type referred to in
subparagraph (A), based on geographic
proximity, cultural and language needs,
capacity to meet the needs of enrollees, or
other factors determined relevant by the State;
and
(ii) establish additional types of
essential community providers under section
1462(a)(2) that a health plan must contract
with under subparagraph (A).
(C) Discretion of secretary.--With respect to a
State request under subparagraph (B), the Secretary
shall--
(i) approve such request; or
(ii) require the designation of such
additional essential community providers in the
State as the Secretary determines necessary.
(b) Participation Agreement.--A participation agreement between a
health plan and an electing essential community provider under this
subsection shall provide that the health plan agrees to treat the
provider in accordance with terms and conditions the same as those that
are applicable to other providers participating in the health plan with
respect to each of the following:
(1) The scope of services for which payment is made by the
plan to the provider.
(2) The rate of payment for covered care and services.
(3) The availability of financial incentives to
participating providers.
(4) Limitations on financial risk provided to other
participating providers.
(5) Assignment of enrollees to participating providers.
(6) Access by the provider's patients to providers in
medical specialties or subspecialties participating in the
plan.
(c) Payments for Providers Without Participation Agreements.--
(1) In general.--Payment in accordance with this subsection
is payment based, as elected by the electing essential
community provider, either--
(A) on the fee schedule developed by the State; or
(B) on payment methodologies and rates used under
the applicable Medicare payment methodology and rates
(or the most closely applicable methodology under such
program as the Secretary specifies in regulations).
(2) Special rule for federally qualified health centers.--
With respect to each federally qualified health center (as such
term is defined in section 1861(aa) of the Social Security Act)
that is an essential community provider, a health plan shall
make payments based on the reasonable cost rates applicable
under section 1833(a)(3) of the Social Security Act, except
that the federally qualified health center may accept other
payment amounts.
(3) No application of gate-keeper limitations.--Payment in
accordance with this subsection may be subject to utilization
review, but may not be subject to otherwise applicable
gatekeeper requirements under the plan.
(d) Election.--
(1) In general.--In this part, the term ``electing
essential community provider'' means, with respect to a health
plan, an essential community provider certified under this
subpart that elects under this subpart to apply to the health
plan.
(2) Form of election.--An election under this subsection
shall be made in a form and manner specified by the Secretary,
and shall include notice to the health plan involved. Such an
election may be made annually with respect to a health plan,
except that the plan and provider may agree to make such an
election on a more frequent basis.
(e) Special Rule for Providers of School Health Services.--A health
plan shall pay, to each provider of school health services located in
the plan's service area, an amount determined by the Secretary for such
services furnished to enrollees of the plan.
SEC. 1467. RECOMMENDATION ON CONTINUATION OF REQUIREMENT.
(a) Studies.--In order to prepare recommendations under subsection
(b), the Secretary shall conduct studies regarding essential community
providers, including studies that assess--
(1) the definition of essential community provider,
(2) the sufficiency of the funding levels for providers,
including the special rule for federally qualified health
centers under section 1466(c)(2), for both covered and
uncovered benefits under this Act,
(3) the effects of contracting requirements relating to
such providers on such providers, health plans, and enrollees,
(4) the impact of the payment rules for such providers, and
(5) the impact of national health reform on such providers.
(b) Recommendations to and Consideration by Congress.--
(1) In general.--Not later than 5 years after the date of
enactment of this Act, the Secretary shall submit to Congress,
specific recommendations concerning whether, and to what
extent, section 1466 should continue to apply to some or all
essential community providers. Such recommendations may include
a description of the particular types of such providers and
circumstances under which such section should continue to
apply.
(2) Joint resolution and consideration by congress.--
(A) In general.--The recommendations under
paragraph (1) shall be implemented unless a joint
resolution (described in subparagraph (B)) disapproving
such recommendations is enacted in accordance with the
provisions of subparagraph (C), before the end of the
45-day period beginning on the date on which such
recommendations were submitted. For purposes of
applying the preceding sentence and subparagraphs (B)
and (C), the days on which either House of Congress is
not in session because of an adjournment of more than
three days to a day certain shall be excluded in the
computation of a period.
(B) Joint resolution of disapproval.--A joint
resolution described in this subparagraph means only a
joint resolution which is introduced within the 10-day
period beginning on the date on which the Secretary
submits recommendations under paragraph (1) and--
(i) which does not have a preamble;
(ii) the matter after the resolving clause
of which is as follows: ``That Congress
disapproves the recommendations of the
Secretary of Health and Human Services
concerning the extension of certain essential
community provider provisions, as submitted by
the Secretary on ______________.'', the blank
space being filled in with the appropriate
date; and
(iii) the title of which is as follows:
``Joint resolution disapproving recommendations
of the Secretary of Health and Human Services
concerning the extension of certain essential
community provider provisions, as submitted by
the Secretary on ______________.'', the blank
space being filled in with the appropriate
date.
(C) Procedures for consideration of resolution of
disapproval.--Subject to subparagraph (D), the
provisions of section 2908 (other than subsection (a))
of the Defense Base Closure and Realignment Act of 1990
shall apply to the consideration of a joint resolution
described in subparagraph (B) in the same manner as
such provisions apply to a joint resolution described
in section 2908(a) of such Act.
(D) Special rules.--For purposes of applying
subparagraph (C) with respect to such provisions--
(i) any reference to the Committee on Armed
Services of the House of Representatives shall
be deemed a reference to an appropriate
Committee of the House of Representatives
(specified by the Speaker of the House of
Representatives at the time of submission of
recommendations under paragraph (1)) and any
reference to the Committee on Armed Services of
the Senate shall be deemed a reference to an
appropriate Committee of the Senate (specified
by the Majority Leader of the Senate at the
time of submission of recommendations under
paragraph (1)); and
(ii) any reference to the date on which the
President transmits a report shall be deemed a
reference to the date on which the Secretary
submits a recommendation under paragraph (1).
SEC. 1468. DEFINITIONS.
As used in subpart:
(1) Children's hospital.--The term ``children's hospital''
means those hospitals whose inpatients are certified by the
Secretary or the State to be predominantly under the age of 18.
(2) Health professional.--The term ``health professional''
means a physician, nurse, nurse practitioner, certified nurse
midwife, physician assistant, psychologist, dentist,
pharmacist, chiropractor, clinical social worker, and other
health care professional recognized by the Secretary.
(3) Subrecipient.--The term ``subrecipient'' means, with
respect to a recipient of a grant under a particular authority,
an entity that--
(A) is receiving funding from such a grant under a
contract with the principal recipient of such a grant,
and
(B) meets the requirements established to be a
recipient of such a grant.
PART 3--SPECIFIC RESPONSIBILITIES OF SECRETARY OF LABOR.
SEC. 1481. RESPONSIBILITIES OF SECRETARY OF LABOR.
(a) In General.--The Secretary of Labor is responsible--
(1) under subtitle D, for the enforcement of requirements
applicable to employers (including requirements relating to
payment of premiums under title X if applicable) and the
administration of large employer purchasing groups;
(2) for the temporary assumption of the operation of self-
insured employer sponsored health plans that are insolvent;
(3) for carrying out any other responsibilities assigned to
the Secretary under this Act; and
(4) for administering title I of the Employee Retirement
Income Security Act of 1974 as it relates to group health plans
maintained by large employer purchasing groups.
(b) Agreements with States.--The Secretary of Labor may enter into
agreements with States in order to enforce responsibilities of
employers and large employer purchasing groups, and requirements of
employer sponsored health plans, under subtitle B of title I of the
Employee Retirement Income Security Act of 1974.
(c) Consultation.--In carrying out activities under this Act with
respect to large employer purchasing groups, employer sponsored health
plans, and employers, the Secretary of Labor shall consult with the
Secretary of Health and Human Services.
(d) Guaranty Funds.--
(1) In general.--The Secretary of Labor shall establish
standards for guaranty funds to be established by a State with
respect to a self-insured plan operating wholly within the
State.
(2) Multistate plans.--The Secretary of Labor shall
establish and administer a guaranty fund with respect to
multistate self-insured plans.
(e) Employer-Related Requirements.--
(1) In general.--The Secretary of Labor, in consultation
with the Secretary, shall be responsible for assuring that
employers--
(A) make payments of any employer premiums (and
withhold and make payment of the family share of
premiums with respect to qualifying employees) and
provide discounts to employees as required under this
Act, including auditing of collection activities with
respect to such payments,
(B) submit timely reports as required under this
Act, and
(C) otherwise comply with requirements imposed on
employers under this Act.
(2) Audit and similar authorities.--The Secretary of
Labor--
(A) may carry out such audits (directly or through
contract) and such investigations of employers and
States and large employer purchasing groups,
(B) may exercise such authorities under section 504
of Employee Retirement Income Security Act of 1974 (in
relation to activities under this Act),
(C) may provide (through contract or otherwise) for
such collection activities (in relation to amounts owed
to large employer purchasing groups, and for the
benefit of such groups), and
(D) may impose such civil penalties in accordance
with this Act,
as may be necessary to carry out such Secretary's
responsibilities under this section.
(3) Auditing of employer payments.--
(A) In general.--Each State is responsible for
auditing the records of community-rated employers to
assure that employer payments (including the payment of
amounts withheld) were made in the appropriate amount
as provided under subtitle B of title X.
(B) Employers with employees residing in different
community-rating areas.--In the case of a community-
rated employer which has employees who reside in more
than one community rating area in more than one State,
the Secretary of Labor, in consultation with the
Secretary, shall establish a process for the
coordination of State auditing activities among the
States involved.
(C) Appeal.--In the case of an audit conducted by a
State on an employer under this paragraph, an employer
or other State that is aggrieved by the determination
in the audit is entitled to review of such audit by the
Secretary of Labor in a manner to be provided by such
Secretary.
(f) Authority.--The Secretary of Labor is authorized to issue such
regulations as may be necessary to carry out section 1305 and
responsibilities of the Secretary under this Act.
SEC. 1482. 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 be responsible for certifying such plans
and carrying out activities under this title in the same manner as a
participating State would carry out activities under this title with
respect to a standard health plan.
(b) Self-Insured Plan Standards.--The Secretary of Labor shall
develop and publish standards applicable to self-insured plans offered
by large employers. The Secretary shall develop and publish such
standards by not later than the date that is 6 months after the date of
enactment of this Act. Such standards shall be the certified standard
health plan standards applicable to self-insured plans under this
title.
(c) Determination of Multistate Status.--For purposes of this Act,
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).
SEC. 1483. ASSISTANCE WITH EMPLOYER COLLECTIONS.
The Secretary of Labor shall provide States with such technical and
other assistance as may promote the efficient collection of all amounts
owed under this Act by employers.
SEC. 1484. PENALTIES FOR FAILURE OF LARGE EMPLOYER PURCHASING GROUPS TO
MEET REQUIREMENTS.
If the Secretary of Labor finds that a large employer purchasing
group has failed substantially to meet the applicable requirements of
subtitle D, the Secretary shall impose a civil money penalty of not to
exceed $10,000 for each such violation.
SEC. 1485. APPLICABILITY OF ERISA ENFORCEMENT MECHANISMS FOR
ENFORCEMENT OF CERTAIN REQUIREMENTS.
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 large group purchasers in the same manner and to same
extent as such provisions apply to enforcement of title I of such Act.
SEC. 1486. 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 5 percent, to employers maintaining
certified workplace wellness programs.
PART 4--OFFICE OF RURAL HEALTH POLICY
SEC. 1491. 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.
Subtitle F--Participating State Responsibilities
PART 1--GENERAL RESPONSIBILITIES
SEC. 1501. STATE PLAN AND CERTIFICATION OF STANDARD HEALTH PLANS AND
SUPPLEMENTAL HEALTH BENEFITS PLANS.
(a) State Plan.--
(1) In general.--For purposes of the approval of a State
health care system by the Secretary under section 1411, a State
is a ``participating State'' if the State meets the applicable
requirements of this subtitle.
(2) Submission of plan.--In order to be approved as a
participating State under section 1411, a State shall submit to
the Secretary a State plan (in a form and manner specified by
the Secretary) that describes the State health care system that
the State is establishing (or has established).
(3) Deadline.--If a State is not a participating State with
a State health care system in operation by January 1, 1997, the
provisions of subpart C of part 1 of subtitle E (relating to
responsibilities in absence of State systems) shall take
effect.
(4) Submission of information subsequent to approval.--A
State approved as a participating State under section 1411
shall submit to the Secretary an annual update to the State
health care system not later than February 15 of each year
following the first year for which the State is a participating
State. The update shall contain--
(A) such information as the Secretary may require
to determine that the system shall meet the applicable
requirements of this Act for the succeeding year; and
(B) such information as the Secretary may require
to determine that the State operated the system during
the previous year in accordance with the Secretary's
approval of the system for such previous year.
(b) Health Plan Accreditation, Certification and Enforcement
Program.--
(1) Establishment.--The Secretary shall establish a program
for the accreditation, certification and enforcement of health
plan standards by States (hereafter referred to in this
subsection as the ``ACE program''). Under such program, the
Secretary shall--
(A) develop guidelines for the accreditation,
certification and enforcement of standards for
certified standard health plans;
(B) approve State ACE programs as meeting such
guidelines; and
(C) monitor the compliance of States with such
guidelines.
(2) Program elements.--The guidelines referred to in
paragraph (1) shall include the following components:
(A) Certification.--State certification, and
recertification not less frequently than once during
each 3-year period, of standard health plans determined
by the State to be in compliance with the standards
established under subtitle B and with the regulations
promulgated by the Secretary concerning such standards.
(B) Disenrollment data.--State review of enrollee
disenrollment from each standard health plan to
determine whether there is a pattern of disenrollment
that does not reflect the distribution of such plans'
reenrolling membership.
(C) Monitoring.--State monitoring of the
performance of each standard health plan to ensure that
such plans continue to meet the criteria for
certification.
(3) State programs.--Each participating State shall develop
accreditation, certification and enforcement programs in
accordance with the guidelines established by the Secretary
under paragraph (1).
(4) Use of private organizations.--
(A) In general.--A State may utilize private
accreditation organizations to review the compliance by
standard health plans with specific standards with
which such organizations have demonstrated expertise. A
State may use such reviews as the basis for determining
plan compliance with such standards. The Secretary
shall approve eligible accreditation organizations and
promulgate regulations prohibiting conflicts of
interest in the use of such bodies by States.
(B) Limitations.--The use of private accreditation
organizations by a State under subparagraph (A) shall
not relieve such State of its obligations under this
subsection. In no case shall a State delegate
enforcement authority or enforcement responsibilities
to private organizations.
(5) Enforcement.--A State ACE program shall establish a
process for imposing sanctions on standard health plans that
fail to comply with the standards established under this title.
Such sanctions may include--
(A) limiting or prohibiting new member enrollment;
(B) permitting existing members to disenroll from
the health plan without penalty;
(C) State operation of a health plan to provide
transitional access;
(D) the imposition of civil monetary penalties in
accordance with this Act;
(E) requiring that a plan follow a corrective
action plan developed by the State; and
(F) decertification or denial of recertification,
but only after the plan has been provided a reasonable
opportunity to comply with such standards.
(6) Multi-state plans.--The Secretary of Labor, in
consultation with the Secretary, shall carry out all
certification and enforcement activities described in this
subsection with respect to multistate self-insured plans.
(c) Other State Duties.--A participating State shall--
(1) certify each purchasing cooperative that meets the
requirements of part 2 of subtitle D; and
(5) administer the State subsidies as provided for in title
VI.
(d) Effective Date.--Subsection (b) shall apply to standard health
plans and supplemental health benefits plans sold, issued, or renewed
on or after January 1, 1997.
SEC. 1502. COMMUNITY RATING AREAS AND HEALTH PLAN SERVICE AREAS.
(a) In General.--In accordance with this section, each
participating State shall, subject to approval by the Secretary,
provide for the division of the State into 1 or more community rating
areas.
(b) Multiple Areas.--With respect to a community rating area--
(1) no metropolitan statistical area in a State may be
incorporated into more than 1 such area in the State;
(2) the number of individuals residing within such an area
may not be less than 250,000; and
(3) no area incorporated in a community rating area may be
incorporated into another such area.
(c) Boundaries.--
(1) In general.--In establishing boundaries for community
rating areas, a participating State shall comply with the
antidiscrimination requirements of section 1602.
(2) Coordinating multiple community rating areas.--Nothing
in this section shall be construed as preventing a
participating State from coordinating the activities of one or
more community rating areas in the State.
(3) Interstate community rating areas.--Community rating
areas with respect to interstate areas shall be established in
accordance with rules established by the Secretary.
(4) Coordination in multi-state areas.--One or more
participating States may coordinate their operations in
contiguous community rating areas. Such coordination may
include, the following activities, adoption of joint operating
rules, contracting with standard health plans, enforcement
activities, and establishment of fee schedules for health
providers.
(d) Health Plan Service Areas.--
(1) In general.--Pursuant to guidelines developed under
paragraph (2), each State shall designate, by not later than
January 1, 19____, health plan service areas.
(2) Guidelines.--The State shall designate one or more
health plan service areas within each community rating area in
the State, that--
(A) prevent discrimination in accordance with
section 1602; and
(B) do not cross community rating area boundaries.
SEC. 1503. OPEN ENROLLMENT PERIODS.
Each participating State, based on rules and procedures established
by the Secretary, shall specify a uniform, annual open enrollment
period for each community rating area during which all eligible
individuals are permitted the opportunity to change enrollment among
the standard health plans offered to such individuals in such area
under this Act. The initial annual open enrollment period shall be for
a period of 90 days.
SEC. 1504. RISK ADJUSTMENT PROGRAM.
(a) Requirement for Implementation.--In accordance with rules
established by the Secretary, each State shall implement a risk
adjustment methodology developed by the Secretary under subsection (d).
(b) State Risk Adjustment Organization.--Each State shall establish
a State risk adjustment organization to carry out the adjustments
required under the methodology implemented by the State under
subsection (a) and make payments in accordance with subsection (c).
Such organization shall meet standards established by the Secretary
relating to organizational structure, operation, fiduciary
responsibilities and financial management.
(c) Adjustments and Payments.--
(1) Classes of purchasers.--The Secretary shall specify
classes of individual health plan purchasers whose expected
expenditures are significantly higher than those of employed
individuals covered under community-rated plans.
(2) Estimates.--The Secretary shall annually estimate the
amount by which the expected expenditures related to specified
high-cost community-rated individual health plan purchasers (as
specified by the Secretary under the methodologies developed
under subsection (a)) for the year involved will exceed the
expected average expenditures for other community-rated health
plan enrollees. Based on such estimates, the Secretary shall
develop a per capita adjustment amount with respect to each
community rating area.
(3) Payments.--
(A) In general.--The State risk adjustment
organization shall, using the methodologies developed
by the Secretary under subsection (a), apply the per
capita adjustment amount to community-rated and
experience-rated (and multistate plans under
subparagraph (C)) health plans offered within each
community rating area in the State.
(B) Standard plans.--Standard health plans subject
to an assessment under subparagraph (A) shall make
payments to the State risk adjustment organization for
the State in which such plans provide coverage.
(C) Multistate plans.--A multistate community-rated
or experience-rated plan that is subject to an
assessment under subparagraph (A) shall make payments
to a single State risk adjustment organization and
provide such organization with information concerning
the geographic distribution of the enrollees in such
plan. Such organization shall determine the amount of
such payments that are applicable to each community-
rating area and distribute such amounts to the
appropriate State risk adjustment organization.
(D) Distribution.--State risk adjustment
organizations shall distribute amounts collected under
this paragraph to community-rated or experience-rated
health plans that are determined to have expenditures
for items and services provided to enrolled individuals
that are greater than the average expenditures for
enrollees in standard health plans. The amounts of such
distributions shall be based on the methodology applied
by the organization involved.
(d) Development of Methodologies.--
(1) In general.--Not later than __________________, the
Secretary, in consultation with an advisory committee
established by the Secretary, shall develop a risk adjustment
and reinsurance methodology for use by States in accordance
with this section.
(2) Methodology.--
(A) Purposes.--The risk adjustment methodology
developed under paragraph (1) shall--
(i) ensure that assessments imposed on or
payments provided to standard health plans
reflect the expected relative utilization and
expenditures for covered items and services by
the enrollees of each plan compared to the
average utilization and expenditures for all
eligible individuals, and
(ii) protect standard health plans that
enroll a disproportionate share of eligible
individuals with respect to whom expected
utilization of health care services (included
in the benefit package) and expected health
care expenditures for such services are greater
than the average level of such utilization and
expenditures for eligible individuals.
(B) Factors to be considered.--The methodology
shall take into account the following factors:
(i) Demographic characteristics.
(ii) Health status, including prior use of
health services.
(iii) Geographic area of residence.
(iv) Socio-economic status.
(v) The cost sharing of the plan.
(vi) Any other factors determined by the
Secretary to be material to the purposes
described in subparagraph (A).
(3) Special consideration for mental illness and mental
retardation.--In developing the methodology under this section,
the Secretary shall give consideration to the unique problems
of adjusting payments relating to health plans with respect to
individuals with mental illness and mental retardation.
(4) Mandatory reinsurance.--
(A) In general.--The methodology developed under
this section shall include a system of mandatory
reinsurance as a component of the risk adjustment
methodology.
(B) Reinsurance system.--The Secretary, in
developing the methodology for a mandatory reinsurance
system under subparagraph (A), shall--
(i) provide for standard health plans to
make payments to state-established reinsurance
programs for the purpose of reinsuring all or
part of the health care expenditures for items
and services included in the standard benefit
package for classes of high-cost individual
health plan purchasers (as specified by the
Secretary) or specific high-cost treatments or
diagnosis; and
(ii) specify the manner of creation,
structure, and operation of the system in each
State, including--
(I) the manner (which may be
prospective or retrospective) in which
standard health plans make payments to
the system, and
(II) the type and level of
reinsurance coverage provided by the
system.
(5) Cost-sharing adjustment.--The standards developed by
the Secretary under this subsection shall include a cost-
sharing adjustment mechanism to adjust for 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 subtitle A of title VI.
(6) Confidentiality of information.--The methodology shall
be developed under this section in a manner that is consistent
with privacy standards promulgated under title V. In developing
such standards, the Secretary shall take into account any
potential need of States for certain individually identifiable
health information in order to carry out risk-adjustment and
reinsurance activities under this Act, but only to the minimum
extent necessary to carry out such activities and with
protections provided to minimize the identification of the
individuals to whom the information relates.
SEC. 1505. GUARANTY FUNDS.
A State, in accordance with the standards established by the
Secretary under section 1442, shall establish a State guaranty fund
with respect to community-rated plans offered in such State. The State
shall establish a separate guaranty fund with respect to self-insured
plans operating in the State in accordance with section 1481.
SEC. 1506. ENROLLMENT ACTIVITIES.
(a) Provider-Based Enrollment Mechanisms.--The Secretary shall
promulgate rules regarding the establishment by each participating
State, in accordance with section 6006, of provider-based enrollment
mechanisms for individuals seeking care who are not enrolled in a
standard health plan. Such rules shall include provisions requiring
standard health plans to pay providers for care delivered to
individuals prior to the individual's enrollment in the plan and be
consistent with section 1114.
(b) Coordination of Enrollment Activities.--Each participating
State shall coordinate its activities, including plan enrollment and
disenrollment activities, with other States in a manner specified by
the Secretary that ensures continuous, nonduplicative coverage of
community-rated and experience-rated individuals in standard health
plans and that minimizes administrative procedures and paperwork.
SEC. 1507. RURAL AND MEDICALLY UNDERSERVED AREAS.
(a) In General.--If, in accordance with appropriate rules
established by the Secretary, a State determines that there is
inadequate access in the provision of health services by standard
health plans in any area of a State, the State may authorize--
(1) a standard health plan to be the only standard health
plan in the area; or
(2) two or more standard health plans to take joint action
to develop and implement a program.
(b) Medically Underserved Area Defined.--For purposes of this
subtitle the term ``medically underserved area'' means an urban or
rural area designated by the Secretary as an area with a shortage of
health professional or of health services or facilities.
SEC. 1508. PUBLIC ACCESS SITES.
(a) Designation.--A State shall designate public access sites
within each community rating area through which residents of such areas
can obtain consumer information concerning health plans and purchasing
cooperatives offered in such areas. Such sites shall be designated in a
manner that ensures access to such information by health care
consumers.
(b) Information.--A State shall, through the public access sites
designated under subsection (a) and using the information provided to
the State under sections 1125 and 1321(f)(6), prepare and make
available information, in a comparative form, concerning standard
health plans certified by the State and purchasing cooperatives
operating in the State. The State shall provide such materials to
employers located within the State.
SEC. 1509. 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 Act 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.
SEC. 1510. RIGHT OF RECOVERY OF CERTAIN TAXES AGAINST PROVIDERS.
Each participating State shall provide that issuers and plan
sponsors of certified standard health plans shall have the right of
recovery against providers described in section 4518 of the Internal
Revenue Code of 1986 and shall provide methods of enforcing such right.
PART 2--TREATMENT OF STATE LAWS
SEC. 1511. PREEMPTION OF CERTAIN STATE LAWS RELATING TO HEALTH PLANS.
(a) Laws Restricting Plans Other Than Fee-for-Service Plans.--
Except as may otherwise be provided in this section, no State law shall
apply to any services provided under a health plan that is not a fee-
for-service plan (or a fee-for-service component of a plan) if such law
has the effect of prohibiting or otherwise restricting plans from--
(1) limiting the number and type of health care providers
who participate in the plan;
(2) requiring enrollees to obtain health services (other
than emergency services) from participating providers or from
providers authorized by the plan;
(3) requiring enrollees to obtain a referral for treatment
by a specialized physician or health institution;
(4) establishing different payment rates for participating
providers and providers outside the plan;
(5) creating incentives to encourage the use of
participating providers; or
(6) requiring the use of single-source suppliers for
pharmacy, non-serviced medical equipment, and other health
products and services.
(b) Preemption of State Corporate Practice Acts.--Any State law
related to the corporate practice of medicine and to provider ownership
of health plans or other providers shall not apply to arrangements
between health plans that are not fee-for-service plans and their
participating providers.
SEC. 1512. OVERRIDE OF RESTRICTIVE STATE PRACTICE LAWS.
(a) Override.--
(1) In general.--No State may, through licensure or
otherwise, restrict the practice of any class of practitioners
beyond that which is justified by the education and training of
such practitioners.
(2) Definition.--As used in this section, the term
``practitioner'' means--
(A) a nurse practitioner;
(B) a certified nurse midwife;
(C) a nurse anesthetist;
(D) a clinical nurse specialist; and
(E) a physicians assistant;
that has been awarded a master's degree or
postmaster's certificate following the completion of an
accredited training program that prepares individuals
in advanced practitioner specialties and that is
authorized by the State to practice as such a
practitioner.
(b) Regulations.--The Secretary shall promulgate regulations to
implement subsection (a) and shall ensure that appropriate technical
assistance is available to States for the purpose of complying with
this section.
PART 3--STATE FLEXIBILITY
Subpart A--Existing State Laws
SEC. 1521. CONTINUANCE OF EXISTING FEDERAL LAW WAIVERS.
Nothing in this Act shall preempt any feature of a State health
care system operating under a waiver granted before the date of the
enactment of this Act under titles XVIII or XIX of the Social Security
Act (42 U.S.C. 1395 et seq. or 1396 et seq.) or the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1001 et seq.).
SEC. 1522. HAWAII PREPAID HEALTH CARE ACT.
(a) ERISA Waiver.--
(1) In general.--Section 514(b)(5) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1144(b)(5))
is amended to read as follows:
``(5)(A) Except as provided in subparagraphs (B) and (C),
subsection (a) shall not apply to the Hawaii Prepaid Health
Care Act (Haw. Rev. Stat. Sec. Sec. 393-1 through 393-51).
``(B) Nothing in subparagraph (A) shall be construed to
exempt from subsection (a) any State tax law relating to
employee benefits plans.
``(C) If the Secretary of Labor notifies the Governor of
the State of Hawaii that as the result of an amendment to the
Hawaii Prepaid Health Care Act enacted after the date of the
enactment of this paragraph--
``(i) the proportion of the population with health
care coverage under such Act is less than such
proportion on such date, or
``(ii) the level of benefit coverage provided under
such Act is less than the actuarial equivalent of such
level of coverage on such date,
subparagraph (A) shall not apply with respect to the
application of such amendment to such Act after the date of
such notification.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act.
(b) HSA Waiver.--
(1) In general.--The Secretary shall, at the request of the
Governor of the State of Hawaii and in accordance with this
section, grant a waiver to the State from the requirements of
this Act (other than the requirements specified in paragraph
(3)).
(2) Scope of waiver.--The waiver granted under paragraph
(1) shall exempt--
(A) the State of Hawaii;
(B) health plans offered within the State; and
(C) health plan participants, including employers,
employees, residents, and health plan sponsors within
the State,
from requirements otherwise applicable to the State and such
plans and participants.
(3) Required compliance of other requirements.--The waiver
shall initially be granted under paragraph (1) if the State of
Hawaii demonstrates to the Secretary that the State maintains--
(A) a requirement that employers make premium
contributions comparable to the requirements of this
Act;
(B) a comprehensive benefit package (including cost
sharing) that is comparable with the requirements of
subtitle B of this title;
(C) a percentage of State population with health
care coverage that is not less than the national
average;
(D) a quality control mechanism and data system
that are comparable to the applicable requirements of
title V; and
(E) health care cost containment consistent with
the provisions of this Act.
(4) Waiver period.--The waiver initially granted under
paragraph (1) shall extend for the period during which the
State of Hawaii continues to comply with the requirements
specified in paragraph (3). The Secretary may require the
State, every 5 years, to demonstrate to the Secretary the
State's continued compliance with such requirements.
(5) Procedure in the event of non-compliance.--
(A) Notice.--If, at any time after granting a
waiver under paragraph (1), the Secretary finds that
the State of Hawaii is not meeting the requirements
specified in paragraph (3), the Secretary shall notify
the State of the Secretary's findings.
(B) Opportunity to contest.--The State may contest
the Secretary's findings under the procedures provided
under section 5231.
(C) Opportunity for correction.--
(i) Findings not contested.--If the State
does not contest the Secretary's findings
within the 30-day period beginning on the date
of receipt of a notice of such findings, the
State shall have--
(I) a 90-day period beginning on
such date to show a good faith effort
to remedy the non-compliance, and
(II) an additional 12-month period
to take such actions as may be required
to bring the State into compliance with
the requirements specified in paragraph
(3).
(ii) Contested findings.--If the State
contests the Secretary's findings within such
30-day period but such findings are upheld, the
State shall have--
(I) a 90-day period beginning on
the date of final adjudication to show
a good faith effort to remedy the non-
compliance, and
(II) an additional 12-month period
to take such actions as may be required
to bring the State into compliance with
the requirements specified in paragraph
(3).
(D) Termination.--If the State fails to demonstrate
a good faith effort under subparagraph (C)(i)(I) or
(C)(ii)(I) or to take actions under subparagraph
(C)(i)(II) or (C)(ii)(II) within the time period
specified, the Secretary may revoke the waiver granted
in paragraph (1).
(6) Cooperative agreement with the secretary.--The
Secretary shall enter into cooperative agreements with
appropriate officials of the State of Hawaii--
(A) to develop standards and reporting requirements
necessary for the issuance and maintenance of the
State's waiver under paragraph (1); and
(B) otherwise to effectuate the provisions of this
subsection.
(7) Eligibility for federal funds provided to participating
states.--Nothing in this subsection shall preclude the
eligibility of the State of Hawaii to participate in any public
health initiative, grant, or financial aid program under this
Act (including the medicaid program under title XIX of the
Social Security Act), or the sharing of revenue resulting from
the amendments made by title VII, designed to implement the
purpose of this Act. The Secretary shall work with appropriate
officials of the State of Hawaii to develop comparable,
alternative standards to govern the State's entitlement under
title XI.
SEC. 1523. ALTERNATIVE STATE PROVIDER PAYMENT SYSTEMS.
Notwithstanding any other provision of law, if a hospital
reimbursement system operated by a State meets the requirements of
section 1814(b) of the Social Security Act (42 U.S.C. 1395f(b)) and has
been approved by the Secretary and in continuous operation since July
1, 1977, the payment rates and methodologies required under the system
for services provided in the State shall apply to all purchasers and
payers, including those under employee welfare benefit plans authorized
under the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1001 et seq.), workers' compensation programs under State law, the
Federal Employees' Compensation Act under chapter 81 of title 5, United
States Code, and Federal employee health benefit plans under chapter 89
of title 5, United States Code.
SEC. 1524. ALTERNATIVE STATE HOSPITAL SERVICES PAYMENT SYSTEMS.
(a) In General.--No State shall be prevented from enforcing--
(1) a State system described in subsection (b), or
(2) a State system described in subsection (c),
by any provision of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1001 et seq.) or chapter 81 or 89 of title 5, United States
Code.
(b) Reimbursement Control System.--A State system is described in
this subsection if it is a State reimbursement control system in
operation before the date of the enactment of this Act which--
(1) applies to substantially all non-Federal acute care
hospitals in the State, and
(2) regulates substantially all rates of payment (including
maximum charges) in the State for inpatient hospital services,
except payments made under title XVIII of the Social Security
Act (42 U.S.C. 1395 et seq.).
(c) Health Insurance Reform System.--A State system is described in
this subsection if it is a State health insurance reform system in
operation before the date of the enactment of this Act which requires
any insurer (including a health maintenance organization) to comply
with requirements governing open enrollment and community rating,
including premium adjustments or other health care assessments, for the
purpose of risk adjustment.
(d) Effective Dates.--
(1) Subsection (b).--In the case of a State system
described in subsection (b), the provisions of this section
shall apply before, on, and after the date of the enactment of
this Act.
(2) Subsection (c).--In the case of a State system
described in subsection (c), the provisions of this section
shall apply before, on, and after the date of the enactment of
this Act, and before the effective date of section 1116 of this
Act.
Subpart B--Requirements for State Single-Payer Systems
SEC. 1531. 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 1532; and
(2)(A) in the case of a system offered throughout a State,
meets the requirements for a Statewide single-payer system
under section 1533; 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 1534.
SEC. 1532. 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 1013(10), or which is sponsored by an
experience-rated employer sponsor with at least
5,000 full-time employees.
(D) Options included in state system document.--A
State may not exercise any of the options described in
subparagraphs (B) or (C) for a year unless the State
included a description of the option in the submission
of its system document to the Secretary for the year
under section 1501(a).
(E) Exclusion of certain individuals.--A single-
payer system may not require the enrollment of
veterans, active duty military personnel, and American
Indians.
(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) Cost containment.--The system shall provide for
mechanisms to ensure, in a manner satisfactory to the
Secretary, that--
(A) the rate of growth in health care spending will
not be higher than the target established under this
Act;
(B) the expenditures described in subparagraph (A)
are computed and effectively monitored;
(C) automatic, mandatory, nondiscretionary
reductions in payments to health care providers will be
imposed to the extent required to assure that such per
capita expenditures do not exceed the applicable target
referred to in subparagraph (A); and
(D) Federal payments to a single payer State or
health care coverage area shall be limited to the
payments that would have been made in the absence of
the implementation of the single payer system.
(7) 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.
(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 1111(b)(3)
(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 1116 (relating to rating
limitations for community-rated market), 1123(a)
(relating to plan solvency), and section 1125 (relating
to restrictions on the marketing of plan materials).
SEC. 1533. 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 1.
(b) Exceptions to Certain Requirements for Participating States.--
In the case of a State operating a Statewide single-payer system, the
State is not required to meet the following requirements otherwise
applicable to participating States under part 1:
(1) Establishment of community rating and service areas.--
The requirements of sections 1502(a) (relating to the
establishment of community rating areas) and 1502(b) (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) Financing.--
(1) In general.--A State operating a Statewide single-payer
system shall provide for the financing of the system using, at
least in part, a payroll-based financing system that requires
employers to pay at least the amount that the employers would
be required to pay if the employers were subject to the
requirements of title X (determined without regard to any
effective date).
(2) Use of financing methods.--Such a State may use,
consistent with paragraph (1), any other method of financing.
(d) 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. 1534. 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, except as provided in
subsection (b), the State shall meet the requirements for participating
States under part 1.
(b) Exceptions to Certain Requirements for Participating States.--
(1) Establishment of service areas.--The requirement of
section 1502(b) (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
community rating area specific single-payer system.
Subpart C--Early Implementation of Comprehensive State Programs
SEC. 1541. EARLY IMPLEMENTATION OF COMPREHENSIVE STATE PROGRAMS
(a) Application.--
(1) In general.--In accordance with this section, each
State desiring to implement the reform standards established in
this Act before the applicable effective date for such
standards, may submit an application to the Secretary of Health
and Human Services and the Secretary of Labor to request
approval of a State comprehensive health care reform program
established under State law which meets the requirements
specified in subsection (b).
(2) Establishment of criteria.--The Secretaries shall
establish not later than January 1, 1995, criteria for--
(A) the approval of such applications, and
(B) the continuing review of such State programs
consistent with the provisions of subpart B of part 1.
(3) Expedited procedure.--The Secretaries shall establish
an expedited procedure for the consideration and disposition of
applications under this subsection. The procedure established
by the Secretaries shall provide that such consideration and
disposition be completed within 90 days, and that if the
application is approved, multistate employers be notified of
such approval.
(b) Requirements Specified.--The State program shall be consistent
with the reform standards established in this Act and the interim and
final (if any) regulations promulgated by the Secretaries, including--
(1) a standardized benefits package meeting the
requirements established under subtitle C, or in the event such
requirements have not been fully promulgated on the date of the
application, the requirements for a qualified health
maintenance organization (as defined in section 1310(d) of the
Public Health Service Act (42 U.S.C. 300e-9(d));
(2) insurance reforms and rating requirements as specified
under part 2 of subtitle B;
(3) standards for health plans as specified under part 3 of
subtitle B;
(4) the recognition of, and standards for, purchasing
cooperatives, as specified in part 2 of subtitle D;
(5) compliance with the data collection and privacy
procedures established under subtitle B of title V;
(6) uniform administrative procedures as specified in
section 1126;
(7) the imposition of employer and individual
responsibilities as specified in part 1 of subtitle D and title
X (determined without regard to any effective date);
(8) the establishment of the subsidy program under this
Act; and
(9) health care cost containment under this Act.
(c) Qualification for Federal Funds.--For purposes of this Act, a
State with an approved State program under this section shall be
considered a participating State and shall maintain such status if such
State meets the requirements of this Act as such provisions become
effective.
(d) Employer Certification Process.--In the case of any multistate
self-insured health plan, certification by the plan to the Secretary of
Labor that such plan is in compliance with the applicable Federal
standards described in subsection (b) shall satisfy compliance with any
State program approved under this section.
(e) Funding.--The Secretary of Health and Human Services shall pay
over to each State with an approved application under this section for
each calendar quarter ending before 1997 an amount equal to the
estimated decrease in Federal expenditures (net of any estimated
decrease in Federal revenues) for such quarter with respect to such
State resulting from the implementation of the State comprehensive
health care reform program.
Subtitle G--Miscellaneous Provisions
SEC. 1601. PROVISION OF ITEMS OR SERVICES CONTRARY TO RELIGIOUS BELIEF
OR MORAL CONVICTION.
A health professional or a health facility may not be required to
provide an item or service in the standard benefit package if the
professional or facility objects to doing so on the basis of a
religious belief or moral conviction.
SEC. 1602. ANTIDISCRIMINATION.
(a) In General.--The Secretary of Health and Human Services, and
any State, health plan, purchasing cooperative, employer, health
program or activity receiving Federal financial assistance, or other
entity subject to this Act, shall not directly or through contractual
arrangements--
(1) deny or limit access to or the availability of health
care services, or otherwise discriminate in connection with the
provision of health care services; or
(2) limit, segregate, or classify an individual in any way
which would deprive or tend to deprive such individual of
health care services, or otherwise adversely affect his or her
access to health care services;
on the basis of race, national origin, sex, religion, language, income,
age, sexual orientation, disability, health status, or anticipated need
for health services.
(b) Application of Section to Specific Actions.--This section shall
apply to, but is not limited to, the following actions:
(1) The establishing of boundaries for community rating
areas under section 1502, the enrollment of individuals in a
health care plan or the marketing of a health care plan, and
the selection of providers or the setting of the terms or
conditions under which providers participate in a health care
plan or provider network.
(2) The determination of the scope of services provided by
a health care plan, and the providing of such services and
determining of the site or location of health care facilities.
(c) Regulations.--Not later than 1 year after the date of the
enactment of this Act, the Secretary of Health and Human Services shall
issue regulations to carry out this section.
(d) Effect on Other Laws. Nothing in this Act shall be construed to
limit the scope of, or the availability of relief under, any other
Federal or State law prohibiting discrimination or providing relief
therefore.
TITLE II--NEW BENEFITS
Subtitle A--Coverage of Outpatient Prescription Drugs in Medicare
SEC. 2000. REFERENCES IN SUBTITLE.
(a) Amendments to Social Security Act.--Except as otherwise
specifically provided, whenever in this subtitle 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.
(b) References to OBRA.--In this title, the terms ``OBRA-1986'',
``OBRA-1987'', ``OBRA-1989'', ``OBRA-1990'', and ``OBRA-1993'' refer to
the Omnibus Budget Reconciliation Act of 1986 (Public Law 99-509), the
Omnibus Budget Reconciliation Act of 1987 (Public Law 100-203), the
Omnibus Budget Reconciliation Act of 1989 (Public Law 101-239), the
Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508), and the
Omnibus Budget Reconciliation Act of 1993 (Public Law 103-66),
respectively.
PART 1--COVERAGE OF OUTPATIENT PRESCRIPTION DRUGS
SEC. 2001. COVERAGE OF OUTPATIENT PRESCRIPTION DRUGS.
(a) Covered Outpatient Drugs as Medical and Other Health
Services.--Section 1861(s)(2)(J) (42 U.S.C. 1395x(s)(2)(J)) is amended
to read as follows:
``(J) covered outpatient drugs;''.
(b) Definition of Covered Outpatient Drug.--Section 1861(t) (42
U.S.C. 1395x(t)) is amended--
(1) in the heading, by adding at the end the following: ``;
Covered Outpatient Drugs'';
(2) in paragraph (1)--
(A) by striking ``paragraph (2)'' and inserting
``the succeeding paragraphs of this subsection'', and
(B) by striking the period at the end and inserting
``, but only if used for a medically accepted
indication.''; and
(3) by striking paragraph (2) and inserting the following:
``(2) Except as otherwise provided in paragraph (3), the term
`covered outpatient drug' means any of the following products used for
a medically accepted indication:
``(A) A drug which may be dispensed only upon prescription
and--
``(i) which is approved for safety and
effectiveness as a prescription drug under section 505
or 507 of the Federal Food, Drug, and Cosmetic Act or
which is approved under section 505(j) of such Act;
``(ii)(I) which was commercially used or sold in
the United States before the date of the enactment of
the Drug Amendments of 1962 or which is identical,
similar, or related (within the meaning of section
310.6(b)(1) of title 21 of the Code of Federal
Regulations) to such a drug, and (II) which has not
been the subject of a final determination by the
Secretary that it is a `new drug' (within the meaning
of section 201(p) of the Federal Food, Drug, and
Cosmetic Act) or an action brought by the Secretary
under section 301, 302(a), or 304(a) of such Act to
enforce section 502(f) or 505(a) of such Act; or
``(iii)(I) which is described in section 107(c)(3)
of the Drug Amendments of 1962 and for which the
Secretary has determined there is a compelling
justification for its medical need, or is identical,
similar, or related (within the meaning of section
310.6(b)(1) of title 21 of the Code of Federal
Regulations) to such a drug, and (II) for which the
Secretary has not issued a notice of an opportunity for
a hearing under section 505(e) of the Federal Food,
Drug, and Cosmetic Act on a proposed order of the
Secretary to withdraw approval of an application for
such drug under such section because the Secretary has
determined that the drug is less than effective for all
conditions of use prescribed, recommended, or suggested
in its labeling.
``(B) A biological product which--
``(i) may only be dispensed upon prescription,
``(ii) is licensed under section 351 of the Public
Health Service Act, and
``(iii) is produced at an establishment licensed
under such section to produce such product.
``(C) Insulin certified under section 506 of the Federal
Food, Drug, and Cosmetic Act.
``(D) Enteral nutrients (but only if provided as a covered
home infusion drug).
``(3) The term `covered outpatient drug' does not include any
product--
``(A) which is administered through infusion in a setting
described in paragraph (5)(A)(ii) unless the product is a
covered home infusion drug;
``(B) when furnished as part of, or as incident to, any
other item or service for which payment may be made under this
title (other than physicians' services or services which would
be physicians' services if furnished by a physician); or
``(C) which is listed under paragraph (2) of section
1927(d) (other than subparagraph (I) or (J) of such paragraph)
as a drug which may be excluded from coverage under a State
plan under title XIX and which the Secretary elects to exclude
from coverage under part B.
``(4) For purposes of this subsection, the term `medically accepted
indication', with respect to the use of an outpatient drug, includes
any use which has been approved by the Food and Drug Administration for
the drug, and includes another use of the drug if--
``(A) the drug has been approved by the Food and Drug
Administration; and
``(B)(i) such use is supported by one or more citations
which are included (or approved for inclusion) in one or more
of the following compendia: the American Hospital Formulary
Service-Drug Information, the American Medical Association Drug
Evaluations, the United States Pharmacopoeia-Drug Information,
and other authoritative compendia as identified by the
Secretary, unless the Secretary has determined that the use is
not medically appropriate or the use is identified as not
indicated in one or more such compendia, or
``(ii) the carrier involved determines, based upon guidance
provided by the Secretary to carriers for determining accepted
uses of drugs, that such use is medically accepted based on
supportive clinical evidence in peer reviewed medical
literature appearing in publications which have been identified
for purposes of this clause by the Secretary.
The Secretary may revise the list of compendia in subparagraph (B)(i)
designated as appropriate for identifying medically accepted
indications for drugs.
``(5)(A) For purposes of this subsection, the term `covered home
infusion drug' means a covered outpatient drug dispensed to an
individual that--
``(i) is administered intravenously, subcutaneously, or
epidurally, using an access device that is inserted into the
body and an infusion device to control the rate of flow of the
drug (or through other means of administration determined by
the Secretary);
``(ii) is administered--
``(I) in the individual's home,
``(II) in an institution used as the individual's
home, but only if the drug is administered during an
inpatient day for which payment is not made to the
institution under part A for inpatient or extended care
services furnished to the individual, or
``(III) in a facility other than the individual's
home if the administration of the drug at the facility
is determined by the Secretary to be cost-effective (in
accordance with such criteria as the Secretary may
establish); and
``(iii) with respect to a drug furnished in a home
setting--
``(I) is an antibiotic drug and the Secretary has
not determined, for the specific drug or the indication
to which the drug is applied, that the drug cannot
generally be administered safely and effectively in
such a setting, or
``(II) is not an antibiotic drug and the Secretary
has determined, for the specific drug or the indication
to which the drug is applied, that the drug can
generally be administered safely and effectively in
such a setting.
``(B) Not later than January 1, 1999, (and periodically
thereafter), the Secretary shall publish a list of the drugs, and
indications for such drugs, that are covered home infusion drugs, with
respect to which home infusion drug therapy may be provided under this
title.''.
(c) Conforming Amendments Repealing Separate Coverage of Certain
Drugs and Products.--(1) Effective January 1, 1999, section 1861(s)(2)
(42 U.S.C. 1395x(s)(2)) is amended--
(A) in subparagraph (A), by striking ``(including drugs''
and all that follows through ``self-administered)'';
(B) by striking subparagraphs (G) and (I);
(C) by adding ``and'' at the end of subparagraph (M); and
(D) by striking subparagraphs (O), (P), and (Q).
(2) Effective January 1, 1999, section 1861 (42 U.S.C. 1395x) is
amended by striking the subsection (jj) added by section 4156(a)(2) of
OBRA-1990.
(3) Effective January 1, 1999, section 1881(b) (42 U.S.C.
1395rr(b)) is amended--
(A) in the first sentence of paragraph (1)--
(i) by striking ``, (B)'' and inserting ``, and
(B)'', and
(ii) by striking ``, and (C)'' and all that follows
and inserting a period; and
(B) in paragraph (11)--
(i) by striking ``(11)(A)'' and inserting ``(11)'',
and
(ii) by striking subparagraphs (B) and (C).
SEC. 2002. PAYMENT RULES AND RELATED REQUIREMENTS FOR COVERED
OUTPATIENT DRUGS.
(a) In General.--Section 1834 (42 U.S.C. 1395m) is amended by
inserting after subsection (c) the following new subsection:
``(d) Payment for and Certain Requirements Concerning Covered
Outpatient Drugs.--
``(1) Deductible.--
``(A) In general.--Payment shall be made under
paragraph (2) only for expenses incurred by an
individual for a covered outpatient drug during a
calendar year after the individual has incurred
expenses in the year for such drugs (during a period in
which the individual is entitled to benefits under this
part) equal to the deductible amount for that year.
``(B) Deductible amount.--
``(i) For purposes of subparagraph (A), the
deductible amount is--
``(I) for 1999, an amount equal to
the amount determined under clause
(ii)(I);
``(II) for 2000, the amount
(rounded to the nearest dollar) that
the Secretary estimates will ensure
that the percentage of individuals
covered under this part (other than
individuals enrolled with an eligible
organization under section 1876, an
organization described in section
1833(a)(1)(A), or a medicare drug
benefit plan under section 1851) during
the year who will incur expenses for
covered outpatient drugs equal to or
greater than such amount will be the
same as the percentage for the previous
year;
``(III) for 2001, an amount equal
to the amount determined under clause
(ii)(II); and
``(IV) for any succeeding year, the
amount (rounded to the nearest dollar)
that the Secretary estimates will
ensure that the percentage of
individuals covered under this part
(other than individuals enrolled with
an eligible organization under section
1876, an organization described in
section 1833(a)(1)(A), or a medicare
drug benefit plan under section 1851)
during the year who will incur expenses
for covered outpatient drugs equal to
or greater than such amount will be the
same as the percentage for the previous
year.
``(ii) For purposes of clause (i), the
amount determined under this clause is--
``(I) in 1999, an amount determined
by the Secretary such that the amount
so determined will result in projected
incurred spending and administrative
costs (net of projected rebates under
section 1851 and any portion of the
part B premium attributable to the
covered outpatient drug benefit) for
providing payment under this title for
covered outpatient drugs that would be
equal to a spending target equal to
$13,500,000,000; and
``(II) in 2001, an amount
determined by the Secretary (based on
actual experience) that the Secretary
estimates will ensure that the
percentage of individuals covered under
this part (other than individuals
enrolled with an eligible organization
under section 1876, an organization
described in section 1833(a)(1)(A), or
a medicare drug benefit plan under
section 1851) during the year who will
incur expenses for covered outpatient
drugs equal to or greater than such
amount will be the same as the
percentage that would have incurred
such expenses had actual experience in
such incurred spending and
administrative costs (described in
subclause (I)) for 1999 been equal to
the spending target for 1999 (described
in subclause (I)).
``(iii) The Secretary shall promulgate the
deductible amount for 1999 and each succeeding
year not later than October 1 of the previous
year.
``(2) Payment amount.--
``(A) In general.--Subject to the deductible
established under paragraph (1), the amount payable
under this part for a covered outpatient drug furnished
to an individual during a calendar year shall be equal
to--
``(i) 80 percent of the payment basis
described in paragraph (3), in the case of an
individual who has not incurred expenses for
covered outpatient drugs during the year
(including the deductible imposed under
paragraph (1)) in excess of the out-of-pocket
limit for the year under subparagraph (B); and
``(ii) 100 percent of the payment basis
described in paragraph (3), in the case of any
other individual.
``(B) Out-of-pocket limit described.--
``(i) For purposes of subparagraph (A), the
out-of-pocket limit for a year is equal to--
``(I) for 1999, $1275; and
``(II) for any succeeding year, the
amount (rounded to the nearest dollar)
that the Secretary estimates will
ensure that the percentage of the
average number of individuals covered
under this part (other than individuals
enrolled with an eligible organization
under section 1876 or an organization
described in section 1833(a)(1)(A))
during the year who will incur expenses
for covered outpatient drugs equal to
or greater than such amount will be the
same as the percentage for the previous
year.
``(ii) The Secretary shall promulgate the
out-of-pocket limit for 1999 and each
succeeding year not later than October 1 of the
previous year.
``(3) Payment basis.--For purposes of paragraph (2), the
payment basis is the lesser of--
``(A) the actual charge for a covered outpatient
drug, or
``(B) the applicable payment limit established
under paragraph (4).
``(4) Payment limits.--
``(A) Payment limit for single source drugs and
multiple source drugs with restrictive prescriptions.--
In the case of a covered outpatient drug that is a
multiple source drug which has a restrictive
prescription, or that is single source drug, the
payment limit for a payment calculation period is equal
to the amount of the administrative allowance
(established under paragraph (5)) plus the product of
the number of dosage units dispensed and the per unit
estimated acquisition cost for the drug product
(determined under subparagraph (C)) for the period.
``(B) Payment limit for multiple source drugs
without restrictive prescriptions.--In the case of a
drug that is a multiple source drug which does not have
a restrictive prescription, the payment limit for a
payment calculation period is equal to the amount of
the administrative allowance (established under
paragraph (5)) plus the product of the number of dosage
units dispensed and the unweighted median of the unit
estimated acquisition cost (determined under
subparagraph (C)) for the drug products for the period.
``(C) Determination of unit price.--
``(i) In general.--The Secretary shall
determine, for the dispensing or providing of a
covered outpatient drug product in the payment
calculation period, the estimated acquisition
cost for the drug product. With respect to any
covered outpatient drug product, the estimated
acquisition cost, may not exceed 93 percent of
the published average wholesale price for the
drug, as determined one month prior to the
beginning of the payment calculation period.
``(ii) Compliance with request for
information.--If a wholesaler or direct seller
of a covered outpatient drug refuses, after
being requested by the Secretary, to provide
price information requested to carry out clause
(i), or deliberately provides information that
is false, the Secretary may impose a civil
money penalty of not to exceed $10,000 for each
such refusal or provision of false information.
The provisions of section 1128A (other than
subsections (a) and (b)) shall apply to civil
money penalties under the previous sentence in
the same manner as they apply to a penalty or
proceeding under section 1128A(a). Information
gathered pursuant to clause (i) shall not be
disclosed except as the Secretary determines to
be necessary to carry out the purposes of this
part and to permit the Comptroller General and
the Director of the Congressional Budget Office
to review the information provided.
``(5) Administrative allowance for purposes of payment
limit.--
``(A) In general.--Except as provided in
subparagraphs (B) and (C), the administrative allowance
established under this paragraph is--
``(i) for 1999, an amount equal to $5; and
``(ii) for each succeeding year, the amount
for the previous year, adjusted by the
percentage change in the consumer price index
for all urban consumers (U.S. city average) for
the 12-month period ending with June of that
previous year.
``(B) No dispensing fee for certain drugs and
products.--No administrative allowance may be provided
under this paragraph with respect to any of the
following covered outpatient drugs:
``(i) Erythropoietin provided to dialysis
patients.
``(ii) Drugs and biologicals provided as an
incident to a physician's service or to a
service which would be a physician's service if
furnished by a physician.
``(iii) Covered home infusion drugs.
``(6) Mail order pharmacy option.--
``(A) Establishment of mail order option.--The
Secretary may establish a competitive bidding process
to award contracts to mail order pharmacies for the
provision of covered outpatient drugs that are
maintenance drugs to individuals who opt to receive
such drugs through the mail order pharmacies. The
payment amount for a covered outpatient drug under this
section to a mail order pharmacy under such a contract
shall be equal to the amount bid by such plan under
this subparagraph instead of the payment limit
determined in accordance with paragraph (4).
``(B) Sharing of savings.--To the extent that
payment is made under this section for maintenance
drugs that are provided through a mail order pharmacy
pursuant to subparagraph (A), an individual that opts
to receive such drugs from such pharmacy shall receive
from the Secretary a rebate or a contribution toward
the individual's cost sharing in an amount equal to 25
percent of the excess of the payment limit determined
in accordance with paragraph (4) over the amount
charged by the mail order pharmacy for such drug.
``(7) Assuring appropriate prescribing and dispensing
practices.--
``(A) In general.--The Secretary shall develop a
program to--
``(i) provide on-line prospective review of
prescriptions on a 24-hour basis (in accordance
with subparagraph (B)) and retrospective review
of claims;
``(ii) establish standards for counseling
individuals to whom covered outpatient drugs
are prescribed; and
``(iii) identify (and to educate
physicians, patients, and pharmacists
concerning)--
``(I) instances or patterns of
unnecessary or inappropriate
prescribing or dispensing practices for
covered outpatient drugs,
``(II) instances or patterns of
substandard care with respect to such
drugs,
``(III) potential adverse
reactions, and
``(IV) appropriate use of generic
products.
``(B) Prospective review.--
``(i) In general.--The program under this
paragraph shall provide for on-line prospective
review of each covered outpatient drug
prescribed for a patient before the
prescription is filled or the drug is
furnished, including screening for potential
drug therapy problems due to therapeutic
duplication, drug-to-drug interactions, and
incorrect drug dosage or duration of drug
treatment.
``(ii) Discussion of appropriate use.--In
conducting prospective review under this
subparagraph, any individual or entity that
dispenses a covered outpatient drug shall offer
to discuss with the patient to whom the drug is
furnished or the patient's caregiver (in person
if practicable, or through access to a toll-
free telephone service) information regarding
the appropriate use of the drug, potential
interactions between the drug and other drugs
dispensed to the individual, and such other
matters as the Secretary may require.
``(iii) Additional duties.--In carrying out
this subparagraph, the Secretary shall--
``(I) develop public domain
software which could be used by
carriers and pharmacies to provide the
on-line prospective review; and
``(II) study the feasibility and
desirability of requiring patient
diagnosis codes on prescriptions and to
the extent that the Secretary finds
such a requirement to be feasible and
desirable, to implement such a
requirement to be effective on and
after January 1, 2000.
``(C) Prior authorization.--
``(i) Development of list of misused
drugs.--The Secretary shall develop (and
periodically) update a list of covered
outpatient drugs which the Secretary has
determined, based on data collected, may be
subject to misuse or inappropriate use. The
Secretary shall provide a means for
manufacturers to appeal an initial decision to
include a drug on the list.
``(ii) Prior authorization for drugs on
list.--The Secretary shall establish a process
under which (subject to clause (iii)) the
Secretary may require advance approval for any
covered outpatient drug included on the list
developed under clause (i).
``(iii) Restrictions on denial of
approval.--The Secretary may not deny the
approval of a drug under the process
established under clause (ii) before its
dispensing unless the process--
``(I) provides responses by
telephone or other telecommunication
device within 24 hours of a request for
prior authorization; and
``(II) provides for the dispensing
of at least a 72-hour supply of a
covered outpatient prescription drug in
emergency situations (as defined by the
Secretary).
``(iv) Expansion to other drugs.--If the
rate of growth of payments under this part for
covered outpatient drugs exceeds the average
rate of growth for parts A and B expenditures
and the Secretary finds such action to be
feasible and desirable, the Secretary may
require advance approval under this
subparagraph for the dispensing of a covered
outpatient drug in cases where a more cost-
effective therapeutically or generically
equivalent drug is available.
``(D) Drug use review.--As part of the program
established under subparagraph (A), the Secretary shall
provide for a drug use review program to provide for
the ongoing periodic examination of claims data and
other records on covered outpatient drugs furnished to
patients under this title in order to identify patterns
of fraud, abuse, gross overuse, or inappropriate or
medically unnecessary care among physicians,
pharmacists, and patients.
``(E) Adoption of medicaid programs.--To the extent
considered appropriate by the Secretary, the program
developed under this paragraph with respect to drugs
furnished in a State may include elements applicable to
the furnishing of covered outpatient drugs under the
State medicaid program under section 1927.
``(8) Billing requirements.--
``(A) Mandatory assignment.--(i) Payment under this
part for a covered outpatient drug may only be made on
an assignment-related basis.
``(ii) Except for deductible, coinsurance, or
copayment amounts applicable under this part, no person
may bill or collect any amount from an individual
enrolled under this part or other person for a covered
outpatient drug for which payment may be made under
this part, and no such individual or person is liable
for payment of any amounts billed in violation of this
clause. If a person knowingly and willfully bills or
collects an amount in violation of the previous
sentence, the Secretary may apply sanctions against
such person in accordance with section 1842(j)(2).
Paragraph (4) of section 1842(j) shall apply in this
clause in the same manner as such paragraph applies to
such section.
``(B) Use of electronic system.--The Secretary
shall establish, by not later than January 1, 1998, a
point-of-sale electronic system for use by carriers and
pharmacies in the submission of information respecting
covered outpatient drugs dispensed to medicare
beneficiaries under this part. Such system shall be
consistent with the standards established by the
National Council of Prescription Drug Programs.
``(9) Requiring pharmacy supplier numbers.--
``(A) In general.--Payment may not be made under
this part with respect to a covered outpatient drug
dispensed by a pharmacy unless the entity has obtained
a supplier number from the Secretary.
``(B) Standards for issuing supplier numbers.--The
Secretary may not issue a supplier number to an entity
for purposes of subparagraph (A) unless the entity
demonstrates to the Secretary that it will maintain
patient records (in accordance with such standards as
the Secretary may impose) and meet the other applicable
requirements of this subsection and section 1848(g).
``(10) Study on pharmaceutical care services.--The
Secretary shall conduct a study to develop, in consultation
with actively practicing pharmacists, a payment methodology (to
be in addition to the administrative allowance established
under paragraph (5)) which is based upon and reflects the
reasonable charges for varying levels of pharmacist services,
including patient consultations provided to individuals under
this section. The Secretary shall submit a report, including
such recommendations as the Secretary determines to be
appropriate, to Congress on the methodology developed under
this paragraph not later than September 30, 1998.
``(11) Definitions.--In this subsection:
``(A) Multiple and single source drugs.--The terms
`multiple source drug' and `single source drug' have
the meanings given those terms under section
1927(k)(7), except that the reference in such section
to a `covered outpatient drug' shall be considered a
reference to a covered outpatient drug under this part.
``(B) Restrictive prescription.--A drug has a
`restrictive prescription' only if--
``(i) in the case of a written
prescription, the prescription for the drug
indicates, in the handwriting of the physician
or other person prescribing the drug and with
an appropriate phrase (such as `brand medically
necessary') recognized by the Secretary, that a
particular drug product must be dispensed, or
``(ii) in the case of a prescription issued
by telephone--
``(I) the physician or other person
prescribing the drug (through use of
such an appropriate phrase) states that
a particular drug product must be
dispensed, and
``(II) the physician or other
person submits to the pharmacy
involved, within 30 days after the date
of the telephone prescription, a
written confirmation which is in the
handwriting of the physician or other
person prescribing the drug and which
indicates with such appropriate phrase
that the particular drug product was
required to have been dispensed.
``(C) Payment calculation period.--The term
`payment calculation period' means a calendar year.''.
(b) Requiring Pharmacies to Submit Claims.--Section 1848(g)(4) (42
U.S.C. 1395w-4(g)(4)) is amended--
(1) in the heading--
(A) by striking ``Physician'', and
(B) by inserting ``by physicians and suppliers''
after ``claims'';
(2) in the matter in subparagraph (A) preceding clause
(i)--
(A) by striking ``For services furnished on or
after September 1, 1990, within 1 year'' and inserting
``Within 1 year (or 90 days in the case of covered
outpatient drugs)'',
(B) by striking ``a service'' and inserting ``an
item or service'', and
(C) by inserting ``or of providing a covered
outpatient drug,'' after ``basis,''; and
(3) in subparagraph (A)(i), by inserting ``item or'' before
``service''.
(c) Special Rules for Carriers.--
(1) Use of regional carriers.--Section 1842(b)(2) (42
U.S.C. 1395u(b)(2)) is amended by adding at the end the
following:
``(D) With respect to activities related to covered outpatient
drugs, the Secretary may enter into contracts with carriers under this
section to perform the activities on a regional basis.''.
(2) Additional functions.--Section 1842(b)(3) (42 U.S.C.
1395u(b)(3)) is amended--
(A) by striking ``and'' at the end of subparagraph
(H);
(B) by adding ``and'' at the end of subparagraph
(L);
(C) by redesignating subparagraph (L) as
subparagraph (I); and
(D) by inserting after subparagraph (I) (as so
redesignated) the following new subparagraphs:
``(J) if it makes determinations or payments with respect
to covered outpatient drugs, will--
``(i) receive information transmitted under the
electronic system established under section
1834(d)(8)(B), and
``(ii) respond to requests by pharmacies (and
individuals entitled to benefits under this part) as to
whether or not such an individual has met the
prescription drug deductible established under section
1834(d)(1)(A) for a year; and
``(K) will enter into such contracts with organizations
described in subsection (f)(3) as the Secretary determines may
be necessary to implement and operate (and for related
functions with respect to) the electronic system established
under section 1834(d)(8)(B) for covered outpatient drugs under
this part;''.
(3) Payment on other than a cost basis.--Section
1842(c)(1)(A) (42 U.S.C. 1395u(c)(1)(A)) is amended--
(A) by inserting ``(i)'' after ``(c)(1)(A)'',
(B) in the first sentence, by inserting ``, except
as otherwise provided in clause (ii),'' after ``under
this part, and'', and
(C) by adding at the end the following:
``(ii) To the extent that a contract under this section provides
for activities related to covered outpatient drugs, the Secretary may
provide for payment for those activities based on any method of payment
determined by the Secretary to be appropriate.''.
(4) Batch prompt processing of claims.--Section 1842(c) (42
U.S.C. 1395u(c)) is amended--
(A) in paragraphs (2)(A) and (3)(A), by striking
``Each'' and inserting ``Except as provided in
paragraph (4), each'';
(B) by adding at the end the following new
paragraph:
``(4)(A) Each contract under this section which provides for the
disbursement of funds, as described in subsection (a)(1)(B), with
respect to claims for payment for covered outpatient drugs shall
provide for a payment cycle under which each carrier will, on a monthly
basis, make a payment with respect to all claims which were received
and approved for payment in the period since the most recent date on
which such a payment was made with respect to the participating
pharmacy or individual submitting the claim.
``(B) If payment is not issued, mailed, or otherwise transmitted
within 5 days of when such a payment is required to be made under
subparagraph (A), interest shall be paid at the rate used for purposes
of section 3902(a) of title 31, United States Code (relating to
interest penalties for failure to make prompt payments) for the period
beginning on the day after such 5-day period and ending on the date on
which payment is made.''.
(5) Use of other entities for covered outpatient drugs.--
Section 1842(f) (42 U.S.C. 1395u(f)) is amended--
(A) by striking ``and'' at the end of paragraph
(1),
(B) by striking the period at the end of paragraph
(2) and inserting ``; and'', and
(C) by adding at the end the following:
``(3) with respect to activities related to covered
outpatient drugs, any other private entity which the Secretary
determines is qualified to conduct such activities.''.
(6) Designated carriers to process claims of railroad
retirees.--Section 1842(g) (42 U.S.C. 1395u(g)) is amended by
inserting ``(other than functions related to covered outpatient
drugs)'' after ``functions''.
(e) Conforming Amendments.--
(1)(A) Section 1833(a)(1) (42 U.S.C. 1395l(a)(1)) is
amended--
(i) by striking ``and'' at the end of clause (O),
and
(ii) by inserting before the semicolon at the end
the following: ``, and (Q) with respect to covered
outpatient drugs, the amounts paid shall be as
prescribed by section 1834(d)''.
(B) Section 1833(a)(2) (42 U.S.C. 1395l(a)(2)) is amended
in the matter preceding subparagraph (A) by inserting ``,
except for covered outpatient drugs,'' after ``and (I) of such
section''.
(2) Section 1833(b)(2) (42 U.S.C. 1395l(b)(2)) is amended
by inserting ``or with respect to covered outpatient drugs''
before the comma.
(3) The first sentence of section 1842(h)(2) (42 U.S.C.
1395u(h)(2)) is amended by inserting ``(other than a carrier
described in subsection (f)(3))'' after ``Each carrier''.
(4) The first sentence of section 1866(a)(2)(A) (42 U.S.C.
1395cc(a)(2)(A)) is amended--
(A) in clause (i), by inserting ``section
1834(d),'' after ``section 1833(b),'', and
(B) in clause (ii), by inserting ``, other than for
covered outpatient drugs,'' after ``provider)''.
SEC. 2003. MEDICARE REBATES FOR COVERED OUTPATIENT DRUGS.
(a) In General.--Part B of title XVIII is amended by adding at the
end the following new section:
``rebates for covered outpatient drugs
``Sec. 1850. (a) Requirement for Rebate Agreement.--In order for
payment to be available under this part for covered outpatient drugs of
a manufacturer dispensed or provided on or after January 1, 1999, the
manufacturer must have entered into and have in effect a rebate
agreement with the Secretary meeting the requirements of subsection
(b), and an agreement to give equal access to discounts in accordance
with subsection (e).
``(b) Terms, Implementation, and Enforcement of Rebate Agreement.--
``(1) Periodic rebates.--
``(A) In general.--A rebate agreement under this
section shall require the manufacturer to pay to the
Secretary for each calendar quarter, not later than 30
days after the date of receipt of the information
described in paragraph (2) for such quarter, a rebate
in an amount determined under subsection (c) for all
covered outpatient drugs of the manufacturer described
in subparagraph (B).
``(B) Drugs included in quarterly rebate
calculation.--Drugs subject to rebate with respect to a
calendar quarter are drugs which are dispensed or
provided during such quarter to individuals (other than
individuals enrolled with an entity with a contract
under section 1876 or a medicare drug benefit plan with
a contract under section 1851) eligible for benefits
under this part, as reported to the Secretary.
``(2) Information furnished to manufacturers.--
``(A) In general.--The Secretary shall report to
each manufacturer, not later than 60 days after the end
of each calendar quarter, information on the total
number, for each covered outpatient drug, of units of
each dosage form, strength, and package size dispensed
or provided under the plan during the quarter, on the
basis of the data reported to the Secretary described
in paragraph (1)(B).
``(B) Audit.--The Comptroller General may audit the
records of the Secretary to the extent necessary to
determine the accuracy of reports by the Secretary
pursuant to subparagraph (A). Adjustments to rebates
shall be made to the extent determined necessary by the
audit to reflect actual units of drugs dispensed.
``(3) Provision of price information by manufacturer.--
``(A) Quarterly pricing information.--Each
manufacturer with an agreement in effect under this
section shall report to the Secretary, not later than
30 days after the last day of each calendar quarter, on
the average manufacturer retail price and the average
manufacturer non-retail price for each dosage form and
strength of each covered outpatient drug for the
quarter.
``(B) Base quarter prices.--Each manufacturer of a
covered outpatient drug with an agreement under this
section shall report to the Secretary, by not later
than 30 days after the effective date of such agreement
(or, if later, 30 days after the end of the base
quarter), the average manufacturer retail price, for
such base quarter, for each dosage form and strength of
each such covered drug.
``(C) Verification of average manufacturer price.--
The Secretary may inspect the records of manufacturers,
and survey wholesalers, pharmacies, and institutional
purchasers of drugs, as necessary to verify prices
reported under subparagraph (A).
``(D) Penalties.--
``(i) Civil money penalties.--The Secretary
may impose a civil money penalty on a
manufacturer with an agreement under this
section--
``(I) for failure to provide
information required under subparagraph
(A) on a timely basis, in an amount up
to $10,000 per day of delay;
``(II) for refusal to provide
information about charges or prices
requested by the Secretary for purposes
of verification pursuant to
subparagraph (C), in an amount up to
$100,000; and
``(III) for provision, pursuant to
subparagraph (A) or (B), of information
that the manufacturer knows or should
know is false, in an amount up to
$100,000 per item of information.
Such civil money penalties are in addition to
any other penalties prescribed by law. The
provisions of section 1128A (other than
subsections (a) (with respect to amounts of
penalties or additional assessments) and (b))
shall apply to a civil money penalty under this
subparagraph in the same manner as such
provisions apply to a penalty or proceeding
under section 1128A(a).
``(ii) Termination of agreement.--If a
manufacturer with an agreement under this
section has not provided information required
under subparagraph (A) or (B) within 90 days of
the deadline imposed, the Secretary may suspend
the agreement with respect to covered
outpatient drugs dispensed after the end of
such 90-day period and until the date such
information is reported (but in no case shall a
suspension be for less than 30 days).
``(4) Length of agreement.--
``(A) In general.--A rebate agreement shall be
effective for an initial period of not less than one
year and shall be automatically renewed for a period of
not less than one year unless terminated under
subparagraph (B).
``(B) Termination.--
``(i) By the secretary.--The Secretary may
provide for termination of a rebate agreement
for violation of the requirements of the
agreement or other good cause shown. Such
termination shall not be effective earlier than
60 days after the date of notice of such
termination. The Secretary shall afford a
manufacturer an opportunity for a hearing
concerning such termination, but such hearing
shall not delay the effective date of the
termination.
``(ii) By a manufacturer.--A manufacturer
may terminate a rebate agreement under this
section for any reason. Any such termination
shall not be effective until the calendar
quarter beginning at least 60 days after the
date the manufacturer provides notice to the
Secretary.
``(iii) Effective date of termination.--Any
termination under this subparagraph shall not
affect rebates due under the agreement before
the effective date of its termination.
``(iv) Notice to pharmacies.--In the case
of a termination under this subparagraph, the
Secretary shall notify pharmacies and physician
organizations not less than 30 days before the
effective date of such termination.
``(c) Amount of Rebate.--
``(1) Base rebate.--Each manufacturer shall remit a basic
rebate to the Secretary for each calendar quarter in an amount,
with respect to each dosage form and strength of a covered
outpatient drug, equal to the product of--
``(A) the total number of units subject to rebate
for such quarter, as described in subsection (b)(1)(B);
and
``(B)(i) in the case of a single-source drug or
innovator-multiple source drug, 15 percent of the
average manufacturer retail price, or
``(ii) in the case of a noninnovator-multiple
source drug furnished over-the-counter, insulin or an
enteral nutrient, 6 percent (or the applicable percent
if the Secretary implements the sliding scale developed
in accordance with paragraph (4)) of the average
manufacturer retail price.
``(2) Additional rebate.--Each manufacturer shall remit to
the Secretary, for each calendar quarter, an additional rebate
for each dosage form and strength of a single-source or
innovator-multiple-source drug, in an amount equal to--
``(A) the total number of units subject to rebate
for such quarter, as described in subsection (b)(1)(B),
multiplied by
``(B) the amount, if any, by which the average
manufacturer retail price for such drugs of the
manufacturer exceeds the average manufacturer retail
price for the base quarter, increased by the percentage
increase in the Consumer Price Index for all urban
consumers (U.S. average) from the end of such base
quarter to the month before the beginning of such
calendar quarter.
``(3) Deposit of rebates.--The Secretary shall deposit
rebates under this section in the Federal Supplementary Medical
Insurance Trust Fund established under section 1841.
``(4) Applicable percent.--
``(A) Noninnovator multiple source drug.--
``(i) In general.--For purposes of this
subparagraph, the Secretary may develop and
implement a sliding scale to determine the
applicable percent for rebates based on the
relationship between the average manufacturer
retail price of the noninnovator-multiple
source drug furnished over-the-counter and the
average manufacturer retail price of the
equivalent innovator drug (except as provided
in subparagraph (B)) .
``(ii) Sliding scale described.--The
sliding scale developed by the Secretary under
clause (i) shall--
``(I) require that the applicable
percent be not less than 2 percent and
not be greater than 15 percent; and
``(II) ensure that the total level
of rebates collected under such a
sliding scale would be equivalent to a
flat 6 percent rebate on such drugs.
``(B) Enteral nutrients and insulin.--For purposes
of this subparagraph, the applicable percent for
enteral nutrients and insulin under the sliding scale
would be equal to 6 percent.
``(d) Confidentiality of Information.--Notwithstanding any other
provision of law, information disclosed by a manufacturer under this
section is confidential and shall not be disclosed by the Secretary (or
a carrier), except--
``(A) as the Secretary determines to be necessary to carry
out this section,
``(B) to permit the Comptroller General to review the
information provided, and
``(C) to permit the Director of the Congressional Budget
Office to review the information provided.
``(e) Definitions.--For purposes of this section--
``(1) Average manufacturer retail price.--The term `average
manufacturer retail price' means, with respect to a covered
outpatient drug of a manufacturer for a calendar quarter, the
average price (inclusive of discounts for cash payment, prompt
payment, volume purchases, and rebates (other than rebates
under this section), but exclusive of nominal prices) paid to
the manufacturer for the drug in the United States for drugs
distributed to the retail pharmacy class of trade.
``(2) Average manufacturer non-retail price.--The term
`average manufacturer non-retail price' means, with respect to
a covered outpatient drug of a manufacturer for a calendar
quarter, the weighted average price (inclusive of discounts for
cash payment, prompt payment, volume purchases, and rebates
(other than rebates under this section), but exclusive of
nominal prices) paid to the manufacturer for the drug in the
United States by hospitals and other institutional purchasers
that purchase drugs for institutional use and not for resale.
``(3) Base quarter.--The term `base quarter' means, with
respect to a covered outpatient drug of a manufacturer, the
calendar quarter beginning April 1, 1993, or (if later) the
first full calendar quarter during which the drug was marketed
in the United States.
``(4) Drug.--The terms `innovator multiple source drug',
`noninnovator multiple source drug', and `single source drug'
have the meanings given those terms under section 1927(k)(7),
except that the reference in such section to a `covered
outpatient drug' shall be considered a reference to a covered
outpatient drug under this part.
``(5) Manufacturer.--The term `manufacturer' means, with
respect to a covered outpatient drug--
``(A) the entity whose National Drug Code number
(as issued pursuant to section 510(e) of the Federal
Food, Drug, and Cosmetic Act) appears on the labeling
of the drug; or
``(B) if the number described in subparagraph (A)
does not appear on the labeling of the drug, the person
named as the applicant in a human drug application (in
the case of a new drug) or the product license
application (in the case of a biological product) for
such drug approved by the Food and Drug
Administration.''.
(b) Exclusions From Coverage.--Section 1862(a) (42 U.S.C. 1395y(a))
is amended--
(1) by striking ``and'' at the end of paragraph (15),
(2) by striking the period at the end of paragraph (16) and
inserting ``; or'', and
(3) by inserting after paragraph (16) the following new
paragraph:
``(17) consisting of a covered outpatient drug (as
described in section 1861(t)) furnished during a year for which
the drug's manufacturer does not have in effect a rebate
agreement with the Secretary that meets the requirements of
section 1850 for the year.''.
SEC. 2004. PRESCRIPTION DRUG PAYMENT REVIEW COMMISSION.
Part B of title XVIII is amended by inserting after section 1846
the following new section:
``prescription drug payment review commission
``Sec. 1847. (a)(1) The Director of the Congressional Office of
Technology Assessment (in this section referred to as the `Director'
and the `Office', respectively) shall provide for the appointment of a
Prescription Drug Payment Review Commission (in this section referred
to as the `Commission'), to be composed of individuals with expertise
in the provision and financing of covered outpatient drugs appointed by
the Director (without regard to the provisions of title 5, United
States Code, governing appointments in the competitive service).
``(2) The Commission shall consist of 11 individuals. Members of
the Commission shall first be appointed by no later than January 1,
1996, for a term of 3 years, except that the Director may provide
initially for such shorter terms as will insure that (on a continuing
basis) the terms of no more than 4 members expire in any one year.
``(3) The membership of the Commission shall include recognized
experts in the fields of health care economics, medicine, pharmacology,
pharmacy, and prescription drug reimbursement, as well as at least one
individual who is a medicare beneficiary, one individual representing a
research-based pharmaceutical company, and one individual representing
a biotechnology company.
``(b)(1) The Commission shall submit to Congress an annual report
no later than May 1 of each year, beginning with 1997--
``(A) concerning the implementation and the
operation of the coverage of covered outpatient drugs
under this part, including recommendations to Congress
on changes to the program to improve access to
prescription drugs, the quality of prescription drug
care, and program efficiencies;
``(B) reviewing the process of contracting with
medicare drug benefits plans under section 1851;
``(C) concerning the fiscal soundness of the
furnishing of covered outpatient drugs under this part;
``(D) concerning the appropriateness, fairness and
effectiveness of the rebate structure under section
1850; and
``(E) concerning the advisability of developing a
review process to exempt small manufacturers of single
source or innovator multiple source drugs from rebates
under section 1850 based on the manufacturer's sales
and the historic pricing of the manufacturer's
products.
``(c) Section 1845(c)(1) shall apply to the Commission in the same
manner as it applies to the Physician Payment Review Commission.
``(d) There are authorized to be appropriated such sums as may be
necessary to carry out the provisions of this section. Such sums shall
be payable from the Federal Supplementary Medical Insurance Trust
Fund.''.
SEC. 2005. COVERAGE OF HOME INFUSION DRUG THERAPY SERVICES.
(a) In General.--Section 1832(a)(2)(A) (42 U.S.C. 1395k(a)(2)(A))
is amended by inserting ``and home infusion drug therapy services''
before the semicolon.
(b) Home Infusion Drug Therapy Services Defined.--Section 1861 (42
U.S.C. 1395x) is amended--
(1) by redesignating the subsection (jj) inserted by
section 4156(a)(2) of the Omnibus Budget Reconciliation Act of
1990 as subsection (kk); and
(2) by inserting after such subsection the following new
subsection:
``Home Infusion Drug Therapy Services
``(ll)(1) The term `home infusion drug therapy services' means the
items and services described in paragraph (2) furnished to an
individual who is under the care of a physician--
``(A) in a setting described in subsection (t)(5)(A)(ii),
``(B) by a qualified home infusion drug therapy provider
(as defined in paragraph (3)) or by others under arrangements
with them made by that provider, and
``(C) under a plan established and periodically reviewed by
a physician.
``(2) The items and services described in this paragraph are such
nursing, pharmacy, and related services (including medical supplies,
intravenous fluids, delivery, and equipment) as are necessary to
conduct safely and effectively a drug regimen through use of a covered
home infusion drug (as defined in subsection (t)(5)), but do not
include such covered home infusion drugs.
``(3) The term `qualified home infusion drug therapy provider'
means any entity that the Secretary determines meets the following
requirements (or, in the case of a home health agency or an entity with
respect to which the only items and services described in paragraph (2)
furnished by the entity are enteral nutrition therapy services, meets
any of the following requirements which the Secretary considers
appropriate):
``(A) The entity is capable of providing nursing or
pharmacy services and providing or arranging for the other
items and services described in paragraph (2) and covered home
infusion drugs.
``(B) The entity maintains clinical records on all
patients.
``(C) The entity adheres to written protocols and policies
with respect to the provision of items and services.
``(D) The entity makes services available (as needed) seven
days a week on a 24-hour basis.
``(E) The entity coordinates all services with the
patient's physician.
``(F) The entity conducts a quality assessment and
assurance program, including drug regimen review and
coordination of patient care.
``(G) The entity assures that only trained personnel
provide covered home infusion drugs (and any other service for
which training is required to provide the service safely).
``(H) The entity assumes responsibility for the quality of
services provided by others under arrangements with the entity.
``(I) In the case of an entity in any State in which State
or applicable local law provides for the licensing of entities
of this nature, the entity (i) is licensed pursuant to such
law, or (ii) is approved, by the agency of such State or
locality responsible for licensing entities of this nature, as
meeting the standards established for such licensing.
``(J) The entity meets such other requirements as the
Secretary may determine are necessary to assure the safe and
effective provision of home infusion drug therapy services and
the efficient administration of the home infusion drug therapy
benefit.''.
(c) Payment.--
(1) In general.--Section 1833 (42 U.S.C. 1395l) is
amended--
(A) in subsection (a)(2)(B), by striking ``or (E)''
and inserting ``(E), or (F)'',
(B) in subsection (a)(2)(D), by striking ``and'' at
the end,
(C) in subsection (a)(2)(E), by striking the
semicolon and inserting ``; and'',
(D) by inserting after subsection (a)(2)(E) the
following new subparagraph:
``(F) with respect to home infusion drug therapy
services, the amounts described in section 1834(j);'',
and
(E) in the first sentence of subsection (b), by
striking ``services, (3)'' and inserting ``services and
home infusion drug therapy services, (3)''.
(2) Amount described.--Section 1834 is amended by adding at
the end the following new subsection:
``(j) Home Infusion Drug Therapy Services.--
``(1) In general.--With respect to home infusion drug
therapy services, payment under this part shall be made in an
amount equal to the lesser of the actual charges for such
services or the fee schedule established under paragraph (2).
``(2) Establishment of fee schedule.--
``(A) In general.--The Secretary shall establish by
regulation before the beginning of 1999 and each
succeeding year a fee schedule for home infusion drug
therapy services for which payment is made under this
part. A fee schedule established under this subsection
shall be on a per diem basis.
``(B) Adjustment for services furnished by
institutions.--The fee schedule established by the
Secretary under subparagraph (A) shall provide for
adjustments in the case of home infusion drug therapy
services for which payment is made under this part that
are furnished by a provider of services to avoid
duplicative payments under this title for the service
costs associated with such services.''.
(d) Certification.--Section 1835(a)(2) (42 U.S.C. 1395n(a)(2)) is
amended--
(1) by striking ``and'' at the end of subparagraph (E),
(2) by striking the period at the end of subparagraph (F)
and inserting ``; and'', and
(3) by inserting after subparagraph (F) the following:
``(G) in the case of home infusion drug therapy
services, (i) such services are or were required
because the individual needed such services for the
administration of a covered home infusion drug, (ii) a
plan for furnishing such services has been established
and is reviewed periodically by a physician, and (iii)
such services are or were furnished while the
individual is or was under the care of a physician.''.
(e) Certification of Home Infusion Drug Therapy Providers;
Intermediate Sanctions for Noncompliance.--
(1) Treatment as provider of services.--Section 1861(u) (42
U.S.C. 1395x(u)) is amended by inserting ``home infusion drug
therapy provider,'' after ``hospice program,''.
(2) Consultation with state agencies and other
organizations.--Section 1863 (42 U.S.C. 1395z) is amended by
striking ``and (dd)(2)'' and inserting ``(dd)(2), and
(ll)(3)''.
(3) Use of state agencies in determining compliance.--
Section 1864(a) (42 U.S.C. 1395aa(a)) is amended--
(A) in the first sentence, by striking ``an agency
is a hospice program'' and inserting ``an agency or
entity is a hospice program or a home infusion drug
therapy provider,''; and
(B) in the second sentence--
(i) by striking ``institution or agency''
and inserting ``institution, agency, or
entity'', and
(ii) by striking ``or hospice program'' and
inserting ``hospice program, or home infusion
drug therapy provider''.
(4) Application of intermediate sanctions.--Section 1846
(42 U.S.C. 1395w-2) is amended--
(A) in the heading, by adding ``and for qualified
home infusion drug therapy providers'' at the end,
(B) in subsection (a), by inserting ``or that a
qualified home infusion drug therapy provider that is
certified for participation under this title no longer
substantially meets the requirements of section
1861(ll)(3)'' after ``under this part'', and
(C) in subsection (b)(2)(A)(iv), by inserting ``or
home infusion drug therapy services'' after ``clinical
diagnostic laboratory tests''.
(f) Use of Regional Intermediaries in Administration of Benefit.--
Section 1816 (42 U.S.C. 1395h) is amended by adding at the end the
following new subsection:
``(k) With respect to carrying out functions relating to payment
for home infusion drug therapy services and covered home infusion
drugs, the Secretary may enter into contracts with agencies or
organizations under this section to perform such functions on a
regional basis.''.
(g) Conforming Amendments.--(1) Section 1834(h)(4)(B) (42 U.S.C.
1395m(h)(4)(B)) is amended by striking ``, except that'' and all that
follows through ``equipment''.
(2) Section 1861(n) (42 U.S.C. 1395x(n)) is amended by adding at
the end the following: ``Such term does not include any home infusion
drug therapy services described in section 1861(ll) or any covered
outpatient drug used as a supply related to the furnishing of an item
of durable medical equipment.''.
(3) Section 1861(s)(8) (42 U.S.C. 1395x(s)(8)) is amended by
inserting after ``dental'' the following: ``devices or enteral and
parenteral nutrients, supplies, and equipment''.
(h) Effective Date.--The amendments made by this section shall
apply to items and services furnished on or after January 1, 1999.
SEC. 2006. MEDICARE DRUG BENEFIT PLANS.
(a) In General.--Part B of title XVIII of the Social Security Act
(42 U.S.C. 1395 et seq.), as amended by section 2003, is further
amended by adding at the end the following new section:
``SEC. 1851. MEDICARE DRUG BENEFIT PLANS.
``(a) In General.--
``(1) General permission to contract.--The Secretary may
enter into contracts with medicare drug benefit plans in a
State for the provision of covered outpatient drugs (as defined
in section 1861(t)(2)) (except as provided in subsection
(i)(3)(G)) to individuals entitled to benefits under part A and
enrolled under part B if the plan meets the requirements of
this section with respect to individuals enrolled under this
section.
``(2) Entities eligible to enter into a contract.--The
Secretary may enter into a contract under this section with a
medicare drug benefit plan that is--
``(A) a certified standard health plan but only if
such plan has not entered into a contract with the
Secretary under section 1876;
``(B) a network of chain and independent pharmacy
providers;
``(C) a pharmacy benefit management company; or
``(D) any other entity that the Secretary
determines is appropriate.
``(3) Availability of plans.--
``(A) In general.--Every individual entitled to
benefits under part A and enrolled under part B shall
be eligible to enroll under this section with any
medicare drug benefit plan with a contract under this
section which serves the State in which the individual
resides.
``(B) Enrollment by an individual.--In accordance
with the enrollment periods established under
subsection (e)(1), an individual may enroll under this
section with a medicare drug benefit plan with a
contract under this section only through a third party
designated by the Secretary in regulations and the
individual may only terminate enrollment in accordance
with subsection (e)(2).
``(C) Information distributed by the secretary.--
``(i) In general.--The Secretary shall
develop and distribute comparative materials to
individuals eligible to enroll under this
section regarding all medicare drug benefit
plans with contracts under this section, the
availability of payment for covered outpatient
drugs under section 1834(d), and the
availability of covered outpatient drugs to
enrollees of entities with contracts under
section 1876. The Secretary shall include in
such comparative materials that each medicare
drug benefit plan with a contract under this
section is authorized by law to terminate or
refuse to renew the contract, and that
termination or nonrenewal of the contract may
result in termination of the enrollments of
individuals enrolled with the plan under this
section.
``(ii) Provision of information by the
plan.--Each medicare drug benefit plan with a
contract under this section shall collect and
provide such standard information as the
Secretary shall prescribe by regulation as
necessary to evaluate the performance and
quality of such plan, including enrollee
satisfaction, and to compare such performance
and quality with competing plans.
``(4) Payments.--
``(A) Payments in lieu of normal payments.--
Payments under a contract to a medicare drug benefit
plan under this section shall be instead of the amounts
which (in the absence of the contract) would be
otherwise payable, pursuant to section 1834, for
covered outpatient drugs furnished by or through the
plan to individuals enrolled with the plan under this
section.
``(B) Source of payment.--The payment to a medicare
drug benefit 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 Supplementary Medical
Insurance Trust Fund.
``(5) Definitions.--
``(A) Service area.--The term `health plan service
area' means a health plan service area designated by
the State under section 1502(d) of the Health Security
Act.
``(B) Certified standard health plan.--The term
`certified standard health plan' has the meaning given
such term in section 1011(2) of the Health Security
Act.
``(b) Payment Rules under Contracts.--
``(1) In general.--
``(A) Payments.--With respect to any calendar year,
each medicare drug benefit plan with a 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
applicable monthly percentage of the lesser of--
``(i) 95 percent of the fee for service
component determined under paragraph (2)(B)(i)
adjusted by the rate factor determined under
subparagraph (C) for the class of such
individual; or
``(ii) the medicare drug benefit plan
component determined under paragraph (2)(B)(ii)
for the plan's service area adjusted by the
rate factor determined under subparagraph (C)
for the class of such individual.
``(B) Applicable monthly percentage.--For purposes
of subparagraph (A), the Secretary shall annually set
the applicable monthly percentage for each month of the
calendar year. Such percentage for a month shall be
equal to the Secretary's estimate of the proportion of
the total covered outpatient drug benefit incurred in
such month under section 1834 to the total covered
outpatient drug benefit incurred for such year under
section 1834.
``(C) 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 such 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 providing covered
outpatient drug coverage under part B among
individuals in such classes.
``(2) Determination of payment rate.--
``(A) Determination by secretary.--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 payment for each
service area.
``(B) Formulas for determining payment amounts.--
``(i) Fee-for-service component.--The
amount determined under this clause is the
projected average annual per capita drug fee-
for-service costs (as defined in subparagraph
(D)) for covered outpatient drugs for the
service area for individuals not enrolled in
medicare drug benefit plans with contracts
under this section or entities with contracts
under section 1876, adjusted by the factor
described in clause (ii)(I).
``(ii) Medicare drug benefit plan
component.--The medicare drug benefit plan
component determined under this clause is the
sum of the following amounts determined with
respect to each medicare drug benefit plan--
``(I) the amount of the uniform
annual 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 individuals
enrolled in all medicare drug benefit
plans in the service area.
``(C) Uniform annual premiums; premium for
additional services.--
``(i) In general.--Each medicare drug
benefit plan 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 proposes to
serve under a contract under this section. A
bid with respect to a service area shall
include the following:
``(I) Uniform annual premium.--A
statement of the uniform annual premium
amount that the plan intends to charge
for individuals enrolled under this
section with the plan.
``(II) Premium for supplemental
plan.--A statement of the fixed monthly
premium amount that the plan intends to
charge for each supplemental plan
offering additional cost-sharing
benefits.
``(ii) Notice before bid submissions.--At
least 45 days before the date for submitting
bids under clause (i) for a year, the Secretary
shall provide for notice to medicare drug
benefit plans of--
``(I) 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;
``(II) the applicable monthly
percentage for each month of the
calendar year as determined by the
Secretary under paragraph (1)(B); and
``(III) the rate factors for such
calendar year determined under
paragraph (1)(C).
``(D) Projected average annual per capita fee-for-
service costs.--
``(i) In general.--For purposes of
subparagraph (B), the term `projected average
annual per capita drug fee-for-service costs'
means, with respect to a service area, the
annual amount that the Secretary estimates in
advance would be payable in any contract year
for providing payment for covered outpatient
drugs for individuals enrolled under part B
(including administrative costs incurred by
organizations described in section 1842), if
the services were to be furnished by other than
a medicare drug benefit plan with a contract
under this section or by an entities with a
contract under section 1876.
``(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. For the first 2 years that
contracts are entered into under this section,
the Secretary shall base such estimates on the
best available data.
``(3) Payment rules.--
``(A) Amount of premium.--
``(i) Standard package.--Each medicare drug
benefit plan with a contract under this section
must provide to individuals enrolled with the
plan under this section, for each month of the
duration of such enrollment during each
contract period, the coverage described in
subsection (d) for the lesser of--
``(I) the applicable monthly
percentage of the uniform annual
premium amount submitted under
paragraph (2)(C)(i)(I); or
``(II) the applicable monthly
percentage of the amount described in
subsection (b)(1)(A).
``(ii) Supplemental plan.--
``(I) In general.--Each medicare
drug benefit 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 for the
supplemental plan described in
paragraph (2)(C)(i)(II) equal to the
premium amount determined by the plan
under such paragraph. An individual
that elects to enroll in the
supplemental plan shall be responsible
for paying to the plan the fixed
monthly premium amount described in the
preceding sentence.
``(II) Payment greater than fixed
monthly premium.--If, with respect to
any individual enrolled in a medicare
drug benefit plan with a contract under
this section, the amount paid to the
plan under subsection (b)(1)(A) exceeds
the applicable monthly percentage of
the uniform annual premium amount
submitted under paragraph (2)(C)(i)(I),
the plan shall apply such excess to a
premium for any supplemental policy
described in paragraph (2)(C)(ii) that
the individual may elect. If the
individual does not elect such a
policy, the medicare drug benefit plan
shall pay such excess to the Secretary
for deposit in the Federal
Supplementary Medical Insurance Trust
Fund.
``(B) Monthly payments.--
``(i) In general.--The Secretary shall make
monthly payments in advance and in accordance
with the rate determined under paragraph (1)(A)
to each medicare drug benefit plan with a
contract under this section for each individual
enrolled with the plan under this section.
``(ii) Adjustments.--The amount of payment
under this subparagraph 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.
``(iii) Payment to plan only.--If an
individual is enrolled under this section with
a medicare drug benefit plan with a contract
under this section, only the plan shall be
entitled to receive payments from the Secretary
under this title for covered outpatient drugs
furnished to the individual.
``(d) Coverage of Benefits.--
``(1) Drugs provided.--A medicare drug benefit plan with a
contract under this section must provide to individuals
enrolled in the plan under this section covered outpatient
drugs (as defined in section 1861(t)(2)), except as provided in
subsection (i)(3)(G).
``(2) Provision of medically necessary care.--Each medicare
drug benefit plan with a contract under this section must--
``(A) make the covered outpatient drugs described
in paragraph (1)--
``(i) available and accessible to enrolled
individuals within the State 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
drugs which are described in subparagraph (A) and which
are provided to such an individual other than through
the plan, if--
``(i) the drugs 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 drugs through the
plan.
``(3) Cost-sharing.--Each medicare drug benefit plan with a
contract under this section must provide to individuals
enrolled under this section with respect to the drugs described
in paragraph (1), cost-sharing requirements that are the same
as the cost-sharing requirements for covered outpatient drug
under section 1834, except that the deductible for a medicare
drug benefit plan shall be reduced by an amount determined by
the Secretary such that the cost-sharing of the plan is equal
to 95 percent of the actuarial value of the cost sharing
requirements under section 1834.
``(4) Cost-sharing for supplemental plans.--A supplemental
plan may not have cost-sharing that applies differential cost-
sharing based on the therapeutic class of drug prescribed or
other cost-sharing structures that the Secretary determines
would be likely to discourage enrollment by individuals with
medical conditions that require extensive use of prescription
drugs.
``(5) Actuarial equivalence of standard plan and
supplemental plan.--The premium charged to an individual
enrolled under this section for a supplemental policy that
eliminates or reduces the cost-sharing requirement imposed on
such individual and the actuarial value of any remaining cost-
sharing requirement under the plan shall not exceed 95 percent
of the actuarial value of the cost-sharing requirements under
section 1834.
``(e) Enrollment.--
``(1) Enrollment periods.--Each medicare drug benefit plan
with a contract under this section must have a uniform open
enrollment period (which shall be the period specified by the
Secretary under section 1876(c)(3)(A)(i)), for the enrollment
of individuals under this section, of at least 30 days duration
every year. The plan must also have additional enrollment
periods in accordance with the enrollment periods required
under clauses (ii), (iii), and (iv) of section 1876(c)(3)(A).
``(2) Termination.--An individual may only terminate an
individual's enrollment with a medicare drug benefit plan
during an open enrollment period described in paragraph (1).
``(3) Nondiscrimination.--The medicare drug benefit plan
must provide assurances to the Secretary that it will not
discriminate against any individual because of the individual's
health status, requirements for covered outpatient drugs,
claims experience, medical history, or other factors that are
generally related to the need for covered outpatient drugs and
that it will notify each individual of such fact at the time of
the individual's enrollment.
``(4) Notice of rights, etc.--Each medicare drug benefit
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 covered outpatient drugs furnished other than by or
through the plan,
``(C) out-of-plan coverage provided by the plan,
and
``(D) appeal rights of enrollees.
``(f) Membership Requirements.--
``(1) Non-medicare requirement.--
``(A) In general.--Each entity with a contract
under this section shall provide at that at least 1/2
of the individuals who are provided with drug coverage
by the entity are individuals who are not enrolled in a
medicare drug benefit plan under this section.
``(B) Suspension of enrollment.--If the Secretary
determines that a medicare drug benefit 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.
``(2) 5000 individuals.--Each medicare drug benefit plan
with a contract under this section shall provide covered
outpatient drug coverage to at least 5000 individuals, except
that the Secretary may enter into such a contract with a
medicare drug benefit plan that has fewer enrollees if the plan
primarily serves members residing outside of urbanized areas.
``(g) Payment Rules for Plans.--
``(1) Subrogation rights.--Notwithstanding any other
provision of law, the medicare drug benefit plan may, (in the
case of the provision of covered outpatient drugs to an
individual enrolled under this section for a drug for which the
member is entitled to benefits under a workmen's compensation
law or plan of the United States or a State, under an
automobile or liability insurance policy or plan, including a
self-insured plan, under no fault insurance, or under a primary
plan (as defined in section 1862(b)(2)(A)) 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 enrollee to the extent that the enrollee
has been paid under such law, plan, or policy for such
services.
``(2) Prompt payment requirement.--
``(A) In general.--A contract under this section
shall require the medicare drug benefit plan to provide
prompt payment (consistent with the provisions of
section 1842(c)(4)) of claims submitted for covered
outpatient drugs furnished to individuals pursuant to
such contract, if the drugs 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 medicare drug benefit
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 drugs provided 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 medicare
drug benefit plan that pertain--
``(I) to the ability of the plan to
bear the risk of potential financial
losses, or
``(II) to drugs provided 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;
``(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; and
``(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 contract with a medicare drug benefit plan if a
previous contract with that plan under this section was
terminated at the request of the plan within the preceding 5-
year period or if the plan submits a bid under subsection
(b)(2)(C) and does not enter into a contract, 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
medicare drug benefit plan with a contract under this
section--
``(i) fails substantially to provide
medically necessary covered outpatient drugs
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 covered outpatient drugs;
``(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) 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;
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).
``(i) Other General Requirements on Plans.--
``(1) Grievance procedures.--Each medicare drug benefit
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 medicare drug
benefit plan under this section who is dissatisfied by reason
of the individual's failure to receive any covered outpatient
drug 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) Additional requirements.--Not later then January 1,
1998, the Secretary shall establish standards for additional
requirements for medicare drug benefit plans with contracts
under this section, that to the extent possible are consistent
with the standards relating to eligible organizations that have
entered into risk contracts under section 1876, and which
provide that a medicare drug benefit plan--
``(A) must demonstrate financial solvency;
``(B) must demonstrate the ability to provide
benefits to all potential enrollees throughout the
State served by the plan;
``(C) must not engage in marketing or other
practices designed to discourage or limit the issuance
of a medicare outpatient drug coverage plan to any
potential enrollee on the basis of health status,
claims experience, medical history, or other factors
that are generally related to utilization of covered
outpatient drugs;
``(D) must inform individuals eligible to enroll
with the plan about the plan only in accordance with
procedures and conditions determined by the Secretary
and may not distribute promotional or informational
material unless--
``(i) at least 45 days before its
distribution, the plan has submitted the
material to the Secretary for review,
``(ii) the material is made available to
all individuals eligible to enroll in the plan
in the State served by the plan, and
``(iii) the Secretary has not disapproved
the distribution of the material due to a
determination that in the Secretary's
discretion, the material is materially
inaccurate or misleading or otherwise makes a
material misrepresentation;
``(E) must provide convenient access to pharmacies
for individuals in each zip code region of the State
taking into account the special needs of individuals
who are enrolled in part B;
``(F) in addition to the access described in
subparagraph (E), may provide enrollees with a mail-
order pharmacy option;
``(G) may establish a formulary system (to be
maintained throughout the 1-year contract period) which
ensures that--
``(i) the formulary shall cover at least
one covered outpatient drug in each therapeutic
class of drugs representing a unique mechanism
of action (as defined by the Secretary); and
``(ii) that any covered outpatient drug
excluded by the formulary is subject to a prior
authorization process in which the plan may not
deny approval of any drug unless the plan
complies with the process described in section
1834(d)(7)(C)(iii);
``(H) must disclose any special relationships or
arrangements with drug manufacturers, including
ownership arrangements, distribution arrangements, or
alliances;
``(I) must have standards to assure the appropriate
use of outpatient prescription medications, including a
program of prospective and retrospective drug use
review, consistent with standards under the drug use
review program developed by the Secretary under section
1834(d)(7), including for any mail order services
operated or used by the plan; and
``(J) is able to process claims for outpatient
prescription drugs under the program through an on-line
real time point of sale system, and has developed a
process for processing out-of-area claims.''.
(b) Effective Date.--The amendments made by this section shall be
effective with respect to contracts entered into on or after January 1,
1999.
SEC. 2007. PAYMENT FOR COVERED OUTPATIENT DRUG BENEFIT UNDER MEDICARE
CONTRACTS WITH HMOS AND CMPS.
(a) In General.--In providing for payments for the covered
outpatient drug benefit, as added by section 2001, to entities with
risk contracts under section 1876 of the Social Security Act, the
Secretary of Health and Human Services may base such payment on classes
of enrollees or geographic factors that are different than the classes
or geographic factors otherwise utilized for determining payment under
such section.
(b) Effective Date.--This section shall apply to contracts entered
into on or after January 1, 1999.
SEC. 2008. MAINTENANCE OF EFFORT.
(a) Maintenance of Effort with Respect to Prescription Drugs.--
Section 1862(b)(1) (42 U.S.C. 1395y(b)(1)) is amended by adding at the
end the following new subparagraph:
``(F) Prescription drugs.--
``(i) In general.--A group health plan may
not take into account that an individual (or
the individual's spouse) who is covered under
the plan by virtue of the individual's current
retirement status with an employer may be
eligible to receive covered outpatient drug
coverage under part B, except that this
subparagraph shall not prohibit a plan from
taking into account that an individual is
eligible to receive covered outpatient drug
coverage under part B on or after January 1,
2002. To the extent that the group health plan
furnishes prescription drugs pursuant to a
collectively bargained agreement, this
subparagraph shall prohibit a plan from taking
into account that an individual is eligible to
receive covered outpatient drug coverage under
part B for the greater of the period of the
agreement or until January 1, 2002.
``(ii) Current retirement status.--An
individual has `current retirement status' with
an employer if the individual no longer has
current employment status due to the
individual's retirement from such employment
status.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to group health plans offering prescription drug coverage on or
after January 1, 1994.
Subtitle B--Home and Community-Based Services
PART 1--HOME AND COMMUNITY-BASED SERVICES FOR INDIVIDUALS WITH
DISABILITIES
SEC. 2101. STATE PROGRAMS FOR HOME AND COMMUNITY-BASED SERVICES FOR
INDIVIDUALS WITH DISABILITIES.
(a) In General.--Each State that has a plan for home and community-
based services for individuals with disabilities submitted to and
approved by the Secretary under section 2102(b) is entitled to payment
in accordance with section 2108.
(b) Entitlement to Services.--Nothing in this subtitle shall be
construed to create a right to services for individuals or a
requirement that a State with an approved plan expend the entire amount
of funds to which it is entitled under this subtitle.
(c) Designation of Agency.--Not later than 6 months after the date
of enactment of this subtitle, the Secretary shall designate an agency
responsible for program administration under this subtitle.
SEC. 2102. STATE PLANS.
(a) Plan Requirements.--In order to be approved under subsection
(b), a State plan for home and community-based services for individuals
with disabilities must meet the following requirements:
(1) State maintenance of effort.--
(A) In general.--A State plan under this subtitle
shall provide that the State will, during any fiscal
year that the State is furnishing services under this
subtitle, make expenditures of State funds in an amount
equal to the State maintenance of effort amount for the
year determined under subparagraph (B) for furnishing
the services described in subparagraph (C) under the
State plan under this subtitle and the State plan under
title XIX of the Social Security Act.
(B) State maintenance of effort amount.--
(i) In general.--The maintenance of effort
amount for a State for a fiscal year is an
amount equal to--
(I) for fiscal year 1998, the base
amount for the State (as determined
under clause (ii)) updated through the
midpoint of fiscal year 1998 by the
estimated percentage change in the
consumer price index during the period
beginning on October 1, 1994 and ending
at that midpoint; and
(II) for succeeding fiscal years,
an amount equal to the amount
determined under this clause for the
previous fiscal year updated through
the midpoint of the year by the
estimated percentage change in the
consumer price index during the 12-
month period ending at that midpoint,
with appropriate adjustments to reflect
previous underestimations or
overestimations under this clause in
the projected percentage change in the
consumer price index.
(ii) State base amount.--The base amount
for a State is an amount equal to the total
expenditures from State funds made under the
State plan under title XIX of the Social
Security Act during fiscal year 1994 with
respect to medical assistance consisting of the
services described in subparagraph (C).
(C) Medicaid services described.--The services
described in this subparagraph are the following:
(i) Personal care services (as described in
section 1905(a)(24) of the Social Security
Act).
(ii) Home or community-based services
furnished under a waiver granted under
subsection (c), (d), or (e) of section 1915 of
such Act.
(iii) Home and community care furnished to
functionally disabled elderly individuals under
section 1929 of such Act.
(iv) Community supported living
arrangements services under section 1930 of
such Act.
(2) Eligibility.--
(A) In general.--Except as provided in subparagraph
(B), within the amounts provided by the State and under
section 2108 for such plan, the plan shall provide that
services under the plan will be available to
individuals with disabilities (as defined in section
2103(a)) in the State.
(C) Initial screening.--The plan shall provide a
process for the initial screening of an individual who
appears to have some reasonable likelihood of being an
individual with disabilities. Any such process shall
require the provision of assistance to individuals who
wish to apply but whose disability limits their ability
to apply. The initial screening and the determination
of disability (as defined under section 2103(b)(1))
shall be conducted by a public agency.
(D) Restrictions.--The plan may not limit the
eligibility of individuals with disabilities based on--
(i) income,
(ii) age,
(iii) residential setting (other than an
institutional setting), or
(iv) other grounds specified by the
Secretary.
(E) Continuation of services.--The plan must
provide assurances that, in the case of an individual
receiving medical assistance for home and community-
based services under the State medicaid plan under
title XIX of the Social Security Act as of the date a
State's plan is approved under this subtitle, the State
will continue to make available (either under this
plan, under the State medicaid plan, or otherwise) to
such individual an appropriate level of assistance for
home and community-based services, taking into account
the level of assistance provided as of such date and
the individual's need for home and community-based
services.
(3) Services.--
(A) Needs assessment.--Not later than the end of
the second year of implementation, the plan or its
amendments shall include the results of a statewide
assessment of the needs of individuals with
disabilities in a format required by the Secretary. The
needs assessment shall include demographic data
concerning the number of individuals within each
category of disability described in this subtitle, and
the services available to meet the needs of such
individuals.
(B) Specification.--Consistent with section 2104,
the plan shall specify--
(i) the services made available under the
plan,
(ii) the extent and manner in which such
services are allocated and made available to
individuals with disabilities, and
(iii) the manner in which services under
the plan are coordinated with each other and
with health and long-term care services
available outside the plan for individuals with
disabilities.
(C) Taking into account informal care.--A State
plan may take into account, in determining the amount
and array of services made available to covered
individuals with disabilities, the availability of
informal care.
(D) Allocation.--The State plan--
(i) shall specify how services under the
plan will be allocated among covered
individuals with disabilities,
(ii) shall attempt to meet the needs of
individuals with a variety of disabilities
within the limits of available funding,
(iii) shall include services that assist
all categories of individuals with
disabilities, regardless of their age or the
nature of their disabling conditions,
(iv) shall demonstrate that services are
allocated equitably, in accordance with the
needs assessment required under subparagraph
(A), and
(v) shall ensure that--
(I) the proportion of the
population of low-income individuals
with disabilities in the State that
represents individuals with
disabilities who are provided home and
community-based services either under
the plan, under the State medicaid
plan, or under both, is not less than,
(II) the proportion of the
population of the State that represents
individuals who are low-income
individuals.
(E) Limitation on licensure or certification.--The
State may not subject consumer-directed providers of
personal assistance services to licensure,
certification, or other requirements which the
Secretary finds not to be necessary for the health and
safety of individuals with disabilities.
(F) Consumer choice.--To the extent feasible, the
State shall follow the choice of an individual with
disabilities (or that individual's designated
representative who may be a family member) regarding
which covered services to receive and the providers who
will provide such services.
(4) Cost sharing.--The plan shall impose cost sharing with
respect to covered services in accordance with section 2105.
(5) Types of providers and requirements for
participation.--The plan shall specify--
(A) the types of service providers eligible to
participate in the program under the plan, which shall
include consumer-directed providers of personal
assistance services, except that the plan--
(i) may not limit benefits to services
provided by registered nurses or licensed
practical nurses; and
(ii) may not limit benefits to services
provided by agencies or providers certified
under title XVIII; and
(B) any requirements for participation applicable
to each type of service provider.
(6) Provider reimbursement.--
(A) Payment methods.--The plan shall specify the
payment methods to be used to reimburse providers for
services furnished under the plan. Such methods may
include retrospective reimbursement on a fee-for-
service basis, prepayment on a capitation basis,
payment by cash or vouchers to individuals with
disabilities, or any combination of these methods. In
the case of payment to consumer-directed providers of
personal assistance services, including payment through
the use of cash or vouchers, the plan shall specify how
the plan will assure compliance with applicable
employment tax and health care coverage provisions.
(B) Payment rates.--The plan shall specify the
methods and criteria to be used to set payment rates
for--
(i) agency administered services furnished
under the plan; and
(ii) consumer-directed personal assistance
services furnished under the plan, including
cash payments or vouchers to individuals with
disabilities, except that such payments shall
be adequate to cover amounts required under
applicable employment tax and health care
coverage provisions.
(C) Plan payment as payment in full.--The plan
shall restrict payment under the plan for covered
services to those providers that agree to accept the
payment under the plan (at the rates established
pursuant to subparagraph (B)) and any cost sharing
permitted or provided for under section 2105 as payment
in full for services furnished under the plan.
(7) Quality assurance and safeguards.--The State plan shall
provide for quality assurance and safeguards for applicants and
beneficiaries in accordance with section 2106.
(8) Advisory group.--The State plan shall--
(A) assure the establishment and maintenance of an
advisory group under section 2107(b), and
(B) include the documentation prepared by the group
under section 2107(b)(4).
(9) Administration and access.--
(A) State agency.--The plan shall designate a State
agency or agencies to administer (or to supervise the
administration of) the plan.
(B) Coordination.--The plan shall specify how it
will--
(i) coordinate services provided under the
plan, including eligibility prescreening,
service coordination, and referrals for
individuals with disabilities who are
ineligible for services under this subtitle
with the State medicaid plan under title XIX of
the Social Security Act, titles V and XX of
such Act, programs under the Older Americans
Act of 1965, programs under the Developmental
Disabilities Assistance and Bill of Rights Act,
the Individuals with Disabilities Education
Act, and any other Federal or State programs
that provide services or assistance targeted to
individuals with disabilities; and
(ii) coordinate with health plans.
(C) Administrative expenditures.--Effective
beginning with fiscal year 2004, the plan shall contain
assurances that not more than 10 percent of
expenditures under the plan for all quarters in any
fiscal year shall be for administrative costs.
(10) Reports and information to secretary; audits.--The
plan shall provide that the State will furnish to the
Secretary--
(A) such reports, and will cooperate with such
audits, as the Secretary determines are needed
concerning the State's administration of its plan under
this subtitle, including the processing of claims under
the plan, and
(B) such data and information as the Secretary may
require in a uniform format as specified by the
Secretary.
(11) Use of state funds for matching.--The plan shall
provide assurances that Federal funds will not be used to
provide for the State share of expenditures under this
subtitle.
(12) Health care worker redeployment.--The plan shall
provide for the following:
(A) Before initiating the process of implementing
the State program under such plan, negotiations will be
commenced with labor unions representing the employees
of the affected hospitals or other facilities.
(B) Negotiations under subparagraph (A) will
address the following:
(i) The impact of the implementation of the
program upon the workforce.
(ii) Methods to redeploy workers to
positions in the proposed system, in the case
of workers affected by the program.
(C) The plan will provide evidence that there has
been compliance with subparagraphs (A) and (B),
including a description of the results of the
negotiations.
(13) Terminology.--The plan shall adhere to uniform
definitions of terms, as specified by the Secretary.
(b) Approval of Plans.--The Secretary shall approve a plan
submitted by a State if the Secretary determines that the plan--
(1) was developed by the State after a public comment
period of not less than 30 days, and
(2) meets the requirements of subsection (a).
The approval of such a plan shall take effect as of the first day of
the first fiscal year beginning after the date of such approval (except
that any approval made before January 1, 1998, shall be effective as of
January 1, 1998). In order to budget funds allotted under this
subtitle, the Secretary shall establish a deadline for the submission
of such a plan before the beginning of a fiscal year as a condition of
its approval effective with that fiscal year. Any significant changes
to the State plan shall be submitted to the Secretary in the form of
plan amendments and shall be subject to approval by the Secretary.
(c) Monitoring.--The Secretary shall annually monitor the
compliance of State plans with the requirements of this subtitle
according to specified performance standards. In accordance with
section 2108(e), States that fail to comply with such requirements may
be subject to a reduction in the Federal matching rates available to
the State under section 2108(a) or the withholding of Federal funds for
services or administration until such time as compliance is achieved.
(d) Technical Assistance.--The Secretary shall ensure the
availability of ongoing technical assistance to States under this
section. Such assistance shall include serving as a clearinghouse for
information regarding successful practices in providing long-term care
services.
(e) Regulations.--The Secretary shall issue such regulations as may
be appropriate to carry out this subtitle on a timely basis.
SEC. 2103. INDIVIDUALS WITH DISABILITIES DEFINED.
(a) In General.--For purposes of this subtitle, the term
`individual with disabilities' means any individual within one or more
of the following categories of individuals:
(1) Individuals requiring help with activities of daily
living.--An individual of any age who--
(A) requires hands-on or standby assistance,
supervision, or cueing (as defined in regulations) to
perform three or more activities of daily living (as
defined in subsection (d)), and
(B) is expected to require such assistance,
supervision, or cueing over a period of at least 90
days.
(2) Individuals with severe cognitive or mental
impairment.--An individual of any age--
(A) whose score, on a standard mental status
protocol (or protocols) appropriate for measuring the
individual's particular condition specified by the
Secretary, indicates either severe cognitive impairment
or severe mental impairment, or both;
(B) who--
(i) requires hands-on or standby
assistance, supervision, or cueing with one or
more activities of daily living;
(ii) requires hands-on or standby
assistance, supervision, or cueing with at
least such instrumental activity (or
activities) of daily living related to
cognitive or mental impairment as the Secretary
specifies; or
(iii) displays symptoms of one or more
serious behavioral problems (that is on a list
of such problems specified by the Secretary)
which create a need for supervision to prevent
harm to self or others; and
(C) who is expected to meet the requirements of
subparagraphs (A) and (B) over a period of at least 90
days.
Not later than 2 years after the date of enactment of this
subtitle, the Secretary shall make recommendations regarding
the most appropriate duration of disability under this
paragraph.
(3) Individuals with severe or profound mental
retardation.--An individual of any age who has severe or
profound mental retardation (as determined according to a
protocol specified by the Secretary).
(4) Young children with severe disabilities.--An individual
under 6 years of age who--
(A) has a severe disability or chronic medical
condition that limits functioning in a manner that is
comparable in severity to the standards established
under paragraphs (1), (2), or (3), and
(B) is expected to have such a disability or
condition and require such services over a period of at
least 90 days.
(b) Determination.--
(1) In general.--In formulating eligibility criteria under
subsection (a), the Secretary shall establish criteria for
assessing the functional level of disability among all
categories of individuals with disabilities that are comparable
in severity, regardless of the age or the nature of the
disabling condition of the individual. The determination of
whether an individual is an individual with disabilities shall
be made by a public or nonprofit agency that is specified under
the State plan and that is not a provider of home and
community-based services under this subtitle and by using a
uniform protocol consisting of an initial screening and a
determination of disability specified by the Secretary. A State
may not impose cost sharing with respect to a determination of
disability. A State may collect additional information, at the
time of obtaining information to make such determination, in
order to provide for the assessment and plan described in
section 2104(b) or for other purposes.
(2) Periodic reassessment.--The determination that an
individual is an individual with disabilities shall be
considered to be effective under the State plan for a period of
not more than 6 months (or for such longer period in such cases
as a significant change in an individual's condition that may
affect such determination is unlikely). A reassessment shall be
made if there is a significant change in an individual's
condition that may affect such determination.
(c) Eligibility Criteria.--The Secretary shall reassess the
validity of the eligibility criteria described in subsection (a) as new
knowledge regarding the assessments of functional disabilities becomes
available. The Secretary shall report to the Committees on Finance and
Labor and Human Resources of the Senate and the Committees on Ways and
Means and Energy and Commerce of the House of Representatives on its
findings under the preceding sentence as determined appropriate by the
Secretary.
(d) Activity of Daily Living Defined.--For purposes of this
subtitle, the term `activity of daily living' means any of the
following: eating, toileting, dressing, bathing, and transferring.
SEC. 2104. HOME AND COMMUNITY-BASED SERVICES COVERED UNDER STATE PLAN.
(a) Specification.--
(1) In general.--Subject to the succeeding provisions of
this section, the State plan under this subtitle shall
specify--
(A) the home and community-based services available
under the plan to individuals with disabilities (or to
such categories of such individuals), and
(B) any limits with respect to such services.
(2) Flexibility in meeting individual needs.--Subject to
subsection (e)(2), such services may be delivered in an
individual's home, a range of community residential
arrangements, or outside the home.
(b) Requirement for Needs Assessment and Plan of Care.--
(1) In general.--The State plan shall provide for home and
community-based services to an individual with disabilities
only if the following requirements are met:
(A) Comprehensive assessment.--A comprehensive
assessment of an individual's need for home and
community-based services (regardless of whether all
need services are available under the plan) shall be
made in accordance with a uniform, comprehensive
assessment tool that shall be used by a State under
this paragraph with the approval of the Secretary. The
Secretary shall provide guidance to the States with
regard to the appropriate qualifications for
individuals who conduct comprehensive assessments.
(B) Individualized plan of care.--An individualized
plan of care based on the assessment made under
subparagraph (A) shall be developed. A plan of care
under this subparagraph shall--
(i) specify which services included under
the individual plan will be provided under the
State plan under this subtitle;
(ii) identify (to the extent possible) how
the individual will be provided any services
specified under the plan of care and not
provided under the State plan;
(iii) specify how the provision of services
to the individual under the plan will be
coordinated with the provision of other health
care services to the individual; and
(iv) be reviewed and updated every 6 months
(or more frequently if there is a change in the
individual's condition).
The State shall make reasonable efforts to identify and
arrange for services described in clause (ii). Nothing
in this subsection shall be construed as requiring a
State (under the State plan or otherwise) to provide
all the services specified in such a plan.
(C) Involvement of individuals.--The individualized
plan of care under subparagraph (B) for an individual
with disabilities shall--
(i) be developed by qualified individuals
(specified under the State plan);
(ii) be developed and implemented in close
consultation with the individual (or the
individual's designated representative); and
(iii) be approved by the individual (or the
individual's designated representative).
(c) Requirement for Care Management.--
(1) In general.--The State shall make available to each
category of individuals with disabilities care management
services that at a minimum include--
(A) arrangements for the provision of such
services, and
(B) monitoring of the delivery of services.
(2) Care management services.--
(A) In general.--Except as provided in subparagraph
(B), the care management services described in
paragraph (1) shall be provided by a public or private
entity that is not providing home and community-based
services under this subtitle.
(B) Exception.--A person who provides home and
community-based services under this subtitle may
provide care management services if--
(i) the State determines that there is an
insufficient pool of entities willing to
provide such services in an area due to a low
population of individuals eligible for home and
community-based services under this subtitle
residing in such area; and
(ii) the State plan specifies procedures
that the State will implement in order to avoid
conflicts of interest.
(d) Mandatory Coverage of Personal Assistance Services.--The State
plan shall include, in the array of services made available to each
category of individuals with disabilities, both agency-administered and
consumer-directed personal assistance services (as defined in
subsection (h)).
(e) Additional Services.--
(1) Types of services.--Subject to subsection (f), services
available under a State plan under this subtitle may include
any (or all) of the following:
(A) Homemaker and chore assistance.
(B) Home modifications.
(C) Respite services.
(D) Assistive devices, as defined in the Technology
Related Assistance for Individuals with Disabilities
Act.
(E) Adult day services.
(F) Habilitation and rehabilitation.
(G) Supported employment.
(H) Home health services.
(I) Transportation.
(J) Any other care or assistive services specified
by the State and approved by the Secretary that will
help individuals with disabilities to remain in their
homes and communities.
(2) Criteria for selection of services.--The State electing
services under paragraph (1) shall specify in the State plan--
(A) the methods and standards used to select the
types, and the amount, duration, and scope, of services
to be covered under the plan and to be available to
each category of individuals with disabilities, and
(B) how the types, and the amount, duration, and
scope, of services specified, within the limits of
available funding, provide substantial assistance in
living independently to individuals within each of the
categories of individuals with disabilities.
(f) Exclusions and Limitations.--A State plan may not provide for
coverage of--
(1) room and board,
(2) services furnished in a hospital, nursing facility,
intermediate care facility for the mentally retarded, or other
institutional setting specified by the Secretary, or
(3) items and services to the extent coverage is provided
for the individual under a health plan or the medicare program.
(g) Payment for Services.--In order to pay for covered services, a
State plan may provide for the use of--
(1) vouchers,
(2) cash payments directly to individuals with
disabilities,
(3) capitation payments to health plans, and
(4) payment to providers.
(h) Personal Assistance Services.--
(1) In general.--For purposes of this subtitle, the term
``personal assistance services'' means those services specified
under the State plan as personal assistance services and shall
include at least hands-on and standby assistance, supervision,
and cueing with activities of daily living, whether agency-
administered or consumer-directed (as defined in paragraph
(2)).
(2) Consumer-directed.--For purposes of this subtitle:
(A) In general.--The term ``consumer-directed''
means, with reference to personal assistance services
or the provider of such services, services that are
provided by an individual who is selected and managed
(and, at the option of the service recipient, trained)
by the individual receiving the services.
(B) State responsibilities.--A State plan shall
ensure that where services are provided in a consumer-
directed manner, the State shall create or contract
with an entity, other than the consumer or the
individual provider, to--
(i) inform both recipients and providers of
rights and responsibilities under all
applicable Federal labor and tax law; and
(ii) assume responsibility for providing
effective billing, payments for services, tax
withholding, unemployment insurance, and
workers' compensation coverage, and act as the
employer of the home care provider.
(C) Right of consumers.--Notwithstanding the State
responsibilities described in subparagraph (B), service
recipients, and, where appropriate, their designated
representative, shall retain the right to independently
select, hire, terminate, and direct (including manage,
train, schedule, and verify services provided) the work
of a home care provider.
(3) Agency administered.--For purposes of this subtitle,
the term `agency-administered' means, with respect to such
services, services that are not consumer-directed.
SEC. 2105. COST SHARING.
(a) No Cost Sharing for Poorest.--
(1) In general.--The State plan may not impose any cost
sharing for individuals with income (as determined under
subsection (d)) less than 150 percent of the official poverty
level (referred to in paragraph (2)) applicable to a family of
the size involved.
(2) Official poverty level.--The term `applicable poverty
level' means, for a family for a year, the official poverty
line (as defined by the Office of Management and Budget, and
revised annually in accordance with section 673(2) of the
Omnibus Budget Reconciliation Act of 1981) applicable to a
family of the size involved.
(b) Sliding Scale for Remainder.--
(1) Required coinsurance.--The State plan shall impose cost
sharing in the form of coinsurance (based on the amount paid
under the State plan for a service)--
(A) at a rate of 10 percent for individuals with
disabilities with income not less than 150 percent, and
less than 175 percent, of such official poverty line
(as so applied);
(B) at a rate of 15 percent for such individuals
with income not less than 175 percent, and less than
225 percent, of such official poverty line (as so
applied);
(C) at a rate of 25 percent for such individuals
with income not less than 225 percent, and less than
275 percent, of such official poverty line (as so
applied);
(D) at a rate of 30 percent for such individuals
with income not less than 275 percent, and less than
325 percent, of such official poverty line (as so
applied);
(E) at a rate of 35 percent for such individuals
with income not less than 325 percent, and less than
400 percent, of such official poverty line (as so
applied); and
(F) at a rate of 40 percent for such individuals
with income equal to at least 400 percent of such
official poverty line (as so applied).
(2) Required annual deductible.--The State plan shall
impose cost sharing in the form of an annual deductible--
(A) of $100 for individuals with disabilities with
income not less than 150 percent, and less than 175
percent, of such official poverty line (as so applied);
(B) of $200 for such individuals with income not
less than 175 percent, and less than 225 percent, of
such official poverty line (as so applied);
(C) of $300 for such individuals with income not
less than 225 percent, and less than 275 percent, of
such official poverty line (as so applied);
(D) of $400 for such individuals with income not
less than 275 percent, and less than 325 percent, of
such official poverty line (as so applied);
(E) of $500 for such individuals with income not
less than 325 percent, and less than 400 percent, of
such official poverty line (as so applied); and
(F) of $600 for such individuals with income equal
to at least 400 percent of such official poverty line
(as so applied).
(c) Recommendation of the Secretary.--The Secretary shall make
recommendations to the States as to how to reduce cost-sharing for
individuals with extraordinary out-of-pocket costs for whom the cost-
sharing provisions of this section could jeopardize their ability to
take advantage of the services offered under this subtitle. The
Secretary shall establish a methodology for reducing the cost-sharing
burden for individuals with exceptionally high out-of-pocket costs
under this subtitle.
(d) Determination of Income for Purposes of Cost Sharing.--The
State plan shall specify the process to be used to determine the income
of an individual with disabilities for purposes of this section. Such
standards shall include a uniform Federal definition of income and any
allowable deductions from income.
SEC. 2106. QUALITY ASSURANCE AND SAFEGUARDS.
(a) Quality Assurance.--
(1) In general.--The State plan shall specify how the State
will ensure and monitor the quality of services, including--
(A) safeguarding the health and safety of
individuals with disabilities,
(B) setting the minimum standards for agency
providers and how such standards will be enforced,
(C) setting the minimum competency requirements for
agency provider employees who provide direct services
under this subtitle and how the competency of such
employees will be enforced,
(D) obtaining meaningful consumer input, including
consumer surveys that measure the extent to which
participants receive the services described in the plan
of care and participant satisfaction with such
services,
(E) establishing a process to receive, investigate,
and resolve allegations of neglect and/or abuse,
(F) establishing optional training programs for
individuals with disabilities in the use and direction
of consumer directed providers of personal assistance
services,
(G) establishing an appeals procedure for
eligibility denials and a grievance procedure for
disagreements with the terms of an individualized plan
of care,
(H) providing for participation in quality
assurance activities, and
(I) specifying the role of the long-term care
ombudsman (under the Older Americans Act of 1965) and
the Protection and Advocacy Agency (under the
Developmental Disabilities Assistance and Bill of
Rights Act) in assuring quality of services and
protecting the rights of individuals with disabilities.
(2) Issuance of regulations.--Not later than 1 year after
the date of enactment of this subtitle, the Secretary shall
issue regulations implementing the quality provisions of this
subsection.
(b) Federal Standards.--The State plan shall adhere to Federal
quality standards in the following areas:
(1) Case review of a specified sample of client records.
(2) The mandatory reporting of abuse, neglect, or
exploitation.
(3) The development of a registry of provider agencies or
home care workers and consumer directed providers of personal
assistance services against whom any complaints have been
sustained, which shall be available to the public.
(4) Sanctions to be imposed on States or providers,
including disqualification from the program, if minimum
standards are not met.
(5) Surveys of client satisfaction.
(6) State optional training programs for informal
caregivers.
(c) Client Advocacy.--
(1) In general.--The State plan shall provide that the
State will expend the amount allocated under section 2109(b)(2)
for client advocacy activities. The State may use such funds to
augment the budgets of the long-term care ombudsman (under the
Older Americans Act of 1965) and the Protection and Advocacy
Agency (under the Developmental Disabilities Assistance and
Bill of Rights Act) or may establish a separate and independent
client advocacy office in accordance with paragraph (2) to
administer a new program designed to advocate for client
rights.
(2) Client advocacy office.--
(A) In general.--A client advocacy office
established under this paragraph shall--
(i) identify, investigate, and resolve
complaints that--
(I) are made by, or on behalf of,
clients; and
(II) relate to action, inaction, or
decisions, that may adversely affect
the health, safety, welfare, or rights
of the clients (including the welfare
and rights of the clients with respect
to the appointment and activities of
guardians and representative payees),
of--
(aa) providers, or
representatives of providers,
of long-term care services;
(bb) public agencies; or
(cc) health and social
service agencies;
(ii) provide services to assist the clients
in protecting the health, safety, welfare, and
rights of the clients;
(iii) inform the clients about means of
obtaining services provided by providers or
agencies described in clause (i)(II) or
services described in clause (ii);
(iv) ensure that the clients have regular
and timely access to the services provided
through the office and that the clients and
complainants receive timely responses from
representatives of the office to complaints;
and
(v) represent the interests of the clients
before governmental agencies and seek
administrative, legal, and other remedies to
protect the health, safety, welfare, and rights
of the clients with regard to the provisions of
this subtitle.
(B) Contracts and arrangements.--
(i) In general.--Except as provided in
clause (ii), the State agency may establish and
operate the office, and carry out the program,
directly, or by contract or other arrangement
with any public agency or nonprofit private
organization.
(C) Licensing and certification organizations;
associations.--The State agency may not enter into the
contract or other arrangement described in clause (i)
with an agency or organization that is responsible for
licensing, certifying, or providing long-term care
services in the State.
(d) Safeguards.--
(1) Confidentiality.--The State plan shall provide
safeguards which restrict the use or disclosure of information
concerning applicants and beneficiaries to purposes directly
connected with the administration of the plan.
(2) Safeguards against abuse.--The State plans shall
provide safeguards against physical, emotional, or financial
abuse or exploitation (specifically including appropriate
safeguards in cases where payment for program benefits is made
by cash payments or vouchers given directly to individuals with
disabilities). All providers of services shall be required to
register with the State agency.
(3) Regulations.--Not later than January 1, 1998, the
Secretary shall promulgate regulations with respect to the
requirements on States under this subsection.
(e) Specified Rights.--The State plan shall provide that in
furnishing home and community-based services under the plan the
following individual rights are protected:
(1) The right to be fully informed in advance, orally and
in writing, of the care to be provided, to be fully informed in
advance of any changes in care to be provided, and (except with
respect to an individual determined incompetent) to participate
in planning care or changes in care.
(2) The right to--
(A) voice grievances with respect to services that
are (or fail to be) furnished without discrimination or
reprisal for voicing grievances,
(B) be told how to complain to State and local
authorities, and
(C) prompt resolution of any grievances or
complaints.
(3) The right to confidentiality of personal and clinical
records and the right to have access to such records.
(4) The right to privacy and to have one's property treated
with respect.
(5) The right to refuse all or part of any care and to be
informed of the likely consequences of such refusal.
(6) The right to education or training for oneself and for
members of one's family or household on the management of care.
(7) The right to be free from physical or mental abuse,
corporal punishment, and any physical or chemical restraints
imposed for purposes of discipline or convenience and not
included in an individual's plan of care.
(8) The right to be fully informed orally and in writing of
the individual's rights.
(9) The right to a free choice of providers.
(10) The right to direct provider activities when an
individual is competent and willing to direct such activities.
SEC. 2107. ADVISORY GROUPS.
(a) Federal Advisory Group.--
(1) Establishment.--The Secretary shall establish an
advisory group, to advise the Secretary and States on all
aspects of the program under this subtitle.
(2) Composition.--The group shall be composed of
individuals with disabilities and their representatives,
providers, Federal and State officials, and local community
implementing agencies. A majority of its members shall be
individuals with disabilities and their representatives.
(b) State Advisory Groups.--
(1) In general.--Each State plan shall provide for the
establishment and maintenance of an advisory group to advise
the State on all aspects of the State plan under this subtitle.
(2) Composition.--Members of each advisory group shall be
appointed by the Governor (or other chief executive officer of
the State) and shall include individuals with disabilities and
their representatives, providers, State officials, and local
community implementing agencies. A majority of its members
shall be individuals with disabilities and their
representatives. The members of the advisory group shall be
selected from the those nominated as described in paragraph
(3).
(3) Selection of members.--Each State shall establish a
process whereby all residents of the State, including
individuals with disabilities and their representatives, shall
be given the opportunity to nominate members to the advisory
group.
(4) Particular concerns.--Each advisory group shall--
(A) before the State plan is developed, advise the
State on guiding principles and values, policy
directions, and specific components of the plan,
(B) meet regularly with State officials involved in
developing the plan, during the development phase, to
review and comment on all aspects of the plan,
(C) participate in the public hearings to help
assure that public comments are addressed to the extent
practicable,
(D) report to the Governor and make available to
the public any differences between the group's
recommendations and the plan,
(E) report to the Governor and make available to
the public specifically the degree to which the plan is
consumer-directed, and
(F) meet regularly with officials of the designated
State agency (or agencies) to provide advice on all
aspects of implementation and evaluation of the plan.
SEC. 2108. PAYMENTS TO STATES.
(a) In General.--Subject to section 2102(a)(9)(C) (relating to
limitation on payment for administrative costs), the Secretary, in
accordance with the Cash Management Improvement Act, shall authorize
payment to each State with a plan approved under this subtitle, for
each quarter (beginning on or after January 1, 1998), from its
allotment under section 2109(b), an amount equal to--
(1)(A) if the amount demonstrated by State claims to have
been expended during the year for home and community-based
services under the plan for individuals with disabilities does
not exceed 20 percent of the amount allotted to the State under
section 2109(b), 100 percent of the amount demonstrated by
State claims to have been expended during the quarter for such
services for such individuals; or
(B) for the amount demonstrated by State claims to have
been expended during the year for home and community-based
services under the plan for individuals with disabilities that
exceeds 20 percent of the amount allotted to the State under
section 2109(b), the Federal home and community-based services
matching percentage (as defined in subsection (b)) of such
amount; plus
(2) an amount equal to 90 percent of the amount
demonstrated by the State to have been expended during the
quarter for quality assurance activities under the plan; plus
(3) an amount equal to 90 percent of amount expended during
the quarter under the plan for activities (including
preliminary screening) relating to determination of eligibility
and performance of needs assessment; plus
(4) an amount equal to 90 percent (or, beginning with
quarters in fiscal year 2004, 75 percent) of the amount
expended during the quarter for the design, development, and
installation of mechanical claims processing systems and for
information retrieval; plus
(5) an amount equal to 50 percent of the remainder of the
amounts expended during the quarter as found necessary by the
Secretary for the proper and efficient administration of the
State plan.
(b) Federal Home and Community-Based Services Matching
Percentage.--In subsection (a), the term `Federal home and community-
based services matching percentage' means, with respect to a State, the
State's Federal medical assistance percentage (as defined in section
1905(b) of the Social Security Act) increased by 15 percentage points,
except that the Federal home and community-based services matching
percentage shall in no case be more than 95 percent.
(c) Payments on Estimates with Retrospective Adjustments.--The
method of computing and making payments under this section shall be as
follows:
(1) The Secretary shall, prior to the beginning of each
quarter, estimate the amount to be paid to the State under
subsection (a) for such quarter, based on a report filed by the
State containing its estimate of the total sum to be expended
in such quarter, and such other information as the Secretary
may find necessary.
(2) From the allotment available therefore, the Secretary
shall provide for payment of the amount so estimated, reduced
or increased, as the case may be, by any sum (not previously
adjusted under this section) by which the Secretary finds that
the estimate of the amount to be paid the State for any prior
period under this section was greater or less than the amount
which should have been paid.
(d) Application of Rules Regarding Limitations on Provider-Related
Donations and Health Care Related Taxes.--The provisions of section
1903(w) of the Social Security Act shall apply to payments to States
under this section in the same manner as they apply to payments to
States under section 1903(a) of such Act.
(e) Failure to Comply with State Plan.--If a State furnishing home
and community-based services under this subtitle fails to comply with
the State plan approved under this subtitle, the Secretary may either
reduce the Federal matching rates available to the State under
subsection (a) or withhold an amount of funds determined appropriate by
the Secretary from any payment to the State under this section.
SEC. 2109. APPROPRIATIONS; ALLOTMENTS TO STATES.
(a) Appropriations.--
(1) Fiscal years 1998 through 2004.--Subject to paragraph
(5)(C), for purposes of this subtitle, the appropriation
authorized under this subtitle for each of fiscal years 1998
through 2004 is the following:
(A) For fiscal year 1998, $1,800,000,000.
(B) For fiscal year 1999, $2,900,000,000.
(C) For fiscal year 2000, $3,600,000,000.
(D) For fiscal year 2001, $5,000,000,000.
(E) For fiscal year 2002, $7,900,000,000.
(F) For fiscal year 2003, $11,400,000,000.
(G) For fiscal year 2004, $15,400,000,000.
(2) Subsequent fiscal years.--For purposes of this
subtitle, the appropriation authorized for State plans under
this subtitle for each fiscal year after fiscal year 2004 is
the appropriation authorized under this subsection for the
preceding fiscal year multiplied by--
(A) a factor (described in paragraph (3))
reflecting the change in the consumer price index for
the fiscal year, and
(B) a factor (described in paragraph (4))
reflecting the change in the number of individuals with
disabilities for the fiscal year.
(3) CPI increase factor.--For purposes of paragraph (2)(A),
the factor described in this paragraph for a fiscal year is the
ratio of--
(A) the annual average index of the consumer price
index for the preceding fiscal year, to--
(B) such index, as so measured, for the second
preceding fiscal year.
(4) Disabled population factor.--For purposes of paragraph
(2)(B), the factor described in this paragraph for a fiscal
year is 100 percent plus (or minus) the percentage increase (or
decrease) change in the disabled population of the United
States (as determined for purposes of the most recent update
under subsection (b)(3)(D)).
(5) Additional funds due to medicaid offsets.--
(A) In general.--Each participating State must
provide the Secretary with information concerning
offsets and reductions in the medicaid program
resulting from home and community-based services
provided disabled individuals under this subtitle, that
would have been paid for such individuals under the
State medicaid plan but for the provision of similar
services under the program under this subtitle. At the
time a State first submits its plan under this subtitle
and before each subsequent fiscal year (through fiscal
year 2004), the State also must provide the Secretary
with such budgetary information (for each fiscal year
through fiscal year 2004), as the Secretary determines
to be necessary to carry out this paragraph.
(B) Reports.--Each State with a program under this
subtitle shall submit such reports to the Secretary as
the Secretary may require in order to monitor
compliance with subparagraph (A). The Secretary shall
specify the format of such reports and establish
uniform data reporting elements.
(C) Adjustments to appropriation.--
(i) In general.--For each fiscal year
(beginning with fiscal year 1998 and ending
with fiscal year 2004) and based on a review of
information submitted under subparagraph (A),
the Secretary shall determine the amount by
which the appropriation authorized under
subsection (a) will increase. The amount of
such increase for a fiscal year shall be
limited to the reduction in Federal
expenditures of medical assistance (as
determined by Secretary) that would have been
made under part A of title XIX for home and
community based services for disabled
individuals but for the provision of similar
services under the program under this subtitle.
(ii) Annual publication.--The Secretary
shall publish before the beginning of such
fiscal year, the revised appropriation
authorized under this subsection for such
fiscal year.
(D) Construction.--Nothing in this subsection shall
be construed as requiring States to determine
eligibility for medical assistance under the State
medicaid plan on behalf of individuals receiving
assistance under this subtitle.
(b) Allotments to States.--
(1) In general.--The Secretary shall allot the amounts
available under the appropriation authorized for the fiscal
year (specified in subsection (a)) to the States with plans
approved under this subtitle in accordance with an allocation
formula developed by the Secretary which takes into account--
(A) the percentage of the total number of
individuals with disabilities in all States that reside
in a particular State;
(B) the per capita costs of furnishing home and
community-based services to individuals with
disabilities in the State; and
(C) the percentage of all individuals with incomes
at or below 150 percent of the official poverty line
(as described in section 2105(a)(2)) in all States that
reside in a particular State.
(2) Allocation for client advocacy activities.--Each State
with a plan approved under this subtitle shall allocate one-
half of one percent of the State's total allotment under
paragraph (1) for client advocacy activities as described in
section 2106(c).
(3) No duplicate payment.--No payment may be made to a
State under this section for any services provided to an
individual to the extent that the State received payment for
such services under section 1903(a) of the Social Security Act.
(4) Reallocations.--Any amounts allotted to States under
this subsection for a year that are not expended in such year
shall remain available for State programs under this subtitle
and may be reallocated to States as the Secretary determines
appropriate.
(c) State Entitlement.--This subtitle constitutes budget authority
in advance of appropriations Acts, and represents the obligation of the
Federal Government to provide for the payment to States of amounts
described in subsection (a).
SEC. 2110. FEDERAL EVALUATIONS.
(a) In General.--Not later than December 31, 2003, December 31,
2006, and each December 31 thereafter, the Secretary shall provide to
Congress analytical reports that evaluate--
(1) the extent to which individuals with low incomes and
disabilities are equitably served;
(2) the adequacy and equity of service plans to individuals
with similar levels of disability across States;
(3) the comparability of program participation across
States, described by level and type of disability; and
(4) the ability of service providers to sufficiently meet
the demand for services.
(b) Geriatric Assessments.--Not later than 18 months after the date
of enactment of this part, the Secretary shall report to Congress
concerning the feasibility of providing reimbursement under health
plans and other payers of health services for full geriatric
assessment, when recommended by a physician.
PART 2--GRANTS RELATING TO THE DEVELOPMENT OF HOSPITAL LINKAGE PROGRAMS
SEC. 2111. INFORMATION AND TECHNICAL ASSISTANCE GRANTS RELATING TO
DEVELOPMENT OF HOSPITAL LINKAGE PROGRAMS.
(a) Findings.--Congress finds that--
(1) demonstration programs and projects have been developed
to offer care management to hospitalized individuals awaiting
discharge who are in need of long-term health care services
that meet individual needs and preferences in home and
community-based settings as an alternative to long-term nursing
home care or institutional placement; and
(2) there is a need to disseminate information and
technical assistance to hospitals and State and local community
organizations regarding such programs and projects and to
provide incentive grants to State and local public and private
agencies, including area agencies on aging, to establish and
expand programs that offer care management to individuals
awaiting discharge from acute care hospitals who are in need of
long-term care so that services to meet individual needs and
preferences can be arranged in home and community-based
settings as an alternative to long-term placement in nursing
homes or other institutional settings.
(b) Dissemination of Information, Technical Assistance, and
Incentive Grants to Assist in the Development of Hospital Linkage
Programs.--Part C of title III of the Public Health Service Act (42
U.S.C. 248 et seq.) is amended by adding at the end thereof the
following new section:
``SEC. 327B. DISSEMINATION OF INFORMATION, TECHNICAL ASSISTANCE AND
INCENTIVE GRANTS TO ASSIST IN THE DEVELOPMENT OF HOSPITAL
LINKAGE PROGRAMS.
``(a) Dissemination of Information.--The Secretary shall compile,
evaluate, publish and disseminate to appropriate State and local
officials and to private organizations and agencies that provide
services to individuals in need of long-term health care services, such
information and materials as may assist such entities in replicating
successful programs that are aimed at offering care management to
hospitalized individuals who are in need of long-term care so that
services to meet individual needs and preferences can be arranged in
home and community-based settings as an alternative to long-term
nursing home placement. The Secretary may provide technical assistance
to entities seeking to replicate such programs.
``(b) Incentive Grants to Assist in the Development of Hospital
Linkage Programs.--The Secretary shall establish a program under which
incentive grants may be awarded to assist private and public agencies,
including area agencies on aging, and organizations in developing and
expanding programs and projects that facilitate the discharge of
individuals in hospitals or other acute care facilities who are in need
of long-term care services and placement of such individuals into home
and community-based settings.
``(c) Administrative Provisions.--
``(1) Eligible entities.--To be eligible to receive a grant
under subsection (b) an entity shall be--
``(A)(i) a State agency as defined in section
102(43) of the Older Americans Act of 1965; or
``(ii) a State agency responsible for administering
home and community care programs under title XIX of the
Social Security Act; or
``(B) if no State agency described in subparagraph
(A) applies with respect to a particular State, a
public or nonprofit private entity.
``(2) Applications.--To be eligible to receive an incentive
grant under subsection (b), an entity shall prepare and submit
to the Secretary an application at such time, in such manner
and containing such information as the Secretary may require,
including--
``(A) an assessment of the need within the
community to be served for the establishment or
expansion of a program to facilitate the discharge of
individuals in need of long-term care who are in
hospitals or other acute care facilities into home and
community-care programs that provide individually
planned, flexible services that reflect individual
choice or preference rather than nursing home or
institutional settings;
``(B) a plan for establishing or expanding a
program for identifying individuals in hospital or
acute care facilities who are in need of individualized
long-term care provided in home and community-based
settings rather than nursing homes or other
institutional settings and undertaking the planning and
management of individualized care plans to facilitate
discharge into such settings;
``(C) assurances that nongovernmental case
management agencies funded under grants awarded under
this section are not direct providers of home and
community-based services;
``(D) satisfactory assurances that adequate home
and community-based long term care services are
available, or will be made available, within the
community to be served so that individuals being
discharged from hospitals or acute care facilities
under the proposed program can be served in such home
and community-based settings, with flexible,
individualized care which reflects individual choice
and preference;
``(E) a description of the manner in which the
program to be administered with amounts received under
the grant will be continued after the termination of
the grant for which such application is submitted; and
``(F) a description of any waivers or approvals
necessary to expand the number of individuals served in
federally funded home and community-based long term
care programs in order to provide satisfactory
assurances that adequate home and community-based long
term care services are available in the community to be
served.
``(3) Awarding of grants.--
``(A) Preferences.--In awarding grants under
subsection (b), the Secretary shall give preference to
entities submitting applications that--
``(i) demonstrate an ability to coordinate
activities funded using amounts received under
the grant with programs providing
individualized home and community-based case
management and services to individuals in need
of long term care with hospital discharge
planning programs; and
``(ii) demonstrate that adequate home and
community-based long term care management and
services are available, or will be made
available to individuals being served under the
program funded with amounts received under
subsection (b).
``(B) Distribution.--In awarding grants under
subsection (b), the Secretary shall ensure that such
grants--
``(i) are equitably distributed on a
geographic basis;
``(ii) include projects operating in urban
areas and projects operating in rural areas;
and
``(iii) are awarded for the expansion of
existing hospital linkage programs as well as
the establishment of new programs.
``(C) Expedited consideration.--The Secretary shall
provide for the expedited consideration of any waiver
application that is necessary under title XIX of the
Social Security Act to enable an applicant for a grant
under subsection (b) to satisfy the assurance required
under paragraph (1)(D).
``(4) Use of grants.--An entity that receives amounts under
a grant under subsection (b) may use such amounts for planning,
development and evaluation services and to provide
reimbursements for the costs of one or more case mangers to be
located in or assigned to selected hospitals who would--
``(A) identify patients in need of individualized
care in home and community-based long-term care;
``(B) assess and develop care plans in cooperation
with the hospital discharge planning staff; and
``(C) arrange for the provision of community care
either immediately upon discharge from the hospital or
after any short term nursing-home stay that is needed
for recuperation or rehabilitation;
``(5) Direct services subject to reimbursements.--None of
the amounts provided under a grant under this section may be
used to provide direct services, other than case management,
for which reimbursements are otherwise available under title
XVIII or XIX of the Social Security Act.
``(6) Limitations.--
``(A) Term.--Grants awarded under this section
shall be for terms of less than 3 years.
``(B) Amount.--Grants awarded to an entity under
this section shall not exceed $300,000 per year. The
Secretary may waive the limitation under this
subparagraph where an applicant demonstrates that the
number of hospitals or individuals to be served under
the grant justifies such increased amounts.
``(C) Supplanting of funds.--Amounts awarded under
a grant under this section may not be used to supplant
existing State funds that are provided to support
hospital link programs.
``(d) Evaluation and Reports.--
``(1) By grantees.--An entity that receives a grant under
this section shall evaluate the effectiveness of the services
provided under the grant in facilitating the placement of
individuals being discharged from hospitals or acute care
facilities into home and community-based long term care
settings rather than nursing homes. Such entity shall prepare
and submit to the Secretary a report containing such
information and data concerning the activities funded under the
grant as the Secretary determines appropriate.
``(2) By secretary.--Not later than the end of the third
fiscal year for which funds are appropriated under subsection
(e), the Secretary shall prepare and submit to the appropriate
committees of Congress, a report concerning the results of the
evaluations and reports conducted and prepared under paragraph
(1).
``(e) Authorization of Appropriations.--There are authorized to be
appropriated to carry out this section, $5,000,000 for each of the
fiscal years 1994 through 1996.''.
Subtitle C--Long-Term Care Insurance Improvement and Accountability
SEC. 2200. SHORT TITLE.
This subtitle may be cited as the ``Long-Term Care Insurance
Improvement and Accountability Act''.
PART 1--PROMULGATION OF STANDARDS AND MODEL BENEFITS
SEC. 2201. STANDARDS.
(a) Application 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 this subtitle.
(2) State standards.--Nothing in this subtitle shall be
construed as preventing a participating State from applying
standards that provide greater protection to insured
individuals under long-term care insurance policies than the
standards promulgated under this subtitle, except that such
State standards may not be inconsistent with any of the
standards specified in this subtitle.
(b) Deadline for Application of Standards.--
(1) In general.--Subject to paragraph (2), the date
specified in this subsection for a State is--
(A) the date the State adopts the standards
established under subsection (a)(1); or
(B) the date that is 1 year after the first day of
the first regular legislative session that begins after
the date such standards are first established under
subsection (a)(2);
whichever is earlier.
(2) State requiring legislation.--In the case of a State
which the Secretary identifies, in consultation with the NAIC,
as--
(A) requiring State legislation (other than
legislation appropriating funds) in order for the
standards established under subsection (a) to be
applied; but
(B) having a legislature which is not scheduled to
meet within 1 year following the beginning of the next
regular legislative session in which such legislation
may be considered;
the date specified in this subsection is the first day of the
first calendar quarter beginning after the close of the first
legislative session of the State legislature that begins on or
after January 1, 1995. For purposes of the previous sentence,
in the case of a State that has a 2-year legislative session,
each year of such session shall be deemed to be a separate
regular session of the State legislature.
(c) Items Included in Standards.--The standards promulgated under
subsection (a) shall include--
(1) minimum Federal standards for long-term care insurance
consistent with the provisions of this subtitle;
(2) standards for the enhanced protection of consumers with
long-term care insurance; and
(3) procedures for the modification of the standards
established under paragraph (1) in a manner consistent with
future laws to expand existing Federal or State long-term care
benefits or establish a comprehensive Federal or State long-
term care benefit program.
(d) Consultation.--In establishing standards and models of benefits
under this section, the Secretary shall, after consultation with
representatives of carriers, consumer groups, and providers of long-
term care services--
(1) recommend the appropriate inflationary index to be used
with respect to the inflation protection benefit portion of the
standards;
(2) recommend the uniform needs assessment mechanism to be
used in determining the eligibility of individuals for benefits
under a policy;
(3) recommend appropriate standards for the regulation of
the insurance aspects of supported housing arrangements; and
(4) perform such other activities as determined appropriate
by the Secretary.
PART 2--ESTABLISHMENT AND IMPLEMENTATION OF LONG-TERM CARE INSURANCE
POLICY STANDARDS
SEC. 2211. IMPLEMENTATION OF POLICY STANDARDS.
(a) In General.--
(1) Regulatory program.--No long-term care policy (as
defined in section (2221)) may be issued, sold, or offered for
sale as a long-term care insurance policy in a State on or
after the date specified in section 2201(b) unless--
(A) the Secretary determines that the State has
established a regulatory program that--
(i) provides for the application and
enforcement of the standards established under
section 2201(a); and
(ii) complies with the requirements of
subsection (b);
by the date specified in section 2201(b), and the
policy has been approved by the State commissioner or
superintendent of insurance under such program; or
(B) if the State has not established such a
program, or if the State's regulatory program has been
decertified, the policy has been certified by the
Secretary (in accordance with such procedures as the
Secretary may establish) as meeting the standards
established under section 2201(a) by the date specified
in section 2201(b).
For purposes of this subsection, the advertising or soliciting
with respect to a policy, directly or indirectly, shall be
deemed the offering for sale of the policy.
(2) Review of state regulatory programs.--The Secretary
shall review regulatory programs described in paragraph (1)(A)
at least biannually to determine if they continue to provide
for the application and enforcement of the standards and
procedures established under section 2201(a) and (b). If the
Secretary determines that a State regulatory program no longer
meets such standards and requirements, before making a final
determination, the Secretary shall provide the State an
opportunity to adopt such a plan of correction as would permit
the program to continue to meet such standards and
requirements. If the Secretary makes a final determination that
the State regulatory program, after such an opportunity, fails
to meet such standards and requirements, the Secretary shall
assume responsibility under paragraph (1)(B) with respect to
certifying policies in the State and shall exercise full
authority under section 2201 for carriers, agents, or
associations or its subsidiary in the State plans in the State.
(b) Additional Requirements for Approval of State Regulatory
Programs.--For purposes of subsection (a)(1)(A)(ii), the requirements
of this subsection for a State regulatory program are as follows:
(1) Enforcement.--The enforcement under the program--
(A) shall be designed in a manner so as to secure
compliance with the standards within 30 days after the
date of a finding of noncompliance with such standards;
and
(B) shall provide for notice in the annual report
required under paragraph (5) to the Secretary of cases
where such compliance is not secured within such 30-day
period.
(2) Process.--The enforcement process under each State
regulatory program shall provide for--
(A) procedures for individuals and entities to file
written, signed complaints respecting alleged
violations of the standards;
(B) responding to such complaints within 90 days;
(C) the investigation of--
(i) those complaints which have a
reasonable probability of validity; and
(ii) such other alleged violations of the
standards as the program finds appropriate; and
(D) the imposition of appropriate sanctions (which
include, in appropriate cases, the imposition of a
civil money penalty as provided for in section 2218) in
the case of a carrier, agent, or association or its
subsidiary determined to have violated the standards.
(3) 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 and may be awarded
appropriate relief and reasonable attorney's fees.
(4) Consumer access to compliance information.--
(A) In general.--A State regulatory program shall
provide for consumer access to complaints filed with
the State commissioner or superintendent of insurance
with respect to long-term care insurance policies.
(B) Confidentiality.--The access provided under
subparagraph (A) shall be limited to the extent
required to protect the confidentiality of the identity
of individual policyholders.
(5) Process for approval of premiums.--
(A) In general.--Each State regulatory program
shall--
(i) provide for a process for approving or
disapproving proposed premium increases or
decreases with respect to long-term care
insurance policies; and
(ii) establish a policy for receipt and
consideration of public comments before
approving such a premium increase or decrease.
(B) Conditions for approval.--No premium increase
shall be approved (or deemed approved) under
subparagraph (A) unless the proposed increase is
accompanied by an actuarial memorandum which--
(i) includes a description of the
assumptions that justify the increase,
including a financial report on expenditures;
(ii) contains such information as may be
required under the Standards; and
(iii) is made available to the public.
(C) Application.--Except as provided in
subparagraph (D), this paragraph shall not apply to a
group long-term care insurance policy issued to a group
described in section 4(E)(1) of the NAIC Long Term Care
Insurance Model Act (effective January 1991), except
that such group policy shall, pursuant to guidelines
developed by the NAIC, provide notice to policyholders
and certificate holders of any premium change under
such group policy.
(D) Exception.--Subparagraph (C) shall not apply
to--
(i) group conversion policies;
(ii) the group continuation feature of a
group policy if the insurer separately rates
employee and continuation coverages; and
(iii) group policies where the function of
the employer is limited solely to collecting
premiums (through payroll deductions or dues
checkoff) and remitting them to the insurer.
(E) Construction.--Nothing in this paragraph shall
be construed as preventing the Secretary, in
consultation with the NAIC, from promulgating
standards, or a State from enacting and enforcing laws,
with respect to premium rates or loss ratios for all,
including group, long-term care insurance policies.
(6) Annual reports.--Each State regulatory program shall
provide for annual reports to be submitted to the Secretary on
the implementation and enforcement of the standards in the
State, including information concerning violations in excess of
30 days.
(7) Access to other information.--The State regulatory
program shall provide for consumer access to actuarial
memoranda, including financial information, provided under
paragraph (4).
(8) Default.--In the case of a State without a regulatory
program approved under subsection (a), the Secretary shall
provide for the enforcement activities described in subsection
(c).
(c) Secretarial Enforcement Authority.--
(1) In general.--The Secretary shall exercise authority
under this section in the case of a State that does not have a
regulatory program approved under this section.
(2) Complaints and investigations.--The Secretary shall
establish procedures--
(A) for individuals and entities to file written,
signed complaints respecting alleged violations of the
requirements of this subtitle;
(B) for responding on a timely basis to such
complaints; and
(C) for the investigation of--
(i) those complaints that have a reasonable
probability of validity; and
(ii) such other alleged violations of the
requirements of this subtitle as the Secretary
determines to be appropriate.
In conducting investigations under this subsection, agents of
the Secretary shall have reasonable access necessary to enable
such agents to examine evidence of any carrier, agent, or
association or its subsidiary being investigated.
(3) Hearings.--
(A) In general.--Prior to imposing an order
described in paragraph (4) against a carrier, agent, or
association or its subsidiary under this section for a
violation of the requirements of this subtitle, the
Secretary shall provide the carrier, agent, association
or subsidiary with notice and, upon request made within
a reasonable time (of not less than 30 days, as
established by the Secretary by regulation) of the date
of the notice, a hearing respecting the violation.
(B) Conduct of hearing.--Any hearing requested
under subparagraph (A) shall be conducted before an
administrative law judge. If no hearing is so
requested, the Secretary's imposition of the order
shall constitute a final and unappealable order.
(C) Authority in hearings.--In conducting hearings
under this paragraph--
(i) agents of the Secretary and
administrative law judges shall have reasonable
access necessary to enable such agents and
judges to examine evidence of any carrier,
agent, or association or its subsidiary being
investigated; and
(ii) administrative law judges, may, if
necessary, compel by subpoena the attendance of
witnesses and the production of evidence at any
designated place or hearing.
In case of contumacy or refusal to obey a subpoena
lawfully issued under this subparagraph and upon
application of the Secretary, an appropriate district
court of the United States may issue an order requiring
compliance with such subpoena and any failure to obey
such order may be punished by such court as a contempt
thereof.
(D) Issuance of orders.--If an administrative law
judge determines in a hearing under this paragraph,
upon the preponderance of the evidence received, that a
carrier, agent, or association or its subsidiary named
in the complaint has violated the requirements of this
subtitle, the administrative law judge shall state the
findings of fact and issue and cause to be served on
such carrier, agent, association, or subsidiary an
order described in paragraph (4).
(4) Cease and desist order with civil money penalty.--
(A) In general.--Subject to the provisions of
subparagraphs (B) through (F), an order under this
paragraph--
(i) shall require the agent, association or
its subsidiary, or a carrier--
(I) to cease and desist from such
violations; and
(II) to pay a civil penalty in an
amount not to exceed $15,000 in the
case of each agent, and not to exceed
$25,000 for each association or its
subsidiary or a carrier for each such
violation; and
(ii) may require the agent, association or
its subsidiary, or a carrier to take such other
remedial action as is appropriate.
(B) Corrections within 30 days.--No order shall be
imposed under this paragraph by reason of any violation
if the carrier, agent, or association or its subsidiary
establishes to the satisfaction of the Secretary that--
(i) such violation was due to reasonable
cause and was not intentional and was not due
to willful neglect; and
(ii) such violation is corrected within the
30-day period beginning on the earliest date
the carrier, agent, association, or subsidiary
knew, or exercising reasonable diligence could
have known, that such a violation was
occurring.
(C) Waiver by secretary.--In the case of a
violation under this subtitle that is due to reasonable
cause and not to willful neglect, the Secretary may
waive part or all of the civil money penalty imposed
under subparagraph (A)(i)(II) to the extent that
payment of such penalty would be grossly excessive
relative to the violation involved and to the need for
deterrence of violations.
(D) Administrative appellate review.--The decision
and order of an administrative law judge under this
paragraph shall become the final agency decision and
order of the Secretary unless, within 30 days, the
Secretary modifies or vacates the decision and order,
in which case the decision and order of the Secretary
shall become a final order under this paragraph.
(E) Judicial review.--A carrier, agent, or
association or its subsidiary or any other individual
adversely affected by a final order issued under this
paragraph may, within 45 days after the date the final
order is issued, file a petition in the Court of
Appeals for the appropriate circuit for review of the
order.
(F) Enforcement of orders.--If a carrier, agent, or
association or its subsidiary fails to comply with a
final order issued under this paragraph against the
carrier, agent, association or subsidiary after
opportunity for judicial review under subparagraph (E),
the Secretary shall file a suit to seek compliance with
the order in any appropriate district court of the
United States. In any such suit, the validity and
appropriateness of the final order shall not be subject
to review.
SEC. 2212. REGULATION OF SALES PRACTICES.
(a) Duty of Good Faith and Fair Dealing.--
(1) In general.--Each agent (as defined in section 2233) or
association that is selling or offering for sale a long-term
care insurance policy has the duty of good faith and fair
dealing to the purchaser or potential purchaser of such a
policy.
(2) Policy replacement form.--With respect to any
individual who elects to replace or effect a change in a long-
term care insurance policy, the individual that is selling such
policy shall ensure that such individual completes a policy
replacement form developed by the Secretary, in consultation
with the NAIC. A copy of such form shall be provided to such
individual and additional copies shall be delivered by the
selling individual to the old policy issuer and the new issuer
and kept on file for inspection by the State regulatory agency.
(3) Prohibited practices.--An agent or association is
considered to have violated paragraph (1) if the agent or
association engages in any of the following practices:
(A) Twisting.--Knowingly making any misleading
representation (including the inaccurate completion of
medical histories) or incomplete or fraudulent
comparison of any long-term care insurance policy or
insurers for the purpose of inducing, or tending to
induce, any individual to retain or effect a change
with respect to a long-term care insurance policy.
(B) High pressure tactics.--Employing any method of
marketing having the effect of, or intending to, induce
the purchase of long-term care insurance policy through
force, fright, threat or undue pressure, whether
explicit or implicit.
(C) Cold lead advertising.--Making use directly or
indirectly of any method of marketing which fails to
disclose in a conspicuous manner that a purpose of the
method of marketing is solicitation of insurance and
that contact will be made by an insurance agent or
insurance company.
(D) Others.--Engaging in such other practices
determined inappropriate under guidelines issued by the
Secretary, in consultation with the NAIC.
(b) Financial Needs Standards.--The Secretary, in consultation with
the NAIC, shall develop recommended 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 insurance policy.
(c) Prohibition of Sale or Issuance to Medicaid Beneficiaries.--An
agent, an association, or a carrier may not knowingly sell or issue a
long-term care insurance policy to an individual who is eligible for
medical assistance under title XIX of the Social Security Act.
(d) Prohibition of Sale or Issuance of Duplicate Service Benefit
Policies.--An agent, association or its subsidiary, or a carrier may
not sell or issue a service-benefit long-term care insurance policy to
an individual--
(1) knowing that the policy provides for coverage that
duplicates coverage already provided in another service-benefit
long-term care insurance policy held by such individual (unless
the policy is intended to replace such other policy); or
(2) for the benefit of an individual unless the individual
(or a representative of the individual) provides a written
statement to the effect that the coverage--
(A) does not duplicate other coverage in effect
under a service-benefit long-term care insurance
policy; or
(B) will replace another service-benefit long-term
care insurance policy.
In this subsection, the term ``service-benefit long-term care insurance
policy'' means a long-term care insurance policy which provides for
benefits based on the type and amount of services furnished.
(e) Prohibition Based on Eligibility for Other Benefits.--A carrier
may not sell or issue a long-term care insurance policy that reduces,
limits, or coordinates the benefits provided under the policy on the
basis that the policyholder has or is eligible for other long-term care
insurance coverage or benefits.
(f) Provision of Outline of Coverage.--No agent, association or its
subsidiary, or carrier may sell or offer for sale a long-term care
insurance policy without providing to every individual purchaser or
potential purchaser (or representative) an outline of coverage that
complies with the standards established under section 2201(a).
(g) Penalties.--Any agent who sells, offers for sale, or issues a
long-term care insurance policy in violation of this section may be
imprisoned not more than 5 years, or fined in accordance with title 18,
United States Code, and, in addition, is subject to a civil money
penalty of not to exceed $15,000 for each such violation. Any
association or its subsidiary or carrier that sells, offers for sale,
or issues a long-term care insurance policy in violation of this
section may be fined in accordance with title 18, United States Code,
and in addition, is subject to a civil money penalty of not to exceed
$25,000 for each violation. Nothing in this subsection shall be
construed as preempting or otherwise limiting the penalties that may be
imposed by a State for conduct that violates this section.
(h) Agent Training and Certification Requirements.--The Secretary,
in consultation with the NAIC, shall establish requirements for long-
term care insurance agent training and certification that--
(1) specify requirements for training insurance agents who
desire to sell or offer for sale long-term care insurance
policies; and
(2) specify procedures for certifying and recertifying
agents who have completed such training and who are qualified
to sell or offer for sale long-term care insurance policies.
SEC. 2213. ADDITIONAL RESPONSIBILITIES FOR CARRIERS.
(a) Refund of Premiums.--If an application for a long-term care
insurance policy (or for a certificate under a group long-term care
insurance policy) is denied or an applicant returns a policy or
certificate within 30 days of the date of its issuance pursuant to
subsection 2217, 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
insurance policy (or for a certificate under a group long-term care
insurance 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 insurance 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 2215, no claim under
such a policy may be denied on the basis of a failure to disclose a
condition at the time of issuance of the policy if the application for
the policy failed to request information respecting the condition.
(d) Reporting of Information.--A carrier that issues one or more
long-term care insurance policies shall periodically (not less often
than annually) report, in a form and in a manner determined by the
Secretary, in consultation with the NAIC, to the Commissioner,
superintendent or director of insurance of each State in which the
policy is delivered, and shall make available to the Secretary, upon
request, information in a form and manner determined by the Secretary,
in consultation with the NAIC, concerning--
(1) the long-term care insurance policies of the carrier
that are in force;
(2) the most recent premiums for such policies and the
premiums imposed for such policies since their initial
issuance;
(3) the lapse rate, replacement rate, and rescission rates
by policy;
(4) the names of that 10 percent of its agents that--
(A) have the greatest lapse and replacement rate;
and
(B) have produced at least $50,000 of long-term
care insurance sales in the previous year; and
(5) the claims denied (expressed as a number and as a
percentage of claims submitted) by policy.
Information required under this subsection shall be reported in a
format specified in the standards established under section 2201(a).
For purposes of paragraph (3), there shall be included (but reported
separately) data concerning lapses due to the death of the
policyholder. For purposes of paragraph (4), there shall not be
included as a claim any claim that is denied solely because of the
failure to meet a deductible, waiting period, or exclusionary period.
(e) Standards on Compensation for Sale of Policies.--
(1) In general.--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 insurance policies may
provide a commission or other compensation to an agent or other
representative for the sale of such a policy only if the first
year commission or other first year compensation to be paid
does not exceed--
(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. 2214. RENEWABILITY STANDARDS FOR ISSUANCE, AND BASIS FOR
CANCELLATION OF POLICIES.
(a) In General.--No long-term care insurance policy may be canceled
or nonrenewed for any reason other than nonpayment of premium, material
misrepresentation, or fraud.
(b) Continuation and Conversion Rights for Group Policies.--
(1) In general.--Each group long-term care insurance policy
shall provide covered individuals with a basis for continuation
or conversion in accordance with this subsection.
(2) Basis for continuation.--For purposes of paragraph (1),
a policy provides a basis for continuation of coverage if the
policy maintains coverage under the existing group policy when
such coverage would otherwise terminate and which is subject
only to the continued timely payment of 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 insurance policy is replaced by another long-term care
insurance policy purchased by the same policyholder, the
succeeding issuer shall offer coverage to all individuals
covered under the old group policy on its date of termination.
Coverage under the new group policy shall not result in any
exclusion for preexisting conditions that would have been
covered under the group policy being replaced.
(c) Standards for Issuance.--
(1) In general.--
(A) Guarantee.--An agent, association or carrier
that sells or issues long-term care insurance policies
shall guarantee that such policies shall be sold or
issued to an individual, or eligible individual in the
case of a group plan, if such individual meets the
minimum medical underwriting requirements of such
policy.
(B) Premium for converted policy.--If a group
policy from which conversion is made is a replacement
for a previous group policy, the premium for the
converted policy shall be calculated on the basis of
the insured's age at the inception of coverage under
the group policy from which conversion is made. Where
the group policy from which conversion is made replaced
previous group coverage, the premium for the converted
policy shall be calculated on the basis of the
insured's age at inception of coverage under the group
policy replaced.
(2) Upgrade for current policies.--The Secretary, in
consultation with the NAIC, shall establish standards,
including those providing guidance on medical underwriting and
age rating, with respect to the access of individuals to
policies offering upgraded benefits.
(3) Rate stabilization.--The Secretary, in consultation
with the NAIC, shall establish standards for premium rate
stabilization.
(d) Effect of Incapacitation.--
(1) In general.--
(A) Prohibition.--Except as provided in paragraph
(2), a long-term care insurance policy in effect as of
the effective date of the standards established under
section 2201(a) may not be canceled for nonpayment if
the policy holder is determined by a long-term care
provider, physician, or other health care provider
(independent of the issuer of the policy), to be
cognitively or mentally incapacitated so as to not make
payments in a timely manner.
(B) Reinstatement.--A long-term care policy shall
include a provision that provides for the reinstatement
of such coverage, in the event of lapse, if the insurer
is provided with proof of cognitive or mental
incapacitation. Such reinstatement option shall remain
available for a period of not less than 5 months after
termination and shall allow for the collection of past
due premium.
(2) Permitted cancellation.--A long-term care insurance
policy may be canceled under paragraph (1) for nonpayment if--
(A) the period of such nonpayment is in excess of
30 days; and
(B) notice of intent to cancel is provided to the
policyholder or designated representative of the policy
holder not less than 30 days prior to such
cancellation, except that notice may not be provided
until the expiration of 30 days after a premium is due
and unpaid.
Notice under this paragraph shall be deemed to have been given
as of 5 days after the mailing date.
SEC. 2215. BENEFIT STANDARDS.
(a) Use of Standard Definitions and Terminology, Uniform Format,
and Standard Benefits.--Pursuant to standards established under section
2201(a), each long-term care insurance 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;
as prescribed under guidelines issued by the Secretary, in consultation
with the NAIC, and periodically updated.
(b) Disclosure.--
(1) Outline of coverage.--
(A) Requirement.--Each carrier that sells or offers
for sale a long-term care insurance policy shall
provide an outline of coverage to each individual
policyholder under such policy that meets the
applicable standards established pursuant to section
2201(a), complies with the requirements of subparagraph
(B), and is in a uniform format as prescribed in
guidelines issued by the Secretary, in consultation
with the NAIC, and periodically updated.
(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 2217, 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 insurance products and long-
term care programs where 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 insurance policy shall include--
(A) a description of the principal benefits and
coverage provided in the policy;
(B) a statement of the principal exclusions,
reductions, and limitations contained in the policy;
and
(C) a statement that the group master policy
determines governing contractual provisions.
(3) Long-term care as part of life insurance.--In the case
of a long-term care insurance policy issued as a part of, or a
rider on, a life insurance policy, at the time of policy
delivery there shall be provided a policy summary that
includes--
(A) an explanation of how the long-term care
benefits interact with other components of the policy
(including deductions from death benefits);
(B) an illustration of the amount of benefits, the
length of benefits, and the guaranteed lifetime
benefits (if any) for each covered individual; and
(C) any exclusions, reductions, and limitations on
benefits of long-term care.
(4) Additional information.--The Secretary, in consultation
with the NAIC shall develop recommendations with respect to
informing consumers of the long-term economic viability of
carriers issuing long-term care insurance policies.
(c) Limiting Conditions on Benefits; Minimum Benefits.--
(1) In general.--A long-term care insurance policy may not
condition or limit eligibility--
(A) for benefits for a type of services to the need
for or receipt of any other services;
(B) for any benefit on the medical necessity for
such benefit;
(C) for benefits furnished by licensed or certified
providers in compliance with conditions which are in
addition to those required for licensure or
certification under State law, or if no State licensure
or certification laws exists, 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 insurance policy provides benefits for the
payment of specified home health care or community-based
services, the policy--
(A) may not limit such benefits to services
provided by registered nurses or licensed practical
nurses;
(B) may not require benefits for such services to
be provided by a nurse or therapist that can be
provided by a home health aide or a home care worker
who is licensed or certified under State licensure or
certification laws, or if no such laws exist, who is in
compliance with qualifications developed by the
Secretary, in consultation with the NAIC;
(C) may not limit such benefits to services
provided by agencies or providers certified under title
XVIII of the Social Security Act; and
(D) shall provide, at a minimum--
(i) benefits for personal care services
(including home health aide and home care
worker services as defined by the Secretary, in
consultation with the NAIC), home health
services, adult day care, and respite care in
an individual's home or in another setting in
the community; or
(ii) any of such benefits on a respite care
basis.
(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 by
the Secretary, in consultation with the NAIC, under uniform
language and definitions established under section 2215(a)(1)),
the term `nursing facilities' has the meaning given such term
by section 1919(a) of the Social Security Act.
(4) Per diem policies.--
(A) Definition.--For purposes of this subtitle, the
term ``per diem long-term care insurance policy'' means
a long-term care insurance policy (or certificate under
a group long-term care insurance policy) that provides
for benefit payments on a periodic basis due to
cognitive impairment or loss of functional capacity
without regard to the expenses incurred or services
rendered during the period to which the payments
relate.
(B) Limitation.--No per diem long-term care
insurance policy (or certificate) may condition, 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 insurance
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 insurance policy may not exclude or
condition benefits based on a medical condition for
which the policyholder received treatment or was
otherwise diagnosed before the issuance of the policy.
(B) 6-month limit.--A long-term care policy or
certificate issued under this subtitle 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 insurance
policy replaces another long-term care insurance policy, the
issuer of the replacing policy shall waive any time periods
applicable to preexisting conditions, waiting 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 insurance
policy shall--
(A) describe the level of benefits available under
the policy; and
(B) specify in clear, understandable terms, the
level (or levels) of physical, cognitive, or mental
impairment required in order to receive benefits under
the policy.
(2) Functional assessment.--In order to submit a claim
under any long-term care insurance policy, each claimant shall
have a professional functional assessment of his or her
functional or cognitive abilities. Such initial assessment
shall be conducted by an individual or entity, meeting the
qualifications established by the Secretary, in consultation
with the NAIC, to assure the professional competence and
credibility of such individual or entity and that such
individual meets any applicable State licensure and
certification requirements. The individual or entity conducting
such assessment may not control, or be controlled by, the
issuer of the policy.
(3) Claims review.--Except as provided in paragraph (4),
each long-term care insurance policy shall be subject to final
claims review by the carrier pursuant to the terms of the long-
term care insurance policy.
(4) Appeals process.--
(A) In general.--Each long-term care insurance
policy shall provide for a timely and independent
appeals process, meeting standards established by the
Secretary, in consultation with the NAIC, 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, in consultation with the NAIC, to assure the
professional competence and credibility of such
individual or entity and any applicable State licensure
and certification requirements and may not be
conducted--
(i) by an individual who has a direct or
indirect significant or controlling interest
in, or direct affiliation or relationship with,
the issuer of the policy;
(ii) by an entity that provides services to
the policyholder or certificate holder for
which benefits are available under the long-
term care insurance policy; or
(iii) by an individual or entity in control
of, or controlled by, the issuer of the policy.
(5) Standard assessments.--Not later than 2 years after the
date of enactment of this subtitle, the advisory committee
established under section 2201(d) shall recommend uniform needs
assessment mechanisms for the determination of eligibility for
benefits under such assessments.
(6) 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 insurance policy unless the carrier also offers to
the proposed policyholder, including each group policyholder,
the option to purchase a long-term care insurance policy that
provides for increases in benefit levels, with benefit maximums
or reasonable durations that are meaningful, to account for
reasonably anticipated increases in the costs of long-term care
services covered by the policy. A carrier may not offer to a
policyholder an inflation protection feature that is less
favorable to the policyholder than one of the following:
(A) With respect to policies that provide for
automatic periodic increases in benefits, the policy
provides for an annual increase in benefits in a manner
so that such increases are computed annually at a rate
of not less than 5 percent.
(B) With respect to policies that provide for
periodic opportunities to elect an increase in
benefits, the policy guarantees that the insured
individual will have the right to periodically increase
the benefit levels under the policy without providing
evidence of insurability or health status so long as
the option for the previous period was not declined.
The amount of any such additional benefit may not be
less than the difference between--
(i) the existing policy benefit; and
(ii) such existing benefit compounded
annually at a rate of at least 5 percent for
the period beginning on the date on which the
existing benefit is purchased and extending
until the year in which the offer of increase
is made.
(C) With respect to service benefit policies, the
policy covers a specified percentage of the actual or
reasonable charges and does not include a maximum
specified indemnity amount or limit.
(2) Exception.--The requirements of paragraph (1) shall not
apply to life insurance policies or riders containing
accelerated long-term care benefits.
(3) Required information.--Carriers shall include the
following information in or together with the outline of
coverage provided under this subtitle:
(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 insurance policy unless a
carrier obtains a written rejection of such protection signed
by the policyholder.
SEC. 2216. NONFORFEITURE.
(a) In General.--Each long-term care insurance policy (or
certificate) shall provide that if the policy lapses after the policy
has been in effect for a minimum period (specified under the standards
under section 2201(a)), the policy will provide, without payment of any
additional premiums, nonforfeiture benefits as determined appropriate
by the Secretary, in consultation with the NAIC.
(b) Establishment of Standards.--The standards under section
2201(a) shall provide that the percentage or amount of benefits under
subsection (a) shall increase based upon the policyholder's equity in
the policy.
SEC. 2217. LIMIT OF PERIOD OF CONTESTABILITY AND RIGHT TO RETURN.
(a) Contestability.--A carrier may not cancel or renew a long-term
care insurance policy or deny a claim under the policy based on fraud
or 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 Secretary, in consultation with the
NAIC.
(b) Right to Return.--Each applicant for a long-term care insurance
policy shall have the right to return the policy (or certificates)
within 30 days of the date of its delivery (and to have the premium
refunded) if, after examination of the policy or certificate, the
applicant is not satisfied for any reason.
SEC. 2218. CIVIL MONEY PENALTY.
(a) Carrier.--Any carrier, association or its subsidiary that sells
or offers for sale a long-term care insurance policy and that--
(1) fails to make a refund in accordance with section
2213(a);
(2) fails to transmit a policy in accordance with section
2213(b);
(3) fails to provide, make available, or report information
in accordance with subsections (c) or (d) of section 2213;
(4) provides a commission or compensation in violation of
section 2213(e);
(5) fails to provide an outline of coverage in violation of
section 2215(b)(1); or
(6) issues a policy without obtaining certain information
in violation of section 2215(f);
is subject to a civil money penalty of not to exceed $25,000 for each
such violation.
(b) Agents.--Any agent that sells or offers for sale a long-term
care insurance policy and that--
(1) fails to make a refund in accordance with section
2213(a);
(2) fails to transmit a policy in accordance with section
2213(b);
(3) fails to provide, make available, or report information
in accordance with subsections (c) or (d) of section 2213;
(4) fails to provide an outline of coverage in violation of
section 2215(b)(1); or
(5) issues a policy without obtaining certain information
in violation of section 2215(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 the penalties that may be
imposed by a State for the types of conduct described in this section.
PART 3--LONG-TERM CARE INSURANCE POLICIES, DEFINITION AND ENDORSEMENTS
SEC. 2221. LONG-TERM CARE INSURANCE POLICY DEFINED.
(a) In General.--As used in this section, the term ``long-term care
insurance policy'' means any insurance policy, rider or certificate
advertised, marketed, offered or designed to provide coverage for not
less than 12 consecutive months for each covered individual on an
expense incurred, indemnity prepaid or other basis, for one or more
necessary diagnostic, preventive, therapeutic, rehabilitative,
maintenance or personal care services, provided in a setting other than
an acute care unit of a hospital. Such term includes--
(1) group and individual annuities and life insurance
policies, riders or certificates that provide directly, or that
supplement long-term care insurance; and
(2) a policy, rider or certificates that provides for
payment of benefits based on cognitive impairment or the loss
of functional capacity.
(b) Issuance.--Long-term care insurance policies may be issued by--
(1) carriers;
(2) fraternal benefit societies;
(3) nonprofit health, hospital, and medical service
corporations;
(4) prepaid health plans;
(5) health maintenance organizations; or
(6) any similar organization to the extent they are
otherwise authorized to issue life or health insurance.
(c) Policies Excluded.--The term ``long-term care insurance
policy'' shall not include any insurance policy, rider or certificate
that is offered primarily to provide basic Medicare supplement
coverage, basic hospital expense coverage, basic medical-surgical
expense coverage, hospital confinement indemnity coverage, major
medical expense coverage, disability income or related asset-protection
coverage, accident only coverage, specified disease or specified
accident coverage, or limited benefit health coverage. With respect to
life insurance, such term shall not include life insurance policies,
riders or certificates--
(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
subtitle, this subtitle shall apply to any product advertised, marketed
or offered as a long-term insurance policy, rider or certificate.
SEC. 2222. CODE OF CONDUCT WITH RESPECT TO ENDORSEMENTS.
Not later than 1 year after the date of enactment of this subtitle,
the Secretary, in consultation with the NAIC, shall issue guidelines
that shall apply to organizations and associations (other than
employers and labor organizations that do not accept compensation) that
provide endorsements of long-term care insurance policies, or that
permit such policies to be offered for sale through the organization or
association. Such guidelines shall include at minimum the following:
(1) In endorsing or selling long-term care insurance
policies, the primary responsibility of an organization or
association shall be to educate their members concerning such
policies and assist such members in making informed decisions.
Such organizations and associations may not function primarily
as sales agents for insurance companies.
(2) Organizations and associations shall provide objective
information regarding long-term care insurance policies sold or
endorsed by such organizations and associations to ensure that
members of such organizations and associations have a balanced
and complete understanding of both the strengths and weaknesses
of the policies that are being endorsed or sold.
(3) Organizations and associations selling or endorsing
long-term care insurance policies shall disclose in marketing
literature provided to their members concerning such policies
the manner in which such policies and the insurance company
issuing such policies were selected. If the organization or
association and the insurance company have interlocking
directorates, the organization or association shall disclose
such fact to their members.
(4) Organizations and associations selling or endorsing
long-term care insurance policies shall disclose in marketing
literature provided to their members concerning such policies
the nature and amount of the compensation arrangements
(including all fees, commissions, administrative fees and other
forms of financial support that the organization or association
receives) from the endorsement or sale of the policy to its
members.
(5) The Boards of Directors of organizations and
associations selling or endorsing long-term care insurance
policies, if such organizations and associations have a Board
of Directors, shall review and approve such insurance policies,
the compensation arrangements and the marketing materials used
to promote sales of such policies.
Subtitle D--Life Care
SEC. 2301. SHORT TITLE.
This title may be cited as the ``Life Care Act''.
SEC. 2302. LIFE CARE: PUBLIC INSURANCE PROGRAM FOR NURSING HOME CARE.
The Public Health Service Act is amended by adding at the end
thereof the following new title:
``TITLE XXVII--LIFE CARE: PUBLIC INSURANCE PROGRAM FOR NURSING HOME
CARE
``SEC. 2701. ESTABLISHMENT OF VOLUNTARY LONG-TERM CARE INSURANCE
PROGRAM.
``The Secretary shall establish a voluntary insurance program for
individuals 35 years of age and over to cover the nursing home stays of
such individuals. The Secretary shall establish a process for
enrollment in the Life Care program.
``SEC. 2702. BENEFITS.
``(a) In General.--
``(1) Eligibility for coverage.--Subject to subsection (c),
an individual who meets the eligibility criteria prescribed in
section 2703 shall be eligible under the program established
under this title for coverage for necessary services described
in subsection (b) (in the amounts described in subsection (c))
that are provided to the individual by a nursing facility while
the individual is an inpatient of the facility.
``(2) Nonforfeiture.--The Secretary shall establish
standards to ensure the nonforfeiture of benefits for which
premiums have been paid.
``(b) Types.--Coverage may be provided under this title for--
``(1) nursing care provided by or under the supervision of
a registered professional nurse;
``(2) physical, occupational, or speech therapy furnished
by a facility or by others under arrangements with a facility;
``(3) medical social work services;
``(4) drug, biological, supply, appliance, and equipment
for use in the facility, that is ordinarily furnished by the
facility for the care and treatment of an inpatient;
``(5) such other services necessary to the functioning of a
patient, including personal care and assistance with activities
of daily living, as are generally provided by a nursing home
facility; and
``(6) with respect to the initial 6 months of covered
residence in a nursing facility, such room and board costs as
are not covered by beneficiary copayment.
``(c) Coverage Amount.--
``(1) In general.--The amount of coverage provided with
respect to an eligible individual for the services described in
subsection (b) shall, based on an election made by the
individual, not exceed $30,000, $60,000, or $90,000 over the
lifetime of the eligible individual. Such amounts shall be
adjusted by the Secretary to reflect increases in the Consumer
Price Index.
``(2) Asset protection.--An eligible individual shall be
entitled to the asset protection provided under section 2708.
``(d) Payment.--Amounts provided under this title with respect to
an eligible individual for the services described in subsection (b)
shall be paid from the general fund of the Treasury of the United
States.
``(e) Residential Care Facilities.--The Secretary shall consider
the feasibility of making payments under this title for services
delivered in residential care facilities. Not later than 2 years after
the date of enactment of this Act, the Secretary shall report its
findings to the Congress with respect to the feasibility of making such
payments.
``SEC. 2703. ELIGIBILITY.
``(a) In General.--An individual shall be eligible for benefits
under this title if--
``(1) the individual--
``(A) is a legal resident of the United States and
has elected coverage under subsection (c); and
``(B) has been determined by a Screening Agency
through a screening process (conducted in accordance
with section 2707)--
``(i)(I) to require hands-on or standby
assistance, supervision, or cueing (as defined
in regulations) to perform three or more
activities of daily living; or
``(II) to require hands-on or standby
assistance, supervision, or cueing with at
least such instrumental activity (or
activities) of daily living related to
cognitive or mental impairment as the Secretary
specifies; or
``(III) to display symptoms of one or more
serious behavioral problems (that is on a list
of such problems specified by the Secretary)
which create a need for supervision to prevent
harm to self or others; or
``(IV) has achieved a score, on a standard
mental status protocol (or protocols)
appropriate for measuring the individual's
particular condition specified by the
Secretary, that indicates either severe
cognitive impairment or severe mental
impairment, or both; and
``(ii) to require such assistance,
supervision, or cueing over a period of at
least 90 days; and
``(2)(A) the individual has filed an application for such
benefits, and is in need of, benefits covered under this title;
or
``(B) the legal guardian of the individual has filed an
application on behalf of an individual who is in need of
benefits covered under this title; or
``(C) the representative of an individual who is
cognitively impaired and who is in need of benefits covered
under this title has filed an application on behalf of the
individual.
``(b) Current Individuals.--An individual who is in a hospital or
nursing home on the date of the enrollment of the individual in the
program established under this title shall be ineligible for coverage
under this section until the individual's first spell of illness
beginning after such date.
``(c) Election of Coverage.--
``(1) In general.--Subject to this subsection, an
individual shall have the option to purchase coverage under
this title when the individual is 35 years of age, 45 years of
age, 55 years of age, or 65 years of age.
``(2) Initial year.--During the 1-year period beginning on
the date on which final regulations that implement this title
are issued, an individual who is 35 years of age or older shall
be eligible to purchase insurance under this title, except that
such an individual shall not be eligible to purchase such
insurance--
``(A) while confined to a hospital or nursing home;
``(B) within the 6-month period after the
individual's confinement in a nursing home; or
``(C) within the 90-day period after the
individual's confinement in a hospital.
Individuals described in the matter preceding subparagraph (A)
shall become eligible to receive benefits under this title on
the expiration of the 3-year period beginning on the date such
individuals purchase insurance under this title.
``(3) Extension beyond initial year.--If an individual is
confined to a nursing home or hospital during a period that
extends beyond the first year after the effective date of this
title, an individual shall be eligible to enroll in the program
established by this title during the 60-day period beginning
after the individual's spell of illness.
``(4) Subsequent years.--During years subsequent to the 1-
year period referred to in paragraph (2), an individual shall
be eligible to purchase insurance under this title within 6
months of the 35th, 45th, 55th or 65th birthday of the
individual.
``(5) Activation of benefits.--To receive coverage under
the insurance program established by this title, an individual
shall have purchased such coverage not later than 1 month prior
to admission to a nursing facility, unless the reason for the
need of services is a result of an accident or stroke
subsequent to the date that such individual enrolled for
coverage under this title.
``(d) Public Education.--In the 12 months preceding the initial
enrollment period, the Secretary shall, either directly or through
grants and contracts, conduct a public service and education campaign
designed to inform potentially eligible individuals as to the nature of
the benefits and the limited enrollment period. In conducting such
campaigns the Secretary shall make information available to individuals
through the open enrollment process for obtaining health care benefits
under this Act.
``SEC. 2704. PREMIUM RATES.
``(a) In General.--The Secretary shall determine one premium rate
for individuals electing to purchase coverage under this title at age
35 (or between the ages of 35 and 44 during the initial enrollment
period), a separate rate for those individuals who elect coverage at
age 45 (or between the ages of 45 and 54 during the initial enrollment
period), a separate rate for those individuals who elect such coverage
at age 55 (or between that ages of 55 and 64 during the initial
enrollment period), and a separate rate for those individuals who elect
such coverage at age 65 (or at age 65 and over during the initial
enrollment period). During the initial enrollment period, the Secretary
shall establish actuarily fair, age-rated premiums for persons age 65
and over.
``(b) Revision.--The Secretary shall revise premium rates annually
to increase such rates to reflect the amount of the increase in the
cost of living adjustment with respect to benefits under title II of
the Social Security Act.
``(c) Rates.--In developing premium rates under the program
established under this title, the Secretary shall establish rates that
are expected to cover 100 percent of the reimbursement amount provided
under this title for nursing home stays for those individuals enrolled
in the program.
``(d) Waiver.--An individual electing to purchase coverage under
this title shall not be required to pay premiums during any period in
which such individual is receiving benefits under this title.
``(e) Payment.--Premiums shall be paid under this section into the
general fund of the Treasury of the United States.
``SEC. 2705. QUALIFIED SERVICE PROVIDERS.
``(a) In General.--To be considered as a covered nursing home
service under this title, such service must have been provided by a
qualified service provider.
``(b) Types.--A provider shall be considered a qualified service
provider under this title if the provider is a nursing facility that is
certified by the State and meets the requirements of this title and any
other standards established by the Secretary by regulation for the safe
and efficient provision of services covered under this title.
``SEC. 2706. REIMBURSEMENT.
``(a) Amount.--Monthly reimbursement for nursing facility services
under this title shall equal 65 percent (or during the initial 6 months
of coverage, 80 percent) of the amount the Secretary determines to be
reasonable and appropriate to cover the cost of care provided under
this title.
``(b) Prospective Payment.--To the extent feasible, the Secretary
shall establish a prospective payment mechanism for payment for nursing
home services under this title that takes into account the expected
resource utilization of individual patients based on their degree of
disability, the methodology recommended for reimbursement of skilled
nursing facilities under title XVIII of the Social Security Act, and
other factors determining service requirements.
``(c) Room and Board Payment.--An individual receiving benefits
under this program shall be responsible for the payment of an amount
for room and board that is equal to--
``(1) with respect to the initial 6 months of residence in
a nursing facility, 20 percent of the average per diem rate
paid by the Secretary to nursing facilities receiving
reimbursement under this title; and
``(2) with respect to subsequent periods of residence, 35
percent of the average per diem rate paid by the Secretary to
nursing facilities receiving reimbursement under this title.
Payments under subsection (a) and (c) shall be considered
payment in full for services received under this section.
``(d) Priority Payers.--Notwithstanding any other provision of this
title, reimbursement for nursing facility services provided under this
title to an individual shall, to the extent available, be made under
the Medicare program, under Department of Veterans Affairs' programs,
or under private insurance policies prior to reimbursement under this
title.
``SEC. 2707. LONG-TERM CARE SCREENING AGENCY.
``(a) Establishment.--The Secretary shall contract with entities to
act as Long-Term Care Screening Agencies (hereafter referred to in this
title as the `Screening Agency') for each designated area of a State.
It shall be the responsibility of such agency to assess the eligibility
of individuals residing in the geographic jurisdiction of the Agency,
for services provided under this title according to the requirements of
this title and regulations prescribed by the Secretary. In entering
into such contracts, the Secretary shall give preference to State
governmental entities and private nonprofit agencies.
``(b) Eligibility.--The Screening Agency shall determine the
eligibility of an individual under this title based on the results of a
preliminary telephone interview or written questionnaire (completed by
the applicant, by the caregiver of the applicant, or by the legal
guardian or representative of the applicant) that shall be validated
through the use of a screening tool administered in person to each
applicant determined eligible through initial telephone or written
questionnaire interviews not later than 15 days from the date on which
such individual initially applied for services under this title.
``(c) Questionnaires and Screening Tools.--
``(1) In general.--The Secretary shall establish a
telephone or written questionnaire and a screening tool to be
used by the Screening Agency to determine the eligibility of an
individual for services under this title consistent with
requirements of this title and the standards established by the
Secretary by regulation.
``(2) Questionnaires.--The questionnaire shall include
questions about the functional impairment and mental status of
an individual and other criteria that the Secretary shall
prescribe by regulation.
``(3) Screening tools.--The screening tool should measure
functional impairment caused by physical or cognitive
conditions as well as information concerning cognition
disability, behavioral problems (such as wandering or abusive
and aggressive behavior), and any other criteria that the
Secretary shall prescribe by regulation. The screening tool
shall be administered in person.
``(d) Notification.--Not later than 15 days after the date on which
an individual initially applied for services under this title (by
telephone or written questionnaire), the Screening Agency shall notify
such individual that such individual is not eligible for benefits, or
that such individuals must schedule an in-person screening to determine
final eligibility for benefits under this title. The Screening Agency
shall notify such individual of its final decision not later than 2
working days after the in-person screening.
``(e) In-Person Screening.--An individual (or the legal guardian or
representative of such individual) whose application for benefits under
this title is denied on the basis of information provided through a
telephone or written questionnaire, shall be notified of such
individual's right to an in-person screening by a nurse or appropriate
health care professionals.
``(f) Appeals.--The Secretary shall establish a mechanism for
hearings and appeals in cases in which individuals contest the
eligibility findings of the Screening Agency.
``(g) Payment.--
``(1) Payment for screening.--The Screening Agency may
require payment from individuals only in accordance with
standards established by the Secretary.
``(2) No payment for poorest.--The Screening Agency may not
require payment for individuals with incomes of less than 150
percent of the official poverty line.
``SEC. 2708. ASSET PROTECTION.
``Notwithstanding any other provision of law, the assets an
eligible individual may retain and be determined eligible for nursing
facility benefits, including payments of room and board under this
title, under State Medicaid programs (in accordance with section
1902(a)(10)) shall be increased by the amount of coverage ($30,000,
$60,000, or $90,000) elected under section 2702.
``SEC. 2709. RELATION TO PRIVATE INSURANCE.
``(a) In General.--Except as provided in subsection (b), an insurer
may not offer a long-term care insurance policy to an individual who
has purchased coverage under this title if the coverage under such
policy duplicates the coverage provided under this title.
``(b) Development of Standard Packages.--The Secretary shall
develop standard long-term care insurance benefits packages that
insurers may offer to insured individuals under this title. Such
packages shall provide coverage for benefits that compliment, but do
not duplicate, those covered under this title.
``SEC. 2710. DEFINITIONS.
``As used in this title:
``(1) Nursing facility.--The term `nursing facility'
means--
``(A) a skilled nursing facility (as defined in
section 1819(a) of the Social Security Act); or
``(B) a facility that is a nursing facility (as
defined in section 1919(a) of such Act) which meets the
requirements of section 1819(b)(4)(C) of such Act
(relating to nursing care).
``(2) Spell of illness.--The term `spell of illness' means
a period of consecutive days beginning with the first day on
which an individual is furnished services as an inpatient in a
hospital or nursing facility and ending with the close of the
first 6 consecutive months thereafter during which the
individual is no longer an inpatient of a nursing facility, or
90 days after the individual is no longer an inpatient in a
hospital.
``SEC. 2711. REPORTS.
``(a) In General.--Prior to the promulgation of regulations
implementing this title, the Secretary shall report to Congress on--
``(1) the actuarially-sound premium rates to be used in the
implementation of this Act, including whether the premiums will
cover 100 percent of the benefits paid out, and whether Federal
funds will be required to support the payment of benefits;
``(2) an assessment of the impact of such premium rates on
the affordability of coverage under this Act;
``(3) a projected enrollment of individuals by age
category; and
``(4) an estimate of current and projected enrollment of
individuals, by age category in coverage under private long-
term care insurance.
``(b) Life Care Report.--Not later than 2 years after the
promulgation of regulations implementing this title, the Secretary
shall report to Congress on the following aspects of the Life Care Act:
``(1) The current and projected premium rates.
``(2) The current and projected enrollment of individuals,
by age category and an estimate of current and projected
enrollment of individuals by age category in private long-term
care insurance.
``(3) The projected use of benefits and the impact of use
on premium rates.
``(4) An assessment of the impact of projected premium
rates on the affordability of coverage under this Act.
``(c) Recommendations.--The Secretary shall make recommendations to
Congress regarding necessary revisions to the Life Care Act as a result
of the findings provided in the reports submitted under this
section.''.
Subtitle E--Study and Report
SEC. 2401. STUDY OF ISSUES RELATED TO END OF LIFE CARE.
(a) Study.--
(1) In general.--Within 6 months after the date of the
enactment of this Act, the Secretary shall enter into an
agreement with the Institute of Medicine of the National
Academy of Sciences (or with another nonprofit, nongovernmental
organization or consortium of institutions if the Institute
declines to perform the study) to investigate and report on
issues relating to appropriate care at the end of life,
including how to determine the appropriateness of curative or
life-prolonging or palliative services for gravely or
terminally ill or injured persons of all ages.
(2) Specific issues.--The study described in paragraph (1)
shall specifically include an examination of the following
issues:
(A) The epidemiology of dying.
(B) The feasibility and utility of clinical
practice guidelines for appropriate care.
(C) Conditions that promote or impede appropriate
care (such as professional training and beliefs,
financing and organization of services, patient and
public knowledge and attitudes).
(D) Priorities for research on the issues described
in the preceding subparagraphs.
(E) Concerns of health care practitioners and
providers, medical educators, the general public, and
those responsible for public and private decisions
about the organization, financing, and quality of
health care in the United States.
(b) Report.--The Institute of Medicine (or the organization
conducting the study under this section) shall submit to the Secretary
and the Congress a report on the study described in subsection (a)
within 27 months after the date of the enactment of this Act.
(c) Authorization of Appropriations.--There are authorized to be
appropriated such sums as are necessary to carry out the purposes of
this section.
TITLE III--HEALTH PROFESSIONS WORKFORCE
Subtitle A--Workforce Priorities Under Federal Payments
SEC. 3000. DEFINITIONS.
For purposes of this subtitle:
(1) The term ``academic year'' has the meaning given such
term in section 3011(b)(3)(A).
(2) The term ``allocation period'' has the meaning given
such term in section 3015(d).
(3) The term ``annual number of specialty positions'' has
the meaning given such term in section 3013(g)(1).
(4) The term ``approved physician training program'' has
the meaning given such term in section 3011(b)(1).
(5) The term ``consumer price index'' has the meaning given
such term in section 3033(e)(1).
(6) The term ``designation period'' has the meaning given
such term in section 3013(g)(2).
(7) The term ``funding agreement'' has the meaning given
such term in section 3011(b)(3)(B).
(8) The term ``general health care inflation factor'' has
the meaning given such term in section 3033(e)(4).
(9) The term ``medical school'' has the meaning given such
term in section 3001(e)(2).
(10) The term ``medical specialty'' has the meaning given
such term in section 3011(b)(3)(C).
(11) The term ``National Council'' has the meaning given
such term in section 3001(e)(3).
(12) The term ``primary health care'' has the meaning given
such term in section 3013(g)(3).
(13) The term ``qualified applicant'' has the meaning given
such term in section 3011(b)(2), in the case of subpart B; and
has the meaning given such term in section 3031(c), in the case
of subpart C.
(14) The term ``specialty position'' has the meaning given
such term in section 3013(g)(4).
(15) The term ``training participant'' has the meaning
given such term in section 3013(g)(5).
PART 1--INSTITUTIONAL COSTS OF GRADUATE MEDICAL EDUCATION; WORKFORCE
PRIORITIES
Subpart A--National Council Regarding Workforce Priorities
SEC. 3001. NATIONAL COUNCIL ON GRADUATE MEDICAL EDUCATION.
(a) In General.--There is established within the Department of
Health and Human Services a council to be known as the National Council
on Graduate Medical Education.
(b) Duties.--The Secretary shall carry out subpart B acting through
the National Council.
(c) Composition.--
(1) In general.--The membership of the National Council
shall include between 12 and 16 individuals who are appointed
to the Council from among individuals who are not officers or
employees of the United States. Such individuals shall be
appointed by the Secretary, and shall include individuals from
each of the following categories in the following proportions:
(A) One-quarter composed of consumers of health
care services, at least one of whom resides in a rural
area.
(B) One-quarter composed of primary health care
physicians who are faculty members of medical schools
(including officials of medical schools and executives
of teaching hospitals) and primary health care
physicians who are practicing and are not faculty
members of medical schools, at least one of whom
resides in a rural area.
(C) One-quarter composed of non-primary health care
specialty physicians who are faculty members of medical
schools, non-primary health care specialty physicians
who are not faculty members of medical schools,
officials of medical schools, and executive officers of
teaching hospitals.
(D) One-quarter composed of officers and employees
of health plans, and officers or members of purchasing
cooperatives.
(2) Ex officio members; other federal officers or
employees.--The membership of the National Council shall
include individuals designated by the Secretary to serve as
members of the Council from among Federal officers or employees
who are appointed by the President, or by the Secretary or
other Federal officers who are appointed by the President with
the advice and consent of the Senate.
(d) Chair.--The Secretary shall, from among members of the National
Council appointed under subsection (c)(1), designate an individual to
serve as the Chair of the Council.
(e) Definitions.--For purposes of this subtitle:
(1) The term ``academic health center'' means an entity
defined in section 3051(c)(1).
(2) The term ``medical school'' means a school of medicine
(as defined in section 799 of the Public Health Service Act) or
a school of osteopathic medicine (as defined in such section).
(3) The term ``National Council'' means the council
established in subsection (a).
(f) Conforming Amendment Repealing the Council on Graduate Medical
Education (COGME).--Effective on the date of the first meeting of the
National Council, section 30 of the Health Professions Education
Extension Amendments of 1992 (Public Law 102-408) is repealed.
Subpart B--Authorized Positions in Specialty Training
SEC. 3011. COOPERATION REGARDING APPROVED PHYSICIAN TRAINING PROGRAMS.
(a) In General.--With respect to an approved physician training
program in a medical specialty, a funding agreement with a qualified
applicant for payments under section 3031 and section 3051 for a
calendar year is that the qualified applicant will ensure that the
number of individuals enrolled in the program in the subsequent
academic year is in accordance with this subpart.
(b) Definitions.--
(1) Approved program.--For purposes of this subtitle:
(A) The term ``approved physician training
program'', with respect to the medical specialty
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 as determined under the applicable
standards of the American Board of Medical
Specialties or the Council on Postdoctoral
Training of the American Osteopathic
Association.
(ii) The program is accredited by the
Accreditation Council on Graduate Medical
Education, or approved by the Council on
Postdoctoral Training of the American
Osteopathic Association.
(B) The term ``approved physician training
program'' includes any postgraduate program described
in subparagraph (A) that provides health services in an
ambulatory setting, without regard to whether the
program provides inpatient hospital services.
(C) The term ``approved physician training
program'' includes any postgraduate program described
in subparagraph (A), whether operated by academic
health centers, teaching hospitals, group practices,
ambulatory care providers, prepaid health plans, or
other entities.
(D) The term ``approved physician training
program'' includes any postgraduate program described
in subparagraph (A) that provides fellowship training
in family medicine, general internal medicine or
general pediatrics, and provides training for a faculty
position in family medicine, general medicine or
general pediatrics.
(2) Qualified applicant; subpart definition.--For purposes
of this subpart, the term ``qualified applicant'', with respect
to an academic year, means an entity that trains individuals in
an approved physician program that receives payments under
subpart C for the calendar year in which the academic year
begins.
(3) Other definitions.--For purposes of this subtitle:
(A)(i) Except as provided in clause (iii), the term
``academic year'' means the 1-year period beginning on
July 1. The academic year beginning July 1, 1993, is
academic year 1993-1994.
(ii) With respect to the funding agreement
described in subsection (a), the term ``subsequent
academic year'' means the academic year beginning July
1 of the calendar year for which payments are to be
made under the agreement.
(iii) For purposes of determining the academic year
in which a training participant enters an approved
physician training program, the academic year is the 1-
year period beginning on or after June 1.
(B) The term ``funding agreement'', with respect to
payments under section 3031 and 3051 to a qualified
applicant, means that the Secretary may make the
payments only if the qualified applicant signs the
agreement involved.
(C) The term ``medical specialty'' includes all
medical, surgical, and other physician specialties and
subspecialties.
SEC. 3012. ANNUAL AUTHORIZATION OF TOTAL NUMBER OF GRADUATE MEDICAL
EDUCATION POSITIONS.
With respect to the numbers designated by the Council for
individuals entering eligible programs for an academic year pursuant to
section 3011, the Council shall ensure that the aggregate number of
individuals first entering any such program for the year does not
exceed the following number (expressed as a percentage), as applicable
to the academic year involved:
(1) For academic year 1998-1999, 134 percent of the number
of individuals who graduated from medical schools in the United
States in academic year 1997-1998.
(2) For academic year 1999-2000, 126 percent of such
number.
(3) For academic year 2000-2001, 118 percent of such
number.
(4) For academic year 2001-2002 and each subsequent
academic year, 110 percent of such number, except as provided
in section 3014.
SEC. 3013. ANNUAL AUTHORIZATION OF NUMBER OF SPECIALTY POSITIONS;
REQUIREMENTS REGARDING PRIMARY HEALTH CARE.
(a) Annual Authorization of Number of Positions.--In the case of
each medical specialty, the National Council shall, pursuant to section
3011, designate for academic year 1998-1999 and each subsequent
academic year the number of individuals nationwide who are authorized
to be enrolled in eligible programs in each medical specialty for the
academic year involved.
(b) Primary Health Care.--
(1) Requirement across specialities.--In carrying out
subsection (a) for an academic year, the National Council shall
ensure that, of the class of training participants entering all
eligible programs for their first year of graduate medical
education for academic year 1998-1999 or any subsequent
academic year, the percentage of such class that completes
eligible programs in primary health care and does not
subsequently enter a non-primary health care training program,
is not less than the following, as applicable to the academic
year involved:
(A) For academic year 1998-1999, 39 percent.
(B) For academic year 1999-2000, 44 percent.
(C) For academic year 2000-2001, 49 percent.
(D) For academic year 2001-2002 and each subsequent
academic year, 55 percent, except as provided in
section 3014.
(2) Rule of construction.--The requirement of paragraph (1)
regarding a percentage applies in the aggregate to training
participants entering eligible programs for the academic year
involved, and not individually to any eligible program.
(c) Designations Regarding 3-Year Periods.--
(1) Designation periods.--For each medical specialty, the
National Council shall make the annual designations under
subsection (a) for periods of 3 academic years.
(2) Initial period.--The first designation period
established by the National Council after the date of the
enactment of this Act shall be the academic years 1998-1999
through 2000-2001.
(d) Certain Considerations in Designating Annual Numbers.--
(1) In general.--Factors considered by the National Council
in designating the annual number of specialty positions for an
academic year for a medical specialty shall include the extent
to which there is a need for additional practitioners in the
speciality, as indicated by the following:
(A) The characteristics of diseases, disorders, or
health conditions treated, including--
(i) the incidence and prevalence (in the
general population and in various other
populations) of the diseases, disorders, or
other health conditions with which the
specialty is concerned;
(ii) the intensity of care required for
each of these diseases, disorders, or health
conditions;
(iii) the relevant training received and
experience attained by primary health care and
specialist physicians in caring for each of
these diseases, disorders, or health
conditions; and
(iv) should sufficient data become
available, the extent to which individuals with
certain diseases, disorders, or health
conditions have better health outcomes when
treated by non-primary health care physicians
than by primary health care physicians.
(B) The number of physicians who will be practicing
in the specialty in the academic year.
(C) The number of physicians who will be practicing
in the specialty at the end of the 5-year period
beginning on the first day of the academic year.
(D) Whether, after examining medical specialty
requirements, the National Council determines that
specialty is a medical shortage specialty (as defined
by the National Council).
(2) Recommendations of private organizations.--In
designating the annual number of specialty positions for an
academic year for a medical specialty, the National Council
shall consider the recommendations of organizations
representing physicians in the specialty, organizations
representing academic medicine, and the recommendations of
organizations representing consumers of the services of such
physicians.
(e) Voluntary Compliance.--
(1) Establishment of the positions for first designation
period.--Not later than June 1, 1996, the National Council
shall establish the number of positions in each medical
specialty that will be allocated under subsection (a) for the
academic years 1998-1999, 1999-2000, and 2000-2001.
(2) Voluntary compliance.--A medical specialty shall not be
subject to the mandatory allocation system described in section
3015 if--
(A) by June 1, 1997, each eligible approved
physician training program has submitted to the
National Council a proposal for first year positions in
approved physician training programs in that particular
medical specialty for the academic years 1998-99, 1999-
2000, and 2000-2001 and the total proposed number of
all such positions for the specialty does not exceed
the number of positions established for such specialty
under paragraph (1) for each such academic year; and
(B) in subsequent academic years, the total
proposed number of first year positions in approved
physician training programs in that particular medical
specialty does not exceed the number of individuals
nationwide who are authorized to be enrolled in
approved medical training programs for such medical
specialty for such year pursuant to subsection (a).
(3) Loss of compliance.--The National Council may, at any
time, determine that a specialty is not in compliance with the
number of positions established by the Council under paragraph
(1) or subsection (a) and initiate, with respect to that
specialty, the system of mandatory allocations described in
section 3015.
(f) Study.--Not later than January 1, 2005, the Secretary shall
arrange for the completion, by the Institute of Medicine or other
similar entity, of an independent study concerning the effect of
medical workforce regulation and planning in general and in particular
geographic areas. The results of such study together with
recommendations concerning the appropriateness of modifying or
eliminating workforce regulations shall be compiled in a report and
transmitted by the Secretary to the President and the Congress.
(g) Definitions.--For purposes of this subtitle:
(1) The term ``annual number of specialty positions'', with
respect to a medical specialty, means the number designated by
the National Council under subsection (a) for eligible programs
for the academic year involved.
(2) The term ``designation period'' means a 3-year period
under subsection (c)(1) for which designations under subsection
(a) are made by the National Council.
(3) The term ``primary health care'' means the following
medical specialties: Family medicine, general internal
medicine, general pediatrics, geriatric medicine, and
obstetrics and gynecology. Only those participants in programs
with a significant primary care training emphasis will be
considered to have completed an eligible program in primary
care for the purposes of subsection (b)(1). Determination of
the meaning of a ``significant primary care training emphasis''
will be made by the National Council.
(4) The term ``specialty position'' means a position as a
training participant.
(5) The term ``training participant'' means an individual
who is enrolled in an approved physician training program.
SEC. 3014. NATIONAL COUNCIL RECOMMENDATION OF NUMBER OF GRADUATE
MEDICAL EDUCATION POSITIONS.
(a) In General.--
(1) Recommendations.--Beginning with academic year 2001-
2002 and each subsequent academic year, the National Council
may after considering the factors described in paragraph (2)
annually recommend to the Secretary a change in--
(A) the aggregate number of all training
participants entering the first year of graduate
medical education training in approved physician
training programs nationwide determined under section
3012(4); and
(B) in accordance with subsection (b), the
distribution of positions among medical specialties
determined under section 3013(a) and 3013(b)(1)(D).
(2) Factors for consideration.--In developing a
recommendation under paragraph (1), the Secretary shall
consider the impact on rural, inner city, and public hospitals
of reducing numbers of individuals authorized to enter approved
physician training programs and the appropriate supply of
physicians in the aggregate and in particular medical
specialties.
(b) Limitations on Recommended Percent for Primary Care for
Academic Year 2001-2002.--For the academic year 2001-2002, the number
that the National Council may recommend under subsection (a)(1)(B) may
not be more than 5 percentage points less or 5 percentage points more
than the number described in section 3013(b)(1)(D).
(c) Consideration and Implementation by the Secretary.--The
Secretary shall in the Secretary's discretion implement the
recommendations by the National Council under subsection (a) in
accordance with sections 3012 and 3013(b)(1). The Secretary may not
modify such recommendations.
SEC. 3015. ALLOCATIONS AMONG SPECIALITIES AND PROGRAMS.
(a) In General.--Subject to the provisions of sections 3012 and
3013, for each academic year, the National Council shall for each
medical specialty make allocations among eligible programs of the
annual number of specialty positions that the Council has designated
for such year. The preceding sentence is subject to subsection (b)(3).
(b) Allocations Regarding 3-Year Period.--
(1) In general.--For each medical specialty, the National
Council shall make the annual allocations under subsection (a)
for periods of 3 academic years.
(2) Advance notice to programs.--With respect to the first
academic year of an allocation period established by the
National Council, the National Council shall, not later than
July 1 of the preceding academic year, notify each eligible
program of the allocations made for the program for each of the
academic years of the period.
(3) Initial period.--The first allocation period
established by the National Council after the date of the
enactment of this Act shall be the academic years 1998-1999
through 2000-2001.
(c) Certain Considerations.--
(1) Geographic areas.--In making allocations under
subsection (a) for eligible programs of the various geographic
areas, the National Council shall include among the factors
considered the--
(A) distribution of approved physician training
programs with respect to population and community need;
and
(B) historical distribution of approved physician
training programs among the geographic areas.
(2) Quality of programs.--In making allocations under
subsection (a) for eligible programs, the National Council
shall consider the quality of such programs.
(3) Underrepresentation of minority groups and women.--In
making an allocation under subsection (a) for an eligible
program, the National Council shall include among the factors
considered the following:
(A) The extent to which the population of training
participants in the program includes training
participants who are members of racial or ethnic
minority groups and women.
(B) With respect to a racial or ethnic group or
women represented among the training participants, the
extent to which the group is underrepresented in the
field of medicine generally and in the various medical
specialities.
(4) Underserved rural and inner-city communities.--In
making allocations under subsection (a) for eligible programs,
the National Council shall consider the extent to which the
population of training participants in the program includes
training participants who have resided in rural or inner-city
communities for a substantial period, as defined by the Council
and the proportion of past participants in the program who are
practicing in rural or inner-city communities.
(5) Recommendations of private organizations.--In making
allocations under subsection (a) for eligible programs, the
National Council shall consider the recommendations of
organizations representing physicians in the medical
specialties, the recommendations of organizations representing
academic medicine and the recommendations of organizations
representing consumers of the services of such physicians.
(d) Definitions.--For purposes of this subtitle, the term
``allocation period'' means a 3-year period under subsection (b)(1) for
which allocations under subsection (a) are made by the National
Council.
Subpart C--Costs of Graduate Medical Education
CHAPTER 1--OPERATION OF APPROVED PHYSICIAN TRAINING PROGRAMS
SEC. 3031. FEDERAL FORMULA PAYMENTS TO QUALIFIED ENTITIES FOR THE COSTS
OF THE OPERATION OF APPROVED PHYSICIAN TRAINING PROGRAMS.
(a) In General.--In the case of a qualified entity that in
accordance with section 3032 submits to the Secretary an application
for calendar year 1997 or any subsequent calendar year, the Secretary
shall make payments for such year to the qualified entity for the
purpose specified in subsection (b). The Secretary shall make the
payments in an amount determined in accordance with section 3033 and
3034, and may administer the payments as a contract, grant, or
cooperative agreement.
(b) Payments for Operation of Approved Physician Training
Programs.--The purpose of payments under subsection (a) is to assist a
qualified applicant with the costs of operation of an approved
physician training program. A funding agreement for such payments is
that the qualified applicant involved will expend the payments only for
such purpose or for such other related purposes as the Secretary may
authorize.
(c) Qualified Applicant; Subpart Definition.--
(1) In general.--For purposes of this subpart, the term
``qualified applicant'', with respect to the calendar year
involved, means an entity--
(A) that trains individuals in approved physician
training programs; and
(B) that submits to the Secretary an application
for such year in accordance with section 3032.
(2) Entities included.--The term ``qualified applicant''
may include an approved physician training program, teaching
hospital, medical school, group practice, an entity
representing two or more parties engaged in a formal
association, a community health center or another entity
operating an approved physician training program.
(d) Treatment of Podiatric and Dental Residency Programs.--Except
as provided in section 3034, for the purposes of this subpart, an
approved physician training program includes training programs approved
by the Commission on Dental Accreditation or the Council of Podiatric
Medical Education of the American Podiatric Medical Association. This
subsection shall not apply for purposes of subpart B.
SEC. 3032. APPLICATION FOR PAYMENTS.
(a) In General.--
(1) In general.--For purposes of section 3031(a), an
application for payments under such section for a calendar year
is in accordance with this section if--
(A) the eligible entity involved submits the
application not later than the date specified by the
Secretary;
(B) the application demonstrates that the condition
described in subsection (b) is met with respect to the
program;
(C) the application contains each funding agreement
described in this part and the application provides
such assurances of compliance with the agreements as
the Secretary may require; and
(D) the application is in such form, is made in
such manner, and contains such agreements, assurances,
and information as the Secretary determines to be
necessary to carry out this part.
(2) Certain entities.--If an applicant under paragraph (1)
is an entity representing two or more parties--
(A) the application shall contain a written
agreement, signed by all participants, in which all of
the participants agree as to the manner in which the
payments will be allocated; and
(B) the applicant shall agree to submit additional
documentation, if requested by the National Council,
that demonstrates that the funds are distributed in the
manner agreed upon by all participants.
(b) Certain Conditions.--An eligible entity meets the condition
described in this subsection for receiving payments under section 3031
for a calendar year if--
(1) the entity agrees to use such funds only to support an
approved physician training program;
(2) with respect to--
(A) a specialty for which programs have received
allocations under section 3015, the entity agrees that
funds will be used only to support approved training
programs for which the number of specialists in
training is consistent with the allotment under section
3015; and
(B) a specialty for which a voluntary program has
received allocations under section 3013(e), the entity
agrees that funds will only be used to support approved
training programs for which the number of specialists
in training is consistent with the allocations under
section 3015(e); and
(3) the entity notifies each residency training program
director of each approved physician training program operated
by the entity of the amount of payments received by the entity
under this section and sections 3051 and 3055 that is
attributable to the number of training participants in the
program.
(c) Residency Training Program Director.--For purposes of this
section, the term ``residency training program director'' means an
individual specified in the application of the entity as the official
with primary administrative responsibility for an approved physician
training program.
SEC. 3033. AVAILABILITY OF FUNDS FOR PAYMENTS; ANNUAL AMOUNT OF
PAYMENTS.
(a) Graduate Medical Education Account.--
(1) In general.--Subject to paragraph (2) and except as
provided in section 3034, the following amounts shall be
available for a calendar year for making payments under
sections 3031 and 3055 from the Graduate Medical Education
Account established under section 9551(a)(2)(A) of the Internal
Revenue Code of 1986:
(A) In the case of calendar year 1997,
$3,200,000,000.
(B) In the case of calendar year 1998,
$3,550,000,000.
(C) In the case of calendar year 1999,
$5,800,000,000.
(D) In the case of each of calendar years 2000 and
2001, $5,800,000,000.
(E) In the case of each subsequent calendar year,
the amount specified in subparagraph (C) increased by
the product of such amount and the general health care
inflation factor for such year (as defined in
subsection (e)).
(2) Transitional provision.--
(A) In general.--With respect to making payments
under sections 3031 and 3055 for calendar year 1997 or
1998, the Secretary shall first make payments under
section 3031 to eligible programs described in
subparagraph (B) in the amount determined for the
programs under subsection (b) for such year, and then,
from such amounts as remain available under paragraph
(1) for such year, shall make payments under section
3031 to other eligible programs and shall make payments
under section 3055.
(B) Participating state.--An eligible program
described in this subparagraph is such a program that
is operated in a State that is a participating State
under title I.
(b) Amount of Payments for Individual Eligible Entities.--
(1) In general.--Except as provided in section 3034,
payment amounts with respect to any physician training program
under this section shall be equal to the product of the number
of full time equivalent training participants in the program,
and the per resident amount for the training program.
(2) Per resident amount.--
(A) In general.--Except as provided under
subparagraph (B), the per resident amount for a
training program shall be equal to--
(i) with respect to--
(I) the first calendar year during
which the program receives payment
under subsection (a), 90 percent;
(II) the second calendar year
during which the program receives
payment under subsection (a), 80
percent;
(III) the third calendar year
during which the program receives
payment under subsection (a), 70
percent;
(IV) the fourth calendar year
during which the program receives
payment under subsection (a), 60
percent; and
(V) the fifth and subsequent
calendar year during which the program
receives payment under subsection (a),
50 percent;
of the approved FTE resident amount that would
have been determined under section
1886(h)(2)(D) of the Social Security Act (42
U.S.C. 1395ww(h)(2)(D)) for the hospital
operating such approved physician training
program for a cost reporting period beginning
in such calendar year if the amendments made by
section 4306 of the Health Security Act had not
been made; and
(ii) with respect to--
(I) the first calendar year during
which the program receives payment
under subsection (a), 10 percent;
(II) the second calendar year
during which the program receives
payment under subsection (a), 20
percent;
(III) the third calendar year
during which the program receives
payment under subsection (a), 30
percent;
(IV) the fourth calendar year
during which the program receives
payment under subsection (a), 40
percent; and
(V) the fifth and subsequent
calendar years during which the program
receives payment under subsection (a),
50 percent;
of the geographically adjusted national average
per resident amount.
(B) Minimum per resident amount.--Notwithstanding
the provisions of subparagraph (A), the per resident
amount for a training program shall not be less than 75
percent of the geographically adjusted national average
per resident amount determined in accordance with
subparagraph (A)(ii).
(C) No historic payment basis.--For purposes of
subparagraph (A)(i), the Secretary shall determine the
appropriate per resident amount applicable to an entity
that--
(i) has an approved physician training
program that sponsored or is affiliated with
more than one hospital that had a per resident
amount determined under section 1886(h) of the
Social Security Act which reflects the average
per resident amounts under such section for
such hospitals; or
(ii) is an institution that did not have a
per resident amount determined under such
section for cost reporting periods beginning
before 1996 which reflects the national average
per resident amount.
(3) Adjustment factor.--Payments under this section shall
be subject to an adjustment factor, as determined by the
Secretary, so that total payments in any year will not exceed
the amounts specified in subsection (a) and as provided in
subsection (d).
(4) Additional provisions regarding national average
cost.--
(A) Determination of national average cost.--The
Secretary shall in accordance with clause (ii) of
subsection (b)(2)(A) determine, for academic year 1992-
1993, an amount equal to the geographically adjusted
national average per resident amount described in such
clause with respect to training a participant in an
approved physician training program. The national
average applicable under such clause for a calendar
year for such programs is, subject to subparagraph (B),
the amount determined under the preceding sentence
increased by the amount necessary to offset the effects
of inflation occurring since academic year 1992-1993,
as determined through use of the consumer price index.
(B) Geographic adjustment.--The national average
determined under subparagraph (A) and applicable to a
calendar year shall, in the case of the eligible entity
involved, be adjusted by a factor to reflect regional
differences in the applicable wage and wage-related
costs.
(5) Funding level and allocation method.--Not later than
January 1, 1998, the Secretary shall complete a study to
determine the effect and appropriateness of the funding level
and allocation method described in subsection (a) and
paragraphs (1), (2), (3), and (4) of this subsection on the
operation of training programs and on national workforce goals
and shall compile the findings and recommendations derived from
such study in a report to be submitted to the President and the
Congress.
(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 physician
training programs under subsection (b)(1).
(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 physician training program or
simultaneously with more than one such program.
(3) Weighting factors for certain training participants.--
(A) In general.--Subject to paragraph (4), such
rules shall provide, in calculating the number of full-
time-equivalent training participants in an approved
physician training program--
(i) for a training participant who is in
the participant's initial training period, the
weighting factor is 1.00,
(ii) except as provided in clause (iii),
for a training participant who is not in the
participant's initial training period, the
weighting factor is 0.75, and
(iii) in an academic year in which the
total number of training participant positions
in all approved physician training programs
does not exceed--
(I) 134 percent of United States
medical school graduates in academic
year 1997-1998, the weighting factor
for a training participant who is not
in the training participant's initial
training period is 0.70;
(II) 126 percent of United States
medical school graduates in academic
year 1997-1998, the weighting factor
for such a participant is 0.90;
(III) 118 percent of United States
medical school graduates in 1997-1998,
the weighting factor for such a
participant is 0.95 percent; and
(IV) 110 percent of United States
medical school graduates in academic
year 1997-1998, the weighting factor
for such a participant, the weighting
factor is 1.0.
(B) Study.--Not later than January 1, 1998, the
Secretary shall complete a study to determine the
effect that applying weighting factors in calculating
the number of full-time-equivalent training
participants would have on supporting national
workforce goals.
(4) International medical graduates required to pass fmgems
examination.--Such rules shall provide that, in the case of an
individual who is an international medical graduate, the
individual shall not be counted as a training participant
unless--
(A) the individual has passed the FMGEMS
examination or the U.S. Medical Licensing 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 shall be counted towards the determination of full-time
equivalency, without regard to the setting in which the
activities are performed.
(d) Limitation.--Subject to subsection (a), if the amount available
from the Graduate Medical Education Account established under section
9551(a)(2)(A) of the Internal Revenue Code of 1986 for a calendar year
is insufficient for providing each eligible entity with the amount of
payments determined under subsection (b) for the entity for such year,
the Secretary shall make such pro rata reductions in the amounts so
determined as may be necessary to ensure that the total of payments
made under section 3031 for such year equals the amount specified under
section 3033(a).
(e) Definitions.--For purposes of this subtitle:
(1) Consumer price index.--The term ``consumer price
index'' means the Consumer Price Index for All Urban Consumers
(U.S. city average).
(2) International medical graduate.--The term
``international 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 osteopathic medicine accredited by
the American Osteopathic Association, or approved by
such Association as meeting the standards necessary for
such accreditation,
(C) a school of dentistry which is accredited by
the Commission on Dental Accreditation, or
(D) a school of podiatric medicine which is
accredited by the Council of Podiatric Medical
Education of the American Podiatric Medical
Association.
(3) FMGEMS examination.--The term ``FMGEMS examination''
means parts I and II of the Foreign Medical Graduate
Examination in the Medical Sciences or any successor
examination recognized by the Secretary for this purpose.
(4) General health care inflation factor.--(A) The term
``general health care inflation factor'', with respect to a
year, means the percentage increase in the consumer price index
for the year plus the following:
(i) For 1997, 1.0 percentage points.
(ii) For 1998, 0.5 percentage points.
(iii) For 1999 and for 2000, 0 percentage points.
(B) Years after 2000.--
(i) Recommendation to congress.--In 1999, the
Secretary shall submit to Congress recommendations,
after consultation with the Federal Reserve Board, on
what the general health care inflation factor should be
for years beginning with 2001.
(ii) Failure of congress to act.--If the Congress
fails to enact a law specifying the general health care
inflation factor for a year after 2000, the Secretary,
in January of the year before the year involved, shall
compute such factor for the year involved. Such factor
shall be the product of the factors described in
subparagraph (C) for that fiscal year, minus 1.
(iii) Study by federal reserve board.--Not later
than January 1, 1999, the Federal Reserve Board shall
conduct a study, and report to the Secretary,
concerning what the general health care inflation
factor should be for years beginning with 2001. Such
study shall consider whether continued indexing with
respect to such factor is advisable and whether the
consumer price index should be used (in whole or in
part, modified or unmodified) with respect to premium
caps for future years. The recommendations of the
Federal Reserve Board under such study shall be
considered in the recommendations submitted under
clause (i).
(C) Factors.--The factors described in this subparagraph
for a year are the following:
(i) CPI.--1 plus the percentage change in the CPI
for the year, determined based upon the percentage
change in the average of the CPI for the 12-month
period ending with August 31 of the previous fiscal
year over such average for the preceding 12-month
period.
(ii) Real gdp per capita.--1 plus the average
annual percentage change in the real, per capita gross
domestic product of the United States during the 3-year
period ending in the preceding calendar year,
determined by the Secretary based on data supplied by
the Department of Commerce.
(5) Initial training period.--The term ``initial training
period'' means the period of time required for board
eligibility, except that--
(A) except as provided in subparagraph (B), in no
case shall the initial period of participation exceed
an aggregate period of formal training of more than 5
years for any individual, and
(B) a period, of not more than 2 years, during
which an individual is in a--
(i) residency or fellowship program in
geriatric medicine, preventive medicine, or
adolescent medicine, or
(ii) a fellowship program in family
medicine, general internal medicine or general
pediatrics, which provides training for a
faculty position in family medicine, general
internal medicine or general pediatrics,
shall be treated as part of the initial training
participation period, but shall not be counted against
any limitation on the initial training period.
The initial training period shall be determined, with respect
to a training participant, as of the time the training
participant enters any approved physician training program.
(6) Period of time required for board eligibility.--
(A) General rule.--Subject to subparagraphs (B) and
(C), the term ``period of time required for board
eligibility'' means, for a training participant, the
minimum number of years of formal training necessary to
satisfy the requirements for initial board eligibility
in the particular specialty for which the training
participant is training.
(B) Application of 1985-1986 directory.--Except as
provided in subparagraph (C), the period of time
required for board eligibility shall be such period
specified in the 1985-1986 Directory of Residency
Training Programs published by the Accreditation
Council on Graduate Medical Education or a more current
version of such Directory or the equivalent directory
regarding postdoctoral training for osteopathic
physician training programs.
(C) Changes in period of time required for board
eligibility.--If the Accreditation Council on Graduate
Medical Education, in its Directory of Residency
Training Programs or the equivalent directory regarding
postdoctoral training for osteopathic physician
training programs--
(i) increases the minimum number of years
of formal training necessary to satisfy the
requirements for a specialty, above the period
specified in its 1985-1986 Directory, the
Secretary may increase the period of time
required for board eligibility for that
specialty, but not to exceed the period of time
required for board eligibility specified in
that later Directory, or
(ii) decreases the minimum number of years
of formal training necessary to satisfy the
requirements for a specialty, below the period
specified in its 1985-1986 Directory, the
Secretary may decrease the period of time
required for board eligibility for that
specialty, but not below the period of time
required for board eligibility specified in
that later Directory.
SEC. 3034. PAYMENTS FOR DENTAL AND PODIATRIC POSITIONS.
(a) In General.--Except as provided in subsections (b) and (c), the
provisions of this chapter shall apply with respect to dental and
podiatric medicine training programs.
(b) Limitation.--Subject to the amount made available under section
3033(a), the aggregate amount available for making payments to all
approved physician training programs in dentistry and podiatric
medicine may not exceed $200,000,000 in any calendar year.
(c) Payment Methodology.--The Secretary shall determine the amount
to be paid to approved dental and podiatric training programs on the
basis of a methodology to be developed by the Secretary that is
equivalent to the methodology described in section 3033(b)(5).
CHAPTER 2--ACADEMIC HEALTH CENTERS AND OTHER ELIGIBLE INSTITUTIONS
SEC. 3051. FEDERAL FORMULA PAYMENTS TO ACADEMIC HEALTH CENTERS AND
OTHER ELIGIBLE INSTITUTIONS.
(a) In General.--In the case of an eligible institution that in
accordance with section 3052 submits to the Secretary a written request
for calendar year 1997 or any subsequent calendar year, the Secretary
shall make payments for such year to the eligible institution for the
purpose specified in subsection (b). The Secretary shall make the
payments in an amount determined in accordance with section 3053, and
may administer the payments as a contract, grant, or cooperative
agreement.
(b) Payments for Costs Incurred by Eligible Institutions.--
(1) Costs attributable to academic nature of
institutions.--With respect to an eligible institution that is
a qualified academic health center or a qualified teaching
hospital, the purpose of payments under subsection (a) is to
assist such institutions with costs that are not routinely
incurred by other entities in providing health services, but
are incurred by such institutions in providing health services
by virtue of the academic nature of such institutions. Such
costs include--
(A) with respect to productivity in the provision
of health services, costs resulting from the reduced
rate of productivity of faculty due to teaching
responsibilities;
(B) the uncompensated costs of clinical research;
and
(C) exceptional costs associated with the treatment
of health conditions with respect to which an eligible
institution has specialized expertise (including
treatment of rare diseases, treatment of unusually
severe conditions, and providing other specialized
health care).
(2) High intensity nonteaching rural hospital.--With
respect to an eligible institution that is a high intensity
nonteaching rural hospital, the purpose of payments under
subsection (a) is to assist the institution with the costs of
treating a substantial number of severely ill patients.
(c) Definitions.--
(1) Academic health center.--For purposes of this subtitle,
the term ``academic health center'' means an entity that
operates a teaching hospital that sponsors or is affiliated
with an approved physician training program.
(2) Eligible institution.--For purposes of this subtitle,
the term ``eligible institution'', with respect to a calendar
year, means a qualified academic health center, qualified
teaching hospital, or high intensity nonteaching rural hospital
that submits to the Secretary a written request in accordance
with section 3052.
(3) High intensity nonteaching rural hospital.--For
purposes of this subtitle, the term ``high intensity
nonteaching rural hospital'' means a nonteaching hospital
located in a rural area as defined in section 1886(d)(2)(D) of
the Social Security Act (42 U.S.C. 1395ww(d)(2)(D)) that the
Secretary determines has a case-mix index (defined as the
average weight of all cases in the hospital for all diagnosis-
related groups as determined in accordance with section
1886(d)(4) of such Act (42 U.S.C. 1395ww(d)(4)) of greater than
120 percent of the national average case-mix index for all
rural hospitals.
(4) Qualified center or hospital.--For purposes of this
subtitle:
(A) The term ``qualified academic health center''
means an academic health center that operates a
teaching hospital.
(B) The term ``qualified teaching hospital'' means
any teaching hospital other than a teaching hospital
that is operated by an academic health center.
(5) Teaching hospital.--For purposes of this subtitle, the
term ``teaching hospital'' means a hospital that sponsors or is
affiliated with an approved physician training program (as
defined in section 3011(b) or section 3031(d)).
SEC. 3052. REQUEST FOR PAYMENTS.
(a) In General.--For purposes of section 3051, a written request for
payments under such section is in accordance with this section if--
(1) the eligible institution involved submits the request
not later than the date specified by the Secretary;
(2) the request is accompanied by each funding agreement
described in this part; and
(3) the request is in such form, is made in such manner,
and contains such agreements, assurances, and information as
the Secretary determines to be necessary to carry out this
part.
(b) Continued Status as Eligible Institution.--A funding agreement
for payments under section 3051 is that the eligible institution
involved will maintain status as such an eligible institution. For
purposes of this subtitle, the term ``funding agreement'', with respect
to payments under section 3051 to such an eligible institution, means
that the Secretary may make the payments only if the eligible
institution makes the agreement involved.
(c) Compliance With Specialty Allocations.--A funding agreement for
payments under section 3051 is that an eligible institution that
operates or is affiliated with an approved physician training program
shall receive such payments only if the number of specialists in such a
program is consistent with the allotment under section 3015 or 3013(e).
SEC. 3053. AVAILABILITY OF FUNDS FOR PAYMENTS; ANNUAL AMOUNT OF
PAYMENTS.
(a) Annual Academic Health Center Account.--
(1) Availability of funds from account.--Except as provided
in paragraph (2), the following amounts shall be available for
a calendar year for making payments under section 3051 from the
Academic Health Center Account established under section
9551(a)(2)(B) of the Internal Revenue Code of 1986 is the
following, as applicable to the calendar year:
(A) In the case of calendar year 1997,
$6,280,000,000.
(B) In the case of calendar year 1997,
$7,250,000,000.
(C) In the case of calendar year 1997,
$8,220,000,000.
(D) In the case of calendar year 2000,
$9,400,000,000.
(E) In the case of calendar year 2001,
$10,640,000,000.
(F) In the case of each subsequent calendar year,
the amount specified in subparagraph (E) increased by
the product of such amount and the general health care
inflation factor (as defined in subsection (d)).
(2) Special allotments.--Of the amounts available for a
calendar year for making payments under subsection (a) pursuant
to paragraph (1)--
(A) such amounts as are necessary shall be reserved
to make payments to eligible institutions that are high
intensity nonteaching rural hospitals; and
(B) the remainder of the amounts available for
making payments under subsection (a), shall be expended
for making payments under section 3051 to other
eligible institutions.
(b) Amount of Payments for Individual Eligible Institutions.--
(1) Qualified academic health centers and qualified
teaching hospitals.--The amount of payments required in section
3051 to be made to a qualified academic health center or a
qualified teaching hospital for a calendar year is an amount
equal to the product of--
(A) the amount available for making such payments
for the calendar year from the Academic Health Center
Account established under section 9551(a)(2)(B) of the
Internal Revenue Code of 1986; and
(B) the percentage constituted by the ratio of--
(i) the product of--
(I) the sum, for all discharges of
individuals, of the amounts otherwise
paid on behalf of such individuals; and
(II) an adjustment factor equal to
(e raised to the power (.405 x r) -
1), where ``r'' is the ratio of the
qualified academic health center's or
the qualified teaching hospital's full-
time equivalent training participants
to beds and ``e'' is the natural log of
one; and
(ii) the sum of the respective amounts
determined under clause (i) for qualified
academic health centers and qualified teaching
hospitals.
(2) High intensity nonteaching rural hospital.--Subject to
the annual amount reserved for high intensity nonteaching rural
hospitals under subsection (a)(2)(A) for a calendar year, the
amount required under section 3051 to be made to a high
intensity nonteaching rural hospital is an amount equal to 5
percent of the inpatient costs of patient care for all patients
of the hospital.
(3) Adjustment factor.--Payments under this section shall
be subject to an adjustment factor, as determined by the
Secretary, so that total payments in any year will not exceed
the amounts specified in 3053(a).
(c) Report Regarding Modifications in Formula.--Not later than July
1, 2000, the Secretary shall submit to the Congress a report containing
any recommendations of the Secretary for the modification of the
program of formula payments described in this chapter. In preparing
such report the Secretary shall consider--
(1) the costs described in section 3051(b) incurred by
academic health centers;
(2) the adequacy of the formula payments established in
this chapter to cover such costs, taking into account any
additional revenues to cover such costs paid by other payers,
including private health plans;
(3) the impact of the current payment methodology on
training in the ambulatory setting of national workforce goals,
and its effect on the education and training of primary care
physicians;
(4) the importance to the maintenance of a quality national
health care system of academic health centers in providing for
the training of health professionals, in conducting clinical
research, and in providing innovative, technically advanced
care; and
(5) the overall impact of the reformed health care system
on the ability of academic health centers to perform such
functions.
(d) General Health Care Inflation Factor.--For purposes of this
subtitle, the term ``general health care inflation factor'', with
respect to a year, has the meaning given such term in section
3033(e)(4) for such year.
Subpart D--Transitional Provisions
SEC. 3055. TRANSITIONAL PAYMENTS TO INSTITUTIONS.
(a) Payments Regarding Effects of Subpart B Allocations.--For each
of the calendar years specified in subsection (b)(2), in the case of an
eligible entity that submits to the Secretary an application for such
year in accordance with subsection (d), the Secretary shall make
payments for the year to the entity for the purpose specified in
subsection (c). The Secretary shall make the payments in an amount
determined in accordance with subsection (e), and may administer the
payments as a contract, grant, or cooperative agreement.
(b) Eligible Entities Losing Specialty Positions; Relevant Years
Regarding Payments.--
(1) Eligible entities losing specialty positions.--The
Secretary may make payments under subsection (a) to an eligible
entity only if, with respect to the calendar year involved, the
entity meets the following conditions:
(A) During the year preceding the initiation of
transitional payments, the entity--
(i) received payments under section 1886(h)
of the Social Security Act (42 U.S.C.
1395ww(h)) for residents in one or more
approved programs, or
(ii) sponsored or was affiliated with one
or more approved physician training programs
that received payments under section 3031.
(B) The aggregate number of full-time-equivalent
training participant positions in such programs have
been reduced below the aggregate number of full-time-
equivalent training participant positions for the
academic year 1993-1994.
(C) The aggregate number of full-time-equivalent
training participant positions in such programs spend
in patient care activities at the hospital have been
reduced below the aggregate number of full-time-
equivalent training participant positions for the
academic year 1993-1994, as a result of allocations
under subpart B, or as a result of voluntary changes
under section 3013(e) prior to January 1, 2002.
(2) Relevant years.--Except as provided in subsection
(e)(3), the Secretary may make payments under subsection (a) to
an eligible entity only for the first four calendar years after
the initial calendar year for which the entity meets the
conditions described in paragraph (1).
(3) Eligible entity.--For purposes of this section, the
term ``eligible entity'' means a qualified academic health
center or teaching hospital entity that submits to the
Secretary an application in accordance with subsection (d).
(c) Purpose of Payments.--The purpose of payments under subsection
(a) is to assist an eligible entity with the costs of operation. A
funding agreement for such payments is that the entity involved will
expend the payments only for such purpose.
(d) Application for Payments.--For purposes of subsection (a), an
application for payments under such subsection is in accordance with
this subsection if--
(1) the eligible entity involved submits the application
not later than the date specified by the Secretary;
(2) the application demonstrates that the entity meets the
conditions described in subsection (b)(1) and that the entity
has cooperated with the approved physician training programs of
the entity in meeting the condition described in section
3032(b);
(3) the application contains each funding agreement
described in this subpart and the application provides such
assurances of compliance with the agreements as the Secretary
may require; and
(4) the application is in such form, is made in such
manner, and contains such agreements, assurances, and
information as the Secretary determines to be necessary to
carry out this subpart.
(e) Amount of Payments.--
(1) In general.--Subject to the amounts available from the
Graduate Medical Education Account established under section
9551(a)(2)(A) of the Internal Revenue Code of 1986 in the
calendar year involved, the amount of payments required in
subsection (a) to be made to an eligible entity for such year
is the product of the amount determined under paragraph (2) and
the applicable percentage specified in paragraph (3).
(2) Number of specialty positions lost.--For purposes of
paragraph (1), the amount determined under this paragraph for
an eligible entity for the calendar year involved is the
product of--
(A) an amount equal to the aggregate number of
full-time equivalent specialty positions lost; and
(B) the amount that would be received under section
3033 for each speciality position lost.
(3) Applicable percentage.--
(A) In general.--Except as provided under
subparagraph (B), for purposes of paragraph (1), the
applicable percentage for a calendar year is the
following, as applicable to such year:
(i) For the first calendar year after
calendar year 1996 for which the eligible
entity involved meets the conditions described
in subsection (b)(1), 100 percent.
(ii) For the second such year, 75 percent.
(iii) For the third such year, 50 percent.
(iv) For the fourth such year, 25 percent.
(B) Exceptions.--
(i) Urban or rural underserved
communities.--If the Secretary determines that
access to health care in a rural or urban
underserved community would be impaired by the
annual reductions of the applicable percentage
described in subparagraph (A), the Secretary
may eliminate such annual reduction or adjust
such percentage (at the discretion of the
Secretary) to eligible institutions in such a
community.
(ii) Voluntary compliance positions.--For
the number of positions determined in paragraph
(4)(A) that result from voluntary reductions in
the number of specialty positions under section
3013(e), the applicable percentage for a
calendar year is the following as applicable to
such year:
(I) For the first 2 calendar years
after calendar year 1997 for which the
eligible entity involved meets the
conditions described in subsection
(b)(1), 100 percent.
(II) For the third such year, 75
percent.
(III) For the fourth such year, 50
percent.
(IV) For the fifth such year, 25
percent.
(4) Determination of specialty positions lost.--
(A) For purposes of this paragraph, the aggregate
number of specialty positions lost, with respect to a
calendar year, is the difference between--
(i) the aggregate number of specialty
positions described in subparagraph (B) that
are estimated for the eligible entity involved
for the academic year beginning in such
calendar year; and
(ii) the aggregate number of such specialty
positions at the entity for academic year 1993-
1994.
(B) For purposes of subparagraph (A), the specialty
positions described in this subparagraph are specialty
positions in the medical specialities with respect to
which payments under section 3031 are made to the
approved physician training programs of the eligible
entities involved.
(C) The total number of physicians lost for all
eligible entities may not exceed the number by which
the aggregate number of specialty positions with
respect to which payments are made under section 3031
for the academic year beginning in such calendar year
is below the number of full-time-equivalent positions
for the academic year 1993-1994.
SEC. 3056. WAIVER OF FOREIGN COUNTRY RESIDENCE REQUIREMENT WITH RESPECT
TO INTERNATIONAL MEDICAL GRADUATES.
(a) Waiver.--Section 212(e) of the Immigration and Nationality Act
(8 U.S.C. 1182(e)) is amended--
(1) in the first proviso by inserting ``(or, in the case of
an alien described in clause (iii), pursuant to the request of
an interested State agency)'' after ``interested United States
Government agency''; and
(2) by inserting after ``public interest'' the following:
``except that in the case of a waiver requested by an
interested State agency the waiver shall be subject to the
requirements of section 214(k)''.
(b) Restrictions on Waiver.--Section 214 of that Act (8 U.S.C.
1184) is amended by adding at the end the following:
``(k)(1) In the case of a request by an interested State agency for
a waiver of the two-year foreign residence requirement under section
212(e) with respect to an alien described in clause (iii) of that
section, the Attorney General shall not grant such waiver unless--
``(A) in the case of an alien who is otherwise
contractually obligated to return to a foreign country the
Director of such country furnishes a statement in writing that
it has no objection to such waiver;
``(B) the alien demonstrates a bona fide offer of full-time
employment at a health facility and begins employment at such
facility within 90 days of arrival and agrees to continue to
work in accordance with paragraph (2) at the health care
facility in which the alien is employed for a total of not less
than 3 years (unless the Attorney General determines that
extenuating circumstances such as the closure of the facility
or hardship to the alien would justify a lesser period of
time);
``(C) the alien agrees to practice medicine in accordance
with paragraph (2) for a total of not less than 3 years only in
the geographic area or areas which are designated by the
Secretary of Health and Human Services as having a shortage of
health care professionals; and
``(D) the grant of such waiver would not cause the number
of waivers allotted for that State for that fiscal year to
exceed twenty.
``(2) Whenever an interested State agency requests the waiver of
the two-year residence requirement under section 212(e) with respect to
an alien described in clause (iii) of that section, the Attorney
General shall adjust the status of the alien to that of an alien
described in section 101(a)(15)(H)(b).
``(3) If an alien whose status was adjusted under paragraph (2)
demonstrates that the alien has worked for a period of 10 years in a
health professional shortage area, then the Attorney General may
approve a petition filed on the alien's behalf by the health care
facility in which the alien is employed seeking adjustment of the
alien's status to that of a special immigrant described in section
101(a)(27)(L).
``(4) Notwithstanding any other provision of this subsection, the
two-year foreign residence requirement under section 212(e) shall apply
with respect to an alien described in clause (iii) of that section, who
has not otherwise been accorded status under section 101(a)(27)(L), if
at any time the alien practices medicine in an area other than an area
described in paragraph (1)(C).''.
(c) Special Immigrant Status.--Section 101(a)(27) of the
Immigration and Nationality Act is amended by adding at the end the
following new subparagraph:
``(L) immigrants whose status have been adjusted
from that of an alien described in paragraph (15)(H)(b)
pursuant to section 214(k)(2), except that not more
than 500 immigrants may be admitted in any fiscal year
under this subparagraph.''.
(d) Grounds for Deportation.--Section 241(a) of the Immigration and
Nationality Act (8 U.S.C. 1251(a)) is amended by adding at the end the
following new subparagraph:
``(I) Failure to maintain employment as a health
care professional.--Any alien described in section
212(e)(iii) who fails to maintain employment in
accordance with subparagraphs (B) and (C) of section
212(k)(1).''.
(e) Effective Date.--The amendments made by this section shall
apply to aliens admitted to the United States under section
101(a)(15)(J) of the Immigration and Nationality Act, or acquiring such
status after admission to the United States, before, on, or after the
date of enactment of this Act and before June 1, 2005.
PART 2--HEALTH PROFESSIONS SCHOOLS PAYMENTS
Subpart A--Payments to Medical Schools
SEC. 3061. FEDERAL PAYMENTS TO MEDICAL SCHOOLS.
(a) Entitlement.--Each eligible medical school that in accordance
with section 3062 submits to the Secretary an application for academic
year 1997, or any subsequent academic year, shall be entitled to
payments for such year for the purpose specified in subsection (b). The
Secretary shall make such payments in an amount determined in
accordance with section 3063, and shall administer the payments as a
grant. The preceding sentence constitutes budget authority in advance
of appropriations Acts and represents the obligation of the Federal
Government to provide funding for such payments in the amounts, and for
the years specified in this subpart.
(b) Payments to Medical Schools.--The purpose specified in this
subsection is to assist an eligible medical school with the direct
costs of academic programs including the education of medical students
(especially in primary health care and ambulatory training), graduate
students in biomedical sciences, and otherwise unfunded faculty
research. Payments under this section shall supplement and not supplant
existing resources for this purpose. A funding agreement for such
payments is that the medical school involved will expend the payments
received pursuant to section 3063(b) as follows:
(1) 50 percent shall be expended for primary health care
education (including prevention), and peer reviewed primary
care research in departments and divisions of primary care,
including family medicine departments, and divisions of general
internal medicine, geriatric medicine, and general pediatrics,
or in medical schools in which primary care activities are
primarily performed by other organizational units of the
medical school, such other units. The medical school will
distribute such amounts among the departments, divisions, or
other units of primary care so that the distribution of such
amounts bears a reasonable relationship to the amount of
ambulatory primary care education of medical students in such
departments and divisions and the national workforce goals and
shall specify such information and the distribution of funds in
the application under section 3062.
(2) 25 percent shall be expended for other ambulatory
training.
(3) 25 percent shall be expended for the support of peer-
reviewed faculty research in biomedicine and health services.
(c) Per Capita Payments by Medical Schools for Off-School
Education.--A funding agreement for payments under subsection (a) for
an eligible medical school for an academic year is that if, for the
academic year, one or more students is enrolled (or accepted for
enrollment) in the medical school on the contingency of successfully
completing for the academic year a substantial number of hours in
medical education through an educational institution that does not
operate a medical school, and if the medical school provides credit
toward a doctorate in medicine for the hours successfully completed at
such other institution, then the medical school will pay to the other
institution for such academic year an amount equal to the product of--
(1) the product of--
(A) the number of such students attending the other
institution for such academic year; and
(B) the percentage of the academic year spent at
the other institution; and
(2) the quotient of--
(A) the amount of payments made to the medical
school under subsection (a) for the academic year; over
(B) the number of students in the eligible medical
school in the academic year (including students
described in this subsection).
(d) Eligible Medical School; Subpart Definition.--For purposes of
this subpart, the term ``eligible medical school'' with respect to the
academic year involved, means an approved medical school that submits
to the Secretary an application for such year in accordance with
section 3062.
SEC. 3062. APPLICATION FOR PAYMENTS.
For purposes of section 3061(a), an application for payments under
such section for an academic year is in accordance with this section
if--
(1) the dean (or appropriate presiding official) of the
eligible medical school submits the application not later than
the date specified by the Secretary;
(2) the application contains each funding agreement
described in this subpart and provides such assurances of
compliance with the agreements as the Secretary may require;
and
(3) the application is in such form, is made in such
manner, and contains such agreements, assurances, and
information as the Secretary determines to be necessary to
carry out this part.
SEC. 3063. AUTHORIZATION OF APPROPRIATIONS; ANNUAL AMOUNT OF PAYMENTS.
(a) Authorization of Appropriations.--
(1) In general.--The appropriation authorized for each each
of the following academic years for making payments pursuant to
section 3061(a) shall not be less than or in excess of the
following:
(A) In the case of academic year 1997,
$200,000,000.
(B) In the case of academic year 1998,
$300,000,000.
(C) In the case of academic year 1998,
$400,000,000.
(D) In the case of academic year 2000,
$500,000,000.
(E) In the case of academic year 2001,
$600,000,000.
(F) In the case of each subsequent academic year,
the amount specified in subparagraph (F) increased by
the product of such amount and the general health care
inflation factor (as defined in subsection (d)).
(b) Amount of Payments for Individual Eligible Programs.--Subject
to the annual amount available for making payments pursuant to
subsection (a) for an academic year, the amount of the payment required
under section 3041 to be made to an eligible medical school for the
academic year is an amount equal to the sum of--
(1) the product of \1/2\ of the amount available for the
academic year pursuant to subsection (a) and the proportion of
students (as determined by the Secretary) at the eligible
medical school in academic year 1993-1994 compared to all
students enrolled in eligible medical schools nationwide in
academic year 1993-1994;
(2) the product of \1/4\ of the amount available for the
academic year pursuant to subsection (a) and the proportion of
peer-reviewed research conducted by the faculty at the eligible
medical school (including health services research) compared to
all such research conducted by the faculty at all eligible
medical schools nationwide; and
(3) the product of \1/4\ of the amount available for the
academic year pursuant to subsection (a) and the proportion of
the eligible medical school's number of graduates in primary
care specialties from the class graduating 6 years prior to
such academic year who complete eligible programs in primary
health care and do not subsequently enter a nonprimary health
care training program compared to such number of graduates of
all eligible medical schools nationwide in such year.
The Secretary shall establish a method for measuring faculty research
contributions.
(c) Studies.--
(1) Funding level and allocation method.--Not later than
January 1, 1998, the Secretary shall arrange for an independent
study and report to be completed, by the Institute of Medicine
or other similar entity, concerning the amount of and
allocation method for medical school funding, and the impact of
the payments under this part on national workforce goals,
including the education and training of primary care
physicians. Such report shall be submitted to the President and
the Congress and shall include findings and recommendations as
to the appropriateness of modifying funding levels or
allocations.
(2) Impact of health care reform on medical education.--Not
later than January 1, 2000, the Secretary shall arrange for an
independent study and report to be completed, by the Institute
of Medicine or other similar entity, concerning the impact of
health reform on undergraduate medical education. Such report
shall be submitted to the President and the Congress and shall
include appropriate findings and recommendations.
(d) General Health Care Inflation Factor.--As used in this
subtitle, the term ``general health care inflation factor'' with
respect to a year, has the meaning given such term in section
3033(e)(4) for such year.
Subpart B--Payments to Nursing Programs
SEC. 3071. FEDERAL PAYMENTS TO GRADUATE NURSE TRAINING PROGRAMS.
(a) Federal Payments to Graduate Nurse Training Programs.--
(1) Entitlement.--Each eligible graduate nurse training
program that in accordance with paragraph (2) submits to the
Secretary an application for calendar year 1997 or any
subsequent calendar year shall be entitled to payments for such
year to the program for the purpose specified in paragraph (3).
The Secretary shall make such payments in an amount determined
in accordance with subsection (b), and shall administer the
payments as a grant. The preceding sentence constitutes budget
authority in advance of appropriations Acts and represents the
obligation of the Federal Government to provide funding for
such payments in the amounts, and for the years specified in
this subpart.
(2) Application for payments.--For purposes of paragraph
(1), an application for payments for a calendar year is in
accordance with this paragraph if--
(A) the eligible graduate nurse training program
involved 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 program will expend
payments only for the purpose described in paragraph
(3);
(C) the application contains each funding agreement
described in this subpart and the application provides
such assurances of compliance with the agreements as
the Secretary may require;
(D) the application contains an assurance that the
graduate nurse training program shall annually submit a
report on the costs of clinical training of nurses in
such manner as the Secretary may require; and
(E) the application is in such form, is made in
such manner, and contains such agreements, assurances,
and information as the Secretary determines to be
necessary to carry out this part.
(3) Payments for operation of graduate nurse training
programs.--The purpose of payments under paragraph (1) is to
assist an eligible graduate nurse training program with the
costs of the clinical portions of training programs and
supporting full-time enrollees in such training programs.
(b) Authorization of Appropriations; Annual Amount of Payments.--
(1) In general.--The appropriation authorized for each of
the following calendar years for making payments pursuant to
subsection (a)(1) shall not be less than or in excess of the
following:
(A) In the case of calendar year 1997,
$200,000,000.
(B) In the case of each subsequent calendar year,
the amount specified in subparagraph (A) increased by
the product of such amount and the general health care
inflation factor as defined in subsection (c).
(2) Amount of payments for individual eligible programs.--
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 an eligible graduate nurse
training program that submits to the Secretary an application
for such year in accordance with subsection (a)(2) is an amount
equal to the product of--
(A) the number of full-time enrollees in the
program; and
(B) the estimated national average per full-time
enrollee cost of each graduate nurse training program
described in subsection (c)(1) for the calendar year
(as determined by the Secretary), adjusted by a factor
to reflect regional differences in the applicable wage
and wage related costs.
(3) Limitation.--If the annual amount available under
paragraph (1) for a calendar year is insufficient for providing
each eligible graduate nurse training program 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) Definitions.--For purposes of this part:
(1) Eligible graduate nurse training program.--The term
``eligible graduate nurse training program'' means programs in
advanced practice nurse education that are programs for
education as nurse practitioners, programs for education as
nurse midwives, programs for education as nurse anesthetists,
and programs for training clinical nurse specialists that are--
(A) designated by the Secretary as eligible
graduate nurse training programs;
(B) accredited programs that award a master degree
or a post-nurse master certificate and provide training
preparing an individual for practice as an advanced
practice nurse; and
(C) existing programs funded in 1994 under section
822 or 831 of the Public Health Service Act that do not
award a master degree may also be designated eligible
programs.
(2) Programs for education as nurse practitioners.--The
term ``programs for education as nurse practitioners'' means
programs meeting the conditions to be programs for which awards
of grants and contracts may be made under section 822 of the
Public Health Service Act for education as a nurse
practitioners.
(3) Programs for education as nurse midwives.--The term
``programs for education as nurse midwives'' means programs
meeting the conditions to be programs for which awards of
grants and contracts may be made under section 822 of the
Public Health Service Act for education as nurse midwives.
(4) Programs for training clinical nurse specialists.--The
term ``programs for training clinical nurse specialists'' means
programs in advanced practice nurse education meeting the
conditions to be programs for which awards of grants and
contracts may be made under section 821 of the Public Health
Service Act.
(5) Full-time enrollee.--The term ``full-time enrollee''
means an individual who is enrolled in an advanced nurse
training program and qualifies as a full-time student at the
institution operating such program.
(6) General health care inflation factor.--The term
``general health care inflation factor'', with respect to a
year, has the meaning given such term in section 3033(e)(4)for
such year.
SEC. 3072. NATIONAL COUNCIL ON GRADUATE NURSE TRAINING.
(a) In General.--There is established within the Department of
Health and Human Services a council to be known as the National Council
on Graduate Nurse Training.
(b) Duties.--The National Council on Graduate Nurse Training
shall--
(1) collect and analyze data on trends of supply and demand
for advanced practice nurses;
(2) analyze and consider the supply of advanced practice
nurses in the context of changes in the overall supply of
health professionals;
(3) recommend priorities for support of graduate nurse
training by type of programs described in section 3071(c);
(4) report to Congress annually and include in its report
the number of students who graduated the previous year from
funded programs; and
(5) consider and recommend appropriate standards for
assessing the quality of advanced practice nursing clinical
training programs.
(c) Composition.--
(1) In general.--The membership of the National Council on
Graduate Nurse Training shall include individuals who are
appointed to the Council from among individuals who are not
officers or employees of the United States. Such individuals
shall be appointed by the Secretary, and shall include--
(A) a nurse practitioner, a nurse-midwife, a nurse
anesthetist, and a clinical nurse specialist; and
(B) an official of a school of nursing, an official
of a teaching hospital or other health services entity,
and other experts in health care financing, delivery,
and professions training.
(2) Ex officio members; other federal officers or
employees.--The membership of the National Council on Graduate
Nurse Training shall include individuals designated by the
Secretary, the Secretary of Veterans Affairs, and the Secretary
of the Department of Defense to serve as members of the Council
from among Federal officers or employees who are appointed by
the President, by the Secretary, the Secretary of Veterans
Affairs, the Secretary of Defense, or other Federal officers
who are appointed by the President with the advice and consent
of the Senate.
(d) Chair.--The Secretary shall, from among members of the National
Council on Graduate Nurse Training appointed under subsection (c)(1),
designate an individual to serve as the Chair of the Council.
Subpart C--Payments to Dental Schools
SEC. 3073. DENTAL SCHOOLS.
(a) Federal Payments to Dental Schools.--
(1) Entitlement.--Each eligible school of dentistry that in
accordance with paragraph (2) submits to the Secretary an
application for calendar year 1997 or any subsequent calendar
year shall be entitled to payments for such year to the program
for the purpose specified in paragraph (3). The Secretary shall
make such payments in an amount determined in accordance with
subsection (b), and shall administer the payments as a grant.
The preceding sentence constitutes budget authority in advance
of appropriations Acts and represents the obligation of the
Federal Government to provide funding for such payments in the
amounts, and for the years specified in this subpart.
(2) Application for payments.--For purposes of paragraph
(1), an application for payments for a calendar year is in
accordance with this paragraph if--
(A) the dean (or appropriate presiding official of
the eligible school of dentistry involved) 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 program will expend
payments only for the purpose described in paragraph
(3);
(C) the application contains each funding agreement
described in this subpart and the application provides
such assurances of compliance with the agreements as
the Secretary may require; and
(D) the application is in such form, is made in
such manner, and contains such agreements, assurances,
and information as the Secretary determines to be
necessary to carry out this subpart.
(3) Purpose.--With respect to an eligible school of
dentistry, the purpose of payments under paragraph (1) is to
assist such school with the costs of training dentists,
including unreimbursed oral health care costs. A funding
agreement for such payments is that the school of dentistry
involved will expend the payments only for direct expenses
determined as allowable by the Secretary.
(4) School of dentistry.--For purposes of this subtitle,
the term ``eligible school of dentistry'' means an accredited
public or nonprofit private school in a State that provides
training leading to a degree of doctor of dentistry or an
equivalent degree, and any advanced training relating to such
training.
(b) Authorization of Appropriations; Annual Amount of Payments.--
(1) In general.--The appropriation authorized for each of
the following calendar years for making payments pursuant to
subsection (a)(1) shall not be less than or in excess of the
following:
(A) In the case of each of calendar years 1997,
1998, 1999 and 2000, $50,000,000.
(B) In the case of each subsequent calendar year,
the amount specified in subparagraph (A) increased by
the product of such amount and the general health care
inflation factor as defined in subsection (c).
(2) Amount of payments for individual eligible programs.--
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 an eligible school of dentistry
that submits to the Secretary an application for such year in
accordance with subsection (a)(2) is an amount equal to the sum
of--
(A) 75 percent of the amount available pursuant to
paragraph (1) multiplied by the ratio of the number of
full-time equivalent training participants in the
school of dentistry (determined in accordance with a
method to be developed by the Secretary) to the
national number of full-time equivalent training
participants in all schools of dentistry (as determined
by the Secretary) in the academic year 1993-1994; and
(B) 25 percent of the amount available pursuant to
paragraph (1) multiplied by the ratio of the
unreimbursed oral health care costs of the school of
dentistry to the national unreimbursed oral health care
costs of all schools of dentistry (as determined by the
Secretary).
(c) Eligible School of Dentistry.--For purposes of this subpart,
the term ``eligible school of dentistry'' with respect to a calendar
year involved, means a school of dentistry that submits to the
Secretary an application for such year in accordance with subsection
(a)(2).
Subpart D--Payments to Schools of Public Health
SEC. 3074. SCHOOLS OF PUBLIC HEALTH.
(a) Federal Payments to Schools of Public Health.--
(1) Entitlement.--Each eligible school of public health
that in accordance with paragraph (2) submits to the Secretary
an application for calendar year 1997 or any subsequent
calendar year shall be entitled to payments for such year to
the program for the purpose specified in paragraph (3). The
Secretary shall make such payments in an amount determined in
accordance with subsection (b), and shall administer the
payments as a grant. The preceding sentence constitutes budget
authority in advance of appropriations Acts and represents the
obligation of the Federal Government to provide funding for
such payments in the amounts, and for the years specified in
this subpart.
(2) Application for payments.--For purposes of paragraph
(1), an application for payments for a calendar year is in
accordance with this paragraph if--
(A) the dean (or appropriate presiding official of
the eligible school of public health involved 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 program will expend
payments only for the purpose described in paragraph
(3);
(C) the application contains each funding agreement
described in this subpart and the application provides
such assurances of compliance with the agreements as
the Secretary may require; and
(D) the application is in such form, is made in
such manner, and contains such agreements, assurances,
and information as the Secretary determines to be
necessary to carry out this subpart.
(3) Purpose.--With respect to an eligible school of public
health, the purpose of payments under this paragraph is to
assist such school with the costs of training public health
professionals in disease prevention and health promotion, the
management of health services, health care policy and health
care organization, public health practice, outcomes and quality
of care, and epidemiologic and biostatistical research. A
funding agreement for such payments is that the school of
public health involved will expend the payments only for direct
expenses determined as allowable by the Secretary.
(4) School of public health.--For purposes of this subpart,
the term ``school of public health'' means an accredited public
or non-profit private school in a State that--
(A) is located within a university accredited by
one of the recognized regional accrediting bodies;
(B) has as its central concept the prevention of
disease and the promotion of health through research,
education and professional practice;
(C) offers the Master of Public Health degree;
(D) provides, with sufficient faculty and other
resources, education at the master degree level with an
emphasis in at least each of the following areas:
(i) Behavioral sciences.
(ii) Biostatistics.
(iii) Environmental and health sciences.
(iv) Epidemiology.
(v) Health services administration; and
(E) offers graduate education at the doctoral
degree level in at least 1 of the 5 areas described in
subparagraph (D).
(b) Authorization of Appropriations; Annual Amount of Payments.--
(1) In general.--The appropriation authorized for each of
the following calendar years for making payments pursuant to
subsection (a)(1) shall not be less than or in excess of the
following:
(A) In the case of each of calendar years 1997,
1998, 1999 and 2000, $25,000,000.
(B) In the case of each subsequent calendar year,
the amount specified in subparagraph (A) increased by
the product of such amount and the general health care
inflation factor.
(2) Payments to schools of public health.--
(A) In general.--The amount required under
subsection (a) to be made to an eligible school of
public health is an amount equal to the product of--
(i) the amount available for making such
payments for the calendar year pursuant to
paragraph (1); and
(ii) the percentage constituted by the
ratio of the number of full-time students
enrolled in degree programs in such schools and
the number of full-time equivalents of part-
time students enrolled in degree programs in
such school (determined in accordance with
subparagraph (B)) to the national number of all
such students in all schools of public health
in the academic year beginning in the previous
fiscal year.
(B) Full-time equivalence.--For the purposes of
this paragraph, the number of full-time equivalents of
part-time students for a school of public health for
any school year is a number equal to--
(i) the total number of credit hours of
instructions in such year for which study
leading to a graduate degree in public health
or an equivalent degree, divided by
(ii) the number of credit hours of
instructions which a student pursuing a full-
time course of study leading to a graduate
degree in public health or equivalent degree.
(C) New school.--In the case of a new school of
public health which applies for a grant under this
section in the fiscal year preceding the fiscal year in
which it will admit its first class, the enrollment for
purposes of subparagraph (A)(ii) shall be the number of
full-time students which the Secretary determines, on
the basis of assurances provided by the school, will be
enrolled in the school, in the fiscal year after the
fiscal year in which the grant is made.
(c) Eligible School of Public Health.--The term ``eligible school
of public health'' with respect to the calendar year involved, means a
school of public health that submits to the Secretary for such year in
accordance with subsection (a)(2).
PART 3--RELATED PROGRAMS
Subpart A--Workforce Development
SEC. 3081. PROGRAMS OF THE SECRETARY OF HEALTH AND HUMAN SERVICES.
(a) In General.--
(1) Funding.--For purposes of carrying out the programs
described in this section, there is authorized to be
appropriated $100,000,000 for each of the fiscal years 1995 and
1996, and $150,000,000 for each of the fiscal years 1997
through 2000 (in addition to amounts that may otherwise be
authorized to be appropriated for carrying out the programs).
(2) Administration.--The programs described in this section
and carried out with amounts made available under subsection
(a) shall be carried out by the Secretary of Health and Human
Services.
(b) Primary Care Physician and Physician Assistant Training.--For
purposes of subsection (a), the programs described in this section
include programs to support projects to train additional numbers of
primary care physicians and physician assistants, including projects to
enhance community-based generalist training for medical students,
residents, and practicing physicians; to retrain mid-career physicians
previously certified in a nonprimary care medical specialty; to expand
the supply of physicians with special training to serve in rural and
inner-city medically underserved areas; to support expansion of
service-linked educational networks that train a range of primary care
providers in community settings; to provide for training in managed
care, cost-effective practice management, and continuous quality
improvement; to provide interdisciplinary training for medical
students, residents or practicing physicians, and dental students,
residents, and dental hygienists, to deliver primary care to
individuals with mental, physical, and developmental disabilities,
including mental retardation, particularly those who are more than 18
years of age; and to develop additional information on primary care
workforce issues as required to meet future needs in health care.
(c) Training of Underrepresented Racial and Ethnic Minorities and
Disadvantaged Persons.--For purposes of subsection (a), the programs
described in this section include a program to support projects to
increase the number of racial and ethnic underrepresented minority and
disadvantaged persons in medicine, osteopathy, dentistry, advanced
practice nursing, public health, psychology, and other health
professions, including projects to provide continuing financial
assistance for such persons entering health professions training
programs; for financial assistance for facility renovation or
construction; to increase support for recruitment and retention of such
persons in the health professions; to maintain efforts to foster
interest in health careers among such persons at the preprofessional
level; and to increase the number of racial and ethnic minority health
professions faculty at programs that have a significant number of
underrepresented racial and ethnic minorities.
(d) Expanding Rural Health Career Opportunities and Retention
Efforts.--
(1) In general.--For purposes of subsection (a), the
programs described in this section include programs to support
projects to increase the number of individuals living in rural,
underserved communities who enter the fields of medicine,
osteopathy, dentistry, advanced practice nursing, public
health, psychology, and other health professions, and to
encourage the retention of such health care professionals in
rural, underserved communities.
(2) Rural health career training.--Projects to increase the
number of individuals recruited from rural, underserved areas
include projects--
(A) to provide continuing financial assistance for
such persons entering health professions education and
training programs;
(B) to increase efforts to foster interest in
health careers among such persons at the
preprofessional level;
(C) to foster the development of training curricula
appropriate to rural health care settings; and
(D) to increase support for recruitment of such
persons in the health professions.
(3) Retention of rural health care providers.--Projects to
encourage the retention of individuals providing health care in
rural, underserved areas include projects--
(A) to establish State and regional locum tenans
programs in rural health care settings so that
substitute health care providers are available when
permanent staff is absent from the health care setting;
(B) to implement programs to foster
interdisciplinary team approaches to rural health
training and practice; and
(C) to develop state-of-the-art network
telecommunications and telemedicine systems to link
rural health professionals to other health care
providers and academic health care centers.
(e) Nurse Training.--For purposes of subsection (a), the programs
described in this section include a program to support projects to
support midlevel provider training and address priority nursing
workforce needs, including projects to train additional nurse
practitioners and nurse midwives; to support baccalaureate-level nurse
training programs providing preparation for careers in teaching,
community health service, and specialized clinical care; to train
additional nurse clinicians and nurse anesthetists; to support
interdisciplinary school-based community nursing programs; and to
promote research on nursing workforce issues.
(f) Inappropriate Practice Barriers; Full Utilization of Skills.--
For purposes of subsection (a), the programs described in this section
include a program--
(1) to develop and encourage the adoption of model
professional practice statutes for advanced practice nurses and
physician assistants, and to otherwise support efforts to
remove inappropriate barriers to practice by such nurses and
such physician assistants; and
(2) to promote the full utilization of the professional
education and clinical skills of advanced practice nurses and
physician assistants.
(g) Advisory Board on Health Care Workforce Development.--
(1) In general.--The Secretary shall establish an Advisory
Board known as the National Advisory Board on Health Care
Workforce Development to advise, consult with, and make
recommendations to the Secretary and to the Secretary of Labor
on matters relating to--
(A) health care worker supply and its adequacy to
assure proper health care delivery system staffing in
both rural and urban areas; and
(B) the impact of this Act, and of related changes
in law regarding health care, on health care workers
and the needs of such workers, including needs
regarding education, training, and other career
development matters and the relationship of health care
workers to health care professionals.
(2) Composition.--The Board established under paragraph (1)
shall be composed of the following members with expertise in
health care workforce issues appointed by the Secretary in
consultation with the Secretary of Labor:
(A) Five representatives of labor organizations
representing health care workers.
(B) Five representatives of health care delivery
institutions.
(C) Two representatives from health care education
organizations.
(D) Two representatives from consumer
organizations.
(3) Assistance.--The Secretary shall provide the Board with
such administrative assistance as may be necessary for the
Board to carry out this subsection.
(h) Other Programs.--For purposes of subsection (a), the programs
described in this section include a program to train health
professionals and administrators in managed care, cost-effective
practice management, continuous quality improvement practices, and
provision of culturally sensitive care.
(i) Relationship to Existing Programs.--This section may be carried
out through programs established in title VII or VIII of the Public
Health Service Act, as appropriate and as consistent with the purposes
of such programs.
(j) Mental Retardation and Other Developmental Disabilities.--Title
VII of the Public Health Service Act is amended by inserting after
section 778, the following new section:
``SEC. 779. MENTAL RETARDATION AND OTHER DEVELOPMENTAL DISABILITIES.
``(a) In General.--The Secretary may make grants and enter into
contracts with university affiliated programs, schools of medicine, and
schools of dentistry to assist in meeting the costs of such programs or
schools to--
``(1) improve the interdisciplinary training of primary
care physicians and dentists in the health care services needs
of individuals with mental, physical, and developmental
disabilities, including mental retardation, particularly those
who are more than 18 years of age;
``(2) develop, evaluate, and disseminate curricula relating
to the health care service needs of individuals with mental,
physical, and developmental disabilities, including mental
retardation, particularly those individuals who are more than
18 years of age;
``(3) support the training and retraining of faculty to
provide such instruction; and
``(4) support continuing education of health professionals
who provide health care services and support to individuals
with mental, physical, and developmental disabilities,
including mental retardation, particularly those who are more
than 18 years of age.
``(b) Authorization of Appropriations.--For purposes of carrying
out this section, there are authorized to be appropriated, $10,000,000
for each of the fiscal years 1995 through 2000.''.
SEC. 3082. PROGRAMS OF THE SECRETARY OF LABOR.
(a) In General.--
(1) Funding.--For purposes of carrying out the programs
described in this section, and for carrying out section 3083,
there is authorized to be appropriated $200,000,000 for fiscal
year 1995 and each subsequent fiscal year (in addition to
amounts that may otherwise be authorized to be appropriated for
carrying out the programs).
(2) Administration.--The programs described in this section
and carried out with amounts made available under subsection
(a) shall be carried out by the Secretary of Labor (in this
section referred to as the ``Secretary'').
(b) Retraining Programs; Advanced Career Positions; Workforce
Adjustment Programs.--
(1) In general.--For purposes of subsection (a), the
programs described in this section are the following:
(A) A program for skills upgrading and occupational
retraining (including retraining health care workers
for more advanced positions as technicians, nurses, and
physician assistants), and for quality and workforce
improvement.
(B) A demonstration program to assist workers in
health care institutions in obtaining advanced career
positions.
(C) A program to develop and operate health care
industry worker job banks in local employment services
agencies or one-stop career centers, subject to the
following:
(i) Such job banks shall be available to
all health care providers in the community
involved.
(ii) Such job banks shall begin operation
not later than 90 days after the date of the
enactment of this Act.
(iii)(I) With respect to each affected
community, the local employment service agency
or one-stop career center serving such
community shall be allocated not less than one
counselor whose responsibility it shall be to
develop and operate health and insurance
industry worker job banks. Where the impact of
health care industry restructuring in the
affected community is such that the functions
required under this clause cannot be adequately
provided by one counselor, additional
counselors shall be allocated to carry out such
functions.
(II) Such counselor shall solicit job
openings from local health care industry
employers, maintain frequent contacts with
these and other employers, and monitor and
update all job listings appropriate for
displaced health care workers seeking
employment.
(III) The local employment service agency
or one-stop career center shall provide
directly, or facilitate the provision of, labor
exchange services to displaced health care
industry workers, including assessment,
counseling, testing, job-search assistance, job
referral and placement, and referral to
training and educational programs, where
appropriate.
(IV) The Secretary of Labor shall develop
performance goals for the effective performance
of such job banks with respect to the number
and quality of jobs listed, the degree of
participation by employers in the affected
community, and success in placement of job bank
users in jobs listed, taking into account
specific geographic, economic and labor market
characteristics of the community served.
(D) A program to provide for joint labor-management
decision-making in the health care sector on workplace
matters related to the restructuring of the health care
delivery system provided for in this Act.
(E) A program to collect data regarding the
adequacy of the supply of health care workers by
occupation and sector of the health industry in light
of existing and projected demand for such workers.
(F)(i) A program to encourage the adoption and
utilization of high performance, high quality health
care delivery systems, including employee participation
committees and employee team systems that will
contribute to more effective health care by increasing
the role and the area of independent decisionmaking of
health care workers.
(ii) For purposes of this subparagraph, the term
``employee participation committees'' means committees
of workers independently selected by and from a
facility's nonmanagerial workforce, or selected by
unions where collective bargaining agreements are in
effect, and which operate independently without
employer interference and consult with management on
issues of efficiency, productivity, and quality of
care, except that an employee participation committee
established under and operating in conformity with this
subparagraph shall not be considered a labor
organization within the meaning of section 2(5) of the
National Labor Relations Act or a representative within
the meaning of section 1, sixth, of the Railway Labor
Act.
(2) Use of funds.--Amounts made available under subsection
(a) for carrying out this section may be expended for program
support, faculty development, trainee support, workforce
analysis, and dissemination of information, as necessary to
produce required performance outcomes.
(c) Certain Requirements for Programs.--In carrying out the
programs described in subsection (b), the Secretary shall, with respect
to the organizations and employment positions involved, provide for the
following:
(1) Explicit, clearly defined skill requirements developed
for all the positions and projections of the number of openings
for each position.
(2) Opportunities for internal career movement.
(3) Opportunities to work while training or completing an
educational program.
(4) Evaluation and dissemination.
(5) Training opportunities in several forms, as
appropriate.
(d) Administrative Requirements.--In carrying out the programs
described in subsection (b), the Secretary shall, with respect to the
organizations and employment positions involved, provide for the
following:
(1) Joint labor-management implementation and
administration.
(2) Discussion with employees as to training needs for
career advancement.
(3) Commitment to a policy of internal hirings and
promotion.
(4) Provision of support services.
(5) Consultations with employers and with organized labor.
SEC. 3083. REQUIREMENT FOR CERTAIN PROGRAMS REGARDING REDEPLOYMENT OF
HEALTH CARE WORKERS.
(a) State Programs for Home and Community-Based Services for
Individuals with Disabilities.--With respect to the plan required in
section 2102(a) (for State programs for home and community-based
services for individuals with disabilities under part 1 of subtitle B
of title II), the plan shall, in addition to requirements under such
part, provide for the following:
(1) Before initiating the process of implementing the State
program under such plan, negotiations will be commenced with
labor unions representing the employees of the affected
hospitals or other facilities.
(2) Negotiations under paragraph (1) will address the
following:
(A) The impact of the implementation of the program
upon the workforce.
(B) Methods to redeploy workers to positions in the
proposed system, in the case of workers affected by the
program.
(3) The plan will provide evidence that there has been
compliance with paragraphs (1) and (2), including a description
of the results of the negotiations.
(b) Plan for Integration of Mental Health Systems.--With respect to
the plan required in section 3511(a) (relating to the integration of
the mental health and substance abuse services of a State and its
political subdivisions with the mental health and substance abuse
services included in the comprehensive benefit package under title I),
the plan shall, in addition to requirements under such section, provide
for the following:
(1) Before initiating the process of implementing the
integration of such services, negotiations will be commenced
with labor unions representing the employees of the affected
hospitals or other facilities.
(2) Negotiations under paragraph (1) will address the
following:
(A) The impact of the proposed changes upon the
workforce.
(B) Methods to redeploy workers to positions in the
proposed system, in the case of workers affected by the
proposed changes.
(3) The plan will provide evidence that there has been
compliance with paragraphs (1) and (2), including a description
of the results of the negotiations.
Subpart B--Transitional Provisions for Workforce Stability
SEC. 3091. APPLICATION.
(a) Limitation to Transition Period.--The provisions of this
subpart are intended to minimize, to the extent possible, disruptions
in established employment relationships during the period of transition
to a restructured health care delivery system, and shall terminate
December 31, 2000.
(b) Health Care Entities Covered by Subpart.--The provisions of
this subpart, including references to displacing employers, hiring
employers, successors and contractors, apply only to health care
entities that employ more than 25 individuals.
SEC. 3092. DEFINITIONS.
(a) Health Care Entity.--As used in this subpart, the term ``health
care entity'' includes individuals, sole proprietorships, partnerships,
associations, business trusts, corporations, governmental institutions,
and public agencies (including state governments and political
subdivisions thereof) that--
(1) provide health care services under title I (including
nonmandatory health care services under title I) or under the
amendments made or programs referred to in titles IV and VIII;
or
(2) provide necessary related services, including
administrative, food service, janitorial or maintenance
services, to an entity that provides health care services (as
described in subparagraph (1));
except that an entity that solely manufactures or provides goods or
equipment to a health care entity shall not be considered a health care
entity.
(b) Affiliated Enterprise.--As used in this subpart, the term
``affiliated enterprise'' means a health care entity that, together
with the displacing employer, is considered a single employer as
defined under 414 of the Internal Revenue Code of 1986.
(c) Preference Eligible Employee.--As used in this subpart, the
term ``preference eligible employee'' means an employee who--
(1) has been employed for in excess of 1 year by a health
care entity; and
(2) has been displaced by or has received notice of an
impending displacement by such entity.
(d) Displacement.--As used in this subpart, the term
``displacement'' includes a lay off, termination, significant cutback
in paid work hours, or other loss of employment, except that a
discharge for just cause shall not constitute a displacement within the
meaning of this paragraph.
SEC. 3093. OBLIGATIONS OF DISPLACING EMPLOYER AND AFFILIATED
ENTERPRISES IN EVENT OF DISPLACEMENT.
(a) Notice.--A health care entity which displaces a preference
eligible employee shall provide such employee with--
(1) written notice, no later than the date of displacement,
of employment rights under this subpart, including employment
rights with respect to affiliated enterprises of the displacing
employer; and
(2) notice of any existing or subsequent vacancies with the
displacing employer or an affiliated enterprise, which notice
may be given by posting of such vacancies wherever notices to
applicants for employment are customarily posted, by listing
such vacancies with the local employment services agency, or in
such other manner as the Secretary of Labor, by regulation, may
hereafter specify.
Any such vacancy shall remain open for applications by preference
eligible employees for not less than 14 calendar days from the date on
which the initial notice is provided.
(b) Hiring Preference.--
(1) In general.--A qualified preference eligible employee
who applies during the notice period described in subsection
(a)(2) for a vacant position with the displacing employer or an
affiliated enterprise, which position is in the employee's
occupational specialty and is located in the same State or
Standard Metropolitan Statistical Area in which the employee
was employed prior to the displacement, shall be given the
right to accept or decline the position before the employer may
offer the position to a nonpreference eligible employee.
(2) Multiple applications.--When considering applications
from more than one qualified preference eligible employee, the
hiring health care entity shall have discretion as to which of
such employees will be offered the position.
(3) Employment qualifications.--Nothing in this subsection
shall be construed to prohibit the hiring health care entity
from establishing reasonable employment qualifications for a
vacancy to which this subpart applies, except that employees
who performed essentially the same work prior to their
displacement shall be deemed presumptively qualified for
comparable positions.
(c) Termination of Preference Eligibility.--A displaced employee's
preference eligibility shall terminate--
(1) at such time as the displaced employee obtains
substantially equivalent employment with the displacing
employer; or
(2) if the employee does not obtain such employment--
(A) with respect to health care entities other than
the displacing employer, 2 years after the date of the
displacement; or
(B) with respect to the displacing employer, upon
the termination of this subpart pursuant to section
3081(a).
SEC. 3094. EMPLOYMENT WITH SUCCESSORS.
A health care entity that succeeds another health care entity
through merger, consolidation, acquisition, contract, or other similar
manner shall provide employees of the previous health care entity who
would otherwise be displaced the right to continued employment in the
job positions held by such employees prior thereto, unless the employer
can establish that such positions no longer exist.
SEC. 3095. COLLECTIVE BARGAINING OBLIGATIONS DURING TRANSITION PERIOD.
(a) Continuation of Previously Recognized Bargaining
Representatives and Agreements.--If a majority of the employees in an
appropriate bargaining unit consists of employees who were previously
covered by a bargaining agreement or represented by an exclusive
representative with respect to terms and conditions of employment, and
there has not been a substantial change in the operations performed by
the employees in that unit, the employer shall recognize such
representative as the exclusive representative for the unit and shall
assume the bargaining agreement, except that where application of this
subsection would result in the recognition of more than one bargaining
representative for a single unit, the question concerning which
representative shall be recognized as the exclusive representative for
the unit shall be resolved in accordance with applicable Federal or
State law.
(b) Joint Employer Status.--If employees of a contractor are
assigned on a regular basis to perform work on the premises of a
contracting entity and the tasks performed by these employees are
functionally integrated with the operations of the contracting entity
on whose premises such employees work, both the contractor and the
contracting entity shall be considered joint employers of the employees
with respect to work performed on those premises for purposes of
determining compliance with labor relations laws. Employees of such
joint employers may not be excluded from a bargaining unit within
either entity on the basis of such joint employer status.
SEC. 3096. GENERAL PROVISIONS.
(a) Regulations.--Not later than 120 days after the date of
enactment of this Act, the Secretary shall promulgate regulations to
implement the requirements of section 3093.
(b) Other Laws.--The standards and requirements of this subpart
shall not preempt or excuse noncompliance with any other applicable
Federal or State law, regulation or municipal ordinance that
establishes additional notice and preference standards or requirements
concerning employee dislocation, employee representation, or collective
bargaining.
(c) Rules of Construction.--Nothing in this subpart shall be
construed--
(1) to excuse or otherwise limit the obligation of an
employer to comply with any collective bargaining agreement or
any employment benefit plan that provides rights to employees
in addition to those provided under this subpart; or
(2) to require an employer to recognize or bargain with a
labor organization in violation of State law.
(d) Enforcement.--Unless otherwise specifically provided in this
subpart, the enforcement provisions of section 107 of the Family and
Medical Leave Act of 1993 (29 U.S.C. 2617) shall apply with respect to
the enforcement of the individual rights, including notice
requirements, provided under section 3093. The collective bargaining
and contractual rights provided under sections 3094 and 3095 shall be
enforced through administrative and judicial procedures otherwise
provided under Federal or State law with respect to such rights.
Subtitle B--Academic Health Centers
SEC. 3131. DISCRETIONARY GRANTS REGARDING ACCESS TO CENTERS.
(a) Rural Information and Referral Systems.--The Secretary may make
grants to eligible centers for the establishment and operation of
information and referral systems to provide the services of such
centers to rural health plans.
(b) Other Purposes Regarding Urban and Rural Areas.--The Secretary
may make grants to community- and provider-based health plans under
section 1651(d) to carry out activities (other than activities carried
out under subsection (a)) for the purpose of providing the services of
eligible centers to residents of rural or urban communities who
otherwise would not have adequate access to such services.
(c) Authorization of Appropriations.--For the purpose of carrying
out this section, there are authorized to be appropriate, $3,000,000
for fiscal year 1995, $4,000,000 for fiscal year 1996, and $5,000,000
for each of the fiscal years 1997 through 2000.
Subtitle C--Health Research Initiatives
PART 1--PROGRAMS FOR CERTAIN AGENCIES
SEC. 3201. BIOMEDICAL, BEHAVIORAL AND HEALTH SERVICES RESEARCH.
(a) Findings.--Congress finds the following:
(1) Nearly 4 of 5 peer reviewed research projects deemed
worthy of funding by the National Institutes of Health are not
funded, and 9 of 10 peer reviewed research projects deemed
worthy of funding by the Agency for Health Care Policy and
Research are not funded.
(2) Less than 2 percent of the nearly one trillion dollars
our Nation spends on health care is devoted to health research,
while the defense industry spends 15 percent of its budget on
research.
(3) Public opinion surveys have shown that Americans want
more Federal resources put into health research and support by
having a portion of their health insurance premiums set aside
for this purpose.
(4) Ample evidence exists to demonstrate that health
research has improved the quality of health care in the United
States. Advances such as the development of vaccines, the cure
of many childhood cancers, drugs that effectively treat a host
of diseases and disorders, a process to protect our Nation's
blood supply from the HIV virus, progress against
cardiovasculor disease including heart attack and stroke, and
new strategies for the early detection and treatment of
diseases such as colon, breast, and prostate cancer clearly
demonstrates the benefits of health research.
(5) Among the most effective methods to control health care
costs are the prevention of intentional and unintentional
injury and the prevention and cure of disease and disability,
thus, health research which holds the promise of prevention of
intentional and unintentional injury and cure and prevention of
disease and disability is a critical component of any
comprehensive health care reform plan.
(6) The state of our Nation's research facilities at the
National Institutes of Health and at universities is
deteriorating significantly. Renovation and repair of these
facilities are badly needed to maintain and improve the quality
of research.
(7) Because the Omnibus Budget Reconciliation Act of 1993
freezes discretionary spending for the next 5 years, the
Nation's investment in health research through the National
Institutes of Health and the Agency for Health Care Policy and
Research is likely to decline in real terms unless corrective
legislative action is taken.
(8) A health research fund is needed to maintain our
Nation's commitment to health research and to increase the
percentage of approved projects which receive funding at the
National Institutes of Health and the Agency for Health Care
Policy and Research to at least 33 percent.
(9) Private sector investment in research and development
has been responsible for the vast majority of new developments
in pharmaceuticals, medical devices, biotechnology and other
health care innovations. Over 90 percent of the most prescribed
drugs in the United States were discovered by the research-
based pharmaceutical industry.
(10) United States industry is the preeminent world leader
in the research, development and delivery of innovative
therapies that improve the quality of care for people
throughout the world.
(11) Global health care budgets may constrict private
sector investment in research and development. Further, they
may be inconsistent with the goal of developing promising new
cost effective treatment therapies.
(b) Availability of Funds.--
(1) In general.--With respect to each calendar year, the
Secretary shall pay, from funds in the Treasury not otherwise
appropriated, for activities under this section, an amount
equal to 0.25 percent in 1996 and subsequent years, of all
private premiums required to be paid in accordance with the
Act.
(2) Definition.--For purposes of this subsection, the term
``private health premiums'' means all premium related payments
made by employers, individuals, and families for coverage under
this Act.
(3) Maintenance of effort.--No amounts made available under
this subsection shall replace or reduce the amount of
appropriations for the National Institutes of Health or the
Agency for Health Care Policy and Research.
(c) Purposes for Expenditures.--Part A of title IV of the Public
Health Service Act (42 U.S.C. 281 et seq.) is amended by adding at the
end thereof the following new section:
``SEC. 404F. EXPENDITURES FOR BIOMEDICAL AND BEHAVIORAL RESEARCH.
``(a) In General.--With respect to 80 percent of the amounts made
available under section 3201 of the Health Security Act in a fiscal
year, the Secretary shall distribute--
``(1) 2 percent of such amounts during any fiscal year to
the Office of the Director of the National Institutes of Health
to be allocated at the Director's discretion for the following
activities:
``(A) for carrying out the responsibilities of the
Office of the Director, in including the Office of
Research on Women's Health and the Office of Research
on Minority Health, the Office of Alternative Medicine
and the Office of Rare Diseases Research; and
``(B) for construction and acquisition of equipment
for or facilities of or used by the National Institutes
of Health;
``(2) 2 percent of such amounts for transfer to the
National Center for Research Resources to carry out section
1502 of the National Institutes of Health Revitalization Act of
1993 concerning Biomedical and Behavioral Research Facilities;
``(3) 1 percent of such amounts during any fiscal year for
carrying out section 301 and part D of title IV with respect to
health information communications; and
``(4) the remainder of such amounts during any fiscal year
to member institutes of the National Institutes of Health and
Centers in the same proportion to the total amount received
under this section, as the amount of annual appropriations
under appropriations Acts for each member institute and Centers
for the fiscal year bears to the total amount of appropriations
under appropriations Acts for all member institutes and Centers
of the National Institutes of Health for the fiscal year.
``(b) Plans of Allocation.--The amounts transferred under
subsection (a) shall be allocated by the Director of NIH or the various
directors of the institutes and centers, as the case may be, pursuant
to allocation plans developed by the various advisory councils to such
directors, after consultation with such directors.''.
SEC. 3202. HEALTH SERVICES RESEARCH.
(a) In General.--The Secretary shall distribute the remainder of
the amounts made available under section 3201 in a fiscal year (not to
exceed 20 percent of the total of amounts available in a fiscal year
under such section), to the Agency for Health Care Policy and Research
for policy-initiated and investigator-initiated research.
(b) Research on Health Care Reform.--Section 902 of the Public
Health Service Act (42 U.S.C. 299a), as amended by section 2(b) of
Public Law 102-410 (106 Stat. 2094), is amended by adding at the end
the following subsection:
``(f) Research on Health Care Reform.--
``(1) In general.--In carrying out section 901(b), the
Administrator shall conduct and support research on the reform
of the health care system of the United States, as directed by
the Secretary.
``(2) Priorities.--In carrying out paragraph (1), the
Administrator shall give priority to the following:
``(A) Conducting and supporting research on the
appropriateness and effectiveness of alternative
clinical strategies (including community-based programs
and preventive services), the quality and outcomes of
care, and administrative simplification.
``(B) Conducting and supporting research on the
appropriateness and effectiveness of alternative
community-based and clinical strategies including
integrating preventive services into primary care, the
effectiveness of preventive counseling and health
education, and the efficacy and cost-effectiveness of
clinical preventive services.
``(C) Conducting and supporting research on
consumer choice and information resources; on the role
of shared decision making in enhancing patient and
provider therapeutic options; the effects of health
care reform on health delivery systems; methods for
risk adjustment; factors influencing access to health
care for vulnerable populations, including children,
persons with low-income, persons with disabilities, or
individuals with chronic or complex health conditions,
and primary care.
``(D) The development of clinical practice
guidelines consistent with section 913, the
dissemination of such guidelines consistent with
section 903, and the assessment of the effectiveness of
such guidelines.''.
SEC. 3203. AHCPR GUIDELINES AND STANDARDS.
(a) Traineeship Program.--Section 902(c) of the Public Health
Service Act (42 U.S.C. 299a(c)) is amended--
(1) by redesignating the matter following the subsection
heading as paragraph (1) and realigning the margin of such so
as to align with the margin of section 903(a)(1);
(2) by inserting before ``The Administrator'' the
following: ``In general.--''; and
(3) by adding at the end thereof the following new
paragraph:
``(2) Traineeship program.--The Administrator shall
establish a traineeship program for not to exceed 25
investigators, to enable such investigators to carry out
research at the Agency that would benefit the mission of the
Agency and further the educational needs of such investigators.
Such investigator positions shall not be counted against any
Federal employment ceilings affecting the Agency.''.
(b) Printing Services.--Section 902 of such Act (42 U.S.C. 299a) is
amended by adding at the end thereof the following new subsection:
``(f) Authority to Contract for Printing Services.--The
Administrator may publish or arrange for the publication of research
findings and practice guidelines, without regard to section 501 of
title 44, United States Code.''.
(c) Panels.--Section 913(a) of the Public Health Service Act (42
U.S.C. 299b-2(a)) is amended by adding at the end thereof the following
new flush sentence:
``Panels convened for the purpose of carrying out paragraphs (1) and
(2) shall not be considered advisory committees within the meaning of
section 3(2) of the Federal Advisory Committee Act (5 U.S.C. App.
3(2)), and prior to publication by the Administrator, clinical practice
guidelines, performance measures, and review criteria as described in
section 912(a) are not subject to the requirements of section 552 of
title 5, United States Code.''.
(d) Arrangements.--Section 913 of such Act (42 U.S.C. 299b-2) is
amended by adding at the end thereof the following new subsection:
``(d) Arrangements.--
``(1) In general.--Upon the request of a public or private
entity, the Administrator may collect, tabulate, and analyze
statistics, perform technology assessments, carry out health
services and outcomes and effectiveness research, and
facilitate the development of clinical practice guidelines
under arrangements with such entities under which such entities
compensate the Administrator for the costs of the services
provided.
``(2) Amounts and personnel.--Amounts collected from
payments under this subsection shall be available to the
Administrator for obligation until expended, and personnel used
to provide such services shall not be counted against any
Federal employment ceilings affecting the Agency.''.
(e) Technical Amendment.--Section 913(c) of such Act (42 U.S.C.
299b-2(c)) is amended by moving the first sentence so as appear after
the subsection heading.
PART 2--FUNDING FOR PROGRAM
SEC. 3211. AUTHORIZATIONS OF APPROPRIATIONS.
(a) Relation to Other Funds.--Amounts made available under this
subtitle are in addition to any other authorizations of appropriations
that are available to carry out section 3202 and the amendments made by
such section.
(b) Trigger and Release of Monies.--No expenditure shall be made
pursuant to section 3201(b) during any fiscal year in which the annual
amount appropriated for the National Institutes of Health and the
Agency for Health Care Policy and Research is less than the amount so
appropriated for the prior fiscal year. With respect to amounts
available for expenditure pursuant to section 3201(b) which, as a
result of the application of this subsection remain unexpended, such
amounts shall be obligated by the Secretary of Health and Human
Services under the public health initiative under subtitle H.
PART 3--MEDICAL TECHNOLOGY IMPACT STUDY
SEC. 3221. MEDICAL TECHNOLOGY IMPACT STUDY.
(a) Assessment of the Standard Impact of Medical Technologies.--
(1) In general.--The Secretary, acting through the
Administrator of the Agency for Health Care Policy and Research
(hereafter referred to in this section as the
``Administrator''), shall undertake an interdisciplinary study
(to be known as the ``Medical Technology Impact Study'') to
assess the overall economic costs, economic benefits, and
effect on patient outcomes of medical technologies used in
treating each of a list of target diseases and conditions. The
Secretary shall submit the report of the Administrator to
Congress (in accordance with subsection (c)) concerning the
results of the study and may provide any recommendations
determined to be necessary to ensure the availability, access,
and appropriate use of medical technologies to improve the
quality of health care in the United States.
(2) Purpose.--The purpose of the study under paragraph (1)
is to assess the impact of old, new, and emerging medical
technologies on health care costs, social costs, and patient
outcomes, and to identify the factors, including government and
private payor reimbursement policies, that impede or encourage
innovation that improves patient outcomes. Congress intends
that the study complement the technology assessment, outcomes
research, and guideline development activities authorized under
title IX of the Public Health Service Act by providing a
comprehensive context for understanding the economic and social
factors related to the development and use of medical
technologies.
(3) Definitions.--As used in this section:
(A) Economic benefits.--The term ``economic
benefits'' may include, based on available data--
(i) reductions in the economic costs of
disease;
(ii) increases in employment attributable
to the medical technology industry;
(iii) increases in Federal and State tax
revenues attributable to the medical technology
industry and its employees;
(iv) improvements in the balance of trade
deficit attributable to the medical technology
industry; and
(v) other benefits that are determined by
the Advisory Committee established under
subsection (b) to be relevant to assessing the
impact of medical technology.
(B) Economic costs.--The term `economic costs' may
include, based on available data--
(i) the financial costs to the health care
system of diagnosing and treating disease,
including the costs of nontreatment and
palliative care;
(ii) the financial costs to employers
resulting from worker illness, including the
costs of productivity losses and worker
absenteeism;
(iii) the financial costs to families
resulting from illness of a family member,
including costs associated with loss of income,
hiring of caretakers, and long term and hospice
care;
(iv) the financial costs to government of
illness, including reductions in income tax
revenues attributable to worker illness and
worker related injuries and increases in
transfer payments, including unemployment,
disability, welfare, and survivor benefit
payments, made to individuals and families on
account of illness; and
(v) other costs that are determined by the
Advisory Committee established under subsection
(b) to be relevant to assessing the impact of
medical technology.
(C) Medical technologies.--The term `medical
technologies' includes drugs, biologics (including
vaccines), medical devices, drug delivery systems, and
surgical services and other procedures for preventing,
diagnosing, and treating diseases or health conditions.
(D) Medical technology industry.--The term `medical
technology industry' includes the biotechnology,
pharmaceutical, and medical device industries, and such
other industries that invent, develop, or market
medical technologies.
(E) Patient outcomes.--The term `patient outcomes'
may include--
(i) changes in clinical outcomes, including
stabilization of patients with progressive
disease or health conditions, resulting from
the use of safe and effective medical
technology in prevention, diagnosis, or
treatment;
(ii) changes in mortality, morbidity, and
health service use, including stabilization of
patients with progressive diseases;
(iii) changes in quality of life, including
ability to perform activities of daily living,
ability to return to work, relief from
discomfort or pain, alleviation of fatigue, and
improved mental functioning and well-being; and
(iv) other outcomes that are determined by
the Advisory Committee to be relevant to
assessing the impact of medical technology.
(b) Advisory Committee.--
(1) In general.--The Administrator shall establish an
Advisory Committee to assist the Agency for Health Care Policy
and Research in preparing the reports required under subsection
(c). Except as provided in paragraph (3), no member of the
Advisory Committee shall be an employee of the Federal
Government.
(2) Membership.--The Advisory Committee shall be balanced
in its representation of interested parties and shall be
composed of at least two individuals appointed by the President
of the Institute of Medicine and two individuals from each of
the following categories to be appointed by the Administrator:
(A) Experts in medical technology assessment.
(B) Experts in objective measures of improved
patient outcomes, such as clinical outcomes, mortality,
morbidity, and health service use.
(C) Experts in subjective measures of improved
patient outcomes, such as quality of life.
(D) Experts in quantifying the economic costs of
disease to the health care system, including public and
private payers.
(E) Experts in quantifying the economic impact of
the medical technology industry.
(F) Experts in health statistics and epidemiology.
(G) Physicians and other health care providers.
(H) Officers or employees of health plans and other
health care payers.
(I) Experts in the ethical implications of health
care.
(J) Experts in private sector financial market
investment in the medical technology industry.
(K) Consumers and members of patient advocacy
groups.
(L) Health professional organizations.
(M) Officers or employees of biotechnology
companies.
(N) Officers or employees of medical device
companies.
(O) Officers or employees of pharmaceutical
companies.
(3) Ex officio.--The following individuals or their
designees shall serve as ex officio members of the Advisory
Committee:
(A) The Director of the National Institutes of
Health.
(B) The Commissioner of Food and Drugs.
(C) The Director of the Centers for Disease Control
and Prevention.
(D) The Administrator of the Health Care Financing
Administration.
(E) The Under Secretary of Commerce for Technology.
(F) The Director of the Congressional Office of
Technology Assessment.
(c) Interdisciplinary Study and Report.--
(1) In general.--The Administrator, in consultation with
the Advisory Committee established under subsection (b), shall
determine which diseases or conditions should be studied in the
Medical Technology Impact Study under subsection (a). In
carrying out the medical technology assessment required under
this subsection, the Administrator shall consider various
factors, including those outlined in section 904(b)(2) of the
Public Health Service Act and government and private payor
reimbursement policies that impede or encourage innovation that
improves patient outcomes. The diseases or conditions studied
in such Study shall be those considered to be high priority
according to the following criteria:
(A) Aggregate economic costs to the United States.
(B) Overall importance to public heath.
(C) Potential for improvements in patient outcomes.
(D) Significant changes expected in management of
the condition.
(E) Other criteria identified by the Advisory
Committee.
(2) Design.--The Administrator, in consultation with the
Advisory Committee established under subsection (b), and the
Institute of Medicine pursuant to paragraph (3), shall develop
a design, based on the list of target diseases and conditions,
for undertaking the Medical Technology Impact Study under
subsection (a).
(3) Contract.--The Secretary shall request the Institute of
Medicine of the National Academy of Sciences to enter into a
contract to review the design of the Medical Technology Impact
Study under subsection (a) and report to the Administrator
concerning any recommendations for revising such design, in the
interest of assuring that it reflects the best available
scientific methodologies.
(4) Publication.--The Administrator shall publish the study
design under this section and list of target diseases and
conditions, the recommendations of the Institute of Medicine,
and the response of the Administrator to such recommendations
in the Federal Register for a 60-day period for public comment.
Any such comments shall be considered by the Administrator in
completing the proposed study design for submission to the
Secretary.
(5) Design report.--The Secretary shall report to Congress
concerning the proposed design of the Medical Technology Impact
Study, together with recommendations for appropriations
necessary to carry out the Study.
(6) Grants and contracts.--Beginning in the first fiscal
year for which Congress appropriates funds under subsection
(d), and ending on September 30 of that year, the Administrator
shall enter into grants and contracts with appropriate entities
to conduct any investigations and analyses that may be required
to carry out the design of the Medical Technology Impact Study
under subsection (a).
(7) Report on findings.--The Administrator, in consultation
with the Advisory Committee established under subsection (b),
shall develop a draft comprehensive report concerning the
findings of the Medical Technology Impact Study under
subsection (a), shall make copies of the draft report available
to the public, and shall publish a notice in the Federal
Register providing for a 60-day period of public comment. Any
such comments shall be considered by the Administrator in
completing and submitting the final report to the Secretary.
(8) Final report.--Not later than 3 years after the date of
enactment of this section, the Secretary shall submit the
report of the Administrator under this section to Congress, and
may include any recommendations determined necessary to assure
the availability, access and appropriate use of medical
technologies to improve the quality of health care in the
United States.
(d) Authorization of Appropriations.--There are authorized to be
appropriated such sums as may be necessary to carry out this section.
Subtitle D--Core Functions of Public Health Programs; National
Initiatives Regarding Preventive Health
PART 1--FUNDING
SEC. 3301. AUTHORIZATIONS OF APPROPRIATIONS.
(a) Core Functions of Public Health Programs.--For the purpose of
carrying out part 2, there are authorized to be appropriated
$123,000,000 for fiscal year 1995, $184,500,000 for fiscal year 1996,
$266,500,000 for fiscal year 1997, $348,500,000 for fiscal year 1998,
$410,000,000 for fiscal year 1999, $512,500,000 for fiscal year 2000,
and $2,000,000 for each of the fiscal years 2001 through 2004.
(b) National Initiatives Regarding Health Promotion and Disease
Prevention.--For the purpose of carrying out part 3, there are
authorized to be appropriated $102,500,000 for each of the fiscal years
1996 through 1998, $123,000,000 for each of the fiscal years 1999 and
2000, and $2,000,000 for each of the fiscal years 2001 through 2004.
(c) Relation to Other Funds.--The authorizations of appropriations
established in subsections (a) and (b) are in addition to any other
authorizations of appropriations that are available for the purposes
described in such subsections.
PART 2--CORE FUNCTIONS OF PUBLIC HEALTH PROGRAMS
SEC. 3311. PURPOSES.
Subject to the subsequent provisions of this subtitle, the purposes
of this part are to strengthen the capacity of State and local public
health agencies to carry out the following functions:
(1) To monitor and protect the health of communities
against communicable diseases and exposure to toxic
environmental pollutants, occupational hazards, harmful
products, and poor quality health care.
(2) To identify and control outbreaks of infectious disease
and patterns of chronic disease and injury.
(3) To inform and educate health care consumers and
providers about their roles in preventing injury, preventing
and controlling disease and the appropriate use of medical
services.
(4) To develop and test new prevention and public health
control interventions.
(5) To integrate and coordinate the prevention programs and
services of standard health plans, community-based providers,
local health departments, State health departments, purchasing
cooperatives, and other sectors of State and local government
that affect health, including education, labor, transportation,
welfare, criminal justice, environment, agriculture, and
housing.
(6) To conduct research on the effectiveness and cost-
effectiveness of public health programs.
SEC. 3312. GRANTS TO STATES FOR CORE FUNCTIONS OF PUBLIC HEALTH.
(a) In General.--The Secretary shall make grants to States that
submit applications as prescribed in section 3313 in an amount which
bears the same ratio to the available amounts for that fiscal year as
the amounts provided by the Secretary under the provisions of law
listed in section 1902(2) of the Public Health Service Act to the State
for fiscal year 1981 bear to the total amount appropriated for such
provisions of law for fiscal year 1981.
(b) Core Functions of Public Health Programs.--For purposes of
subsection (a), the functions described in this subsection are, subject
to subsection (c), as follows:
(1)(A) Data collection, activities related to population
health (including the population of individuals ineligible for
the comprehensive benefit package) measurement and outcomes
monitoring, including the acquisition and installation of
hardware and software, personnel training and technical
assistance to operate and support automated and integrated
information systems, the regular collection and analysis of
public health data, vital statistics, and personal health
services data and analysis for planning and needs assessment
purposes of data collected from health plans through the
information system under title V of this Act.
(B) Data measures under this paragraph must include an
ethnic identifier on all forms. To the extent feasible, ethnic
identifiers should be classified by ethnic sub-group
populations. Access to data must be ensured for research
organizations and data clearinghouses. Population health
measurement and outcome monitoring should focus on health
status differentials between racial, and ethnic groups, by
subpopulation, and gender differences.
(2) Activities to protect the environment and to assure the
safety of housing, workplaces, food and water, including the
following activities:
(A) Monitoring and improving the overall public
health quality and safety of communities.
(B) Assessing exposure to high lead levels and
water contamination.
(C) Providing support for poison control centers.
(D) Monitoring sewage and solid waste disposal,
radiation exposure, radon exposure, and noise levels.
(E) Abatement of lead-related hazards.
(F) Assuring recreation, home and worker safety.
(G) Public information and education programs that
help to reduce intentional and unintentional injuries,
including training parents and children on use of
safety devices.
(H) Enforcing public health safety and sanitary
codes.
(I) Other activities relating to promoting the
public health of communities.
(3) Investigation and control of adverse health conditions,
including improvements in emergency treatment preparedness,
injury prevention, cooperative activities to reduce violence
levels in homes and communities, activities to control the
outbreak of disease, exposure related conditions and other
threats to the health status of individuals.
(4) Public information and education programs to reduce
risks to health such as use of tobacco, alcohol and other
drugs, sexual activities that increase the risk to HIV
transmission and sexually transmitted diseases, domestic
violence, poor diet, physical inactivity, and low childhood
immunization levels.
(5) Accountability and quality assurance activities,
including monitoring the quality of personal health services
furnished by health plans and providers of medical and health
services in a manner consistent with the overall quality of
care monitoring activities undertaken under title V, and
monitoring communities' overall access to health services.
(6) Provision of public health laboratory services to
complement private clinical laboratory services and that screen
for diseases and conditions such as metabolic diseases in
newborns, provide toxicology assessments of blood lead levels
and other environmental toxins, diagnose sexually transmitted
diseases, tuberculosis and other diseases requiring partner
notification, test for infectious and food-borne diseases, and
monitor the safety of water and food supplies.
(7) Training and education to assure provision of care by
all health professionals, with special emphasis placed on the
training of public health professions including
epidemiologists, biostatisticians, health educators, public
health administrators, sanitarians and laboratory technicians.
(8) Leadership, policy development and administration
activities, including needs assessment, the setting of public
health standards, the development of community public health
policies, and the development of community public health
coalitions.
(9) Establishment of programs that encourage partnerships
among local law enforcement and community groups for the
purpose of developing community response teams to assist
victims of domestic violence.
(c) Restrictions on Use of Grant.--
(1) In general.--A funding agreement for a grant under
subsection (a) for a State is that the grant will not be
expended--
(A) to provide inpatient services;
(B) to make cash payments to intended recipients of
health services;
(C) to purchase or improve land, purchase,
construct, or permanently improve (other than minor
remodeling) any building or other facility, or purchase
major medical equipment;
(D) to satisfy any requirement for the expenditure
of non-Federal funds as a condition for the receipt of
Federal funds; or
(E) to provide financial assistance to any entity
other than a public or nonprofit private entity.
(2) Limitation on administrative expenses.--A funding
agreement for a grant under subsection (a) is that the State
involved will not expend more than 10 percent of the grant for
administrative expenses with respect to the grant.
(d) Maintenance of Effort.--A funding agreement for a grant under
subsection (a) is that the State involved will maintain expenditures of
non-Federal amounts for core health functions at a level that is not
less than the level of such expenditures maintained by the State for
the fiscal year preceding the first fiscal year for which the State
receives such a grant.
SEC. 3313. SUBMISSION OF INFORMATION.
The Secretary may make a grant under section 3312 only if the State
involved submits to the Secretary the following information:
(1) A description of existing deficiencies in the State's
public health system (at the State level and the local level),
using standards of sufficiency developed by the Secretary.
(2) A description of health status measures to be improved
within the State (at the State level and the local level)
through expanded public health functions.
(3) Measurable outcomes and process objectives for
improving health status and core health functions for which the
grant is to be expended.
(4) Information regarding each such function, which--
(A) identifies the amount of State and local
funding expended on each such function for the fiscal
year preceding the fiscal year for which the grant is
sought; and
(B) provides a detailed description of how
additional Federal funding will improve each such
function by both the State and local public health
agencies.
(5) A description of the core health functions to be
carried out at the local level, and a specification for each
such function of--
(A) the communities in which the function will be
carried out; and
(B) the amount of the grant to be expended for the
function in each community so specified.
SEC. 3314. REPORTS.
A funding agreement for a grant under section 3312 is that the
States involved will, not later than the date specified by the
Secretary, submit to the Secretary a report describing--
(1) the purposes for which the grant was expended; and
(2) describing the extent of progress made by the State in
achieving measurable outcomes and process objectives described
in section 3313(3).
SEC. 3315. APPLICATION FOR GRANT.
The Secretary may make a grant under section 3312 only if an
application for the grant is submitted to the Secretary, the
application contains each agreement described in this part, the
application contains the information required in section 3314, and the
application is in such form, is made in such manner, and contains such
agreements, assurances, and information as the Secretary determines to
be necessary to carry out this part.
SEC. 3316. ALLOCATIONS FOR CERTAIN ACTIVITIES.
Of the amounts made available under section 3301 for a fiscal year
for carrying out this part, the Secretary may reserve not more than 5
percent for carrying out the following activities:
(1) Technical assistance with respect to planning,
development, and operation of core health functions carried out
under section 3312, including provision of biostatistical and
epidemiological expertise and provision of laboratory
expertise.
(2) Development and operation of a national information
network among State and local health agencies.
(3) Program monitoring and evaluation of core health
functions carried out under section 3312.
(4) Development of a unified electronic reporting mechanism
to improve the efficiency of administrative management
requirements regarding the provision of Federal grants to State
public health agencies.
SEC. 3317. DEFINITIONS.
For purposes of this part:
(1) The term ``funding agreement'', with respect to a grant
under section 3312 to a State, means that the Secretary may
make the grant only if the State makes the agreement involved.
(2) The term ``core health functions'', with respect to a
State, means the functions described in section 3312(b).
SEC. 3318. SINGLE APPLICATION AND UNIFORM REPORTING SYSTEMS FOR CORE
FUNCTIONS OF PUBLIC HEALTH AND PUBLIC HEALTH CATEGORICAL
GRANT PROGRAMS ADMINISTERED BY THE CENTERS FOR DISEASE
CONTROL AND PREVENTION.
(a) Single Application.--
(1) In general.--The Secretary, acting through the Director
of the Centers for Disease Control and Prevention, shall
establish a single consolidated application to enable States to
apply for the Core Functions of Public Health Grants Program
and any or all of the Public Health Service Act categorical
programs described in subsection (b).
(2) Requirements.--The application developed under
paragraph (1) shall--
(A) be designed so that information collected will
be consistent with the requirements of this part
including subsection (b);
(B) be designed and implemented not later than 1
year after the date of enactment of this Act; and
(C) be developed with resources made available
under section 3316 (not resources made available for
the programs described in subsection (b)).
(3) State public health officers.--In developing the single
consolidated application form to be used under this subsection
the Secretary shall consult with Federal, State and local
public health agencies.''.
(4) Eligibility.--States and local governments that have
grants, contracts or cooperative agreements in effect with the
Centers for Disease Control and Prevention on the date of
enactment of this Act shall be eligible to use a single
application under this section to apply for any or all of the
Public Health Service Act categorical programs described in
subsection (b).
(b) Eligible Public Health Service Act Programs.--Eligible Public
Health Service Act categorical programs described in this subsection
are the following:
(1) The Preventive Health and Health Services Block Grant
under section 1903 of the Public Health Service Act.
(2) The Childhood Lead Poisoning Prevention Program under
section 317A of the Public Health Service Act.
(3) The Sexually Transmitted Diseases Program under section
318 of the Public Health Service Act.
(4) The Prevention of Sexually Transmitted Diseases-Related
Infertility Program under section 318A of the Public Health
Service Act.
(5) The Breast and Cervical Cancer Early Detection Program
under sections 1501 through 1509 of the Public Health Service
Act.
(6) The National Program of Cancer Registries under section
399H of the Public Health Service Act.
(7) The Injury Control and Prevention Program under
sections 391 through 394 of the Public Health Service Act.
(8) The preventive health for prostate cancer program under
section 317D of the Public Health Service Act.
(9) The birth defects data program under section 317C of
the Public Health Service Act.
(10) Programs under subtitle D of this title.
(11) Other relevant programs as determined appropriate by
the Secretary.
(c) Allocation of Funds.--In awarding grants to States and local
governments under a single application under this section, the
Secretary shall delineate to each grantee the amounts to be dedicated
to each of the programs described in subsection (b) and ensure that
funding allotments for each of such programs are consistent with the
requirements of Federal law.
(d) Uniform Core Functions of Public Health Reporting System.--
(1) Development.--The Secretary, acting through the
Director of the Office of Disease Prevention and Health
Promotion and the Director of the Centers for Disease Control
and Prevention, in consultation with other relevant Federal and
State health agencies with data collection responsibilities,
shall develop and implement a Uniform Core Public Health
Functions Reporting System to collect program and fiscal data
concerning the programs described in subsection (b).
(2) Requirements.--The system developed under paragraph (1)
shall--
(A) use outcomes consistent with the goals of
Healthy People 2000;
(B) be designed so that information collected will
be consistent with the requirements of this part
including subsection (b);
(C) be designed and implemented not later than 2
years after the date of enactment of this Act; and
(D) be developed with resources made available
under section 3316 of this Act (not resources made
available for the programs described in subsection
(b)).
(3) State public health officers.--In developing the data
set to be used under Uniform Core Public Health Functions
Reporting System the Secretary shall consult with Federal,
State and local public health agencies.
(e) Study.--
(1) In general.--Within a reasonable period of time after
the date of enactment of this Act, the Secretary shall request
that the Institute of Medicine conduct a study concerning--
(A) the effects of consolidating any or all of the
grant programs administered by the Centers for Disease
Control and Prevention and described in subsection (b)
into a Core Functions of Public Health Block Grant
Program;
(B) the development of alternative methods for
implementing a block grant program or categorical grant
program; and
(C) alternative formulas for allocating State
grants that incorporate measures of health status,
population and degree of poverty.
In particular, the impact of program consolidation on the
targeted recipients, including women and vulnerable
populations, shall be addressed in the study. If the Institute
of Medicine declines to do the study, the Secretary shall make
grants to or enter into contracts with a public or nonprofit
private entity with relevant expertise for the conduct of such
a study.
(2) Report.--Not later than 1 year after the date of the
receipt of the contract under paragraph (1), the contract
recipient shall prepare and submit to the Secretary, the Energy
and Commerce Committee of the House of Representatives, and the
Committee on Labor and Human Resources of the Senate a report
that contains the results of the study conducted under
paragraph (1).
(3) Issuance of plan.--Not later than 1 year after the date
on which the report under paragraph (2) is received by the
Secretary and the committees referred to in such paragraph, the
Secretary shall issue a plan in response to the report. Such a
plan shall include the identification of relevant changes in
authorizing language.
PART 3--NATIONAL INITIATIVES REGARDING HEALTH PROMOTION AND DISEASE
PREVENTION
Subpart A--General Grants
SEC. 3331. GRANTS FOR NATIONAL PREVENTION INITIATIVES.
(a) In General.--The Secretary may make grants to entities
described in subsection (b) for the purpose of carrying out projects to
develop and implement innovative community-based strategies to provide
for health promotion and disease prevention activities for which there
is a significant need, as identified under section 1701 of the Public
Health Service Act.
(b) Eligible Entities.--The entities referred to in subsection (a)
are agencies of State or local government, private nonprofit
organizations (including research institutions), and coalitions that
link two or more of these groups.
(c) Certain Activities.--The Secretary shall ensure that projects
carried out under subsection (a)--
(1) reflect approaches that take into account the special
needs and concerns of the affected populations;
(2) are targeted to the most needy and vulnerable
population groups and geographic areas of the Nation;
(3) examine links between various high priority preventable
health problems and the potential community-based remedial
actions; and
(4) establish or strengthen the links between the
activities of agencies engaged in public health activities with
those of purchasing cooperatives, health care providers, and
other entities involved in the personal health care delivery
system described in title I.
SEC. 3332. PRIORITIES.
(a) Establishment.--
(1) Annual statement.--The Secretary shall for each fiscal
year develop a statement of proposed priorities for grants
under section 3331 for the fiscal year.
(2) Allocations among priorities.--With respect to the
amounts available under section 3301(b) for the fiscal year for
carrying out this part, each statement under paragraph (1) for
a fiscal year shall include a specification of the percentage
of the amount to be devoted to projects addressing each of the
proposed priorities established in the statement.
(3) Process for establishing priorities.--
(A) Preference.--In establishing priorities for
grants under this part, preference shall be given to
projects that--
(i) reduce the prevalence of chronic
diseases including cardiovascular disease,
stroke, diabetes, and cancer;
(ii) prevent violence against women by
training providers and other health care
professionals to identify victims of domestic
violence, to provide appropriate examination
and treatment, and to refer the victims for
appropriate social and legal services; and
(iii) establish community health advisor
programs described in subparagraph (B).
(B) Community health advisor programs.--For
purposes of subparagraph (A)(iii), the term ``community
health advisor program'' means a program that performs
the following functions:
(i) Provides outreach services to inform
the community of the availability of program
services.
(ii) Collaborate efforts with health care
providers and related entities to facilitate
the provision of health services and health
related social services.
(iii) Provide public education on health
promotion and disease prevention and efforts to
facilitate the use of available health services
and health-related social services.
(iv) Provide health-related counseling.
(v) Make referrals for available health
services and health-related social services.
(vi) Improve the ability of individuals to
use health services and health-related social
services under Federal, State, and local
programs, through assisting individuals in
establishing eligibility under the programs.
(vii) Establish a community health advisor
training program.
(viii) Provide services in the language and
cultural context most appropriate for the
individuals served by the program.
(ix) Provide compensation for the services
of, and opportunities for training and
employment of, community health advisors.
(x) Such other services as the Secretary
determines to be appropriate, which may include
transportation and translation services.
(C) Publication of statement.--Not later than
January 1 of each fiscal year, the Secretary shall
publish a statement under paragraph (1) in the Federal
Register. A period of 60 days shall be allowed for the
submission of public comments and suggestions
concerning the proposed priorities. After analyzing and
considering comments on the proposed priorities, the
Secretary shall publish in the Federal Register final
priorities (and associated reservations of funds) for
approval of projects for the following fiscal year.
(D) Definition of community health advisor.--For
purposes of subparagraph (B), the term ``community
health advisor'' means an individual--
(i) who has demonstrated the capacity to
carry out one or more of the authorized program
services;
(ii) who, for not less than 1 year, has
been a resident of the community in which the
community health advisor program involved is to
be operated; and
(iii) is a member of a socioeconomic group
to be served by the program.
(b) Applicability to Making of Grants.--
(1) In general.--The Secretary may make grants under
section 3331 for projects that the Secretary determines--
(A) are consistent with the applicable final
statement of priorities and otherwise meets the
objectives described in subsection (a); and
(B) will assist in meeting a health need or concern
of a population within a defined health care coverage
area or other service area.
(2) Special consideration for certain projects.--In making
grants under section 3331, the Secretary shall give special
consideration to applicants that will carry out projects that,
in addition to being consistent with the applicable published
priorities under subsection (a) and otherwise meeting the
requirements of this part, have the potential for replication
in other communities.
SEC. 3333. SUBMISSION OF INFORMATION.
The Secretary may make a grant under section 3331 only if the
applicant involved submits to the Secretary the following information:
(1) A description of the activities to be conducted, and
the manner in which the activities are expected to contribute
to meeting one or more of the priority health needs specified
under section 3332 for the fiscal year for which the grant is
initially sought.
(2) A description of the total amount of Federal funding
requested, the geographic area and populations to be served,
and the evaluation procedures to be followed.
(3) Such other information as the Secretary determines to
be appropriate.
SEC. 3334. APPLICATION FOR GRANT.
The Secretary may make a grant under section 3331 only if an
application for the grant is submitted to the Secretary, the
application contains each agreement described in this part, the
application contains the information required in section 3333, and the
application is in such form, is made in such manner, and contains such
agreements, assurances, and information as the Secretary determines to
be necessary to carry out this part.
Subpart B--Development of Telemedicine in Rural Underserved Areas
SEC. 3341. GRANTS FOR DEVELOPMENT OF RURAL TELEMEDICINE.
(a) In General.--
(1) Grants awarded.--The Secretary, acting through the
Office of Rural Health Policy, shall award grants to eligible
entities that have applications approved under subsection (b)
for the purpose of expanding access to health care services for
individuals in rural areas through the use of telemedicine.
Grants shall be awarded under this section to encourage the
initial development of rural telemedicine networks, expand
existing networks, link existing networks together, or link
such networks to existing fiber optic telecommunications
systems.
(2) Eligible entity.--For purposes of this section, the
term ``eligible entity'' means a public or nonprofit entity
operating in a nonmetropolitan area (as defined by the
Secretary of Commerce) as part of a network of community-based
providers that includes at least three of the following:
(A) Community or migrant health centers.
(B) Local health departments.
(C) Community mental health centers.
(D) Nonprofit hospitals.
(E) Private practice health professionals,
including rural health clinics.
(F) Other publicly funded health or social services
agencies.
(b) Application.--To be eligible to receive a grant under this
section an entity shall prepare and submit to the Secretary an
application at such time, in such manner and containing such
information as the Secretary may require, including a description of
the use to which the entity will apply any amounts received under the
grant.
(c) Preference.--The Secretary shall, in awarding grants under this
section, give preference to applicants that--
(1) are health care providers in rural health care networks
or providers that propose to form such networks, and the
majority of the providers in such a network are located in a
medically underserved or health professional shortage areas;
(2) can demonstrate broad geographic coverage in the rural
areas of the State, or States in which the applicant is
located;
(3) propose to use Federal funds to develop plans for, or
to establish, telemedicine systems that will link rural
hospitals and rural health care providers to other hospitals
and health care providers;
(4) will use the amounts provided under the grant for a
range of health care applications such as teleradiology,
telepathology, interactive video consultation and remote
educational services, and to promote greater efficiency in the
use of health care resources; and
(5) propose to use local matching funds to finance
projects.
(d) Use of Amounts.--Amounts received under a grant awarded under
this section shall be utilized for the development of telemedicine
networks involving two or more providers. Such amounts may be used to
cover the costs associated with the development of telemedicine
networks and the acquisition or construction of telecommunications
facilities and equipment including--
(1) the development and acquisition through lease or
purchase of computer hardware and software, audio and visual
equipment, computer network equipment, telecommunications
transmission facilities, telecommunications terminal
equipments, interactive video equipment, data terminal
equipment, and other facilities and equipment that would
further the purposes of this section;
(2) the provision of technical assistance and instruction
for the development and use of such programming equipment or
facilities;
(3) the development and acquisition of instructional
programming;
(4) demonstration projects for teaching or training medical
students, residents, and other health professions students in
rural training sites about the application of telemedicine;
(5) transmission costs, maintenance of equipment, and
compensation of specialists and referring practitioners;
(6) demonstration projects to use telemedicine to
facilitate collaboration between physicians and nonphysician
primary care practitioners such as physician assistants, nurse
practitioners, and certified nurse-midwives; or
(7) such other uses that are consistent with achieving the
purposes of this section as approved by the Secretary.
(e) Prohibited Uses.--Amounts received under a grant awarded under
this section may not be used for any of the following:
(1) Expenditures to purchase or lease equipment to the
extent the expenditures would exceed more than 60 percent of
the total grant funds.
(2) Expenditures for indirect costs (as determined by the
Secretary) to the extent the expenditures would exceed more
than 10 percent of the total grant funds.
SEC. 3342. REPORT AND EVALUATION OF TELEMEDICINE.
Not later than the date that is 3 years after the date on which the
first grant is awarded under section 3341, the Secretary, in
consultation with the Administrator of the Rural Electrification
Administration, the Secretary of Veterans Affairs, and other agencies
and departments that have responsibilities for overseeing telemedicine
projects, shall prepare and submit to the appropriate committees of
Congress a report that evaluates telemedicine in the United States.
Such report shall contain an evaluation of--
(1) whether telemedicine expands access to health care
services;
(2) the cost effectiveness of telemedicine services; and
(3) the quality of telemedicine services delivered.
SEC. 3343. REGULATIONS ON REIMBURSEMENT OF TELEMEDICINE.
Not later than July 1, 1996, the Secretary, in consultation with
the Director of the Office of Rural Health and the Administrator of the
Health Care Financing Administration, shall issue regulations
concerning reimbursement for telemedicine services provided under title
XVIII of the Social Security Act.
SEC. 3344. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated such sums as may be
necessary to carry out this subpart.
SEC. 3345. DEFINITIONS.
As used in this part:
(1) Computer networks.--The term ``computer networks''
means computer hardware and software, terminals, signal
conversion equipment including both modulators and
demodulators, or related devices, used to communicate with
other computers to process and exchange date through a
telecommunication network in which signals are generated,
modified, or prepared for transmission, or received, via
telecommunications terminal equipment and telecommunications
transmission facilities.
(2) Data terminal equipment.--The term ``data terminal
equipment'' means equipment that converts user information into
data signals for transmission, or reconverts the received data
signals into user information, and is normally found on the
terminal of a circuit and on the premises of the end user.
(3) Fiber optic cable.--The term ``fiber optic cable''
means a bundle of optical transmission elements or waveguides
usually consisting of a fiber core and fiber cladding that can
guide a lightwave and that are incorporated into an assembly of
materials that provide tensile strength and external
protection.
(4) Interactive video equipment.--The term ``interactive
video equipment'' means equipment used to produce and prepare
for transmission audio and visual signals from at least two
distant locations in order that individuals at such locations
can verbally and visually communicate with each other, and such
equipment includes monitors, other display devices, cameras or
other recording devices, audio pick-up devices, and other
related equipment.
(5) Rural health care network.--The term ``rural health
care network'' means a group of rural hospitals or other rural
care health care providers (including clinics, physicians and
non-physicians primary care providers) that have entered into a
formal relationship with each other or with nonrural hospitals
and health care providers for the purpose of strengthening the
delivery of health care services in rural areas or specifically
to improve their patients' access to telemedicine services. At
least 75 percent of hospitals and other health care providers
participating in the network shall be located in rural areas.
(6) Telecommunication transmission facilities.--The term
``telecommunications transmission facilities'' means those
facilities that transmit, receive, or carry data between the
telecommunications terminal equipment at each end of a
telecommunications circuit or path. Such facilities include
microwave antennae, relay stations and towers, other
telecommunications antennae, fiber-optic cables and repeaters,
coaxial cables, communication satellite ground station
complexes, copper cable electronic equipment associated with
telecommunications transmissions, and similar items as defined
by the Secretary.
(7) Telecommunication terminal equipment.--The term
``telecommunications terminal equipment'' means the assembly of
telecommunications equipment at the end of a circuit, normally
located on the premises of the end user, that interfaces with
telecommunications transmission facilities, and that is used to
modify, convert, encode, or otherwise prepare signals to be
transmitted via such telecommunications facilities, or that is
used to modify, reconvert or carry signals received from such
facilities, the purpose of which is to accomplish the goal for
which the circuit was established.
Subtitle E--Health Services for Medically Underserved Populations
PART 1--INITIATIVES FOR ACCESS TO HEALTH CARE
Subpart A--Authorization of Appropriations
SEC. 3411. AUTHORIZATIONS OF APPROPRIATIONS.
(a) Improving Access to Health Services.--
(1) Subpart b.--
(A) Except as provided in subparagraph (B), for the
purpose of carrying out subpart B, there are authorized
to be appropriated $105,000,000 for fiscal year 1995,
$245,000,000 for fiscal year 1996, $385,000,000 for
fiscal year 1997, $315,000,000 for fiscal year 1998,
$245,000,000 for fiscal year 1999, and $105,000,000 for
fiscal year 2000.
(B) With respect to awards to federally qualified
health centers (as defined in section 1861(aa)(4) of
the Social Security Act) and rural health clinics under
subpart B, there are authorized to be appropriated
$45,000,000 for fiscal year 1995, $105,000,000 for
fiscal year 1996, $165,000,000 for fiscal year 1997,
$135,000,000 for fiscal year 1998, $105,000,000 for
fiscal year 1999, and $45,000,000 for fiscal year 2000.
(2) Subpart c.--
(A) For the purpose of providing loans under
subpart C, there are authorized to be appropriated such
sums as may be necessary to support a loan level of
$200,000,000 for each of the fiscal years 1995 through
2000.
(B) For the purpose of making grants under subpart
C, there are authorized to be appropriated $35,000,000
for each of the fiscal year 1995 through 2000.
(b) Relation to Other Funds.--The authorizations of appropriations
established in subsection (a) are in addition to any other
authorizations of appropriations that are available for the purpose
described in such subsection.
(c) Eligible Entities.--For purposes of this part, the term
``eligible entities'' means--
(1) covered entities as defined in section 340B(a)(4) of
the Public Health Service Act (42 U.S.C. 256b(a)(4)), except
that subsection (a)(4)(L)(iii) and (a)(7) of such section shall
not apply;
(2) school health service sites under title III of this
Act;
(3) nonprofit hospitals meeting the criteria for public
hospitals which are eligible entities under section 340B of the
Public Health Service Act, except that subsection
(a)(4)(L)(iii) of such section shall not apply, and children's
hospitals meeting comparable criteria as determined appropriate
by the Secretary;
(4) public and private, nonprofit community mental health
centers and substance abuse treatment providers receiving funds
from the Substance Abuse and Mental Health Services
Administration;
(5) runaway homeless youth centers or transitional living
programs for homeless youth for the provision of health
services under the Runaway Homeless Youth Act of 1974 (42
U.S.C. 5701 et seq.);
(6) rural referral centers under section 1886(d)(5)(C) of
the Social Security Act, except that such eligibility is
restricted to the receipt of grants under section 3441; and
(7) public or nonprofit entities in nonmetropolitan areas
(as defined by the Department of Commerce) in a consortium of
community-based providers that includes at least three of the
following:
(A) community or migrant health centers;
(B) local health departments;
(C) community mental health centers;
(D) nonprofit hospitals;
(E) private practice health professionals,
including rural health clinics; or
(F) other publicly funded health or social services
agencies;
except that such eligibility is restricted to the receipt of
grants or contracts under section 3421(a).
(d) Priority.--In making awards from amounts appropriated under
subsection (a)(1)(B) and section 3462, the Secretary shall give the
highest priority to providing adequate assistance to federally
qualified health centers in order to ensure the provision of
comprehensive primary health care services, other covered services and
benefits, and enabling services to medically underserved populations
that were served by such centers prior to the date of enactment of this
Act, except that such federally qualified health centers must continue
to meet the requirements for designation under section 1861(aa)(4) of
the Social Security Act.
(e) Equitable Distribution.--The Secretary shall, in awarding
grants, entering into contracts, and making loans under this part,
assure an equitable distribution of funds between rural and urban
areas.
Subpart B--Development of Community Health Groups and Health Care Sites
and Services
SEC. 3421. GRANTS AND CONTRACTS FOR DEVELOPMENT OF PLANS AND NETWORKS
AND THE EXPANSION AND DEVELOPMENT OF HEALTH CARE SITES
AND SERVICES.
(a) Authority.--
(1) In general.--The Secretary may make grants to and enter
into contracts with eligible entities described in section
3411(c) for--
(A) the development of community health groups
whose principal purpose is to provide the comprehensive
benefit package under title I in one or more health
professional shortage areas or to provide such items
and services to a significant number of individuals who
are members of a medically underserved population; and
(B) the expansion of existing health delivery sites
and services and the development of new health delivery
sites and services.
(2) Consideration by secretary.--In awarding grants or
contracts under paragraph (1), the Secretary shall give
consideration to--
(A) the geographic proximity of the grant
applicants and recipients;
(B) cultural and language differences existing
within the communities to be served under the grants or
contracts; and
(C) the capacity needs of the communities to be
served.
(b) Service Area.--In making an award under subsection (a), the
Secretary shall designate the geographic area with respect to which the
community health group involved is to provide health services.
(c) Priority.--In making awards under subsection (a)(1), the
Secretary shall give priority to proposals in which a greater number of
eligible entities and other health care providers, especially providers
in community-and provider-based health plans under section 1651(d), are
participants in the community health group, except in areas such as
rural areas, where providers are severely limited in number.
(d) Limitation on Awards.--The Secretary may not make awards under
subsection (a)(1) for more than 5 years to the same community health
group.
(e) Definitions.--For purposes of this subpart:
(1) The term ``community health group'' means--
(A) a community health network that--
(i) is a public or nonprofit private
consortium of health care providers that
principally provides some of the items and
services of the standard benefit package to
medically underserved populations, and
residents of health professional shortage
areas;
(ii) has an agreement with one or more
health plans; and
(iii) has a written agreement governing the
participation of health care providers in the
consortium to which each participating provider
is a party; or
(B) a community health plan that--
(i) is a public or nonprofit private entity
that principally provides all of the items and
services of the standard benefit package to
medically underserved populations, and
residents of health professional shortage
areas;
(ii) is a participant in one or more health
alliances; and
(iii) has a written agreement governing the
participation of health care providers in the
consortium to which each participating provider
is a party.
(2) The term ``health professional shortage areas'' means
health professional shortage areas designated under section 332
of the Public Health Service Act.
(3) The term ``medically underserved population'' means a
medically underserved population designated under section
330(b)(3) of the Public Health Service Act, populations
residing in health professional shortage areas under section
332 of the Public Health Service Act, and populations eligible
for premium subsidies and cost sharing reductions based on
income under title I.
SEC. 3422. CERTAIN USES OF AWARDS.
(a) In General.--Amounts awarded under section 3421 may be expended
for--
(1) the development of a community health group, including
entering into contracts between the recipient of the award and
health care providers who are to participate in the group;
(2) the expansion, development and on-going operation of
health delivery sites and services; and
(3) activities under paragraphs (1) and (2) which include--
(A) the recruitment, compensation, and training of
health professionals and administrative staff;
(B) the purchase and upgrading of equipment,
supplies, and information systems including
telemedicine systems; and
(C) the establishment of reserves required for
furnishing services on a prepaid or capitated basis,
except that eligible entities may use non-cash
mechanisms (including bonds, letters of credit and
federally guaranteed reinsurance pools) for
establishing and maintaining financial reserves.
(b) Loans and Grants.--The Secretary may expend, in any fiscal
year, not to exceed 10 percent of the amounts appropriated to carry out
this subpart to make loans and grants to eligible entities to support
the types of activities described in section 3441, subject to the
requirements of subpart C, except that, with respect to amounts
available for non-federally qualified health center activities, such
funds may be used to convert facilities from providers of acute care
service to providers of primary, emergency or long-term care.
SEC. 3423. APPLICATION.
The Secretary may not make an award to an entity under section 3421
until such entity submits and application to the Secretary, in such
form and containing such assurances and information as the Secretary
determines appropriate, including--
(1) an assessment of the need that the medically
underserved population or populations proposed to be served by
the applicant have for health services and for enabling
services (as defined in section 3461);
(2) a description of how the applicant will design the
proposed community health plan or practice network (including
the service sites involved) for such populations based on the
assessment of need;
(3) a description of efforts to secure financial and
professional assistance and support for the project; and
(4) evidence of significant community involvement in the
initiation, development and ongoing operation of the project.
SEC. 3424. PURPOSES AND CONDITIONS.
Grants shall be made under this subpart for the purposes and
subject to all of the conditions under which eligible entities
otherwise receive funding to provide health services to medically
underserved populations under the Public Health Service Act. The
Secretary shall prescribe comparable purposes and conditions for
eligible entities not receiving funding under the Public Health Service
Act.
Subpart C--Capital Cost of Development of Community Health Groups and
Other Purposes
SEC. 3441. DIRECT LOANS AND GRANTS.
(a) In General.--The Secretary shall make grants and loans to--
(1) eligible entities (as defined in section 3412(c));
(2) hospitals designated by the Secretary as essential
access community hospitals under section 1820(i)(1) of the
Social Security Act; or
(3) rural primary care hospitals under section 1820(i)(2)
of such Act;
for the capital costs of developing community health groups (as defined
in section 3421(e)) and expanding existing health delivery sites or
developing new health delivery sites.
(b) Use of Assistance.--
(1) In general.--The capital costs for which grants and
loans made pursuant to subsection (a) may be expended are,
subject to paragraphs (2) and (3), the following:
(A) The acquisition, modernization, expansion or
construction of facilities, or the conversion of
unneeded hospital facilities to facilities that will
assure or enhance the provision and accessibility of
health care and enabling services to medically
underserved populations.
(B) The purchase of major equipment, including
equipment necessary for the support of external and
internal information systems.
(C) The establishment of reserves required for
furnishing services on a prepaid or capitated basis.
(D) Such other capital costs as the Secretary may
determine are necessary to achieve the objectives of
this section.
(2) Priorities regarding use of funds.--In providing grants
and loans under subsection (a) for an entity, the Secretary
shall give priority to authorizing the use of amounts for
projects for the renovation and modernization of medical
facilities necessary to prevent or eliminate safety hazards
including asbestos removal, avoid noncompliance with licensure
or accreditation standards, or projects to replace obsolete
facilities.
(3) Limitation.--The Secretary may authorize the use of
grants and loans under subsection (a) for the construction of
new buildings only if the Secretary determines that appropriate
facilities are not available through acquiring, modernizing,
expanding or converting existing buildings, or that
construction new buildings will cost less.
(c) Amount of Assistance.--
(1) In general.--The principal amount of loans under
subsection (a) may cover up to 90 percent of the costs
involved.
(2) Grants.--Grants under this subsection may not exceed 75
percent of the costs involved.
(d) Interest Subsidies.--Amounts provided under this section may be
used to provide interest subsidies for loans provided under this
section where such subsidies are necessary to make a project financial
feasible.
SEC. 3442. CERTAIN REQUIREMENTS.
(a) In General.--The Secretary may approve a loan under section
3441 only if--
(1) the Secretary is reasonably satisfied that the
applicant for the project for which the loan would be made will
be able to make payments of principal and interest thereon when
due; and
(2) the applicant provides the Secretary with reasonable
assurances that there will be available to it such additional
funds as may be necessary to complete the project or
undertaking with respect to which such loan is requested.
(b) Terms and Conditions.--Any loan made under section 3441 shall,
subject to the Federal Credit Reform Act of 1990, meet such terms and
conditions (including provisions for recovery in case of default) as
the Secretary, in consultation with the Secretary of the Treasury,
determines to be necessary to carry out the purposes of such section
while adequately protecting the financial interests of the United
States. Terms and conditions for such loans shall include provisions
regarding the following:
(1) Security.
(2) Maturity date.
(3) Amount and frequency of installments.
(4) Rate of interest, which shall be at a rate comparable
to the rate of interest prevailing on the date the loan is
made.
SEC. 3443. DEFAULTS; RIGHT OF RECOVERY.
(a) Defaults.--
(1) In general.--The Secretary may take such action as may
be necessary to prevent a default on loans under section 3441,
including the waiver of regulatory conditions, deferral of loan
payments, renegotiation of loans, and the expenditure of funds
for technical and consultative assistance, for the temporary
payment of the interest and principal on such a loan, and for
other purposes.
(2) Foreclosure.--The Secretary may take such action,
consistent with State law respecting foreclosure procedures, as
the Secretary deems appropriate to protect the interest of the
United States in the event of a default on a loan made pursuant
to section 3441, including selling real property pledged as
security for such a loan and for a reasonable period of time
taking possession of, holding, and using real property pledged
as security for such a loan.
(3) Waivers.--The Secretary may, for good cause, but with
due regard to the financial interests of the United States,
waive any right of recovery which the Secretary has by reasons
of the failure of a borrower to make payments of principal of
and interest on a loan made pursuant to section 3441, except
that if such loan is sold and guaranteed, any such waiver shall
have no effect upon the Secretary's guarantee of timely payment
of principal and interest.
(b) Twenty-Year Obligation; Right of Recovery; Subordination;
Waivers.--
(1) In general.--With respect to an eligible entity for
which a grant or loan was made under section 3441, the
Secretary may award the grant or loan only if the applicant
involved agrees that the applicant will be liable to the United
States for the amount of the grant or loan, 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 entity--
(A) ceases to be an eligible entity utilized by a
community health group, or by another public or
nonprofit private entity that provides health services
in one or more health professional shortage areas or
that provides such services to a significant number of
individuals who are members of a medically underserved
population; or
(B) is sold or transferred to any entity other than
an entity that is--
(i) a community health group or other
entity described in subparagraph (A); and
(ii) approved by the Secretary as a
purchaser or transferee regarding the facility.
(2) Subordination; waivers.--With respect to essential
community providers, the Secretary may subordinate or waive the
right of recovery under paragraph (1), and any other Federal
interest that may be derived by virtue of a grant or loan under
section 3441, if the Secretary determines that subordination or
waiver will further the objectives of this part.
SEC. 3444. PROVISIONS REGARDING CONSTRUCTION OR EXPANSION OF
FACILITIES.
(a) Submission of Information.--In the case of a project for
construction, conversion, expansion or modernization of a facility, the
Secretary may provide loans under section 3441 only if the applicant
submits to the Secretary the following:
(1) A description of the site.
(2) Plans and specifications which meet requirements
prescribed by the Secretary.
(3) Information reasonably demonstrating that title to such
site is vested in one or more of the entities filing the
application (unless the agreement described in subsection
(b)(1) is made).
(4) A specification of the type of assistance being
requested under section 3441.
(b) Agreements.--In the case of a project for construction,
conversion, expansion or modernization of a facility, the Secretary may
provide loans under section 3441 only if the applicant makes the
following agreements:
(1) Title to such site will be vested in one or more of the
entities filing the application (unless the assurance described
in subsection (a)(3) has been submitted under such subsection).
(2) Adequate financial support will be available for
completion of the project and for its maintenance and operation
when completed.
(3) All laborers and mechanics employed by contractors or
subcontractors in the performance of work on a project will be
paid wages at rates not less than those prevailing on similar
construction in the locality as determined by the Secretary of
Labor in accordance with the Act of March 3, 1931 (40 U.S.C.
276a et seq.; commonly known as the Davis-Bacon Act), and the
Secretary of Labor shall have with respect to such labor
standards the authority and functions set forth in
Reorganization Plan Numbered 14 of 1950 (15 FR 3176; 5 U.S.C.
Appendix) and section 276c of title 40.
(4) The facility will be made available to all persons
seeking service regardless of their ability to pay.
SEC. 3445. APPLICATION FOR ASSISTANCE.
The Secretary may provide loans under section 3441 only if an
application for such assistance is submitted to the Secretary, the
application contains each agreement described in this subpart, the
application contains the information required in section 3444(a), and
the application is in such form, is made in such manner, and contains
such agreements, assurances, and information as the Secretary
determines to be necessary to carry out this subpart.
SEC. 3446. ADMINISTRATION OF PROGRAMS.
This subpart, and any other program of the Secretary that provides
loans, shall be carried out by a centralized loan unit established
within the Department of Health and Human Services.
Subpart D--Enabling and Supplemental Services
SEC. 3461. GRANTS AND CONTRACTS FOR ENABLING AND SUPPLEMENTAL SERVICES.
(a) Authority.--
(1) In general.--The Secretary may make grants to and enter
into contracts with eligible entities to assist such entities
in providing the services described in subsections (b) and (c)
for the purpose of increasing the capacity of individuals to
utilize the items and services included in the comprehensive
benefits package under title I, and to provide access to
essential supplemental services that are not fully reimbursable
under title I prior to January 2001.
(2) Consideration by secretary.--In awarding grants or
contracts under paragraph (1), the Secretary shall give
consideration to--
(A) the geographic proximity of the grant
applicants and recipients;
(B) cultural and language differences existing
within the communities to be served under the grants or
contracts; and
(C) the capacity needs of the communities to be
served.
(b) Enabling Services.--Enabling services shall include
transportation, community and patient outreach, patient and family
education, translation services, case management, home visiting, and
such other services as the Secretary determines to be appropriate in
carrying out the purpose described in such subsection.
(c) Supplemental Services.--Supplemental services shall include
items or services described in section 1106 or section 1118 of this Act
that would otherwise be excluded from coverage prior to January 1,
2001.
(d) Certain Requirements Regarding Project Area.--The Secretary may
make an award of a grant or contract under subsection (a) only if the
applicant involved--
(1) submits to the Secretary--
(A) information demonstrating that the medically
underserved populations in the community to be served
under the award have a need for enabling services; and
(B) a proposed budget for providing such services;
(2) the applicant for the award agrees that the medically
underserved residents of the community will be consulted with
respect to the design and implementation of the project carried
out with the award;
(3) agrees that the services will not be denied because the
individual is unable to pay for such services; and
(4) agrees that the applicant will utilize existing
resources to the maximum extent practicable.
(e) Application for Awards of Assistance.--The Secretary may make
an award of a grant or contract under subsection (a) only if an
application for the award is submitted to the Secretary, the
application contains each agreement described in this subpart, and the
application is in such form, is made in such manner, and contains such
agreements, assurances, and information as the Secretary determines to
be necessary to carry out this subpart.
SEC. 3462. AUTHORIZATIONS OF APPROPRIATIONS.
(a) Enabling Services.--For the purpose of carrying out section
3461(b), there are authorized to be appropriated $17,200,000 for fiscal
year 1996, $68,900,000 for each of the fiscal years 1997 through 1999,
$68,900,000 for fiscal year 2000, and $2,000,000 for each of the fiscal
years 2001 through 2004.
(b) Supplemental Services.--For the purpose of carrying out section
3461(c), there are authorized to be appropriated $82,000,000 for fiscal
year 1996, $123,000,000 for each of the fiscal years 1997 through 1999,
$205,000,000 for fiscal year 2000, and $2,000,000 for each of the
fiscal years 2001 through 2004.
(c) Federally Qualified Health Centers and Rural Health Clinics.--
With respect to federally qualified health centers (as defined in
section 1861(aa)(4) of the Social Security Act) and rural health
clinics--
(1) for the purpose of carrying out section 3461(b), there
are authorized to be appropriated $40,000,000 for fiscal year
1996, $161,000,000 for each of the fiscal years 1997 through
1999, $201,000,000 for fiscal year 2000, and $2,000,000 for
each of the fiscal years 2001 through 2004; and
(2) for the purpose of carrying out section 3461(c), there
are authorized to be appropriated $24,600,000 for fiscal year
1996, $36,900,000 for each of the fiscal years 1997 through
1999, $61,500,000 for fiscal year 2000, and $2,000,000 for each
of the fiscal years 2001 through 2004; and
(d) Relation to Other Funds.--The authorizations of appropriations
established in subsection (a) are in addition to any other
authorizations of appropriations that are available for the purpose
described in such subsection.
PART 2--NATIONAL HEALTH SERVICE CORPS
SEC. 3471. AUTHORIZATIONS OF APPROPRIATIONS.
(a) Additional Funding; General Corps Program; Allocations
Regarding Nurses.--For the purpose of carrying out subpart II of part D
of title III of the Public Health Service Act, and for the purpose of
carrying out section 3472, there are authorized to be appropriated
$123,000,000 for each of the fiscal years 1996 and 1997, and
$201,000,000 for each of the fiscal years 1998 through 2000, and
$2,000,000 for each of the fiscal years 2001 through 2004.
(b) Relation to Other Funds.--The authorizations of appropriations
established in subsection (a) are in addition to any other
authorizations of appropriations that are available for the purpose
described in such subsection.
SEC. 3472. ALLOCATION FOR PARTICIPATION OF NURSES IN SCHOLARSHIP AND
LOAN REPAYMENT PROGRAMS.
Of the amounts appropriated under section 3471, the Secretary shall
reserve such amounts as may be necessary to ensure that, of the
aggregate number of individuals who are participants in the Scholarship
Program under section 338A of the Public Health Service Act, or in the
Loan Repayment Program under section 338B of such Act, the total number
who are being educated as nurse practitioners, nurse midwives, or nurse
anesthetists or are serving as nurse practitioners, nurse midwives, or
nurse anesthetists, respectively, is increased to 20 percent.
SEC. 3473. ALLOCATION FOR PARTICIPATION OF PSYCHIATRISTS,
PSYCHOLOGISTS, AND CLINICAL SOCIAL WORKERS IN SCHOLARSHIP
AND LOAN REPAYMENT PROGRAMS.
Of the amounts appropriate under section 3471, the Secretary shall
reserve such amounts as may be necessary to ensure that of the
aggregate number of individuals who are participants in the scholarship
program under section 338A of the Public Health Service Act, the number
who are being educated as psychiatrists, psychologists, and clinical
social workers or are serving as psychiatrists, psychologists, and
clinical social workers, respectively, is increased to 15 percent.
PART 3--PAYMENTS TO HOSPITALS SERVING VULNERABLE POPULATIONS
SEC. 3481. PAYMENTS TO HOSPITALS.
(a) Entitlement Status.--The Secretary shall make payments in
accordance with this part to eligible hospitals described in section
3482. The preceding sentence--
(1) is an entitlement in the Secretary on behalf of such
eligible hospitals (but is not an entitlement in the State in
which any such hospital is located or in any individual
receiving services from any such hospital); and
(2) constitutes budget authority in advance of
appropriations Acts and represents the obligation of the
Federal Government to provide funding for such payments in the
amounts, and for the fiscal years, specified in subsection (b).
(b) Appropriations.--
(1) In general.--For purposes of subsection (a)(2), the
amounts and fiscal years specified in this subsection are (in
the aggregate for all eligible hospitals) $1,300,000,000 for
the fiscal year in which the general effective date occurs and
for each subsequent fiscal year.
(2) Special rule for years before general effective date.--
(A) In general.--For each of the fiscal years 1996
and 1997, the amount specified in this subsection for
purposes of subsection (a)(2) shall be equal to the
aggregate DSH percentage of the amount otherwise
determined under paragraph (1).
(B) Aggregate dsh percentage defined.--In
subparagraph (A), the ``aggregate DSH percentage'' for
a year is the amount (expressed as a percentage) equal
to--
(i) the total amount of payment made by the
Secretary under section 1903(a) of the Social
Security Act during the base year with respect
to payment adjustments made under section
1923(c) of such Act for hospitals in the States
in which eligible hospitals for the year are
located; divided by
(ii) the total amount of payment made by
the Secretary under section 1903(a) of such Act
during the base year with respect to payment
adjustments made under section 1923(c) of such
Act for hospitals in all States.
(c) Payments Made on Quarterly Basis.--Payments to an eligible
hospital under this section for a year shall be made on a quarterly
basis during the year.
SEC. 3482. IDENTIFICATION OF ELIGIBLE HOSPITALS.
(a) State Identification.--In accordance with the criteria
described in subsection (b) and such procedures as the Secretary may
require, each State shall identify the hospitals in the State that meet
such criteria and provide the Secretary with a list of such hospitals.
(b) Criteria for Eligibility.--A hospital meets the criteria
described in this subsection if the hospital's low-income utilization
rate for the base year under section 1923(b)(3) of the Social Security
Act (as such section is in effect on the day before the date of the
enactment of this Act) is not less than 25 percent.
SEC. 3483. AMOUNT OF PAYMENTS.
(a) Distribution of Allocation for Low-Income Assistance.--
(1) Allocation from total amount.--Of the total amount
available for payments under this section in a year, 66.66
percent shall be allocated to hospitals for low-income
assistance in accordance with this subsection.
(2) Determination of hospital payment amount.--The amount
of payment to an eligible hospital from the allocation made
under paragraph (1) during a year shall be the equal to the
hospital's low-income percentage of the allocation for the
year.
(b) Distribution of Allocation for Assistance for Uncovered
Services.--
(1) Allocation from total amount; determination of state-
specific portion of allocation.--Of the total amount available
for payments under this section in a year, 33.33 percent shall
be allocated to hospitals for assistance in furnishing hospital
services that are not covered services under title I (in
accordance with regulations of the Secretary) or in furnishing
hospital services to individuals, including those residing in
Southwestern border States, who are not eligible individuals
under title I, in accordance with this subsection. The amount
available for payments to eligible hospitals in a State shall
be equal to an amount determined in accordance with a
methodology specified by the Secretary that shall take into
consideration the volume of such services provided by hospital
in the State as compared to the volume of such services
provided by all eligible hospitals.
(2) Determination of hospital payment amount.--The amount
of payment to an eligible hospital in a State from the amount
available for payments to eligible hospitals in the State under
paragraph (1) during a year shall be the equal to the
hospital's low-income percentage of such amount for the year.
(c) Low-Income Percentage Defined.--
(1) In general.--In this subsection, an eligible hospital's
``low-income percentage'' for a year is equal to the amount
(expressed as a percentage) of the total low-income days for
all eligible hospitals for the year that are attributable to
the hospital.
(2) Low-income days described.--For purposes of paragraph
(1), an eligible hospital's low-income days for a year shall be
equal to the product of--
(A) the total number of inpatient days for the
hospital for the year (as reported to the Secretary by
the State in which the hospital is located, in
accordance with a reporting schedule and procedures
established by the Secretary); and
(B) the hospital's low-income utilization rate for
the base year under section 1923(b)(3) of the Social
Security Act (as such section is in effect on the day
before the date of the enactment of this Act).
SEC. 3484. BASE YEAR.
In this part, the ``base year'' is, with respect to a State and
hospitals in a State, the year immediately prior to the year in which
the general effective date occurs.
Subtitle F--Mental Health; Substance Abuse
PART 1--AUTHORITIES REGARDING PARTICIPATING STATES
SEC. 3510. INTEGRATION OF MENTAL HEALTH AND SUBSTANCE ABUSE SYSTEMS.
(a) In General.--As a condition of being a participating State
under title I, each State shall, not later than January 1, 2001,
achieve the integration of the mental illness and substance abuse
services of the State and its political subdivisions with the mental
illness and substance abuse services offered by health plans pursuant
to title I of this Act. A State may petition the Secretary for a waiver
of the requirement of this subsection under the circumstances described
in section 3511(b)(7).
(b) Certification of Readiness.--
(1) Petition.--A State may petition the Secretary to
integrate the mental illness and substance abuse services of
the State and its political subdivisions with the mental
illness and substance abuse services offered by health plans
pursuant to title I of this Act prior to January 1, 2001.
(2) State readiness to integrate.--Upon receiving such a
petition, the Secretary shall, based on the reports submitted
pursuant to subsections (b) and (c) of section 3511 and the
criteria promulgated pursuant to paragraph (3), ascertain the
State's readiness to integrate its mental illness and substance
abuse services with the mental illness and substance abuse
services offered by health plans pursuant to title I of this
Act and certify whether the State is prepared to conduct such
an integration.
(3) Criteria.--The certification by the Secretary of a
State's readiness to integrate under paragraph (2) shall be
based on objective criteria promulgated by the Secretary after
consultation with the States.
(c) Application of Provisions.--Upon the issuance of a
certification of readiness by the Secretary for a State, the limits set
forth in subsections (d)(2)(B) and (e)(2)(A) of section 1106 shall not
apply to the provision of mental illness and substance abuse services
in the State.
SEC. 3511. REPORT ON INTEGRATION OF MENTAL HEALTH SYSTEMS.
(a) In General.--As a condition of being a participating State
under title I, each State shall, not later than October 1, 1998, submit
to the Secretary a report containing the information described in
subsection (b) on (including a plan for) the measures to be implemented
by the State to achieve the integration of the mental illness and
substance abuse services of the State and its political subdivisions
with the mental illness and substance abuse services that are included
in the comprehensive benefit package under title I. The plan required
in the preceding sentence shall meet the conditions described in
section 3083(b). In addition, each State shall submit to the Secretary
a report containing the information described in subsection (c) for
each year in which the State participates under title I up to and
including the year 2001 or the date on which an unlimited benefit for
mental illness and substance abuse services is provided, whichever
occurs later.
(b) Required Contents of Integration Report.--With respect to the
provision of items and services relating to mental illness and
substance abuse, the report of a State under subsection (a) shall, at a
minimum, contain the following information:
(1) Information on the number of individuals served by or
through mental illness and substance abuse programs
administered by State and local agencies and the proportion who
are eligible persons under title I.
(2) Information on the extent to which each health provider
furnishing mental illness and substance abuse services under a
State program participates or will participate in one or more
regional or corporate alliance health plans, and, in the case
of providers that do not so participate, the reasons for the
lack of participation.
(3) With respect to the two years preceding the year in
which the State becomes a participating State under title I--
(A) the amount of funds expended by the State and
its political subdivisions for each of such years for
items and services that are included in the
comprehensive benefit package under such title;
(B) the amount of funds expended for medically
necessary and appropriate items and services not
included in such benefit package, including medical
care, other health care, and supportive services
related to the provision of health care.
(4) An estimate of the amount that the State will expend to
furnish items and services not included in such package once
the expansion of coverage for mental illness and substance
abuse services is implemented in the year 2001.
(5) A description of how the State will assure that all
individuals served by mental illness and substance abuse
programs funded by the State will be enrolled in a health plan
and how mental illness and substance abuse services not covered
under the benefit package will continue to be furnished to such
enrollees.
(6) A description of the conditions under which the
integration of mental illness and substance abuse providers
into regional and corporate alliances can be achieved, and an
identification of changes in participation and certification
requirements that are needed to achieve the integration of such
programs and providers into health plans.
(7) If the integration of mental illness and substance
abuse programs operated by the State into one or more health
plans is not medically appropriate or feasible for one or more
groups of individuals treated under State programs, a
description of the reasons that integration is not feasible or
appropriate and a plan for assuring the coordination for such
individuals of the care and services covered under the
comprehensive benefit package with the additional items and
services furnished by such programs.
(8) A description of the manner in which the resources that
the State and its political subdivisions currently spend on
mental health and substance abuse services will be used to
facilitate integration.
(c) Required Contents of Transition Report.--With respect to the a
report required under this subsection, the report shall, at a minimum,
contain the following information:
(1) The amount of funds expended for substance abuse and
mental health services by the source of revenue, including,
Federal block grant funds, under title XIX of the Public Health
Service Act, Federal categorical grant funds, State and local
revenues and health plan payments.
(2) The amount of funds expended for supportive services to
individuals enrolled in substance abuse and mental health
treatment programs, including transportation, child care,
educational and vocational training and coordination with other
public systems such as the social service, child welfare and
juvenile and criminal justice systems, by source of revenue.
(3) The amount of funds expended on medically necessary and
appropriate items and services not covered or reimbursed in the
comprehensive benefit package by source of revenue.
(4) The amount of funds expended by the State on substance
abuse and mental illness services for individuals who are not
eligible to receive the comprehensive benefit package pursuant
to this Act, and the source of revenue for such services.
(d) General Provisions.--Reports under subsections (b) and (c)
shall be provided at the time and in the manner prescribed by the
Secretary. The Secretary shall also determine what, if any, reports
shall be submitted in years following the implementation of an
unlimited benefit for mental illness and substance abuse services.
(e) Reporting Requirement.--Each State shall report annually to the
Secretary on the incidence and prevalence of mental illness and
substance abuse disorders in the prison population, changes in such
incidence and prevalence in the prison population, and potential
causative factors with respect to such changes, including an estimate
of the extent to which the denial of treatment, or the provision of
inadequate treatment, to individuals with mental illness and substance
abuse disorders is contributing to the criminal activity of such
individuals.
PART 2--ASSISTANCE FOR STATE MANAGED MENTAL HEALTH AND SUBSTANCE ABUSE
PROGRAMS
SEC. 3531. AVAILABILITY OF ASSISTANCE.
(a) In General.--The Secretary shall make grants to States for the
development and operation of comprehensive managed mental health and
substance abuse programs that are integrated with the health delivery
system established under this Act. Such programs shall--
(1) promote the development of integrated delivery systems
for the management of the mental health and substance abuse
services provided under the comprehensive benefits package;
(2) give priority to providing services to low-income
adults with serious mental illness or substance abuse disorders
and children with serious emotional disturbance or substance
abuse disorders and provide for the phase-in of such services
for all eligible persons within 5 years;
(3) ensure that individuals participating in the program
have access to all medically necessary mental health and
substance abuse services;
(4) promote the linkage of mental health and substance
abuse services with primary and preventive health care
services; and
(5) meet such other requirements as the Secretary may
impose.
(b) Exception.--Nothing in this part shall be construed as
preventing States that have separate administrative entities for mental
health and for substance abuse services from establishing separate
comprehensive managed care programs for such services and receiving
assistance under this part for either or both programs.
SEC. 3532. PLAN REQUIREMENTS.
In order to receive a grant under this part, a State must have a
plan for a comprehensive managed mental health and substance abuse
program which is approved by the Secretary. Such plan shall--
(1) describe the management, access, and referral structure
that the State will use to promote and achieve integration of
mental health and substance abuse services with the health
delivery system established under this Act for eligible
individuals in the State;
(2) describe how the State will ensure that providers of
specialized services will meet appropriate standards and
provide assurances that the State has complied with section
1504 as it affects mental health and substance abuse services;
(3) describe payment, utilization review, and other
mechanisms that the State will use to encourage appropriate
service delivery and management of costs;
(4) describe uniform patient placement criteria that the
State will use to ensure placement in appropriate substance
abuse treatment programs;
(5) describe the processes the State will use to ensure
that individuals will continue to have access to treatment
through referrals from nonhealth public entities, such the
juvenile or criminal justice systems, or social service
systems;
(6) specify the methods the State will use to ensure that
individuals receiving services under the program have access to
all medically necessary and appropriate mental health and
substance abuse services;
(7) define terms that will be used by the State in
determining the eligibility of individuals for services under
the program;
(8) describe how health plans will use services under the
comprehensive managed mental health and substance abuse
programs established under this part;
(9) describe the role of local government in financing and
managing the integrated mental illness and substance abuse
treatment system;
(10) describe the sources of funding, including Medicaid
and the block grants authorized by title XIX of the Public
Health Service Act, that will be used by the State, other than
the grant received under this part, to operate the program, and
provide the status of any request for a Medicaid waiver made by
the State to the Secretary;
(11) describe how the State provided for broad-based public
input in the development of the plan, and the mechanism that
will be used for ongoing public comment on and review of
amendments to the plan; and
(12) describe grievance procedures that will be available
for individuals dissatisfied with their health plan's
participation in the comprehensive managed mental health and
substance abuse program, and mechanisms that will be available
to review the performance of health plans and fee-for-service
arrangements to ensure against under treatment.
SEC. 3533. ADDITIONAL FEDERAL RESPONSIBILITIES.
The Secretary shall, upon the submission of a State's plan under
section 3532, ensure the timely consideration of any Medicaid waiver
requests submitted by the State, affirm that section 1504 has been
implemented, and ensure the timely implementation of section
1641(b)(5).
SEC. 3534. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated for grants under this part,
$82,000,000 for each of the fiscal years 1995 through 2000, and
$2,000,000 for each of the fiscal years 2001 through 2004.
Subtitle G--Comprehensive School Health Education; School-Related
Health Services
PART 1--HEALTHY STUDENTS-HEALTHY SCHOOLS GRANTS FOR SCHOOL HEALTH
EDUCATION
SEC. 3601. PURPOSES.
It is the purpose of this part--
(1) to support the development and implementation of
comprehensive age appropriate health education programs in
public schools for children and youth kindergarten through
grade 12; and
(2) to increase access to preventive and primary health
care services for children and youth through school-based or
school-linked health service sites in accordance with locally
determined needs.
SEC. 3602. HEALTHY STUDENTS-HEALTHY SCHOOLS GRANTS.
(a) In General.--The Secretary, in consultation with the Secretary
of Education, shall award grants to State educational agencies in
eligible States to integrate comprehensive school health education in
schools within the State, with priority given within States to those
communities in greatest need as defined by section 3683(a).
(b) Eligible Uses of Funds.--Funds made available under this
section shall be used--
(1) to implement comprehensive school health education
programs, as defined in subsection (f)(1) through grants to
local educational agencies;
(2) to provide staff development and technical assistance
to local educational agencies, schools, local health agencies,
and other community organizations involved in providing
comprehensive school health education programs;
(3) to evaluate and report to the Secretary on the progress
made towards attaining the goals and objectives described under
subsection (c)(1)(A); and
(4) to conduct such other activities to achieve the
objectives of this subpart as the Secretary may require.
(c) Application.--An application for a grant under subsection (a),
shall be jointly developed by the State educational agency and the
State health agencies of the State involved, and shall contain--
(1) a State plan for comprehensive school health education
programs, that outlines--
(A) the goals and objectives of the State for
school health education programs, and the manner in
which the State will allocate funds to local
educational agencies in order to achieve these goals
and objectives;
(B) the manner in which the State will coordinate
programs under this part with other Federal, State and
local health education programs and resources, and
school health services;
(C) the manner in which comprehensive school health
education programs will be coordinated with other
Federal, State and local education programs (such as
programs under titles I, II, and IV of the Elementary
and Secondary Education Act of 1965), with the school
improvement plan of the State, if any, under title III
of the Goals 2000: Educate America Act, and with any
similar programs;
(D) the manner in which the State shall work with
State and local educational agencies and with State and
local health agencies to reduce barriers to
implementing school health education programs;
(E) the manner in which the State will monitor the
implementation of such programs by local educational
agencies and establish outcome criteria by which to
evaluate their effectiveness in achieving progress
towards the goals and objectives described in
subparagraph (A);
(F) the manner in which the State will provide
staff development and technical assistance to local
educational agencies, and build capacity for
professional development of health educators; and
(G) the manner in which such school health
education programs will be, to the extent practicable,
culturally competent and linguistically appropriate and
responsive to the diverse needs of the students served;
(2) a description of the respective roles of the State
educational agency, local educational agencies, the State
health agency and local health agencies in developing and
implementing the State's school health education plan and
resulting programs;
(3) a description of the input of the local community
(including students and parents) in the development and
operation of comprehensive school health education programs;
(4) an assurance that communities identified in section
3683(a) receive priority as locations for comprehensive school
health education programs for all grades to the extent that a
State does not implement a statewide program; and
(5) an assurance that grants to local educational agencies
under subsection (b)(1) are contingent upon submission by such
agencies of a plan consistent with the requirements for the
State plan as required under this subsection.
(d) Waivers of Statutory and Regulatory Requirements.--
(1) Waivers.-- Except as provided in paragraph (4), upon
the request of an entity and under a relevant program described
in paragraph (2), the Secretary of Health and Human Services
and the Secretary of Education may grant to the entity a waiver
of any requirement of such program regarding the use of funds,
or of the regulations issued for the program by the Secretary
involved, if the following conditions are met with respect to
such program:
(A) The Secretary involved determines that the
requirements of such program impede the ability of the
State educational agency to achieve more effectively
the purposes described in section 3601.
(B) The Secretary involved determines that, with
respect to the use of funds under such program, the
requested use of the funds by the entity would be
consistent with the purposes described in section 3601.
(C) The State educational agency provides all
interested local educational agencies in the State with
notice and an opportunity to comment on the proposal
and makes these comments available to the Secretary.
(2) Relevant programs.--For purposes of paragraph (1), the
programs described in this subparagraph are the following:
(A) In the case of programs administered by the
Secretary of Health and Human Services, the following:
(i) The program known as the Prevention,
Treatment, and Rehabilitation Model Projects
for High Risk Youth, carried out under section
517 of the Public Health Service Act.
(ii) The program known as the State and
Local Comprehensive School Health Programs to
Prevent Important Health Problems and Improve
Educational Outcomes, carried out under such
Act.
(B) In the case of programs administered by the
Secretary of Education, any program carried out under
part B of the Drug-Free Schools and Communities Act of
1986, except that a component of such comprehensive
school health education must be consistent with the
statutory intent and purposes of such Act.
(3) Waiver period.--A waiver under this paragraph shall be
for a period not to exceed 3 years, unless the Secretary
involved determines that--
(A) the waiver has been effective in enabling the
State to carry out the activities for which it was
requested and has contributed to improved performance
of comprehensive health education programs; and
(B) such extension is in the public interest;
(4) Waivers not authorized.--The Secretary involved under
paragraph (1), may not waive, under this section, any statutory
or regulatory requirements relating to--
(A) comparability of services;
(B) maintenance of effort;
(C) parental participation and involvement;
(D) the distribution of funds to States or to local
educational agencies or other recipients of funds under
the programs described in paragraph (2);
(E) maintenance of records;
(F) applicable civil rights requirements; or
(G) the requirements of sections 438 and 439 of the
General Education Provisions Act.
(5) Termination of waiver.--The Secretary involved under
paragraph (1) shall terminate a waiver under this subsection if
the Secretary determines that the performance of the State
affected by the waiver has been inadequate to justify a
continuation of the waiver or if it is no longer necessary to
achieve its original purpose.
(e) Definitions.--As used in this section:
(1) Comprehensive school health education.--The term
``comprehensive school health education'' means a planned,
sequential program of health education that addresses the
physical, emotional and social dimensions of student health in
kindergarten through grade 12. Such program shall--
(A) be designed to assist students in developing
the knowledge and behavioral skills needed to make
positive health choices and maintain and improve their
health, prevent disease and injuries, and reduce risk
behaviors which adversely impact health;
(B) be comprehensive and include a variety of
components addressing personal health, community and
environmental health, injury prevention and safety,
nutritional health, the effects of substance use and
abuse, consumer health regarding the benefits and
appropriate use of medical services including
immunizations and other clinical preventive services,
and other components deemed appropriate by the local
educational agencies;
(C) be designed to be linguistically and culturally
competent and responsive to the needs of the students
served; and
(D) address locally relevant priorities as
determined by parents, students, teachers, and school
administrators and health officials.
(2) Eligible state.--The term ``eligible State'' means a
State with a memorandum of understanding or a written
cooperative agreement entered into by the agencies responsible
for health and education concerning the planning and
implementation of comprehensive school health education
programs. Among these States a priority shall be given to
qualified States as defined in section 3682(c).
(3) State educational agency.--The term ``State educational
agency'' means the officer or agency primarily responsible for
the State supervision of public elementary and secondary
schools.
(4) Local educational agency.--The term ``local educational
agency'' means a public board of education or other public
authority legally constituted within a State for either
administrative control or direction of, or to perform a service
function for, public elementary or secondary schools in a city,
county, township, school district, or other political
subdivision of a State, or such combination of school districts
or counties as are recognized in a State as an administrative
agency for its public elementary or secondary schools. Such
term includes any other public institution or agency having
administrative control and direction of a public elementary or
secondary school.
(f) Authorized Funding.--For the purpose of carrying out this
section, out of the funds available under section 3695(b)(2), there are
made available, not to exceed $15,000,000 for fiscal year 1995,
$20,000,000 for fiscal year 1996, $25,000,000 for fiscal year 1997,
$30,000,000 for fiscal year 1998, $40,000,000 for fiscal year 1999, and
$50,000,000 for fiscal year 2000.
SEC. 3603. HEALTHY STUDENTS-HEALTHY SCHOOLS INTERAGENCY TASK FORCE.
(a) Establishment.--Not later than 120 days after the date of
enactment of this Act, the Secretary shall establish a Healthy
Students-Healthy Schools Interagency Task Force to be composed of
representatives of the Office of Disease Prevention and Health
Promotion, the National Institutes of Health, the Centers for Disease
Control and Prevention, the Health Resources and Services
Administration, the Office of School Health Education within the
Department of Education, and other Federal agencies and departments
which have responsibility for components of school health and
education.
(b) Co-chairpersons.--The Assistant Secretary for Health and the
Assistant Secretary for Elementary and Secondary Education shall serve
as co-chairpersons of the task force established under subsection (a).
(c) Functions and Activities.--The task force established under
subsection (a) shall--
(1) review and coordinate all Federal efforts in school
health education and health services;
(2) provide scientific and technical advice concerning the
development and implementation of model comprehensive school
health education programs and curricula;
(3) develop model student learning objectives and
assessment instruments that shall be made available to all
States;
(4) develop a uniform grant application form (a form that
serves as the principal document containing the core
information concerning a particular entity) and procedures that
may be used with respect to all school health education-related
programs (including supplementary information procedures to be
implemented when an entity that has already submitted an
application form is applying for additional assistance) that
require the submission of an application; and
(5) recommend to the Secretary, for inclusion in the
biennial report required by section 3604(2), methods for
effectively linking school health education and health services
research findings at the Federal level with implementation at
the State and local levels.
(d) Consolidation of Initiatives.--Not later than 12 months after
the date of enactment of this Act, the task force established under
subsection (a) shall prepare and submit to the Congress a report
containing the recommendations of the task force for the consolidation
of Federal school health education initiatives.
SEC. 3604. DUTIES OF THE SECRETARY.
The Secretary shall--
(1) establish and maintain a national clearinghouse, using
advanced technologies to the maximum extent practicable, and
mechanisms for the diverse dissemination of school health
education material, including written, audio-visual, and
electronically conveyed information to educators, schools,
health care providers, and other individuals, organizations,
and governmental entities;
(2) submit a biennial report to the Committee on Labor and
Human Resources of the Senate and the appropriate committees of
the House of Representatives on the implementation and
contribution of comprehensive school health education programs
funded under this part toward achieving relevant National
Healthy People 2000 objectives established by the Secretary;
and
(3) encourage coordination among Federal agencies, State
and local governments, educators, school health providers,
community-based organizations, and private sector entities to
support development of comprehensive school health education
programs and school health services.
PART 5--SCHOOL-RELATED HEALTH SERVICES
Subpart A--Development and Operation
SEC. 3681. AUTHORIZATION OF APPROPRIATIONS.
(a) Funding for School-Related Health Services.--For the purpose of
carrying out this subpart, there are authorized to be appropriated
$82,000,000 for fiscal year 1995, $164,000,000 for fiscal year 1996,
$266,500,000 for fiscal year 1997, and $369,000,000 for fiscal year
1998, $471,500,000 for fiscal year 1999, $574,000,000 for fiscal year
2000, and $2,000,000 for each of the fiscal years 2001 through 2004.
(b) Funding for Planning and Development Grants.--Of amounts made
available under this section, not to exceed $10,000,000 for each of
fiscal years 1995 and 1996 may be utilized to carry out section 3684.
SEC. 3682. ELIGIBILITY FOR GRANTS.
(a) In General.--
(1) Planning and development grants.--Entities eligible to
apply for and receive grants under section 3684 are--
(A) State health agencies that apply on behalf of
local community partnerships; or
(B) local community partnerships in States in which
health agencies have not successfully applied.
(2) Operational grants.--Entities eligible to apply for and
receive grants under section 3685 are--
(A) a qualified State as designated under
subsection (c) that apply on behalf of local community
partnerships; or
(B) local community partnerships in States that are
not designated under subparagraph (A).
(b) Local Community Partnerships.--
(1) In general.--A local community partnership under
subsection (a)(1)(B) and (a)(2)(B) is an entity that, at a
minimum includes--
(A) a local health care provider, which may be a
local public health department, with experience in
delivering services to children and youth or medically
underserved populations;
(B) local educational agency on behalf of one or
more public schools; and
(C) one community based organization located in the
community to be served that has a history of providing
services to at-risk children and youth.
(2) Rural communities.--In rural communities, local
partnerships should seek to include, to the fullest extent
practicable, providers and community based organizations with
experience in serving the target population.
(3) Parent and community participation.--An applicant
described in subsection (a) shall, to the maximum extent
feasible, involve broad-based community participation
(including parents of the youth to be served).
(c) Qualified State.--A qualified State under subsection (a)(2)(A)
is a State that, at a minimum--
(1) demonstrates an organizational commitment (including a
strategic plan) to providing a broad range of health, health
education and support services to at-risk youth; and
(2) has a memorandum of understanding or cooperative
agreement jointly entered into by the State agencies
responsible for health and education regarding the planned
delivery of health and support services in school-based or
school-linked centers.
SEC. 3683. PREFERENCES.
In making grants under sections 3684 and 3685, the Secretary shall
give priority to applicants whose-communities to be served show the
most substantial level of need for health services among children and
youth.
SEC. 3684. PLANNING AND DEVELOPMENT GRANTS.
(a) In General.--The Secretary may make grants during fiscal years
1995 and 1996 to entities eligible under section 3862 to develop
school-based or school-linked health service sites.
(b) Use of Funds.--Amounts provided under a grant under this
section may be used for the following:
(1) Planning for the provision of school health services,
including--
(A) an assessment of the need for health services
among youth in the communities to be served;
(B) the health services to be provided and how new
services will be integrated with existing services;
(C) assessing and planning for the modernization
and expansion of existing facilities and equipment to
accommodate such services; and
(D) an affiliation with relevant health plans.
(2) recruitment and training of staff for the
administration and delivery of school health services;
(3) the establishment of local community partnerships as
described in section 3682 (b);
(4) in the case of States, the development of memorandums
of understanding or cooperative agreements for the coordinated
delivery of health and support services through school health
service sites; and
(5) other activities necessary to assume operational
status.
(c) Application for Grants.--To be eligible to receive a grant
under this section an entity described in section 3682 (a) shall submit
an application in a form and manner prescribed by the Secretary.
(d) Number of Grants.--Not more than one planning grant may be made
to a single applicant. A planning grant may not exceed 2 years in
duration.
(e) Amount Available for Development Grant.--The Secretary may
award not to exceed--
(1) $150,000 to entities under section 3682(a)(1)(A) and to
localities planning for a citywide or countywide school health
services delivery system; and
(2) $50,000 to entities under section 3682(a)(1)(B).
SEC. 3685. GRANTS FOR OPERATION OF SCHOOL HEALTH SERVICES.
(a) In General.--The Secretary may make grants to eligible entities
described in section 3682(a)(2) that submit applications consistent
with the requirements of this section, to pay the cost of operating
school-based or school-linked health service sites.
(b) Use of Grant.--Amounts provided under a grant under this
section may be used for the following--
(1) health services, including diagnosis and treatment of
simple illnesses and minor injuries;
(2) preventive health services, including health screenings
follow-up health care, mental health, and preventive health
education;
(3) enabling services, as defined in section 3461(b), and
other necessary support services;
(4) training, recruitment, and compensation of health
professionals and other staff necessary for the administration
and delivery of school health services; and
(5) referral services, including the linkage of individuals
to health plans, and community-based health and social service
providers.
(c) Application for Grant.--To be eligible to receive a grant under
this section an entity described in section 3682(a)(2) shall submit an
application in a form and manner prescribed by the Secretary. In order
to receive a grant under this section, an applicant must include in the
application the following information--
(1) a description of the services to be furnished by the
applicant;
(2) the amounts and sources of funding that the applicant
will expend, including estimates of the amount of payments the
applicant will receive from health plans and other sources;
(3) a description of local community partnerships,
including parent and community participation;
(4) a description of the linkages with other health and
social service providers; and
(5) such other information as the Secretary determines to
be appropriate.
(d) Assurances.--In order to receive a grant under this section, an
applicant must meet the following conditions--
(1) school health service sites will, directly or
indirectly, provide a broad range of health services, in
accordance with the determinations of the local community
partnership, that may include--
(A) diagnosis and treatment of simple illnesses and
minor injuries;
(B) preventive health services, including health
screenings and follow-up health care, mental health and
preventive health education;
(C) enabling services, as defined in section
3461(b);
(D) referrals (including referrals regarding mental
health and substance abuse) with follow-up to ensure
that needed services are received;
(2) the applicant provides services recommended by the
health provider, in consultation with the local community
partnership, and with the approval of the local education
agency;
(3) the applicant provides the services under this
subsection to adolescents, and other school age children and
their families as deemed appropriate by the local partnership;
(4) the applicant maintains agreements with community-based
health care providers with a history of providing services to
such populations for the provision of health care services not
otherwise provided directly or during the hours when school
health services are unavailable;
(5) the applicant establishes an affiliation with relevant
health plans and will establish reimbursement procedures and
will make every reasonable effort to collect appropriate
reimbursement for services provided; and
(6) the applicant agrees to supplement and not supplant the
level of State or local funds under the direct control of the
applying State or participating local education or health
authority expended for school health services as defined by
this Act;
(7) services funded under this Act will be coordinated with
existing school health services provided at a participating
school; and
(8) for applicants in rural areas, the assurances required
under paragraph (4) shall be fulfilled to the maximum extent
possible.
(e) State Laws.--Notwithstanding any other provision in this part,
no school based health clinic may provide services, to any minor, when
to do so is a violation of State laws or regulations pertaining to
informed consent for medical services to minors.
(f) Limitation on Administrative Funds.--In the case of a State
applying on behalf of local educational partnerships, the applicant may
retain not more than 5 percent of grants awarded under this subpart for
administrative costs.
(g) Duration of Grant.--A grant under this section shall be for a
period determined appropriate by the Secretary.
(h) Amount of Grant.--The annual amount of a grant awarded under
this section shall not be more than $200,000 per school-based or
school-linked health service site.
(i) Federal Share.--
(1) In general.--Subject to paragraph (3), a grant for
services awarded under this section may not exceed--
(A) 90 percent of the non-reimbursed cost of the
activities to be funded under the program for the first
2 fiscal years for which the program receives
assistance under this section; and
(B) 75 percent of the non-reimbursed cost of such
activities for subsequent years for which the program
receives assistance under this section.
The remainder of such costs shall be made available as provided
in paragraph (2).
(2) Form of non-federal share.--The non-Federal share
required by paragraph (1) may be in cash or in-kind, fairly
evaluated, including facilities, equipment, personnel, or
services, but may not include amounts provided by the Federal
Government. In-kind contributions may include space within a
school facilities, school personnel, program use of school
transportation systems, outposted health personnel, and
extension of health provider medical liability insurance.
(3) Waiver.--The Secretary may waive the requirements of
paragraph (1) for any year in accordance with criteria
established by regulation. Such criteria shall include a
documented need for the services provided under this section
and an inability of the grantee to meet the requirements of
paragraph (1) despite a good faith effort.
(j) Training and Technical Assistance.--Entities that receive
assistance under this section may use not to exceed 10 percent of the
amount of such assistance to provide staff training and to secure
necessary technical assistance. To the maximum extent feasible,
technical assistance should be sought through local community-based
entities. The limitation contained in this subsection shall apply to
individuals employed to assist in obtaining funds under this part.
Staff training should include the training of teachers and other school
personnel necessary to ensure appropriate referral and utilization of
services, and appropriate linkages between class-room activities and
services offered.
(k) Report and Monitoring.--The Secretary will submit to the
Committee on Labor and Human Resources in the Senate and the Committee
on Energy and Commerce in the House of Representatives a biennial
report on the activities funded under this Act, consistent with the
ongoing monitoring activities of the Department. Such reports are
intended to advise the relevant Committees of the availability and
utilization of services, and other relevant information about program
activities.
Subpart B--Capital Costs of Developing Projects
SEC. 3691. FUNDING.
Amounts available to the Secretary under section 3412 for the
purpose of carrying out subparts B and C of part 2 of subtitle E are,
in addition to such purpose, available to the Secretary for the purpose
of carrying out this subpart.
Subtitle H--Public Health Service Initiative
SEC. 3695. PUBLIC HEALTH SERVICE INITIATIVE.
(a) In General.--Subject to subsection (c), the Secretary of Health
and Human Services shall pay, from funds in the Treasury not otherwise
appropriated, individuals and entities that are eligible to receive
assistance pursuant to the provisions referred to in paragraphs (1)
through (13) of subsection (b), to the extent of the amounts specified
under subsection (b).
(b) Amounts Specified.--The amounts specified in subsection (a)
with respect to a fiscal year shall be--
(1) with respect to the core functions of public health
programs authorized under part 2 of subtitle D of title III,
$123,000,000 for fiscal year 1995, $184,500,000 for fiscal year
1996, $266,500,000 for fiscal year 1997, $348,500,000 for
fiscal year 1998, $410,000,000 for fiscal year 1999,
$512,500,000 for fiscal year 2000, and $2,000,000 for each of
the fiscal years 2001 through 2004;
(2) with respect to the national initiatives regarding
health promotion and disease prevention under part 3 of
subtitle D of title III, $102,500,000 for each of the fiscal
years 1996 through 1998, $123,000,000 for each of the fiscal
years 1999 and 2000, and $2,000,000 for each of the fiscal
years 2001 through 2004;
(3) with respect to occupational injury and illness
prevention under section 3903, $92,250,000 for each of the
fiscal years 1995 through 2000, and $2,000,000 for each of the
fiscal years 2001 through 2004;
(4) with respect to activities for the development of plans
and networks under subpart B of part 2 of subtitle E of title
III--
(A) $43,050,000 for fiscal year 1995, $100,450,000
for fiscal year 1996, $157,850,000 for fiscal year
1997, $129,150,000 for fiscal year 1998, $100,450,000
for fiscal year 1999, $43,050,000 for fiscal year 2000,
and $2,000,000 for each of the fiscal years 2001
through 2004; and
(B) with respect to awards to federally qualified
health centers (as defined in section 1861(aa)(4) of
the Social Security Act) and rural health clinics under
such subpart, $79,950,000 for fiscal year 1995,
$186,550,000 for fiscal year 1996, $293,150,000 for
fiscal year 1997, $239,850,000 for fiscal year 1998,
$186,550,000 for fiscal year 1999, $79,950,000 for
fiscal year 2000, and $2,000,000 for each of the fiscal
years 2001 through 2004;
(5) with respect to capital costs under subpart C of part 2
of subtitle E of title III, $41,000,000 for each of the fiscal
years 1995 through 2000, and $2,000,000 for each of the fiscal
years 2001 through 2004;
(6) with respect to enabling services under subpart D of
part 2 of subtitle E of title III--
(A) $17,200,000 for fiscal year 1996, $68,900,000
for each of the fiscal years 1997 through 1999,
$68,900,000 for fiscal year 2000, and $2,000,000 for
each of the fiscal years 2001 through 2004; and
(B) with respect to awards to federally qualified
health centers (as defined in section 1861(aa)(4) of
the Social Security Act) and rural health clinics under
such subpart, $40,000,000 for fiscal year 1996,
$161,000,000 for each of the fiscal years 1997 through
1999, $201,000,000 for fiscal year 2000, and $2,000,000
for each of the fiscal years 2001 through 2004;
(7) with respect to supplemental services under subpart D
of part 1 of subtitle E of title III--
(A) $24,600,000 for fiscal year 1996, $36,900,000
for each of the fiscal years 1997 through 1999,
$61,500,000 for fiscal year 2000, and $2,000,000 for
each of the fiscal years 2001 through 2004; and
(B) with respect to awards to federally qualified
health centers (as defined in section 1861(aa)(4) of
the Social Security Act) and rural health clinics under
such subpart, $57,400,000 for fiscal year 1996,
$86,100,000 for each of the fiscal years 1997 through
1999, and $143,500,000 for fiscal year 2000 and
$2,000,000 for each of the fiscal years 2001 through
2004;
(8) with respect to the National Health Service Corps
program referred to under section 3471, $123,000,000 for each
of the fiscal years 1996 and 1997, and $201,000,000 for each of
the fiscal years 1998 through 2000, and $2,000,000 for each of
the fiscal years 2001 through 2004;
(9) with respect to school-related health service programs
under subpart A of part 5 of subtitle G of title III,
$82,000,000 for fiscal year 1995, $164,000,000 for fiscal year
1996, $266,500,000 for fiscal year 1997, and $369,000,000 for
fiscal year 1998, $471,500,000 for fiscal year 1999,
$574,000,000 for fiscal year 2000, and $2,000,000 for each of
the fiscal years 2001 through 2004;
(10) with respect to the development and operation of
comprehensive managed mental health and substance abuse
programs under section 3534, $82,000,000 for each of the fiscal
years 1995 through 2000, and $2,000,000 for each of the fiscal
years 2001 through 2004;
(11) with respect to programs of the Secretary of Health
and Human Services under section 3081, $82,000,000 for each of
the fiscal years 1995 and 1996, $123,000,000 for each of the
fiscal years 1997 through 2000 and $2,000,000 for each of the
fiscal years 2001 through 2004;
(12) with respect to programs of the Secretary of Labor
under section 3082, $164,000,000 for each of the fiscal years
1995 through 2000 and $2,000,000 for each of the fiscal years
2001 through 2004; and
(13) with respect to programs of the Indian Health Service
under subtitle D of title VIII, $164,000,000 for each of the
fiscal years 1995 through 2000 and $2,000,000 for each of the
fiscal years 2001 through 2004.
(c) Authority to Transfer Funds.--The Committee on Appropriations
of the House of Representatives and the Committee on Appropriations of
the Senate, acting through appropriations Acts, may transfer the
amounts specified under subsection (b) in each fiscal year among the
programs referred to in such subsection.
(d) Report.--The Secretary shall review the effectiveness of the
programs included in the Public Health Initiative. Not later than
October 1, 1998, the Secretary shall prepare and submit to Congress a
report concerning such review. Such report shall include
recommendations concerning whether Congress should increase the program
funding levels described in subsection (b) in fiscal years 2001 through
2004 to a level equal to that of prior fiscal years.
Subtitle I--Additional Provisions Regarding Public Health
SEC. 3901. CURRICULUM DEVELOPMENT AND IMPLEMENTATION REGARDING DOMESTIC
VIOLENCE AND WOMEN'S HEALTH.
(a) In General.--The Secretary shall make grants to eligible
entities for the purpose of implementing and developing for trainees a
curriculum that includes training in identification, treatment and
referral of victims of domestic violence and women's health needs.
(b) Eligible Entities.--For purposes of subsection (a), eligible
entities are any school of medicine, school of osteopathic medicine,
school of public health, graduate program in mental health practice,
school of nursing as defined in section 853 of the Public Health
Service Act, a program to train physician assistants, a program for
training allied health professionals, and a program for training of
family medicine physicians, general internists, general pediatricians,
geriatricians, and obstetrician/gynecologists.
(c) Curriculum.--A curriculum developed under this section shall
include--
(1) identification of victims of domestic violence and
maintaining complete medical records that include documentation
of the examination, treatment provided, and referral made and
recording the location and nature of the victim's injuries;
(2) examining and treating such victims within the scope of
the health professional's discipline, training, and practice,
including at a minimum providing medical advice regarding the
dynamics and nature of domestic violence;
(3) referring the victims to public and nonprofit entities
that provide support services for such victims;
(4) training in the identification and diagnosis of
diseases afflicting women and other medical disorders as they
affect women;
(5) training in the treatment of such diseases and
disorders with emphasis on the unique needs of women; and
(6) research into the causes of such diseases and
disorders, including determination of appropriate means of
prevention.
(d) Allocation of Appropriations.--Of the amounts made available
under section 3301(b) for a fiscal year, the Secretary shall reserve
not to exceed $20,000,000 for a fiscal year for carrying out this
section.
SEC. 3902. COMMUNITY SCHOLARSHIP PROGRAMS.
Section 338L of the Public Health Service Act (42 U.S.C. 254t) is
amended--
(1) in the section heading, by striking ``DEMONSTRATION'';
(2) in subsection (a)--
(A) by striking ``for the purpose of carrying out
demonstration programs''; and
(B) by striking ``health manpower shortage areas''
and inserting ``Federally-designated health
professional shortage areas'';
(3) in subsection (c)--
(A) by striking ``health manpower shortage areas''
and inserting ``Federally-designated health
professional shortage areas'' in the matter preceding
paragraph (1); and
(B) by striking ``in the health manpower shortage
areas in which the community organizations are
located,'' and inserting ``in a Federally-designated
health professional shortage area that is served by the
community organization awarding the scholarship,'' in
paragraph (2);
(4) in subsection (e)(1)--
(A) by striking ``health manpower shortage area''
and inserting ``a Federally-designated health
professional shortage area''; and
(B) by striking ``in which the community'' and all
that follows through ``located'';
(5) in subsection (k)(2), by striking ``internal medicine''
and all that follows through the end thereof and inserting
``general internal medicine, general pediatrics, obstetrics and
gynecology, dentistry, or mental health, that are provided by
physicians or other health professionals.''; and
(6) in subsection (l)(1), by striking ``$5,000,000'' and
all that follows through ``1993'' and inserting ``$1,000,000
for fiscal year 1994, and such sums as may be necessary for
each fiscal year thereafter''.
Subtitle J--Occupational Safety and Health
SEC. 3903. OCCUPATIONAL INJURY AND ILLNESS PREVENTION.
(a) In General.--The Secretary of Health and Human Services and the
Secretary of Labor shall work together to develop and implement a
comprehensive program to expand and coordinate initiatives to prevent
occupational injuries and illnesses.
(b) Secretary of Labor.--The Secretary of Labor after consultation
with the Secretary of Health and Human Services shall directly or by
grants or contracts--
(1) provide for training and education programs for
employees and employers in the recognition and control of
workplace hazards and methods and measures to prevent
occupational injuries and illnesses;
(2) develop model educational materials for training and
educating employees and employers on the recognition and
control of workplace hazards, including a core curriculum for
general safety and health training and materials related to
specific safety and health hazards; and
(3) provide programs and services for technical assistance
to employers and employees on the recognition and control of
workplace safety and health hazards including programs for
onsite consultation.
Technical assistance and consultative services under paragraph (3)
shall be provided in a manner that is separate from the enforcement
programs conducted by the Secretary of Labor.
(c) Secretary of Health and Human Services.--The Secretary of
Health and Human Services after consultation with the Secretary of
Labor shall directly or by grants or contracts--
(1) provide education programs for training occupational
safety and health professionals including professionals in the
fields of occupational medicine, occupational health nursing,
industrial hygiene, safety engineering, toxicology and
epidemiology;
(2) provide education programs for other health
professionals and health care providers and the public to
improve the recognition, treatment and prevention of
occupationally related injuries and illnesses;
(3) conduct surveillance programs to identify patterns and
to determine the prevalence of occupational illnesses, injuries
and deaths related to exposure to particular safety and health
hazards;
(4) conduct investigations and evaluations to determine if
workplace exposures to toxic chemicals, harmful physical agents
or potentially hazardous conditions pose a risk to exposed
employees; and
(5) conduct research, demonstrations and experiments
relating to occupational safety and health to identify the
causes of and major factors contributing to occupational
illnesses and injuries.
(d) National Advisory Board.--
(1) Establishment.--There is established a National
Advisory Board for Occupational Injury and Illness Prevention
to provide oversight, advice and direction on the occupational
injury and illness prevention programs and initiatives
conducted by the Secretary of Labor and Secretary of Health and
Human Services.
(2) Composition.--The Board shall be composed of 10 members
appointed by the Secretary of Labor, 5 of whom are to be
designated by the Secretary of Health and Human Services. Such
members shall be composed of representatives of employers,
employees, and occupational safety and health professionals.
(e) Director of NIOSH.--The responsibilities of the Secretary of
Health and Human Services established under this section shall be
carried out by the Director of the National Institute for Occupational
Safety and Health.
(f) Authorization of Appropriations.--For the purposes of carrying
out this section there are authorized to be appropriated $92,250,000
for each of the fiscal years 1995 through 2000, and $2,000,000 for each
of the fiscal years 2001 through 2004.
Subtitle K--Full Funding for WIC
SEC. 3905. FULL FUNDING FOR WIC.
Section 17 of the Child Nutrition Act of 1966 (42 U.S.C. 1786) is
amended--
(1) in the second sentence of subsection (a)--
(A) by striking ``authorized'' and inserting
``established''; and
(B) by striking ``, up to the authorization levels
set forth in subsection (g) of this section,'' and
inserting ``, up to the levels made available under
this section,'';
(2) in subsection (c)--
(A) in the first sentence of paragraph (1), by
striking ``may'' and inserting ``shall'';
(B) in paragraph (2), by striking ``appropriated''
and inserting ``made available'';
(3) in subsection (g)--
(A) by striking paragraph (1) and inserting the
following new paragraph:
``(1)(A) There are authorized to be --
``(i) appropriated to carry out this section such amounts
as are necessary for each of fiscal years 1995 through 2000;
and
``(ii) made available such amounts as are necessary for the
Secretary of the Treasury to fulfill the requirements of
subparagraph (B).
``(B)(i) Out of any money in the Treasury not otherwise
appropriated, the Secretary of the Treasury shall provide to the
Secretary of Agriculture, on January 1 of each fiscal year, to carry
out this subsection--
``(I) $444,000,000 for fiscal year 1996;
``(II) $696,000,000 for fiscal year 1997;
``(III) $775,000,000 for fiscal year 1998;
``(IV) $924,000,000 for fiscal year 1999; and
``(V) $1,077,000,000 for fiscal year 2000.
``(ii) The Secretary of Agriculture shall be entitled to receive
the funds and shall accept the funds.
``(C) In lieu of obligating the funds made available under
subparagraph (B) to carry out this subsection, if the amount
appropriated (in addition to the amount appropriated under subparagraph
(B)(i)) to carry out this subsection for--
``(i) fiscal year 1996 is less than $3,470,000,000, the
amount referred to in subparagraph (B)(i)(I) shall be obligated
by the Secretary, during the period beginning December 31,
1995, and ending June 30, 1996, to increase the special
assistance factor prescribed under section 11(a) of the
National School Lunch Act (42 U.S.C. 1759a(a)) for free lunches
served under the school lunch program (as established under
section 4 of such Act (42 U.S.C. 1753));
``(ii) fiscal year 1997 is less than $3,470,000,000, the
amount referred to in subparagraph (B)(i)(II) shall be
obligated by the Secretary, during the period beginning
December 31, 1996, and ending June 30, 1997, to increase the
special assistance factor prescribed under section 11(a) of
such Act for free lunches served under the school lunch program
(as established under section 4 of such Act);
``(iii) fiscal year 1998 is less than $3,470,000,000, the
amount referred to in subparagraph (B)(i)(III) shall be
obligated by the Secretary, during the period beginning
December 31, 1997, and ending June 30, 1998, to increase the
special assistance factor prescribed under section 11(a) of
such Act for free lunches served under the school lunch program
(as established under section 4 of such Act);
``(iv) fiscal year 1999 is less than $3,470,000,000, the
amount referred to in subparagraph (B)(i)(IV) shall be
obligated by the Secretary, during the period beginning
December 31, 1998, and ending June 30, 1999, to increase the
special assistance factor prescribed under section 11(a) of
such Act for free lunches served under the school lunch program
(as established under section 4 of such Act); and
``(v) fiscal year 2000 is less than $3,470,000,000, the
amount referred to in subparagraph (B)(i)(V) shall be obligated
by the Secretary, during the period beginning December 31,
1999, and ending June 30, 2000, to increase the special
assistance factor prescribed under section 11(a) of such Act
for free lunches served under the school lunch program (as
established under section 4 of such Act).
``(D) Any increase in the special assistance factor prescribed
under section 11(a) of such Act as a result of subparagraph (C) shall
not affect any annual adjustment in the factor under section 11(a)(3)
of such Act.
``(E) Notwithstanding any other provision of law, no additional
amounts shall be made available under this paragraph for any fiscal
year after fiscal year 2000.'';
(B) in the first sentence of paragraph (4), by
striking ``appropriated'' and inserting ``made
available''; and
(C) in paragraph (5), by striking ``appropriated''
and inserting ``made available'';
(4) in subsection (h)--
(A) in paragraph (1)--
(i) in subparagraph (A), by striking
``appropriated'' both places it appears and
inserting ``made available''; and
(ii) in subparagraph (C), by striking
``appropriated'' both places it appears and
inserting ``made available''; and
(B) in the first sentence of paragraph (2)(A), by
striking ``1990, 1991, 1992, 1993 and 1994'' and
inserting ``1990 through 2000''; and
(5) in subsection (l), by striking ``funds appropriated''
and inserting ``funds made available''.
Subtitle L--Border Health Improvement
SEC. 3908. BORDER HEALTH COMMISSION.
(a) Establishment.--The President is authorized and encouraged to
conclude an agreement with Mexico to establish a binational commission
to be known as the United States-Mexico Border Health Commission.
(b) Duties.--It should be the duty of the Commission--
(1) to conduct a comprehensive needs assessment in the
United States-Mexico Border Area for the purposes of
identifying, evaluating, preventing, and resolving health
problems and potential health problems that affect the general
population of the area;
(2) to develop and implement a comprehensive plan for
carrying out the actions recommended by the needs assessment
through--
(A) assisting in the coordination of public and
private efforts to prevent potential health problems
and resolve existing health problems,
(B) assisting in the coordination of public and
private efforts to educate the population, in a
culturally competent manner, concerning such potential
and existing health problems; and
(C) developing and implementing culturally
competent programs to prevent and resolve such health
problems and to educate the population, in a culturally
competent manner, concerning such health problems where
a new program is necessary to meet a need that is not
being met through other public or private efforts; and
(3) to formulate recommendations to the Governments of the
United States and Mexico concerning a fair and reasonable
method by which the government of one country could reimburse a
public or private person in the other country for the cost of a
health care service that such person furnishes to a citizen or
resident alien of the first country who is unable, through
insurance or otherwise, to pay for the service.
(c) Other Authorized Functions.--In addition to the duties
described in subsection (b), the Commission should be authorized to
perform the following functions as the Commission determines to be
appropriate--
(1) to conduct or support investigations, research, or
studies designed to identify, study, and monitor, on an on-
going basis, health problems that affect the general population
in the United States-Mexico Border Area;
(2) to conduct or support a binational, public-private
effort to establish a comprehensive and coordinated system,
which uses advanced technologies to the maximum extent
possible, for gathering health-related data and monitoring
health problems in the United States-Mexico Border Area; and
(3) to provide financial, technical, or administrative
assistance to public or private persons who act to prevent or
resolve such problems or who educate the population concerning
such health problems.
(d) Membership.--
(1) Number and appointment of united states section.--The
United States section of the Commission should be composed of
13 members. The section should consist of the following
members:
(A) The Secretary of Health and Human Services or
the Secretary's delegate.
(B) The commissioners of health or chief health
officer from the States of Texas, New Mexico, Arizona,
and California or such commissioners' delegates.
(C) Two individuals residing in United States-
Mexico Border Area in each of the States of Texas, New
Mexico, Arizona, and California who are nominated by
the chief executive officer of the respective States
and appointed by the President from among individuals--
(i) who have a demonstrated interest or
expertise in health issues of the United
States-Mexico Border Area; and
(ii) whose name appears on a list of 6
nominees submitted to the President by the
chief executive officer of the State where the
nominees resides.
(2) Commissioner.--The Commissioner of the United States
section of the Commission should be the Secretary of Health and
Human Services or such individual's delegate to the Commission.
The Commissioner should be the leader of the section.
(3) Compensation.--Members of the United States section of
the Commission who are not employees of the United States--
(A) shall each receive compensation at a rate of
not to exceed the daily equivalent of the annual rate
of basic pay payable for positions at GS-15 of the
General Schedule under section 5332 of title 5, United
States Code, for each day such member is engaged in the
actual performance of the duties of the Commission; and
(B) shall be allowed travel expenses, including per
diem in lieu of subsistence at rates authorized for
employees of agencies under subchapter I of chapter 57
of title 5, United States Code, while away from their
homes or regular places of business in the performance
of services of the Commission.
(e) Regional Offices.--The Commission should designate or establish
one border health office in each of the States of Texas, New Mexico,
Arizona, and California. Such office should be located within the
United States-Mexico Border Area, and should be coordinated with--
(1) State border health offices; and
(2) local nonprofit organizations designated by the State's
governor and directly involved in border health issues.
If feasible to avoid duplicative efforts, the Commission offices should
be located in existing State or local nonprofit offices. The Commission
should provide adequate compensation for cooperative efforts and
resources.
(f) Reports.--Not later than February 1 of each year that occurs
more than 1 year after the date of the establishment of the Commission,
the Commission should submit an annual report to both the United States
Government and the Government of Mexico regarding all activities of the
Commission during the preceding calendar year.
(g) Definitions.--As used in this section:
(1) Commission.--The term ``Commission'' means the United
States-Mexico Border Health Commission.
(2) Health problem.--The term ``health problem'' means a
disease or medical ailment or an environmental condition that
poses the risk of disease or medical ailment. Such term
includes diseases, ailments, or risks of disease or ailment
caused by or related to environmental factors, control of
animals and rabies, control of insect and rodent vectors,
disposal of solid and hazardous waste, and control and
monitoring of air quality.
(3) Resident alien.--The term ``resident alien'', when used
in reference to a country, means an alien lawfully admitted for
permanent residence to the United States or otherwise
permanently residing in the United States under color of law
(including residence as an asylee, refugee, or parolee).
(4) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(5) United states-mexico border area.--The term ``United
States-Mexico Border Area'' means the area located in the
United States and Mexico within 100 kilometers of the border
between the United States and Mexico.
TITLE IV--MEDICARE AND MEDICAID
SEC. 4000. REFERENCES IN TITLE.
(a) Amendments 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.
(b) References to OBRA.--In this title, the terms ``OBRA-1986'',
``OBRA-1987'', ``OBRA-1989'', ``OBRA-1990'', and ``OBRA-1993'' refer to
the Omnibus Budget Reconciliation Act of 1986 (Public Law 99-509), the
Omnibus Budget Reconciliation Act of 1987 (Public Law 100-203), the
Omnibus Budget Reconciliation Act of 1989 (Public Law 101-239), the
Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508), and the
Omnibus Budget Reconciliation Act of 1993 (Public Law 103-66),
respectively.
Subtitle A--Medicare
PART 1--INTEGRATION OF MEDICARE BENEFICIARIES
SEC. 4001. INDIVIDUAL ELECTION TO REMAIN IN CERTAIN HEALTH PLANS.
(a) In General.--Section 1876 (42 U.S.C. 1395mm) is amended by
adding at the end the following new subsection:
``(k)(1) Notwithstanding any other provision of this section, each
eligible organization with a risk-sharing contract (or which is
eligible to enter into such a contract, as determined by the Secretary)
that is the sponsor of a standard health plan under subtitle B of title
I of the Health Security Act shall provide each individual who meets
the requirements of paragraph (2) with the opportunity to elect (by
submitting an application at such time and in such manner as specified
by the Secretary) to continue enrollment in such plan (for the same
benefits as other individuals enrolled in the plan) and to have
payments made by the Secretary to the plan on the individual's behalf
in accordance with paragraph (3). The premium imposed with respect to
such an individual by the plan shall be in an amount (determined in
accordance with rules of the Secretary and notwithstanding other
provisions of such Act) which reflects the difference between the
premium otherwise established (adjusted by a factor to reflect the
actuarial difference between medicare beneficiaries and other plan
enrollees) and the amount payable under paragraph (3).
``(2) An individual meets the requirements of this paragraph if the
individual is--
``(A) enrolled in the health plan of an eligible
organization in a month in which the individual is either not
entitled to benefits under part A, or is an employee (as
defined in the Health Security Act) or the spouse or dependent
of an employee,
``(B) entitled to benefits under part A and enrolled under
part B in the succeeding month,
``(C) a community-rated individual under the Health
Security Act in that succeeding month, and
``(D) not an experience-rated employee (as defined in the
Health Security Act) or the spouse or dependent of an
experience-rated employee in that succeeding month.
``(3) The Secretary shall make a payment to an eligible
organization on behalf of each individual enrolled with the
organization for whom an election is in effect under this subsection in
an amount determined by the rate specified by subsection (a)(1)(C)
(notwithstanding the second sentence of paragraph (1)). Such payment
shall be made from the Federal Hospital Insurance Trust Fund and the
Federal Supplementary Medical Insurance Trust Fund as provided under
subsection (a)(5) (other than as provided under subparagraph (B) of
that paragraph).
``(4) The period for which payment may be made under paragraph
(3)--
``(A) begins with the first month for which the individual
meets the requirements of paragraph (2) (or a later month, in
the case of a late application, as may be specified by the
Secretary); and
``(B) ends with the earliest of--
``(i) the month following the month--
``(I) in which the individual notifies the
Secretary that the individual no longer wishes
to be enrolled in the health plan of the
eligible organization and to have payment made
on the individual's behalf under this
subsection; and
``(II) which is a month specified by the
Secretary as a uniform open enrollment period
under subsection (c)(3)(A)(i), or
``(ii) the month in which the individual ceases to
meet the requirements of paragraph (2).
``(5) Notwithstanding any other provision of this title, payments
to an eligible organization under this subsection on behalf of an
individual shall be the sole payments made with respect to items and
services furnished to the individual during the period for which the
individual's election under this subsection is in effect.''.
(b) Conforming Amendment.--Section 1838(b) (42 U.S.C. 1395q(b)) is
amended by inserting after ``section 1843(e)'' the following: ``,
1876(c)(3)(B) or 1876(k)(4)(B)''.
SEC. 4002. ENROLLMENT AND TERMINATION OF ENROLLMENT.
(a) Uniform Open Enrollment Periods.--
(1) For capitated plans.--The first sentence of section
1876(c)(3)(A)(i) (42 U.S.C. 1395mm(c)(3)(A)(i)) is amended by
inserting ``(which may be specified by the Secretary)'' after
``open enrollment period''.
(2) For medigap plans.--Section 1882(s) (42 U.S.C.
1395ss(s)) is amended--
(A) in paragraph (3), by striking ``paragraphs (1)
and (2)'' and inserting ``paragraph (1), (2), or (3)'',
(B) by redesignating paragraph (3) as paragraph
(4), and
(C) by inserting after paragraph (2) the following
new paragraph:
``(3) Each issuer of a medicare supplemental policy shall have an
open enrollment period (which shall be the period specified by the
Secretary under section 1876(c)(3)(A)(i)), of at least 30 days duration
every year, 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)). The
Secretary may require enrollment through a third party designated under
section 1876(c)(3)(B).''.
(b) Enrollments for New Medicare Beneficiaries and Those Who
Move.--Section 1876(c)(3)(A) (42 U.S.C. 1395mm(c)(3)(A)) is amended--
(1) in clause (i), by striking ``clause (ii)'' and
inserting ``clauses (ii) through (iv)'', and
(2) by adding at the end the following:
``(iii) Each eligible organization shall have an open enrollment
period for each individual eligible to enroll under subsection (d)
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.
``(iv) Each eligible organization shall have an open enrollment
period for each individual eligible to enroll under subsection (d) who
has previously resided outside the geographic area which the
organization serves. The enrollment period shall begin with the
beginning of the month that precedes the month in which the individual
becomes a resident of that geographic area and shall end at the end of
the following month. Enrollment under this clause shall be effective as
of the first of the month following the month in which the individual
enrolls.''.
(c) Enrollment Through Third Party; Uniform Termination of
Enrollment.--The first sentence of section 1876(c)(3)(B) (42 U.S.C.
1395mm(c)(3)(B)) is amended--
(1) by inserting ``(including enrollment through a third
party)'' after ``regulations'', and
(2) by striking everything after ``with the eligible
organization'' and inserting ``during an annual period as
prescribed by the Secretary, and as specified by the Secretary
in the case of financial insolvency of the organization, if the
individual moves from the geographic area served by the
organization, or in other special circumstances that the
Secretary may prescribe.''.
(d) Effective Date.--The amendments made by the previous
subsections apply to enrollments and terminations of enrollments
occurring after 1995 (but only after the Secretary of Health and Human
Services has prescribed the relevant annual period), except that the
amendments made by subsection (a)(2) apply to enrollments for a
medicare supplemental policy made after 1995.
PART 2--PROVISIONS RELATING TO PART A
SEC. 4101. 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. 4102. REDUCTION IN PAYMENTS FOR CAPITAL-RELATED COSTS FOR
INPATIENT HOSPITAL SERVICES.
(a) PPS Hospitals.--
(1) 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).''.
(2) Reduction in update.--Section 1886(g)(1) (42 U.S.C.
1395ww(g)(1)) is amended--
(A) in subparagraph (B)(i)--
(i) by striking ``and (II)'' and inserting
``(II)'', and
(ii) by striking the semicolon at the end
and inserting the following: ``, and (III) an
annual update factor established for the
prospective payment rates applicable to
discharges in a fiscal year which (subject to
reduction under subparagraph (C)) will be based
upon such factor as the Secretary determines
appropriate to take into account amounts
necessary for the efficient and effective
delivery of medically appropriate and necessary
care of high quality;'';
(B) by redesignating subparagraph (C) as
subparagraph (D); and
(C) by inserting after subparagraph (B) the
following new subparagraph:
``(C)(i) With respect to payments attributable to portions
of cost reporting periods or discharges occurring during each
of the fiscal years 1996 through 2003, the Secretary shall
include a reduction in the annual update factor established
under subparagraph (B)(i)(III) for discharges in the year equal
to the applicable update reduction described in clause (ii) to
adjust for excessive increases in capital costs per discharge
for fiscal years prior to fiscal year 1992 (but in no event may
such reduction result in an annual update factor less than
zero).
``(ii) In clause (i), the term `applicable update
reduction' means, with respect to the update factor for a
fiscal year--
``(I) 4.9 percentage points; or
``(II) if the annual update factor for the previous
fiscal year was less than the applicable update
reduction for the previous year, the sum of 4.9
percentage points and the difference between the annual
update factor for the previous year and the applicable
update reduction for the previous year.''.
(b) PPS-Exempt Hospitals.--Section 1861(v)(1) (42 U.S.C.
1395x(v)(1)) is further 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. 4103. 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'';
(2) in clause (vi), by striking ``In'' and inserting
``Subject to clause (x), in''; and
(3) 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 by an amount equal to the sum of--
``(I) for discharges occurring on or after the date on
which the State in which such hospital is located becomes a
participating State (as such term is defined in title I of the
Health Security Act), 33 percent of such additional payment.''.
SEC. 4104. 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 4104(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. 4105. 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. 4106. 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. 4107. 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. 4108. MORATORIUM ON DESIGNATION OF NEW LONG-TERM HOSPITALS.
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. 4109. 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. 4110. 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,
1997, 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, 1997,
excluding''.
SEC. 4111. 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 service hospital
program described in subsection (d).
``(c) Application.--A State may establish a limited service
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 Service Hospital Program Described.--
``(1) In general.--A State that has submitted an
application in accordance with subsection (c), may establish a
limited service 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
service 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 service 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. 4112. 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 3--PROVISIONS RELATING TO PART B
SEC. 4201. 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. 4202. 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. 4203. 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. 4204. 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 4204(e) 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 paragraph (1) are
effective for services furnished on or after January 1, 1995.
SEC. 4205. CORRECTION OF MVPS UPWARD BIAS.
(a) In General.--Section 1848(f)(2)(A)(iv) (42 U.S.C. 1395w-
4(f)(2)(A)(iv)) is amended by striking ``including changes in law and
regulations affecting the percentage increase described in clause (i)''
and inserting ``excluding anticipated responses to such changes''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply with respect to performance standard rates of increase determined
for fiscal year 1995 and succeeding fiscal years.
SEC. 4206. 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. 4207. 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 July 1, 1994.
SEC. 4208. 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. 4209. 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. 4210. 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) Enteral and parenteral nutrients and supplies.''.
(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 during 1996 does not result in a reduction of at least 10
percent in the projected payment amount that would have applied to the
items or services under part B if the items or services had not been
furnished through competitive acquisition under such section in such
year, the Secretary shall reduce for such year the payment amount for
all such services by such percentage as the Secretary determines
necessary to result in such a reduction for such year.
(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. 4211. APPLICATION OF COMPETITIVE ACQUISITION PROCEDURES FOR
LABORATORY SERVICES.
(a) In General.--Section 1847(c), as added by section 4210, 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 during 1996 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 in such year if the tests had not been furnished through
competitive acquisition under section 1847, the Secretary shall reduce
for such year each payment amount for all such tests 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 for such year.''.
SEC. 4212. 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)(II), by inserting ``and before
January 1, 1997,'' after ``January 1, 1992,'';
(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--
``(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
assistant at surgery, and
``(II) in the case of other
services, 85 percent of the fee
schedule amount provided 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 section4108(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 4108(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. 4213. ELIMINATION OF BALANCE BILLING.
Effective January 1, 1996, notwithstanding any provision of title
XVIII of the Social Security Act (42 U.S.C. 1395 et seq.), a
nonparticipating physician, or nonparticipating supplier or other
person (as such terms are defined in section 1842(i)(2) of such Act (42
U.S.C. 1395u(i)(2)) may not receive payment for services or items under
such title.
SEC. 4214. 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. 4215. PAYMENTS FOR DURABLE MEDICAL EQUIPMENT.
(a) In General.--Subparagraph (B) of section 1834(a)(14) (42 U.S.C.
1395m(a)(14)) is amended by striking the period at the end and
inserting ``, except that such percentage increase shall--
``(i) be reduced by 2 percentage points for
each of years 1995 and 1996;
``(ii) be reduced by 1.5 percentage points
for 1997;
``(iii) be reduced by 2 percentage points
for 1998; and
``(iv) be reduced by 1 percentage points
for 1999.''.
(b) Effective Date.--The amendment made by this section shall be
effective on the date of the enactment of this Act.
SEC. 4216. 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 4--PROVISIONS RELATING TO PARTS A AND B
SEC. 4301. 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. 4302. INCREASE IN MEDICARE SECONDARY PAYER COVERAGE FOR END STAGE
RENAL DISEASE SERVICES TO 24 MONTHS.
(a) In General.--Section 1862(b)(1)(C) (42 U.S.C. 1395y(b)(1)(C)),
as amended by section 4301(c), is amended by striking the last sentence
and inserting: ``Effective for items and services furnished on or after
January 1, 1996 (with respect to periods beginning on or after July 1,
1994), this subparagraph shall be applied by substituting `24-month'
for `12-month' each place it appears.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to items and services provided on or after January 1, 1996.
SEC. 4303. 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, coronary artery by-pass surgery, and such other
services as the Secretary determines to be appropriate. 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.
(C) Such other services as the Secretary and the
center may agree to cover under the contract.
(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. 4304. REDUCTION IN ROUTINE COST LIMITS FOR HOME HEALTH SERVICES.
(a) Reduction in Update To Maintain Freeze in 1996.--Section
1861(v)(1)(L)(i) (42 U.S.C. 1395x(v)(1)(L)(i)) is amended--
(1) in subclause (II), by striking ``or'' at the end;
(2) in subclause (III), by striking ``112 percent,'' and
inserting ``and before July 1, 1996, 112 percent, or''; and
(3) 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),''.
(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) 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(b) of the Health Security Act shall not be considered by
the Secretary in making adjustments pursuant to this clause.''.
(3) Effective date.--The amendments made by paragraphs (1)
and (2) shall apply to cost reporting periods beginning on or
after July 1, 1997.
SEC. 4305. IMPOSITION OF 20 PERCENT COINSURANCE ON HOME HEALTH SERVICES
UNDER MEDICARE.
(a) Part A.--Section 1813(a) (42 U.S.C. 1395e(a)) is amended by
adding at the end the following new paragraph:
``(5) The amount payable for a home health service furnished to an
individual under this part shall be reduced by a copayment amount equal
to 20 percent of the average of all the per visit costs for such
service furnished under this title determined under section
1861(v)(1)(L) (as determined by the Secretary on a prospective basis
for services furnished during a calendar year).''.
(b) Part B.--Section 1833(a)(2) (42 U.S.C. 1395l(a)(2)), as amended
by section 4108(c)(2), is amended--
(1) in subparagraph (A), by striking ``to home health
services,'' and by striking the comma after ``opinion)'';
(2) in subparagraph (E), by striking ``and'' at the end;
(3) in subparagraph (F), by striking the semicolon at the
end and inserting ``; and''; and
(4) by adding at the end the following new subparagraph:
``(G) with respect to any home health service--
``(i) the lesser of --
``(I) the reasonable cost of such
service, as determined under section
1861(v), or
``(II) the customary charges with
respect to such service,
less the amount a provider may charge as
described in clause (ii) of section
1866(a)(2)(A), or
``(ii) if such service is furnished by a
public provider of services, or by another
provider which demonstrates to the satisfaction
of the Secretary that a significant portion of
its patients are low-income (and requests that
payment be made under this clause), free of
charge or at nominal charges to the public, the
amount determined in accordance with section
1814(b)(2),
less a copayment amount equal to 20 percent of the
average of all per visit costs for such service
furnished under this title determined under section
1861(v)(1)(L) (as determined by the Secretary on a
prospective basis for services furnished during a
calendar year);''.
(c) Provider Charges.--Section 1866(a)(2)(A)(i) (42 U.S.C.
1395cc(a)(2)(A)(i)) is amended--
(1) by striking ``deduction or coinsurance'' and inserting
``deduction, coinsurance, or copayment''; and
(2) by striking ``or (a)(4)'' and inserting ``(a)(4), or
(a)(5)''.
(d) Effective Date.--The amendments made by this section shall
apply to services furnished on or after July 1, 1995.
SEC. 4306. 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, 1997.''.
(b) Prohibition Against Recognition of Costs.--Section 1861(v)(1)
(42 U.S.C. 1395x(v)(1)), as amended by section 4102(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, 1997. 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. 4307. 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.
Subtitle B--Medicaid Program
PART 1--INTEGRATION OF CERTAIN MEDICAID ELIGIBLES INTO REFORMED HEALTH
CARE SYSTEM
SEC. 4601. LIMITING COVERAGE UNDER MEDICAID OF ITEMS AND SERVICES
COVERED UNDER STANDARD BENEFIT PACKAGE.
(a) In General.--Title XIX (42 U.S.C. 1396 et seq.) is amended by
redesignating section 1931 as section 1932 and by inserting after
section 1930 the following new section:
``treatment of items and services in the standard benefit package
``Sec. 1931. (a) Items and Services Covered Under Standard Benefit
Package.--Except as provided in subsection (c), a State plan under this
part shall not provide medical assistance consisting of payment for
items and services in the standard benefit package described in section
1201(a) of the Health Security Act.
``(b) Medical Assistance Not Affected.--Subsection (a) shall not be
construed as--
``(1) affecting the eligibility of any individual for
medical assistance consisting of payment for items and services
not covered under the standard benefits package;
``(2) affecting the amount, duration, and scope of any
medical assistance consisting of payment for the items and
services described in paragraph (1); or
``(3) prohibiting payment of medical assistance for items
and services covered under the standard benefits package to the
extent that the items and services under this part exceed the
items and services covered under such package with respect to
amount, duration, and scope.
``(c) Exceptions.--Subsection (a) shall not affect the provision of
medical assistance consisting of payment for items and services in the
standard benefits package--
``(1) which are provided to--
``(A) an individual eligible for medical assistance
under the State plan who is not a premium subsidy
eligible individual (as defined in 6002(a)(2) of the
Health Security Act);
``(B) an individual with respect to whom
supplemental security income benefits are being paid
under title XVI; and
``(C) an individual who is eligible for benefits
under part A of title XVIII; or
``(2) which consist of emergency services to certain aliens
under section 1903(v)(2).
``(d) State Maintenance of Effort.--
``(1) In general.--
``(A) Reduction in quarterly payments.--For any
calendar quarter in an applicable year (as defined in
subparagraph (B)), the amount otherwise payable to a
State under section 1903 for the quarter shall be
reduced by the State maintenance of effort amount for
the quarter determined under paragraph (2).
``(B) Applicable year.--For purposes of this
paragraph, the term `applicable year' means 1997 and
any succeeding year.
``(2) Maintenance of effort amount.--
``(A) In general.--The maintenance of effort amount
for a State for a calendar quarter in an applicable
year shall be equal to 25 percent of the sum of--
``(i) the State's AFDC eligibles payment
amount for the year determined under paragraph
(3); and
``(ii) the State's non-cash eligibles
payment amount for the year determined under
paragraph (4).
``(3) State afdc eligibles payment amount.--
``(A) In general.--The AFDC eligibles payment
amount for a State for a year is an amount equal to the
product of--
``(i) the adjusted State per capita amount
for the year determined under subparagraph (B);
multiplied by
``(ii) the number of AFDC eligible
individuals receiving premium assistance under
section 6002 of the Health Security Act during
the year (as estimated by the Secretary).
``(B) Adjusted state per capita amount.--
``(i) In general.--The adjusted State per
capita amount for a year is the base State per
capita amount determined under clause (ii)
updated by the percentage change in per capita
health expenditures index (as described in
paragraph (5)(B)) during the period beginning
on October 1, 1994, and ending on December 31
of the year preceding the applicable year (as
determined by the Secretary).
``(ii) Base state per capita amount.--The
base per capita amount for a State shall be an
amount, as determined by the Secretary, equal
to the quotient of--
``(I) the total expenditures from
State funds made under the State plan
during fiscal year 1994 with respect to
medical assistance consisting of items
and services of the type included in
the standard benefit package for AFDC
eligible individuals; divided by
``(II) the average total number of
AFDC eligible individuals who received
such medical assistance under the State
plan in any month during fiscal year
1994.
``(iii) Disproportionate share payments not
included.--In applying clause (ii), payments
made under section 1923 shall not be counted in
the gross amount of payments.
``(C) AFDC eligible defined.--For purposes of this
paragraph, the term `AFDC eligible' means an individual
who receives aid or assistance under any plan of the
State approved under part A or part E of title IV.
``(4) Non-cash eligibles payment amount.--
``(A) In general.--The non-cash eligibles payment
amount for a State for a year is an amount equal to the
State's base payment amount (determined under
subparagraph (B)) for the applicable year updated by
the percentage change in the health expenditures index
(as described in paragraph (5)(A)) and the State
population index (as described in paragraph (5)(C))
during the period beginning on October 1, 1994, and
ending on December 31 of the year preceding the
applicable year (as determined by the Secretary).
``(B) State base payment amount.--
``(i) In general.--The base payment amount
for a State for an applicable year shall be an
amount, as determined by the Secretary, equal
to the total expenditures from State funds made
under the State plan during fiscal year 1994
with respect to medical assistance consisting
of items and services of the type included in
the standard benefit package for non-cash
eligible individuals who would not have
received such medical assistance if the
provisions of this section and subtitle A of
title VI of the Health Security Act had been in
effect in fiscal year 1994.
``(ii) Disproportionate share payments
included.--In applying clause (i), payments
made under section 1923 shall be counted in the
gross amount of payments.
``(C) Non-cash eligible defined.--For purposes of
this paragraph, the term `non-cash eligible' means any
individual who received medical assistance under the
State plan during fiscal year 1994 other than an AFDC
eligible individual or an individual described in
subsection (b).
``(5) Indexes.--
``(A) Health expenditures index.--The Secretary
shall establish a health expenditures index which
measures the change in national health expenditures
from year to year.
``(B) Per capita health expenditures index.--The
Secretary shall establish a per capita health
expenditures index which measures the change in
national per capita health expenditures from year to
year.
``(C) State population index.--The Secretary shall
establish a State population index which measures the
change in the number of individuals residing in a State
from year to year.''.
(b) No Federal Financial Participation.--Section 1903(i) (42 U.S.C.
1396b(i)) is amended--
(1) by striking ``or'' at the end of paragraph (14),
(2) by striking the period at the end of paragraph (15) and
inserting ``; or'', and
(3) by inserting after paragraph (15) the following new
paragraph:
``(16) with respect to items and services covered under the
standard benefit package described in section 1201(a) of the
Health Security Act for individuals to whom section 1931(a)
applies.''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to items or services furnished in a State on or
after January 1, 1997.
PART 2--COORDINATED CARE SERVICES FOR DISABLED MEDICAID ELIGIBLES
SEC. 4605. COORDINATED CARE SERVICES FOR DISABLED MEDICAID ELIGIBLES.
(a) State Expenditures Limited to Certified Health Plans.--Section
1903(m) (42 U.S.C. 1396b) is amended by adding at the end the following
new paragraph:
``(7) No payment shall be made under this part to a State
with respect to expenditures incurred by the State for payment
for services provided by an entity with a contract under this
subsection unless such entity is a standard health plan (as
defined in section 1011(2)(B) of the Health Security Act).''.
(b) Modification to 75/25 Rule.--Section 1903(m)(2)(A)(ii) (42
U.S.C. 1396b(m)(2)(A)(ii)) is amended by striking ``75 percent'' and
inserting ``50 percent''.
(c) Effective Date.--The amendments made by this section shall
become effective with respect to payments for calendar quarters
beginning on or after January 1, 1997.
PART 3--PAYMENTS TO HOSPITALS SERVING VULNERABLE POPULATIONS
SEC. 4611. REPLACEMENT OF DSH PAYMENT PROVISIONS WITH PROVISIONS
RELATING TO PAYMENTS TO HOSPITALS SERVING VULNERABLE
POPULATIONS.
(a) Amendments to Provisions Requiring States to Make DSH Payment
Adjustments.--
(1) Adjustments to national dsh payment limit.--Section
1923(f)(1)(B) (42 U.S.C. 1396r-4(f)(1)(B)) is amended to read
as follows:
``(B) National dsh payment limit.--
``(i) In general.--Except as provided in
clause (ii), the national DSH payment limit for
a fiscal year is equal to 12 percent of the
total amount of expenditures under the State
plans under this part for medical assistance
during the fiscal year.
``(ii) Reduction in limit.--For fiscal
years ending in a calendar year during which
the percentage of individuals covered by
insurance, as determined by the National Health
Care Cost and Coverage Commission established
under section 10001 of the Health Security
Act--
``(I) equals or exceeds 85 percent
but is less than 88 percent, `10
percent' shall be substituted for `12
percent' in clause (i);
``(II) equals or exceeds 88 percent
but is less than 90 percent, `8
percent' shall be substituted for `12
percent' in clause (i);
``(III) equals or exceeds 90
percent but is less than 92 percent, `6
percent' shall be substituted for `12
percent' in clause (i); and
``(IV) equals or exceeds 92
percent, `4 percent' shall be
substituted for `12 percent' in clause
(i).
(2) Adjustments to state allotment limits.--Section
1923(f)(2)(B) (42 U.S.C. 1396r-4(f)(2)(B)) is amended to read
as follows:
``(B) Exceptions.--
``(i) In general.--Except as provided in
clause (ii), a State DSH allotment under
subparagraph (A) for a fiscal year shall not
exceed 12 percent of the total amount of
expenditures under the State plan for medical
assistance during the fiscal year.
``(ii) Reduction in limit.--For fiscal
years ending in a calendar year during which
the percentage of individuals covered by
insurance, as determined by the National Health
Care Cost and Coverage Commission established
under section 10001 of the Health Security
Act--
``(I) equals or exceeds 85 percent
but is less than 88 percent, `10
percent' shall be substituted for `12
percent' in clause (i);
``(II) equals or exceeds 88 percent
but is less than 90 percent, `8
percent' shall be substituted for `12
percent' in clause (i);
``(III) equals or exceeds 90
percent but is less than 92 percent, `6
percent' shall be substituted for `12
percent' in clause (i); and
``(IV) equals or exceeds 92
percent, `4 percent' shall be
substituted for `12 percent' in clause
(i).
(3) Elimination of high dsh states and state supplemental
amounts.--
(A) In general.--Section 1923(f)(2)(A) (42 U.S.C.
1396r-4(f)(2)(A)) is amended to read as follows:
``(A) In general.--Subject to subparagraph (B), the
State DSH allotment for a fiscal year is equal to the
State DSH allotment for the previous fiscal year
increased by the State growth factor (as defined in
paragraph (3)(B)) for the fiscal year.''.
(B) Conforming amendments.--(i) Section 1923(f) (42
U.S.C. 1396r-4(f)) is amended by striking paragraph (3)
and redesignating paragraph (4) as paragraph (3).
(ii) Section 1923(f)(3) (42 U.S.C. 1396r-4(f)(3)),
as redesignated by clause (i), is amended by striking
subparagraphs (A) and (C) and redesignating
subparagraphs (B), (D), and (E) as subparagraphs (A),
(B), and (C).
(iii) Section 1923(f)(3)(B) (42 U.S.C. 1396r-
4(f)(3)(B)), as redesignated by clauses (i) and (ii),
is amended to read as follows:
``(B) State growth amount.--The term `State growth
amount' means, with respect to a State for a fiscal
year, the product of the State growth factor and the
State DSH payment limit for the previous fiscal
year.''.
(iv) Section 1923(f)(1)(A) (42 U.S.C. 1396r-
4(f)(1)(A) is amended by striking ``(as defined in
paragraph (4)(B))'' and inserting ``(as defined in
paragraph (3)(A))''.
(3) Termination of requirement on states to make dsh
payment adjustments.--Section 1923 (42 U.S.C. 1396r-4) is
amended by adding at the end the following new subsection:
``(h) Termination of Requirement to Make Payment Adjustments.--
``(1) In general.--Any requirement imposed by this section
on a State to increase the rate or amount of payment for
inpatient hospital services provided by a hospital which serves
a disproportionate number of low income patients with special
needs shall terminate in the year described in paragraph (2).
``(2) Year described.--The year described in this paragraph
is the first year beginning after the year during which the
percentage of individuals covered by insurance, as determined
by the National Health Care Cost and Coverage Commission
established under section 100001 of the Health Security Act,
equals or exceeds 92 percent.''.
(4) No federal financial participation.--Section 1903(i)
(42 U.S.C. 1396b(i)), as amended by section 4601(b), is
amended--
(A) by striking ``or'' at the end of paragraph
(15),
(B) by striking the period at the end of paragraph
(16) and inserting ``; or'', and
(C) by inserting after paragraph (16) the following
new paragraph:
``(17) during or after the year described in section
1923(h)(2) with respect to any payment made by a State to a
hospital which serves a disproportionate number of low income
patients with special needs that is in excess of the payment
otherwise required under this part.''.
(5) Effective date.--The amendments made by this section
shall be effective for calendar quarters beginning on or after
January 1, 1997.
(b) Payments to Hospitals Serving Vulnerable Populations.--Title
XIX (42 U.S.C. 1396 et seq.) is amended by adding at the end the
following new part:
``PART B--PAYMENTS TO HOSPITALS SERVING VULNERABLE POPULATIONS
``SEC. 1951. PAYMENTS TO HOSPITALS.
``(a) Entitlement Status.--The Secretary shall make payments in
accordance with this part to eligible hospitals described in section
1952. The preceding sentence constitutes budget authority in advance of
appropriations Acts and represents the obligation of the Federal
Government to provide funding for such payments in the amounts, and for
the fiscal years, specified in subsection (b).
``(b) Amount of Entitlement.--For purposes of subsection (a), the
amounts and fiscal years specified in this subsection are (in the
aggregate for all eligible hospitals) $2,500,000,000 for the first
applicable fiscal year (as defined in section 1954) and for each
subsequent fiscal year.
``(c) Payments Made on Quarterly Basis.--Payments to an eligible
hospital under this section for a year shall be made on a quarterly
basis during the year.
``SEC. 1952. IDENTIFICATION OF ELIGIBLE HOSPITALS.
``(a) Hospitals in Participating States.--In order to be an
eligible hospital under this part, a hospital must be located in a
State that is a participating State under title I of the Health
Security Act.
``(b) State Identification.--In accordance with the criteria
described in subsection (c) and such procedures as the Secretary may
require, each State shall identify the hospitals in the State that meet
such criteria and provide the Secretary with a list of such hospitals.
``(c) Criteria for Eligibility.--A hospital meets the criteria
described in this subsection if the hospital's low-income utilization
rate for the base year under section 1923(b)(3) (as such section is in
effect on the day before the date of the enactment of this part) is not
less than 25 percent.
``SEC. 1953. AMOUNT OF PAYMENTS.
``(a) In General.--The total amount available for payments under
this part in a year shall be allocated to hospitals for low-income
assistance in accordance with this subsection.
``(b) Determination of Hospital Payment Amount.--The amount of
payment to an eligible hospital during a year shall be the equal to the
hospital's low-income percentage (as defined in subsection (c)) of the
total amount available for payments under this part for the year.
``(c) Low-Income Percentage Defined.--
``(1) In general.--For purposes of this section, an
eligible hospital's `low-income percentage' for a year is equal
to the amount (expressed as a percentage) of the total low-
income days for all eligible hospitals for the year that are
attributable to the hospital.
``(2) Low-income days described.--For purposes of paragraph
(1), an eligible hospital's low-income days for a year shall be
equal to the product of--
``(A) the total number of inpatient days for the
hospital for the year (as reported to the Secretary by
the State in which the hospital is located, in
accordance with a reporting schedule and procedures
established by the Secretary); and
``(B) the hospital's low-income utilization rate
for the base year under section 1923(b)(3) (as such
section is in effect on the day before the date of the
enactment of this part).
``SEC. 1954. DEFINITIONS.
``For purposes of this part:
``(1) Base year.--The term `base year' means 1996.
``(2) First applicable fiscal year--The term `first
applicable fiscal year' means first fiscal year that begins
after the fiscal year ending in the calendar year during which
the percentage of individuals covered by insurance, as
determined by the National Health Care Cost and Coverage
Commission established under section 10001 of the Health
Security Act, equals or exceeds 92 percent.''.
(c) Conforming Amendments.--(1) Title XIX (42 U.S.C. 1396 et seq.)
is amended by striking the title and inserting the following:
``TITLE XIX--MEDICAL ASSISTANCE PROGRAMS AND PAYMENTS TO HOSPITALS
SERVING VULNERABLE POPULATIONS''
``PART A--GRANTS TO STATES FOR MEDICAL ASSISTANCE PROGRAMS''.
(2) Title XIX (42 U.S.C. 1396 et seq.) is amended by striking each
reference to ``this title'' and inserting ``this part''.
PART 4--MEDICAID LONG-TERM CARE PROVISIONS
SEC. 4615. INCREASED RESOURCE DISREGARD FOR INDIVIDUALS RECEIVING
CERTAIN SERVICES.
(a) In general.--Section 1902(a)(10) (42 U.S.C. 1396a(a)(10)) is
amended--
(1) by striking ``and'' at the end of subparagraph (E);
(2) by adding ``and'' at the end of subparagraph (F); and
(3) by adding at the end the following new subparagraph:
``(G) provide that, in determining the eligibility
of any unmarried individual who has applied for or is
receiving medical assistance consisting of community-
based services furnished under a waiver under
subsection (c) or (d) of section 1915, personal care
services described in section 1905(a)(24), or home and
community care for functionally disabled elderly
individuals under section 1929, the first $4,000 of
resources may, at the option of the State, be
disregarded.''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to payments for medical assistance for calendar quarters
beginning on or after January 1, 1995.
SEC. 4616. FRAIL ELDERLY DEMONSTRATION PROJECT WAIVERS.
(a) Expansion of Number of Waivers.--Section 9412(b)(1) of the
Omnibus Budget Reconciliation Act of 1986 is amended by striking ``15''
and inserting ``40''.
(b) Development of Protocols and Model Certification Guidelines.--
Section 9412(b) of the Omnibus Budget Reconciliation Act of 1986 is
amended by adding at the end the following new paragraphs:
``(5) The Secretary, in consultation with the States and
organizations operating projects in accordance with waivers
under this subsection shall develop and publish a waiver
protocol that will establish minimum standard requirements that
an organization must meet to be eligible for a waiver under
this subsection. In developing the protocol under the preceding
sentence, the Secretary shall incorporate standards for
organizations to deliver integrated acute and long-term care
services for the elderly, children, and young adults.
``(6) The Secretary shall develop model guidelines that
shall be available to States that choose to establish a
comprehensive procedure for the licensure and certification of
an organization operating a demonstration project under a
waiver granted pursuant to this subsection. Such guidelines
shall encompass the range of services provided by such an
organization.''.
(c) Evaluations and Reports.--Section 9412(b) of the Omnibus Budget
Reconciliation Act of 1986, as amended by subsection (b), is amended by
adding at the end the following new paragraph:
``(7)(A) The Secretary shall develop standard evaluation
protocols to assess the cost-effectiveness and quality of
service provided under--
``(i) demonstration projects operating on the date
of the enactment of this paragraph under waivers
granted pursuant to this subsection; and
``(ii) demonstration projects granted waivers after
the date of the enactment of this paragraph.
``(B) The Secretary shall conduct evaluations of the
demonstration projects in accordance with the protocols
developed under subparagraph (A) and based on the results of
such evaluations, report to the Committee on Finance of the
Senate, the Committee on Ways and Means of the House of
Representatives, and the Subcommittee on Health and the
Environment of the Committee on Energy and Commerce of the
House of Representatives by--
``(i) not later than January 1, 1998, with respect
to demonstration projects described in subparagraph
(A)(i); and
``(ii) not later than January 1, 2003, with respect
to demonstration projects described in subparagraph
(A)(ii);
on the desirability of granting permanent status under titles
XVIII and XIX of the Social Security Act to such demonstration
projects that the Secretary has determined to be successful.''.
(d) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
SEC. 4617. ELIMINATION OF REQUIREMENT OF PRIOR INSTITUTIONALIZATION
WITH RESPECT TO HABILITATION SERVICES FURNISHED UNDER A
WAIVER FOR HOME OR COMMUNITY-BASED SERVICES.
(a) In General.--Section 1915(c)(5) (42 U.S.C. 1396n(c)(5)) is
amended in the matter preceding subparagraph (A) by striking ``, with
respect to individuals who receive such services after discharge from a
nursing facility or intermediate care facility for the mentally
retarded''.
(b) Effective Date.--The amendments made by this section shall
apply to services furnished on or after January 1, 1995.
SEC. 4618. ELIMINATION OF RULE REGARDING AVAILABILITY OF BEDS IN
CERTAIN INSTITUTIONS.
(a) In General.--The first sentence of section 1915(c)(1) (42
U.S.C. 1396n(c)(1)) is amended by inserting the following before the
end period: ``(at the option of the State, such determination may be
made without regard to the availability of beds in such a hospital,
nursing facility, or intermediate care facility for the mentally
retarded located in the State)''.
(b) Effective Date.--The amendment made by subsection (a) shall be
effective with respect to waivers granted or renewed on or after
January 1, 1995.
SEC. 4619. PREADMISSION SCREENING FOR MENTALLY RETARDED INDIVIDUALS.
(a) In General.--Section 1919(b)(3)(F)(ii) (42 U.S.C.
1396r(b)(3)(F)(ii)) is amended by striking ``that, because'' and all
that follows through the period at the end and inserting ``that the
individual's primary need is for medical services that are at the level
provided by the nursing facility and that the nursing facility has the
capability to provide any specialized services necessary for
habilitation of the individual.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to admissions on or after July 1, 1995.
PART 5--MISCELLANEOUS
SEC. 4621. MEDICAID COVERAGE OF ALL CERTIFIED NURSE PRACTITIONER AND
CLINICAL NURSE SPECIALIST SERVICES.
(a) In General.--Paragraph (21) of section 1905(a) (42 U.S.C.
1396d(a)) is amended to read as follows:
``(21) services furnished by all certified nurse
practitioners (as defined by the Secretary) or clinical nurse
specialists (as defined in subsection (t)) which the certified
nurse practitioner or clinical nurse specialist is legally
authorized to perform under State law (or the State regulatory
mechanism provided by State law), whether or not the certified
nurse practitioner or clinical nurse specialist is under the
supervision of, or associated with, a physician or other health
care provider;''.
(b) Clinical Nurse Specialist Defined.--Section 1905 (42 U.S.C.
1396) is amended by adding at the end the following new subsection:
``(t) The term `clinical nurse specialist' means an individual
who--
``(1) is a registered nurse and is licensed to practice
nursing in the State in which the clinical nurse specialist
services are performed; and
``(2) holds a master's degree in a defined clinical area of
nursing from an accredited educational institution.''.
(c) Effective Date.--The amendments made by this section shall
become effective with respect to payments for calendar quarters
beginning on or after January 1, 1995.
SEC. 4622. RELIEF FROM THIRD PARTY LIABILITY REQUIREMENTS WHEN COST-
EFFECTIVE.
(a) In General.--Section 1902(a)(25)(B) (42 U.S.C. 1396a(a)(25)(B))
is amended to read as follows--
``(B) that in any case where such a legal liability is
found to exist after medical assistance has been made
available, the State or local agency will seek reimbursement
for such assistance to the extent of such legal liability,
unless--
``(i) the amount of reimbursement the State can
reasonably expect to recover for medical assistance
furnished to an individual does not exceed the costs of
such recovery, or
``(ii) with respect to case management services (as
defined in section 1915(g)(2)), the State demonstrates
to the satisfaction of the Secretary (using the methods
specified by the Secretary under subsection (aa)) that
it is not cost-effective in the aggregate to seek such
recovery with respect to such services furnished to
individuals covered under the State plan;''.
(b) Methods for Demonstration.--Section 1902(a) (42 U.S.C.
1396a(a)) is amended by adding at the end the following new subsection:
``(aa) The Secretary shall specify in regulations the methods by
which a State may demonstrate that it is not cost-effective in the
aggregate to seek reimbursement for medical assistance paid for case
management services under subsection (a)(25)(B)(ii). The methods
specified by the Secretary under the preceding sentence shall include
allowing a State to demonstrate that case management services are not
generally covered by health insurers in the State.''.
(c) Effective Date.--The amendments made by this section shall
apply to payments for medical assistance for calendar quarters
beginning on or after January 1, 1995.
TITLE V--QUALITY AND CONSUMER PROTECTION
Subtitle A--Quality Management and Improvement
SEC. 5001. NATIONAL QUALITY COUNCIL.
(a) Establishment.--Not later than 1 year after the date of
enactment of this Act, the Secretary of Health and Human Services shall
establish a council to be known as the National Quality Council to
oversee a program of quality management and improvement designed to
enhance the quality, appropriateness, and effectiveness of health care
services and access to such services.
(b) Appointment.--The National Quality Council shall consist of 15
members appointed by the President, with the advice and consent of the
Senate, who are broadly representative of the population of the United
States and shall include the following:
(1) Individuals and health care providers distinguished in
the fields of medicine, public health, health care quality, and
related fields of health services research. Such members shall
constitute at least one-third of the Council's membership.
(2) Individuals representing consumers of health care
services. Such members shall constitute at least one-third of
the Council's membership.
(3) Other individuals representing purchasers of health
care, health plans, States, and nationally recognized health
care accreditation organizations.
(c) Duties.--The National Quality Council shall--
(1) develop national goals and performance measures of
quality;
(2) develop uniform quality goals and performance measures
for plans;
(3) oversee the design and implementation of a program of
national surveys of plans and consumers;
(4) oversee the design and production of Consumer Report
Cards;
(5) oversee Quality Improvement Foundations;
(6) oversee National and State-based Consumer Information
and Advocacy Centers; and
(7) oversee the evaluation of the impact of the
implementation of this Act on the quality of health care
services in the United States and the access of consumers to
such services.
(d) Consultation.--In carrying out these duties, the National
Quality Council shall establish a process of consultation with
appropriate interested parties.
(e) Terms.--
(1) In general.--Except as provided in paragraph (2),
members of the Council shall serve for a term of 4 years.
(2) Staggered rotation.--Of the members first appointed to
the Council under subsection (b), the President shall appoint
members to serve for a term of between 1 and 4 years so that no
more than one third of the Council seats are vacated each year.
(3) Service beyond term.--A member of the Council may
continue to serve after the expiration of the term of the
member until a successor is appointed.
(f) Vacancies.--If a member of the Council does not serve the full
term applicable under subsection (e), the individual appointed to fill
the resulting vacancy shall be appointed for the remainder of the term
of the predecessor of the individual.
(g) Chair.--The President shall designate an individual to serve as
the chair of the Council.
(h) Meetings.--The Council shall meet not less than once during
each 4-month period and shall otherwise meet at the call of the
President or the chair.
(i) Compensation and Reimbursement of Expenses.--Members of the
Council shall receive compensation for each day (including travel time)
engaged in carrying out the duties of the Council. 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.
(j) Conflicts of Interest.--Members of the Council shall disclose
upon appointment to the Council or at any subsequent time that it may
occur, conflicts of interest.
(k) Executive Director; Staff.--
(1) Executive director.--
(A) In general.--The Council 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.
(2) Staff.--
(A) In general.--Subject to subparagraphs (B) and
(C), the Executive Director, with the approval of the
Council, 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 Council to assist the
Council in carrying out its duties under this Act.
(l) Contract Authority.--To the extent provided in advance in
appropriations Acts, the Council 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 Council to assist the Council
in carrying out its duties.
(m) Consultations with Experts.--The Council may consult with any
outside expert individuals or groups that the Council determines
appropriate in performing its duties under this section. The Council
may establish advisory committees.
(n) Access to Information.--The Council 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 Council.
(o) Delegation of Authority.--Except as otherwise provided, the
Council may delegate any function to such officers and employees as the
Council may designate and may authorize such successive redelegations
of such functions with the Council as the Council deems to be necessary
or appropriate. No delegation of functions by the Council shall relieve
the Council of responsibility for the administration of such functions.
(p) Rulemaking.--The Council is authorized to establish such rules
as may be necessary to carry out this section.
(q) Health Care Provider.--For purposes of this subtitle, the term
``health care provider'' means an individual who, or entity that,
provides an item or service to an individual that is covered under the
health plan (as defined in section 1111) in which the individual is
enrolled.
SEC. 5002. NATIONAL GOALS AND PERFORMANCE MEASURES OF QUALITY.
(a) In General.--The National Quality Council shall develop a set
of national quality goals and performance measures of quality for both
the general population and for population subgroups defined by
demographic characteristics and health status. The goals and measures
shall incorporate goals identified by the Secretary of Health and Human
Services for meeting public health objectives utilizing, but not
limited to, goals delineated in Healthy People 2000.
(b) Subject of Measures.--National measures of quality performance
shall be developed under subsection (a) in a manner that provides
statistical and other information on at least the following subjects:
(1) Outcomes of health care services and procedures.
(2) Population health status.
(3) Health promotion.
(4) Prevention of diseases, disorders, disabilities,
injuries, and other health conditions.
(5) Access to care and appropriateness of care.
(6) Consumer satisfaction.
SEC. 5003. STANDARDS AND PERFORMANCE MEASURES FOR HEALTH PLANS.
(a) Development.--
(1) In general.--The National Quality Council shall
establish national standards and performance measures for
health plans, which may be used to assess the provision of
health care services and access to such services, both for the
general population and population subgroups defined by
demographic characteristics and health status. In subject
matter areas with which the National Quality Council determines
that sufficient information and consensus exist, the Council
shall establish goals for performance by health plans
consistent with the national goals and performance measures
established under section 5002.
(2) Measures and standards.--
(A) Measures.--Quality measures under this section
shall relate, at a minimum, to:
(i) Access by consumers to health care
services and providers.
(ii) Appropriateness of health care
services.
(iii) Consumer satisfaction.
(iv) Outcomes of care.
(v) Disease prevention and health
promotion.
(B) Standards.--Quality standards under this
section at a minimum shall relate to:
(i) Health plan compliance with members'
rights under this Act.
(ii) Quality improvement and
accountability.
(iii) Documentation and review of provider
credentialing and competency.
(iv) Management of clinical, and
administrative and financial information.
(b) Certification of Plans.--The National Quality Council shall
provide information and technical assistance to the Secretary and the
States concerning the use of national standards and performance
measures developed under this section for State certification of health
plans.
SEC. 5004. PLAN DATA ANALYSIS AND CONSUMER SURVEYS.
(a) In General.--The National Quality Council shall oversee the
design and conduct of periodic surveys of health care consumers and
plans to gather information concerning the quality measures established
under sections 5002 and 5003. The surveys shall monitor consumer
reaction to the implementation of this Act and, in coordination with
relevant data from health plans and other sources, be designed to
assess the impact of this Act both for the general population of the
United States and for populations vulnerable to discrimination or to
receiving inadequate care due to health status, demographic
characteristics, or geographic location.
(b) Survey Administration and Data Analysis.--The National Quality
Council shall approve a standard design for the consumer surveys and
sampling of relevant plan data described in subsection (a) which shall
be administered by the Administrator of the Agency for Health Care
Policy and Research or such other appropriate entity as the Council
shall designate on a plan-by-plan and State-by-State basis. Sufficient
consumer survey and plan data shall be collected and verified to
provide for reliable and valid analysis. A State may add survey
questions on quality measures of local interest to surveys conducted in
the State. The plan-level survey shall include a subset of consumer
survey questions related to consumer satisfaction, perceived health
status, access, and such other survey items designated by the Council.
(c) Sampling Strategies.--The National Quality Council shall
approve sampling strategies under subsection (a) that ensure that
appropriate survey samples adequately measure populations that are
considered to be at risk of receiving inadequate health care or may be
difficult to reach through consumer-sampling methods, including
individuals who--
(1) fail to enroll in a health plan;
(2) resign from a plan; or
(3) are vulnerable to discrimination or to receiving
inadequate care due to health status, demographic
characteristics, or geographic location.
(d) Survey Integration.--To the extent feasible, the consumer and
plan surveys developed under this section shall be integrated with
existing Federal surveys.
SEC. 5005. EVALUATION AND REPORTING OF QUALITY PERFORMANCE.
(a) Health Plan Reports.--Each State annually shall publish and
make available to the public and Consumer Information and Advocacy
Centers a performance report, in a standard format designated by the
National Quality Council, outlining the performance of each health plan
offered in the State with respect to the set of national measures of
quality performance developed under sections 5002 and 5003. The report
shall include--
(1) the results of a smaller number of such measures for
health care providers if the available information is
statistically meaningful; and
(2) the results of consumer surveys and an analysis of the
plan data collected in section 5004.
(b) Consumer Report Cards.--The health plan reports under
subsection (a) shall be summarized in a consumer report card as
specified by the National Quality Council and made available by the
State through the Consumer Information and Advocacy Centers to all
individuals in the State.
(c) Quality Reports.--The National Quality Council annually shall
provide recommendations to the Congress, the National Health Benefits
Board, and the Secretary in the form of a summary report that--
(1) outlines in a standard format the performance of each
State;
(2) discusses State-level and national trends relating to
health care quality; and
(3) presents data for each State from health plan reports
and consumer surveys that were conducted during the year.
SEC. 5006. DEVELOPMENT AND DISSEMINATION OF PRACTICE GUIDELINES.
The National Quality Council may advise the Secretary and the
Administrator of the Agency for Health Care Policy and Research
concerning priorities for the development and periodic review and
updating of clinically relevant guidelines established under section
912 of the Public Health Service Act.
SEC. 5007. RESEARCH ON HEALTH CARE QUALITY.
The National Quality Council may make recommendations to the
Secretary and the Administrator of the Agency for Health Care Policy
and Research concerning priorities for research with respect to the
quality, appropriateness, and effectiveness of health care.
SEC. 5008. QUALITY IMPROVEMENT FOUNDATIONS.
(a) Establishment.--The National Quality Council shall oversee the
operation of quality improvement foundations in performing the duties
specified in subsection (c).
(b) Structure and Membership.--
(1) Grant process.--The Secretary, in consultation with the
Council, shall, through a competitive grantmaking process,
award grants for the establishment and operation of a quality
improvement foundation in each State or region (as defined in
paragraph (2)(B)).
(2) Establishment of geographic areas.--The Secretary shall
establish throughout the United States geographic areas with
respect to which grants under this section will be made. In
establishing such areas, the Secretary shall take into account
the following criteria:
(A) State areas.--Each State shall generally be
designated as a geographic area for purposes of this
paragraph.
(B) Multi-state areas.--The Secretary may establish
geographic areas comprised of multiple contiguous
States only where the Secretary determines that volume
of activity or other relevant factors justifies such an
establishment.
(3) Eligible applicants.--To be eligible to receive a grant
for the establishment of a quality improvement foundation under
paragraph (1), an applicant entity shall meet the following
conditions:
(A) Not-for-profit.--The entity shall be a not-for-
profit entity operating within the State or region
involved.
(B) Board.--The entity shall have a board which
includes--
(i) representatives of health care
providers from throughout the State or region
involved, including both practicing providers
and experts in the field of quality measurement
and improvement, which together shall comprise
at least one-fourth of the advisory board's
membership;
(ii) at least one representative of
Academic Health Centers or Schools of Public
Health as defined in section 799 of the Public
Health Service Act operating within the State
or region involved (or operating outside of the
State or region if no such Centers or schools
operate within the State or region), which
shall comprise up to one-fourth of the
membership;
(iii) representatives of consumers residing
within the State or region involved, who shall
comprise one-fourth of the membership; and
(iv) representatives of purchasers of
health care, health plans, and other interested
parties residing within the State or region
involved, and representatives of the State or
States within a region.
(C) Staffing.--Each entity shall have sufficient,
competent staff of experts possessing the skills and
knowledge necessary to enable the foundation to perform
its duties.
(c) Duties.--
(1) In general.--Each quality improvement foundation shall
carry out the duties described in paragraph (2) for the State
or region in which the foundation is located. The foundation
shall establish a program of activities incorporating such
duties and shall be able to demonstrate the involvement of a
broad cross-section of the providers and health care
institutions throughout the State or region. A foundation may
apply for and conduct research described in section 5007.
(2) Duties described.--The duties described in this
paragraph include the following:
(A) Collaboration with and technical assistance to
providers and health plans in ongoing efforts to
improve the quality of health care provided to
individuals in the State.
(B) Population-based monitoring of practice
patterns and patient outcomes,on an other than a case-
by-case basis.
(C) Developing programs in lifetime learning for
health professionals to improve the quality of health
care by ensuring that health professionals remain
informed about new knowledge, acquire new skills, and
adopt new roles as technology and societal demands
change.
(D) Disseminating information about successful
quality improvement programs, practice guidelines, and
research findings, including information on innovative
staffing of health professionals.
(E) Assist in developing innovative patient
education systems that enhance patient involvement in
decisions relating to their health care, including an
emphasis on shared decisionmaking between patients and
health care providers.
(F) Issuing a report to the public regarding the
foundation's activities for the previous year including
areas of success during the previous year and areas for
opportunities in improving health outcomes for the
community, and the adoption of guidelines.
(G) Providing notice to the State or appropriate
entity if the foundation determines, after reasonable
opportunities for improvement, that the quality of a
provider or plan remains so inadequate that the
patients or enrollees of such a provider or plan are
subject to potential harm in utilizing the services of
such provider or services under such plan.
(d) Restrictions on Disclosure.--The restrictions on disclosure of
information under section 1160 of the Social Security Act shall apply
to quality improvement foundations under this section, except that--
(1) such foundations shall make data available to qualified
organizations and individuals for research for public benefit;
(2) individuals and qualified organizations shall meet
standards consistent with the Public Health Service Act and
policies regarding the conduct of scientific research,
including provisions related to confidentiality, privacy,
protection of humans and shall pay reasonable costs for data;
and
(3) such foundations may exchange information with other
quality improvement foundations.
SEC. 5009. CONSUMER INFORMATION AND ADVOCACY.
(a) Establishment.--
(1) In general.--The Secretary shall establish (by grant or
contract) and oversee a National Center of Consumer Information
and Advocacy to provide technical assistance, adequate training
and support to States and Consumer Information and Advocacy
Centers in each State (hereafter referred to in this section as
the ``Center'') to carry out the duties of this section,
including providing public education to consumers concerning
this Act.
(2) Requirements for national center.--The National Center
of Consumer Information and Advocacy shall be a national non-
profit organization with public education and health policy
expertise and shall have sufficient staff to carry out its
duties and a demonstrated ability to represent and work with a
broad spectrum of consumers, including vulnerable and
underserved populations.
(3) State-based centers.--The Consumer Information and
Advocacy Center in each State shall disseminate State reports
on quality performance (as defined in section 5005(4)) and
health plan consumer report cards (as defined in section
5005(2)) in order to facilitate consumer choice of health
plans, perform public outreach and provide education and
assistance regarding consumer rights and responsibilities under
this Act, and assist consumers in dealing with problems that
arise with consumer purchasing cooperatives, large group
purchasers, health plans, insurance agencies, and health care
providers operating in such State.
(b) Contracts.--
(1) Solicitation.--The Secretary shall solicit contracts
from private non-profit organizations based in each State to
fulfill the duties of the Center in the State. The Secretary
may develop such regulations and guidelines as necessary to
oversee the process of considering and awarding competitive
contracts under this section. In awarding such contracts, the
Secretary shall consult with the National Center of Consumer
Information and Advocacy and shall, at a minimum, consider the
demonstrated ability of the organization to represent and work
with a broad spectrum of consumers, including vulnerable and
underserved populations.
(2) Contract period.--The contract period for the State-
based Consumer Information and Advocacy Centers and the
National Center of Consumer Information and Advocacy under this
section shall be not less than 4 years and not more than 7
years.
(c) Functions and Responsibilities.--
(1) Dissemination of reports.--Each Center shall
disseminate State reports on quality performance (as defined in
section 5005(2)) and health plan consumer report cards (as
defined in section 5005(2)) in order to facilitate consumer
choice of health plans.
(2) Staff, offices and hotlines.--Each Center shall have
sufficient staff, local offices throughout the State, and a
State-wide toll-free hotline to carry out the advocacy duties
of this section. Through direct contact and the hotline, the
Center shall provide the following services in the State,
including appropriate assistance to individuals with limited
English language ability--
(A) outreach and education relating to consumer
rights and responsibilities under this Act, including
such rights and services available through the Center;
(B) assistance with enrollment in health plans, or
obtaining services or reimbursement from health plans;
(C) assistance with filing an application for
premium or cost sharing subsidies;
(D) information to enrollees about existing
grievance procedures and coordination with other
entities to assist in identifying, investigating, and
resolving enrollee grievances under this Act (including
grievances before State medical boards);
(E) referrals to appropriate local providers of
legal assistance and to appropriate State and Federal
agencies which may be of assistance to aggrieved
individuals in the area; and
(F) conduct public hearings no less frequently than
once a year to identify and address community health
care needs.
(d) Access to Information.--The Secretary and the States shall
ensure that, for purposes of carrying out the Center's duties under
this section, the Center (and officers and employees of the Center in
local offices) have appropriate access to necessary information subject
to protections for confidentiality of enrollee information. Each Center
shall have the capability to accept electronic quality data from plans
as required under subtitle B.
(e) Evaluation and Report.--The Secretary shall have the right to
evaluate the quality and effectiveness of the organization in carrying
out the functions specified in the contract. The Center shall report to
the Secretary and the State annually on the nature and patterns of
consumer complaints received in the Center and its local offices during
each year and any policy, regulatory, and legislative recommendations
for needed improvements together with a record of the activities of the
Center.
(f) Conflicts of Interest.--The Secretary shall ensure that no
individual involved in the designation of a State Center, the Center
itself, or of any delegate thereof is subject to a conflict of
interest, including affiliation with (through ownership or common
control) a health care facility, managed care organization, health
insurance company or association of health care facilities or
providers. No grantee under this section may have a direct involvement
with the licensing, certification, or accreditation of a health care
facility, a health care plan, or a provider of health care services .
(g) Legal Counsel.--The Secretary shall ensure that adequate legal
counsel is available, and is able, without conflict of interest, to
assist the Center, and the local offices thereof in the performance of
their official duties.
(h) Coordination.--The Center shall coordinate its activities with
all appropriate entities including Quality Improvement Foundations
(established under section 5008) and the State agencies designated to
carry out client advocacy activities pursuant to section 2106.
(i) Construction.--Nothing in this section shall replace grievance
procedures established or otherwise required under this Act.
SEC. 5010. AUTHORIZATION OF APPROPRIATIONS.
(a) National Quality Council.--For the purpose of carrying out this
subtitle with respect to the establishment and activities of the
National Quality Council, there are authorized to be appropriated
$4,000,000 for each of the fiscal years 1995 through 2000.
(b) Quality Improvement Foundations.--For the purpose of carrying
out section 5008, the are authorized to be appropriated $100,000,000
for fiscal year 1996, $200,000,000 for fiscal year 1997, and
$300,000,000 for each of the fiscal years 1998 through 2000.
(c) Consumer Information and Advocacy Centers.--For the purpose of
carrying out section 5009, the are authorized to be appropriated
$100,000,000 for fiscal year 1996, $200,000,000 for fiscal year 1997,
$300,000,000 for each of the fiscal years 1998 through 2000, of which
$4,000,000 for each fiscal year shall be made available to the National
Center of Consumer Information and Advocacy.
SEC. 5011. ROLE OF HEALTH PLANS IN QUALITY MANAGEMENT.
Each health plan shall--
(1) measure and disclose performance on quality measures as
designated by this Act;
(2) furnish information required under subtitles B and of
this title and provide such other reports and information on
the quality of care delivered by health care providers who are
members of a provider network of the plan as may be required
under this Act; and
(3) maintain quality management systems that--
(A) use the national measures of quality
performance developed by the National Quality Council
under section 5003; and
(B) measure the quality of health care furnished to
enrollees under the plan by all health care providers
of the plan where practical.
SEC. 5012. INFORMATION ON HEALTH CARE PROVIDERS.
(a) State Obligations.--Each State shall make available to
consumers, upon request, information concerning providers of health
care services or supplies. Such information shall include--
(1) the identity of any provider that has been convicted,
under Federal or State law, of a criminal offense relating to
fraud, corruption, breach of fiduciary responsibility, or other
financial misconduct in connection with the delivery of a
health care service or supply;
(2) the identity of any provider that has been convicted,
under Federal or State law, of a criminal offense relating to
neglect or abuse of patients in connection with the delivery of
a health care service or supply;
(3) the identity of any provider that has been convicted,
under Federal or State law, of a criminal offense relating to
the unlawful manufacture, distribution, prescription, or
dispensing of a controlled substance; and
(4) the identity of any provider whose license to provide
health care services or supplies has been revoked, suspended,
restricted, or not renewed, by a State licensing authority for
reasons relating to the provider's professional competence,
professional performance, or financial integrity, or any
provider who surrendered such a license while a formal
disciplinary proceeding was pending before such an authority,
if the proceeding concerned the provider's professional
competence, professional performance, or financial integrity.
(b) Public Availability of Information in National Practitioner
Data Bank on Defendants, Awards, and Settlements.--
(1) In general.--Section 427(a) of the Health Care Quality
Improvement Act (42 U.S.C. 11137 (a)) is amended by adding at
the end the following new sentence: ``Not later the January 1,
1996, the Secretary shall promulgate regulations under which
individuals seeking to enroll in health plans under the Health
Security Act shall be able to obtain information reported under
this part with respect to physicians and other licensed health
practitioners participating in such plans for whom information
has been reported under this part on repeated occasions.''.
(2) Access to data bank for point-of-service contractors
under medicare.--Section 427(a) of such Act (42 U.S.C.
11137(a)) is amended--
(A) by inserting ``to sponsors of point-of-service
networks under section 1990 of the Social Security
Act,'', and
(B) in the heading, by inserting ``Related'' after
``Care''.
SEC. 5013. CONFORMING AMENDMENTS TO PUBLIC HEALTH SERVICE ACT.
Title IX of the Public Health Service Act is amended--
(1) in section 903(a)(4) (42 U.S.C. 299a-1(a)(4)), by
inserting ``and Quality Improvement Foundations'' after
``health agencies'';
(2) in section 904(c)(1) (42 U.S.C. 299a-2(c)(1)), by
inserting ``the National Quality Council and'' after ``in
consultation with'';
(3) in section 912(b)(4) (42 U.S.C. 299b-1(b)(4))--
(A) by inserting ``outcomes,'' before ``risks'';
and
(B) by inserting before the semicolon ``to the
extent feasible given the availability of unbiased,
reliable, and valid data'';
(4) in section 914 (42 U.S.C. 299b-3)--
(A) in subsection (a)(2)(B)--
(i) by inserting ``the National Quality
Council,'' after ``shall consult with''; and
(ii) by inserting before the period ``and
relevant sections of the Health Security Act'';
(B) in subsection (c), by inserting ``Quality
Improvement Foundations and other'' after ``carried out
through''; and
(C) in subsection (f)--
(i) by striking ``to Administrator'' in the
subsection heading;
(ii) by striking ``Administrator'' and
inserting ``National Quality Council and the'';
and
(5) in section 927 (42 U.S.C. 299c-6), by adding at the end
thereof the following new paragraphs:
``(5) The term `National Quality Council' means the Council
established under section 5001 of the Health Security Act.
``(6) The term ``Quality Improvement Foundations'' means
the Foundations established under section 5008 of the Health
Security Act.''.
Subtitle B--Administrative Simplification
PART 1--PURPOSE AND DEFINITIONS
SEC. 5101. 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 of the Social Security Act and the medicaid program
under title XIX of such Act, by encouraging the development of a health
information network through the establishment of standards and
requirements for the electronic transmission of certain health
information.
SEC. 5102. 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) of the Social Security Act), a provider of
medical or other health services (as defined in section 1861(s)
of the Social Security Act), 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 5202), health researcher, public
health authority (as defined in section 5202),
employer, life insurer, school or university, or health
information network service certified under section
5141; 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 1011(1)(A) except that such term
shall include clauses (iii), (iv), (v), (vi), and (viii) 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 5202.
(10) Health researcher.--The term ``health researcher''
shall have the meaning given such term under section 5202.
(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 2 that applies to
such information transaction or data elements.
PART 2--STANDARDS FOR DATA ELEMENTS AND INFORMATION TRANSACTIONS
SEC. 5111. 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. 5112. 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 5121;
(2) the quality information required to be submitted by a
health plan under title I and subtitle A of this title; 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) of
the Social Security Act.
(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 5115(c).
SEC. 5113. 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 5112 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. 5114. STANDARDS RELATING TO WRITTEN CLAIMS SUBMITTED BY
INDIVIDUALS AND WRITTEN EXPLANATIONS OF BENEFITS.
The Secretary shall adopt standard methods and formats which--
(1) may be used by an individual to submit a written claim
when the individual's health care provider does not submit the
claim; and
(2) shall be used by health plans to submit a written
explanation of benefits to an enrollee.
SEC. 5115. 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 5112(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 5112(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 5113 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) Standards for Written Claims and Explanations of Benefits.--The
Secretary shall adopt standard methods and formats described in section
5114 not later than 9 months after the date of the enactment of this
subtitle.
(d) 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.
(e) 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 3--REQUIREMENTS WITH RESPECT TO CERTAIN TRANSACTIONS AND
INFORMATION
SEC. 5121. 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
quality information required to be submitted by a health plan under
title I or subtitle A of this title 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 1013(12)) 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 5164(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 5141 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. 5122. 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 2 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 2, 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 2, 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 4--ACCESSING HEALTH INFORMATION
SEC. 5131. 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 5141,
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 5141 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 5141 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. 5132. 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. 5133. 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. 5134. 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 5--STANDARDS AND CERTIFICATION FOR HEALTH INFORMATION NETWORK
SEC. 5141. 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 5151, 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. 5142. 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 5141 shall be able
to make health information available for disclosure as authorized by
this subtitle.
PART 6--PENALTIES
SEC. 5151. 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 of the Social
Security Act (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 of
such Act.
(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 7--MISCELLANEOUS PROVISIONS
SEC. 5161. 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 5112 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 5113 or 5131 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 5112.
(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 5112, 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. 5162. 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. 5164. 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 5141 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 5141, as designated by the Secretary.
SEC. 5165. 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. 5166. 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. 5167. 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) of the Social Security Act.
(b) 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 5112(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. 5168. 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. 5169. 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) Exception.--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 exception 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. 5170. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated such sums as may be
necessary to carry out the purposes of this subtitle.
PART 8--ASSISTANCE TO THE SECRETARY
SEC. 5171. 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 5172 and shall consult
with appropriate Federal agencies.
SEC. 5172. 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) of the Social Security Act shall apply to the
committee in the same manner as they apply to the Prospective Payment
Assessment Commission.
(g) Reports.--
(1) In general.--The committee shall annually prepare and
submit to Congress and the Secretary a report including at
least an analysis of--
(A) the status of the health information network
established under this subtitle, including whether the
network is fulfilling the purpose described in section
5101;
(B) the savings and costs of the network;
(C) the activities of health information network
services certified under section 5141, 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 9--DEMONSTRATION PROJECTS FOR COMMUNITY-BASED CLINICAL INFORMATION
SYSTEMS
SEC. 5181. 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.
(g) Authorization of Appropriations.--There are authorized to be
appropriated such sums as may be necessary to carry out the purposes of
this section.
PART 10--MEDICARE AND MEDICAID COVERAGE DATA BANK
SEC. 5191. REPEAL OF MEDICARE AND MEDICAID COVERAGE DATA BANK.
(a) Repeal of Data Bank.--Section 1144 of the Social Security Act
(42 U.S.C. 1320b-14), as added by section 13581 of the Omnibus Budget
Reconciliation Act of 1993, is repealed.
(b) Conforming Amendments.--
(1) Medicare.--Section 1862(b)(5) of such Act (42 U.S.C.
1395y(b)(5)) is amended--
(A) in subparagraph (B), by striking ``the
information received under'' and all that follows and
inserting ``the information received under subparagraph
(A) for the purposes of carrying out this
subsection.''; and
(B) in subparagraph (C)(i), by striking
``subparagraph (B)(i)'' and inserting ``subparagraph
(B)''.
(2) Medicaid.--Section 1902(a)(25)(A)(i) of such Act (42
U.S.C. 1396(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 as specified'' and inserting ``(as specified''.
(3) Conforming amendment related to data matches.--
Subsection (a)(8)(B) of section 552a of title 5, United States
Code, is amended--
(A) in clause (v), by adding ``; or'' at the end;
(B) in clause (vi), by striking ``; or'' and
inserting a semicolon; and
(C) by striking clause (vii).
(4) Conforming amendment to erisa.--
(A) Section 101 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1031) is amended--
(i) by striking subsection (f); and
(ii) by redesignating subsection (g) as
subsection (f).
(B) Section 502(a) of such Act (29 U.S.C. 1132(a))
is amended--
(i) in paragraph (6), by striking the
semicolon at the end and inserting ``; or'';
(ii) in paragraph (7), by striking ``; or''
and inserting a period; and
(iii) by striking paragraph (8).
(C) Section 502(c) of such Act (29 U.S.C. 1132(c))
is amended by striking paragraph (4).
(D) Section 502(e)(1) of such Act (29 U.S.C.
1132(e)(1)) is amended by striking ``fiduciary, or any
person referred to in section 101(f)(1)'' and inserting
``or fiduciary''.
Subtitle C--Privacy of Health Information
PART 1--FINDINGS AND DEFINITIONS
SEC. 5201. 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 of the Social Security Act, and the medicaid program
under title XIX of such Act, 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. 5202. 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 5213, 5217, 5218, 5221, 5222,
5226, or 5231; and
(C) any employee or agent of a person covered under
subparagraph (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 5102.
(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 5102) that is
certified under section 5141.
(2) Certified health information protection organization.--
The term ``certified health information protection
organization'' means a health information protection
organization (as defined in section 5102) that is certified
under section 5141.
(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 2--AUTHORIZED DISCLOSURES
Subpart A--General Provisions
SEC. 5206. 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 5213 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. 5207. 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. 5208. 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
5102).
Subpart B--Specific Disclosures Relating to Patient
SEC. 5211. 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 5213, 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. 5212. NEXT OF KIN AND DIRECTORY INFORMATION.
(a) Next of Kin.--A health care provider or person who receives
protected health information under section 5213 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 5213 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. 5213. 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. 5216. 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
5206(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. 5217. PUBLIC HEALTH.
A health care provider, health plan, public health authority,
employer, or person who receives protected health information under
section 5213 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. 5218. 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 5102) 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. 5221. 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. 5222. LAW ENFORCEMENT.
(a) In General.--A health care provider, health plan, health
oversight agency, employer, or person who receives protected health
information under section 5213 may disclose protected health
information to a law enforcement agency (other than a health oversight
agency governed by section 5216) 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
5206(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. 5226. 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 5213 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 5227;
(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 5227; or
(3) an administrative subpoena or a judicial subpoena or
warrant, and the disclosure otherwise meets the conditions of
section 5216, 5217, 5221, or 5222.
(b) Restrictions on Additional Disclosure.--
(1) Actions or investigations.--Notwithstanding section
5206(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 5216, 5217, 5221, or 5222.
SEC. 5227. 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 5226(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 5228.
(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 5228, 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 5228; or
(2) disclosure is ordered by a court after challenge under
section 5228.
(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. 5228. 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 5226(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. 5231. PRIVATE PARTY SUBPOENAS.
A health care provider, health plan, employer, or person who
receives protected health information under section 5213 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 5232.
SEC. 5232. 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 5233 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 5233; or
(2) disclosure is ordered by a court under section 5233.
SEC. 5233. 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
5231, 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 3--PROCEDURES FOR ENSURING SECURITY OF PROTECTED HEALTH
INFORMATION
Subpart A--Establishment of Safeguards
SEC. 5236. 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. 5237. 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 5213 and 5217.
(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. 5241. 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. 5242. 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. 5243. 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. 5246. 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 4--SANCTIONS
Subpart A--No Sanctions for Permissible Actions
SEC. 5251. 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. 5252. 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. 5253. 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 to
the individual who is the subject of the information for such unlawful
disclosure.
Subpart B--Civil Sanctions
SEC. 5256. 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 of the
Social Security Act, 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 of such Act.
SEC. 5257. 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. 5261. 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 5--ADMINISTRATIVE PROVISIONS
SEC. 5266. 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 5207 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. 5267. RIGHTS OF INCOMPETENTS.
(a) Effect of Declaration of Incompetence.--Except as provided in
section 5268, 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 5268, 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. 5268. 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.
Subtitle D--Expanded Efforts To Combat Health Care Fraud and Abuse
Affecting Federal Outlay Programs
PART 1--IMPROVED ENFORCEMENT
SEC. 5301. HEALTH CARE FRAUD AND ABUSE AFFECTING FEDERAL OUTLAY
PROGRAMS.
(a) In General.--Not later than January 1, 1995, 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 conduct investigations (including consumer complaint
investigations), audits, evaluations, and inspections relating
to the delivery of and payment for health care in the United
States, and
(3) to facilitate the enforcement of this subtitle and
other statutes applicable to health care fraud and abuse.
(b) Coordination With Law Enforcement Agencies.--In carrying out
the program under subsection (a), the 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 standard health plans.
(d) Authorities of Attorney General and Secretary.--In carrying out
duties under subsection (a), the Attorney General and the Secretary
shall--
(1) conduct, supervise, and coordinate audits, civil and
criminal investigations, inspections, and evaluations relating
to the program established under such subsection;
(2) have access (including on-line access as requested and
available) to all records available to purchasing cooperatives
and certified standard health plans relating to the activities
described in paragraph (1) (subject to restrictions based on
the confidentiality of certain information under subtitles B
and C of this title); and
(3) issue advisory opinions, fraud alerts, and other
appropriate educational material to assist in compliance with
the provisions of this subtitle.
(e) Qualified Immunity for Providing Information.--The provisions
of section 1157(a) of the Social Security Act (relating to limitation
on liability) shall apply to a person providing information 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 2.
(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 standard health plans; purchasing
cooperatives.--The terms ``certified standard health plan'' and
``purchasing cooperative'' have the meanings given such terms
by sections 1011(2) and 1013(16), respectively.
(2) Federal outlay programs.--The term ``Federal outlay
programs'' means--
(A) any program under title XVIII of the Social
Security Act,
(B) any State health care program (as defined in
section 1128(h) of the Social Security Act),
(C) any program under the Public Health Service
Act, and
(D) any program under this Act, including any State
program approved under title I which certifies standard
health plans, supplemental health benefits plans, and
long-term care policies.
(3) Inspector general.--The term ``Inspector General''
means the Inspector General of the Department of Health and
Human Services.
SEC. 5302. ESTABLISHMENT OF FEDERAL OUTLAY PROGRAM FRAUD AND ABUSE
CONTROL ACCOUNT.
(a) Establishment.--
(1) In general.--There is hereby established an account to
be known as the ``Federal Outlay Program Fraud and Abuse
Control Account'' (in this section referred to as the ``Anti-
Fraud Account''). The Anti-Fraud Account shall consist of--
(A) such gifts and bequests as may be made as
provided in paragraph (2);
(B) such amounts as may be deposited in the Anti-
Fraud Account as provided in section 5311(d)(2) and
title IX of the Social Security Act; and
(C) such amounts as are transferred to the Anti-
Fraud Account under paragraph (3).
(2) Authorization to accept gifts.--The Anti-Fraud Account
is authorized to accept on behalf of the United States money
gifts and bequests made unconditionally to the Anti-Fraud
Account, for the benefit of the Anti-Fraud Account or any
activity financed through the Anti-Fraud Account.
(3) Transfer of amounts.--
(A) In general.--Subject to the limitation in
subparagraph (B), the Secretary of the Treasury shall
transfer to the Anti-Fraud Account an amount equal to
the sum of the following:
(i) Criminal fines imposed in cases
involving a Federal health care offense (as
defined in subsection (d)).
(ii) Penalties and damages imposed under
the False Claims Act (31 U.S.C. 3729 et seq.),
in cases involving claims related to the
provision of health care items and services
(other than funds awarded to a relator or for
restitution).
(iii) Administrative penalties and
assessments imposed under section 5311 (except
as otherwise provided by law).
(iv) Amounts resulting from the forfeiture
of property by reason of a Federal health care
offense.
(B) Limitation.--The Secretary of the Treasury
shall not transfer more than the $75,000,000, plus 50
percent of the excess (if any) of the amount described
in subparagraph (A) for any fiscal year (beginning in
fiscal year 1995).
(b) Use of Funds.--
(1) In general.--Amounts in the Anti-Fraud Account shall be
available without appropriation and until expended as
determined jointly by the Secretary and the Attorney General of
the United States in carrying out the Federal Outlay Program
Fraud and Abuse Control Program established under section 5301
(including the administration of the Program), and may be used
to cover costs incurred in operating the Program, including
costs of--
(A) prosecuting health care matters (through
criminal, civil, and administrative proceedings);
(B) investigations;
(C) financial and performance audits of health care
programs and operations;
(D) inspections and other evaluations;
(E) rewards paid under section 5304; and
(F) provider and consumer education (including the
provision of advisory opinions) regarding compliance
with the provisions of this subtitle.
Twenty percent of the amounts available in the Anti-Fraud
Account for any fiscal year shall be used for costs described
in subparagraph (F).
(2) Funds used to supplement agency appropriations.--It is
intended that disbursements made from the Anti-Fraud Account to
any Federal agency be used to increase and not supplant the
recipient agency's appropriated operating budget.
(c) Annual Report.--The Secretary and the Attorney General shall
submit jointly an annual report to Congress on the amount of revenue
which is generated and disbursed by the Anti-Fraud Account in each
fiscal year.
(d) Federal Health Care Offense Defined.--For purposes of
subsection (a)(3)(A)(i), 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 of the Social Security Act;
(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. 5303. USE OF FUNDS BY INSPECTOR GENERAL.
(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. 5304. REWARDS FOR INFORMATION LEADING TO PROSECUTION AND
CONVICTION.
(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 5302(d)).
(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 2--CIVIL PENALTIES AND RIGHTS OF ACTION
SEC. 5311. CIVIL MONETARY PENALTIES.
(a) Actions Subject to Penalty.--
(1) In general.--Any person who is determined by the
Secretary to have committed any action with respect to a
certified standard health plan or certified long-term care plan
or long-term care services provided under this Act that would
subject the person to a penalty under paragraphs (1) through
(11) of section 1128A of the Social Security Act if the action
was taken with respect to title V, XVIII, XIX, or XX of such
Act, shall be subject to a penalty in accordance with
subsection (b).
(2) Treatment of amounts recovered.--Any amounts recovered
under the preceding sentence shall be paid to the Secretary and
such portions of the amounts recovered as is determined to have
been improperly paid from a certified standard 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 5302.
(b) Penalties.--
(1) General rule.--In the case of a person who the
Secretary determines has committed an action described in
subsection (a), the person shall be subject to the civil
monetary penalty (together with any additional assessment) to
which the person would be subject to under section 1128A of the
Social Security Act if the action was taken with respect to
title V, XVIII, XIX, or XX of such Act.
(2) Penalties described.--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''.
(3) 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.''.
(c) 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 Federal outlay program (as defined in section
5301(g)(1) of the Health Security Act) 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 Federal outlay
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 Federal outlay 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;
``(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 (as compared to other plan enrollees) the appropriate
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) fails to comply with a quality assurance program or a
utilization review activity;
``(9) employs or contracts with any individual or entity
who is excluded from participating in a program under title
XVIII or a Federal outlay 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
``(10) 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 ____ of title ____ of
the Health Security Act), or any other Federal, State or local
agency charged with implementation or oversight of a certified
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''.
(c) Procedures for Imposition of Penalties.--
(1) Applicability of procedures under social security
act.--Except as otherwise provided in paragraph (2), the
provisions of section 1128A of the Social Security Act (other
than subsections (a) and (b) and the second sentence of
subsection (f)) shall apply to the imposition of a civil
monetary penalty, assessment, or exclusion under this section
in the same manner as such provisions apply with respect to the
imposition of a penalty, assessment, or exclusion under section
1128A of such Act.
(4) Authority of secretary of labor to impose penalties,
assessments, and exclusions.--
(A) In general.--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 if authorized by the Attorney
General of the United States and the Secretary pursuant
to regulations promulgated by the Secretary in
consultation with the Attorney General.
(B) Regulations described.--Under the regulations
promulgated under subparagraph (A), 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--
(i) approve the proposed action to be taken
by the Secretary of Labor;
(ii) disapprove the proposed action; or
(iii) assume responsibility for initiating
a criminal, civil, or administrative action
based on the information provided in the
notice.
(C) Action deemed approved.--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.--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) of the Social
Security Act) that such a penalty, assessment, or exclusion has become
final and the reasons therefore.
SEC. 5312. PERMITTING PARTIES TO BRING ACTIONS ON OWN BEHALF.
(a) In General.--Subject to subsections (b) and (c), a certified
standard health plan (as defined in section 1011(2)) or an experience-
rated employer (as defined in section 1011(5)(E)) 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 5311 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 5311 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 5311
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 5302.
(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. 5313. EXCLUSION FROM PROGRAM PARTICIPATION.
(a) Mandatory Exclusion.--
(1) In general.--Except as provided in paragraph (2), the
Secretary shall exclude an individual or entity from
participating in any applicable health plan if the individual
or entity--
(A) is excluded from participation in a public
program under, or is otherwise described in, section
1128(a) of the Social Security Act (relating to
individuals and entities convicted of health care-
related crimes or patient abuse);
(B) has been convicted after the date of the
enactment of this section, 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; or
(C) 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.--The Secretary may exclude and individual
or entity from participating in any applicable health plan if the
individual or entity--
(1) is excluded from participation in a public program
under, or is otherwise described in, section 1128(b) of the
Social Security Act (other than paragraphs (3), (6)(A), (6)(C),
(6)(D), (10), or (13) of such section);
(2) has been convicted after the date of the enactment of
this section, under Federal or State law, in connection with
the delivery of a health care item or service of a criminal
offense consisting of a misdemeanor relating to fraud, theft,
embezzlement, breach of fiduciary responsibility, or other
financial misconduct; or
(3) has been convicted after the date of the enactment of
this section, under Federal or State law, of a criminal offense
consisting of a misdemeanor relating to the unlawful
manufacture, distribution, prescription, or dispensing of a
controlled substance.
(c) Period of Exclusion.--
(1) Notice of exclusion.--An exclusion under this section
shall be effective at such time and upon such reasonable notice
to the public and to the individual or entity excluded as may
be specified in regulations consistent with paragraph (2).
(2) Effective date of exclusion.--Such an exclusion shall
be effective with respect to services furnished to an
individual on or after the effective date of the exclusion.
(3) Period of exclusion.--
(A) In general.--The Secretary shall specify, in
the notice of exclusion under paragraph (1), the
minimum period (or, in the case of an exclusion of an
individual excluded from participation in a public
program under, or is otherwise described in, section
1128(b)(12) of the Social Security Act, the period) of
the exclusion.
(B) Minimum period for mandatory exclusions.--In
the case of a mandatory exclusion under subsection (a),
the minimum period of exclusion shall be not less than
2 years.
(C) Minimum period for certain permissive
exclusions.--
(i) Fraud, obstruction of investigation,
and controlled substance conviction.--In the
case of an exclusion of an individual excluded
from participation in a public program under,
or is otherwise described in, paragraph (1) or
(2) of section 1128(b) of the Social Security
Act or paragraph (1), (2), or (3) of subsection
(b) of this section, 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) Suspensions.--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 section 1128(b) of the
Social Security Act, 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) Unnecessary services.--In the case of
an exclusion of an individual or entity
described in paragraph (6)(B) of section
1128(b) of the Social Security Act, 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.--
(1) In general.--The Secretary shall exercise the authority
under this section in a manner that results in an individual's
or entity's exclusion from all certified standard health plans
under such program for the delivery of or payment for health
care items or services.
(2) Notification.--The Secretary shall promptly notify each
sponsor of an applicable health plan and each entity that
administers a State health care program described in section
1128(h) of the Social Security Act of the fact and
circumstances of each exclusion (together with the period
thereof) effected against an individual or entity under this
section or under section 5311(b)(3).
(e) Notice to State Licensing Agencies.--The provisions of section
1128(e) of the Social Security Act shall apply to this section in the
same manner as such provisions apply to sections 1128 and 1128A of such
Act.
(f) Notice, Hearing, and Judicial Review.--
(1) In general.--Subject to paragraph (2), any individual
or entity that is excluded (or directed to be excluded) from
participation under this section is entitled to reasonable
notice and opportunity for a hearing thereon by the Secretary
to the same extent as is provided in section 205(b) of the
Social Security Act, and to judicial review of the Secretary's
final decision after such hearing as is provided in section
205(g) of such Act, except that such action shall be brought in
the Court of Appeals of the United States for the judicial
circuit in which the individual or entity resides, or has a
principal place of business, or, if the individual or entity
does not reside or have a principal place of business within
any such judicial circuit, in the United States Court of
Appeals for the District of Columbia Circuit.
(2) Administrative hearing.--Unless the Secretary
determines that the health or safety of individuals receiving
services warrants the exclusion taking effect earlier, any
individual or entity that is the subject of an adverse
determination based on paragraphs (6)(B), (7), (8), (9), (11),
(12), (14), or (15) of section 1128(b) of the Social Security
Act, shall be entitled to a hearing by an administrative law
judge (as provided under section 205(b) of the Social Security
Act) on the determination before any exclusion based upon the
determination takes effect. If a hearing is requested, the
exclusion shall be effective upon the issuance of an order by
the administrative law judge upholding the determination of the
Secretary to exclude.
(g) Convicted Defined.--In this section, the term ``convicted'' has
the meaning given such term in section 1128(i) of the Social Security
Act.
(h) Request for Exclusion.--
(1) In general.--The sponsor of any standard 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.
(2) Response by secretary.--
(A) In general.--An individual or entity excluded
(or directed to be excluded) from participation under
this section or section 5411(b)(3) may apply to the
Secretary, in a manner specified by the Secretary in
regulations and at the end of the minimum period of
exclusion (or, in the case of an individual or entity
described in section 1128(b)(12) of the Social Security
Act, the period of exclusion) provided under this
section or section 5411(b)(3) and at such other times
as the Secretary may provide, for termination of the
exclusion.
(B) Secretarial response.--The Secretary may
terminate the exclusion if the Secretary determines, on
the basis of the conduct of the applicant which
occurred after the date of the notice of exclusion or
which was unknown to the Secretary at the time of the
exclusion, that--
(i) there is no basis under this section or
section 5411(b)(3) for a continuation of the
exclusion, and
(ii) there are reasonable assurances that
the types of actions which formed the basis for
the original exclusion have not recurred and
will not recur.
(C) Notification of termination.--The Secretary
shall promptly notify each sponsor of an applicable
health plan and each entity that administers a State
health care program described in section 1128(h) of the
Social Security Act of each termination of exclusion
made under this paragraph.
(i) Effect of Exclusion.--Notwithstanding any other provision of
this Act, no payment may be made under a certified standard 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--
(1) by an individual or entity during the period when such
individual or entity is excluded pursuant to this section from
participation in a certified standard health plan; or
(2) 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 3--AMENDMENTS TO CRIMINAL LAW
SEC. 5321. 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
standard health plan, certified long-term care insurance
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 standard health plan, certified long-
term care insurance 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 the terms `purchasing cooperative',
`certified standard health plan', and `certified long-term care
insurance policy' have the meanings given those terms in sections
1013(16), 1011(2), and 1011(4) of the Health 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. 5322. 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 standard health plan, certified long-term care insurance
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 standard health plan', and `certified long-term care
insurance policy' have the meanings given those terms in sections
1013(16), 1011(2), and 1011(4) of the Health 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. 5323. 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 standard health plan, or certified long-term care insurance
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 standard health plan', and `certified long-term care
insurance policy' have the meanings given those terms in sections
1013(16), 1011(2), and 1011(4) of the Health 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. 5324. 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 standard health plan,
or certified long-term care insurance 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 standard
health plan, or certified long-term care insurance
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 standard health plan,
or certified long-term care insurance 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 standard health
plan, or certified long-term care insurance policy;
``(B) an officer, counsel, agent, or employee, of
an organization that provides services under contract
to any purchasing cooperative, certified standard
health plan, or certified long-term care insurance
policy;
``(C) an official or employee of a State agency
having regulatory authority over any purchasing
cooperative, certified standard health plan, or
certified long-term care insurance 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 the Health Security Act, and includes the joint
board of trustees or other similar body used by two or more
employers to administer a certified standard health plan for
purposes of such Act; and
``(3) the terms `purchasing cooperative', `certified
standard health plan', and `certified long-term care insurance
policy' have the meanings given those terms in sections
1013(16), 1011(2), and 1011(4) of the Health 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. 5325. 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 5302(d) of the Health Security
Act);''.
SEC. 5326. 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 5302(d) of the Health Security Act).''.
SEC. 5327. 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 5302(d) of the
Health Security Act), 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 4--AMENDMENTS TO CIVIL FALSE CLAIMS ACT
SEC. 5331. 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
standard health plan or certified long-term care insurance
policy'' after ``property to the Government'';
(2) in the matter following subsection (a)(7), by inserting
``or certified standard health plan or certified long-term care
insurance 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 standard health plan or certified
long-term care insurance 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 standard health plan
or certified long-term care insurance policy.''; and
(5) by adding at the end the following:
``(f) Certified Standard Health Plan and Certified Long-Term Care
Insurance Policy Defined.--For purposes of this section, the terms
`purchasing cooperative', `certified standard health plan', and
`certified long-term care insurance policy' have the meanings given
those terms in sections 1013(16), 1011(2), and 1011(4) of the Health
Security Act, respectively.''.
PART 5--EFFECTIVE DATE
SEC. 5341. 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.
Subtitle E--Medical Liability Reform
PART 1--SYSTEM REFORMS
SEC. 5401. FEDERAL TORT REFORM.
(a) Applicability.--
(1) In general.--Except as provided in section 5402, this
subtitle shall apply with respect to any medical malpractice
liability action brought in any State or Federal court, except
that this subtitle shall not apply to a claim or action for
damages arising from a vaccine-related injury or death to the
extent that title XXI of the Public Health Service Act applies
to the claim or action.
(2) Preemption.--The provisions of this subtitle shall
preempt any State law to the extent that such law is
inconsistent with the limitations contained in such provisions.
(3) Effect on sovereign immunity and choice of law or
venue.--Nothing in this subtitle 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 subtitle shall be construed
to establish any jurisdiction in the district courts of the
United States over medical malpractice liability actions on the
basis of section 1331 or 1337 of title 28, United States Code.
(b) Definitions.--In this subtitle, 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 cause of
action brought in a State or Federal court against a health
care provider or health care professional by which the
plaintiff brings a medical malpractice claim.
(7) Medical malpractice claim.--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, except that such term
does not include--
(A) any claim based on an allegation of an
intentional tort;
(B) 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; or
(C) any claim brought pursuant to subtitle F.
SEC. 5402. STATE-BASED ALTERNATIVE DISPUTE RESOLUTION MECHANISMS.
(a) Application to Malpractice Claims Under Plans.--Prior to or
immediately following the commencement of any medical malpractice
action, the parties shall participate in the alternative dispute
resolution system administered by the State under subsection (b). Such
participation shall be in lieu of any other provision of Federal or
State law or any contractual agreement made by or on behalf of the
parties prior to the commencement of the medical malpractice action.
(b) Adoption of Mechanism by State.--Each State shall--
(1) maintain or adopt at least one of the alternative
dispute resolution methods satisfying the requirements
specified under subsection (c) and (d) for the resolution of
medical malpractice claims arising from the provision of (or
failure to provide) health care services to individuals
enrolled in a standard health plan; and
(2) clearly disclose to enrollees (and potential enrollees)
the availability and procedures for consumer grievances,
including a description of the alternative dispute resolution
method or methods adopted under this subsection.
(c) Specification of Permissible Alternative Dispute Resolution
Methods.--
(1) In general.--The Attorney General, in consultation with
the Secretary, shall, by regulation, develop alternative
dispute resolution methods for the use by States in resolving
medical malpractice claims under subsection (a). Such methods
shall include at least the following:
(A) Arbitration.--The use of arbitration, a nonjury
adversarial dispute resolution process which may,
subject to subsection (d), result in a final decision
as to facts, law, liability or damages.
(B) Claimant-requested binding arbitration.--For
claims involving a sum of money that falls below a
threshold amount set by the Secretary, the use of
arbitration not subject to subsection (d). Such binding
arbitration shall be at the sole discretion of the
claimant.
(C) Mediation.--The use of mediation, a settlement
process coordinated by a neutral third party without
the ultimate rendering of a formal opinion as to
factual or legal findings.
(D) Early neutral evaluation.--The use of early
neutral evaluation, in which the parties make a
presentation to a neutral attorney or other neutral
evaluator for an assessment of the merits, to encourage
settlement. If the parties do not settle as a result of
assessment and proceed to trial, the neutral
evaluator's opinion shall be kept confidential.
(2) Standards for establishing methods.--In developing
alternative dispute resolution methods under paragraph (1), the
Attorney General shall assure that the methods promote the
resolution of medical malpractice claims in a manner that--
(A) is affordable for the parties involved;
(B) provides for timely resolution of claims;
(C) provides for the consistent and fair resolution
of claims; and
(D) provides for reasonably convenient access to
dispute resolution for individuals enrolled in plans.
(3) Waiver authority.--Upon application of a State, the
Attorney General, in consultation with the Secretary, may grant
the State the authority to fulfill the requirement of
subsection (b) by adopting a mechanism other than a mechanism
established by the Attorney General pursuant to this
subsection, except that such mechanism must meet the standards
set forth in paragraph (2).
(d) Further Redress.--Except with respect to the claimant-requested
binding arbitration method set forth in subsection (c)(1)(B), and
notwithstanding any other provision of a law or contractual agreement,
a plan enrollee dissatisfied with the determination reached as a result
of an alternative dispute resolution method applied under this section
may, after the final resolution of the enrollee's claim under the
method, initiate or resume a cause of action to seek damages or other
redress with respect to the claim to the extent otherwise permitted
under State law. The results of any alternative dispute resolution
procedure are inadmissible at any subsequent trial, as are all
statements, offers, and other communications made during such
procedures, unless otherwise admissible under State law.
SEC. 5403. REQUIREMENT OF CERTIFICATE OF MERIT.
(a) Requiring Submission With Complaint.--Except as provided in
subsection (c) and subject to the penalties of subsection (e), no
medical malpractice liability action may be brought by any individual
unless, at the time the individual commences such action, the
individual or the individual's attorney submits an affidavit declaring
that--
(1) the individual (or the individual's attorney) has
consulted and reviewed the facts of the claim with a qualified
specialist (as defined in subsection (d));
(2) the individual or the individual's attorney has
obtained a written report by a qualified specialist that
clearly identifies the individual and that includes the
specialist's determination that, based upon a review of the
available medical record and other relevant material, a
reasonable medical interpretation of the facts supports a
finding that the claim against the defendant is meritorious and
based on good cause; and
(3) on the basis of the qualified specialist's review and
consultation, the individual (or the individual's attorney) has
concluded that the claim is meritorious and based on good
cause.
(b) Identity of Specialist.--Only upon a showing of good cause may
a court order that the identity of the specialist used for purposes of
subsection (a) be revealed. In such an event, such identity shall be
reviewed by the court on an in camera basis only.
(c) Extension in Certain Instances.--
(1) In general.--Subject to paragraph (2), subsection (a)
shall not apply with respect to an individual who brings a
medical malpractice liability action without submitting an
affidavit described in such subsection if--
(A) despite good faith efforts, the individual is
unable to obtain the written report before the
expiration of the applicable statute of limitations;
(B) despite good faith efforts, at the time the
individual commences the action, the individual has
been unable to obtain medical records or other
information necessary, pursuant to any applicable law,
to prepare the written report requested; or
(C) the court of competent jurisdiction determines
that the affidavit requirement shall be extended upon a
showing of good cause.
(2) Deadline for submission where extension applies.--In
the case of an individual who brings an action to which
paragraph (1) applies, the action shall be dismissed unless the
individual submits the affidavit described in subsection (a)
not later than--
(A) in the case of an action to which subparagraph
(A) of paragraph (1) applies, 90 days after commencing
the action; or
(B) in the case of an action to which subparagraph
(B) of paragraph (1) applies, 90 days after obtaining
the information described in such subparagraph or when
good cause for an extension no longer exists.
(d) Qualified Specialist Defined.--
(1) In general.--As used in subsection (a), the term
``qualified specialist'' means, with respect to a medical
malpractice liability action, a health care professional who is
reasonably believed by the individual bringing the action (or
the individual's attorney) to have expertise in the same or
substantially similar area of practice to that involved in the
action.
(2) Evidence of expertise.--For purposes of paragraph (1),
evidence of required expertise may include evidence that the
individual--
(A) practices (or has practiced) or teaches (or has
taught) in the same or substantially similar area of
health care or medicine to that involved in the action;
or
(B) is otherwise qualified by experience or
demonstrated competence in the relevant practice area.
(e) Sanctions for Submitting False Affidavit.--Upon the motion of
any party or on its own initiative, the court in a medical malpractice
liability action may impose a sanction on a party, the party's
attorney, or both, for--
(1) any knowingly false statement made in an affidavit
described in subsection (a);
(2) making any false representations in order to obtain a
qualified specialist's report; or
(3) failing to have the qualified specialist's written
report in his or her custody and control;
and may require that the sanctioned party reimburse the other party to
the action for costs and reasonable attorney's fees.
SEC. 5404. LIMITATION ON AMOUNT OF ATTORNEY'S CONTINGENCY FEES.
(a) In General.--An attorney who represents, on a contingency fee
basis, a plaintiff in a medical malpractice liability action may not
charge, demand, receive, or collect for services rendered in connection
with such action (including the resolution of the claim that is the
subject of the action under any alternative dispute resolution system)
in excess of--
(1) 33\1/3\ percent of the first $150,000 of the total
amount recovered by judgment or settlement in such action; plus
(2) 25 percent of any amount recovered above the amount
described in paragraph (1);
unless otherwise determined under State law. Such amount shall be
computed after deductions are made for all the expenses associated with
the claim other than those attributable to the normal operating
expenses of the attorney.
(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 subsection (a) may, in the discretion of the
court, be based on the cost of the annuity or trust established to make
the payments. In any case in which an annuity or trust is not
established to make such payments, such amount shall be based on the
present value of the payments.
(c) Contingency Fee Defined.--As used in this section, the term
``contingency fee'' means any fee for professional legal services which
is, in whole or in part, contingent upon the recovery of any amount of
damages, whether through judgment or settlement.
SEC. 5405. PERIODIC PAYMENT OF AWARDS.
(a) In General.--A party to a medical malpractice liability action
may petition the court to instruct the trier of fact to award any
future damages on an appropriate periodic basis. If the court, in its
discretion, so instructs the trier of fact, and damages are awarded on
a periodic basis, the court may require the defendant to purchase an
annuity or other security instrument (typically based on future damages
discounted to present value) adequate to assure payments of future
damages.
(b) Failure or Inability To Pay.--With respect to an award of
damages described in subsection (a), if a defendant fails to make
payments in a timely fashion, or if the defendant becomes or is at risk
of becoming insolvent, upon such a showing the claimant may petition
the court for an order requiring that remaining balance be discounted
to present value and paid to the claimant in a lump-sum.
(c) Modification of Payment Schedule.--The court shall retain
authority to modify the payment schedule based on changed
circumstances.
(d) Future Damages Defined.--As used in this section, the term
``future damages'' means any economic or noneconomic loss other than
that incurred or accrued as of the time of judgment.
SEC. 5406. FEDERAL STUDY ON MEDICAL NEGLIGENCE.
(a) Study.--To improve the level of empirical data on the incidence
and effect of medical negligence in the United States, the Secretary of
Health and Human Services shall commission and oversee a nationwide
interdisciplinary study to evaluate--
(1) the incidence of injuries resulting from medical
treatment, including a determination of the percentage of such
injuries that resulted from the negligence of a physician,
other health care provider or health care institution;
(2) the costs of medical expenses and lost wages to the
victims of medical negligence and their families, and their
compensation for such losses under the current malpractice
system;
(3) methods to reduce the incidence and costs of medical
negligence; and
(4) methods to promote the efficient and fair resolution of
legal claims stemming from the incidence of medical negligence.
(b) Access to Records.--For the purposes of the study conducted
under subsection (a), the Secretary of Health and Human Services shall
have the powers necessary to access hospital patients' records while
maintaining patient confidentiality.
(c) Report to Congress.--Not later than 3 years after the
commission of the study under subsection (a), the study shall be
completed and the Secretary of Health and Human Services shall prepare
and submit to Congress a report describing the findings of the study.
PART 2--DEMONSTRATION PROJECT RELATING TO MEDICAL MALPRACTICE LIABILITY
SEC. 5411. PILOT PROGRAM APPLYING PRACTICE GUIDELINES TO MEDICAL
MALPRACTICE LIABILITY ACTIONS.
(a) Establishment.--Not later than 1 year after the Secretary of
Health and Human Services determines that appropriate practice
guidelines are available and were developed with the input of health
care providers, legal professionals and consumer representatives, the
Secretary shall establish pilot programs under which the Secretary
shall provide funds (in such amounts as the Secretary determines
appropriate) to one or more eligible States to determine the effect of
applying practice guidelines in the resolution of medical malpractice
liability actions.
(b) Eligibility of State.--To be eligible to participate in a pilot
program under subsection (a), a State shall prepare and submit to the
Secretary an application at such time, in such manner, and containing
such information as the Secretary may require, including--
(1) assurances that, under the law of the State, in the
resolution of any medical malpractice liability action,
compliance or noncompliance with an appropriate practice
guideline shall be admissible by either party at trial as
presumptive evidence-of nonliability or liability for medical
negligence; and
(2) such other information and assurances as the Secretary
may require.
(c) Reports to Congress.--Not later than 3 months after the last
day of each year for which a pilot program established under subsection
(a) is in effect, the Secretary of Health and Human Services shall
prepare and submit to Congress a report describing the operation of the
program during the year for which the report is submitted. Such report
shall contain such recommendations as the Secretary considers
appropriate, include recommendations relating to revisions to the laws
governing medical practice liability.
SEC. 5412. ENTERPRISE LIABILITY DEMONSTRATION PROJECT.
(a) Establishment.--The Secretary of Health and Human Services
shall establish a demonstration project under which the Secretary shall
provide funds (in such amount as the Secretary considers appropriate)
to one or more eligible States to demonstrate whether substituting
liability for medical malpractice on the part of the health plan in
which a physician participates for the personal liability of the
physician will result in improvements in the quality of care provided
under the plan, reductions in defensive medical practices, and better
risk management.
(b) Eligibility of State.--A State is eligible to participate in
the demonstration project established under subsection (a) if the State
submits an application to the Secretary (at such time and in such form
as the Secretary may require) containing such information and
assurances as the Secretary may require, including assurances that the
State--
(1) has entered into an agreement with a health plan (other
than a fee-for-service plan) operating in the State under which
the plan assumes legal liability with respect to any medical
malpractice claim arising from the provision of (or failure to
provide) services under the plan by any physician participating
in the plan;
(2) has provided that, under the law of the State, a
physician participating in a plan that has entered into an
agreement with the State under paragraph (1) may not be liable
in damages or otherwise for such a claim and the plan may not
require such physician to indemnify the plan for any such
liability; and
(3) will provide the Secretary with such reports on the
operation of the project as the Secretary may require.
(c) Authorization of Appropriations.--There are authorized to be
appropriated such sums as may be necessary to carry out demonstration
projects under this section.
Subtitle F--Remedies and Enforcement
PART 1--REVIEW OF BENEFIT DETERMINATIONS FOR ENROLLED INDIVIDUALS
Subpart A--General Rules
SEC. 5501. 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''
with respect to a claim means 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'' with
respect to a claim means 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.--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 language calculated to
be understood by the typical individual enrolled under the plan
and in a form which takes into account accessibility to the
information by individuals whose primary language is not
English. In the case of a denial of the claim, the notice shall
be provided within 5 days after the date of the determination
to deny the claim, and shall set forth the specific reasons for
the denial. Such notice shall include an explanation of the
specific reasons and facts underlying the decision to reduce or
fail to provide services or pay the claim. The notice of a
denial shall clearly explain the right to appeal the denial
under paragraph (2) and 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. 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 the comprehensive benefit package or exceeds
payment rates under the applicable fee schedule, 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 Act as a condition for
approval of any claim under the plan, except to the extent otherwise
specified in a formal settlement agreement.
SEC. 5502. REVIEW IN AREA COMPLAINT REVIEW OFFICES OF GRIEVANCES BASED
ON ACTS OR PRACTICES BY HEALTH PLANS.
(a) Complaint Review Offices.--
(1) In general.--In accordance with rules which shall be
prescribed by the Secretary of Labor, each State shall
establish and maintain a complaint review office for each
community rating area established by such State. According to
designations which shall be made by each State under
regulations of the Secretary of Labor, the complaint review
office for a community rating area established by such State
shall also serve as the complaint review office for large group
sponsors operating in the State with respect to individuals who
are enrolled under health plans maintained by such sponsors and
who reside within the area of the community rating area.
(2) Health systems not established by States.--In the case
of any health care system established in any State by the
Secretary of Health and Human Services, the Secretary of Health
and Human Services shall assume all duties and obligations of
such State under this part in accordance with the applicable
regulations of the Secretary of Labor under this part.
(b) Filings of Complaints by Aggrieved Persons.--In the case of any
person who is aggrieved by--
(1) 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, or
(2) any act or practice engaged in by any other plan
maintained in a community rating area or by a large group
sponsor which consists of or results in denial of payment or
provision of benefits under a supplemental benefit policy or a
cost sharing policy or delay in the payment or provision of the
benefits,
if the claimant alleges that the denial or delay consists 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 Act, such person may file a
complaint with the appropriate complaint review office.
(c) Exhaustion of Plan Remedies.--Any complaint including a claim
to which section 5501 applies may not be filed until the complainant
has exhausted all remedies provided under the plan with respect to the
claim in accordance with such section.
(d) Form of Complaint.--The complaint 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 of Labor.
(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.--Complaints 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 should have reasonably
known that a violation has occurred. This subsection shall not prevent
the subsequent amending of a complaint.
SEC. 5503. INITIAL PROCEEDINGS IN COMPLAINT REVIEW OFFICES.
(a) Elections.--Whenever a complaint is brought to the complaint
review office under section 5502(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 of Labor, to elect
one of the following:
(1) To forego further proceedings in the complaint review
office and rely on remedies available in a court of competent
jurisdiction.
(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
complaint to a hearing in the complaint review office under
section 5504 regarding the unresolved matters.
(b) Duty of Complaint Review Office.--The complaint review office
shall provide (in a linguistically 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 5504 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. 5504. 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 5503(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 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 of Labor.
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 of Labor. 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.--Any such complaint may be
amended by the hearing officer conducting the hearing, upon the
motion of the complainant, in the hearing officer's discretion
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 his or her discretion, upon notice may provide for the
taking of further testimony or hear argument.
(3) Authority of hearing officers.--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.
(4) Expedited hearings.--Notwithstanding section 5503 and
the preceding provisions of this section, upon receipt of a
complaint containing a claim described in section 5501(c)(1),
the complaint review office shall promptly provide the
complainant with the opportunity to make an election under
section 5503(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.--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 described in section 5502(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 Act,
(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 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 5502(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 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) Final Decision.--The decision of the hearing officer shall be
final and binding upon all parties.
(f) Court Enforcement of Orders.--
(1) In general.--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 relating to such
action.
SEC. 5505. CIVIL MONEY PENALTIES.
(a) Denial or Delay in Payment or Provision of Benefits.--
(1) In general.--The Secretary of Labor may assess a civil
penalty against any health plan, or against any other plan in
connection with benefits provided thereunder under a
supplemental benefit policy or a cost sharing policy, for
unreasonable denial or delay in the payment or provision of
benefits thereunder, in an amount not to exceed--
(A) $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
(B) 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 subparagraph (A) with respect to such
violations.
For purposes of subparagraph (A), each violation with respect
to any single individual shall be treated as a separate
violation.
(2) Civil action to enforce civil penalty.--The Secretary
of Labor may commence a civil action in any court of competent
jurisdiction to enforce a civil penalty assessed under
paragraph (1).
(3) Supplemental plans.--Nothing in this section shall be
construed to limit the rights and remedies available under
State law with respect to supplemental benefit plans.
(b) Civil Penalties for Certain Other Actions.--The Secretary of
Labor may assess a civil penalty described in section 5505(b)(1)
against any experience-rated health plan, or against any other plan
sponsored by a large employer group purchaser in connection with
benefits provided thereunder under a cost sharing policy, for any
action described in section 5505(a). The Secretary of Labor may
initiate proceedings to impose such penalty in the same manner as the
Secretary of Health and Human Services may initiate proceedings under
section 5505 with respect to actions described in section 5505(a).
Subpart B--Early Resolution Programs
SEC. 5511. ESTABLISHMENT OF EARLY RESOLUTION PROGRAMS IN COMPLAINT
REVIEW OFFICES.
(a) Establishment of Programs.--Each 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 of Labor.
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 State--
(1) shall administer its Early Resolution Program in
accordance with regulations of the Secretary of Labor,
(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 of Labor,
(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. 5512. 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, or against
any other health plan with respect to benefits provided
under a supplemental benefit policy or a cost sharing
policy, based on alleged coverage under the plan; and
(B) a denial by the plan of the claims, or a denial
of appropriate reimbursement based on the claims, by
the plan.
(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 Act
(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 5503(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
5502(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 5501 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. 5513. 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, after identifying the necessary parties and confirming that
the case is eligible for the Program, the facilitator shall analyze the
record of the claims procedure conducted pursuant to section 5501 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 of
Labor, 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 of Labor 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 of Labor may bring a civil action to
enforce such civil penalty in any court of competent
jurisdiction.
SEC. 5514. 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 shall be enforceable under section 5515.
(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 Act
or the plan, with respect to any person who is not a party to the
settlement agreement.
SEC. 5515. 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 possible extent the
disposition of any petition filed under this section, with due
deference to the role of settlement agreements under this part 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 reasonable costs and expenses (including a reasonable
attorney's fee and reasonable expert witness fees) on the charges on
which the plaintiff prevails.
SEC. 5516. DUE PROCESS FOR HEALTH CARE PROVIDERS.
(a) Publicly Available Standards and Process.--Each health plan
shall establish and utilize--
(1) publicly available standards for contracting with
health care providers; and
(2) a publicly available process for dismissing such
providers or failing to renew contracts with such providers.
(b) Notice Requirement.--
(1) In general.--The process established by a health plan
under subsection (a) shall include reasonable notification to a
health care provider of a decision to dismiss such provider or
not to renew a contract with such provider before such decision
takes effect.
(2) Exception.--The notice required under paragraph (1)
shall not apply if failure to dismiss a provider or renewing a
provider's contract would adversely affect the health or safety
of a patient.
(3) Contents of notice.--Each notice to a health care
provider under paragraph (1) shall contain the reasons for the
dismissal or failure to renew. Such reasons shall be consistent
with the standards established under subsection (a).
(c) Review.--The process established by a health plan under
subsection (a) shall include an opportunity for review of the health
plan's action by a health care provider who is dismissed by a health
plan or with respect to whom a health plan fails to renew a contract.
Such review shall be conducted by--
(1) the provider's peers who have contracts with, or are
employed by, the health plan; and
(2) if there is mutual consent of the provider and the
health plan, one or more enrollees in the health plan.
A health care provider may have an attorney present in connection with
any review under this subsection if the provider notifies the health
plan that an attorney will be present in advance of the review
proceeding.
(d) Effect on Other Laws.--The provisions of this section shall not
supersede any other provision of Federal or State law.
PART 2--ADDITIONAL REMEDIES AND ENFORCEMENT PROVISIONS
SEC. 5531. JUDICIAL REVIEW OF FEDERAL ACTION ON STATE SYSTEMS.
(a) In General.--Any State that is aggrieved by a determination by
the Secretary under subpart B of part 1 of subtitle E of title I shall
be entitled to judicial review of such determination in accordance with
this section.
(b) Judicial Review.--
(1) Jurisdiction.--The courts of appeals of the United
States (other than the United States Court of Appeals for the
Federal Circuit) shall have jurisdiction to review a
determination described in subsection (a), to affirm the
determination, or to set it aside, in whole or in part. A
judgment of a court of appeals in such an action shall be
subject to review by the Supreme Court of the United States
upon certiorari or certification as provided in section 1254 of
title 28, United States Code.
(2) Petition for review.--A State that desires judicial
review of a determination described in subsection (a) shall,
within 30 days after it has been notified of such
determination, file with the United States court of appeals for
the circuit in which the State is located a petition for review
of such determination. A copy of the petition shall be
transmitted by the clerk of the court to the Secretary, and the
Secretary shall file in the court the record of the proceedings
on which the determination or action was based, as provided in
section 2112 of title 28, United States Code.
(3) Scope of review.--The findings of fact of the
Secretary, if supported by substantial evidence, shall be
conclusive; but the court, for good cause shown, may remand the
case to the Secretary to take further evidence, and the
Secretary may make new or modified findings of fact and may
modify its previous action, and shall certify to the court the
record of the further proceedings. Such new or modified
findings of fact shall likewise be conclusive if supported by
substantial evidence.
SEC. 5532. CIVIL ENFORCEMENT.
Unless otherwise provided in this Act, the district courts of the
United States shall have jurisdiction of civil actions brought by--
(1) the Secretary of Labor to enforce any final order of
such Secretary or to collect any civil monetary penalty
assessed by such Secretary under this Act; and
(2) the Secretary of Health and Human Services to enforce
any final order of such Secretary or to collect any civil
monetary penalty assessed by such Secretary under this Act.
SEC. 5533. PRIORITY OF CERTAIN BANKRUPTCY CLAIMS.
Section 507(a)(8) of title 11, United States Code, is amended to
read as follows:
``(8) Eighth, allowed unsecured claims--
``(A) based upon any commitment by the debtor to
the Federal Deposit Insurance Corporation, the
Resolution Trust Corporation, the Director of the
Office of Thrift Supervision, the Comptroller of the
Currency, or the Board of Governors of the Federal
Reserve System, or their predecessors or successors, to
maintain the capital of an insured depository
institution; or
``(B) for payments under title X of the Health
Security Act owed to a State.''.
SEC. 5534. PRIVATE RIGHT TO ENFORCE STATE RESPONSIBILITIES.
The failure of a participating State to carry out a responsibility
applicable to participating States under this Act constitutes a
deprivation of rights secured by this Act for the purposes of section
1977 of the Revised Statutes of the United States (42 U.S.C. 1983). In
an action brought under such section, the court shall exercise
jurisdiction without regard to whether the aggrieved person has
exhausted any administrative or other remedies that may be provided by
law.
SEC. 5535. PRIVATE RIGHT TO ENFORCE FEDERAL RESPONSIBILITIES IN
OPERATING A SYSTEM IN A STATE.
(a) In General.--The failure of the Secretary of Health and Human
Services to carry out a responsibility under subpart C of part 1 of
subtitle E of title I, confers an enforceable right of action on any
person who is aggrieved by such failure. Such a person may commence a
civil action against the Secretary in an appropriate State court or
district court of the United States.
(b) Exhaustion of Remedies.--In an action under subsection (a), the
court shall exercise jurisdiction without regard to whether the
aggrieved person has exhausted any administrative or other remedies
that may be provided by law.
(c) Relief.--In an action under subsection (a), if the court finds
that a failure described in such subsection has occurred, the aggrieved
person may recover compensatory damages and the court may award any
other appropriate relief.
(d) Attorney's Fees.--In an action under subsection (a), the court,
in its discretion, may allow the prevailing party, other than the
United States, a reasonable attorney's fee (including expert fees) as
part of the costs, and the United States shall be liable for costs the
same as a private person.
SEC. 5536. ENFORCEMENT OF CONSUMER PROTECTIONS.
(a) Covered Violations.--The provisions of this section shall apply
with respect to a health plan that fails to fulfill a duty imposed on
the plan under section 1122 and subtitle A of this title.
(b) Administrative Enforcement and Civil Penalties.--The penalties
described in section 1867(d)(1) of the Social Security Act and the
procedures described in section 1128A of such Act (other than the first
two sentences of subsection (a) and subsection (b)) shall apply to
health plans described in subsection (a). In addition to such
penalties, an amount not to exceed $1,000,000 may be assessed in the
case of a finding of a pattern or practice of such violations. The
Secretary shall establish procedures whereby, when a consumer has
disenrolled from a health plan violating the duties described in
subsection (a), successor health plans may recover from the original
health plan for health care costs attributable to such violations.
(c) Correction of Substantial Violations.--Upon an administrative
or judicial finding of a substantial violation of the duties described
in subsection (a), the State or court may--
(1) inform all current enrollees of the plan of the
violation and that they may disenroll immediately from that
plan and enroll with another community-rated health plan; and
(2) notify the health plan that it shall immediately cease
enrollment activities until it has obtained certifications from
the appropriate certifying entity or court that the violation
has been corrected.
Such actions shall not be taken without providing the health plan with
a reasonable opportunity to correct such violations, except where
providing such an opportunity would risk health or safety.
SEC. 5537. DISCRIMINATION CLAIMS.
(a) Civil Action by Aggrieved Person.--
(1) In general.--Any person who is aggrieved by a
violation of section 1602 may commence a civil action against
the party or parties committing such violation in an
appropriate State court or district court of the United States.
(2) Standards.--The standards used to determine whether a
violation has occurred in a complaint alleging discrimination
on the basis of age or disability under section 1602 shall be
the standards applied under the Age Discrimination Act of 1975
(42 U.S.C. 6101 et seq.) and the Americans with Disabilities
Act of 1990 (42 U.S.C. 12101 et seq.).
(3) Relief.--In any action under paragraph (1), if the
court finds a violation of section 1602, the court may award
such equitable and injunctive relief as it deems appropriate,
and may award to the aggrieved person any sums lost as a result
of the violation. If the court finds that the party or parties
committing a violation engaged in intentional discrimination in
violation of section 1602, the aggrieved person may recover
compensatory damages. If the court finds that the party or
parties committing such violation did so with malice or
reckless indifference to the federally protected rights of the
aggrieved person, the aggrieved person may recover punitive
damages under this section against a defendant other than a
government, government agency or political subdivision.
(4) Attorneys' fees.--In any action under paragraph (1),
the court, in its discretion, may allow the prevailing party,
other than the United States, a reasonable attorney's fee
(including expert fees and other litigation expenses) as part
of the costs, and the United States shall be liable for costs
the same as a private person.
(b) Action by Secretary.--Whenever the Secretary of Health and
Human Services finds that a party has failed to comply with section
1602 or with an applicable regulation issued under such section, the
Secretary shall notify the party. If within a reasonable period of time
the party fails or refuses to comply, the Secretary may--
(1) refer the matter to the Attorney General with a
recommendation that an appropriate civil action be instituted;
(2) terminate or limit the participation of such party in
the programs authorized by this Act;
(3) withhold Federal financial assistance to the party; or
(4) take such other action as may be provided by law.
(c) Action by Attorney General.--When a matter is referred to the
Attorney General under subsection (b)(1), the Attorney General may
bring a civil action in a district court of the United States for such
relief as may be appropriate, including injunctive relief. In a civil
action under this section, the court--
(1) may grant any equitable relief that the court considers
to be appropriate;
(2) may award such other relief as the court considers to
be appropriate, including in cases of intentional
discrimination compensatory and punitive damages; and
(3) may, to vindicate the public interest when requested by
the Attorney General, assess a civil money penalty against the
party in an amount--
(A) not exceeding $50,000 for a first violation;
and
(B) not exceeding $100,000 for any subsequent
violation.
SEC. 5538. NONDISCRIMINATION IN FEDERALLY ASSISTED PROGRAMS.
Federal payments under this Act 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).
SEC. 5539. CIVIL AND ADMINISTRATION ACTION BY ESSENTIAL COMMUNITY
PROVIDER.
(a) In General.--An electing essential community provider (as
defined in section 1466(d)) who is aggrieved by the failure of a health
plan to fulfill a duty imposed on the plan by section 1466 may commence
a civil action against the plan in an appropriate State court or
district court of the United States.
(b) Relief.--In an action under subsection (a), if the court finds
that the health plan has failed to fulfill a duty imposed on the plan
by section 1466, the electing essential community provider may recover
compensatory damages and the court may order any other appropriate
relief.
(c) Attorney's Fees.--In any action under subsection (a), the
court, in its discretion, may allow the prevailing party, other than
the United States, a reasonable attorney's fee (including expert fees)
as part of the costs, and the United States shall be liable for costs
the same as a private person.
(d) State Complaint System Required.--Prior to commencing an action
under subsection (a), the aggrieved essential community provider may
first elect to utilize the administrative process provided under this
subsection as follows:
(1) The Secretary shall prescribe regulations governing
administrative grievance actions by essential community
providers that shall be consistent with the requirements of
section 5504 and that shall provide for the consolidation of
complaints (at the election of the essential community
providers) in cases involving multiple complaints against a
single health plan.
(2) A State shall make available to each electing essential
community provider that is aggrieved by an action of a health
plan under section 1466, the opportunity to file a complaint in
the complaint review office established under section 5502. In
the case of essential community providers located in a
cooperative established in any State by the Secretary, the
Secretary shall assume all of the duties and obligations of
such State under this section.
SEC. 5540. 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 this Act or a provision of this
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 this Act or any provision of this 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 this Act or any provision of this Act invalid;
and
(2) makes a determination that its holding will materially
undermine the application of the Act as whole.
(e) Construction.--This section does not limit--
(1) the right of any person--
(A) to a litigation concerning the Act or any
portion of the 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. 5541. TREATMENT OF PLANS AS PARTIES IN CIVIL ACTIONS.
(a) In General.--A health plan may sue or be sued under this Act as
an entity. Service of summons, subpoena, or other legal process of a
court or hearing officer upon a trustee or an administrator of any such
plan in his or her capacity as such shall constitute service upon the
plan. In a case where a plan has not designated in applicable plan
documents an individual as agent for the service of legal process,
service upon the Secretary of Health and Human Services (in the case of
a community-rated health plan) or the Secretary of Labor (in the case
of an experienced-rated health plan) shall constitute such service. The
Secretary, not later than 15 days after receipt of service under the
preceding sentence, shall notify the administrator or any trustee of
the plan of receipt of such service.
(b) Other Parties.--Any money judgment under this Act against a
plan referred to in subsection (a) shall be enforceable only against
the plan as an entity and shall not be enforceable against any other
person unless liability against such person is established in his
individual capacity under this Act.
SEC. 5542. WHISTLEBLOWER PROTECTIONS.
(a) In General.--A health plan may not discharge, discriminate or
otherwise take adverse action against any employee with respect to
compensation, terms, conditions or privileges of employment because the
employee (or any person acting pursuant to the request of the employee)
provided information to any Federal, State or private supervisory
agency or entity regarding a possible violation of any provision of
this Act or any regulation issued under this Act.
(b) Civil Action.--An employee or former employee who believes that
such employee has been discharged, discriminated or otherwise subject
to adverse action in violation of subsection (a) may file a civil
action in the appropriate United States district court within 2 years
of the date of such discharge, discrimination or adverse action.
(c) Determination of Court.--If a court in an action under
subsection (b) determines that a violation of subsection (a) has
occurred, the court may order the health care entity or plan that
committed the violation--
(1) to reinstate the employee to his or her former
position;
(2) to pay compensatory damages to the employee;
(3) to pay reasonable costs and attorneys fees incurred by
the employee in bringing such action; and
(4) to take such other appropriate actions to remedy any
past discrimination.
SEC. 5543. 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 title.
Subtitle G--Repeal of Exemption
SEC. 5601. REPEAL OF EXEMPTION FOR HEALTH INSURANCE.
(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 on the first day of the sixth month beginning after the
date of the enactment of this Act.
TITLE VI--INDIVIDUAL AND EMPLOYER SUBSIDIES
Subtitle A--Individual Premium and Cost-Sharing Assistance
SEC. 6001. REQUIREMENT TO OPERATE STATE PROGRAM.
(a) In General.--A participating State shall have in effect a
program for furnishing premium assistance and cost-sharing assistance
in accordance with this subtitle for calendar years beginning after
1996.
(b) Designation of State Agency.--A State may designate any
appropriate State agency to administer the program under this subtitle.
SEC. 6002. ASSISTANCE WITH STANDARD HEALTH PLAN PREMIUMS.
(a) Eligibility.--
(1) In general.--An eligible individual (as defined in
section 6008(4)) who has been determined by a State under
section 6004 to be a premium subsidy eligible individual (as
defined in paragraph (2)) shall be eligible for premium
assistance in the amount determined under subsection (b).
(2) Premium subsidy eligible individual.--For purposes of
this subtitle, the term ``premium subsidy eligible individual''
means any of the following individuals:
(A) Individuals with incomes below a certain income
threshold.--An eligible individual who has a family
income determined under section 6008(3) which does not
exceed 200 percent of the poverty line (as defined in
section 6008(5)).
(B) Children.--An eligible individual who--
(i) is a child (as defined in section
6008(2));
(ii) has a family income determined under
section 6008(3) which does not exceed 240
percent of the poverty line; and
(iii) has not been enrolled in a health
plan during the 6-month period ending on the
date the individual submits an application to
the State for premium assistance under this
subtitle.
(C) Pregnant women.--An eligible individual who--
(i) is a pregnant woman (as defined in
section 6008(6));
(ii) has a family income determined under
section 6008(3) which does not exceed 240
percent of the poverty line; and
(iii) is not enrolled in a health plan on
the date the individual submits an application
to the State for premium assistance under this
subtitle.
(3) Special rule with respect to children and pregnant
women.--An eligible individual may not be a premium subsidy
eligible individual described in subparagraphs (B) or (C) of
paragraph (2) if an employer contribution of at least 80
percent of the premium under a standard health plan that is
available to the individual through the employer is made or
offered to be made on behalf of the individual.
(b) Amount of Assistance.--
(1) In general.--
(A) Formula.--The amount of premium assistance for
a month for a premium subsidy eligible individual is--
(i) the least of --
(I) the subsidy percentage
specified in paragraph (2) multiplied
by \1/12\th of the annual premium paid
for coverage under a standard health
plan in which the individual is
enrolled;
(II) the subsidy percentage
specified in paragraph (2) multiplied
by \1/12\th of the weighted average
annual premium rate (as defined in
subparagraph (B)) for all community-
rated standard health plans offered in
the community rating area in which the
individual resides; or
(III) the subsidy percentage
specified in paragraph (2) multiplied
by \1/12\th of the annual reference
premium for the community rating area
in which the individual resides (as
defined in subparagraph (C)); minus
(ii) the amount of any employer
contribution made or offered to be made on
behalf of the individual for coverage under the
standard health plan that is available to the
individual through an employer.
(B) Weighted average annual premium rate.--For
purposes of this paragraph, the term ``weighted average
annual premium rate'' means the average premium for the
community-rated standard health plans offered in the
community rating area in which the individual resides,
weighted to reflect the total enrollment of community-
rated eligible individuals among such plans.
(C) Reference premium.--For purposes of this
paragraph, the term ``reference premium'' means the
reference premium established under section 4512 of the
Internal Revenue Code of 1986.
(D) Special rules for determining amount of
employer contributions.--For purposes of determining
the amount of an employer contribution under
subparagraph (A), the following rules shall apply:
(i) Family contributions.--If an employer
makes a contribution on behalf of a family
(rather than any particular individual) such
contribution shall be allocated ratably among
the individuals in the family.
(ii) Greatest employer contribution
available.--The employer contribution with
respect to any individual is the largest
employer contribution offered to be made on
behalf of the individual by the individual's
employer or any employer of any member of the
individual's family.
(2) Subsidy percentage.--For purposes of paragraph (1)(A),
the term ``subsidy percentage'' means the following:
(A) Individuals with incomes below certain income
threshold.--
(i) In general.--Except as provided in
clauses (ii) and (iii), for a premium subsidy
eligible individual described in subsection
(a)(2)(A), 100 percent reduced (but not below
zero) by .80 percentage points for each 1
percentage point (or portion thereof) by which
such individual's family income exceeds 100
percent of the poverty line.
(ii) AFDC recipients.--For a premium
subsidy eligible individual described in
subsection (a)(2)(A) who is a member of a
family receiving aid to families with dependent
children under part A or E of title IV of the
Social Security Act, the subsidy percentage
shall be 100 percent.
(iii) Non-cash medicaid eligibles.--
(I) In general.--For a premium
subsidy eligible individual described
in subsection (a)(2)(A) who is a non-
cash medicaid eligible described in
subclause (II), the subsidy percentage
shall be 100 percent during the 6-month
period beginning on January 1, 1997.
(II) Non-cash medicaid eligible.--
The non-cash medicaid eligibles
described in this subclause are
individuals receiving medical
assistance under the State plan under
title XIX of the Social Security Act as
of December 31, 1996, who are not
individuals--
(aa) who are members of a
family receiving aid to
families with dependent
children under part A or E of
title IV of the Social Security
Act;
(bb) with respect to whom
supplemental security income
benefits are being paid under
title XVI of such Act; or
(cc) eligible for benefits
under part A of title XVIII of
such Act.
(B) Children and pregnant women.--For a premium
subsidy eligible individual described in subparagraph
(B) or (C) of subsection (a)(2), 100 percent reduced
(but not below zero) by 1.82 percentage points for each
1 percentage point (or portion thereof) by which such
individuals family income exceeds 185 percent of the
poverty line.
(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 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 6004 to be a premium subsidy eligible
individual.
(2) Special rule with respect to families with multiple
children.--If a family includes more than 1 child described in
subsection (a)(2)(B), no premium assistance may be paid to a
plan under paragraph (1) on behalf of any such child unless
such assistance is paid on behalf of all such children.
(3) 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. 6003. ASSISTANCE WITH COST-SHARING FOR STANDARD HEALTH PLANS.
(a) Non-AFDC Low-Income Individuals.--
(1) Individuals working for community-rated employers.--
(A) In general.--If a non-AFDC low-income
individual described in subparagraph (B) is enrolled in
a community-rated standard health plan providing a high
cost-sharing schedule, such individual shall be
eligible for cost-sharing assistance consisting of a
reduction in the cost-sharing under such plan to the
level of a plan providing a low cost-sharing schedule.
(B) Individual described.--A non-AFDC low-income
individual described in this subparagraph is an
individual who is employed by a community-rated
employer and who is unable to enroll in a standard
health plan--
(i) with a premium at or below the weighted
average premium rate for all community-rated
standard health plans offered through the
purchasing cooperative offered by the
individual's employer, and
(ii) providing a low or combination cost-
sharing schedule.
(2) Individuals working for experience-rated employers.--
(A) In general.--If a non-AFDC low-income
individual described in subparagraph (B) is enrolled in
an experience-rated standard health plan providing a
high cost-sharing schedule, such individual shall be
eligible for cost-sharing assistance consisting of a
reduction in the cost-sharing under such plan to the
level of a plan providing a low cost-sharing schedule.
(B) Individual described.--A non-AFDC low-income
individual described in this subparagraph is an
individual who is employed by an experience-rated
employer and who is unable to enroll in a standard
health plan offered by such employer providing a low or
combination cost-sharing schedule.
(3) Non-working individuals.--
(A) In general.--If a non-AFDC low-income
individual described in subparagraph (B) is enrolled in
a community-rated standard plan providing a high cost-
sharing schedule, such individual shall be eligible for
cost-sharing assistance consisting of a reduction in
the cost-sharing under such plan to the level of a plan
providing a low cost-sharing schedule.
(B) Individual described.--A non-AFDC low-income
individual described in this subparagraph is an
individual who is not employed and who is unable to
enroll in a standard health plan--
(i) with a premium at or below the weighted
average premium rate for all community-rated
standard health plans offered in the community
rating area in which the individual resides,
and
(ii) providing a low or combination cost-
sharing schedule.
(4) Non-afdc low-income individual.--For purposes of this
subsection, the term ``non-AFDC low-income individual'' means
an eligible individual who--
(A) has a family income determined under section
6008(3) which does not exceed 150 percent of the
poverty line; and
(B) is not a member of a family receiving aid to
families with dependent children under part A or E of
title IV of the Social Security Act.
(b) AFDC Recipients.--
(1) Low or combination cost-sharing plan.--An AFDC
recipient enrolled in a community-rated standard plan--
(A) with a premium at or below the weighted average
premium rate for all community rated-standard health
plans offered in the community rating area in which the
individual resides, and
(B) providing a low or combination cost-sharing
schedule,
shall be eligible for cost-sharing assistance consisting of a
reduction in the amount of copayment applied with respect to an
item or service in an amount equal to 20 percent of the
copayment amount otherwise applicable under the plan, rounded
to the nearest dollar.
(2) High cost-sharing plan.--If an AFDC recipient is unable
to enroll in a health plan described in paragraph (1) and such
individual is enrolled in a community-rated standard plan
providing a high cost-sharing schedule, such individual shall
be eligible for cost-sharing assistance consisting of a
reduction in the cost-sharing under such plan to the level of a
plan providing a low cost-sharing schedule.
(3) AFDC recipient.--For purposes of this subsection, the
term ``AFDC recipient'' means an eligible individual who is a
member of a family receiving aid to families with dependent
children under part A or E of title IV of the Social Security
Act.
(c) Notification of Health Plans.--If a State determines that an
individual is eligible for cost-sharing assistance under this section,
the State shall notify the standard health plan in which such
individual is enrolled of such determination in a timely manner.
SEC. 6004. ELIGIBILITY DETERMINATIONS.
(a) In General.--The Secretary shall promulgate regulations
specifying requirements for State programs under this subtitle with
respect to determining eligibility for premium and cost-sharing
assistance.
(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
make applications accessible at locations where individuals are
most likely to obtain the applications.
(4) Requirement to submit revised application.--A State
program shall require individuals to submit revised
applications 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) Verification.--A State program shall provide for
verification of the information supplied in applications under
this subtitle. 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 subtitle 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
eligible for assistance, 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.
(d) Effectiveness of Eligibility.--A determination by a State that
an individual is a premium subsidy eligible individual or an individual
eligible for cost-sharing assistance 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 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 subtitle shall be liable to the Federal
Government for the amount any 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 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 such amount to
the Secretary in a timely manner.
SEC. 6005. END-OF-YEAR RECONCILIATION FOR PREMIUM ASSISTANCE.
(a) In General.--
(1) Requirement to file statement.--An individual who
received premium assistance under this subtitle 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 subtitle 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
subtitle 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 subtitle, 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, 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 subtitle 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 6004(e) for a
misrepresentation of material fact described in such section.
SEC. 6006. ENROLLMENT OUTREACH.
(a) In General.--The Secretary shall promulgate regulations under
which each State operating a program for premium assistance under this
subtitle shall have in effect an enrollment outreach system under which
individuals may be determined eligible for such assistance by health
care providers who furnish services to such individuals.
(b) Specifications for Regulations.--The regulations promulgated by
the Secretary under subsection (a) shall include the following
requirements:
(1) Health care providers.--Each State shall permit only
the classes or categories of health care providers determined
appropriate by the Secretary (referred to in this subsection as
``eligible health care providers'') to participate in an
enrollment outreach system established by the State.
(2) Application for assistance.--Each State shall develop
and make available to eligible health care providers in the
State an enrollment package for distribution to potentially
eligible individuals which includes a simple form for
individuals who receive services from such providers to apply
for premium assistance. Such form shall--
(A) permit an individual completing the form to
make a declaration that the individual is eligible for
a full subsidy under section 6002; and
(B) permit an individual to enroll in a community-
rated standard health plan offered in the community
rating area in which the individual resides.
(3) Submission of completed application.--An individual who
receives an enrollment application form from an eligible health
care provider may complete the form and submit it to the
individual's provider or the State agency operating the program
for premium assistance under this subtitle. If a health care
provider receives an application under this section the
provider shall submit the application to the State agency
administering the premium assistance program under this
subtitle within a period of time determined appropriate by the
Secretary in regulations.
(4) Selection of health plan.--An individual may select a
community-rated standard health plan with which to enroll on
the date the individual submits an application form under this
section or the individual may make such selection at a later
date determined appropriate by the Secretary in regulations. If
an individual fails to select a health plan with which to
enroll by the date determined appropriate by the Secretary, the
State agency shall select such a plan for the individual.
(5) Effective date of enrollment.--An individual who is
enrolled in a community-rated standard health plan in
accordance with the enrollment eligibility system established
under this section shall be an enrollee of the plan as of the
date the individual submits an application to the State agency
or a health care provider.
(6) Period of eligibility.--An individual who submits an
application to a health care provider under an enrollment
outreach system under this section shall be eligible for
premium assistance under this subtitle for the period beginning
on the date such application is submitted and ending 60 days
after such date.
(7) No state responsibility for administrative errors.--
Section 6002(c)(3) shall not apply to any eligibility
determinations made under this section.
(8) No reconciliation required.--The reconciliation
provisions of section 6005 shall not apply to any premium
assistance paid on behalf of an individual during a period of
eligibility for such assistance under this section.
(9) Requirement on states.--During a period of eligibility
for premium assistance under this section, an individual shall
be given an opportunity by a State to apply for continuing
eligibility for premium assistance under this subtitle.
SEC. 6007. PAYMENTS TO STATES.
(a) In General.--
(1) Payments from the Secretary.--A State operating a
program for furnishing premium assistance under this subtitle
shall be entitled to receive payments from the Secretary in an
amount equal to the premium assistance paid on behalf of
individuals eligible for such assistance under this subtitle.
Such payments shall be made at such time and in such form as
provided in regulations promulgated by the Secretary.
(2) 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 subtitle in accordance
with this section.
(b) State Assessments for Administration Costs.--A State operating
a program for furnishing premium and cost-sharing assistance under this
subtitle may impose a premium assessment on the insured health plans
offered in the State in an amount not to exceed one percent of the
amount of the premium. Amounts collected pursuant to this subsection
may only be used to cover the administrative costs of the State in
operating such program.
(c) Audits.--The Secretary shall conduct regular audits of the
activities under the State programs conducted under this subtitle.
SEC. 6008. DEFINITIONS AND DETERMINATIONS OF INCOME.
For purposes of this subtitle:
(1) Standard health plan.--The term ``standard health
plan'' means a health plan (as defined in section 1011(2)(B))
providing the standard benefits package as described in section
1201(a).
(2) Child.--The term ``child'' means an individual who is
under 19 years of age.
(3) 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
children who are 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 children who are
dependents of the other individual.
(B) Dependent.--The term ``dependent'' shall have
the meaning given such term under section 152 of the
Internal Revenue Code of 1986.
(C) Special rule for foster children.--For purposes
of subparagraph (A), a child who is placed in foster
care by a State agency shall not be considered a
dependent of another individual.
(D) Modified adjusted gross income.--The term
``modified adjusted gross income'' means adjusted gross
income (as defined in section 62(a) of the Internal
Revenue Code of 1986)--
(i) determined without regard to sections
135, 162(l), 911, 931, and 933 of such Code,
and
(ii) increased by--
(I) the amount of interest received
or accrued by the individual during the
taxable year which is exempt from tax,
and
(II) the amount of the social
security benefits (as defined in
section 86(d) of such Code) received
during the taxable year to the extent
not included in gross income under
section 86 of such Code.
The determination under the preceding sentence shall be
made without regard to any carryover or carryback.
(E) Special rule for individuals temporarily
unemployed.--
(i) In general.--For purposes of
determining eligibility for premium assistance
under this subtitle for an individual who
becomes unemployed, such individual's spouse,
and children who are dependents of such
individual, the family income for such
individuals determined under subparagraph (A)
shall be reduced--
(I) for each month before and after
the period of unemployment, by an
amount equal to the lesser of the gross
wages of the individual for the month
or \1/12\th of the amount equal to 75
percent of the poverty line for an
individual; and
(II) for each month after the date
the individual becomes unemployed, by
an amount equal to any unemployment
compensation under an unemployment
compensation law of a State or of the
United States received by or on behalf
of the unemployed individual.
(ii) Limitation.--Clause (i) shall no
longer apply to an individual on the earlier
of--
(I) the date on which the period of
unemployment ends; or
(II) the end of the 6-month period
beginning on the first day of the first
month during which the individual
receives premium assistance under this
subtitle that would not be available to
such individual if the provisions of
clause (i) did not apply.
(iii) Special rule.--Clause (i) shall not
apply if an employer contribution of at least
80 percent of the premium under a standard
health plan is available to the unemployed
individual through an employer of a member of
the individual's family.
(4) 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.
(5) Poverty line.--The term ``poverty line'' means, for a
family for a year, the official poverty line (as defined by the
Office of Management and Budget, and revised annually in
accordance with section 673(2) of the Omnibus Budget
Reconciliation Act of 1981) applicable to a family of the size
involved.
(6) Pregnant woman.--
(A) In general.--The term ``pregnant woman''
includes a woman deemed to be a pregnant woman under
subparagraph (B).
(B) Period after termination of pregnancy.--For
purposes of this subtitle, a woman shall be deemed to
be a pregnant woman during the period beginning on the
date of the termination of the pregnancy and ending on
the first day of the first month that begins more than
90 days after such date.
Subtitle B--Employer Subsidies
SEC. 6101. PURPOSE.
It is the purpose of this subtitle to provide subsidies to eligible
employers to assist such employers in providing, or expanding the
provision of, health care coverage for the employees of such employers.
SEC. 6102. ELIGIBLE EMPLOYERS.
(a) In General.--To be eligible for a subsidy under this subtitle
an employer shall--
(1) comply with the requirements of part 1 of subtitle D of
title I;
(2) contribute to the cost of health care coverage for all
employees of the same class (limited to full- or part-time)
employed by the employer;
(3) contribute not less than 50 percent of the cost of
health care coverage for each class of family enrollment for
each employee so covered; and
(4) prepare and submit to the Secretary of Labor an
application, at such time, in such manner and containing such
information as the Secretary may require.
(b) Application of Requirements.--
(1) In general.--The requirements of paragraphs (2) and (3)
of subsection (a) shall only apply with respect to the
employees described in paragraph (2).
(2) Coverage of employees.--The employees described in this
paragraph are those employees--
(A) for which the employer is contributing to the
costs of health care coverage; and
(B) for which the employer did not make such a
contribution prior to the date of enactment of this
Act.
(c) Sole Proprietorships.--A sole proprietorship with not less than
3 full-time employees (including the sole proprietor) shall be eligible
for a subsidy under this subtitle if such proprietorship reports the
payment of wages (as defined in the Internal Revenue Code of 1986), in
the year prior to the year for which the subsidy is applied for, in an
amount required under regulations promulgated by the Secretary of
Labor.
(d) Ineligibility.--
(1) Self-employed.--A self-employed individual (as such
term is defined in section 1011(c)) shall not be eligible for a
subsidy under this subtitle.
(2) Employee leasing firms.--An employer that is an
employee leasing firm shall not be eligible for a subsidy under
this subtitle. The Secretary of Labor shall promulgate
regulations defining the term ``employee leasing firm''.
(3) State or local governments.--An employer that is a
State or local government shall not be eligible for a subsidy
under this section.
SEC. 6103. EMPLOYER CERTIFICATION.
(a) Requirement.--An employer that submits an application under
section 6102(a)(4) shall certify that such employer, prior to the date
of enactment of this Act, did not contribute to the costs of health
care coverage for the employees for which the employer is applying for
the subsidy.
(b) Contribution Limit.--For purposes of subsection (a), an
employer shall be treated as having contributed to the health care
coverage of an employee if the amount of such contribution is $500 or
more (as annualized).
(c) Union Sickness Funds.--For purposes of this subtitle, employers
that contribute to union sickness funds on behalf of their employees
shall be deemed to have contributed to the costs of health care
coverage for the employees of such employer.
(d) Regulations.--For purposes of this section, the Secretary of
Labor shall promulgate regulations to enable an employer to determine
whether and to what extent an employer contributed to the costs of an
employee's health care coverage prior to the date of enactment of this
Act. An employer shall utilize such regulations in submitting a
certification under this section.
SEC. 6104. AMOUNT OF SUBSIDY.
(a) In General.--With respect to an employee for which a subsidy
application submitted by an employer has been approved by the Secretary
of Labor under this subtitle, the employer shall receive a subsidy (to
be paid over a 5-year period) in an amount that equals--
(1) with respect to the first 3 years after the date of
enactment of this Act--
(A)(i) in the case of a community-rated employer,
50 percent of the lesser of--
(I) the weighted average premium rate (as
defined in section 6002(b)(1)(C)) for the
purchasing cooperative through which the
employer has contributed to the employee's
health care coverage (for the year involved);
(II) the community-rate of the standard
health plan under which the employee received
coverage (for the year involved); or
(III) the weighted average premium rate of
the community rating area in which the employee
resides; or
(ii) in the case of an experience-rated employer,
50 percent of the lesser of--
(I) the weighted average premium rate of
the community rating area in which the employee
resides; or
(II) the premium rate for the experience-
rated plan under which the employee received
coverage (for the year involved);
less
(B) 12 percent of the wages of the employee (for
the year involved);
(2) with respect to the fourth year after the date of
enactment of this Act--
(A) 37.5 percent of the lesser of the amounts
referred to in subparagraph (A) of paragraph (1) (for
the type of employer and the year involved); less
(B) 12 percent of the wages of the employee (for
the year involved); and
(3) with respect to the fifth year after the date of
enactment of this Act--
(A) 25 percent of the lesser of the amounts
referred to in subparagraph (A) of paragraph (1) (for
the type of employer and the year involved); less
(B) 12 percent of the wages of the employee (for
the year involved).
(b) Limitations.--
(1) Amount of contribution.--If, in applying the formula
under subsection (a), the Secretary of Labor determines that an
employer's contributions to the health care coverage costs of
its employees exceeds 50 percent of the weighted average
premium rate for the purchasing cooperative through which the
employer has so contributed (for the year involved), the
Secretary shall notify such employer that such employer is not
eligible for a subsidy under this subtitle.
(2) Part-time employees.--With respect to subsidies for
health care coverage for part-time employee, the Secretary of
Labor shall develop a formula for the pro-rata reduction in
such subsidies based on the formula described in subsection (a)
and the hours of work performed by the employee.
(3) Single subsidy.--An employer shall not be eligible to
receive more than one subsidy under this section. The Secretary
of Labor shall promulgate regulations to ensure that no
employer will receive a second or subsequent subsidy under this
subtitle regardless of whether such employer had previously
received the previous subsidy as an employer in a capacity
different from that of the employer's present capacity.
SEC. 6105. DEFINITION.
For purposes of this Act, an employee who is employed by an
employer--
(1) for at least 120 hours in a month shall be deemed to be
employed on a full-time basis with respect to that month, or
(2) for at least 40 hours, but less than 120 hours, in a
month shall be deemed to be employed on a part-time basis.
TITLE VII--REVENUE PROVISIONS
SEC. 7000. AMENDMENT OF 1986 CODE.
Except as otherwise expressly provided, whenever in this title an
amendment or repeal is expressed in terms of an amendment to, or repeal
of, a section or other provision, the reference shall be considered to
be made to a section or other provision of the Internal Revenue Code of
1986.
Subtitle A--Financing Provisions
PART 1--INCREASE IN TAX ON TOBACCO PRODUCTS
SEC. 7101. INCREASE IN EXCISE TAXES ON TOBACCO PRODUCTS.
(a) Cigarettes.--Subsection (b) of section 5701 is amended by
striking paragraph (1) and all that follows and inserting the
following:
``(1) Small cigarettes.--On cigarettes, weighing not more
than 3 pounds per thousand, the amount per thousand determined
under the following table:
The tax per
``In the case of cigarettes removed-- thousand is--
After July 31, 1995, and before January 1, 1997....... $19.50 cigarettes.--On cigarettes, weighing more than
3 pounds per thousand, removed at any time, an amount per
thousand equal to 2.1 times the tax per thousand imposed by
paragraph (1) on cigarettes removed at such time; except that,
if more than 6\1/2\ inches in length, they shall be taxable at
the rate prescribed for cigarettes weighing not more than 3
pounds per thousand, counting each 2\3/4\ inches, or fraction
thereof, of the length of each as one cigarette.''
(b) Cigars.--Paragraphs (1) and (2) of section 5701(a) are amended
to read as follows:
``(1) Small cigars.--On cigars, weighing not more than 3
pounds per thousand, the amount per thousand determined under
the following table:
The tax per
``In the case of cigars removed-- thousand is--
After July 31, 1995, and before January 1, 1997....... $1.83 is--
After July 31, 1995 and before January
1, 1997................................ 21 percent $48.75 The tax for
``In the case of cigarette papers removed-- each 50 papers
is--
After July 31, 1995 and before January 1, 1997........ 1.22 cents The tax for
``In the case of cigarette tubes removed-- each 50 tubes
is--
After July 31, 1995 and before January 1, 1997........ 2.44 cents
The tax per
``In the case of snuff removed-- pound is--
After July 31, 1995 and before January 1, 1997........ 58.5 cents
During 1997........................................... 73.5 cents
During 1998........................................... 88.5 cents
After December 31, 1998............................... $1.03\1/2\.''
(f) Chewing Tobacco.--Paragraph (2) of section 5701(e) is amended--
(1) by striking ``12 cents (10 cents on chewing tobacco
removed during 1991 or 1992)'' and inserting ``the amount
determined in accordance with the following table'', and
(2) by adding at the end the following:
The tax per
``In the case of chewing tobacco removed-- pound is--
After July 31, 1995 and before January 1, 1997........ 19.5 cents The tax per
``In the case of pipe tobacco removed-- pound is--
After July 31, 1995 and before January 1, 1997........ $1.10 hereby imposed a tax at the rate equal to
the excess of--
``(A) the rate of tax applicable under this section
to like articles manufactured in the United States,
over
``(B) the rate referred to in subparagraph (A) as
in effect on the day before the date of the enactment
of the Health Security Act.
``(2) Shipments to puerto rico from the united states.--
Only the rates of tax in effect on the day before the date of
the enactment of the Health Security Act shall be taken into
account in determining the amount of any exemption from, or
credit or drawback of, any tax imposed by this section on any
article shipped to the Commonwealth of Puerto Rico from the
United States.
``(3) Shipments from puerto rico to the united states.--The
rates of tax taken into account under section 7652(a) with
respect to tobacco products and cigarette papers and tubes
coming into the United States from the Commonwealth of Puerto
Rico shall be the rates of tax in effect on the day before the
date of the enactment of the Health Security Act.
``(4) Disposition of revenues.--The provisions of section
7652(a)(3) shall not apply to any tax imposed by reason of this
subsection.''
(i) Effective Date.--The amendments made by this section shall
apply to articles removed (as defined in section 5702(k) of the
Internal Revenue Code of 1986, as amended by this Act) after July 31,
1995.
(j) Floor Stocks Taxes.--
(1) Imposition of tax.--On tobacco products and cigarette
papers and tubes manufactured in or imported into the United
States or the Commonwealth of Puerto Rico which are removed
before any tax-increase date and held on such date for sale by
any person, there is hereby imposed a tax in an amount equal to
the excess of--
(A) the tax which would be imposed under section
5701 of the Internal Revenue Code of 1986 on the
article if the article had been removed on such date,
over
(B) the prior tax (if any) imposed under section
5701 or 7652 of such Code on such article.
(2) Authority to exempt cigarettes held in vending
machines.--To the extent provided in regulations prescribed by
the Secretary, no tax shall be imposed by paragraph (1) on
cigarettes held for retail sale on any tax-increase date, by
any person in any vending machine. If the Secretary provides
such a benefit with respect to any person, the Secretary may
reduce the $500 amount in paragraph (3) with respect to such
person.
(3) Credit against tax.--Each person shall be allowed as a
credit against the taxes imposed by paragraph (1) on each tax-
increase date an amount equal to $500. Such credit shall not
exceed the amount of taxes imposed by paragraph (1) on such
date for which such person is liable.
(4) Liability for tax and method of payment.--
(A) Liability for tax.--A person holding any
article on any tax-increase date to which any tax
imposed by paragraph (1) applies shall be liable for
such tax.
(B) Method of payment.--The tax imposed by
paragraph (1) shall be paid in such manner as the
Secretary shall prescribe by regulations.
(C) Time for payment.--The tax imposed by paragraph
(1) on any tax-increase date shall be paid on or before
the date which is 3 months after such tax-increase
date.
(5) Articles in foreign trade zones.--Notwithstanding the
Act of June 18, 1934 (48 Stat. 998, 19 U.S.C. 81a) and any
other provision of law, any article which is located in a
foreign trade zone on any tax-increase date shall be subject to
the taxes imposed by paragraph (1) if--
(A) internal revenue taxes have been determined, or
customs duties liquidated, with respect to such article
before such date pursuant to a request made under the
1st proviso of section 3(a) of such Act, or
(B) such article is held on such date under the
supervision of a customs officer pursuant to the 2d
proviso of such section 3(a).
(6) Definitions.--For purposes of this subsection--
(A) Tax-increase date.--The term ``tax-increase
date'' means August 1, 1995, January 1, 1997, January
1, 1998, and January 1, 1999.
(B) Other definitions.--Terms used in this
subsection which are also used in section 5702 of the
Internal Revenue Code of 1986 shall have the respective
meanings such terms have in such section, as amended by
this Act.
(C) Secretary.--The term ``Secretary'' means the
Secretary of the Treasury or his delegate.
(7) Controlled groups.--Rules similar to the rules of
section 5061(e)(3) of such Code shall apply for purposes of
this subsection.
(8) Other laws applicable.--All provisions of law,
including penalties, applicable with respect to the taxes
imposed by section 5701 of such Code shall, insofar as
applicable and not inconsistent with the provisions of this
subsection, apply to the floor stocks taxes imposed by
paragraph (1), to the same extent as if such taxes were imposed
by such section 5701. The Secretary may treat any person who
bore the ultimate burden of the tax imposed by paragraph (1) as
the person to whom a credit or refund under such provisions may
be allowed or made.
SEC. 7102. MODIFICATIONS OF CERTAIN TOBACCO TAX PROVISIONS.
(a) Exemption for Exported Tobacco Products and Cigarette Papers
and Tubes To Apply Only to Articles Marked for Export.--
(1) Subsection (b) of section 5704 is amended by adding at
the end the following new sentence: ``Tobacco products and
cigarette papers and tubes may not be transferred or removed
under this subsection unless such products or papers and tubes
bear such marks, labels, or notices as the Secretary shall by
regulations prescribe.''
(2) Section 5761 is amended by redesignating subsections
(c) and (d) as subsections (d) and (e), respectively, and by
inserting after subsection (b) the following new subsection:
``(c) Sale of Tobacco Products and Cigarette Papers and Tubes for
Export.--Except as provided in subsections (b) and (d) of section
5704--
``(1) every person who sells, relands, or receives within
the jurisdiction of the United States any tobacco products or
cigarette papers or tubes which have been labeled or shipped
for exportation under this chapter,
``(2) every person who sells or receives such relanded
tobacco products or cigarette papers or tubes, and
``(3) every person who aids or abets in such selling,
relanding, or receiving,
shall, in addition to the tax and any other penalty provided in this
title, be liable for a penalty equal to the greater of $1,000 or 5
times the amount of the tax imposed by this chapter. All tobacco
products and cigarette papers and tubes relanded within the
jurisdiction of the United States, and all vessels, vehicles, and
aircraft used in such relanding or in removing such products, papers,
and tubes from the place where relanded, shall be forfeited to the
United States.''
(3) Subsection (a) of section 5761 is amended by striking
``subsection (b)'' and inserting ``subsection (b) or (c)''.
(4) Subsection (d) of section 5761, as redesignated by
paragraph (2), is amended by striking ``The penalty imposed by
subsection (b)'' and inserting ``The penalties imposed by
subsections (b) and (c)''.
(5)(A) Subpart F of chapter 52 is amended by adding at the
end the following new section:
``SEC. 5754. RESTRICTION ON IMPORTATION OF PREVIOUSLY EXPORTED TOBACCO
PRODUCTS.
``(a) In General.--Tobacco products and cigarette papers and tubes
previously exported from the United States may be imported or brought
into the United States only as provided in section 5704(d). For
purposes of this section, section 5704(d), section 5761, and such other
provisions as the Secretary may specify by regulations, references to
exportation shall be treated as including a reference to shipment to
the Commonwealth of Puerto Rico.
``(b) Cross Reference.--
``For penalty for the sale of tobacco
products and cigarette papers and tubes in the United States which are
labeled for export, see section 5761(c).''
(B) The table of sections for subpart F of chapter 52 is
amended by adding at the end the following new item:
``Sec. 5754. Restriction on importation
of previously exported tobacco
products.''
(b) Importers Required To Be Qualified.--
(1) Sections 5712, 5713(a), 5721, 5722, 5762(a)(1), and
5763 (b) and (c) are each amended by inserting ``or importer''
after ``manufacturer''.
(2) The heading of subsection (b) of section 5763 is
amended by inserting ``Qualified Importers,'' after
``Manufacturers,''.
(3) The heading for subchapter B of chapter 52 is amended
by inserting ``and Importers'' after ``Manufacturers''.
(4) The item relating to subchapter B in the table of
subchapters for chapter 52 is amended by inserting ``and
importers'' after ``manufacturers''.
(c) Repeal of Tax-Exempt Sales to Employees of Cigarette
Manufacturers.--
(1) Subsection (a) of section 5704 is amended--
(A) by striking ``Employee Use or'' in the heading,
and
(B) by striking ``for use or consumption by
employees or'' in the text.
(2) Subsection (e) of section 5723 is amended by striking
``for use or consumption by their employees, or for
experimental purposes'' and inserting ``for experimental
purposes''.
(d) Repeal of Tax-Exempt Sales to United States.--Subsection (b) of
section 5704 is amended by striking ``and manufacturers may similarly
remove such articles for use of the United States;''.
(e) Books of 25 or Fewer Cigarette Papers Subject to Tax.--
Subsection (c) of section 5701 is amended by striking ``On each book or
set of cigarette papers containing more than 25 papers,'' and inserting
``On cigarette papers,''.
(f) Storage of Tobacco Products.--Subsection (k) of section 5702 is
amended by inserting ``under section 5704'' after ``internal revenue
bond''.
(g) Authority To Prescribe Minimum Manufacturing Activity
Requirements.--Section 5712 is amended by striking ``or'' at the end of
paragraph (1), by redesignating paragraph (2) as paragraph (3), and by
inserting after paragraph (1) the following new paragraph:
``(2) the activity proposed to be carried out at such
premises does not meet such minimum capacity or activity
requirements as the Secretary may prescribe, or''.
(h) Special Rules Relating to Puerto Rico and the Virgin Islands.--
Section 7652 is amended by adding at the end the following new
subsection:
``(h) Limitation on Cover Over of Tax on Tobacco Products.--For
purposes of this section, with respect to taxes imposed under section
5701 or this section on any tobacco product or cigarette paper or tube,
the amount covered into the treasuries of Puerto Rico and the Virgin
Islands shall not exceed the rate of tax under section 5701 in effect
on the article on the day before the date of the enactment of the
Health Security Act.''
(i) Effective Date.--The amendments made by this section shall
apply to articles removed (as defined in section 5702(k) of the
Internal Revenue Code of 1986, as amended by this Act) after December
31, 1994.
SEC. 7103. IMPOSITION OF EXCISE TAX ON MANUFACTURE OR IMPORTATION OF
ROLL-YOUR-OWN TOBACCO.
(a) In General.--Section 5701 (relating to rate of tax), as amended
by section 7101, is amended by redesignating subsections (g) and (h) as
subsections (h) and (i) and by inserting after subsection (f) the
following new subsection:
``(g) Roll-Your-Own Tobacco.--On roll-your-own tobacco,
manufactured in or imported into the United States, there shall be
imposed a tax of the amount determined in accordance with the following
table per pound (and a proportionate tax at the like rate on all
fractional parts of a pound).
The tax per
``In the case of roll-your-own tobacco removed-- pound is--
After July 31, 1995 and before January 1, 1997........ $1.10
(b) Roll-Your-Own Tobacco.--Section 5702 (relating to definitions)
is amended by adding at the end the following new subsection:
``(p) Roll-Your-Own Tobacco.--The term `roll-your-own tobacco'
means any tobacco which, because of its appearance, type, packaging, or
labeling, is suitable for use and likely to be offered to, or purchased
by, consumers as tobacco for making cigarettes.''
(c) Technical Amendments.--
(1) Subsection (c) of section 5702 is amended by striking
``and pipe tobacco'' and inserting ``pipe tobacco, and roll-
your-own tobacco''.
(2) Subsection (d) of section 5702 is amended--
(A) in the material preceding paragraph (1), by
striking ``or pipe tobacco'' and inserting ``pipe
tobacco, or roll-your-own tobacco'', and
(B) by striking paragraph (1) and inserting the
following new paragraph:
``(1) a person who produces cigars, cigarettes, smokeless
tobacco, pipe tobacco, or roll-your-own tobacco solely for the
person's own personal consumption or use, and''.
(3) The chapter heading for chapter 52 is amended to read
as follows:
``CHAPTER 52--TOBACCO PRODUCTS AND CIGARETTE PAPERS AND TUBES''.
(4) The table of chapters for subtitle E is amended by
striking the item relating to chapter 52 and inserting the
following new item:
``Chapter 52. Tobacco products and
cigarette papers and tubes.''
(d) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to roll-your-own tobacco removed (as defined in section
5702(k) of the Internal Revenue Code of 1986, as amended by
this Act) after July 31, 1995.
(2) Transitional rule.--Any person who--
(A) on the date of the enactment of this Act is
engaged in business as a manufacturer of roll-your-own
tobacco or as an importer of tobacco products or
cigarette papers and tubes, and
(B) before August 1, 1995, submits an application
under subchapter B of chapter 52 of such Code to engage
in such business,
may, notwithstanding such subchapter B, continue to engage in
such business pending final action on such application. Pending
such final action, all provisions of such chapter 52 shall
apply to such applicant in the same manner and to the same
extent as if such applicant were a holder of a permit under
such chapter 52 to engage in such business.
PART 2--HEALTH RELATED ASSESSMENTS
SEC. 7111. ASSESSMENTS ON INSURED AND SELF-INSURED HEALTH PLANS.
(a) General Rule.--Subtitle D (relating to miscellaneous excise
taxes) is amended by adding after chapter 36 the following new chapter:
``CHAPTER 37--HEALTH RELATED ASSESSMENTS
``Subchapter A. Insured and self-insured
health plans.
``Subchapter A--Insured and Self-Insured Health Plans
``Sec. 4501. Health insurance and health-
related administrative
services.
``Sec. 4502. Self-insured health plans.
``Sec. 4503. Definitions and special
rules.
``SEC. 4501. HEALTH INSURANCE AND HEALTH-RELATED ADMINISTRATIVE
SERVICES.
``(a) Imposition of Tax.--There is hereby imposed--
``(1) on each taxable health insurance policy, a tax equal
to 1.75 percent of the premiums received under such policy, and
``(2) on each amount received for health-related
administrative services, a tax equal to 1.75 percent of the
amount so received.
``(b) Liability for Tax.--
``(1) Health insurance.--The tax imposed by subsection
(a)(1) shall be paid by the issuer of the policy.
``(2) Health-related administrative services.--The tax
imposed by subsection (a)(2) shall be paid by the person
providing the health-related administrative services.
``(c) Taxable Health Insurance Policy.--For purposes of this
section--
``(1) In general.--Except as otherwise provided in this
section, the term `taxable health insurance policy' means any
insurance policy providing accident or health insurance with
respect to individuals residing in the United States.
``(2) Exemption of certain policies.--The term `taxable
health insurance policy' does not include any insurance policy
if substantially all of the coverage provided under such policy
relates to--
``(A) liabilities incurred under workers'
compensation laws,
``(B) tort liabilities,
``(C) liabilities relating to ownership or use of
property,
``(D) credit insurance, or
``(E) such other similar liabilities as the
Secretary may specify by regulations.
``(3) Special rule where policy provides other coverage.--
In the case of any taxable health insurance policy under which
amounts are payable other than for accident or health coverage,
in determining the amount of the tax imposed by subsection
(a)(1) on any premium paid under such policy, there shall be
excluded the amount of the charge for the nonaccident or health
coverage if--
``(A) the charge for such nonaccident or health
coverage is either separately stated in the policy, or
furnished to the policyholder in a separate statement,
and
``(B) such charge is reasonable in relation to the
total charges under the policy.
In any other case, the entire amount of the premium paid under
such a policy shall be subject to tax under subsection (a)(1).
``(4) Treatment of prepaid health coverage arrangements.--
``(A) In general.--In the case of any arrangement
described in subparagraph (B)--
``(i) such arrangement shall be treated as
a taxable health insurance policy,
``(ii) the payments or premiums referred to
in subparagraph (B)(i) shall be treated as
premiums received for a taxable health
insurance policy, and
``(iii) the person referred to in
subparagraph (B)(i) shall be treated as the
issuer.
``(B) Description of arrangements.--An arrangement
is described in this subparagraph if under such
arrangement--
``(i) fixed payments or premiums are
received as consideration for any person's
agreement to provide or arrange for the
provision of accident or health coverage to
residents of the United States, regardless of
how such coverage is provided or arranged to be
provided, and
``(ii) substantially all of the risks of
the rates of utilization of services is assumed
by such person or the provider of such
services.
``(d) Health-Related Administrative Services.--For purposes of this
section, the term `health-related administrative services' means--
``(1) the processing of claims or performance of other
administrative services in connection with accident or health
coverage under a taxable health insurance policy if the charge
for such services is not included in the premiums under such
policy, and
``(2) processing claims, arranging for provision of
accident or health coverage, or performing other administrative
services in connection with an applicable self-insured health
plan (as defined in section 4502(c)) established or maintained
by a person other than the person performing the services.
For purposes of paragraph (1), rules similar to the rules of subsection
(c)(3) shall apply.
``SEC. 4502. SELF-INSURED HEALTH PLANS.
``(a) Imposition of Tax.--In the case of any applicable self-
insured health plan, there is hereby imposed a tax for each month equal
to 1.75 percent of the sum of--
``(1) the accident or health coverage expenditures for such
month under such plan, and
``(2) the direct administrative expenditures for such month
under such plan.
``(b) Liability for Tax.--
``(1) In general.--The tax imposed by subsection (a) shall
be paid by the plan sponsor.
``(2) Plan sponsor.--For purposes of paragraph (1), the
term `plan sponsor' means--
``(A) the employer in the case of a plan
established or maintained by a single employer,
``(B) the employee organization in the case of a
plan established or maintained by an employee
organization, or
``(C) in the case of--
``(i) a plan established or maintained by 2
or more employers or jointly by 1 or more
employers and 1 or more employee organizations,
``(ii) a voluntary employees' beneficiary
association under section 501(c)(9), or
``(iii) a plan described in subsection
(c)(2)(F),
the association, committee, joint board of trustees,
cooperative, or other similar group of representatives
of the parties who establish or maintain the plan.
``(c) Applicable Self-Insured Health Plan.--For purposes of this
section, the term `applicable self-insured health plan' means any plan
for providing accident or health coverage if--
``(1) any portion of such coverage is provided other than
through an insurance policy, and
``(2) such plan is established or maintained--
``(A) by one or more employers for the benefit of
their employees or former employees,
``(B) by one or more employee organizations for the
benefit of their members or former members,
``(C) jointly by 1 or more employers and 1 or more
employee organizations for the benefit of employees or
former employees,
``(D) by a voluntary employees' beneficiary
association described in section 501(c)(9),
``(E) by any organization described in section
501(c)(6), or
``(F) in the case of a plan not described in the
preceding subparagraphs, by a multiple employer welfare
arrangement, a rural electric cooperative, or a rural
telephone cooperative association, as such terms are
defined in section 3(40) of the Employee Retirement
Income Securities Act of 1974.
``(d) Accident or Health Coverage Expenditures.--For purposes of
this section--
``(1) In general.--The accident or health coverage
expenditures of any applicable self-insured health plan for any
month are the aggregate expenditures paid in such month for
accident or health coverage provided under such plan to the
extent such expenditures are not subject to tax under section
4501.
``(2) Treatment of reimbursements.--In determining accident
or health coverage expenditures during any month of any
applicable self-insured health plan, reimbursements (by
insurance or otherwise) received during such month shall be
taken into account as a reduction in accident or health
coverage expenditures.
``(3) Certain expenditures disregarded.--Paragraph (1)
shall not apply to any expenditure for the acquisition or
improvement of land or for the acquisition or improvement of
any property to be used in connection with the provision of
accident or health coverage which is subject to the allowance
under section 167, except that, for purposes of paragraph (1),
allowances under section 167 shall be considered as
expenditures.
``(e) Direct Administrative Expenditures.--For purposes of this
section, the term `direct administrative expenditures' means the
administrative expenditures under the plan to the extent such
expenditures are not subject to tax under section 4501. In determining
the amount of such expenditures, rules similar to the rules of
subsection (d)(3) shall apply.
``SEC. 4503. DEFINITIONS AND SPECIAL RULES.
``(a) Definitions.--For purposes of this subchapter--
``(1) Accident or health coverage.--The term `accident or
health coverage' means any coverage which, if provided by an
insurance policy, would cause such policy to be a taxable
health insurance policy (as defined in section 4501(c)).
``(2) Insurance policy.--The term `insurance policy' means
any policy or other instrument whereby a contract of insurance
is issued, renewed, or extended.
``(3) Premium.--The term `premium' means the gross amount
of premiums and other consideration (including advance
premiums, deposits, fees, and assessments) arising from
policies issued by a person acting as the primary insurer,
adjusted for any return or additional premiums paid as a result
of endorsements, cancellations, audits, or retrospective
rating. Amounts returned where the amount is not fixed in the
contract but depends on the experience of the insurer or the
discretion of management shall not be included in return
premiums.
``(4) United states.--The term `United States' includes any
possession of the United States.
``(b) Treatment of Governmental Entities.--
``(1) In general.--For purposes of this subchapter--
``(A) the term `person' includes any governmental
entity, and
``(B) notwithstanding any other law or rule of law,
governmental entities shall not be exempt from the
taxes imposed by this subchapter except as provided in
paragraph (2).
``(2) Exempt governmental programs.--In the case of an
exempt governmental program--
``(A) no tax shall be imposed under section 4501 on
any premium received pursuant to such program or on any
amount received for health-related administrative
services pursuant to such program, and
``(B) no tax shall be imposed under section 4502 on
any expenditures pursuant to such program.
``(3) Exempt governmental program.--For purposes of this
subchapter, the term `exempt governmental program' means--
``(A) the insurance programs established by parts A
and B of title XVIII of the Social Security Act,
``(B) the medical assistance program established by
title XIX of the Social Security Act,
``(C) any program established by Federal law for
providing medical care (other than through insurance
policies) to individuals (or the spouses and dependents
thereof) by reason of such individuals being--
``(i) members of the Armed Forces of the
United States, or
``(ii) veterans, and
``(D) any program established by Federal law for
providing medical care (other than through insurance
policies) to members of Indian tribes (as defined in
section 4(d) of the Indian Health Care Improvement
Act).
``(c) No Cover Over to Possessions.--Notwithstanding any other
provision of law, no amount collected under this subchapter shall be
covered over to any possession of the United States.''
(b) Clerical Amendment.--The table of chapters for subtitle D is
amended by inserting after the item relating to chapter 36 the
following new item:
``Chapter 37. Health related
assessments.''
(c) Effective Date.--The amendments made by this section shall
apply with respect to premiums received, and expenses incurred, with
respect to coverage for periods after December 31, 1995.
SEC. 7112. HIGH COST HEALTH PLAN ASSESSMENT.
(a) In General.--Subchapter A of chapter 37 (relating to
assessments on insured and self-insured health benefits), as added by
section 7111, is amended by adding at the end the following new part:
``PART II--HIGH COST HEALTH PLANS
``Subpart A. Community-rated plans.
``Subpart B. Experience-rated plans.
``Subpart C. Definitions and special
rules.
``Subpart A--Community-Rated Plans
``Sec. 4511. Community-rated plans.
``Sec. 4512. Reference premiums.
``SEC. 4511. COMMUNITY-RATED PLANS.
``(a) Imposition of Tax.--
``(1) In general.--If a community-rated certified standard
health plan is a high cost plan for any coverage period
beginning after December 31, 1996, there is hereby imposed a
tax equal to 25 percent of the excess premiums of the plan for
the period.
``(2) Liability for tax.--The tax imposed by this section
shall be paid by the issuer of the high cost plan.
``(b) High Cost Plan.--For purposes of this section--
``(1) In general.--A plan is a high cost plan for any
coverage period if--
``(A) it is operating within a noncompetitive
community rating area, and
``(B) it has excess premiums for the period.
``(2) Noncompetitive community rating area.--A community
rating area is a noncompetitive community rating area for any
coverage period if, for the preceding coverage period--
``(A) the weighted average premium per primary
insured in community-rated certified standard health
plans in the area, exceeded
``(B) the weighted average reference premium for
all such plans.
The determination under this paragraph shall be made on the
basis of enrollment during the annual open enrollment period
for such preceding coverage period.
``(c) Excess Premiums.--For purposes of this section--
``(1) In general.--The term `excess premiums' means, with
respect to a certified standard health plan, the excess (if
any) of--
``(A) the premiums received under the plan during
the coverage period, over
``(B) the sum of the amounts determined under
paragraph (2) with respect to each class of enrollment.
``(2) Excess premium baseline.--
``(A) In general.--The amount determined under this
paragraph for any class of enrollment for any coverage
period is an amount equal to the product of the
reference premium for such class and the number of
primary insureds in such class for the period.
``(B) Proportionate reduction of reference
premium.--The reference premium applicable under
subparagraph (A) to an individual who was a primary
insured for only a portion of the coverage period shall
be proportionately reduced to reflect the period the
individual was not a primary insured.
``(3) Disregard of age adjustment.--The amount determined
under paragraph (1)(A) shall be adjusted to reflect the
premiums which would have been received if no age adjustment
were permitted under section 1116 of the Health Security Act.
``(4) Reduction for taxes.--The amount determined under
paragraph (1)(A) shall be reduced by the amount of the tax
imposed by this section included in determining the amount of
the premiums.
``(d) Coverage Period.--For purposes of this subpart, the term
`coverage period' means, with respect to any community rating area, the
12-month period for which an individual is covered under a standard
health plan if the individual enrolls in the plan during the annual
open enrollment period for the area under section 1503 of the Health
Security Act.
``(e) Plans Covering More Than One Area.--For purposes of this
subpart, if a community-rated plan covers individuals residing in more
than 1 community rating area, the plan shall be treated as a separate
plan with respect to each such area.
``SEC. 4512. REFERENCE PREMIUMS.
``(a) Establishment of Reference Premiums.--For purposes of this
subpart--
``(1) In general.--The Secretary shall, in consultation
with the Secretary of Health and Human Services, establish for
each coverage period a reference premium for each class of
enrollment for community-rated plans within a community rating
area. The Secretary shall publish such reference premiums
within a reasonable period of time before the annual open
enrollment period for the coverage period.
``(2) Method of determining reference premium.--Each
reference premium for a class of enrollment for any coverage
period shall be the reference premium in effect for such class
for the preceding coverage period--
``(A) increased by the target growth rate for the
coverage period as provided under subsection (b)(1),
and
``(B) adjusted to reflect--
``(i) material changes in the
characteristics of community-rated individuals
as provided under subsection (b)(2), and
``(ii) changes in the actuarial value of
the standard benefits package as provided under
subsection (b)(3).
``(b) Annual Adjustments to Reference Premiums.--For purposes of
subsection (a)(2)--
``(1) Target growth rate.--The target growth rate for any
coverage period is the percentage increase in the Consumer
Price Index (as defined in section 1(f)(4)) which the Secretary
estimates will occur during the coverage period--
``(A) increased by 2 percentage points (3 and 2.5
percentage points in the case of coverage periods
beginning in 1997 and 1998, respectively), and
``(B) increased or decreased by the amount the
estimate under this paragraph was incorrect for the
preceding coverage period.
``(2) Material changes.--
``(A) In general.--The Secretary may, in
consultation with the Secretary of Health and Human
Services and pursuant to such method as the Secretary
prescribes, adjust the reference premium to reflect
changes in the demographic characteristics (including
factors such as age, gender, and socioeconomic status)
and health status of community-rated individuals in the
community rating area which are materially different
when compared to the average changes in such
characteristics and status in the United States.
``(B) Effect on weighted average.--Any adjustments
under subparagraph (A) for any coverage period shall
not result in a change in the weighted average of such
factors for all community rating areas in the United
States.
``(3) Changes in benefit package.--If the actuarial value
of the standard benefits package is changed pursuant to
subtitle C of title I of the Health Security Act, the Secretary
shall adjust the reference premiums appropriately to reflect
such change.
``(c) Computation of Reference Premium for 1996.--
``(1) In general.--The Secretary, in consultation with the
Secretary of Health and Human Services, shall compute the
reference premium for each class of enrollment for 1996. Each
such reference premium shall be the reference premium which is
adjusted under subsection (a)(2) in determining the reference
premium for coverage periods beginning in 1997.
``(2) Method of determining reference premiums.--Each
reference premium under paragraph (1) shall be equal to the
national average per capita current coverage health
expenditures for 1994 (determined under subsection (d))--
``(A) increased as provided in paragraph (3),
``(B) adjusted to reflect the differences in the
community rating area as provided in paragraph (4), and
``(C) modified to reflect the class of enrollment
for which it is being determined in the same manner as
premiums are modified under section 1116 of the Health
Security Act.
``(3) Updating for 1995 and 1996.--The Secretary shall
update the national average per capita current coverage health
expenditures for 1994 to reflect the annual percentage
increases for calendar years 1995 and 1996 in private sector
health care spending for items and services included in the
standard benefits package. Such increase shall not exceed the
current projected increase in per capita private health
insurance premiums for such years contained in the estimate of
national health insurance expenditures published by the
Congressional Budget Office in the fall of 1993.
``(4) Area adjustments.--
``(A) In general.--The Secretary shall, using
information of the type described in subparagraph (B),
establish an adjustment for each community rating area
which takes into account the differences among
community rating areas, including variations in health
care expenditures, in rates of uninsurance and
underinsurance, and in the proportion of expenditures
for services provided by academic health centers.
``(B) Type of information.--The type of information
described in this subparagraph is--
``(i) information on variations in premiums
across States and across community rating areas
within a State (based on surveys and other
data);
``(ii) information on variations in per
capita health spending by State, as measured by
the Secretary;
``(iii) information on variations across
States in per capita spending under the
medicare program and in such spending among
community rating areas within a State under
such program; and
``(iv) area rating factors commonly used by
actuaries.
``(C) Consultation process.--The Secretary shall,
in cooperation with the Secretary of Health and Human
Services, consult with representatives of States and
community rating areas before establishing the
adjustment under this subsection.
``(d) Determination of National Average per Capita Current Coverage
Health Expenditures.--
``(1) In general.--The national average per capita current
coverage health expenditures are equal to--
``(A) the total amount of covered current health
care expenditures described in paragraph (2), divided
by
``(B) the estimated population in the United States
of community-rated individuals as of 1994 (as
determined under paragraph (4)) for whom such
expenditures were determined.
The population under subparagraph (B) shall not include SSI
recipients.
``(2) Covered current health care expenditures.--
``(A) In general.--For purposes of paragraph (1),
the term `covered current health care expenditures'
means the amount of total payments made in the United
States during 1994 (other than amounts for cost
sharing) for items and services included in the
standard benefits package.
``(B) Removal of certain expenditures not to be
covered.--The amount determined under subparagraph (A)
shall be decreased by the proportion of such amount
that is attributable to any of the following:
``(i) Medicare beneficiaries.
``(ii) SSI recipients.
``(iii) Expenditures which are paid for
through workers' compensation or automobile or
other liability insurance.
``(iv) Any other expenditures by parties
(including the Federal Government) that the
Secretary estimates will not be payable by
community-rated plans for coverage under the
standard benefits package.
``(C) Addition of projected expenditures for
uninsured and underinsured individuals.--The amount
determined under subparagraph (A) (as adjusted under
subparagraph (B)) shall be increased to take into
account increased utilization of, and expenditures for,
items and services covered under the standard benefits
package likely to occur, as a result of coverage under
a community-rated plan of individuals who, as of 1994,
were uninsured or underinsured with respect to the
standard benefits package. In making such
determination, such expenditures shall be based on the
estimated average cost for such services in 1994 (and
not on private payment rates established for such
services). In making such determination, the estimated
amount of uncompensated care in 1994 shall be reduced
to reflect the number and characteristics of the
currently uninsured who will become insured by reason
of the Health Security Act and will not include
adjustments to offset payments below costs by public
programs.
``(D) Addition of health plan administration
costs.--The amount determined under subparagraph (A)
(as adjusted under the preceding subparagraphs) shall
be increased by an estimated percentage (determined by
the Secretary, but no more than 15 percent) that
reflects the proportion of premiums that are required
for administration and for State premium taxes (which
taxes shall be limited to such amounts in 1994 as are
attributable to the health benefits to be included in
the standard benefits package).
``(E) Decrease for cost sharing.--The amount
determined under subparagraph (A) (as adjusted under
the preceding subparagraphs) shall be decreased by a
percentage that reflects (i) the estimated average
percentage of total amounts payable for items and
services covered under the standard benefits package
that will be payments in the form of cost sharing under
a certified standard benefit plan with a high cost-
sharing option, and (ii) the percentage reduction in
utilization estimated to result from the application of
such cost sharing.
``(3) Special rules.--
``(A) Benefits used.--The determinations under this
subsection shall be based on the standard benefits
package as in effect in 1996.
``(B) Assuming no change in expenditure pattern.--
The determination under paragraph (2) shall be made
without regard to any change in the pattern of
expenditures that may result from the enrollment of SSI
recipients in community-rated plans.
``(4) Eligible individuals.--The determination of
individuals who are community-rated individuals under this
subsection shall be made as though the Health Security Act was
fully in effect in each State as of 1994.
``(e) Treatment of Certain States.--For purposes of this section--
``(1) Nonparticipating states.--In the case of a State that
is not a participating State or otherwise has not established
community rating areas, the entire State shall be treated as a
single community rating area.
``(2) Changes in boundaries.--In the case of a State that
changes the boundaries of its community rating areas, the
Secretary shall provide a method for computing reference
premiums for each area affected by such change in a manner
that--
``(A) reflects the factors taken into account in
establishing the adjustment factors under this section,
and
``(B) results in the weighted average of the newly
computed reference premiums for the areas affected by
the change being equal to the weighted average of the
reference premiums for the areas as previously
established.
``Subpart B--Experience-Rated Plans
``Sec. 4515. Experience-rated plans.
``SEC. 4515. EXPERIENCE-RATED PLANS.
``(a) Imposition of Tax.--
``(1) In general.--In the case of any calendar year
beginning after December 31, 1999, there is hereby imposed a
tax equal to 25 percent of the excess premium equivalents of an
experience-rated standard health plan.
``(2) Liability for tax.--The tax imposed by this section
shall be paid by the plan sponsor.
``(b) Excess Premium Equivalents.--For purposes of this section--
``(1) In general.--The term `excess premium equivalents'
means the excess (if any) of--
``(A) the premium equivalents of the plan for the
calendar year, over
``(B) the product of the reference premium and the
number of primary insureds covered by the plan during
the calendar year.
``(2) Proportionate reduction in reference premium.--The
reference premium applicable under paragraph (1)(B) to a
primary insured covered under the plan for only a portion of
the calendar year shall be proportionately reduced to reflect
the period the individual was not a primary insured.
``(c) Reference Premium.--For purposes of this section--
``(1) In general.--The reference premium for any plan for
any calendar year shall be the reference premium in effect for
the preceding calendar year--
``(A) increased by the target growth rate for the
calendar year as provided under paragraph (2), and
``(B) adjusted to reflect--
``(i) material changes in the
characteristics of individuals covered by the
plan as provided under paragraph (3), and
``(ii) changes in the actuarial value of
the standard benefits package as provided under
paragraph (4).
``(2) Target growth rate.--The target growth rate for any
calendar year is the percentage increase in the Consumer Price
Index (as defined in section 1(f)(4)) which the Secretary
estimates will occur during the calendar year--
``(A) increased by 2 percentage points, and
``(B) increased or decreased by the amount the
estimate under this paragraph was incorrect for the
preceding calendar year.
``(3) Material changes.--The Secretary may, in consultation
with the Secretary of Health and Human Services, establish such
method as the Secretary determines appropriate for adjusting
the reference premium for any plan to reflect changes in the
demographic characteristics (including factors such as age,
gender, socioeconomic status, and class of enrollment) and
health status of individuals in the plan which are materially
different when compared to the average changes in such
characteristics and status in the United States.
``(4) Changes in benefit package.--If the actuarial value
of the standard benefits package is changed pursuant to
subtitle C of title I of the Health Security Act, the Secretary
shall adjust the reference premiums appropriately to reflect
such change.
``(d) Reference Premium for 1999.--
``(1) In general.--The reference premium for calendar year
1999 shall be equal to the average of the per capita premium
equivalents for calendar years 1997, 1998, and 1999. Such
reference premium shall be the reference premium which is
adjusted under subsection (c) for determining the reference
premium for calendar year 2000.
``(2) Per capita premium equivalent.--
``(A) In general.--The per capita premium
equivalent for any calendar year shall be equal to the
premium equivalent for providing the standard benefits
package to each primary insured, adjusted as provided
under subparagraph (B).
``(B) Growth factors.--The amount determined under
subparagraph (A)--
``(i) for calendar year 1997 shall be
increased by the target growth rates for
calendar years 1998 and 1999, and
``(ii) for calendar year 1998 shall be
increased by the target growth rate for
calendar year 1999.
For purposes of this subparagraph, the target growth
rate shall be determined under subsection (c)(2),
except that subsection (c)(2)(A) shall be applied for
calendar year 1998 by substituting `2.5' for `2'.
``(e) Premium Equivalents.--For purposes of this section--
``(1) In general.--The term `premium equivalents' means,
with respect to any calendar year, the sum of--
``(A) expenditures described in subsections (d) and
(e) of section 4502 with respect to coverage under the
plan, and
``(B) in the case of any coverage provided through
an insurance policy, premiums paid for such coverage.
``(2) Exclusion of nonstandard coverage.--The premium
equivalents for any calendar year shall not include amounts
with respect to--
``(A) any coverage other than coverage for the
standard benefits package, or
``(B) any cost-sharing coverage.
``(3) Risk adjustment payments.--The premium equivalents
for any calendar year shall include payments under any risk
adjustment program established under title I of the Health
Security Act.
``(4) Taxes disregarded.--The premium equivalents for any
calendar year shall not include the amount of any tax imposed
by this section.
``(f) Special Rules.--For purposes of this section--
``(1) Aggregation rules.--
``(A) Plans.--All plans maintained by the same plan
sponsor shall be treated as 1 plan.
``(B) Sponsors.--All plan sponsors which are
treated as a single employer under subsection (b) or
(c) of section 414 shall be treated as 1 plan sponsor.
``(2) Startup plans.--If a plan sponsor first begins
operation of an experience-rated plan after 1997, the reference
premium for the first calendar year for which the plan is in
operation and to which this section applies shall, under
regulations prescribed by the Secretary, be determined as if
the reference premium for the preceding calendar year were
equal to the average of the reference premiums for all
community-rated plans for the preceding calendar year in the
areas in which the plan is operating, adjusted to reflect the
factors described in subsection (c)(3) under the plan which
materially differ from such factors under the community-rated
plans.
``(3) Acquisitions and dispositions.--The reference premium
after an acquisition or disposition described in section
41(f)(3) involving the plan sponsor of an experience-rated plan
shall be made pursuant to such regulations as the Secretary may
prescribe.
``(4) Information.--The Secretary may require a plan
sponsor of an experience-rated plan to adopt such conventions
as are necessary in its accounting practices and financial
records to assure that only costs related to the standard
benefits package are taken into account in determining the
premium equivalents with respect to the plan.
``Subpart C--Definitions and Special Rules
``Sec. 4518. Right of recovery.
``Sec. 4519. Definitions and special
rules.
``SEC. 4518. RIGHT OF RECOVERY FROM PROVIDERS.
``(a) General Rule.--Each issuer or plan sponsor of a certified
standard health plan shall be entitled to recover from the providers of
items or services covered by the plan an amount equal to 50 percent of
the amount of any tax imposed by this part on the issuer or sponsor.
``(b) Recovery.--For purposes of subsection (a)--
``(1) any amount recovered from any provider shall not
exceed the provider's proportionate share of items or services
provided under the plan for the period the tax was imposed, and
``(2) an issuer or plan sponsor may recover an amount from
a provider through a reduction in payments under the plan,
direct payments from the provider, or such other manner as may
be provided under State law adopted pursuant to section 1510 of
the Health Security Act.
``(c) Balance Billing.--For prohibition of balance billing of any
amount recovered from a provider under this section, see section
1128(h)(3) of the Health Security Act.
``SEC. 4519. DEFINITIONS AND SPECIAL RULES.
``(a) Health Plans.--For purposes of this part--
``(1) Standard health plan.--The term `standard health
plan' has the meaning given such term by section 1011(2)(B) of
the Health Security Act, except that such term does not include
a plan offering the alternative standard benefit package
described in 1201(b) of such Act.
``(2) Standard benefits package.--The term `standard
benefits package' has the meaning given such term by section
1201(a) of such Act.
``(b) Community Rating Areas and Plans.--For purposes of this
part--
``(1) Community rating area.--The term `community rating
area' means an area established under section 1502 of the
Health Security Act.
``(2) Community-rated plan.--The term `community-rated
plan' means a plan which is community-rated under section 1116
of such Act.
``(3) Experience-rated plan.--The term `experience-rated
plan' means any plan which is not a community-rated plan.
``(c) Premiums.--For purposes of this part--
``(1) In general.--The term `premium' has the meaning given
such term by section 4503(a)(3).
``(2) Administrative costs.--Amounts received for health-
related administrative services (as defined in section 4501(d))
provided in connection with any standard health plan taken into
account under section 4511(c)(3) shall be treated as premiums.
``(3) Risk adjustment payments.--Payments under a risk
adjustment program established under title I of the Health
Security Act shall be disregarded in computing the amount of
any premiums.
``(d) Insurance Policy and Plan Sponsor.--For purposes of this
part--
``(1) Insurance policy.--The term `insurance policy' has
the meaning given such term by section 4503(a)(2).
``(2) Plan sponsor.--The term `plan sponsor' has the
meaning given such term by section 4502(b)(2), except that in
the case of a plan not described in such section, such term
means the person or persons who establish or maintain the plan.
``(e) Special Rules.--For purposes of this part--
``(1) Deposits.--The Secretary may require deposits of any
taxes imposed by subpart A or B at such times as the Secretary
determines appropriate.
``(2) Governmental entities subject to tax.--The rules of
section 4503(b) shall apply for purposes of this part.
``(3) No cover over to possessions.--Notwithstanding any
other provision of law, no amount collected under this part
shall be covered over to any possession of the United States.
``(f) Regulations.--The Secretary shall issue such regulations as
are necessary to carry out the provisions of this part, including
regulations--
``(1) requiring the maintenance of such records, and the
reporting of such information as the Secretary determines
necessary, and
``(2) which provide that 2 or more plans of a person or any
related persons must be aggregated, or a plan must be treated
as 2 or more separate plans.''
(b) Conforming Amendments.--
(1) Subchapter A of chapter 37, as added by section 7111,
is amended by inserting after the subchapter heading the
following:
``Part I. Premium and related
assessments.
``Part II. High cost health plans.
``PART I--PREMIUM AND RELATED ASSESSMENTS''.
(2) Section 4503, as so added, is amended by striking
``subchapter'' each place it appears and inserting ``part''.
(c) Effective Date.--The amendments made by this section shall take
effect on January 1, 1996.
PART 3--RECAPTURE OF CERTAIN HEALTH CARE SUBSIDIES
SEC. 7121. RECAPTURE OF CERTAIN HEALTH CARE SUBSIDIES RECEIVED BY HIGH-
INCOME INDIVIDUALS.
(a) In General.--Subchapter A of chapter 1 is amended by adding at
the end the following new part:
``PART VIII--CERTAIN HEALTH CARE SUBSIDIES RECEIVED BY HIGH-INCOME
INDIVIDUALS
``Sec. 59B. Recapture of certain health
care subsidies.
``SEC. 59B. RECAPTURE OF CERTAIN HEALTH CARE SUBSIDIES.
``(a) Imposition of Recapture Amount.--In the case of an
individual, if the modified adjusted gross income of the taxpayer for
the taxable year exceeds the threshold amount, such taxpayer shall pay
(in addition to any other amount imposed by this subtitle) a recapture
amount for such taxable year equal to the aggregate of the Medicare
part B recapture amounts (if any) for months during such year that a
premium is paid under part B of title XVIII of the Social Security Act
for the coverage of the individual under such part.
``(b) Medicare Part B Premium Recapture Amount for Month.--For
purposes of this section, the Medicare part B premium recapture amount
for any month is the amount equal to the excess of--
``(1) 150 percent of the monthly actuarial rate for
enrollees age 65 and over determined for that calendar year
under section 1839(b) of the Social Security Act, over
``(2) the total monthly premium under section 1839 of the
Social Security Act (determined without regard to subsections
(b) and (f) of section 1839 of such Act).
``(c) Phase-in of Recapture Amount.--
``(1) In general.--If the modified adjusted gross income of
the taxpayer for any taxable year exceeds the threshold amount
by less than $15,000, the recapture amount imposed by this
section for such taxable year shall be an amount which bears
the same ratio to the recapture amount which would (but for
this subsection) be imposed by this section for such taxable
year as such excess bears to $15,000.
``(2) Joint returns.--If a recapture amount is determined
separately for each spouse filing a joint return, paragraph (1)
shall be applied by substituting `$30,000' for `$15,000' each
place it appears.
``(d) Other Definitions and Special Rules.--For purposes of this
section--
``(1) Threshold amount.--The term `threshold amount'
means--
``(A) except as otherwise provided in this
paragraph, $90,000,
``(B) $115,000 in the case of a joint return, and
``(C) zero in the case of a taxpayer who--
``(i) is married (as determined under
section 7703) but does not file a joint return
for such year, and
``(ii) does not live apart from his spouse
at all times during the taxable year.
``(2) Modified adjusted gross income.--The term `modified
adjusted gross income' means adjusted gross income--
``(A) determined without regard to sections 135,
911, 931, and 933, and
``(B) increased by the amount of interest received
or accrued by the taxpayer during the taxable year
which is exempt from tax.
``(3) Joint returns.--In the case of a joint return--
``(A) the recapture amount under subsection (a)
shall be the sum of the recapture amounts determined
separately for each spouse, and
``(B) subsections (a) and (c) shall be applied by
taking into account the combined modified adjusted
gross income of the spouses.
``(4) Coordination with other provisions.--
``(A) Treated as tax for subtitle f.--For purposes
of subtitle F, the recapture amount imposed by this
section shall be treated as if it were a tax imposed by
section 1.
``(B) Not treated as tax for certain purposes.--The
recapture amount imposed by this section shall not be
treated as a tax imposed by this chapter for purposes
of determining--
``(i) the amount of any credit allowable
under this chapter, or
``(ii) the amount of the minimum tax under
section 55.
``(C) Treated as payment for medical insurance.--
The recapture amount imposed by this section shall be
treated as an amount paid for insurance covering
medical care, within the meaning of section 213(d).
``(5) Taxes imposed by possessions.--The tax imposed by
this section shall not apply to a bona fide resident of a
possession with respect to which the requirements of section
1509 of the Health Security Act are met.''
(b) Transfers to Federal Supplementary Medical Insurance Trust
Fund.--
(1) In general.--There are hereby appropriated to the
Federal Supplementary Medical Insurance Trust Fund amounts
equivalent to the aggregate increase in liabilities under
chapter 1 of the Internal Revenue Code of 1986 which is
attributable to the application of section 59B(a) of such Code,
as added by this section.
(2) Transfers.--The amounts appropriated by paragraph (1)
to the Federal Supplementary Medical Insurance Trust Fund shall
be transferred from time to time (but not less frequently than
quarterly) from the general fund of the Treasury on the basis
of estimates made by the Secretary of the Treasury of the
amounts referred to in paragraph (1). Any quarterly payment
shall be made on the first day of such quarter and shall take
into account the recapture amounts referred to in such section
59B(a) for such quarter. Proper adjustments shall be made in
the amounts subsequently transferred to the extent prior
estimates were in excess of or less than the amounts required
to be transferred.
(c) Reporting Requirements.--
(1) Paragraph (1) of section 6050F(a) (relating to returns
relating to social security benefits) is amended by striking
``and'' at the end of subparagraph (B) and by inserting after
subparagraph (C) the following new subparagraph:
``(D) the number of months during the calendar year
for which a premium was paid under part B of title
XVIII of the Social Security Act for the coverage of
such individual under such part, and''.
(2) Paragraph (2) of section 6050F(b) is amended to read as
follows:
``(2) the information required to be shown on such return
with respect to such individual.''
(3) Subparagraph (A) of section 6050F(c)(1) is amended by
inserting before the comma ``and in the case of the information
specified in subsection (a)(1)(D)''.
(4) The heading for section 6050F is amended by inserting
``and medicare part b coverage'' before the period.
(5) The item relating to section 6050F in the table of
sections for subpart B of part III of subchapter A of chapter
61 is amended by inserting ``and Medicare part B coverage''
before the period.
(d) Waiver of Certain Estimated Tax Penalties.--No addition to tax
shall be imposed under section 6654 of the Internal Revenue Code of
1986 (relating to failure to pay estimated income tax) for any period
before April 16, 1997, with respect to any underpayment to the extent
that such underpayment resulted from section 59B(a) of the Internal
Revenue Code of 1986, as added by this section.
(e) Clerical Amendment.--The table of parts for subchapter A of
chapter 1 is amended by adding at the end thereof the following new
item:
``Part VIII. Certain health care
subsidies received by high-
income individuals.''
(f) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1995.
PART 4--OTHER PROVISIONS
SEC. 7131. INCREASE IN TAX ON CERTAIN HOLLOW POINT AND LARGE CALIBER
HANDGUN AMMUNITION.
(a) Increase in Manufacturers Tax.--
(1) In general.--Section 4181 (relating to imposition of
tax on firearms) is amended--
(A) by striking ``Shells, and cartridges'' and
inserting ``Shells and cartridges not taxable at 10,000
percent'', and
(B) by adding at the end the following:
``Articles taxable at 10,000 percent.--
``Any jacketed, hollow point projectile which may
be used in a handgun and the jacket of which is
designed to produce, upon impact, sharp-tipped, barb-
like projections that extend beyond the diameter of the
unfired projectile.
``Any cartridge with a projectile measuring .500
inch or greater in diameter which may be used in a
handgun.''
(2) Additional taxes added to the general fund.--Section
3(a) of the Act of September 2, 1937 (16 U.S.C. 669b(a)),
commonly referred to as the ``Pittman-Robertson Wildlife
Restoration Act'', is amended by adding at the end the
following new sentence: ``There shall not be covered into the
fund the portion of the tax imposed by such section 4181 that
is attributable to any increase in amounts received in the
Treasury under such section by reason of the amendments made by
section 7131(a)(1) of the Health Security Act, as estimated by
the Secretary.''
(b) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply to sales after December 31, 1994.
(2) Floor stocks tax.--
(A) In general.--In the case of any article held on
January 1, 1995, which is taxable under section 4181 of
the Internal Revenue Code of 1986 on and after such
date at a tax rate of 10,000 percent, there is hereby
imposed a tax equal to the excess of--
(i) the tax which would be imposed under
section 4181 of such Code if the article were
sold on such date, over
(ii) the prior tax (if any) imposed under
such section on such article.
(B) Credit.--Each person shall be allowed as a
credit against the taxes imposed by subparagraph (A) an
amount equal to the taxes imposed on articles which
such person destroys (in such manner as the Secretary
may prescribe) after December 31, 1994, and before
April 1, 1995.
(C) Payment.--The taxes imposed by subparagraph (A)
on any article shall be paid by the person holding the
article on January 1, 1995. Such taxes shall be paid
before April 1, 1995, in such manner as the Secretary
of the Treasury may prescribe.
(D) Articles in foreign trade zones.--
Notwithstanding the Act of June 18, 1934 (48 Stat. 998,
19 U.S.C. 81a) and any other provision of law, any
article which is located in a foreign trade zone on
January 1, 1995, shall be subject to the tax imposed by
subparagraph (A) if--
(i) internal revenue taxes have been
determined, or customs duties liquidated, with
respect to such article before such date
pursuant to a request made under the 1st
proviso of section 3(a) of such Act, or
(ii) such article is held on such date
under the supervision of a customs officer
pursuant to the 2d proviso of such section
3(a).
(E) Controlled groups.--Rules similar to the rules
of section 5061(e)(3) of such Code shall apply for
purposes of this paragraph.
(F) Other laws applicable.--All provisions of law,
including penalties, applicable with respect to the
taxes imposed by section 4181 of such Code shall,
insofar as applicable and not inconsistent with the
provisions of this subsection, apply to the floor
stocks taxes imposed by subparagraph (A), to the same
extent as if such taxes were imposed by such section
4181. The Secretary may treat any person who bore the
ultimate burden of the tax imposed by subparagraph (A)
as the person to whom a credit or refund under such
provisions may be allowed or made.
SEC. 7132. MODIFICATION TO SELF-EMPLOYMENT TAX TREATMENT OF CERTAIN S
CORPORATION SHAREHOLDERS AND PARTNERS.
(a) Treatment of Certain S Corporation Shareholders.--
(1) Amendment to internal revenue code.--Section 1402
(relating to definitions) is amended by adding at the end the
following new subsection:
``(k) Treatment of Certain S Corporation Shareholders.--
``(1) In general.--In the case of any individual--
``(A) who is a 2-percent shareholder (as defined in
section 1372(b)) of an S corporation for any taxable
year of such corporation, and
``(B) who provides significant services to or on
behalf of such S corporation during such taxable year,
such shareholder's net earnings from self-employment shall
include 80 percent of such shareholder's pro rata share (as
determined under section 1366(a)) of the taxable income or loss
of such corporation for such taxable year from service-related
businesses carried on by such corporation, and to the extent
provided in regulations, for any other taxable year to the
extent such income or loss is attributable to such services.
``(2) Certain exceptions to apply.--In determining the
amount to be taken into account under paragraph (1), the
exceptions provided in subsection (a) shall apply, except that,
in the case of the exceptions provided in subsection (a)(5),
rules similar to the rules of subparagraph (B) thereof shall
apply to shareholders in S corporations.
``(3) Service-related business.--For purposes of this
subsection, the term `service-related business' means--
``(A) any trade or business involving the
performance of services in the fields of health (other
than with respect to inpatient personal care
facilities), law, engineering, architecture,
accounting, actuarial services, performing arts,
consulting, athletics, or financial services (other
than lending or brokerage services), or
``(B) any other trade or business with respect to
which the Secretary determines that capital is an
insignificant income-producing factor.
``(4) Application of deferred compensation rules.--For
purposes of subchapter D of chapter 1 (and any other provision
of this title relating thereto), in the case of an individual
who is treated as having net earnings from self-employment by
reason of paragraph (1)--
``(A) such individual shall not be treated as a
self-employed individual (within the meaning of section
401(c)(1)) with respect to services performed for the S
corporation, and
``(B) such net earnings shall be treated as
compensation received by the individual as an employee
of the S corporation.''
(2) Amendment to social security act.--Section 211 of the
Social Security Act is amended by adding at the end the
following new subsection:
``Treatment of Certain S Corporation Shareholders
``(k)(1) In the case of any individual--
``(A) who is a 2-percent shareholder (as defined in section
1372(b) of the Internal Revenue Code of 1986) of an S
corporation for any taxable year of such corporation, and
``(B) who provides significant services to or on behalf of
such S corporation during such taxable year,
such shareholder's net earnings from self-employment shall include 80
percent of such shareholder's pro rata share (as determined under
section 1366(a) of such Code) of the taxable income or loss of such
corporation for such taxable year from service-related businesses (as
defined in section 1402(k)(3) of such Code) carried on by such
corporation, and to the extent provided in regulations, for any other
taxable year to the extent such income or loss is attributable to such
services.
``(2) In determining the amount to be taken into account under
paragraph (1), the exceptions provided in subsection (a) shall apply,
except that, in the case of the exceptions provided in subsection
(a)(5), rules similar to the rules of subparagraph (B) thereof shall
apply to shareholders in S corporations.''
(b) Treatment of Certain Limited Partners.--
(1) Amendment of the internal revenue code.--Paragraph (13)
of section 1402(a) is amended to read as follows:
``(13) there shall be excluded the distributive share of
any item of income or loss of a limited partner, as such, other
than--
``(A) guaranteed payments described in section
707(c) to that partner for services actually rendered
to or on behalf of the partnership to the extent that
those payments are established to be in the nature of
remuneration for those services, or
``(B) in the case of a limited partner who provides
significant services to or on behalf of the partnership
for any taxable year of the partnership, 80 percent of
the limited partner's distributive share (determined
without regard to payments described in subparagraph
(A)) of the taxable income or loss of such
partnership--
``(i) for such taxable year from service-
related businesses (as defined in subsection
(k)(3)) of such partnership, and
``(ii) to the extent provided in
regulations, for any other taxable year to the
extent attributable to such services;''.
(2) Amendment of the social security act.--Paragraph (12)
of section 211(a) of the Social Security Act is amended to read
as follows:
``(12) there shall be excluded the distributive share of
any item of income or loss of a limited partner, as such, other
than--
``(A) guaranteed payments described in section
707(c) of the Internal Revenue Code of 1986 to that
partner for services actually rendered to or on behalf
of the partnership to the extent that those payments
are established to be in the nature of remuneration for
those services, or
``(B) in the case of a limited partner who provides
significant services to or on behalf of the partnership
for any taxable year of the partnership, 80 percent of
the limited partner's distributive share (determined
without regard to payments described in subparagraph
(A)) of the taxable income or loss of such
partnership--
``(i) for such taxable year from service-
related businesses (as defined in section
1402(k)(3) of such Code) of such partnership,
and
``(ii) to the extent provided in
regulations prescribed by the Secretary of the
Treasury, for any other taxable year to the
extent attributable to such services;''.
(c) Inventory Income.--Section 1402 (relating to definitions), as
amended by subsection (a), is amended by adding at the end the
following new subsection:
``(l) Inventory Income.--
``(1) In general.--The net earnings from self-employment of
any taxpayer for any taxable year under subsection (a)
(determined without regard to this subsection) shall be reduced
by 40 percent of the lesser of--
``(A) the taxpayer's allocable share of net
inventory income, or
``(B) the amount of such net earnings in excess of
the applicable amount for the taxable year.
``(2) Net inventory income.--
``(A) In general.--For purposes of paragraph (1),
the term `net inventory income' means net income from
the sale of property described in section 1221(1).
``(B) Dealers in securities.--For purposes of
subparagraph (A)--
``(i) any security described in section
475(c)(2) (without regard to the last sentence
thereof) which is held by a person as a dealer
in securities (as defined in section 475(c)(1))
shall be treated as property described in
section 1221(1), and
``(ii) net income from any such security
shall be taken into account to the extent
otherwise taken into account in computing net
earnings from self-employment.
``(3) Applicable amount.--For purposes of paragraph (1),
the term `applicable amount' means the excess of--
``(A) $135,000, adjusted, in the case of any
taxable year beginning in any calendar year after 1996,
in the same manner as is used in adjusting the
contribution and benefit base for the calendar year
under section 230(b) of the Social Security Act, over
``(B) the amount of wages paid to the individual
during the taxable year.''
(d) Effective Date.--The amendments made by this section shall
apply to taxable years of individuals beginning after December 31,
1995, and to taxable years of S corporations and partnerships ending
with or within such taxable years of individuals.
SEC. 7133. EXTENDING MEDICARE COVERAGE OF, AND APPLICATION OF HOSPITAL
INSURANCE TAX TO, ALL STATE AND LOCAL GOVERNMENT
EMPLOYEES.
(a) In General.--
(1) Application of hospital insurance tax.--Section
3121(u)(2) is amended by striking subparagraphs (C) and (D).
(2) Coverage under medicare.--Section 210(p) of the Social
Security Act (42 U.S.C. 410(p)) is amended by striking
paragraphs (3) and (4).
(3) Effective date.--The amendments made by this subsection
shall apply to services performed after September 30, 1995.
(b) Transition in Benefits for State and Local Government Employees
and Former Employees.--
(1) In general.--
(A) Employees newly subject to tax.--For purposes
of sections 226, 226A, and 1811 of the Social Security
Act, in the case of any individual who performs
services during the calendar quarter beginning October
1, 1995, the wages for which are subject to the tax
imposed by section 3101(b) of the Internal Revenue Code
of 1986 only because of the amendment made by
subsection (a), the individual's medicare qualified
State or local government employment (as defined in
subparagraph (B)) performed before October 1, 1995,
shall be considered to be ``employment'' (as defined
for purposes of title II of such Act), but only for
purposes of providing the individual (or another
person) with entitlement to hospital insurance benefits
under part A of title XVIII of such Act for months
beginning with October 1995.
(B) Medicare qualified state or local government
employment defined.--In this paragraph, the term
``medicare qualified State or local government
employment'' means medicare qualified government
employment described in section 210(p)(1)(B) of the
Social Security Act (determined without regard to
section 210(p)(3) of such Act, as in effect before its
repeal under subsection (a)(2)).
(2) Authorization of appropriations.--There are authorized
to be appropriated to the Federal Hospital Insurance Trust Fund
from time to time such sums as the Secretary of Health and
Human Services deems necessary for any fiscal year on account
of--
(A) payments made or to be made during such fiscal
year from such Trust Fund with respect to individuals
who are entitled to benefits under title XVIII of the
Social Security Act solely by reason of paragraph (1),
(B) the additional administrative expenses
resulting or expected to result therefrom, and
(C) any loss in interest to such Trust Fund
resulting from the payment of those amounts, in order
to place such Trust Fund in the same position at the
end of such fiscal year as it would have been in if
this subsection had not been enacted.
(3) Information to individuals who are prospective medicare
beneficiaries based on state and local government employment.--
Section 226(g) of the Social Security Act (42 U.S.C. 426(g)) is
amended--
(A) by redesignating paragraphs (1) through (3) as
subparagraphs (A) through (C), respectively,
(B) by inserting ``(1)'' after ``(g)'', and
(C) by adding at the end the following new
paragraph:
``(2) The Secretary, in consultation with State and local
governments, shall provide procedures designed to assure that
individuals who perform medicare qualified government
employment by virtue of service described in section 210(a)(7)
are fully informed with respect to (A) their eligibility or
potential eligibility for hospital insurance benefits (based on
such employment) under part A of title XVIII, (B) the
requirements for, and conditions of, such eligibility, and (C)
the necessity of timely application as a condition of becoming
entitled under subsection (b)(2)(C), giving particular
attention to individuals who apply for an annuity or retirement
benefit and whose eligibility for such annuity or retirement
benefit is based on a disability.''
(c) Technical Amendments.--
(1) Subparagraph (A) of section 3121(u)(2) is amended by
striking ``subparagraphs (B) and (C),'' and inserting
``subparagraph (B),''.
(2) Subparagraph (B) of section 210(p)(1) of the Social
Security Act (42 U.S.C. 410(p)(1)) is amended by striking
``paragraphs (2) and (3).'' and inserting ``paragraph (2).''
(3) Section 218 of the Social Security Act (42 U.S.C. 418)
is amended by striking subsection (n).
(4) The amendments made by this subsection shall apply
after September 30, 1995.
Subtitle B--Tax Treatment of Employer-Provided Health Care
PART 1--GENERAL PROVISIONS
SEC. 7201. LIMITATION ON EXCLUSION FOR EMPLOYER-PROVIDED HEALTH
BENEFITS.
(a) General Rule.--Section 106 (relating to contributions by
employer to accident and health plans) is amended to read as follows:
``SEC. 106. CONTRIBUTIONS BY EMPLOYER TO ACCIDENT AND HEALTH PLANS.
``(a) General Rule.--Except as otherwise provided in this section,
gross income of an employee does not include employer-provided coverage
under an accident or health plan.
``(b) Inclusion of Certain Benefits Not Part of Permitted
Coverage.--
``(1) In general.--Effective on and after January 1, 2004,
gross income of an employee shall include employer-provided
coverage under any accident or health plan which is not
permitted coverage.
``(2) Permitted coverage.--For purposes of this subsection,
the term `permitted coverage' means any--
``(A) coverage under a certified standard health
plan (as defined in section 1011(2)(A) of the Health
Security Act),
``(B) coverage under a certified supplemental
health benefit plan (as defined in section 1011(3)(A)
of the Health Security Act) which consists of the
payment of cost sharing amounts under a certified
standard health plan (as so defined) providing the
standard benefits package described in part 1 of
subtitle C of title I of such Act,
``(C) coverage under a qualified long-term care
insurance policy (as defined in section 7702B(b)),
``(D) 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,
``(E) coverage only for accidental death or
dismemberment,
``(F) coverage under a medicare supplemental policy
(as defined in section 1882(g)(1) of the Social
Security Act),
``(G) coverage under an equivalent health care
program (as defined in section 1013(3) of the Health
Security Act), and
``(H) other coverage to the extent that the
Secretary determines that the continuation of an
exclusion for such coverage is not inconsistent with
the purposes of this subsection.
``(3) Special rules for flexible spending arrangements.--
``(A) In general.--To the extent that any employer-
provided coverage is provided through a flexible
spending or similar arrangement, paragraph (1) shall be
applied by substituting `January 1, 1996,' for `January
1, 2004'.
``(B) Flexible spending arrangement.--For purposes
of this paragraph, a flexible spending arrangement is a
benefit program which provides employees with coverage
under which--
``(i) specified incurred expenses may be
reimbursed (subject to reimbursement maximums
and other reasonable conditions), and
``(ii) the maximum amount of reimbursement
which is reasonably available to a participant
for such coverage is less than 500 percent of
the value of such coverage.
In the case of an insured plan, the maximum amount
reasonably available shall be determined on the basis
of the underlying coverage.''
(b) Employment Tax Treatment.--
(1) Social security tax.--
(A) Subsection (a) of section 3121 is amended by
inserting after paragraph (21) the following new
sentence:
``Nothing in paragraph (2) shall exclude from the term `wages' any
amount which is required to be included in gross income under section
106(b).''
(B) Subsection (a) of section 209 of the Social
Security Act is amended by inserting after paragraph
(21) the following new sentence:
``Nothing in paragraph (2) shall exclude from the term `wages' any
amount which is required to be included in gross income under section
106(b) of the Internal Revenue Code of 1986.''
(2) Railroad retirement tax.--Paragraph (1) of section
3231(e) is amended by adding at the end the following new
sentence: ``Nothing in clause (i) of the second sentence of
this paragraph shall exclude from the term `compensation' any
amount which is required to be included in gross income under
section 106(b).''
(3) Unemployment tax.--Subsection (b) of section 3306 is
amended by inserting after paragraph (16) the following new
sentence:
``Nothing in paragraph (2) shall exclude from the term `wages' any
amount which is required to be included in gross income under section
106(b).''
(4) Wage withholding.--Subsection (a) of section 3401 is
amended by adding at the end the following new sentence:
``Nothing in the preceding provisions of this subsection shall exclude
from the term `wages' any amount which is required to be included in
gross income under section 106(b).''
(c) Effective Dates.--
(1) In general.--The amendments made by this section shall
take effect on January 1, 1996.
(2) Benefits provided pursuant to collective bargaining
agreements.--In the case of a flexible spending arrangement
maintained pursuant to 1 or more collective bargaining
agreements between employee representatives and 1 or more
employers which was ratified before June 30, 1994, the
amendments referred to in paragraph (1) shall not apply to
benefits pursuant to any such agreement before the later of--
(A) January 1, 1996, or
(B) the earlier of--
(i) the date on which the last of such
agreements terminate (determined without regard
to any extension thereof on or after June 30,
1994), or
(ii) January 1, 1998.
SEC. 7202. HEALTH BENEFITS MAY NOT BE PROVIDED UNDER CAFETERIA PLANS.
(a) General Rule.--Subsection (f) of section 125 (defining
qualified benefits) is amended by adding at the end the following new
sentence: ``Such term shall not include any benefits or coverage under
an accident or health plan.''
(b) Conforming Amendment.--Subsection (g) of section 125 is amended
by striking paragraph (2) and redesignating paragraphs (3) and (4) as
paragraphs (2) and (3), respectively.
(c) Effective Dates.--
(1) In general.--The amendments made by this section shall
take effect on January 1, 1997.
(2) Benefits provided pursuant to collective bargaining
agreements.--In the case of a cafeteria plan maintained
pursuant to 1 or more collective bargaining agreements between
employee representatives and 1 or more employers which was
ratified before June 30, 1994, the amendments referred to in
paragraph (1) shall not apply to benefits pursuant to any such
agreement before the later of--
(A) January 1, 1997, or
(B) the earlier of--
(i) the date on which the last of such
agreements terminate (determined without regard
to any extension thereof on or after June 30,
1994), or
(ii) January 1, 1999.
SEC. 7203. INCREASE IN DEDUCTION FOR HEALTH INSURANCE COSTS OF SELF-
EMPLOYED INDIVIDUALS.
(a) Provision Made Permanent.--
(1) In general.--Subsection (l) of section 162 (relating to
special rules for health insurance costs of self-employed
individuals) is amended by striking paragraph (6).
(2) Effective date.--The amendment made by paragraph (1)
shall apply to taxable years beginning after December 31, 1993.
(b) Amount of Deduction.--
(1) In general.--Paragraphs (1) and (2) of section 162(l)
are amended to read as follows:
``(1) In general.--In the case of an individual who is an
employee within the meaning of section 401(c), there shall be
allowed as a deduction under this section an amount equal to 50
percent of the amount paid during the taxable year for coverage
under a certified standard health plan (as defined in section
1011(2)(A) of the Health Security Act).
``(2) Limitations.--
``(A) Lower percentage in certain cases.--
``(i) In general.--If the taxpayer has 1 or
more employees in a trade or business with
respect to which such taxpayer is treated as an
employee within the meaning of section 401(c),
the deduction under paragraph (1) shall not
exceed the portion of the amount paid which is
equivalent to the largest employer contribution
made on behalf of any such employee for
coverage under a certified standard health
plan.
``(ii) Equivalent contribution.--For
purposes of clause (i), the amount paid is
equivalent to a contribution if--
``(I) it is the same dollar amount
as the contribution,
``(II) it represents the same
percentage of cost under the plan to
which it is made as does the
contribution, or
``(III) it represents the same
percentage of the weighted average
premium for the class of enrollment (as
defined in section 1113(c) of the
Health Security Act) for the community
rating area in which the employee works
as does the contribution.
For purposes of applying subclause (II) or
(III), any dollar limitation applicable to all
employer contributions (whether expressed as a
dollar amount or a percentage described in
subclause (III)) shall be disregarded.
``(B) Deduction limited to earned income.--No
deduction shall be allowed under paragraph (1) to the
extent that the amount of such deduction exceeds the
taxpayer's earned income (within the meaning of section
401(c)).
``(C) Other coverage.--Paragraph (1) shall not
apply to any taxpayer for any calendar month for which
the taxpayer is eligible to participate in any
subsidized health plan maintained by any employer of
the taxpayer or the taxpayer's spouse.''
(2) Conforming amendment.--Subparagraph (A) of section
162(l)(5) is amended by striking ``shall be treated as such
individual's earned income'' and inserting ``shall be included
in such individual's earned income''.
(3) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after December 31, 1995.
SEC. 7204. LIMITATION ON PREPAYMENT OF MEDICAL INSURANCE PREMIUMS.
(a) General Rule.--Subsection (d) of section 213 is amended by
adding at the end the following new paragraph:
``(10) Limitation on prepayments.--If--
``(A) the taxpayer pays a premium or other amount
which constitutes medical care under paragraph (1), and
``(B) such premium or other amount is properly
allocable to insurance coverage or care to be provided
during periods more than 12 months after the month in
which such payment is made,
such premium or other amount shall be treated as paid ratably
over the period during which such insurance coverage or care is
to be provided. The preceding sentence shall not apply to any
premium to which paragraph (7) applies.''
(b) Effective Date.--The amendment made by subsection (a) shall
apply to amounts paid after December 31, 1994.
PART 2--VOLUNTARY EMPLOYER HEALTH CARE CONTRIBUTIONS
SEC. 7111. TAX TREATMENT OF VOLUNTARY EMPLOYER HEALTH CARE
CONTRIBUTIONS.
(a) In General.--Chapter 37 (relating to health-related taxes), as
added by section 7111, is amended by adding at the end the following
new subchapter:
``Subchapter B--Voluntary Employer-Provided Health Benefits
``Sec. 4521. Taxable employer-provided
health benefits.
``Sec. 4522. Discriminatory employer
practices.
``Sec. 4523. Exceptions.
``Sec. 4524. Definitions and special
rules.
``SEC. 4521. TAXABLE EMPLOYER-PROVIDED HEALTH BENEFITS.
``(a) Imposition of Tax.--There is hereby imposed a tax equal to
the product of--
``(1) the sum of--
``(A) the taxable employer contributions for any
taxable year, plus
``(B) the aggregate employer contributions for
permitted coverage described in subparagraph (A) or (B)
of subsection (b)(2) during any portion of the taxable
year during which there is discriminatory permitted
coverage, and
``(2) the highest rate of tax imposed under section 11(b)
for the taxable year.
``(b) Taxable Employer Contribution.--For purposes of this
section--
``(1) In general.--The term `taxable employer contribution'
means any employer contribution under an accident or health
plan for coverage of an employee other than permitted coverage.
``(2) Permitted coverage.--For purposes of this subsection,
the term `permitted coverage' means--
``(A) coverage under a certified standard health
plan (as defined in section 1011(2)(A) of the Health
Security Act),
``(B) coverage under a certified supplemental
health benefit plan (as defined in section 1011(3)(A)
of such Act), except that this subparagraph shall not
apply to coverage of any employee who is covered under
a certified standard health plan which provides the
alternative standard benefits package described in
subtitle C of title I of such Act,
``(C) coverage under a qualified long-term care
insurance policy (as defined in section 7702B(b)),
``(D) 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,
``(E) coverage only for accidental death or
dismemberment,
``(F) coverage under a medicare supplemental policy
(as defined in section 1882(g)(1) of the Social
Security Act), and
``(G) coverage under an equivalent health care
program (as defined in section 1013(3) of the Health
Security Act).
``(c) Discriminatory Permitted Coverage.--For purposes of this
section, the term `discriminatory permitted coverage' means, with
respect to any period, coverage--
``(1) which is permitted coverage described in subparagraph
(A) or (B) of subsection (b)(2), and
``(2) with respect to which the requirements of subsection
(a) or (b) of section 4522 are not met during such period.
``SEC. 4522. DISCRIMINATORY EMPLOYER PRACTICES.
``(a) Health Status Requirements.--For purposes of section 4521(c),
an employer meets the requirements of this subsection if, with respect
to coverage described in such section--
``(1) there is no waiting period or denial of coverage with
respect to an employee, and
``(2) the amount of the employer contribution on behalf of
an employee is not conditioned, and does not vary,
by reason of the employee's health status, claims experience, medical
history, receipt of health care, or lack of evidence of insurability.
``(b) Uniform Contribution Requirements.--
``(1) In general.--For purposes of section 4521(c), an
employer meets the requirements of this subsection if the
employer contribution on behalf of an employee for coverage
described in such section is equivalent to each employer
contribution on behalf of all other employees who elect such
coverage under plans offered by the employer.
``(2) Equivalent contribution.--For purposes of paragraph
(1), a contribution is equivalent to any other contribution
if--
``(A) it is the same dollar amount as the other
contribution,
``(B) it represents the same percentage of cost
under the plan to which it is made as does the other
contribution, or
``(C) it represents the same percentage of the
weighted average premium for the class of enrollment
(as defined in section 1113(c) of the Health Security
Act) for the community rating area in which the
employee works as does the other contribution.
For purposes of applying subparagraph (B) or (C), any dollar
limitation applicable to all employer contributions (whether
expressed as a dollar amount or a percentage described in
subparagraph (C)) shall be disregarded.
``(3) Excluded employees.--
``(A) In general.--The following employees of an
employer shall be excluded from consideration under
this subsection:
``(i) Any employee before the employee has
completed 6 months of service with the
employer.
``(ii) Any employee who normally works less
than 24 hours per week.
``(iii) Any employee who normally works
during not more than 6 months of any year.
``(iv) Any employee who has not attained
age 18.
``(v) Any employee who is included in a
unit of employees covered by an agreement which
the Secretary finds to be a collective
bargaining agreement between employee
representatives and 1 or more employers if
there is evidence that employer-provided
benefits for standard health benefits coverage
was the subject of good faith bargaining
between the employee representatives and
employer or employers.
``(vi) Any employee who is a nonresident
alien and who receives no earned income (within
the meaning of section 911(d)(2)) from the
employer which constitutes income from sources
within the United States (within the meaning of
section 861(a)(3)).
``(vii) Any former employee.
``(B) Coverage of part-time employees.--
``(i) In general.--If an employer makes an
employer contribution for any period for
coverage described in section 4521(c) for any
employee who normally works at least 10 hours
but less than 24 hours per week, subparagraph
(A)(ii) shall be applied by substituting `10
hours' for `24 hours'.
``(ii) Requirements may be met
separately.--If an employer elects the
application of this clause--
``(I) the requirements of this
subsection shall be applied separately
to employees to whom this subsection
applies by reason of clause (i), and
``(II) such employees shall be
excluded in determining whether such
requirements are met with respect to
any other employees.
``(iii) Pro rata contributions
permissible.--For purposes of this subsection,
contributions on behalf of any employee to
which this subsection applies by reason of
clause (i) shall not fail to be treated as
equivalent solely because they are
proportionate to the number of hours the
employee works.
``(4) Aggregation rules.--For purposes of this subsection--
``(A) In general.--All employers treated as a
single employer under subsection (b) or (c) of section
414 shall be treated as a single employer.
``(B) Affiliated service groups.--All employees of
members of an affiliated service group (as defined in
section 414(m)) shall be treated as employed by a
single employer.
``(5) Separate lines of business.--If, under section
414(r), an employer is treated as operating separate lines of
business for a year, the employer may apply this subsection
separately to employees in each separate line of business.
``SEC. 4523. EXCEPTIONS.
``(a) Exception for Reasonable Diligence.--No tax shall be imposed
by this subchapter during any period for which it is established to the
satisfaction of the Secretary that the employer did not know, or
exercising reasonable diligence would not have known, that the employer
had taken any action subject to tax under this subchapter.
``(b) Corrections Within 30 Days.--No tax shall be imposed by this
subchapter with respect to any action subject to tax under this
subchapter if--
``(1) such action was due to reasonable cause and not to
willful neglect, and
``(2) such action is corrected during the 30-day period
beginning on the 1st date the employer knew, or exercising
reasonable diligence would have known, that such action was
subject to such tax.
``(c) Waiver by Secretary.--In the case of any action subject to
tax under this subchapter which is due to reasonable cause and not to
willful neglect, the Secretary may waive part or all of any tax imposed
by this subchapter to the extent that the payment of such tax would be
excessive relative to the action involved.
``SEC. 4524. DEFINITIONS AND SPECIAL RULES.
``(a) Definitions.--For purposes of this subchapter--
``(1) Employer.--
``(A) In general.--The term `employer' means any
person or governmental entity for whom an individual
performs services, of whatever nature, as an employee
(as defined in section 3401(c)).
``(B) Special rules.--
``(i) A partnership shall be treated as the
employer of each partner who is an employee
within the meaning of section 401(c)(1).
``(ii) An S corporation shall be treated as
the employer of each shareholder who is an
employee within the meaning of section
401(c)(1).
``(2) Employer contributions.--The term `employer
contribution' means, with respect to coverage under a health
plan, a reasonable estimate of the portion of the cost of the
coverage which is to be provided by the employer.
``(b) Liability for Tax.--Any tax imposed by this subchapter shall
be paid by the employer.
``(c) Taxes To Apply to Governmental and Other Tax-Exempt
Entities.--Notwithstanding any other provision of law or rule of law,
none of the following shall be exempt from the taxes imposed by this
subchapter:
``(1) The United States, any State or political subdivision
thereof, the District of Columbia, and any agency or
instrumentality of any of the foregoing.
``(2) Any other entity otherwise exempt from tax under
chapter 1.
``(d) No Cover Over to Possessions.--Notwithstanding any other
provision of law, no amount collected under this subchapter shall be
covered over to any possession of the United States.
``(e) Regulations.--The Secretary shall prescribe such regulations
as are necessary to carry out the provisions of this subchapter,
including regulations providing for the determination of the amount of
any employer contribution, the aggregation of governmental and tax-
exempt entities, and the prevention of the avoidance of any tax imposed
by this subchapter through the use of any arrangement described in
section 414(o).''
(b) Employee Leasing.--Paragraph (3) of section 414(n) is amended
by striking ``and'' at the end of subparagraph (B), by striking the
period at the end of subparagraph (C) and inserting ``, and'', and by
adding at the end the following new subparagraph:
``(D) subchapter B of chapter 37.''
(c) Tax Not Deductible.--Section 275(a) is amended by adding at the
end the following new paragraph:
``(7) The taxes imposed by section 4521 (relating to
taxable employer-provided health benefits).''
(d) Conforming Amendment.--The table of subchapters for chapter 37
is amended by adding at the end the following new item:
``Subchapter B. Voluntary employer-
provided health benefits.''
(e) Effective Date.--The amendments made by this section shall take
effect on January 1, 1996.
Subtitle C--Exempt Health Care Organizations
PART 1--GENERAL PROVISIONS
SEC. 7301. QUALIFICATION AND DISCLOSURE REQUIREMENTS FOR NONPROFIT
HEALTH CARE ORGANIZATIONS.
(a) Treatment of Hospitals and Other Entities Providing Health Care
Services.--Section 501 (relating to exemption from tax on corporations,
certain trusts, etc.) is amended by redesignating subsection (n) as
subsection (o) and by inserting after subsection (m) the following new
subsection:
``(n) Qualification of Health Care Organizations as Exempt
Organizations.--
``(1) In general.--An organization which is described in
paragraph (3) or (4) of subsection (c) and the predominant
activity of which is the provision of health care services
shall be exempt from tax under subsection (a) only if--
``(A) such organization, with the participation of
community representatives, annually--
``(i) assesses its community's needs for
health care services and qualified outreach
services, and
``(ii) prepares a written plan to meet
those needs,
``(B) pursuant to such plan, such organization
provides (directly or indirectly) significant qualified
outreach services,
``(C) such organization does not discriminate
against individuals in the provision of health care
services on the basis of participation in a government-
sponsored health plan, and
``(D) such organization does not discriminate
against individuals in the provision of emergency
health care services on the basis of ability to pay.
``(2) Special rule for health maintenance organizations.--A
health maintenance organization shall not be treated as
described in subsection (c)(3) unless substantially all of its
primary care health services are provided as described in
subsection (m)(6)(A).
``(3) Definitions and special rule.--For purposes of this
subsection--
``(A) Qualified outreach services.--The term
`qualified outreach services' means health care
services (or preventive care, educational, or social
services programs related thereto) which are provided--
``(i) in 1 or more medically underserved
areas,
``(ii) at below cost to individuals who are
otherwise unable to afford such services, or
``(iii) at emergency care facilities which
provide specialty services and which normally
operate at a loss.
Such term shall not include insurance described in
subparagraph (B)(iii) unless such insurance is provided
on a subsidized basis.
``(B) Health care services.--The term `health care
services' means--
``(i) any activity which consists of
providing medical care (as defined in section
213(d)(1)(A)) to individuals,
``(ii) in the case of an organization
described in subsection (c)(3), any activity
which is treated as accomplishing an exempt
purpose of the organization solely because it
is carried on as part of an activity described
in clause (i), and
``(iii) insurance (other than commercial-
type insurance, as defined in subsection (m))
for the activities described in clauses (i) and
(ii).
``(C) Medically underserved area.--The term
`medically underserved area' means, with respect to a
health care service, any area reasonably determined by
the organization (in a manner not inconsistent with
regulations prescribed by the Secretary) to have--
``(i) a shortage (relative to the number of
individuals needing such service) of health
professionals performing such service, or
``(ii) a population group experiencing such
a shortage.
Such term includes a health professional shortage area
(as defined in section 332 of the Public Health Service
Act).
``(4) Exceptions.--This subsection shall not apply to any
organization which--
``(A) demonstrates, in a manner not inconsistent
with regulations prescribed by the Secretary, that one
of its principal purposes is academic training or
medical research, or
``(B) provides health care services exclusively on
an uncompensated basis, regardless of ability to pay.
``(5) Disallowance of charitable deductions.--No gift or
bequest to an organization which is not exempt from tax by
reason of this subsection shall be allowed as a deduction under
section 170, 545(b)(2), 556(b)(2), 642(c), 2055, 2106(a)(2), or
2522.
``(6) Requirements supplement other requirements.--The
requirements of this subsection are in addition to, and not in
lieu of, the requirements otherwise applicable to an
organization described in paragraph (3) or (4) of subsection
(c).''
(b) Reporting and Disclosure of Needs Assessment and Plan.--
(1) Reporting.--
(A) Organizations described in section 501(c)(3).--
Subsection (b) of section 6033 (relating to certain
organizations described in section 501(c)(3)) is
amended by striking ``and'' at the end of paragraph
(9), by redesignating paragraph (10) as paragraph (12),
and by inserting after paragraph (9) the following new
paragraphs:
``(10) in the case of an organization which prepares a plan
described in section 501(n)(1)(A) (relating to community
needs)--
``(A) a copy of such plan for the year, and
``(B) information on the implementation of such
plan for the year (including unrecovered costs and
revenues foregone in furtherance of such plan),
``(11) such information as the Secretary may require with
respect to any taxable inurement (as defined in section
4958(d)), and''.
(B) Organizations described in section 501(c)(4).--
Section 6033 is amended by redesignating subsection (f)
as subsection (g) and by inserting after subsection (e)
the following new subsection:
``(f) Certain Organizations Described in Section 501(c)(4).--Every
organization described in section 501(c)(4) which is subject to the
requirements of subsection (a) and which prepares a plan described in
section 501(n)(1)(A) (relating to community needs) for the year--
``(1) shall include a copy of such plan with the return
required under subsection (a) for the year, and
``(2) shall include on such return the information referred
to in paragraphs (10)(B) and (11) of subsection (b) with
respect to such organization.''
(2) Disclosure.--
(A) In general.--Subsection (e) of section 6104
(relating to public inspection of certain annual
returns and applications for exemption) is amended by
adding at the end the following new paragraph:
``(3) Community health care needs assessment and plan.--
``(A) In general.--Every organization which is
required to prepare a plan described in section
501(n)(1)(A) (relating to community needs)--
``(i) shall make a copy of such plan (and
the assessment on which such plan is based)
available for inspection during regular
business hours by any individual at the
principal office of such organization and, if
such organization regularly maintains 1 or more
regional or district offices having 3 or more
employees, at each such regional or district
office, and
``(ii) upon request of an individual made
at such principal office or such a regional or
district office, shall provide--
``(I) a copy of such plan (and
assessment), and
``(II) a copy of the annual return
filed under section 6033,
to such individual without charge other than a
reasonable fee for any reproduction and mailing
costs.
If the request under clause (ii) is made in person,
such copies shall be provided immediately and, if made
other than in person, shall be provided within 30 days.
``(B) Period of availability.--Subparagraph (A)
shall apply--
``(i) with respect to any plan (and
assessment) during the 3-year period after the
close of the year for which such plan is
prepared, and
``(ii) with respect to any return, during
the 3-year period beginning on the filing date
(as defined in paragraph (1)(D)).
``(C) Limitation.--Subparagraph (A)(ii) shall not
apply to any request if the Secretary determines, upon
application by an organization, that such request is
part of a harassment campaign and that compliance with
such request is not in the public interest.''
(B) Technical amendment.--The heading for
subsection (e) of section 6104 is amended by striking
``and Applications for Exemption'' and inserting ``,
Applications for Exemption, and Community Needs
Assessment and Plan for Health and Outreach Services''.
(c) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall take effect on January 1,
1995.
(2) HMO service requirement.--So much of the amendments
made by this section as relates to section 501(n)(2) of the
Internal Revenue Code of 1986, as added by this section, shall
take effect on the date of the enactment of this Act.
SEC. 7302. EXCISE TAXES FOR PRIVATE INUREMENT BY TAX-EXEMPT HEALTH CARE
ORGANIZATIONS.
(a) In General.--Chapter 42 (relating to private foundations and
certain other tax-exempt organizations) is amended by redesignating
subchapter D as subchapter E and by inserting after subchapter C the
following new subchapter:
``Subchapter D--Private Inurement by Tax-Exempt Health Care
Organizations
``Sec. 4958. Taxes on private inurement.
``Sec. 4959. Other definitions.
``SEC. 4958. TAXES ON PRIVATE INUREMENT.
``(a) Initial Taxes.--
``(1) On the beneficiary.--There is hereby imposed on any
taxable inurement a tax equal to 25 percent of the amount
thereof. The tax imposed by this paragraph shall be paid by any
beneficiary of such inurement.
``(2) On the management.--In any case in which there is a
tax imposed by paragraph (1), there is hereby imposed on the
participation of any organization manager of an organization in
any taxable inurement which occurs with respect to such
organization, knowing that it is taxable inurement, a tax equal
to 2\1/2\ percent of the amount thereof, unless such
participation is not willful and is due to reasonable cause.
The tax imposed by this paragraph shall be paid by any
organization manager who participated in the taxable inurement.
``(b) Additional Taxes.--
``(1) On the beneficiary.--In any case in which an initial
tax is imposed by subsection (a)(1) on any taxable inurement
and such inurement is not corrected within the taxable period,
there is hereby imposed a tax equal to 200 percent of the
amount of the taxable inurement. The tax imposed by this
paragraph shall be paid by any beneficiary of such inurement.
``(2) On the management.--In any case in which an
additional tax is imposed by paragraph (1), if an organization
manager refused to agree to part or all of the correction,
there is hereby imposed a tax equal to 50 percent of the amount
of the taxable inurement. The tax imposed by this paragraph
shall be paid by any organization manager who refused to agree
to part or all of the correction.
``(c) Special Rules Relating to Liability for Tax.--For purposes of
this section--
``(1) Joint and several liability.--If more than one person
is liable under any paragraph of subsection (a) or (b) with
respect to any one taxable inurement, all such persons shall be
jointly and severally liable under such paragraph with respect
to such inurement.
``(2) Limit for management.--With respect to any 1 taxable
inurement, the maximum amount of the tax imposed by subsection
(a)(2) shall not exceed $10,000, and the maximum amount of the
tax imposed by subsection (b)(2) shall not exceed $10,000.
``(d) Taxable Inurement.--For purposes of this section, the term
`taxable inurement' means any inurement not permitted under paragraph
(3) or (4) of section 501(c), as the case may be, in a transaction
involving an applicable tax-exempt health care organization in which--
``(1) the value of any economic benefit provided to or for
the use of a disqualified person exceeds the value of the
consideration (including the performance of services) received
by the organization for providing such benefit, or
``(2) the amount of any economic benefit provided to or for
the use of a disqualified person is determined in whole or in
part by the gross or net revenues of 1 or more activities of
the organization.
The amount of any taxable inurement with respect to any such
transaction shall be the excess described in paragraph (1) or the
amount described in paragraph (2). For purposes of paragraph (1), an
economic benefit shall not be treated as provided as consideration for
the performance of services unless the organization clearly indicated
its intent to so treat such benefit.
``(e) Other Definitions.--For purposes of this section--
``(1) Disqualified person.--The term `disqualified person'
means, with respect to any transaction--
``(A) any person who was, at any time during the 5-
year period ending on the date of such transaction--
``(i) an organization manager, or
``(ii) an individual (other than an
organization manager)--
``(I) in a position to exercise
substantial influence over the affairs
of the organization, or
``(II) performing substantial
medical services as a physician
pursuant to an employment or other
contractual relationship with the
organization or a related organization,
``(B) a member of the family of an individual
described in subparagraph (A), and
``(C) a 35-percent controlled entity.
``(2) Organization manager.--The term `organization
manager' means, with respect to any applicable tax-exempt
health care organization, any officer, director, or trustee of
such organization (or any individual having powers or
responsibilities similar to those of officers, directors, or
trustees of the organization).
``(3) 35-percent controlled entity.--
``(A) In general.--The term `35-percent controlled
entity' means--
``(i) a corporation in which persons
described in subparagraph (A) or (B) of
paragraph (1) own more than 35 percent of the
total combined voting power,
``(ii) a partnership in which such persons
own more than 35 percent of the profits
interest, and
``(iii) a trust or estate in which such
persons own more than 35 percent of the
beneficial interest.
``(B) Constructive ownership rules.--Rules similar
to the rules of paragraphs (3) and (4) of section
4946(a) shall apply for purposes of this subsection.
``(4) Family members.--The members of an individual's
family shall be determined under section 4946(d); except that
such members also shall include the brothers and sisters
(whether by the whole or halfblood) of the individual and their
spouses.
``(f) Treatment of Previously Exempt Organizations.--
``(1) In general.--For purposes of this section, the status
of any organization as an applicable tax-exempt health care
organization shall be terminated only if--
``(A)(i) such organization notifies the Secretary
(at such time and in such manner as the Secretary may
by regulations prescribe) of its intent to accomplish
such termination, or
``(ii) there is a final determination by the
Secretary that such status has terminated, and
``(B)(i) such organization pays the tax imposed by
paragraph (2) (or any portion not abated pursuant to
paragraph (3)), or
``(ii) the entire amount of such tax is abated
pursuant to paragraph (3).
``(2) Imposition of tax.--There is hereby imposed on each
organization referred to in paragraph (1) a tax equal to the
lesser of--
``(A) the amount which the organization
substantiates by adequate records or other
corroborating evidence as the aggregate tax benefit
resulting from its exemption from tax under section
501(a), or
``(B) the value of the net assets of such
organization.
``(3) Abatement of tax.--The Secretary may abate the unpaid
portion of the assessment of any tax imposed by paragraph (2),
or any liability in respect thereof, if the applicable tax-
exempt health care organization distributes all of its net
assets to 1 or more organizations each of which has been in
existence, and described in section 501(c)(3), for a continuous
period of at least 60 calendar months. If the distributing
organization is described in section 501(c)(4), the preceding
sentence shall be applied by treating the reference to section
501(c)(3) as including a reference to section 501(c)(4).
``(4) Certain rules made applicable.--Rules similar to the
rules of subsections (d), (e), and (f) of section 507 shall
apply for purposes of this subsection.
``SEC. 4959. OTHER DEFINITIONS.
``(a) Applicable Tax-Exempt Health Care Organization.--For purposes
of this subchapter, the term `applicable tax-exempt health care
organization' means any organization--
``(1) the predominant activity of which is the provision of
health care services (as defined in section 501(n)(3)), and
``(2) which (without regard to any taxable inurement) would
be described in paragraph (3) or (4) of section 501(c) and
exempt from tax under section 501(a).
Such term does not include a private foundation (as defined in section
509(a)).
``(b) Taxable Period; Correction.--For purposes of this
subchapter--
``(1) Taxable period.--The term `taxable period' means,
with respect to any taxable inurement, the period beginning
with the date on which the inurement occurs and ending on the
earliest of--
``(A) the date of mailing a notice of deficiency
under section 6212 with respect to the tax imposed by
subsection (a)(1) of section 4958, or
``(B) the date on which the tax imposed by such
subsection (a)(1) is assessed.
``(2) Correction.--The terms `correction' and `correct'
mean, with respect to any taxable inurement, undoing the
inurement to the extent possible, establishing safeguards to
prevent future such inurement, and where fully undoing the
inurement is not possible, such additional corrective action as
is prescribed by the Secretary by regulations.''
(b) Application of Private Inurement Rule to Tax-Exempt Health Care
Organizations Described in Section 501(c)(4).--Paragraph (4) of section
501(c) is amended by inserting ``(A)'' after ``(4)'' and by adding at
the end the following:
``(B) Subparagraph (A) shall not apply to an entity the
predominant activity of which is the provision of health care
services (as defined in subsection (n)(3)) unless no part of
the net earnings of such entity inures to the benefit of any
private shareholder or individual.''
(c) Technical and Conforming Amendments.--
(1) Subsection (e) of section 4955 is amended--
(A) by striking ``Section 4945'' in the heading and
inserting ``Sections 4945 and 4958'', and
(B) by inserting before the period ``or a taxable
inurement for purposes of section 4958''.
(2) Subsections (a), (b), and (c) of section 4963 are each
amended by inserting ``4958,'' after ``4955,''.
(3) Subsection (e) of section 6213 is amended by inserting
``4958 (relating to private inurement),'' before ``4971''.
(4) Paragraphs (2) and (3) of section 7422(g) are each
amended by inserting ``4958,'' after ``4955,''.
(5) Subsection (b) of section 7454 is amended by inserting
``or whether an organization manager (as defined in section
4958(f)) has `knowingly' participated in taxable inurement (as
defined in section 4958(d)),'' after ``section 4912(b),''.
(6) The table of subchapters for chapter 42 is amended by
striking the last item and inserting the following:
``Subchapter D. Private inurement by tax-
exempt health care
organizations.
``Subchapter E. Abatement of first and
second tier taxes in certain
cases.''
(d) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to inurement
occurring on or after June 30, 1994.
(2) Application of binding contract rule to tax-exempt
health care organizations described in section 501(c)(4).--The
amendments made by this section shall not apply to any
inurement involving an organization described in section
501(c)(4) of the Internal Revenue Code of 1986 occurring before
July 1, 1996, pursuant to a written contract which was binding
on June 29, 1994, and at all times thereafter before such
inurement occurred.
SEC. 7303. TREATMENT OF HEALTH MAINTENANCE ORGANIZATIONS, PARENT
ORGANIZATIONS, AND HEALTH INSURANCE PURCHASING
COOPERATIVES.
(a) Insurance Provided by Health Maintenance Organizations.--
(1) In general.--Section 501(m) (relating to certain
organizations providing commercial-type insurance not exempt
from tax) is amended by adding at the end the following new
paragraph:
``(6) Certain activities provided by health maintenance
organizations not treated as commercial-type insurance.--For
purposes of this subsection, the provision of (or the arranging
for the provision of) medical care on a prepaid basis by a
health maintenance organization shall not be treated as
providing commercial-type insurance if (and only if) such care
is--
``(A) care provided by such organization to its
members at its own facilities through health care
professionals who do not provide substantial health
care services other than on behalf of such
organization,
``(B) care provided by a health care professional
to a member of such organization on a basis under which
substantially all of the risks of the rates of
utilization is assumed by the provider of such care,
``(C) care (other than primary care) provided to a
member of such organization pursuant to a referral by
such organization, or
``(D) emergency care provided to a member of such
organization at a location outside such member's area
of residence.''
(2) Technical amendments.--
(A) Paragraph (3) of section 501(m) is amended by
striking subparagraph (B) and by redesignating
subparagraphs (C), (D), and (E) as subparagraphs (B),
(C), and (D), respectively.
(B) Paragraph (5) of section 501(m) is amended by
striking ``paragraph (3)(E)'' and inserting ``paragraph
(3)(D)''.
(b) Treatment of Parent Organizations of Health Care Providers.--
Section 509(a) (defining private foundation) is amended by striking
``and'' at the end of paragraph (3), by redesignating paragraph (4) as
paragraph (5), and by inserting after paragraph (3) the following new
paragraph:
``(4) an organization which is organized and operated for
the benefit of, and which directly or indirectly controls, an
organization described in section 170(b)(1)(A)(iii), and''.
(c) Purchasing Cooperatives Exempt From Tax.--
(1) In general.--Subsection (c) of section 501 (relating to
exemption from tax on corporations, certain trusts, etc.) is
amended by adding at the end the following new paragraph:
``(26)(A) Any health insurance purchasing cooperative
described in section 1013(12) of the Health Security Act.
``(B) Such a cooperative shall not be exempt from tax
pursuant to any provision other than this paragraph.
``(C) Such a cooperative shall not be exempt from tax
unless--
``(i) no part of the net earnings of such
cooperative inures to the benefit of any private
shareholder or individual,
``(ii) no substantial part of the activities of
such cooperative is carrying on propaganda, or
otherwise attempting, to influence legislation (except
as otherwise provided in subsection (h)), and
``(iii) such cooperative does not participate in,
or intervene in (including the publishing or
distributing of statements), any political campaign on
behalf of (or in opposition to) any candidate for
public office.''
(2) Certain provisions applicable to organizations
described in section 501(c)(3) made applicable to purchasing
cooperatives.--Section 501 is amended by redesignating
subsection (o) as subsection (p) and by inserting after
subsection (n) the following new subsection:
``(o) Certain Provisions Made Applicable to Health Insurance
Purchasing Cooperatives.--A health insurance purchasing cooperative
described in subsection (c)(26) shall be treated--
``(1) as described in subsection (c)(3) for purposes of
applying subsection (h) (relating to expenditures by public
charities to influence legislation), section 4955 (relating to
taxes on political expenditures of section 501(c)(3)
organizations), and section 4958 (relating to private
inurement), and
``(2) as described in subsection (h)(4).''
(d) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
SEC. 7304. TAX TREATMENT OF TAXABLE ORGANIZATIONS PROVIDING HEALTH
INSURANCE AND OTHER PREPAID HEALTH CARE SERVICES.
(a) General Rule.--Section 831 is amended by redesignating
subsection (c) as subsection (d) and by inserting after subsection (b)
the following new subsection:
``(c) Treatment of Organizations Providing Health Insurance and
Other Prepaid Health Care Services.--
``(1) General rule.--Any organization to which this
subsection applies shall be taxable under this part in the same
manner as if it were an insurance company other than a life
insurance company.
``(2) Organizations to which subsection applies.--This
subsection shall apply to any organization--
``(A) which is not exempt from taxation under this
subtitle,
``(B) which is not taxable as a life insurance
company under part I of this subchapter, and
``(C) the primary and predominant business activity
of which during the taxable year consists of 1 or more
of the following:
``(i) Issuing accident and health insurance
contracts or the reinsuring of risks undertaken
by other insurance companies under such
contracts.
``(ii) Operating as a health maintenance
organization.
``(iii) Entering into arrangements under
which--
``(I) fixed payments or premiums
are received as consideration for the
organization's agreement to provide or
arrange for the provision of health
care services, regardless of how the
health care services are provided or
arranged to be provided, and
``(II) substantially all of the
risks of the rates of utilization of
such services is assumed by such
organization or the provider of such
services.
In the case of an organization which has as a material business
activity the issuing of accident and health insurance contracts
or the reinsuring of risks undertaken by other insurance
companies under such contracts, the administering of accident
and health insurance contracts by such organization shall be
treated as part of such business activity for purposes of
subparagraph (C)(i).''
(b) Effective Date.--
(1) In general.--The amendment made by this section shall
apply to taxable years beginning after December 31, 1994.
(2) Transitional rules.--
(A) Organizations to which paragraph applies.--This
paragraph shall apply to any organization to which
section 831(c) of the Internal Revenue Code of 1986 (as
added by subsection (a)) applies for such
organization's first taxable year beginning after
December 31, 1994; except that this paragraph shall not
apply if such organization treated itself as an
insurance company taxable under part II of subchapter L
of chapter 1 of such Code on its original Federal
income tax return for its taxable year beginning in
1992 and for all of its taxable years thereafter
beginning before January 1, 1995.
(B) Treatment of currently taxable companies.--
Except as provided in regulations prescribed by the
Secretary of the Treasury or his delegate, in the case
of any organization to which this paragraph applies--
(i) the amendments made by this section
shall be treated as a change in the method of
accounting, and
(ii) all adjustments required to be taken
into account under section 481 of the Internal
Revenue Code of 1986 shall be taken into
account for such company's first taxable year
beginning after December 31, 1994.
(C) Treatment of currently tax-exempt companies.--
Except as provided in regulations prescribed by the
Secretary of the Treasury or his delegates, in the case
of any organization to which this paragraph applies and
which was exempt from tax under chapter 1 of the
Internal Revenue Code of 1986 for such organization's
last taxable year beginning before January 1, 1995--
(i) no adjustment shall be made under
section 481 (or any other provision) of such
Code on account of a change in its method of
accounting required by this section for its
first taxable year beginning after December 31,
1994, and
(ii) for purposes of determining gain or
loss, the adjusted basis of any asset held by
such organization on the first day of such
taxable year shall be treated as equal to its
fair market value as of such day.
SEC. 7305. REPEAL OF SECTION 833.
(a) Repeal of Section 833.--
(1) In general.--Section 833 (relating to treatment of Blue
Cross and Blue Shield and similar organizations) is hereby
repealed.
(2) Conforming amendments.--
(A) Section 56(c) is amended by striking paragraph
(3).
(B) The table of sections for part II of subchapter
L of chapter 1 is amended by striking the item relating
to section 833.
(b) Application of Section 833 Prior to Repeal.--
(1) In general.--Section 833(c) (relating to organization
to which section applies) is amended by adding at the end the
following new paragraph:
``(4) Treatment as existing blue cross or blue shield
organization.--
``(A) In general.--Paragraph (2) shall be applied
to an organization described in subparagraph (B) as if
it were a Blue Cross or Blue Shield organization.
``(B) Applicable organization.--An organization is
described in this subparagraph if it--
``(i) is organized and governed by State
laws which are specifically and exclusively
applicable to not-for-profit insurance or
health-service type organizations, and
``(ii) is not a Blue Cross or Blue Shield
organization or health maintenance
organization.''
(2) Effective date.--The amendment made by this section
shall apply to taxable years beginning after December 31, 1986.
(c) Effective Date of Repeal.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by subsection (a) shall apply
to taxable years beginning after December 31, 1996.
(2) Transition rules for blue cross and blue shield and
similar organizations.--
(A) Prior fresh start preserved.--The adjusted
basis of any asset determined under section
1012(c)(3)(A)(ii) of the Tax Reform Act of 1986 shall
not be affected by the amendments made by this section.
(B) Recoupment of prior reserve benefit.--In the
case of any organization entitled to the benefits of
section 833(a)(3) of the Internal Revenue Code of 1986
(as in effect after the amendment made by subsection
(a)) for such organization's last taxable year
beginning before January 1, 1997, the amount determined
under paragraph (4) of section 832(b) of such Code for
each of such organization's first 6 taxable years
beginning after December 31, 1996, shall be increased
by an amount equal to 3\1/3\ percent of its unearned
premiums on outstanding business as of the close of
such organization's last taxable year beginning before
January 1, 1997.
SEC. 7306. TAX EXEMPTION FOR HIGH-RISK INSURANCE POOLS.
Subsection (c) of section 501 (relating to list of exempt
organizations) is amended by adding at the end the following new
paragraph:
``(27)(A) In the case of taxable years beginning after December 31,
1989, and before January 1, 1997, a qualified high risk health
insurance pool.
``(B) For purposes of subparagraph (A), the term `qualified high
risk health insurance pool' means an entity--
``(i) which was established by a State or political
subdivision thereof to provide health insurance on a nonprofit
basis to persons unable to obtain health insurance because of
health conditions,
``(ii) with respect to which the State or political
subdivision--
``(I) participates in the ongoing governance of the
entity, and
``(II) subsidizes the operation of the entity, and
``(iii) no part of the net earnings of which inure to the
benefit of any private shareholder, member, or individual.''
PART 2--TAX TREATMENT OF SECTION 501(c)(3) BONDS
SEC. 748. TAX TREATMENT OF 501(c)(3) BONDS SIMILAR TO GOVERNMENTAL
BONDS.
(a) In General.--Subsection (a) of section 150 (relating to
definitions and special rules) is amended by striking paragraphs (2)
and (4), by redesignating paragraphs (5) and (6) as paragraphs (4) and
(5), respectively, and by inserting after paragraph (1) the following
new paragraph:
``(2) Exempt person.--
``(A) In general.--The term `exempt person' means--
``(i) a governmental unit, or
``(ii) a 501(c)(3) organization, but only
with respect to its activities which do not
constitute unrelated trades or businesses as
determined by applying section 513(a).
``(B) Governmental unit not to include federal
government.--The term `governmental unit' does not
include the United States or any agency or
instrumentality thereof.
``(C) 501(c)(3) organization.--The term `501(c)(3)
organization' means any organization described in
section 501(c)(3) and exempt from tax under section
501(a).''
(b) Repeal of Qualified 501(c)(3) Bond Designation.--Section 145
(relating to qualified 501(c)(3) bonds) is repealed.
(c) Conforming Amendments.--
(1) Paragraph (3) of section 141(b) is amended--
(A) by striking ``government use'' in subparagraph
(A)(ii)(I) and subparagraph (B)(ii) and inserting
``exempt person use'',
(B) by striking ``a government use'' in
subparagraph (B) and inserting ``an exempt person
use'',
(C) by striking ``related business use'' in
subparagraph (A)(ii)(II) and subparagraph (B) and
inserting ``related private business use'',
(D) by striking ``related business use'' in the
heading of subparagraph (B) and inserting ``related
private business use'', and
(E) by striking ``government use'' in the heading
thereof and inserting ``exempt person use''.
(2) Subparagraph (A) of section 141(b)(6) is amended by
striking ``a governmental unit'' and inserting ``an exempt
person''.
(3) Paragraph (7) of section 141(b) is amended--
(A) by striking ``government use'' and inserting
``exempt person use'', and
(B) by striking ``Government use'' in the heading
thereof and inserting ``Exempt person use''.
(4) Section 141(b) is amended by striking paragraph (9).
(5) Paragraph (1) of section 141(c) is amended by striking
``governmental units'' and inserting ``exempt persons''.
(6) Section 141 is amended by redesignating subsection (e)
as subsection (f) and by inserting after subsection (d) the
following new subsection:
``(e) Certain Issues Used To Provide Residential Rental Housing for
Family Units.--
``(1) In general.--Except as provided in paragraph (2), for
purposes of this title, the term `private activity bond'
includes any bond issued as part of an issue if any portion of
the net proceeds of the issue are to be used (directly or
indirectly) by an exempt person described in section
150(a)(2)(A)(ii) to provide residential rental property for
family units. This paragraph shall not apply if the bond would
not be a private activity bond if the section 501(c)(3)
organization were not an exempt person.
``(2) Exception for bonds used to provide qualified
residential rental projects.--Paragraph (1) shall not apply to
any bond issued as part of an issue if the portion of such
issue which is to be used as described in paragraph (1) is to
be used to provide--
``(A) a residential rental property for family
units if the first use of such property is pursuant to
such issue,
``(B) qualified residential rental projects (as
defined in section 142(d)), or
``(C) property which is to be substantially
rehabilitated in a rehabilitation beginning within the
2-year period ending 1 year after the date of the
acquisition of such property.
``(3) Substantial rehabilitation.--
``(A) In general.--Except as provided in
subparagraph (B), rules similar to the rules of section
47(c)(1)(C) shall apply in determining for purposes of
paragraph (2)(C) whether property is substantially
rehabilitated.
``(B) Exception.--For purposes of subparagraph (A),
clause (ii) of section 47(c)(1)(C) shall not apply, but
the Secretary may extend the 24-month period in section
47(c)(1)(C)(i) where appropriate due to circumstances
not within the control of the owner.
``(4) Certain property treated as new property.--Solely for
purposes of determining under paragraph (2)(A) whether the 1st
use of property is pursuant to tax-exempt financing--
``(A) In general.--If--
``(i) the 1st use of property is pursuant
to taxable financing,
``(ii) there was a reasonable expectation
(at the time such taxable financing was
provided) that such financing would be replaced
by tax-exempt financing, and
``(iii) the taxable financing is in fact so
replaced within a reasonable period after the
taxable financing was provided,
then the 1st use of such property shall be treated as
being pursuant to the tax-exempt financing.
``(B) Special rule where no operating state or
local program for tax-exempt financing.--If, at the
time of the 1st use of property, there was no operating
State or local program for tax-exempt financing of the
property, the 1st use of the property shall be treated
as pursuant to the 1st tax-exempt financing of the
property.
``(C) Definitions.--For purposes of this paragraph:
``(i) Tax-exempt financing.--The term `tax-
exempt financing' means financing provided by
tax-exempt bonds.
``(ii) Taxable financing.--The term
`taxable financing' means financing which is
not tax-exempt financing.''
(7) Section 141(f), as redesignated by paragraph (6), is
amended--
(A) by adding ``or'' at the end of subparagraph
(E),
(B) by striking ``, or'' at the end of subparagraph
(F), and inserting in lieu thereof a period, and
(C) by striking subparagraph (G).
(8) The last sentence of section 144(b)(1) is amended by
striking ``(determined'' and all that follows to the period.
(9) Clause (ii) of section 144(c)(2)(C) is amended by
striking ``a governmental unit'' and inserting ``an exempt
person''.
(10) Section 146(g) is amended--
(A) by striking paragraph (2), and
(B) by redesignating the remaining paragraphs after
paragraph (1) as paragraphs (2) and (3), respectively.
(11) The heading of section 146(k)(3) is amended by
striking ``governmental'' and inserting ``exempt person''.
(12) The heading of section 146(m) is amended by striking
``Government'' and inserting ``Exempt Person''.
(13) Subsection (h) of section 147 is amended to read as
follows:
``(h) Certain Rules Not To Apply to Mortgage Revenue Bonds and
Qualified Student Loan Bonds.--Subsections (a), (b), (c), and (d) shall
not apply to any qualified mortgage bond, qualified veterans' mortgage
bond, or qualified student loan bond.''
(14) Section 147 is amended by striking paragraph (4) of
subsection (b) and redesignating paragraph (5) of such
subsection as paragraph (4).
(15) Subparagraph (F) of section 148(d)(3) is amended--
(A) by striking ``or which is a qualified 501(c)(3)
bond'', and
(B) by striking ``governmental use bonds and
qualified 501(c)(3)'' in the heading thereof and
inserting ``exempt person''.
(16) Subclause (II) of section 148(f)(4)(B)(ii) is amended
by striking ``(other than a qualified 501(c)(3) bond)''.
(17) Clause (iv) of section 148(f)(4)(C) is amended--
(A) by striking ``a governmental unit or a
501(c)(3) organization'' each place it appears and
inserting ``an exempt person'',
(B) by striking ``qualified 501(c)(3) bonds,'', and
(C) by striking the comma after ``private activity
bonds'' the first place it appears.
(18) Subparagraph (A) of section 148(f)(7) is amended by
striking ``(other than a qualified 501(c)(3) bond)''.
(19) Paragraph (2) of section 149(d) is amended--
(A) by striking ``(other than a qualified 501(c)(3)
bond)'', and
(B) by striking ``Certain private'' in the heading
thereof and inserting ``Private''.
(20) Section 149(e)(2) is amended--
(A) by striking ``which is not a private activity
bond'' in the second sentence and inserting ``which is
a bond issued for an exempt person described in section
150(a)(2)(A)(i)'', and
(B) by adding at the end the following new
sentence: ``Subparagraph (D) shall not apply to any
bond which is not a private activity bond but which
would be such a bond if the 501(c)(3) organization
using the proceeds thereof were not an exempt person.''
(21) The heading of subsection (b) of section 150 is
amended by striking ``Tax-Exempt Private Activity Bonds'' and
inserting ``Certain Tax-Exempt Bonds''.
(22) Paragraph (3) of section 150(b) is amended--
(A) by inserting ``owned by a 501(c)(3)
organization'' after ``any facility'' in subparagraph
(A),
(B) by striking ``any private activity bond which,
when issued, purported to be a tax-exempt qualified
501(c)(3) bond'' in subparagraph (A) and inserting
``any bond which, when issued, purported to be a tax-
exempt bond, and which would be a private activity bond
if the 501(c)(3) organization using the proceeds
thereof were not an exempt person'', and
(C) by striking the heading thereof and inserting
``Bonds for exempt persons other than governmental
units.--''.
(23) Paragraph (5) of section 150(b) is amended--
(A) by striking ``private activity'' in
subparagraph (A),
(B) by inserting ``and which would be a private
activity bond if the 501(c)(3) organization using the
proceeds thereof were not an exempt person'' after
``tax-exempt bond'' in subparagraph (A),
(C) by striking subparagraph (B) and inserting the
following new subparagraph:
``(B) such facility is required to be owned by an
exempt person, and'', and
(D) by striking ``governmental units or 501(c)(3)
organizations'' in the heading thereof and inserting
``exempt persons''.
(24) Section 150 is amended by adding at the end the
following new subsection:
``(f) Certain Rules To Apply to Bonds for Exempt Persons Other Than
Governmental Units.--
``(1) In general.--Nothing in section 103(a) or any other
provision of law shall be construed to provide an exemption
from Federal income tax for interest on any bond which would be
a private activity bond if the 501(c)(3) organization using the
proceeds thereof were not an exempt person unless such bond
satisfies the requirements of subsections (b) and (f) of
section 147.
``(2) Special rule for pooled financing of 501(c)(3)
organization.--
``(A) In general.--At the election of the issuer, a
bond described in paragraph (1) shall be treated as
meeting the requirements of section 147(b) if such bond
meets the requirements of subparagraph (B).
``(B) Requirements.--A bond meets the requirements
of this subparagraph if--
``(i) 95 percent or more of the net
proceeds of the issue of which such bond is a
part are to be used to make or finance loans to
2 or more 501(c)(3) organizations or
governmental units for acquisition of property
to be used by such organizations,
``(ii) each loan described in clause (i)
satisfies the requirements of section 147(b)
(determined by treating each loan as a separate
issue),
``(iii) before such bond is issued, a
demand survey was conducted which shows a
demand for financing greater than an amount
equal to 120 percent of the lendable proceeds
of such issue, and
``(iv) 95 percent or more of the net
proceeds of such issue are to be loaned to
501(c)(3) organizations or governmental units
within 1 year of issuance and, to the extent
there are any unspent proceeds after such 1-
year period, bonds issued as part of such issue
are to be redeemed as soon as possible
thereafter (and in no event later than 18
months after issuance).
A bond shall not meet the requirements of this
subparagraph if the maturity date of any bond issued as
part of such issue is more than 30 years after the date
on which the bond was issued (or, in the case of a
refunding or series of refundings, the date on which
the original bond was issued).''
(25) Section 1302 of the Tax Reform Act of 1986 is
repealed.
(26) Subparagraph (C) of section 57(a)(5) is amended by
striking clause (ii) and redesignating clauses (iii) and (iv)
as clauses (ii) and (iii), respectively.
(27) Paragraph (3) of section 103(b) is amended by
inserting ``and section 150(f)'' after ``section 149''.
(28) Paragraph (3) of section 265(b) is amended--
(A) by striking clause (ii) of subparagraph (B) and
inserting the following:
``(ii) Certain bonds not treated as private
activity bonds.--For purposes of clause
(i)(II), there shall not be treated as a
private activity bond any obligation issued to
refund (or which is part of a series of
obligations issued to refund) an obligation
issued before August 8, 1986, which was not an
industrial development bond (as defined in
section 103(b)(2) as in effect on the day
before the date of the enactment of the Tax
Reform Act of 1986) or a private loan bond (as
defined in section 103(o)(2)(A), as so in
effect, but without regard to any exemption
from such definition other than section
103(o)(2)(A)).''; and
(B) by striking ``(other than a qualified 501(c)(3)
bond, as defined in section 145)'' in subparagraph
(C)(ii)(I).
(d) Effective Date.--The amendments made by this section shall
apply to bonds (including refunding bonds) issued after December 31,
1994.
Subtitle D--Tax Treatment of Long-Term Care Insurance and Services
SEC. 7401. QUALIFIED LONG-TERM CARE SERVICES TREATED AS MEDICAL CARE.
(a) General Rule.--Paragraph (1) of section 213(d) (defining
medical care) is amended by striking ``or'' at the end of subparagraph
(B), by redesignating subparagraph (C) as subparagraph (D), and by
inserting after subparagraph (B) the following new subparagraph:
``(C) for qualified long-term care services (as
defined in subsection (g)), or''.
(b) Qualified Long-Term Care Services Defined.--Section 213
(relating to the deduction for medical, dental, etc., expenses) is
amended by adding at the end the following new subsection:
``(g) Qualified Long-Term Care Services.--For purposes of this
section--
``(1) In general.--The term `qualified long-term care
services' means necessary diagnostic, curing, mitigating,
treating, preventive, therapeutic, and rehabilitative services,
and maintenance and personal care services (whether performed
in a residential or nonresidential setting) which--
``(A) are required by an individual during any
period the individual is an incapacitated individual
(as defined in paragraph (2)),
``(B) have as their primary purpose--
``(i) the provision of needed assistance
with 1 or more activities of daily living (as
defined in paragraph (3)), or
``(ii) protection from threats to health
and safety due to severe cognitive impairment,
and
``(C) are provided pursuant to a continuing plan of
care prescribed by a licensed professional (as defined
in paragraph (4)).
``(2) Incapacitated individual.--The term `incapacitated
individual' means any individual who--
``(A) is unable to perform, without substantial
assistance from another individual (including
assistance involving cueing or substantial
supervision), at least 2 activities of daily living as
defined in paragraph (3), or
``(B) has severe cognitive impairment as defined by
the Secretary in consultation with the Secretary of
Health and Human Services.
Such term shall not include any individual otherwise meeting
the requirements of the preceding sentence unless a licensed
professional within the preceding 12-month period has certified
that such individual meets such requirements.
``(3) Activities of daily living.--Each of the following is
an activity of daily living:
``(A) Eating.
``(B) Toileting.
``(C) Transferring.
``(D) Bathing.
``(E) Dressing.
``(4) Licensed professional.--The term `licensed
professional' means--
``(A) a physician or registered professional nurse,
or
``(B) any other individual who meets such
requirements as may be prescribed by the Secretary
after consultation with the Secretary of Health and
Human Services.
``(5) Certain services not included.--The term `qualified
long-term care services' shall not include any services
provided to an individual--
``(A) by a relative (directly or through a
partnership, corporation, or other entity) unless the
relative is a licensed professional with respect to
such services, or
``(B) by a corporation or partnership which is
related (within the meaning of section 267(b) or
707(b)) to the individual.
For purposes of this paragraph, the term `relative' means an
individual bearing a relationship to the individual which is
described in paragraphs (1) through (8) of section 152(a).''
(c) Technical Amendments.--
(1) Subparagraph (D) of section 213(d)(1) (as redesignated
by subsection (a)) is amended to read as follows:
``(D) for insurance (including amounts paid as
premiums under part B of title XVIII of the Social
Security Act, relating to supplementary medical
insurance for the aged) covering medical care referred
to in--
``(i) subparagraphs (A) and (B), or
``(ii) subparagraph (C), but only if such
insurance is provided under a qualified long-
term care insurance policy (as defined in
section 7702B(b)) and the amount paid for such
insurance is not disallowed under section
7702B(d)(4).''
(2) Paragraph (6) of section 213(d) is amended--
(A) by striking ``subparagraphs (A) and (B)'' and
inserting ``subparagraph (A), (B), and (C)'', and
(B) by striking ``paragraph (1)(C)'' in
subparagraph (A) and inserting ``paragraph (1)(D)''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1995.
SEC. 7402. TREATMENT OF LONG-TERM CARE INSURANCE.
(a) General Rule.--Chapter 79 (relating to definitions) is amended
by inserting after section 7702A the following new section:
``SEC. 7702B. TREATMENT OF LONG-TERM CARE INSURANCE.
``(a) In General.--For purposes of this title--
``(1) a qualified long-term care insurance policy (as
defined in subsection (b)) shall be treated as an accident or
health insurance contract,
``(2) amounts (other than policyholder dividends (as
defined in section 808) or premium refunds) received under a
qualified long-term care insurance policy shall be treated as
amounts received for personal injuries and sickness and shall
be treated as reimbursement for expenses actually incurred for
medical care (as defined in section 213(d)),
``(3) any plan of an employer providing coverage under a
qualified long-term care insurance policy shall be treated as
an accident or health plan with respect to such coverage,
``(4) except as provided in subsection (d)(4), amounts paid
for a qualified long-term care insurance policy providing the
benefits described in subsection (b)(6)(B) shall be treated as
payments made for insurance for purposes of section
213(d)(1)(D), and
``(5) a qualified long-term care insurance policy shall be
treated as a guaranteed renewable contract subject to the rules
of section 816(e).
``(b) Qualified Long-Term Care Insurance Policy.--For purposes of
this title:
``(1) In general.--The term `qualified long-term care
insurance policy' means any certified long-term care policy (as
defined in section 1011(4)(A)) of the Health Security Act)
that--
``(A) limits benefits under such policy to
individuals who are certified by a licensed
professional (as defined in section 213(g)(4)) within
the preceding 12-month period--
``(i) as being unable to perform, without
substantial assistance from another individual
(including assistance involving cueing or
substantial supervision), 2 or more activities
of daily living (as defined in section
213(g)(3)), or
``(ii) having a severe cognitive impairment
(as defined in section 213(g)(2)(B)), and
``(B) satisfies the requirements of paragraphs (2),
(3), (4), (5), and (6).
``(2) Premium requirements.--The requirements of this
paragraph are met with respect to a policy if such policy
provides that premium payments may not be made earlier than the
date such payments would have been made if the contract
provided for level annual payments over the life expectancy of
the insured or 20 years, whichever is shorter. A policy shall
not be treated as failing to meet the requirements of the
preceding sentence solely by reason of a provision in the
policy providing for a waiver of premiums if the insured
becomes an individual certified in accordance with paragraph
(1)(A).
``(3) Prohibition of cash value.--The requirements of this
paragraph are met if the policy does not provide for a cash
value or other money that can be paid, assigned, pledged as
collateral for a loan, or borrowed, other than as provided in
paragraph (4).
``(4) Refunds of premiums and dividends.--The requirements
of this paragraph are met with respect to a policy if such
policy provides that--
``(A) policyholder dividends are required to be
applied as a reduction in future premiums or, to the
extent permitted under paragraph (6), to increase
benefits described in subsection (a)(2),
``(B) refunds of premiums upon a partial surrender
or a partial cancellation are required to be applied as
a reduction in future premiums, and
``(C) any refund on the death of the insured, or on
a complete surrender or cancellation of the policy,
cannot exceed the aggregate premiums paid under the
contract.
Any refund on a complete surrender or cancellation of the
policy shall be includible in gross income to the extent that
any deduction or exclusion was allowable with respect to the
premiums.
``(5) Coordination with other entitlements.--The
requirements of this paragraph are met with respect to a policy
if such policy does not pay, or provide reimbursement for,
expenses incurred to the extent that such expenses are also
paid or reimbursed under title XVIII of the Social Security Act
or are paid or reimbursed under a certified standard health
plan (as defined in section 1011(2)(A)) of the Health Security
Act).
``(6) Maximum benefit.--
``(A) In general.--The requirements of this
paragraph are met if the benefits payable under the
policy for any period (whether on a periodic basis or
otherwise) may not exceed the dollar amount in effect
for such period.
``(B) Nonreimbursement payments permitted.--
Benefits shall include all payments described in
subsection (a)(2) to or on behalf of an insured
individual without regard to the expenses incurred
during the period to which the payments relate. For
purposes of section 213(a), such payments shall be
treated as compensation for expenses paid for medical
care.
``(C) Dollar amount.--The dollar amount in effect
under this paragraph shall be $150 per day (or the
equivalent amount within the calendar year in the case
of payments on other than a per diem basis).
``(D) Adjustments for increased costs.--
``(i) In general.--In the case of any
calendar year after 1996, the dollar amount in
effect under subparagraph (C) for any period or
portion thereof occurring during such calendar
year shall be equal to the sum of--
``(I) the amount in effect under
subparagraph (C) for the preceding
calendar year (after application of
this subparagraph), plus
``(II) the product of the amount
referred to in subclause (I) multiplied
by the cost-of-living adjustment for
the calendar year.
``(ii) Cost-of-living adjustment.--For
purposes of clause (i), the cost-of-living
adjustment for any calendar year is the
percentage (if any) by which the cost index
under clause (iii) for the preceding calendar
year exceeds such index for the second
preceding calendar year.
``(iii) Cost index.--The Secretary, in
consultation with the Secretary of Health and
Human Services, shall before January 1, 1997,
establish a cost index to measure increases in
costs of nursing home and similar facilities.
The Secretary may from time to time revise such
index to the extent necessary to accurately
measure increases or decreases in such costs.
``(iv) Special rule for calendar year
1997.--Notwithstanding clause (ii), for
purposes of clause (i), the cost-of-living
adjustment for calendar year 1997 is the sum of
1.5 percent plus the percentage by which the
CPI for calendar year 1996 (as defined in
section 1(f)(4)) exceeds the CPI for calendar
year 1995 (as so defined).
``(E) Period.--For purposes of this paragraph, a
period begins on the date that an individual has a
condition which would qualify for certification under
subsection (b)(1)(A) and ends on the earlier of the
date upon which--
``(i) such individual has not been so
certified within the preceding 12-months, or
``(ii) the individual's condition ceases to
be such as to qualify for certification under
subsection (b)(1)(A).
``(F) Aggregation rule.--For purposes of this
paragraph, all policies issued with respect to the same
insured shall be treated as one policy.
``(c) Treatment of Long-Term Care Insurance Policies.--For purposes
of this title, any amount received or coverage provided under a long-
term care insurance policy that is not a qualified long-term care
insurance policy shall not be treated as an amount received for
personal injuries or sickness or provided under an accident or health
plan and shall not be treated as excludible from gross income under any
provision of this title.
``(d) Treatment of Coverage Provided as Part of a Life Insurance
Contract.--Except as otherwise provided in regulations prescribed by
the Secretary, in the case of any long-term care insurance coverage
(whether or not qualified) provided by rider on a life insurance
contract--
``(1) In general.--This section shall apply as if the
portion of the contract providing such coverage is a separate
contract or policy.
``(2) Premiums and charges for long-term care coverage.--
Premium payments for coverage under a long-term care insurance
policy and charges against the life insurance contract's cash
surrender value (within the meaning of section 7702(f)(2)(A))
for such coverage shall be treated as premiums for purposes of
subsection (b)(2).
``(3) Application of section 7702.--Section 7702(c)(2)
(relating to the guideline premium limitation) shall be applied
by increasing the guideline premium limitation with respect to
a life insurance contract, as of any date--
``(A) by the sum of any charges (but not premium
payments) described in paragraph (2) made to that date
under the contract, less
``(B) any such charges the imposition of which
reduces the premiums paid for the contract (within the
meaning of section 7702(f)(1)).
``(4) Application of section 213.--No deduction shall be
allowed under section 213(a) for charges against the life
insurance contract's cash surrender value described in
paragraph (2), unless such charges are includible in income as
a result of the application of section 72(e)(10) and the
coverage provided by the rider is a qualified long-term care
insurance policy under subsection (b).
``(5) Amount of distribution under rider.--This subsection
shall not apply to any rider on a life insurance contract
unless the percentage reduction in the cash surrender value of
the contract by reason of any payment under the rider does not
exceed the percentage reduction in the death benefit payable
under the contract by reason of the payment.
For purposes of this subsection, the term `portion' means only the
terms and benefits under a life insurance contract that are in addition
to the terms and benefits under the contract without regard to the
coverage under a long-term care insurance policy, except that the
coverage under a rider described in this subsection shall not fail to
be treated as such an addition by reason of a reduction in the
contract's death benefit or cash surrender value resulting from any
payment under the rider.
``(e) Regulations.--The Secretary shall prescribe such regulations
as may be necessary to carry out the requirements of this section,
including regulations to prevent the avoidance of this section by
providing long-term care insurance coverage under a life insurance
contract and to provide for the proper allocation of amounts between
the long-term care and life insurance portions of a contract.''
(b) Cafeteria Plans.--Section 125(f) is amended by adding at the
end the following new sentence: ``Such term does not include any
coverage or benefits under a qualified long-term care policy (as
defined in section 7702B).''
(c) Reserves.--Clause (iii) of section 807(d)(3)(A) is amended by
inserting ``(other than a qualified long-term care insurance policy
within the meaning of section 7702(B))'' after ``contract''.
(d) Clerical Amendment.--The table of sections for chapter 79 is
amended by inserting after the item relating to section 7702A the
following new item:
``Sec. 7702B. Treatment of long-term care
insurance.''
(e) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to policies issued after December 31, 1995, except that a
policy issued before January 1, 1996, which, on January 1,
1996, satisfies the requirements of a qualified long-term care
insurance policy as set forth in section 7702B(b) of the
Internal Revenue Code of 1986 shall be treated as having been
issued on January 1, 1996.
(2) Transition rule.--If, after the date of enactment of
this Act and before January 1, 1996, a policy providing for
long-term care insurance coverage is exchanged solely for a
qualified long-term care insurance policy (as defined in
section 7702B(b) of such code), no gain or loss shall be
recognized on the exchange, except that gain (if any) shall be
recognized to the extent of the sum of the money and the fair
market value of the other property received. For purposes of
this paragraph, the cancellation of a policy providing for
long-term care insurance coverage and reinvestment of the
cancellation proceeds in a qualified long-term care insurance
policy within 60 days thereafter shall be treated as an
exchange.
(3) Issuance of rider not treated as material change.--For
purposes of applying section 101(f), 7702, or 7702A of such
Code to any contract, the issuance of a rider on a life
insurance contract providing long-term care insurance coverage
shall not be treated as a modification or material change of
such contract.
SEC. 7403. TAX TREATMENT OF ACCELERATED DEATH BENEFITS UNDER LIFE
INSURANCE CONTRACTS.
(a) General Rule.--Section 101 (relating to certain death benefits)
is amended by adding at the end the following new subsection:
``(g) Treatment of Certain Accelerated Death Benefits.--
``(1) In general.--For purposes of this section, any amount
received under a life insurance contract on the life of an
insured who is a terminally ill individual shall be treated as
an amount paid by reason of the death of such insured.
``(2) Necessary conditions.--
``(A) In general.--Paragraph (1) shall not apply to
any amount received unless--
``(i) the total amount received is not less
than the present value (determined under
subparagraph (B)) of the reduction in the death
benefit otherwise payable in the event of the
death of the insured, and
``(ii) the percentage reduction in the cash
surrender value of the contract by reason of
the distribution does not exceed the percentage
reduction in the death benefit payable under
the contract by reason of such distribution.
``(B) Present value.--The present value of the
reduction in the death benefit shall be determined by--
``(i) using a discount rate which is based
on an interest rate which does not exceed the
highest interest rate set forth in subparagraph
(C), and
``(ii) assuming that the death benefit (or
the portion thereof) would have been paid on
the date which is 12 months after the date of
the certification referred to in paragraph (3).
``(C) Rates.--The interest rates set forth in this
subparagraph are the following:
``(i) the 90-day Treasury bill yield,
``(ii) the rate described as Moody's
Corporate Bond Yield Average-Monthly Average
Corporates as published by Moody's Investors
Service, Inc., or any successor thereto, for
the calendar month ending 2 months before the
date on which the rate is determined, and
``(iii) the rate used to compute the cash
surrender values under the contract during the
applicable period plus 1 percent per annum.
``(D) Special rules relating to liens.--If a lien
is imposed against a life insurance contract with
respect to any amount referred to in paragraph (1)--
``(i) for purposes of subparagraph (A), the
amount of such lien shall be treated as a
reduction (at the time of receipt) in the death
benefit or cash surrender value to the extent
that such benefit or value, as the case may be,
is (or may become) subject to the lien, and
``(ii) paragraph (1) shall not apply to the
amount received unless any rate of interest
with respect to any amount in connection with
which such lien is imposed does not exceed the
highest rate set forth in subparagraph (C).
``(3) Terminally ill individual.--For purposes of this
subsection, the term `terminally ill individual' means an
individual who the insurer has determined, after receipt of an
acceptable certification by a licensed physician, has an
illness or physical condition which can reasonably be expected
to result in death within 12 months after the date of
certification.
``(4) Exception for business-related policies.--This
subsection shall not apply in the case of any amount paid to
any taxpayer other than the insured if such taxpayer has an
insurable interest with respect to the life of the insured by
reason of the insured being a director, officer, or employee of
the taxpayer or by reason of the insured having a financial
interest in any trade or business carried on by the taxpayer.''
(b) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendment made by this section shall apply to amounts received
after the date of the enactment of this Act.
(2) Delay in application of discount rules.--Clause (i) of
section 101(g)(2)(A) of the Internal Revenue Code of 1986 shall
not apply to any amount received before January 1, 1995.
(3) Issuance of rider not treated as material change.--For
purposes of applying section 101(f), 7702, or 7702A of the
Internal Revenue Code of 1986 to any contract, the issuance of
a qualified accelerated death benefit rider (as defined in
section 818(g) of such Code (as added by this Act)) shall not
be treated as a modification or material change of such
contract.
SEC. 7404. TAX TREATMENT OF COMPANIES ISSUING QUALIFIED ACCELERATED
DEATH BENEFIT RIDERS.
(a) Qualified Accelerated Death Benefit Riders Treated as Life
Insurance.--Section 818 (relating to other definitions and special
rules) is amended by adding at the end the following new subsection:
``(g) Qualified Accelerated Death Benefit Riders Treated as Life
Insurance.--For purposes of this part--
``(1) In general.--Any reference to a life insurance
contract shall be treated as including a reference to a
qualified accelerated death benefit rider on such contract.
``(2) Qualified accelerated death benefit riders.--For
purposes of this subsection, the term `qualified accelerated
death benefit rider' means any rider on a life insurance
contract which provides for a distribution to an individual
upon the insured becoming a terminally ill individual (as
defined in section 101(g)(3)).''
(b) Effective Date.--The amendments made by this section shall take
effect on January 1, 1995.
Subtitle E--Other Revenue Provisions
PART 1--EMPLOYMENT STATUS PROVISIONS
SEC. 7501. EMPLOYMENT STATUS PROPOSAL REQUIRED FROM DEPARTMENT OF THE
TREASURY.
Not later than January 1, 1996, the Secretary of the Treasury shall
submit to the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the Senate a
legislative proposal providing statutory standards for the
classification of workers as employees or independent contractors.
SEC. 7502. INCREASE IN SERVICES REPORTING PENALTIES.
(a) Increase in Penalty.--Section 6721(a) (relating to imposition
of penalty) is amended by adding at the end the following new
paragraph:
``(3) Increased penalty for returns involving payments for
services.--
``(A) In general.--Subject to the overall
limitation of paragraph (1), the amount of the penalty
under paragraph (1) for any failure with respect to any
applicable return shall be equal to the greater of $50
or 5 percent of the amount required to be reported
correctly but not so reported.
``(B) Exception where substantial compliance.--
Subparagraph (A) shall not apply to failures with
respect to applicable returns required to be filed by a
person during any calendar year if the aggregate amount
which is timely and correctly reported on applicable
returns filed by the person for the calendar year is at
least 97 percent of the aggregate amount which is
required to be reported on applicable returns by the
person for the calendar year.
``(C) Applicable return.--For purposes of this
paragraph, the term `applicable return' means any
information return required to be filed under--
``(i) section 6041(a) but only if such
return relates to payments to any person for
services performed by such person (other than
as an employee), or
``(ii) section 6041A(a).''
(b) Conforming Amendment.--Section 6721(a)(1) is amended by
striking ``In'' and inserting ``Except as provided in paragraph (3),
in''.
(c) Effective Date.--The amendments made by this section shall
apply to returns the due date for which (without regard to extensions)
is more than 30 days after the date of the enactment of this Act.
PART 2--TAX INCENTIVES FOR HEALTH SERVICES PROVIDERS
SEC. 7511. NONREFUNDABLE CREDIT FOR CERTAIN PRIMARY HEALTH SERVICES
PROVIDERS.
(a) In General.--Subpart A of part IV of subchapter A of chapter 1
(relating to nonrefundable personal credits) is amended by inserting
after section 22 the following new section:
``SEC. 23. PRIMARY HEALTH SERVICES PROVIDERS.
``(a) Allowance of Credit.--There shall be allowed as a credit
against the tax imposed by this chapter for the taxable year an amount
equal to the product of--
``(1) the number of months during such taxable year--
``(A) during which the taxpayer is a qualified
primary health services provider, and
``(B) which are within the taxpayer's eligible
service period, and
``(2) $1,000 ($500 in the case of a qualified practitioner
who is not a physician).
``(b) Qualified Primary Health Services Provider.--For purposes of
this section--
``(1) In general.--The term `qualified primary health
services provider' means, with respect to any month, any
qualified practitioner who--
``(A) has in effect a certification by the Bureau
as a provider of primary health services and such
certification is, when issued, for a health
professional shortage area in which the qualified
practitioner is providing primary health services,
``(B) is providing primary health services full
time in the health professional shortage area
identified in such certification, and
``(C) has not received a scholarship under the
National Health Service Corps Scholarship Program or
any loan repayments under the National Health Service
Corps Loan Repayment Program.
``(2) Special rules relating to shortage areas.--
``(A) Areas ceasing to be shortage areas.--For
purposes of paragraph (1)(B) and subsection (e)(2), a
provider shall be treated as providing services in a
health professional shortage area when such area ceases
to be such an area if it was such an area on the first
day of the provider's eligible service period.
``(B) Areas within metropolitan areas.--A qualified
practitioner who is providing services within a
metropolitan statistical area (as defined in section
143(k)(2)) shall not be treated as meeting the
requirements of paragraph (1)(B) unless such services
are provided for, or on behalf of, a governmental or
nonprofit entity.
``(3) Qualified practitioner.--The term `qualified
practitioner' means a physician, a physician assistant, a nurse
practitioner, or a certified nurse-midwife.
``(c) Eligible Service Period.--For purposes of this section, the
term `eligible service period' means the period of 36 consecutive
calendar months beginning with the first month the taxpayer is a
qualified primary health services provider (as specified in the
certification under subsection (b)(1)(A)). A taxpayer shall not have
more than 1 eligible service period.
``(d) Other Definitions and Special Rules.--For purposes of this
section--
``(1) Bureau.--The term `Bureau' means the Bureau of
Primary Health Care, Health Resources and Services
Administration of the United States Public Health Service.
``(2) Physician.--The term `physician' has the meaning
given to such term by section 1861(r) of the Social Security
Act.
``(3) Physician assistant; nurse practitioner.--The terms
`physician assistant' and `nurse practitioner' have the
meanings given to such terms by section 1861(aa)(5) of the
Social Security Act.
``(4) Certified nurse-midwife.--The term `certified nurse-
midwife' has the meaning given to such term by section
1861(gg)(2) of the Social Security Act.
``(5) Primary health services.--The term `primary health
services' has the meaning given such term by section 330(b)(1)
of the Public Health Service Act.
``(6) Health professional shortage area.--The term `health
professional shortage area' has the meaning given such term by
section 332(a)(1)(A) of the Public Health Service Act.
``(7) Practitioner currently practicing in shortage
areas.--In the case of a qualified practitioner who, on
December 31, 1994, was providing primary health services in any
health professional shortage area--
``(A) the practitioner's eligible service period
shall begin on January 1, 1995, and
``(B) if such practitioner is a physician,
subsection (a)(2) shall be applied by substituting
`$500' for `$1,000'.
``(e) Recapture of Credit.--
``(1) In general.--If there is a recapture event during any
taxable year, then--
``(A) no credit shall be allowed under subsection
(a) for such taxable year and any succeeding taxable
year, and
``(B) the tax of the taxpayer under this chapter
for such taxable year shall be increased by an amount
equal to the aggregate credits allowed to such taxpayer
under this section for all prior taxable years.
``(2) Recapture event defined.--
``(A) In general.--For purposes of this subsection,
the term `recapture event' means the failure of the
taxpayer to be a qualified primary health services
provider during any of the first 24 months during the
taxpayer's eligible service period.
``(B) Secretarial waiver.--The Secretary, in
consultation with the Secretary of Health and Human
Services, may waive any recapture event caused by
extraordinary circumstances.
``(3) No credits against tax; minimum tax.--Any increase in
tax under this subsection shall not be treated as a tax imposed
by this chapter for purposes of determining the amount of any
credit under subpart A, B, or D of this part or for purposes of
section 55.''
(b) Clerical Amendment.--The table of sections for subpart A of
part IV of subchapter A of chapter 1 is amended by inserting after the
item relating to section 22 the following new item:
``Sec. 23. Primary health services
providers.''
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1994.
SEC. 7512. EXPENSING OF MEDICAL EQUIPMENT.
(a) In General.--Paragraph (1) of section 179(b) (relating to
dollar limitation on expensing of certain depreciable business assets)
is amended to read as follows:
``(1) Dollar limitation.--
``(A) General rule.--The aggregate cost which may
be taken into account under subsection (a) for any
taxable year shall not exceed $17,500.
``(B) Health care property.--The aggregate cost
which may be taken into account under subsection (a)
shall be increased by the lesser of--
``(i) the cost of section 179 property
which is health care property placed in service
during the taxable year, or
``(ii) $10,000.''
(b) Definition.--Section 179(d) (relating to definitions) is
amended by adding at the end the following new paragraph:
``(11) Health care property.--
``(A) In general.--For purposes of this section,
the term `health care property' means section 179
property--
``(i) which is medical equipment used in
the screening, monitoring, observation,
diagnosis, or treatment of patients in a
laboratory, medical, or hospital environment,
``(ii) which is owned (directly or
indirectly) and used by 1 or more physicians
(as defined in section 1861(r) of the Social
Security Act) in the active conduct of the
full-time trade or business of all such
physicians of providing primary health services
(as defined in section 330(b)(1) of the Public
Health Service Act) in a health professional
shortage area (as defined in section
332(a)(1)(A) of the Public Health Service Act),
and
``(iii) substantially all the use of which
is in such area.
``(B) Special rule for metropolitan statistical
areas.--A physician who is providing services within a
metropolitan statistical area (as defined in section
143(k)(2)) shall not be treated as meeting the
requirements of subparagraph (A)(ii) unless such
services are provided for, or on behalf of, a
governmental or nonprofit entity.''
(c) Recapture.--Paragraph (10) of section 179(d) is amended by
inserting ``and with respect to any health care property which ceases
(other than by an area failing to be treated as a health professional
shortage area) to be health care property at any time'' before the
period.
(d) Effective Date.--The amendments made by this section shall
apply to property placed in service in taxable years beginning after
December 31, 1994.
PART 3--MISCELLANEOUS PROVISIONS
SEC. 7521. POST-RETIREMENT MEDICAL AND LIFE INSURANCE RESERVES.
(a) Minimum Period for Working Lives.--Section 419A(c)(2) (relating
to additional reserves for post-retirement medical and life insurance
benefits) is amended by inserting ``(but not less than 10 years)''
after ``working lives of the covered employees''.
(b) Separate Accounting.--
(1) Requirement.--Section 419A(c)(2) is amended by adding
at the end the following new flush sentence:
``Such reserve shall be maintained as a separate account.''
(2) Use of reserve for other purposes.--Paragraph (1) of
section 4976(b) (defining disqualified benefit) is amended by
striking ``and'' at the end of subparagraph (B), by striking
the period at the end of subparagraph (C) and inserting ``,
and'', and by adding after subparagraph (C) the following new
subparagraph:
``(D) any payment to which subparagraph (C) does
not apply which is out of an account described in
section 419A(c)(2) and which is not used to provide a
post-retirement medical benefit or life insurance
benefit.''
(c) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to contributions
paid or accrued after December 31, 1994, in taxable years
ending after such date.
(2) Separate accounting.--The amendments made by subsection
(b) shall apply to contributions paid or accrued after the date
of the enactment of this Act, in taxable years ending after
such date.
SEC. 7522. CREDIT FOR COST OF PERSONAL ASSISTANCE SERVICES REQUIRED BY
EMPLOYED INDIVIDUALS.
(a) In General.--Subpart A of part IV of subchapter A of chapter 1
(relating to nonrefundable personal credits), as amended by section
7511, is amended by inserting after section 23 the following new
section:
``SEC. 24. COST OF PERSONAL ASSISTANCE SERVICES REQUIRED BY EMPLOYED
INDIVIDUALS.
``(a) Allowance of Credit.--
``(1) In general.--In the case of an eligible individual,
there shall be allowed as a credit against the tax imposed by
this chapter for the taxable year an amount equal to the
applicable percentage of the personal assistance expenses paid
or incurred by the taxpayer during such taxable year.
``(2) Applicable percentage.--For purposes of paragraph
(1), the term `applicable percentage' means 50 percent reduced
(but not below zero) by 10 percentage points for each $5,000 by
which the modified adjusted gross income (as defined in section
59B(d)(2)) of the taxpayer for the taxable year exceeds
$45,000. In the case of a married individual filing a separate
return, the preceding sentence shall be applied by substituting
`$2,500' for `$5,000' and `$22,500' for `$45,000'.
``(b) Limitation.--The amount of personal assistance expenses for
the benefit of an individual which may be taken into account under
subsection (a) for the taxable year shall not exceed the lesser of--
``(1) $15,000, or
``(2) such individual's earned income (as defined in
section 32(c)(2)) for the taxable year.
In the case of a joint return, the amount under the preceding sentence
shall be determined separately for each spouse.
``(c) Eligible Individual.--For purposes of this section, the term
`eligible individual' means any individual (other than a nonresident
alien) who, by reason of any medically determinable physical impairment
which can be expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than 12 months, is
unable to engage in any substantial gainful activity without personal
assistance services appropriate to carry out activities of daily
living. An individual shall not be treated as an eligible individual
unless such individual furnishes such proof thereof (in such form and
manner, and at such times) as the Secretary may require.
``(d) Other Definitions.--For purposes of this section--
``(1) Personal assistance expenses.--The term `personal
assistance expenses' means expenses for--
``(A) personal assistance services appropriate to
carry out activities of daily living in or outside the
home,
``(B) homemaker/chore services incidental to the
provision of such personal assistance services,
``(C) in the case of an individual with a cognitive
impairment, assistance with life skills,
``(D) communication services,
``(E) work-related support services,
``(F) coordination of services described in this
paragraph,
``(G) assistive technology and devices, including
assessment of the need for particular technology and
devices and training of family members, and
``(H) modifications to the principal place of abode
of the individual to the extent the expenses for such
modifications would (but for subsection (e)(2)) be
expenses for medical care (as defined by section 213)
of such individual.
``(2) Activities of daily living.--The term `activities of
daily living' means eating, toileting, transferring, bathing,
and dressing.
``(e) Special Rules.--
``(1) Payments to related persons.--No credit shall be
allowed under this section for any amount paid by the taxpayer
to any person who is related (within the meaning of section 267
or 707(b)) to the taxpayer.
``(2) Coordination with medical expense deduction.--Any
amount taken into account in determining the credit under this
section shall not be taken into account in determining the
amount of the deduction under section 213.
``(3) Basis reduction.--For purposes of this subtitle, if a
credit is allowed under this section for any expense with
respect to any property, the increase in the basis of such
property which would (but for this paragraph) result from such
expense shall be reduced by the amount of the credit so
allowed.
``(f) Cost-of-Living Adjustment.--In the case of any taxable year
beginning after 1996, the $45,000 and $22,500 amounts in subsection
(a)(2) and the $15,000 amount in subsection (b) shall be increased by
an amount equal to--
``(1) such dollar amount, multiplied by
``(2) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable year
begins by substituting `calendar year 1995' for `calendar year
1992' in subparagraph (B) thereof.
If any increase determined under the preceding sentence is not a
multiple of $1,000, such increase shall be rounded to the nearest
multiple of $1,000.''
(b) Technical Amendment.--Subsection (a) of section 1016 is amended
by striking ``and'' at the end of paragraph (24), by striking the
period at the end of paragraph (25) and inserting ``, and'', and by
adding at the end thereof the following new paragraph:
``(26) in the case of any property with respect to which a
credit has been allowed under section 24, to the extent
provided in section 24(e)(3).''
(c) Clerical Amendment.--The table of sections for subpart A of
part IV of subchapter A of chapter 1 is amended by inserting after the
item relating to section 23 the following new item:
``Sec. 24. Cost of personal assistance
services required by employed
individuals.''
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1995.
SEC. 7523. DISCLOSURE OF RETURN INFORMATION FOR ADMINISTRATION OF
CERTAIN PROGRAMS UNDER THE HEALTH SECURITY ACT.
(a) In General.--Section 6103(l) (relating to disclosure of returns
and return information for purposes other than tax administration) is
amended by adding at the end the following new paragraph:
``(15) Disclosure of return information for purposes of
health security act.--
``(A) In general.--The Secretary shall, upon
written request, disclose current return information
described in subparagraph (B) to any Federal, State, or
local agency administering an assistance program under
the Health Security Act.
``(B) Information.--The information described in
this subparagraph is information which consists only of
adjusted gross income, the untaxed portion of social
security benefits, tax-exempt interest income, marital
status, and dependents.
``(C) Restriction on disclosure.--The Secretary
shall disclose return information under subparagraph
(A) only for purposes of, and to the extent necessary
in, determining eligibility for, or the correct amount
of, assistance provided under the Health Security Act.
``(D) Exclusion from matching program.--Any matches
of information under this paragraph shall not be
treated as a matching program for purposes of section
552a of title 5, United States Code.''
(b) Conforming Amendments.--
(1) Section 6103(9)(2) is amended by inserting ``or (15)''
after ``subsection (l)(7)(D)''.
(2) Section 6103(p)(3)(A) is amended by striking ``or
(14)'' and inserting ``(14), or (15)''.
(3) Section 6103(p)(4) is amended--
(A) by striking ``or (12)'' in the matter preceding
subparagraph (A) and inserting ``(12), or (15)'', and
(B) by striking ``or (14)'' in subparagraph (F)(ii)
and inserting ``(14), or (15)''.
(4) Section 7213(a)(2) is amended by striking ``or (12)''
and inserting ``(12), or (15)''.
Subtitle F--Graduate Medical Education and Academic Health Centers
Trust Fund
SEC. 7601. ESTABLISHMENT OF GRADUATE MEDICAL EDUCATION AND ACADEMIC
HEALTH CENTERS TRUST FUND.
(a) In General.--Subchapter A of chapter 98 (relating to
establishment of trust funds) is amended by adding at the end the
following new part:
``PART II--HEALTH CARE TRUST FUNDS
``Sec. 9551. Graduate Medical Education
and Academic Health Centers
Trust Fund
``SEC. 9551. GRADUATE MEDICAL EDUCATION AND ACADEMIC HEALTH CENTERS
TRUST FUND.
``(a) Creation of Trust Fund.--
``(1) In general.--There is established in the Treasury of
the United States a trust fund to be known as the `Graduate
Medical Education and Academic Health Centers Trust Fund',
consisting of such amounts as may be appropriated or credited
to the Academic Health Centers Trust Fund as provided in this
section or section 9602(b).
``(2) Accounts in the trust fund.--The Graduate Medical
Education and Academic Health Centers Trust Fund shall consist
of the following 2 accounts:
``(A) The Graduate Medical Education Account.
``(B) The Academic Health Centers Account.
Each such account shall consist of such amounts as are
allocated to it under this section.
``(b) Transfers to the Trust Fund.--
``(1) Taxes.--There are hereby appropriated to the Graduate
Medical Education and Academic Health Centers Trust Fund
amounts received in the Treasury under sections 4501 and 4502
(relating to assessments on insured and self-insured health
plans) to the extent attributable to the rates of such taxes
not in excess of 1.5 percent.
``(2) Transfers from other trust funds.--The Secretary of
Health and Human Services shall transfer each fiscal year to
the Graduate Medical Education and Academic Health Centers
Trust Fund from the Federal Hospital Insurance Trust Fund and
the Federal Supplementary Medical Insurance Trust Fund
established under the Social Security Act the sum of--
``(A) the amount that would have been paid from the
Federal Hospital Insurance Trust Fund in such fiscal
year under section 1886(d)(5)(B) of such Act (as in
effect before the date of the enactment of the Health
Security Act), plus
``(B) the amount that would have been paid from
such trust funds in such fiscal year under section
1886(h) of such Act (as so in effect).
``(c) Graduate Medical Education Account.--
``(1) Transfers.--There is allocated to the Graduate
Medical Education Account each fiscal year an amount equal to
the sum of--
``(A) amounts described in subsection (b)(2)(B),
plus
``(B) the excess of--
``(i) the amounts made available under
section 3033 of the Health Security Act, over
``(ii) the amount described in subparagraph
(A).
``(2) Expenditures.--Amounts in the Graduate Medical
Education Account are appropriated to make the payments
described in sections 3031 and 3055 of the Health Security Act,
and to the extent any such amount is not expended during any
fiscal year, such amount shall be available for such purpose
for subsequent fiscal years.
``(d) Academic Health Centers Account.--
``(1) Transfers.--There is allocated to the Academic Health
Centers Account each fiscal year an amount equal to the sum
of--
``(A) amounts described in subsection (b)(2)(A),
plus
``(B) the excess of--
``(i) the amounts made available under
section 3053 of the Health Security Act, over
``(ii) the amount described in subparagraph
(A).
``(2) Expenditures.--Amounts in the Academic Health Centers
Account are appropriated to make the payments described in
section 3051 of the Health Security Act, and to the extent any
such amount is not expended during any fiscal year, such amount
shall be available for such purpose for subsequent fiscal
years.
``(e) Rules Relating To Accounts.--
``(1) Insufficient funds.--If, for any fiscal year, the sum
of the amounts required to be allocated under subsections (c)
and (d) exceeds the amounts received in the Graduate Medical
Education and Academic Health Centers Trust Fund, then each of
such amounts required to be so allocated shall be reduced to an
amount which bears the same ratio to such amount as the amounts
received in the trust fund bear to the amounts required to be
so allocated (without regard to this paragraph).
``(2) Allocation of excess funds and interest.--Amounts
received in the Graduate Medical Education and Academic Health
Centers Trust Fund in excess of the amounts required to be
allocated under subsections (c) and (d), and amounts credited
to such trust fund under section 9602(b), for any fiscal year
shall be allocated to each account ratably on the basis of the
amounts allocated to the account for the fiscal year (without
regard to this paragraph).''.
(b) Conforming Amendment.--Subchapter A of chapter 98 is amended by
inserting after the subchapter heading the following new items:
``Part I. General trust funds.
``Part II. Health care trust funds.
``PART I--GENERAL TRUST FUNDS''.
TITLE VIII--OTHER FEDERAL PROGRAMS
Subtitle A--Indian Health Service
SEC. 8101. PURPOSES.
The purposes of this subtitle are as follows:
(1) To ensure the delivery of health care services to
American Indians and Alaska Natives in a culturally appropriate
manner in fulfillment of the unique trust responsibility of the
Federal Government and legal obligation to American Indian and
Alaska Native people--
(A) derived from the province of international law;
and
(B) founded in the treaties, Constitution,
statutes, and court decisions of the United States.
(2) To provide sufficient funding for the provision of the
standard benefit package as it applies to all eligible
beneficiaries under this subtitle.
(3) To ensure that funding levels for services and benefits
that are not part of the standard benefits package described in
this subtitle are not diluted or diminished.
(4) To raise the health status of American Indians and
Alaska Natives to the highest possible level.
(5) To raise the quality of health care delivery to
American Indians and Alaska Natives to the highest possible
level.
(6) To ensure that health care services provided to
American Indians and Alaska Natives are provided in a manner
consistent with, and carries out, the recognized Indian self-
determination and tribal self-governance policy of the United
States.
SEC. 8102. DEFINITIONS.
For the purposes of this subtitle--
(1) the term ``American Indian'' has the meaning provided
the term ``Indian'' under paragraph (6);
(2) the term ``Alaska Native'' has the meaning provided the
term ``Native'' under section 3(b) of the Alaska Native Claims
Settlement Act (43 U.S.C. 1602(b));
(3) the term ``health program of the Indian Health
Service'' means a program which provides or is responsible for
obtaining health services under this Act or any other
applicable law through programs operated by the Indian Health
Service, Indian tribes, or tribal organizations, including
Indian tribes or tribal organizations operating under the
authority of the Indian Self-Determination and Education
Assistance Act (25 U.S.C. 450 et seq.);
(4) the term ``reservation'' means the reservation of any
federally recognized Indian tribe, former Indian reservations
in Oklahoma, and lands held by incorporated Native groups,
regional corporations, and village corporations under the
provisions of the Alaska Native Claims Settlement Act (43
U.S.C. 1601 et seq.);
(5) the term ``urban Indian program'' means any program
operated pursuant to title V of the Indian Health Care
Improvement Act; and
(6) the terms ``Indian'', ``Indian tribe'', ``tribal
organization'', ``urban Indian'', ``urban Indian
organization'', and ``service unit'' have the same meaning as
given such terms under the Indian Health Care Improvement Act
(25 U.S.C. 1601 et seq.).
SEC. 8103. ELIGIBILITY AND HEALTH SERVICE COVERAGE OF INDIANS.
(a) Coverage.--The programs of the Indian Health Service shall
remain as the principal provider of health care for Indians, except
that nothing in this subtitle shall limit the ability of Indians to
seek care from providers outside the programs of the Indian Health
Service.
(b) Eligibility.--An Indian is eligible for services under a
program of the Indian Health Service if the individual is--
(1) eligible to receive services pursuant to sections 36.1
through 36.14 of title 42, Code of Federal Regulations (as in
effect on the day before the date of enactment of this Act);
(2) an urban Indian residing in an area served by an urban
Indian program; or
(3) an Indian described in section 809(b) of the Indian
Health Care Improvement Act (25 U.S.C. 1679(b)).
(c) Limitation on Charges.--An eligible Indian (as defined in
subsection (b)) receiving services from or being referred by a health
program of the Indian Health Service shall not be subject to any charge
for deductibles, copayments, coinsurance, or any other cost for health
services provided under such program.
SEC. 8104. SUPPLEMENTAL INDIAN HEALTH CARE BENEFITS.
(a) In General.--All individuals described in section 8103(b) shall
remain eligible for such benefits under the laws administered by the
Indian Health Service as supplement the standard benefit package. The
individual shall not be subject to any charge or any other cost for
such benefits.
(b) Maintenance of Effort.--The Secretary shall ensure that the
requirements of this subtitle do not result in a reduction of the level
of supplemental benefits provided by or through the Indian Health
Service.
SEC. 8105. PROVISION OF HEALTH SERVICES TO NON-INDIANS.
(a) Contracts With Health Plans.--A health program of the Indian
Health Service may enter into a contract with a health plan for the
provision of health care services to individuals enrolled in such
health plan if--
(1) the appropriate official of the program determines that
the provision of such health services will not result in a
denial or diminishment of health services to any individual
described in section 8103(b); and
(2) each tribe or urban Indian organization served by the
program authorizes or has authorized the provision of services
to such individuals.
(b) Family Treatment.--A health program of the Indian Health
Service may provide health care services to insured non-Indian family
members of individuals described in section 8103(b) under the same
restrictions as those described in subsection (a).
(c) Applicable Individual Charges.--Non-Indians receiving services
in a program under subsection (b) shall be subject to any applicable
deductibles, copayments, coinsurance, or any other cost for health
services provided.
SEC. 8106. ESSENTIAL COMMUNITY PROVIDERS.
A health program of the Indian Health Service automatically
certified as an essential community provider under section 1462 may
elect to accept certification--
(1) only for eligible individuals described in section
8103(b);
(2) for non-Indian individuals if each tribe or tribal
organization served by the program authorizes or has authorized
serving non-Indians; or
(3) for eligible individuals described in section 8103(b)
and family members of such individuals described in section
8505(b) who are enrolled in a plan other than a health program
of the Indian Health Service, if each tribe or urban Indian
organization served by the program authorizes or has authorized
serving such family members.
SEC. 8107. PAYMENT BY OTHER PROVIDERS.
(a) Payment for Services Provided by Indian Health Service
Programs.--Nothing in this subtitle shall be construed as amending
section 206, 401, or 402 of the Indian Health Care Improvement Act (25
U.S.C. 1621e, 1641, or 1642) or any other provision of law relating to
payments on behalf of Indians for health services from other Federal
programs or from other third party payers.
(b) Payment for Services Provided by Contractors.--Nothing in this
subtitle shall be construed as affecting any other provision of law,
regulation, or judicial or administrative interpretation of law or
policy concerning the status of the Indian Health Service as the payer
of last resort for Indians eligible for contract health services under
a health program of the Indian Health Service.
(c) Payment for Services by Medicare.--Programs of the Indian
Health Service shall be eligible for payments for services provided to
Medicare beneficiaries.
(d) Retention of Receipts.--Notwithstanding any other provision of
law, the collections made by a health program of the Indian Health
Service shall remain with the health program if the receipts are used
to--
(1) expand or improve its services;
(2) increase the number of persons it is able to serve;
(3) construct, expand or modernize its health care
facilities;
(4) improve the administration of its health service
programs; or
(5) develop or improve linkages with other health care
providers.
(e) Collection.--Each health program of the Indian Health Service
shall make every reasonable effort to collect appropriate reimbursement
for its costs in providing health services to persons who are covered
by public or private health insurance programs.
SEC. 8108. CONTRACTING AUTHORITY.
Section 601(d)(1)(B) of the Indian Health Care Improvement Act (25
U.S.C. 1661(d)(1)(B)) is amended by inserting ``(including personal
services for the provision of direct health care services)'' after
``goods and services''.
SEC. 8109. CONSULTATION.
(a) OMB and Secretary.--The Director of the Office of Management
and Budget and the Secretary shall consult, on an annual basis, with
representatives of Indian tribes, tribal organizations, and urban
Indian organizations concerning health care reform initiatives that
affect Indian communities, and policy, funding, and administration of
health programs of the Indian Health Service. The Secretary shall
solicit and consider the views and recommendations provided by Indian
tribes, tribal organizations, and representatives of urban Indian
organizations in making determinations that affect Indians and Indian
tribes and shall resolve any differences in favor of Indians and Indian
tribes.
(b) Federal Advisory Group.--
(1) Establishment.--The Secretary shall establish an
advisory group to assess all aspects of the development and
administration of the budget for programs of the Indian Health
Service and advise the Office of Management and Budget, the
Secretary and Congress with respect to such aspects.
(2) Composition.--The advisory group shall be comprised
of--
(A) not less than one representative from each area
of the Indian Health Service to be appointed by the
Secretary from nominees of tribes and tribal
organizations in the respective areas;
(B) not less than one urban Indian representative
from each area the Indian Health Service with an urban
Indian (as defined in section 4(f) of the Indian Health
Care Improvement Act (25 U.S.C. 1603(f)) program to be
appointed by the Secretary; and
(C) such other appointees as the Secretary
determines appropriate, on the condition that a
majority of the members are selected from nominations
submitted to the Secretary by a tribe or tribal
organization.
SEC. 8110. TRANSITIONAL STUDIES.
(a) In General.--The Secretary shall conduct planning, feasibility,
or similar health services studies related to the transition of the
health programs of the Indian Health Service under health care reform.
Such studies shall take into account the measurements and the means to
accomplish the Healthy People 2000 objectives as required under
sections 3 and 214 of the Indian Health Care Improvement Act. Such
studies shall include an assessment of--
(1) the feasibility of developing an Indian health plan or
plans;
(2) the financing necessary to provide the same level of
standard benefits to American Indians and Alaska Natives as
will be available to all other Americans;
(3) the staffing, program and infrastructure enhancements
required to deliver the standard benefits package;
(4) the facility and capital construction needs necessary
to provide the standard benefit package; and
(5) the administrative improvements necessary to network,
share and access patient data, quality management and
improvement data, and financial information.
(b) Advisory Group.--
(1) Establishment.--The Secretary shall establish an
advisory group to provide the Secretary with advise concerning
the focus, content and conduct of studies under subsection (a).
(2) Composition.--The advisory group shall be comprised
of--
(A) not less than one representative from each area
of the Indian Health Service to be appointed by the
Secretary from among nominees of tribes and tribal
organizations in the respective areas;
(B) not less than one urban Indian representative
from each area of the Indian Health Service which an
urban Indian (as defined in section 4(f) of the Indian
Health Care Improvement Act (25 U.S.C. 1603(f)) program
to appointed by the Secretary; and
(C) other appointees as the Secretary determines
appropriate, except that the Secretary shall ensure
that a majority of the members so appointed are
selected from nominations submitted to the Secretary by
tribes or tribal organizations.
(c) Recommendations.--Not later than June 30, 1997, the Secretary
shall submit to Congress recommendations based on the studies conducted
under this section, including recommendations for changes in the
structure of Indian Health Services. A time-table for implementing
health care reform activities shall be included in such final
recommendations.
SEC. 8111. LOANS AND LOAN GUARANTEES.
The Secretary may make loans, and guarantee the payment of
principal and interest, to Federal and non-Federal lenders on behalf of
health programs of the Indian Health Service for the purpose of
improving and expanding such facilities. Loans and loan guarantees
under this section shall be provided under such terms and conditions as
the Secretary may prescribe.
SEC. 8112. SIMPLIFICATION OF BILLING.
The Secretary shall take such action as may be necessary to ensure
that health programs of the Indian Health Service may submit all claims
for benefits or payment for services entitled to reimbursement in a
manner consistent with that of all other health care providers.
SEC. 8113. LONG-TERM CARE DEMONSTRATIONS.
Subject to the availability of appropriations under subtitle B of
title II (for home and community-based long-term care services), the
Secretary shall establish a demonstration program to provide five
grants to health programs of the Indian Health Service to enable such
Programs to plan and implement innovative methods of providing enhanced
home and community-based long-term care services.
SEC. 8114. TECHNICAL ASSISTANCE.
Indian tribes shall be eligible for funds made available under this
Act for technical assistance or transitional support.
SEC. 8115. PUBLIC HEALTH PROGRAMS.
Health programs of the Indian Health Service shall be eligible to
apply for funding under public health programs authorized under title
III of this Act (including those under section 3695(b)(14)), as deemed
appropriate by the Secretary.
SEC. 8116. SURVEY OF HEALTH SERVICES AVAILABLE TO INDIAN VETERANS.
(a) In General.--The Secretary, in consultation with the Secretary
of Veterans Affairs, Indian tribes and tribal organizations, shall
conduct a survey to assess the availability and accessibility of health
care services for Indian veterans residing on Indian reservations.
(b) Report.--Not later than 180 days after the date of enactment of
this Act, the Secretary shall submit a report to Congress that shall
include recommendations concerning the survey conducted under
subsection (a).
SEC. 8117. RULE OF CONSTRUCTION.
Unless otherwise provided in this Act, no part of this Act shall be
construed to rescind or otherwise modify any obligations, findings, or
purposes contained in the Indian Health Care Improvement Act (25 U.S.C.
1601 et seq.) and in the Indian Self-Determination and Education
Assistance Act (25 U.S.C. 450 et seq).
SEC. 8118. AUTHORIZATION OF APPROPRIATIONS.
(a) Authorization.--
(1) In general.--For the purpose of carrying out this
subtitle, including transitional costs and the purchase of
additional contract health care services for individual
eligible Indians, there are authorized to be appropriated
$515,000,000 for fiscal year 1995, $930,000,000 for fiscal year
1996, and $1,150,000,000 for each of the fiscal years 1997
through 2004.
(2) Supplemental indian health care benefits.--In addition
to amounts otherwise authorized to be appropriated (including
the amounts authorized to be appropriated under paragraph (1)),
for the purpose of carrying out section 8104, there are
authorized to be appropriated $360,000,000 for fiscal year
1995, $400,000,000 for each of the fiscal years 1996 through
1999, and such sums as may be necessary for fiscal year 2000
and each fiscal year thereafter.
(3) Loans and loan guarantees.--In addition to amounts
otherwise authorized to be appropriated (including the amounts
authorized to be appropriated under paragraph (1)), for the
purpose of carrying out section 8111, there are authorized to
be appropriated $500,000,000 for the principal of the loan. The
authority of the Secretary to make loans and to guarantee loans
under such section shall be subject to such amounts as may be
provided for in each fiscal year in advance in an
appropriations Act.
(b) Relation to Other Funds.--The authorizations of appropriations
established under this subtitle are in addition to any other
authorizations of appropriations that are available for the purposes of
carrying out this subtitle.
SEC. 8119. FUNDING METHODOLOGY.
The Secretary shall establish new methodologies, consistent with
the Indian Health Care Improvement Act, for the distribution to Indian
tribes of all new funds that become available for health care
initiatives under this subtitle. New distribution methodologies should
consider differences in local resources, status of health (as declared
under section 3 of such Act), socioeconomic status of tribal people,
and facilities, equipment and staff available in concert with the
establishment of Indian epidemiological centers under such Act.
Subtitle B--Department of Veterans Affairs
SEC. 8101. SHORT TITLE.
This Act may be cited as the ``Veterans Health Care Reform Act of
1994''.
SEC. 8102. BENEFITS AND ELIGIBILITY THROUGH DEPARTMENT OF VETERANS
AFFAIRS MEDICAL SYSTEM.
(a) Department of Veterans Affairs As a Participant in Health Care
Reform.--
(1) In general.--Title 38, United States Code, is amended
by inserting after chapter 17 the following new chapter:
``CHAPTER 18--ELIGIBILITY AND BENEFITS UNDER HEALTH SECURITY ACT
``SUBCHAPTER I--GENERAL
``1801. Definitions.
``SUBCHAPTER II--ENROLLMENT
``1811. Enrollment: veterans.
``1812. Enrollment: CHAMPVA eligibles.
``1813. Enrollment: family members.
``SUBCHAPTER III--BENEFITS
``1821. Benefits for VA enrollees.
``1822. Chapter 17 benefits.
``1823. Supplemental health benefits plans.
``1824. Limitation regarding veterans enrolled with health plans
outside Department.
``SUBCHAPTER IV--FINANCIAL MATTERS
``1831. Premiums, copayments, and other charges.
``1832. Medicare coverage and reimbursement.
``1833. Recovery of cost of certain care and services.
``1834. Health Plan Fund.
``SUBCHAPTER I--GENERAL
``Sec. 1801. Definitions
``For purposes of this chapter:
``(1) The term `health plan' means an entity that has been
certified under the Health Security Act as a health plan.
``(2) The term `VA health plan' means a health plan that is
operated by the Secretary under section 7341 of this title.
``(3) The term `VA enrollee' means an individual enrolled
under the Health Security Act in a VA health plan.
``(4) The term `standard benefit package' means the package
of benefits required to be provided by a health plan under the
Health Security Act.
``SUBCHAPTER II--ENROLLMENT
``Sec. 1811. Enrollment: veterans
``Each veteran may enroll with a VA health plan. A veteran who
wants to receive the standard benefit package through the Department
shall enroll with a VA health plan.
``Sec. 1812. Enrollment: CHAMPVA eligibles
``An individual who is eligible for benefits under section 1713 of
this title may enroll with a VA health plan in the same manner as a
veteran.
``Sec. 1813. Enrollment: family members
``(a) The Secretary may authorize a VA health plan to enroll
members of the family of an enrollee under section 1811 or 1812 of this
title, subject to payment of premiums, deductibles, copayments, and
coinsurance as required under the Health Security Act.
``(b) For purposes of subsection (a), an enrollee's family is those
individuals (other than the enrollee) included within the term `family'
as defined in section 1113(b) of the Health Security Act.
``SUBCHAPTER III--BENEFITS
``Sec. 1821. Benefits for VA enrollees
``The Secretary shall ensure that each VA health plan provides to
each individual enrolled with it the items and services in the standard
benefit package under the Health Security Act, to the extent that such
items and services can be provided consistent with appropriations for
that purpose. In the event that appropriations are insufficient the
Secretary may revise the standard benefit package available to enrolled
individuals.
``Sec. 1822. Chapter 17 benefits
``The Secretary shall provide to a veteran the care and services
not included in the standard benefit package that are authorized to be
provided under chapter 17 of this title in accordance with the terms
and conditions applicable to that veteran and that care under such
chapter, to the extent that such items and services can be provided
consistent with appropriations for that purpose. In the event that
appropriations are insufficient the Secretary may revise the standard
benefit package available to enrolled individuals.
``Sec. 1823. Supplemental health benefits plans
``(a) As part of a VA health plan, the Secretary may offer to
veterans--
``(1) supplemental health benefits plans (as that term is
defined in section 1011(3)(B) of the Health Security Act) for
the care and services described in subsection (b); and
``(2) cost-sharing plans consistent with the requirements
of part 4 of subtitle B of title I of the Health Security Act.
``(b) The care and services referred to in subsection (a) are care
and services that--
``(1) are not available under the standard benefit package;
and
``(2) can be provided by the Secretary at reasonable cost.
``Sec. 1824. Limitation regarding veterans enrolled with health plans
outside Department
``A veteran who is residing in a community-rated area in which the
Department operates a health plan and who is enrolled in a health plan
that is not operated by the Department may be provided the items and
services in the standard benefit package by a VA health plan only if
the plan is reimbursed for the care provided.
``SUBCHAPTER IV--FINANCIAL MATTERS
``Sec. 1831. Premiums, copayments, and other charges
``(a) Except as provided in paragraph (2), the Secretary may not
impose on or collect from a veteran described in subsection (b) who is
a VA enrollee a cost-share charge of any kind (whether a premium,
copayment, deductible, coinsurance charge, or other charge) for items
and services in the standard benefit package that a VA health plan
provides.
``(b) The veterans referred to in subsection (a) are the following:
``(1) Any veteran with a compensable service-connected
disability.
``(2) Any veteran whose discharge or release from the
active military, naval or air service was for a disability
incurred or aggravated in the line of duty.
``(3) Any veteran who is in receipt of, or who, but for a
suspension pursuant to section 1151 of this title (or both such
a suspension and the receipt of retired pay), would be entitled
to disability compensation, but only to the extent that such a
veteran's continuing eligibility for such care is provided for
in the judgment or settlement provided for in such section.
``(4) Any veteran who is a former prisoner of war.
``(5) Any veteran of the Mexican border period or World War
I.
``(6) Any veteran who is unable to defray the expenses of
necessary care as determined under section 1722(a) of this
title.
``(7) Any veteran referred to in subparagraph (A), (B), or
(C) of section 1710(e) of this title.
``(c)(1) Except as provided in paragraph (2), in the case of a VA
enrollee who is not described in subsection (b), the Secretary shall
charge premiums and establish copayments, deductibles, and coinsurance
amounts for care and services provided under this chapter. The premium
rate, and the rates for deductibles and copayments, for each VA health
plan shall be established by that health plan based on rules
established under the Health Security Act.
``(2) The Secretary may not charge a veteran referred to in
paragraph (1) a premium for any care or service that the Secretary
provides the veteran under a supplemental health benefits plan offered
under section 1823 of this title if the Secretary is required to
provide such care or service under chapter 17 of this title.
``Sec. 1832. Medicare coverage and reimbursement
``(a) For purposes of any program administered by the Secretary of
Health and Human Services under title XVIII of the Social Security Act
(42 U.S.C. 1395 et seq.), a Department facility shall be deemed to be a
Medicare provider.
``(b)(1) A VA health plan shall be considered to be a Medicare HMO.
``(2) For purposes of this section, the term `Medicare HMO' means
an eligible organization under section 1876 of the Social Security Act.
``(c) In the case of care provided under this chapter to a veteran
(other than a veteran described in section 1831(b) of this title), or
to a family member of a veteran, who is eligible for benefits under the
Medicare program under title XVIII of the Social Security Act, the
Secretary of Health and Human Services shall reimburse a VA health plan
or Department health-care facility providing services as a Medicare
provider or Medicare HMO in the same amounts and under the same terms
and conditions as that Secretary reimburses other Medicare providers or
Medicare HMOs, respectively. The Secretary of Health and Human Services
shall include with each such reimbursement a Medicare explanation of
benefits.
``(d) When the Secretary provides care to a veteran, or a family
member of a veteran, for which the Secretary receives reimbursement
under this section, the Secretary shall require the veteran to pay to
the Department any applicable deductible or copayment that is not
covered by Medicare.
``Sec. 1833. Recovery of cost of certain care and services
``(a) In the case of an individual provided care or services
through a VA health plan who has coverage under a supplemental health
benefits plan pursuant to part 4 of subtitle B of title I of the Health
Security Act, a Medicare supplemental health insurance plan, or any
other provision of law, the Secretary has the right to recover or
collect charges for care or services (as determined by the Secretary,
but not including care or services for a service-connected disability)
from the party providing that coverage to the extent that the
individual (or the provider of the care or services) would be eligible
to receive payment for such care or services from such party if the
care or services had not been furnished by a department or agency of
the United States.
``(b) In the case of a veteran referred to in section 1831(b) of
this title who is enrolled in a health plan other than a VA health plan
and who is provided care or services for a service-connected disability
by a VA health plan, the Secretary has the right to recover or collect
charges for such care and services from the party operating the health
plan to the extent that the veteran (or the provider of the care or
services) would be eligible to receive payment for such care or
services from such party if the care or services had not been furnished
by a department or agency of the United States.
``(c) The provisions of subsections (b) through (f) of section 1729
of this title shall apply with respect to claims by the United States
under subsection (a) or (b) in the same manner as they apply to claims
under subsection (a) of that section.
``Sec. 1834. Health Plan Fund
``(a) There is hereby established in the Treasury a revolving fund
to be known as the `Department of Veterans Affairs Health Plan Fund'.
``(b)(1) Subject to paragraphs (2) and (3), amounts collected or
recovered by the Department under this subchapter by reason of the
furnishing of care and services to an individual by a VA health plan or
the enrollment of an individual with a VA health plan (including
amounts received as premiums, premium discount payments, copayments or
coinsurance, and deductibles, amounts received as third-party
reimbursements or reimbursements from Medicare, and amounts received as
reimbursements from another health plan for care furnished to one of
its enrollees) shall be credited to the revolving fund.
``(2) Premiums collected by the Department under this subchapter
during fiscal year 1996 or 1997 by reason of the furnishing of care and
services under a VA health plan to a veteran referred to in section
1831(b) of this title shall be credited to the revolving fund
established under subsection (a) only if the amount of funds
appropriated to the Veterans Health Care Investment Fund established
under subsection (a)(1) of section 7346 of this title for the fiscal
year concerned is less than the amount specified to be credited to that
fund for that fiscal year under subsection (c) of such section 7346.
``(3) Premiums received by the Department under this subchapter in
any fiscal year after fiscal year 1997 by reason of the furnishing of
care and services under a VA health plan to a veteran referred to in
paragraph (2) shall be credited to the revolving fund established under
subsection (a) only if the cost of providing such care and services is
not covered by appropriations. The amount so credited shall be the
amount of such premiums received that is necessary to cover the
difference between the cost of such care and services and such
appropriations.
``(c) The Secretary shall establish in the revolving fund a
separate account for each VA health plan. The Secretary shall credit
any amount received under subsection (b) by reason of the furnishing of
care and services in or through a VA health plan or the enrollment of
an individual with a VA health plan.
``(d) Amounts credited to the account of the revolving fund for a
VA health plan under subsection (b) are hereby made available to the VA
health plan for the expenses of the delivery by the VA health plan of
the items and services in the standard benefit package and any
supplemental health benefits plan offered by the VA health plan.''.
(2) The table of chapters at the beginning of title 38,
United States Code, and at the beginning of part II of such
title, is amended by inserting after the item relating to
chapter 17 the following new item:
``18. Benefits and Eligibility Under Health Security Act.... 1801.''.
(b) Preservation of Existing Benefits for Facilities Not Operating
as Health Plans.--(1) Chapter 17 of title 38, United States Code, is
amended by inserting after section 1704 the following new section:
``Sec. 1705. Facilities not operating within health plans
``The provisions of this chapter shall apply with respect to the
furnishing of care and services by any facility of the Department when
it is not operating as or within a health plan certified as a health
plan under the Health Security Act.''.
(2) The table of sections at the beginning of such chapter is
amended by inserting after the item relating to section 1704 the
following new item:
``1705. Facilities not operating within health plans.''.
SEC. 8103. ORGANIZATION OF DEPARTMENT OF VETERANS AFFAIRS FACILITIES AS
HEALTH PLANS.
(a) In General.--Chapter 73 of title 38, United States Code, is
amended--
(1) by redesignating subchapter IV as subchapter V; and
(2) by inserting after subchapter III the following new
subchapter IV:
``SUBCHAPTER IV--PARTICIPATION AS PART OF NATIONAL HEALTH CARE REFORM
``Sec. 7341. Organization of health care facilities as health plans
``(a)(1) The Secretary may, subject to the availability of
appropriations, organize health plans and operate Department facilities
as or within health plans under the Health Security Act.
``(2)(A) The Secretary may prescribe regulations establishing
standards for the operation of Department health care facilities as or
within health plans under that Act. In prescribing such standards, the
Secretary shall ensure that they conform, to the extent possible under
the requirements of section 1821, to the requirements for health plans
generally set forth in part 1 of subtitle B of title I of the Health
Security Act.
``(B) Not later than 30 days after prescribing such standards, the
Secretary shall submit to the Committees on Veterans' Affairs of the
Senate and the House of Representatives a report describing the
differences, if any, between such standards and the requirements for
health plans generally referred to in subparagraph (A).
``(b) Health care facilities of the Department located within an
area or region may be organized to operate as a single health plan
encompassing all Department facilities within that area or region or
may be organized to operate as several health plans.
``(c) In carrying out responsibilities under the Health Security
Act, a State (or a State-established entity)--
``(1) may not impose any standard or requirement on a VA
health plan that is inconsistent with this chapter or any
regulation prescribed under this chapter or other Federal laws
regarding the operation of this chapter; and
``(2) may not deny certification of a VA health plan under
the Health Security Act on the basis of a conflict between a
rule of a State and this chapter or regulations prescribed
under this chapter or other Federal laws regarding the
operation of this chapter.
``Sec. 7342. Contract authority for facilities operating as or within
health plans
``(a) The Secretary shall designate a health plan director for each
VA health plan organized and operated under this subchapter.
``(b) The health plan director of a VA health plan may enter into
contracts and agreements for the provision of care and services to be
provided under the VA health plan and contracts and agreements for
other services (including procurement of equipment, maintenance and
repair services, and other services related to the provision of health
care services) consistent with section 1821 of this title.
``(c) Contracts and agreements (including leases) under subsection
(a) shall not be subject to the following provisions of law:
``(1) Section 8110(c) of this title, relating to the
contracting of services at Department health-care facilities.
``(2) Section 8122(a)(1) of this title, relating to the
lease of Department property.
``(3) Section 8125 of this title, relating to local
contracts for the procurement of health-care items.
``(4) Section 702 of title 5, relating to the right of
review of agency wrongs by courts of the United States.
``(5) Sections 1346(a)(2) and 1491 of title 28, relating to
the jurisdiction of the district courts of the United States
and the United States Court of Federal Claims, respectively,
for the actions enumerated in such sections.
``(6) Subchapter V of chapter 35 of title 31, relating to
adjudication of protests of violations of procurement statutes
and regulations.
``(7) Sections 3526 and 3702 of such title, relating to the
settlement of accounts and claims, respectively, of the United
States.
``(8) Subsections (b)(7), (e), (f), (g), and (h) of section
8 of the Small Business Act (15 U.S.C. 637(b)(7), (e), (f),
(g), and (h)), relating to requirements with respect to small
businesses for contracts for property and services.
``(9) The provisions of law assembled for purposes of
codification of the United States Code as section 471 through
544 of title 40 that relate to the authority of the
Administrator of General Services over the lease and disposal
of Federal Government property.
``(10) The provisions of the Office of Federal Procurement
Policy Act (41 U.S.C. 401 et seq.), relating to the procurement
of property and services by the Federal Government.
``(11) Chapter 3 of the Federal Property and Administrative
Services Act of 1949 (41 U.S.C. 251 et seq.), relating to the
procurement of property and services by the Federal Government.
``(12) Office of Management and Budget Circular A-76.
``(c)(1) Contracts and agreements for the provision of care and
services under subsection (a) may include any contract or other
agreement that the health plan director of a VA health plan determines
is consistent with section 1821 of this title and appropriate in order
to provide care and services under the VA health plan.
``(2) Contracts and agreements under this subsection may be entered
into without prior review by the Central Office of the Department.
``(d)(1) The entry into a contract or agreement under this section
for services other than the services referred to in subsection (c)
(including contracts and agreements for procurement of equipment,
maintenance and repair services, and other services related to the
provision of health care services) shall not be subject to prior review
by the Central Office if the contract is consistent with section 1821
of this title and the amount of the contract or agreement is less than
$250,000.
``(2) The Central Office may conduct a prior review of a contract
or agreement referred to in paragraph (1) if the amount of the contract
or agreement is $250,000 or greater.
``Sec. 7343. Resource sharing authority
``(a) The Secretary may, consistent with section 1821 of this
title, enter into agreements under section 8153 of this title with
other health care plans, with health care providers, and with other
health industry organizations, and with individuals, for the sharing of
resources of the Department under a VA health plan.
``(b) The Secretary may, consistent with section 1821 of this
title, enter into agreements with other departments and agencies of the
Federal Government for the sharing of resources of the Department and
such departments and agencies in order to provide care and services
under a VA health plan.
``Sec. 7344. Administrative and personnel flexibility
``(a) Notwithstanding any other provision of law, the Secretary
may--
``(1) appoint health care personnel to positions in any
facility of the Department operating as or within a VA health
plan in accordance with such qualifications for such positions
as the Secretary may establish; and
``(2) promote and advance personnel serving in such
positions in accordance with such qualifications as the
Secretary may establish.
``(b) Subject to the provisions of section 1125 of the Health
Security Act, the Secretary may carry out appropriate promotional,
advertising, and marketing activities to inform individuals of the
availability of VA health plans.
``Sec. 7345. Expenditure authority
``(a)(1) To the extent that appropriations are available, the
director of a VA health plan may expend funds available to a VA health
plan (including funds available under section 1834(c) of this title,
funds available under section 7346(d)(2)(B) of this title, and funds
otherwise made available to the VA health plan by the Secretary) for
any purpose, and in any amount, that the director determines
appropriate in order to ensure that the VA health plan meets the
requirements and the requirements of furnishing care and services to
veterans under chapter 17 of this title.
``(2) Funds may be expended under this subsection in order to cover
the following costs:
``(A) The costs of marketing and advertising under a VA
health plan.
``(B) The costs of legal services provided to a VA health
plan by the General Counsel of the Department.
``(C) The costs of acquisition (including acquisition of
land), construction, repair, or renovation of facilities.
``(3) The exercise by a health plan director of the authority
provided in paragraph (1) shall not be subject to prior review by the
Central Office of the Department.
``(b) Subsection (a) shall not apply to expenditures of funds
provided to a facility by the Central Office of the Department
exclusively for the purpose of the provision of the following services:
``(1) Services relating to post-traumatic stress disorder.
``(2) Services relating to spinal-cord dysfunction.
``(3) Services relating to substance abuse.
``(4) Services relating to the rehabilitation of blind
veterans.
``Sec. 7346. Veterans Health Care Investment Fund
``(a) There is hereby established in the Treasury of the United
States a fund to be known as the Veterans Health Care Investment Fund
(in this section referred to as the `Fund').
``(b) There is hereby authorized to be appropriated to the
Department, in addition to amounts otherwise authorized to be
appropriated to the Department for VA health plans, such amounts as are
necessary for the Secretary of the Treasury to fulfill the requirement
of subsection (c).
``(c) For each of fiscal years 1995, 1996, and 1997, the Secretary
of the Treasury shall, subject to the availability of appropriated
funds, credit to the Fund an amount in that fiscal year as follows:
``(1) For fiscal year 1995, $1,225,000,000.
``(2) For fiscal year 1996, $600,000,000.
``(3) For fiscal year 1997, $1,700,000,000.
``(d)(1) Subject to paragraph (2), amounts in the Fund shall be
available to the Secretary only for the VA health plans organized and
operated under this subchapter.
``(2)(A) For each of fiscal years 1996 and 1997, the Secretary
shall estimate the total amount to be collected or recovered under
sections 1831, 1832, and 1833 of this title by reason of the provision
of care and services through VA health plans under chapter 18 of this
title or the enrollment of individuals in such plans under that
chapter. The Secretary shall estimate the amount to be so collected or
recovered with respect to each VA health plan and with respect to all
VA health plans.
``(B) For each such fiscal year, the Secretary shall make available
to each VA health plan an amount that bears the same relationship to
the total amount available in the Fund for the fiscal year as the
amount estimated to be collected or recovered by the VA health plan
during the fiscal year bears to the total amount estimated to be
collected or recovered by all VA health plans during that fiscal year.
``(e) Not later than March 1, 1997, the Secretary shall submit to
Congress a report concerning the operation of the Department of
Veterans Affairs health care system in preparing for, and operating
under, national health care reform under the Health Security Act during
fiscal years 1995 and 1996. The report shall include a discussion of--
``(1) the adequacy of amounts in the Fund for the operation
of VA health plans;
``(2) the quality of care provided by such plans; and
``(3) the ability of such plans to attract patients.
``Sec. 7347. Funding provisions: grants and other sources of assistance
``The Secretary may apply for and accept, if awarded, any grant or
other source of funding that is intended to meet the needs of special
populations and that but for this section is unavailable to facilities
of the Department or to health plans operated by the Government if
funds obtained through the grant or other source of funding will be
used through a facility of the Department operating as or within a
health plan.''.
(b) Clerical Amendment.--The table of sections at the beginning of
chapter 73 is amended by striking out the item relating to the heading
for subchapter IV and inserting in lieu thereof the following:
``Subchapter IV--Participation as Part of National Health Care Reform
``7341. Organization of health care facilities as health plans.
``7342. Contract authority for facilities operating as or within health
plans.
``7343. Resource sharing authority.
``7344. Administrative and personnel flexibility.
``7345. Expenditure authority.
``7346. Veterans Health Care Investment Fund.
``7347. Funding provisions: grants and other sources of assistance.
``Subchapter V--Research Corporations''.
TITLE IX--WORKERS COMPENSATION MEDICAL SERVICES
SEC. 9000. APPLICATION OF INFORMATION REQUIREMENTS.
(a) In General.--The provisions of subtitle B of title V shall
apply to the provision of workers compensation medical services
provided by a health plan or health care provider in the same manner as
such provisions apply with respect to the provision of services
included in the standard benefit package.
(b) Information.--Subject to the provisions of subtitle C of title
V, health plans and health care providers that render workers
compensation medical services shall provide to the worker and to the
workers compensation carrier, the employer or both, as appropriate,
relevant health care information necessary to assist the worker in the
safe and timely return to work.
(c) Compliance With Duties and Requirements.--A health plan to
which this section applies and its providers shall comply with legal
duties and reporting requirements under State workers compensation
laws, and other Federal and State laws, including laws regarding the
reporting of occupational injuries and diseases.
(d) Rules.--The Secretary of Labor shall promulgate rules to
clarify the responsibilities of health plans and health care providers
in carrying out the provisions referred to in subsection (a).
SEC. 9001. PROVISION OF CARE IN DISPUTED CASES.
(a) In General.--In cases in which a workers compensation claim is
challenged by the employer, the workers compensation carrier, or both,
a health plan shall provide or pay for all medical care included in the
standard benefit package according to the applicable workers
compensation fee schedule, if any, until such time as a determination
is made through the adjudication process that the claim is compensable
as a workers compensation claim. If such a determination is made, the
workers compensation carrier (or the employer, if self-insured) shall
reimburse the health plan (for the cost of services delivered to the
member for the work-related illness or injury) and the worker (for any
copayments, deductibles or coinsurance costs incurred for such
services).
(b) Applicability.--Subsection (a) shall not apply in a case where
compensation has been accepted by the insurer or the employer, or paid
without prejudice.
SEC. 9002. DEMONSTRATION PROJECTS.
(a) Authorization.--The Secretary of Health and Human Services and
the Secretary of Labor are authorized to conduct demonstration projects
under this section in one or more States with respect to treatment of
work-related injuries and illnesses.
(b) Development of Work-Related Protocols.--
(1) In general.--The Secretary of Health and Human Services
and the Secretary of Labor, in consultation with the States and
such experts on work-related injuries and illnesses as each
such Secretary finds appropriate, shall develop protocols for
the appropriate treatment of work-related conditions.
(2) Testing of protocols.--The Secretary of Health and
Human Services and the Secretary of Labor shall enter into
contracts with one or more community-rated health plans to test
the validity of the protocols developed under subsection (a).
(c) Development of Capitation Payment Models.--The Secretary of
Health and Human Services and the Secretary of Labor shall develop,
using protocols developed under subsection (b) if possible, methods of
providing for payment by workers compensation carriers to health plans
on a per case basis, capitated payment for the treatment of specified
work-related injuries and illnesses.
SEC. 9003. COMMISSION ON WORKERS COMPENSATION MEDICAL SERVICES.
(a) Establishment.--There is hereby established a Commission on
Workers Compensation Medical Services (hereafter in this section
referred to as the ``Commission'').
(b) Composition.--
(1) In general.--The Commission shall consist of 15 members
appointed in accordance with paragraph (2). Members of the
Commission shall include--
(A) one or more individuals representing State
workers compensation commissioners;
(B) one or more individuals representing State
workers compensation funds;
(C) one or more individuals representing labor
organizations;
(D) one or more individuals representing employers
(other than workers compensation insurance carriers);
(E) one or more individuals representing workers
compensation insurance carriers;
(F) one or more members of the medical profession
having expertise in occupational health; and
(G) one or more educators or researchers having
expertise in the field of occupational health.
Eight members of the Commission shall constitute a quorum.
(2) Appointments.--Members of the Commission shall be
appointed by the President and shall include--
(A) three members appointed from among individuals
recommended by the Speaker of the House of
Representatives;
(B) three members appointed from among individuals
recommended by the Minority Leader of the House of
Representatives;
(C) three members appointed from among individuals
recommended by the Majority Leader of the Senate; and
(D) three members appointed from among individuals
recommended by the Minority Leader of the Senate.
(3) No compensation except travel expenses.--Members of the
Commission shall serve without compensation, but each member
shall receive travel expenses, including per diem in lieu of
subsistence, in accordance with sections 5702 and 5703 of title
5, United States Code.
(c) Duties.--
(1) In general.--The Commission shall study the
relationship of workers compensation medical services to the
new health system under this Act in terms of impact on the cost
of workers compensation medical services, access to appropriate
care for injured workers, and quality of medical care and its
impact on functional and vocational outcomes for injured
workers.
(2) Evaluation issues to be addressed.--In its
deliberations under paragraph (1), the Commission shall
consider the following issues in examining the relationship
between health plans and workers compensation medical services:
(A) The impact of health reform on workers
compensation medical costs and premium rates charged to
employers for workers compensation insurance.
(B) The extent and impact of cost-shifting and
price discrimination between the workers compensation
medical system and traditional health insurers.
(C) The impact of experience rating adjustments
resulting from workers compensation medical services on
workplace safety.
(D) The advantages and disadvantages of maintaining
separate financing, payment and delivery systems for
workers compensation medical services, including the
impact on--
(i) the quality of medical care delivered
to workers injured or made ill on the job;
(ii) the incentives for employers to
maintain safe work-places; and
(iii) workers compensation indemnity
benefit costs, medical costs and the overall
costs of the workers compensation system.
(E) The advisability and appropriateness of
transferring financial responsibility for some or all
workers compensation medical benefits to health plans.
(F) The impact of State-to-State variations in
medical and rehabilitation benefits on costs, access
and quality of care.
(G) The options that are available to accomplish
the delivery of workers compensation benefits not
included in the standard benefit package in integrated
systems
(H) Whether capitated rates can be developed for
workers compensation medical benefits, and the impact
of using such rates on medical and indemnity costs,
access, and quality of care.
(I) The impact of provider choice, with respect to
an injured worker, on workers compensation medical
costs, wage-loss benefits costs, and quality of care.
(d) Staff Support.--The Secretary of Health and Human Services and
the Secretary of Labor shall provide staff support for the Commission.
(e) Reports.--Not later than October 1, 2000, the Commission shall
submit a final report on its work to the President, the Committee on
Labor and Human Resources of the Senate and the Committee on Education
and Labor of the House of Representatives. Such report shall include a
recommendation as to whether a transfer of financial responsibility for
some or all medical benefits to health plans should be effected, and a
detailed implementation plan should such a transfer be recommended.
Prior to the submission of the final report, the Commission shall
submit such interim reports on issues addressed by the Commission as
the members of the Commission determine to be appropriate.
TITLE X--PREMIUM FINANCING
Subtitle A--National Health Care Cost and Coverage Commission
SEC. 10001. NATIONAL HEALTH CARE COST AND COVERAGE COMMISSION.
There is established a commission to be known as the National
Health Care Cost and Coverage Commission (hereafter in this title
referred to as the ``Commission'').
SEC. 10002. COMPOSITION.
(a) Composition.--The Commission shall be composed of 7 members
appointed by the President and confirmed by the Senate. Members shall
be appointed not later than 9 months after the date of the enactment of
this Act based on their expertise and national recognition in the
fields of health economics including insurance practices, health care
benefit design, health care provider organization and reimbursement,
and labor 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.
(b) Chairperson.--The President shall designate 1 individual
described in subsection (a) who shall serve as Chairperson of the
Commission.
(c) Terms.--
(1) In general.--The terms of members of the Commission
shall be for 6 years to commence on January 1, 1996, except
that of the members first appointed, 3 shall be appointed for
an initial term of 4 years, 3 shall be appointed for an initial
term of 5 years and the chairperson shall be appoint for an
initial term of 6 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.
SEC. 10003. DUTIES OF COMMISSION.
(a) In General.--The general duties of the Commission are to
monitor and respond to--
(1) trends in health care 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 coverage of health insurance.
(b) Annual Reports.--
(1) In general.--The Commission shall report to Congress
annually on January 1 (beginning in 1997) concerning trends in
health care coverage and costs. Such reports shall categorize
such information on a national basis, a State by State basis,
and a community rating area basis.
(2) Health care coverage.--For purposes of this title, the
term ``health care 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 of the
Social Security Act;
(C) the medicaid program under title XIX of the
Social Security Act;
(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 under
subpart B of part 3 of subtitle F of title I; or
(I) any governmental health care program for
institutionalized individuals.
(3) Contents of report.--Each report under paragraph (1)
shall include the findings of the Commission with respect to
the following:
(A) Demographics and employment status of the
uninsured individuals, and findings on why such
individuals are uninsured.
(B) Structure of delivery systems.
(C) Status of insurance reforms.
(D) Development and operation of purchasing
cooperatives and other buyer reforms.
(E) Success of market and other mechanisms in
expanding coverage and controlling health expenditures
and premium costs among employers and families.
(F) Success of the tax imposed under section 4521
of the Internal Revenue Code of 1986.
(G) Success and adequacy of the individual and
employer subsidy programs under title VI in expanding
coverage through employers and families.
(H) Per capita cost of health care, including--
(i) the rate of growth in health care costs
categorized by type of health care provider and
type of payor in States and community rating
areas;
(ii) the expected rate of growth in per
capita health care costs;
(iii) the causes of such growth; and
(iv) proposed strategies for controlling
such growth.
(I) The percentage of the resident population in
the United States, and each State, that has health care
coverage.
(4) Benefits issues.--The Commission shall consult with the
National Health Benefits Board in gathering data and in making
recommendations concerning issues that effect the standard
benefit package.
(c) Affordability Reports.--
(1) In general.--As part of each annual report under
subsection (b), beginning with the report for 1999, the
Commission shall include information on--
(A) the affordability of health care coverage for
families and employers; and
(B) the success of market incentives and other
provisions of this Act in achieving health care cost
containment.
(2) Determination and recommendations.--If the Commission
determines for any year that health care coverage is
unaffordable (as described in paragraph (3)) or that cost
containment efforts under this Act are unsuccessful, the
Commission shall submit recommendations in the annual report
for systematic improvements as provided for in paragraph (4).
(3) Cost of coverage.--The Commission shall make a
determination of unaffordability under paragraph (2) if the
Commission finds that, with respect to the year for which the
report is submitted, fewer than 35 percent of those eligible to
enroll in community-rated health plans were able to enroll in
plans with a premium that was at or below the reference premium
for the community rating area involved.
(4) Recommendations.--If the Commission makes a finding
under paragraph (3) with respect to any year, the Commission
shall recommend to Congress a means of controlling health care
costs in order to ensure that the growth in the per capita
premium for community-rated plans is at or below the growth in
the target per capita premium for the community rating area
involved. The Commission may recommend alternative target per
capita premium growth if the Commission determines that such
alternative would be more appropriate.
(5) Congressional consideration.--The recommendations of
the Commission under paragraph (4) shall be submitted to
Congress in the form of an implementing bill which contains
such statutory provisions as the Commission determines are
necessary or appropriate to implement such recommendations.
Such bill shall be considered under the procedures established
under section 10004.
(d) Coverage Trigger.--
(1) Commission determination.--By January 1, 2000, the
Commission shall make a determination as to the percentage of
the resident population in the United States, and each State,
that has health care coverage.
(2) Attainment of coverage goal.--
(A) In general.--If, under paragraph (1), the
Commission determines that health care coverage of at
least 95 percent of the resident population in the
United States has been attained, the Commission shall
submit recommendations (under subparagraph (B)) in its
annual report to Congress on January 1, 2000.
(B) Recommendation requirement.--The
recommendations of the Commission under subparagraph
(A) shall include methods to expand health care
coverage to those who are not covered. Such
recommendations shall address all relevant parties,
including States, employers, employees, unemployed and
low-income individuals, and public program
participants.
(3) Coverage goal not attained.--
(A) In general.--If, under paragraph (1), the
Commission determines that health care coverage of at
least 95 percent of the resident population in the
United States has not been attained by January 1, 2000,
the Commission shall submit recommendations (under
subparagraph (B)) in its annual report to Congress not
later than May 15, 2000.
(B) Recommendation requirements.--The
recommendations of the Commission under paragraph (1)
shall include one or more legislative proposals for
expanding health care coverage to cover the remaining
uninsured population. Such recommendations shall
address all relevant parties, including States,
employers, employees, unemployed and low-income
individuals, and public program participants.
(C) Congressional consideration.--The
recommendations of the Commission under subparagraph
(A) shall be submitted to Congress in the form of one
or more implementing bills which contains such
statutory provisions as the Commission determines are
necessary or appropriate to implement such
recommendations. Such bill shall be considered under
the procedures established under section 10004.
SEC. 10004. CONGRESSIONAL CONSIDERATION OF COMMISSION RECOMMENDATIONS.
(a) Implementing Bills.--
(1) In general.--Except as provided in paragraph (2), an
implementing bill described in section 10003(c)(5) or section
10003(d)(3)(C) shall be considered by Congress under the
procedures for consideration described in subsection (b),
except that with respect to an implementing bill described in
section 10003(c)(5), the date described in subsection (b)(3)
shall not apply.
(2) GAO consideration.--With respect to an implementing
bill described in section 10003(d)(3)(C), to be eligible for
Congressional consideration under subsection (b), the General
Accounting Office must certify that, if implemented, the
legislative proposals in such bill would expand health care
coverage to cover the remaining uninsured population.
(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 (a) 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 Leader of the House, for himself or herself and the
Minority Leader of the House, or by Members of the House
designated by the Majority Leader and Minority Leader of the
House and shall be introduced (by request) in the Senate by the
Majority Leader of the Senate, for himself or herself and the
Minority Leader of the Senate, or by Members of the Senate
designated by the Majority Leader and Minority Leader of the
Senate. If either House is not in session on the day on which
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, 2000 (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.
(7) Points of order based on expanding coverage.--
(A) In general.--It shall not be in order in the
Senate to consider--
(i) any bill;
(ii) any bill prior to third reading; or
(iii) any conference report;
under the procedures described in this subsection if
such bill or conference report has not been certified
by the General Accounting Office under subsection
(a)(2) as expanding coverage to cover the remaining
uninsured.
(B) Waiver or suspension.--Subparagraph (A) may be
waived or suspended in the Senate only by the
affirmative vote of \3/5\ of the members duly chosen
and sworn. An affirmative vote of \3/5\ of the members
of the Senate duly chosen and sworn shall be required
in the Senate to sustain an appeal of the ruling of the
chair on a point of order raised under this paragraph.
(c) Failure to Enact Legislation.--If Congress fails to enact
legislation with respect to an implementing bill under section
10003(d)(3)(C) by December 31, 2000, the employer and individual
premium financing provisions of subtitle B shall become effective on
January 1, 2002 with respect to those States determined by the
Commission under 10003(d)(3)(A) to have health care coverage for less
than 95 percent of the resident populations of each such State.
SEC. 10005. OPERATION OF THE COMMISSION.
(a) 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.
(b) 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 of the Commission shall be
paid at a rate equal to the daily equivalent of the
minimum annual rate of basic pay payable for level IV
of the Executive Schedule under section 5315 of title
5, United States Code, for each day (including travel
time) during which the member is engaged in the actual
performance of duties vested in the Commission.
(B) Travel expenses.--Members of the Commission
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.
(c) Authorization of Appropriations.--There are authorized to be
appropriated such sums as are necessary for the operation of the
Commission.
Subtitle B--Employer and Individual Premium Requirements and Assistance
SEC. 10101. APPLICATION OF SUBTITLE.
(a) In General.--The provisions of the subtitle shall apply as
provided in section 10003(c).
(b) Application With Respect To Individuals.--
(1) Lawful residents.--
(A) In general.--This subtitle shall only apply
with respect to an individual who is residing in a
State involved 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 (B)).
(B) 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.
(2) Individual responsibilities.--With respect to a State
to which this subtitle applies, each individual described in
paragraph (1)(A)--
(A) must enroll in (or be covered under) a health
plan for the individual, and
(B) must pay any premium required, consistent with
this Act, with respect to such enrollment.
(3) Individuals covered under equivalent health care
programs.--This subtitle shall not apply with respect to an
individual covered under an equivalent health care program.
(4) Equivalent health care program.--As used in paragraph
(1), 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 subpart B of part 3 of subtitle F.
(5) Inmates.--This subtitle shall not apply with respect to
an individual who is an inmate of a public institution (except
as a patient of a medical institution).
(6) Exemption.--
(A) In general.--The requirements of this subtitle
shall not apply with respect to an individual granted a
qualified religious exemption.
(B) Qualified religious exemption.--
(i) In general.--The term `qualified
religious exemption' means an exemption granted
by the Secretary to an individual--
(I) who is a member of a recognized
religious sect or division thereof with
respect to which such Secretary makes
the findings referred to in
subparagraphs (C), (D), and (E) of
section 1402(g)(1) of the Internal
Revenue Code of 1986,
(II) who is an adherent of
established tenets or teachings of such
sect or division as described in such
section, and
(III) who submits an application
for such exemption which contains or is
accompanied by the evidence described
in section 1402(g)(1)(A) of such Act
and a waiver described in section
1402(g)(1)(B) of such Act.
(C) Limitation.--An exemption granted under this
paragraph shall cease to apply beginning on the date
such Secretary determines that the individual, or the
sect or division, ceased to meet the requirements of
subparagraph (B).
SEC. 10102. DEFINITIONS.
For purposes of this title:
(1) Full-time equivalent employees; part-time employees.--
(A) In general.--A qualifying employee who is
employed by an employer--
(i) for at least 120 hours in a month, is
counted as 1 full-time equivalent employee for
the month and shall be deemed to be employed on
a full-time basis, or
(ii) for at least 40 hours, but less than
120 hours, in a month, is counted as a fraction
of a full-time equivalent employee in the month
equal to the full-time employment ratio (as
defined in subparagraph (B)) for the employee
and shall be deemed to be employed on a part-
time basis.
(B) Full-time employment ratio defined.--The term
``full-time employment ratio'' means, with respect to a
qualifying employee of an employer in a month, the
lesser of 1 or the ratio of--
(i) the number of hours of employment such
employee is employed by such employer for the
month, to
(ii) 120 hours.
(C) Full-time employee.--The term ``full-time
employee'' means, with respect to an employer, an
employee who is employed on a full-time basis (as
specified in subparagraph (A)) by the employer.
(D) Part-time employee.--The term ``part-time
employee'' means, with respect to an employer, an
employee who is employed on a part-time basis (as
specified in subparagraph (A)) by the employer.
(E) Consideration of industry practice.--As
provided under rules established by the Secretary of
Labor, an employee who is not described in subparagraph
(C) or (D) shall be considered to be employed on a
full-time or part-time basis by an employer (and to be
a full-time or part-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 or part-
time employment in that industry.
(F) Qualifying employee.--
(i) The term ``qualifying employee'' means,
with respect to an employer for a month, an
employee who is employed by the employer for at
least 40 hours in the month, subject to the
limitation set forth in clause (ii).
(i) The term qualifying employee shall not
include, with respect to an employer for a
month, an employee of a nonelecting employer.
(2) Family adjusted income.--
(A) In general.--Except as otherwise provided, the
term ``family adjusted income'' means, with respect to
a family, the sum of the adjusted incomes (as defined
in subparagraph (B)) for all members of the family.
(B) Adjusted income.--In subparagraph (A), the term
``adjusted income'' means, with respect to an
individual, adjusted gross income (as defined in
section 62(a) of the Internal Revenue Code of 1986)--
(i) determined without regard to sections
135, 162(l), 911, 931, and 933 of such Code,
and
(ii) increased by the amount of interest
received or accrued by the individual which is
exempt from tax.
(C) Presence of additional dependents.--At the
option of an individual, a family may include (and not
be required to separate out) the income of other
individuals who are claimed as dependents of the family
for income tax purposes, but such individuals shall not
be counted as part of the family for purposes of
determining the size of the family.
(3) Nonenrolling employee.--The term ``nonenrolling
employee'' means an employee of an employer who does not enroll
in a health plan offered by the employer.
(4) Reference premium.--The term ``reference premium''
means the reference premium established under section 4512 of
the Internal Revenue Code of 1986.
(5) Secretary.--The term ``Secretary'' means the Secretary
of Labor.
(6) Self-employed individual.--The term ``self-employed
individual'' means, for a year, an individual who has net
earnings (as defined in section 1402(a) of the Internal Revenue
Code of 1986) from self-employment for the year.
(7) Weighted average premium.--The term ``weighted average
premium'' has the same meaning given such term in section
6002(b)(1)(C).
PART 1--EMPLOYER PREMIUM PAYMENTS
SEC. 10111. OBLIGATION.
(a) In General.--Except as otherwise provided in this subtitle, a
contributing employer (as defined in subsection (b)) shall make health
care coverage premium payments on behalf of the qualifying employees of
the employer in accordance with this subtitle.
(b) Contributing Employer.--As used in subsection (a), the term
``contributing employer'' means an employer that--
(1) employs, on average, 25 or more employees; or
(2) employs less than 25 employees that elects under
subsection (c) to be a contributing employee.
(c) Election.--
(1) In general.--An employer that does not meet the
requirements of subsection (b) may elect to be treated as a
community-rated employer under the procedures to be developed
by the Secretary.
(2) Community-rated employer.--An exempt employer shall be
treated as a community-rated employer as of the first date of
the first year following an election made under paragraph (1).
(3) Self-employed.--A self-employed individual that does
not employ at least one full-time employee may not make an
election under paragraph (1).
SEC. 10112. COMMUNITY-RATED EMPLOYERS.
(a) Requirement.--
(1) In general.--Each community-rated contributing employer
for a month shall pay at least an amount equal to the sum
across all qualifying employees of the amount specified in
subsection (b) for each such qualifying employee of the
employer. Such payments shall be made in accordance with
standards established by the Secretary.
(2) Treatment of certain employment by experience-rated
employers.--An experience-rated employer shall be deemed, for
purposes of this subtitle, to be a community-rated employer
with respect to qualifying employees who are not experience
rate eligible individuals.
(b) Premium Payment Amount.--
(1) General rule.--The amount of the employer premium
payment under subsection (a) for a month for each qualifying
employee of the employer who is residing in a community rating
area, shall be equal to the sum of--
(A) 50 percent of the weighted average premium of
the purchasing cooperative through which the employer
offered health plan coverage with respect to each such
employee in such area; and
(B) the employer collection shortfall add-on
described in paragraph (2).
(2) Employer collection shortfall add-on.--The employer
collection shortfall add-on for a month for each qualifying
employee of the employer residing in a community rating area
shall be equal to 50 percent of the amount described in section
10134 with respect to each such employee.
(3) Part-time employees.--With respect to a part-time
employee, the payment required under paragraph (1) (and the
add-on described in paragraph (2)) shall be based on a pro-
rated share (to be established by the Secretary) of the
weighted average premium of the purchasing cooperative involved
(or, with respect to the shortfall add-on, the amount described
in paragraph (2)).
SEC. 10113. EXPERIENCE RATED EMPLOYERS.
(a) Requirement.--Each experience-rated employer that in a month
employs a qualifying employee who is--
(1) enrolled in an experienced-rated health plan sponsored
by the employer, shall provide for a payment toward the premium
for the plan for such employee in an amount specified under
subsection (b); or
(2) is not so enrolled, shall make employer premium
payments with respect to such employee in an amount that is
equal to 50 percent of the weighted average premium (for the
applicable class of family enrollment) of the community rating
area in which the employee resides.
(b) Premium Payment Amount.--
(1) General rule.--The amount of the experience rated
employer premium payment under subsection (a)(1) for a month
for each qualifying employee of the employer, shall be equal to
50 percent of the weighted average premium of the health plans
offered by the employer.
(2) Self-insured plans.--In the case of a self-insured
health plan, the amount of the premium payment under subsection
(a) shall be equal to the premium equivalent of the self-
insured health plan.
(3) Part-time employees.--With respect to a part-time
employee, the payment required under paragraph (1) shall be a
pro-rated share (to be established by the Secretary) of the
amount described in subsection (a)(2).
(4) Premium areas.--An experience-rated plan sponsor
employer may, based on regulations promulgated by the
Secretary, establish premium areas. Experience rated employers
may base their payments under this section on the weighted
average premium of the health plans offered in such premium
areas.
PART 2--FAMILY PAYMENT RESPONSIBILITIES
Subpart A--Family Share
SEC. 10131. ENROLLMENT AND PREMIUM PAYMENTS.
(a) Requirement.--Each family enrolled in a community-rated health
plan or in a experienced-rated health plan in a class of family
enrollment is responsible for payment of the family share of premium
payable respecting such enrollment. Such premium may be paid by an
employer or other person on behalf of such a family.
(b) Family Share of Premium Defined.--In this part, the term
``family share of premium'' means, with respect to enrollment of a
family--
(1) in a community-rated health plan, the amount specified
in section 10132(a) for the class; or
(2) in an experienced-rated health plan, the amount
specified in section 10132(b) for the class.
SEC. 10132. FAMILY SHARE OF PREMIUMS.
(a) Community-Rated Health Plans.--
(1) In general.--The family share of premiums for a family
enrolled in a community-rated health plan based on a class of
family enrollment shall equal the sum of the base amounts
described in paragraph (2) reduced (but not below zero) by the
sum of the amounts described in paragraph (3).
(2) Base.--The base amounts described in this paragraph
(for a plan for a class of enrollment) are--
(A) the applicable premium specified in section
10133(a) with respect to such class of enrollment;
(B) 50 percent of the applicable collection
shortfall add-on (computed under section 10134 for such
class); and
(C) any applicable marketing fee as described in
section 1112(f).
(3) Credits and discounts.--The amounts described in this
paragraph (for a plan for a class of enrollment) are--
(A) the amount of the family credit under section
10135(a); and
(B) the amount of any premium discount provided
under section 10136(a)(1).
(b) Experience-Rated Health Plans.--
(1) In general.--The family share of premiums for a family
enrolled in an experience-rated health plan based on a class of
family enrollment shall equal the premium described in
paragraph (2) reduced (but not below zero) by the sum of the
amounts described in paragraph (3).
(2) Premium.--The premium described in this paragraph (for
a plan for a class of enrollment) is the applicable plan
premium specified in section 10133(b) with respect to the plan
and class of enrollment involved.
(3) Credits and discounts.--The amounts described in this
paragraph (for a plan for a class of enrollment) are--
(A) the amount of the family credit under section
10135(a); and
(B) the amount of any premium discount provided
under section 10136(a).
(4) Multistate employers.--For purposes of this subsection,
the Secretary shall establish alternative contribution rules
for multistate self-insured employers.
SEC. 10133. AMOUNT OF PREMIUM.
(a) Community-Rated Plans.--The amount of the applicable premium
charged by a community-rated health plan for all families in a class of
family enrollment under a community-rated health plan offered in the
health care coverage area is equal to the product of--
(1) the final community rate for the plan; and
(2) the premium class factor established by the Secretary
of Health and Human Service for that class under subpart D of
part 1 of subtitle E of title I;
increased for any applicable plan marketing fees (described in section
1112(f)) and purchasing cooperative membership fees (described in
section 1324).
(b) Reference to Other Premiums.--The amount of the premium charged
by an experience-rated employer for all families in a class of family
enrollment under an experience-rated health plan is specified under
section 10113.
SEC. 10134. COLLECTION SHORTFALL ADD-ON.
(a) In General.--The collection shortfall add-on for a community
rating area for a class of enrollment for a year, is a per enrollee
amount (determined under rules developed by the Secretary of Health and
Human Services), adjusted proportionately by the premium class factors
described in section 10133(a)(2), such that the total of the adjusted
per enrollee amounts in the community rating area equals the aggregate
collection shortfall as determined under subsection (b).
(b) Aggregate Collection Shortfall.--
(1) In general.--Each State shall estimate, for each
community rating area for each year (beginning with the first
year for which this section applies) the total amount of
payments which the State can reasonably identify as owed to
community-rated health plans under this Act for the year and
not likely to be collected during a period specified by the
Secretary beginning on the first day of the year.
(2) Exclusion of government debts.--The amount under
paragraph (1) shall not include any payments owed to a
community-rated health plan by the Federal, State, or local
governments.
(3) Adjustment for previous shortfall estimation
discrepancy.--The amount estimated under this subsection for a
year shall be adjusted to reflect over (or under) estimations
in the amounts so computed under this subsection for previous
years (based on actual collections), taking into account
interest payable based upon borrowings (or savings)
attributable to such over or under estimations.
SEC. 10135. FAMILY CREDIT.
(a) In General.--The credit provided under this section for a
family enrolled through an employer in a community-rated or experience-
rated plan for a class of family enrollment is equal to the amount of
the minimum employer premium payment required under part 1 with respect
to the family.
(b) Family Not Enrolled Through Employer.--The credit provided
under this section for a family that is not enrolled in a community-
rated or experience-rated plan through an employer for a class of
family enrollment is equal to 50 percent of the premium of the plan in
which the family is enrolled. In no case shall such amount exceed the
weighted average premium in the community rating area involved.
SEC. 10136. PREMIUM SUBSIDY.
(a) In General.--Except as otherwise provided in this section, each
family enrolled with a community-rated or experience-rated plan is
entitled to a premium discount under this section, in the amount
specified in subsection (b)(1).
(b) Amount of Premium Discount.--
(1) In general.--Subject to the succeeding paragraphs of
this subsection, the amount of the premium discount under this
subsection for a family under a class of family enrollment is
equal to--
(A) 50 percent of the lesser of--
(i) the weighted average premium for
community-rated plans offered in the community-
rating area involved, increased by any amount
provided under paragraph (2); or
(ii)(I) in the case of a family enrolled
through a community-rated employer, the
weighted average premium for the purchasing
cooperative through which the family obtains
coverage; or
(II) in the case of a family enrolled
through an experience-rated employer, the
weighted average premium for the premium area
of the health plans offered by the employer;
less
(B) the sum of--
(i) the family obligation amount described
in subsection (c); and
(ii) the amount of any voluntary employer
payment (not required under part 1) towards the
family share of premiums for covered members of
the family.
(2) Increase for community-rated families to assure
enrollment in at-or-below-average-cost plan.--In the case of a
family enrolled in a community-rated plan, if a State
determines that a family eligible for a discount under this
section is unable to enroll in an at-or-below-average-cost plan
(as defined in paragraph (3)) that serves the area in which the
family resides, the amount of the premium discount under this
subsection is increased to the extent that such amount will
permit the family to enroll in a community-rated plan without
the need to pay a family share of premium under this part in
excess of the sum described in paragraph (1)(B).
(3) At-or-below-average-cost plan defined.--In this
section, the term ``at-or-below-average-cost plan'' means a
community-rated plan the premium for which does not exceed, for
the class of family enrollment involved, the weighted average
premium for the community-rating area.
(c) Family Obligation Amount.--
(1) Determination.--Subject to paragraphs (2) and (3), the
family obligation amount under this subsection is determined as
follows:
(A) No obligation if income below income threshold
amount.--If the family adjusted income of the family is
less than the income threshold amount (specified in
paragraph (4)), the family obligation amount is zero.
(B) Income above income threshold amount.--If such
income is at least such income threshold amount, the
family obligation amount is the sum of the following:
(i) For income (above income threshold
amount) up to the poverty level.--The product
of the initial marginal rate for the applicable
class of family enrollment (specified in
paragraph (2)) and the amount by which--
(I) the family adjusted income (not
including any portion that exceeds the
applicable poverty level for the class
of family involved), exceeds;
(II) such income threshold amount.
(ii) Graduated phase out of discount up to
200 percent of poverty level.--The product of
the final marginal rate for the applicable
class of family enrollment (specified in
paragraph (2)) and the amount by which the
family adjusted income exceeds 100 percent (but
is less than 200 percent) of the applicable
poverty level.
(2) Marginal rates.--In paragraph (1), for a year:
(A) Initial marginal rate.--The initial marginal
rate is the ratio of--
(i) 4 percent of the applicable poverty
level for the class of enrollment involved for
the year; to
(ii) the amount by which such poverty level
exceeds such income threshold amount.
(B) Final marginal rate.--The final marginal rate
is 12 percent.
(3) Limitation to 8 percent for all families.--
(A) In general.--In no case shall the family
obligation amount under this subsection for the year
exceed 8 percent of the adjusted income of the family.
(B) Families above 200 percent of poverty.--With
respect to a family with a family adjusted income that
exceeds 200 percent of the applicable poverty level,
the family obligation amount shall be equal to 8
percent of such family adjusted income.
(4) Income threshold amount.--
(A) In general.--For purposes of this subtitle, the
income threshold amount specified in this paragraph is
$1,000 (adjusted under subparagraph (B)).
(B) Indexing.--For the 1-year period beginning on
January 1, 1995, the income threshold amount specified
in subparagraph (A) shall be increased or decreased by
the same percentage as the percentage increase or
decrease by which the average CPI for the 12-month-
period ending with August 31 of the preceding year
exceeds such average for the 12-month period ending
with August 31. 1993.
(C) Rounding.--Any increase or decrease under
subparagraph (B) for a year shall be rounded to the
nearest multiple of $10.
SEC. 10137. NO LOSS OF COVERAGE.
In no case shall the failure to pay amounts owed under this Act
result in an individual's or family's loss of coverage.
Subpart B--Payment of Family Credit by Certain Families
SEC. 10141. PAYMENT OF FAMILY CREDIT BY NONWORKING AND PART-TIME
CERTAIN FAMILIES.
Subject to the limitations described in section 10142, a family
with an employer contribution for a month that is less than the family
credit amount described in section 10135, shall be liable for payment
of an amount equal to the family credit amount less any employer
contributions for the family for the month.
SEC. 10142. LIMITATION OF LIABILITY BASED ON INCOME.
(a) In General.--In the case of an eligible family described in
subsection (b), the repayment amount required under section 10141 with
respect to a year shall not exceed the amount of liability described in
subsection (c) for the year.
(b) Eligible Family Described.--An eligible family described in
this subsection is a family which is determined by the State for the
community rating area in which the family resides, to have wage-
adjusted income (as defined in subsection (d)) below 200 percent of the
applicable poverty level.
(c) Amount of Liability.--
(1) Determination.--Subject to subsection (f), in the case
of a family enrolled in a class of enrollment with wage-
adjusted income (as defined in subsection (d)), the amount of
liability under this subsection is determined as follows:
(A) No obligation if income below income threshold
amount.--If such income is less than the income
threshold amount (specified in section 10136(c)(4)),
the amount of liability is zero.
(B) Income above income threshold amount.--If such
income is at least such income threshold amount, the
amount of liability is the sum of the following:
(i) Initial marginal rate.--The initial
marginal rate (specified in paragraph (2)(A))
of the amount by which--
(I) the wage-adjusted income (not
including any portion that exceeds the
applicable poverty level for the class
of family involved), exceeds
(II) such income threshold amount.
(ii) Final marginal rate.--Where wage-
adjusted income exceeds 100 percent of the
applicable poverty level, the final marginal
rate (specified in paragraph (2)(B)) of the
amount by which the wage-adjusted income
exceeds 100 percent of the applicable poverty
level.
(2) Marginal rates.--In paragraph (1)--
(A) Initial marginal rate.--The initial marginal
rate, for a year for a class of enrollment, is the
ratio of--
(i) 4 percent of the applicable poverty
level for the class of enrollment for the year,
to
(ii) the amount by which such poverty level
exceeds such income threshold amount.
(B) Final marginal rate.--The final marginal rate,
for a year for a class of enrollment, is the ratio of--
(i) the amount by which (I) 50 percent of
the weighted average premium in the community
rating area (for the class and year) exceeds
(II) 4 percent of applicable poverty level (for
the class and year); to
(ii) 100 percent of such poverty level.
(d) Wage-Adjusted Income Defined.--In this subtitle, the term
``wage-adjusted income'' means, for a family, family adjusted income of
the family, reduced by the sum of the following:
(1)(A) Subject to subparagraph (B), the amount of any wages
included in such family's income that is received for
employment which is taken into account in the computation of
the amount of employer premiums under part 1.
(B) The reduction under subparagraph (A) shall not exceed
for a year $5,000 (adjusted under section 10136(c)(3)(B))
multiplied by the number of months (including portions of
months) of employment with respect to which employer premiums
were payable under part 1.
(2) The amount of unemployment compensation included in
income under section 85 of the Internal Revenue Code of 1986.
(e) Determinations.--A family's wage-adjusted income and the amount
of liability under subsection (c) shall be determined by the State upon
application by a family.
TITLE XI--ENSURING HEALTH CARE REFORM FINANCING
SEC. 11001. ENSURING HEALTH CARE REFORM FINANCING.
(a) Purpose.--The purpose of this section is to ensure that the
enactment of this Act does not result in unanticipated increases in the
Federal deficit.
(b) Legal Entitlements Contingent.--Any entitlement provided by
this Act, including those to premium assistance, shall be subject to
the operation of this section.
(c) Determination of Unfinanced Health Spending.--
(1) Initial health care baseline.--Not later than the date
that is 60 days after the date of enactment of this Act, the
President shall, using up-to-date estimates, issue an order
setting forth the initial health care baseline for fiscal year
1995 and for each subsequent fiscal year through 2004, which
shall consist of estimates (for each year) projecting the
following:
(A) total direct spending outlays resulting from
this Act and under the Medicare and Medicaid programs;
and
(B) total revenues resulting from this Act.
(2) President's budget to include a current health care
baseline.--When the President submits the budget for fiscal
year 1997 (as required by section 1105 of title 31), and for
each fiscal year through 2004, the President shall include--
(A) a current health care baseline (as specified in
paragraph (3)) with respect to the current fiscal year,
the budget year, and the 4 following fiscal years; and
(B) an estimate of the difference between the
current health care baseline and the initial health
care baseline for the current fiscal year, the budget
year, and the 4 following fiscal years.
(3) Current health care baseline.--The current health care
baseline shall, for the applicable fiscal year, consist of--
(A) updated spending and revenue amounts contained
in the initial projection (as set forth in paragraph
(1)); plus or minus
(B) other outlays or revenue changes contained in
legislation enacted after the date of enactment of this
Act offsetting outlays or revenues resulting from this
Act.
(4) Comparing initial and current health care baselines.--
Once OMB has determined the difference between the initial and
current health care baselines, OMB shall remove from that
difference any health care variable not attributable either to
this Act or to any legislation described in paragraph (3)(B).
(d) Offsetting Unfinanced Health Spending.--
(1) Requirement for sequestration to fully offset
unfinanced health spending.--If the President's budget includes
a determination that the current health care baseline exceeds
the initial health care baseline pursuant to subsection
(c)(2)(B) for the budget year and the current fiscal year by
more than $10,000,000,000 in total, such determination shall be
accompanied by a proposed order to become effective on October
1 of that calendar year which fully offsets in the budget year
and the following fiscal year the sum of such excess (for the
budget year and the current fiscal year) in the manner provided
in this subsection. Such proposed order shall be accompanied by
such proposed regulations as the President deems necessary to
carry out the sequester.
(2) Offsets.--
(A) In general.--The offsets required by this
subsection shall be accomplished through a combination
of--
(i) subject to the provisions of
subparagraph (B), in the case of the premium
assistance program, reducing the percentages
otherwise in effect for the fiscal year under
subparagraphs (A), (B), and (C) of section
6002(a)(2);
(ii) adjusting the deductible for Medicare
drugs as provided in section 1834(d)(1)(B)(i)
of the Social Security Act; and
(iii) reducing each direct spending program
provided in the Act by a uniform percentage,
to the extent (subject to paragraph (3)) necessary to
accomplish all of the sequestrations necessary to fully
offset the amounts required for that fiscal year.
(B) Eligibility percentage for pregnant women and
children reduced last.--Any reduction under
subparagraph (A)(i)--
(i) shall be made first by reducing the
percentages under section 6002(a)(2)(A); and
(ii) to the extent sufficient offsets may
not be made under subparagraph (A), shall then
be made by reducing the percentages under
section 6002(a)(2) (B) and (C).
(3) Proportionality.--The President shall apply the offset
mechanisms provided in paragraph (2)(A) (i), (ii), and (iii)
proportionally (based on the ratio of the outlays caused by
each program to the total outlays of all sequesterable programs
under paragraph (2)(A)), to the extent possible, in the budget
year and the following fiscal year, but in no case shall the
total amount of offsets be less than the amount required by
paragraph (1).
(4) Effective period.--For purposes of a fiscal year not
subject to an order under this section following a fiscal year
subject to an order under this section, this Act and the
amendments made by this Act shall be assumed to continue as if
the order had not been issued.
(5) Consultation.--The President shall confer with the
National Health Benefits Board and the National Health Care
Cost and Coverage Commission in carrying out this subsection.
(e) Final Sequester Determination.--Using the same economic and
technical assumptions as used in making the preliminary determination
under subsection (c), the President shall reestimate the current health
care baselines on September 15 based on legislation in effect as of
September 10. If the aggregate difference between the initial and
updated baseline is more than $10,000,000,000 in the current fiscal
year and budget year combined, the President shall issue a final order
(and accompanying final regulations) following the procedure set forth
in subsection (d).
(f) Suspension in the Event of War or Low Growth.--
(1) Low growth.--The President shall not issue either a
proposed or final order under this section if the Office of
Management and Budget notifies the Congress that--
(A) during the period consisting of the quarter
during which such notification is given, the quarter
preceding such notification, and the 4 quarters
following such notification, the Office of Management
and Budget has determined that real economic growth is
projected or estimated to be less than zero with
respect to each of any 2 consecutive quarters within
such period; or
(B) the most recent of the Department of Commerce's
advance preliminary or final reports of actual real
economic growth indicate that the rate of real economic
growth for each of the most recently reported quarter
and the immediately preceding quarter is less than 1
percent.
(2) War.--The President shall not issue either a proposed
or final order under this section if a declaration of war is in
effect.
(g) Recommendations for Alternative Reductions.--If the President's
budget for a fiscal year is accompanied by an order under subsection
(d)(1), the National Health Benefits Board shall, within a reasonable
time, transmit to the President, the Speaker of the House of
Representatives, and the President of the Senate a report including
alternative proposals to offset the projected excess set forth in
subsection (c)(4).
(h) GAO Audit of Reductions.--If the President has issued an order
under subsection (d)(1), the General Accounting Office shall report to
Congress, as soon thereafter as possible following the date of
transmittal of the President's budget, an analysis of whether the order
has fully complied with the requirements of this section.
(i) Additional OMB Reporting Requirements To Be Included in
President's Budget.--
(1) Adjusted estimate of total Federal health care costs.--
(A) In general.--When the President submits the
budget for fiscal year 1997, and each fiscal thereafter
through 2004, the President shall include an estimate
of total Federal health care costs as described in
subparagraph (B).
(B) Total federal health care costs.--Total Federal
health care costs are--
(i) Federal spending in the current health
care baseline (as determined under subsection
(c)(3)); plus
(ii) discretionary health care spending
on--
(I) the health care program for
active military personnel under title
10, United States Code;
(II) the veterans health care
program under chapter 17 of title 38,
United States Code;
(III) the Civilian Health and
Medical Program of the Uniformed
Services (CHAMPUS), as defined in
section 1073(4) of title 10, United
States Code;
(IV) the Federal Employee Health
Benefit Plan under chapter 89 of title
5, United States Code (FEHB); and
(V) the Indian health service
program under the Indian Health Care
Improvement Act (25 U.S.C. 1601 et
seq.).
(2) Cost as a percent of total revenues.--The President
shall include with the estimate required by this subsection a
calculation by OMB of the percentage of personal and corporate
income taxes needed to pay for total Federal health care costs,
as adjusted by this subsection, in excess of dedicated health
revenues. OMB shall assume that all dedicated health revenues
resulting from amendments made by this Act will be allocated
for total Federal health care costs, as adjusted by this
subsection.
(j) Additional Commission Reporting Requirements.--Effective
beginning in 1997, the National Health Care Commission shall report
annually on how health care expenses are being financed. Among other
things, this report shall include--
(1) how much is spent annually in premiums, out-of-pocket
expenses, and third party expenses; and
(2) the number of businesses that provide health insurance
and a profile of businesses that do not provide health
insurance, including the earnings of such businesses.
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