[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3222 Introduced in House (IH)]
103d CONGRESS
2d Session
H. R. 3222
To contain health care costs and improve access to health care through
accountable health plans and managed competition, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 6, 1993
Mr. Cooper (for himself, Mr. Andrews of Texas, Mr. Grandy, Mr. Klug,
Mr. Stenholm, Mrs. Johnson of Connecticut, Mr. Payne of Virginia, Mr.
Gunderson, Mr. Peterson of Florida, Mr. Hobson, Mr. Carr of Michigan,
Mr. Houghton, Mr. McCurdy, Mr. Quillen, Mr. Barcia of Michigan, Mr.
Boehlert, Mr. Browder, Mr. Clement, Mr. Clinger, Mr. Dooley, Mr.
Edwards of Texas, Mr. Emerson, Mrs. Fowler, Mr. Gilchrest, Mr. Gordon,
Mr. Goss, Mr. Hayes, Mr. Horn, Mr. Hughes, Mr. Hutto, Mr. Laughlin,
Mrs. Lloyd, Ms. Long, Mr. McHale, Mr. McMillan, Mr. Machtley, Mr.
Miller of Florida, Mr. Montgomery, Mr. Moran, Mr. Neal of North
Carolina, Mr. Nussle, Mr. Orton, Mr. Parker, Mr. Petri, Mr. Porter, Mr.
Shays, Ms. Snowe, Mr. Tanner, and Mr. Tauzin) introduced the following
bill; which was referred jointly to the Committees on Energy and
Commerce, Ways and Means, Education and Labor, and the Judiciary
October 27, 1993
Additional sponsor: Mr. Sabo
January 27, 1994
Additional sponsors: Mr. Synar, Mr. Kolbe, Mr. Minge, Mr. Regula, Ms.
English of Arizona, Mr. Camp, and Mr. Walsh
_______________________________________________________________________
A BILL
To contain health care costs and improve access to health care through
accountable health plans and managed competition, 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 ``Managed
Competition Act of 1993''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Page
Sec. 2. Findings; purposes.................................. 7
Sec. 3. Glossary of certain terms used in titles I and II... 10
TITLE I--MANAGED COMPETITION IN EMPLOYER-BASED HEALTH PLANS: INCENTIVES
TO CONTROL COSTS
Subtitle A--Use of Tax Incentives to Purchase Cost-Effective Plans
Sec. 1001. Uniform tax disincentive to effectively limit 15
deductibility of excess employer
health plan expenses.
Sec. 1002. Increase in deduction for health plan premium 21
expenses of self-employed
individuals.
Sec. 1003. Deduction for health plan premium expenses of 22
individuals.
Sec. 1004. Exclusion from gross income for contributions by 24
a partnership or S corporation
to a health plan covering its
partners or shareholders.
Sec. 1005. Employer obligations............................. 25
Sec. 1006. Encouraging group purchasing for large employer 31
by eliminating commonality of
interest or geographic location
requirement for tax exempt trust
status.
Sec. 1007. Simplifying filing of reports by permitting 32
single annual filing for all
employers covered under an
insured multiple employer health
plan.
Subtitle B--Health Plan Purchasing Cooperatives (HPPCs)
Sec. 1101. Establishment and organization; HPPC areas....... 33
Sec. 1102. Agreements with accountable health plans (AHPs).. 40
Sec. 1103. Agreements with small employers.................. 46
Sec. 1104. Enrolling individuals in accountable health plans 49
through a HPPC.
Sec. 1105. Receipt of premiums.............................. 54
Sec. 1106. Coordination among HPPCs......................... 56
Sec. 1107. Complaint process; ombudsman..................... 58
Sec. 1108. Enrollee satisfaction surveys; monitoring 59
enrollee disenrollment.
Subtitle C--Accountable Health Plans (AHPs)
Part 1--Requirements for Accountable Health Plans
Sec. 1201. Registration process; qualifications............. 61
Sec. 1202. Specified uniform set of effective benefits; 63
reduction in cost-sharing for
low-income individuals; quality
standards.
Sec. 1203. Collection and provision of standardized 67
information.
Sec. 1204. Prohibition of discrimination based on health 69
status for certain conditions;
limitation on pre-existing
condition exclusions.
Sec. 1205. Use of standard premiums......................... 72
Sec. 1206. Financial solvency requirements.................. 78
Sec. 1207. Grievance mechanisms; enrollee protections; 79
written policies and procedures
respecting advance directives;
agent commissions.
Sec. 1208. Additional requirements of open AHPs............. 81
Sec. 1209. Coordination of benefits with low-income 86
assistance.
Sec. 1210. Additional requirement of certain AHPs........... 87
Sec. 1211. Funding for approved medical residency training 88
programs and physician
retraining programs.
Part 2--Preemption of State Laws for Accountable Health Plans
Sec. 1221. Preemption from State benefit mandates........... 89
Sec. 1222. Preemption of State law restrictions on network 89
plans.
Sec. 1223. Preemption of State laws restricting utilization 92
review programs.
Part 3--Antitrust Provisions
Sec. 1231. Publication of guidelines for accountable health 92
plans.
Sec. 1232. Issuance of health care certificates of public 93
advantage..
Subtitle D--Health Care Standards Commission
Sec. 1301. Establishment of Health Care Standards Commission 101
Sec. 1302. Specification of uniform set of effective 104
benefits.
Sec. 1303. Benefits, Evaluations, and Data Standards Board.. 119
Sec. 1304. Health Plan Standards Board...................... 122
Sec. 1305. Registration of accountable health plans......... 124
Sec. 1306. Specification of risk-adjustment factors......... 126
Sec. 1307. National health data system...................... 128
Sec. 1308. Measures of quality of care of specialized 130
centers of care.
Sec. 1309. Agency for Clinical Evaluations.................. 132
Sec. 1310. Report and recommendations on achieving universal 136
coverage.
Sec. 1311. No authority to impose controls relating to 137
health care spending.
Sec. 1312. Monitoring reinsurance market.................... 138
Sec. 1313. Authorization of appropriations; sunset.......... 138
Subtitle E--Managed Competition in Rural and Urban Underserved Areas
Part 1--Special Treatment of Designated Underserved Areas
Sec. 1401. Designation of underserved areas................. 138
Sec. 1402. Special treatment................................ 140
Part 2--Transitional Support for Development of Accountable Health
Plans in Underserved Areas
Sec. 1411. Technical assistance funding..................... 141
Sec. 1412. Rural development grants......................... 142
Sec. 1413. Migrant health centers........................... 145
Sec. 1414. Community health centers......................... 146
Part 3--Establishment of Rural Emergency Access Care Hospitals
Sec. 1421. Rural emergency access care hospitals described.. 147
Sec. 1422. Coverage of and payment for services............. 150
Sec. 1423. Effective date................................... 152
Part 4--Transitional Assistance for Safety Net Hospitals
Sec. 1431. Payments to hospitals............................ 152
Sec. 1432. Application for assistance....................... 155
Sec. 1433. Public service responsibilities.................. 156
Sec. 1434. Authorization of appropriations.................. 157
Subtitle F--Treatment of Chronically Underserved Areas
Sec. 1501. Promoting State action........................... 157
Subtitle G--Repeal of COBRA Continuation Requirements
Sec. 1601. Repeal of COBRA continuation requirements........ 159
Subtitle H--Definitions
Sec. 1701. Definitions...................................... 160
TITLE II--LOW-INCOME ASSISTANCE FOR HEALTH COVERAGE
Subtitle A--Low-Income Assistance
Sec. 2001. Eligibility...................................... 170
Sec. 2002. Premium assistance............................... 171
Sec. 2003. Cost-sharing assistance.......................... 172
Sec. 2004. Assistance for certain items and services........ 175
Sec. 2005. Computation of base Federal premium amount....... 177
Sec. 2006. Applications for assistance...................... 182
Sec. 2007. Reconciliation of premium assistance through use 187
of income statements.
Sec. 2008. Treatment of certain cash assistance recipients.. 190
Sec. 2009. Definitions...................................... 190
Subtitle B--Long-Term Care Phase-Down Assistance to States
Sec. 2101. Long-term care phase-down assistance............. 196
Subtitle C--Financing
Part 1--Medicare Savings
Sec. 2201. Reduction in update for inpatient hospital 199
services.
Sec. 2202. Reduction in conversion factor for physician fee 200
schedule for non-primary care
services.
Sec. 2203. Reduction in hospital outpatient services through 201
establishment of prospective
payment system.
Sec. 2204. Increase in medicare part B premium for 202
individuals with high income.
Sec. 2205. Phased-in elimination of medicare hospital 206
disproportionate share
adjustment payments.
Sec. 2206. Reduction in routine cost limits for home health 207
services.
Sec. 2207. Reduction in routine cost limits for extended 207
care services.
Sec. 2208. Reductions in payments for hospice services...... 208
Part 2--Other Savings
Sec. 2211. Requirement that certain agencies prefund 209
government health benefits
contributions for their
annuitants.
Subtitle D--Repeal of Medicaid Program
Sec. 2301. Repeal of medicaid program....................... 212
TITLE III--TRAINING AND EDUCATION OF HEALTH CARE PROFESSIONALS
Subtitle A--Reform of Federal Funding for Medical Residency Training
Sec. 3001. Definitions...................................... 213
Sec. 3002. Approval of medical residency training positions. 215
Sec. 3003. Funding for approved medical residency training 218
programs and physician
retraining programs.
Sec. 3004. Financing........................................ 222
Sec. 3005. National Medical Education Fund.................. 223
Sec. 3006. Repeal of separate medical education payments 224
under medicare.
Subtitle B--Other Medical Education Grants and Programs
Sec. 3101. Scholarship and loan repayment programs of 226
National Health Service Corps.
Sec. 3102. Area health education centers.................... 227
Sec. 3103. Public health and preventive medicine............ 227
Sec. 3104. Family medicine.................................. 227
Sec. 3105. General internal medicine and pediatrics......... 227
Sec. 3106. Physician assistants............................. 227
Sec. 3107. Allied health project grants and contracts....... 228
Sec. 3108. Nurse allied health project grants and contracts. 228
Sec. 3109. Nurse practitioner and nurse midwife programs.... 228
Sec. 3110. Use of health care policy and research funds for 228
primary care.
TITLE IV--PREVENTIVE HEALTH AND INDIVIDUAL RESPONSIBILITY
Subtitle A--Expansion of Public Health Programs
Sec. 4001. Immunizations against vaccine-preventable 229
diseases.
Sec. 4002. Prevention, control, and elimination of 229
tuberculosis.
Sec. 4003. Lead poisoning prevention........................ 229
Sec. 4004. Preventive health measures with respect to breast 229
and cervical cancers.
Sec. 4005. Office of Disease Prevention and Health Promotion 230
Sec. 4006. Preventive health and health services block grant 231
Sec. 4007. Categorical grants for early intervention 231
regarding acquired immune
deficiency syndrome.
Sec. 4008. Programs of Office of Smoking and Health......... 231
Subtitle B--Medicare
Part 1--Coverage of Preventive Services
Sec. 4101. Coverage of colorectal screening................. 232
Sec. 4102. Coverage of certain immunizations................ 238
Sec. 4103. Coverage of well-child care...................... 239
Sec. 4104. Annual screening mammography..................... 242
Sec. 4105. Financing of additional benefits................. 242
Part 2--Notice of Advance Directive Rights
Sec. 4111. Providing notice of rights regarding medical care
to individuals entering
medicare. 243
TITLE V--MALPRACTICE REFORM
Subtitle A--Findings; Purpose; Definitions
Sec. 5001. Findings; purpose................................ 244
Sec. 5002. Definitions...................................... 245
Subtitle B--Uniform Standards for Malpractice Claims
Sec. 5101. Applicability.................................... 250
Sec. 5102. Requirement for initial resolution of action 250
through alternative dispute
resolution.
Sec. 5103. Procedural requirements for filing of actions.... 254
Sec. 5104. Treatment of noneconomic and punitive damages.... 258
Sec. 5105. Periodic payments for future losses.............. 263
Sec. 5106. Treatment of attorney's fees and other costs..... 264
Sec. 5107. Uniform statute of limitations................... 268
Sec. 5108. Special provision for certain obstetric services. 268
Sec. 5109. Uniform standard for determining liability in 269
actions based on negligence.
Sec. 5110. Jurisdiction of Federal courts................... 270
Sec. 5111. Preemption....................................... 270
Subtitle C--Requirements for State Alternative Dispute Resolution
Systems (ADR)
Sec. 5201. Basic requirements............................... 271
Sec. 5202. Certification of State systems; applicability of 273
alternative Federal system.
Sec. 5203. Grants to States................................. 276
Sec. 5204. Reports on implementation and effectiveness of 276
alternative dispute resolution
systems.
Subtitle D--Grants to States for Development of Practice Guidelines
Sec. 5301. Grants to States................................. 277
TITLE VI--PAPERWORK REDUCTION AND ADMINISTRATIVE SIMPLIFICATION
Sec. 6001. Preemption of State quill pen laws............... 279
Sec. 6002. Confidentiality of electronic health care 279
information.
Sec. 6003. Standardization for the electronic receipt and 283
transmission of health plan
information.
Sec. 6004. Use of uniform health claims forms and 284
identification numbers.
Sec. 6005. Priority among insurers.......................... 285
Sec. 6006. Furnishing of information among health plans..... 286
Sec. 6007. Failure to satisfy certain health plan 287
requirements.
Sec. 6008. Definitions...................................... 290
TITLE VII--ADDITIONAL BENEFITS ON A PAY-AS-YOU-GO BASIS
Sec. 7001. Sense of Congress................................ 291
SEC. 2. FINDINGS; PURPOSES.
(a) Findings.--Congress finds the following:
(1) Need for cost containment incentives.--The current
health insurance marketplace is unable to provide efficient and
effective health care coverage because--
(A) there is no organized method for price-based
competition among health plans offering standardized
benefits;
(B) there is no method by which health plans are
held accountable for their performance in effectively
and efficiently improving the health and well-being of
their enrollees;
(C) the Internal Revenue Code not only provides no
incentives for employees to select carefully among
competing health plans on the basis of cost, but also
provides incentives for employers and employees to
select plans with greater expenses;
(D) health plans frequently manage costs through
underwriting practices and favorable selection rather
than through increased efficiencies in the provision of
health care; and
(E) underwriting practices discriminate unfairly
against individuals in need of health care.
(2) Managed competition.--
(A) The economy of the United States has been based
on a model of competitive markets and the United States
has successfully relied on this model in order to
promote efficiencies and innovation in nearly every
economic area.
(B) However, in order to provide for such a market
in health care, there is a need to provide proper
incentives to providers and purchasers in the market
for health care.
(C) Only through such a reform will the country
achieve the dual goals of maintaining high quality
care, innovation, and consumer choice and of providing
real incentives for cost containment.
(b) Purpose.--
(1) General objective.--It is the general objective of this
Act to reform the health care marketplace to provide universal
access to high quality, cost-effective care through competitive
health plans.
(2) Cost containment objective.--It is also a specific
objective of this Act to bring the rate of increase in health
care costs by the year 2000 down to the rate of increase in
costs in the economy as a whole.
(3) Specific measures to achieve objectives.--In order to--
(A) control costs through enhanced price
competition, the Act extends tax benefits for employer
contributions only to the lowest price of a qualifying
plan in an area;
(B) promote competition based on cost-effective
care instead of through risk selection, the Act
standardizes benefits, prohibits experience rating, and
adjusts premium payments to plans based on the risk
characteristics of individuals enrolled in the plan;
(C) provide access to coverage, the Act makes
available to all individuals competitively priced
accountable health plans regardless of their employment
status;
(D) to promote competition based on quality, the
Act provides for the systematic reporting and public
dissemination of information on the performance of
plans in meeting the clinical health requirements,
functional needs, well-being, and personal satisfaction
of its enrollees; and
(E) improve health care coverage of low-income
individuals, the Act offers financial assistance in
purchasing accountable health plans and meeting cost-
sharing requirements.
SEC. 3. GLOSSARY OF CERTAIN TERMS USED IN TITLES I AND II.
The following specialized, defined terms are used in titles I and
II of this Act:
Accountable health plan; ahp.--The terms ``accountable
health plan'' and ``AHP'' are defined in section 1701(b)(1).
Applicable federal assistance amount.--The term
``applicable Federal assistance amount'' is defined in section
2009(c)(1).
Applicable low-income premium amount.--The term
``applicable low-income premium amount'' is defined in section
2009(c)(2).
Base federal premium amount.--The ``base Federal premium
amount'' is defined in section 2005(a)(1).
Base individual premium.--The term ``base individual
premium'' is defined in section 2009(c)(3).
Benefits, evaluations, and data standards board.--The term
``Benefits, Evaluations, and Data Standards Board'' refers to
the Board established under section 1303.
Closed and open plans.--The terms ``closed'' and ``open''
are defined, with respect to a health plan, under section
1701(b)(4).
Commission.--The term ``Commission'' is defined in section
1701(b)(2).
Eligible employee.--The term ``eligible employee'' is
defined in section 1701(a)(2).
Eligible family member.--The term ``eligible family
member'' is defined in section 1701(a)(3).
Eligible individual.--The term ``eligible individual'' is
defined in section 1701(a)(1).
Eligible resident.--The term ``eligible resident'' is
defined in section 1701(a)(4).
Enrollee unit.--The term ``enrollee unit'' is defined in
section 1701(a)(5).
Family adjusted total income.--The term ``family adjusted
total income'' is defined in section 2009(b)(1).
Health care joint venture.--The term ``health care joint
venture'' is defined in section 1232(i)(3).
Health outcome.--The term ``health outcome'' is defined in
section 1302(b)(5)(B).
Health plan standards board.--The term ``Health Plan
Standards Board'' refers to the Board established under section
1304.
Health plan.--The term ``health plan'' is defined in
section 1701(c)(1).
HPPC; health plan purchasing cooperative.--The terms
``health plan purchasing cooperative'' and ``HPPC'' are defined
in section 1701(b)(3).
Individual responsibility percentage.--The term
``individual responsibility percentage'' is defined in section
2009(c)(5).
Investigational treatment.--The term ``investigational
treatment'' is defined in section 1302(b)(4)(B).
Low-income individual.--The term ``low-income individual''
is defined in section 2009(a)(1).
Medically appropriate.--The term ``medically appropriate''
is defined in section 1302(b)(1).
Medicare beneficiary.--The term ``medicare beneficiary'' is
defined in section 1701(a)(6).
Medicare-eligible individual.--The term ``medicare-eligible
individual'' is defined in section 1701(a)(6).
Moderately low-income individual.--The term ``moderately
low-income individual'' is defined in section 2009(a)(2).
Modified family income.--The term ``modified family
income'' is defined in section 2009(b)(2).
Network plan.--The term ``network plan'' is defined in
section 1208(b)(3)(D) and in section 1222(b)(1).
Participating provider.--The term ``participating
provider'' is defined in section 1222(b)(2).
Physician incentive plan.--The term ``physician incentive
plan'' is defined in section 1207(b)(2).
Poverty line.--The term ``poverty line'' is defined in
section 2009(c)(4).
Pre-existing condition.--The term ``pre-existing
condition'' is defined in section 1204(b)(2)(B)(ii).
Premium class.--The term ``premium class'' is defined in
section 1701(c)(3).
Reference premium rate.--The term ``reference premium
rate'' is defined in section 2009(c)(4).
Secretary.--The term ``Secretary'' is defined in section
1701(c)(4).
Small employer; large employer.--The terms ``small
employer'' and ``large employer'' are defined in section
1701(c)(2).
Specialized center of care.--The term ``specialized center
of care'' is defined in section 1308(d).
State-adjusted poverty level defined.--The term ``State-
adjusted poverty level'' is defined in section 2009(b)(3)(A).
State.--The term ``State'' is defined in section
1701(c)(5).
Treatment.--The term ``treatment'' is defined in section
1302(b)(5)(A).
Type of enrollment.--The term ``type of enrollment'' is
defined in section 1701(c)(6).
Uniform set of effective benefits.--The term ``uniform set
of effective benefits'' is defined in section 1701(c)(7).
Utilization review program.--The term ``utilization review
program'' is defined in section 1223(b).
Very low-income individual.--The term ``very low-income
individual'' is defined in section 2009(a)(3).
TITLE I--MANAGED COMPETITION IN EMPLOYER-BASED HEALTH PLANS: INCENTIVES
TO CONTROL COSTS
Subtitle A--Use of Tax Incentives to Purchase Cost-Effective Plans
SEC. 1001. UNIFORM TAX DISINCENTIVE TO EFFECTIVELY LIMIT DEDUCTIBILITY
OF EXCESS EMPLOYER HEALTH PLAN EXPENSES.
(a) In General.--Chapter 43 of the Internal Revenue Code of 1986
(relating to qualified pension plans, etc.) is amended by adding at the
end thereof the following new section:
``SEC. 4980C. EMPLOYER HEALTH PLAN EXPENSES IN EXCESS OF ACCOUNTABLE
HEALTH PLAN COSTS.
``(a) General Rule.--There is hereby imposed a tax equal to the
product of the rate of tax specified in section 11(b)(1)(C) and the
amount of the excess health plan expenses of any employer.
``(b) Excess Health Plan Expenses.--For purposes of this section--
``(1) In general.--The term `excess health plan expenses'
means health plan expenses paid or incurred by the employer for
any month with respect to any covered individual to the extent
such expenses do not meet the requirements of paragraphs (2),
(3), and (4).
``(2) Limit to accountable health plans.--Health plan
expenses meet the requirements of this paragraph only if--
``(A) the expenses are attributable to coverage of
the covered individual under an accountable health
plan, and
``(B) in the case of a small employer, the expenses
are attributable to payment to a health plan purchasing
cooperative for coverage under an accountable health
plan.
``(3) Limit on per individual contribution.--
``(A) In general.--Health plan expenses with
respect to any covered individual meet the requirements
of this paragraph for any month only to the extent that
the amount of such expenses does not exceed the
reference premium rate (as defined in section
2009(c)(4) of the Managed Competition Act of 1993) for
the month.
``(B) Use of community rate within type of
enrollment or across hppc areas in place of reference
premium rate for large employers.--In the case of an
employer that is not a small employer and which
maintains a closed AHP (as defined in section
1701(b)(4)(A)) that elects certain rules to apply under
section 1205(b)(3) of the Managed Competition Act of
1993, the reference premium rate amount for a covered
individual shall be computed based on the weighted
average of such amounts within the type of enrollment
or across HPPC areas, as elected under such section.
``(C) Treatment of health plans outside the united
states.--For purposes of subparagraph (A), in the case
of a covered individual residing outside the United
States, there shall be substituted for the reference
premium rate such reasonable amounts as the Health Care
Standards Commission determines to be comparable to the
limit imposed under subparagraph (A) or subparagraph
(B) (if applicable).
``(4) Requirement of level contribution.--Health plan
expenses meet the requirements of this paragraph for any month
only if the amount of the employer contribution (for a premium
class) does not vary based on the accountable health plan
selected.
``(c) Exception for Medicare-Eligible Retirees.--Subsections (a)
and (b) shall not apply to health plan expenses with respect to an
individual who is eligible for benefits under part A of title XVIII of
the Social Security Act if such expenses are for a health plan that is
not a primary payor under section 1862(b) of such Act.
``(d) Special Rules.--
``(1) Treatment of self-insured plans.--In the case of a
self-insured health plan, the amount of contributions per
employee shall be determined for purposes of subsection (b)(3)
in accordance with rules established by the Health Care
Standards Commission which are based on the principles of
section 4980B(f)(4)(B) (as in effect before the date of the
enactment of this Act).
``(2) Contributions to cafeteria plans.--Contributions
under a cafeteria plan on behalf of an employee that are used
for a group health plan coverage shall be treated for purposes
of this section as health plan expenses paid or incurred by the
employer.
``(e) Employees Held Harmless.--Nothing in this section shall be
construed as affecting the exclusion from gross income of an employee
under section 106.
``(f) Other Definitions.--For purposes of this section--
``(1) Covered individual.--The term `covered individual'
means any beneficiary of a group health plan.
``(2) Group health plan.--The term `group health plan' has
the meaning given such term by section 5000(b)(1), but does not
include, as defined by the Health Care Standards Commission,
health coverage under a disability or accident policy or under
a workers' compensation plan.
``(3) Health plan expenses.--
``(A) In general.--The term `health plan expenses'
means employer expenses for any group health plan,
including expenses for premiums as well as payment of
deductibles and coinsurance that would otherwise be
applicable.
``(B) Exclusion of certain direct expenses.--Such
term does not include expenses for direct services
which are determined by the Health Care Standards
Commission to be primarily aimed at workplace health
care and health promotion or related population-based
preventive health activities.
``(4) Small employer.--The term `small employer' means, for
a taxable year, an employer that is a small employer (within
the meaning of section 1701(c)(2) of the Managed Competition
Act of 1993) for the most recent calendar year ending before
the end of the taxable year.
``(5) Type of enrollment.--The term `type of enrollment' is
described in section 1701(c)(6) of the Managed Competition Act
of 1993.''
(b) Clerical Amendment.--The table of sections for such chapter 43
is amended by adding at the end thereof the following new section:
``Sec. 4980C. Employer health plan
expenses in excess of
accountable health plan
costs.''
(c) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
expenses incurred for the provision of health services for
periods after December 31, 1994.
(2) Transition for collective bargaining agreements.--The
amendments made by this section shall not apply to employers
with respect to their employees, insofar as such employees are
covered under a collective bargaining agreement ratified before
the date of the enactment of this Act, earlier than the date of
termination of such agreement (determined without regard to any
extension thereof agreed to after the date of the enactment of
this Act), or January 1, 1997, whichever is earlier.
SEC. 1002. INCREASE IN DEDUCTION FOR HEALTH PLAN PREMIUM EXPENSES OF
SELF-EMPLOYED INDIVIDUALS.
(a) Increasing Deduction to 100 Percent.--Paragraph (1) of section
162(l) of the Internal Revenue Code of 1986 is amended by striking ``25
percent of''.
(b) Making Provision Permanent.--Subsection (l) of section 162 of
such Code (relating to special rules for health insurance costs of
self-employed individuals) is amended by striking paragraph (6).
(c) Limitation to Accountable Health Plans.--Paragraph (2) of
section 162(l) of such Code is amended by adding at the end thereof the
following new paragraph:
``(3) Deduction limited to accountable health plan costs.--
No deduction shall be allowed under this section for any amount
which would be excess health plan expenses (as defined in
section 4980C(b), determined without regard to paragraph (4)
thereof) if the taxpayer were a small employer.''
(d) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
taxable years beginning after December 31, 1994.
(2) Exception.--The amendment made by subsection (c) shall
apply to expenses for periods of coverage beginning on or after
January 1, 1995.
SEC. 1003. DEDUCTION FOR HEALTH PLAN PREMIUM EXPENSES OF INDIVIDUALS.
(a) In General.--Section 213 of the Internal Revenue Code of 1986
(relating to medical, dental, etc., expenses) is amended by adding at
the end the following new subsection:
``(g) Special Rules for Health Plan Premium Expenses.--
``(1) In general.--The deduction under subsection (a) shall
be determined without regard to the limitation based on
adjusted gross income with respect to amounts paid for premiums
for coverage under an accountable health plan.
``(2) Limits.--
``(A) Limit in amount.--The amount allowed as a
deduction under paragraph (1) with respect to the cost
of providing coverage for any individual shall not
exceed the applicable limit specified in section
4980C(b)(3) reduced by the aggregate amount paid by all
other entities (including any employer or any level of
government) for coverage of such individual under any
health plan.
``(B) Limit to hppc plans.--
``(i) In general.--The deduction under this
subsection shall be allowed only in the case of
an individual who obtains coverage under an
accountable health plan through a health plan
purchasing cooperative.
``(ii) Exception for employees of large
employers.--Clause (i) shall not apply to an
individual who obtains coverage in an
accountable health plan by virtue of the
individual's (or other person's) employment by
a large employer.
``(3) Deduction allowed against gross income.--The
deduction under this subsection shall be taken into account in
determining adjusted gross income under section 62(a).
``(4) Treatment of medicare program.--Coverage under part A
or part B of title XVIII of the Social Security Act shall not
be considered for purposes of this subsection to be coverage
under an accountable health plan.''
(b) Effective Date.--The amendment made by subsection (a) shall
apply to amounts paid after December 31, 1994, and taxable years ending
after such date.
SEC. 1004. EXCLUSION FROM GROSS INCOME FOR CONTRIBUTIONS BY A
PARTNERSHIP OR S CORPORATION TO A HEALTH PLAN COVERING
ITS PARTNERS OR SHAREHOLDERS.
(a) S Corporations.--Section 1372 of the Internal Revenue Code of
1986 (relating to partnership rules to apply for fringe benefit
purposes) is amended by adding at the end thereof the following new
subsection:
``(c) Exception for Coverage Provided Under Subsidized Accident or
Health Plan.--This section shall not apply to coverage under a
subsidized accident or health plan maintained by the S corporation for
its employees.''
(b) Partnerships.--Section 707 of such Code (relating to
transactions between partner and partnership) is amended by adding at
the end thereof the following new subsection:
``(d) Exclusion for Coverage Provided Under Subsidized Accident or
Health Plan.--In the case of coverage under a subsidized accident or
health plan maintained by a partnership for its partners, for purposes
of sections 104, 105, 106, and 162(l)(2)(B), the partnership shall be
treated as the employer of each partner who is an employee within the
meaning of section 401(c)(1).''
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1994.
SEC. 1005. EMPLOYER OBLIGATIONS.
(a) Small Employers.--Each small employer (as defined in section
1701(c)(2)) shall--
(1) have in effect an agreement described in section 1103
with the health plan purchasing cooperative (requiring the
offering to employees of coverage through accountable health
plans) for the HPPC area in which the employer has its
principal place of business, and
(2) comply with such agreement.
(b) Other Employers.--
(1) In general.--Each employer that is not a small employer
shall--
(A) offer to each employee (in a time and manner
specified by the Health Care Standards Commission)
enrollment in a qualifying accountable health plan (as
defined in paragraph (3)) both on an individual basis,
and, if applicable and at the employee's option, on a
family basis; and
(B) provide, at the option of the employee, for
deduction from wages or other compensation (in the
manner specified in section 1103(c)) of amount of any
premiums due for such enrollment (taking into account
the amount of any employer contribution).
(2) Open enrollment periods.--For purposes of paragraph
(1)(A), the Commission shall provide for--
(A) initial enrollment periods (of not less than 30
days) during which newly employed individuals are
offered enrollment under a qualifying accountable
health plan;
(B) an annual open enrollment period (of not less
than 30 days) in which employees are offered enrollment
under a qualifying accountable health plan (and, if
there is a choice among such plans, the opportunity to
change the plan in which the employee is enrolled); and
(C) special enrollment periods during which,
because of a change in family situation (such as
marriage, birth or adoption of a child, divorce,
separation, or death), the employee is offered the
opportunity to change the type of enrollment provided.
(3) Qualifying accountable health plan.--For purposes of
this subsection, the term ``qualifying accountable health
plan'' means, with respect to an employee, an accountable
health plan--
(A) that serves the area in which the employee
resides, and
(B) for which the premium charged to the employee
for a premium class does not exceed (except as provided
in paragraph (4)) the premium of the least expensive
accountable health plan offered to individuals by a
health plan purchasing cooperative in the HPPC area in
which the employee resides for that premium class.
Nothing in this subsection shall be construed as preventing an
employer from offering, or an employee from electing enrollment
in, a health plan that serves the area in which the employee is
employed, rather than the area in which the employee resides.
(4) Special rule for certain closed ahps electing special
community rating.--In the case of a closed AHP offered to an
employee, if the plan has made an election described in section
1205(b)(3), paragraph (3)(B) shall be applied to the plan based
on the weighted average of premiums determined without regard
to age, HPPC area, or both (as elected under such section),
rather than on the basis of premium class.
(c) Nondiscrimination Under Group Health Plans.--
(1) Application of rules similar to medicare
nondiscrimination rules.--Subject to paragraph (2), the
provisions of paragraphs (1)(A), (1)(D), (1)(E), (3)(A), and
(3)(C) of section 1862(b) of the Social Security Act shall
apply to an individual eligible for low-income assistance under
subtitle A of title II in the same manner as such provisions
apply to an individual age 65 or over who is entitled to
benefits under title XVIII of such Act under section 226(a) of
such Act.
(2) Rules of application.--In applying paragraph (1) under
this Act--
(A) in applying clauses (ii) and (iii) of section
1862(b)(1)(A) of the Social Security Act, any reference
to ``20 or more employees'' is deemed a reference to
``5 or more employees'';
(B) clause (iv) of section 1862(b)(1)(A) of such
Act shall not apply; and
(C) any reference to title XVIII of such Act is
deemed a reference to assistance under subtitle A of
title II of this Act.
(d) Enforcement.--
(1) Civil money penalties.--
(A) Small employer agreements.--Failure to have in
effect or comply with an agreement under subsection
(a)(1)(A) is subject to a civil monetary penalty (not
to exceed $500) for each day in which the violation
continues.
(B) Failure to offer coverage or provide for wage
deduction.--Failure to offer coverage or provide for
deduction from wages required under subsection (b)(1)
is subject to a civil monetary penalty (not to exceed
$500) for each day in which the violation continues.
(C) Violation of nondiscrimination requirements.--
Failure to comply with the requirement of subsection
(c) is subject to a civil monetary penalty (not to
exceed $500) for each day for each individual with
respect to which the failure occurs.
(2) Direct enforcement.--
(A) HPPC agreement.--An agreement in effect between
a small employer and a HPPC is directly enforceable by
civil action by the HPPC or by an employee (as a third-
party beneficiary of the agreement). In any such
action, if the HPPC or employee substantially prevails,
the HPPC or employee is entitled to reasonable
attorneys' fees.
(B) Offer.--The obligation to offer coverage under
subsection (b) with respect to an employee is directly
enforceable by civil action by the employee. In any
such action, if the employee substantially prevails,
the employee is entitled to reasonable attorneys' fees.
SEC. 1006. ENCOURAGING GROUP PURCHASING FOR LARGE EMPLOYER BY
ELIMINATING COMMONALITY OF INTEREST OR GEOGRAPHIC
LOCATION REQUIREMENT FOR TAX EXEMPT TRUST STATUS.
(a) In General.--Paragraph (9) of section 501(c) of the Internal
Revenue Code of 1986 (relating to exempt organizations) is amended--
(1) by inserting ``(A)'' after ``(9)''; and
(2) by adding at the end the following:
``(B) Any determination of whether a health plan maintained
by one or more large employers (within the meaning of section
1701(c)(2) of the Managed Competition Act of 1993) is a
voluntary employees' beneficiary association meeting the
requirements of this paragraph shall be made without regard to
any determination of commonality of interest or geographic
location if the plan is an accountable health plan (as defined
in section 1701(b)(1) of such Act).''
(b) Effective Date.--The amendments made by subsection (a) shall
apply with respect to determinations made on or after January 1, 1994.
SEC. 1007. SIMPLIFYING FILING OF REPORTS BY PERMITTING SINGLE ANNUAL
FILING FOR ALL EMPLOYERS COVERED UNDER AN INSURED
MULTIPLE EMPLOYER HEALTH PLAN.
(a) In General.--Section 110 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1030) is amended by adding at the end
the following new subsection:
``(c) The Secretary shall prescribe by regulation or otherwise an
alternative method providing for the filing of a single annual report
(as referred to in section 104(a)(1)(A)) with respect to all employers
who are covered under the same fully insured multiple employer welfare
arrangement under which benefits consist solely of medical care
described in section 607(1) (disregarding such incidental benefits as
the Secretary shall specify by regulations).''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on the date of the enactment of this Act. The Secretary of
Labor shall prescribe the alternative method referred to in section
110(c) of the Employee Retirement Income Security Act of 1974, as added
by such amendment, within 90 days after the date of the enactment of
this Act.
Subtitle B--Health Plan Purchasing Cooperatives (HPPCs)
SEC. 1101. ESTABLISHMENT AND ORGANIZATION; HPPC AREAS.
(a) HPPC Areas.--
(1) In general.--For purposes of carrying out this title,
subject to paragraphs (2) and (3), each State shall be
considered a HPPC area.
(2) Alternative, intrastate areas.--Each State may provide
for the division of the State into HPPC areas so long as--
(A) all portions of each metropolitan statistical
area in a State are within the same HPPC area, and
(B) the number of eligible individuals residing
within a HPPC area is not less than 250,000.
(3) Alternative, interstate areas.--In accordance with
rules established by the Health Care Standards Commission, one
or more contiguous States may provide for the establishment of
a HPPC area that includes adjoining portions of the States so
long as such area, if it includes any part of a metropolitan
statistical area, includes all of such area. In the case of a
HPPC serving a multi-state area, section 1701(c)(2)(C) shall
only apply to the area if all the States encompassed in the
area by law agree to the number to be substituted.
(b) Establishment of HPPCs.--
(1) In general.--Each State shall provide, by legislation
or otherwise, for the establishment by not later than July 1,
1994, as a not-for-profit corporation, with respect to each
HPPC area (specified under subsection (a)) of a health plan
purchasing cooperative (each in this title referred to as a
``HPPC'').
(2) Interstate hppc areas.--HPPCs with respect to
interstate areas specified under subsection (a)(3) shall be
established in accordance with rules of the Health Care
Standards Commission.
(c) Cooperative Board.--
(1) Establishment.--Each HPPC shall be governed by a
Cooperative Board which shall be initially appointed by the
Governor or other chief executive officer of the State (or as
otherwise provided under State law or by the Health Care
Standards Commission in the case of a HPPC described in
subsection (b)(2)). The Cooperative Board for a HPPC shall be
responsible for ensuring the performance of the duties of the
HPPC under subsection (d).
(2) Election.--By not later than January 1, 1996, each HPPC
shall provide under State law (or in the case of a HPPC
described in subsection (b)(2), under rules established by the
Health Care Standards Commission) for the election of members
to the Cooperative Board from among eligible individuals who
are enrolled in an accountable health plan offered by the HPPC
and who do not receive remuneration from the HPPC or any such
accountable health plan for any services provided.
(3) Limitation on compensation.--A HPPC shall not provide
compensation to members of the Cooperative Board other than
reimbursement for reasonable and necessary expenses incurred in
the performance of their duties as members of the Cooperative
Board.
(d) Duties of HPPCs.--
(1) In general.--Subject to paragraph (2), each HPPC
shall--
(A) enter into agreements with accountable health
plans under section 1102;
(B) enter into agreements with small employers
under section 1103;
(C) offer enrollment and enroll individuals under
accountable health plans, in accordance with section
1104;
(D) charge, receive, and forward adjusted premiums,
in accordance with section 1105, including reconciling
low-income assistance among accountable health plans;
(E) provide for coordination with other HPPCs, in
accordance with section 1106;
(F) provide for establishment of a complaint
process and appointment of an ombudsman, in accordance
with section 1107;
(G) conduct and analyze surveys of enrollee
satisfaction and monitor enrollee disenrollment, in
accordance with section 1108; and
(H) carry out other functions provided for under
this title.
(2) Limitation on activities.--A HPPC shall not--
(A) perform any activity (including review,
approval, or enforcement) relating to payment rates for
providers;
(B) except as specifically provided under sections
1102, 1105, or 1106(c), perform any activity (including
review, approval, or enforcement) relating to premium
rates for health plans;
(C) perform any activity (including registration or
enforcement) relating to compliance of accountable
health plans with the requirements of part 1 of
subtitle C (other than as required to carry out its
specific duties under this subtitle or under section
1305(c)(2));
(D) discriminate among such plans, other than on
the basis of the performance of such plans under this
title, as determined in accordance with standards
established by the Health Care Standards Commission
under this title;
(E) assume financial risk in relation to any such
plan; or
(F) perform other activities identified by the
Health Care Standards Commission as being inconsistent
with the performance of its duties under paragraph (1).
(e) Performance of Duties.--
(1) In general.--If the Health Care Standards Commission
finds that a HPPC is not carrying out its duties as required
under subsection (d), the Commission shall notify the
Cooperative Board of the HPPC, and the Governor (or other chief
executive officer) of each State in which the HPPC operates, of
such finding and permit the Board an opportunity to take such
action as may be necessary for the HPPC to carry out such
duties.
(2) Corrective action.--If, after such an opportunity, the
deficiency has not been corrected, the Health Care Standards
Commission may--
(A) order the HPPC to hold a new election for
members of the Cooperative Board, and
(B) take such other action as may be appropriate in
order to assure the performance of such duties.
(3) Performance criteria.--
(A) Development.--The Health Care Standards
Commission shall develop criteria relating to HPPC
performance of duties. Such criteria shall include
criteria relating to the following:
(i) Overhead.--The HPPC overhead percentage
(computed under section 1105(b)(2)) for the
HPPC.
(ii) Float.--The average period (described
in section 1102(d)(2)) between the HPPC's
receipt and payment of funds received.
(iii) Satisfaction of eligible
individuals.--The satisfaction of eligible
individuals with the performance of the HPPC
(as measured under surveys under section 1108).
(iv) Enrollment of at risk individuals.--
The effectiveness of the HPPC's activities
under section 1102(b)(3) in enrolling
individuals who are eligible for low-income
assistance or who reside in medically
underserved areas.
(B) Report.--Each HPPC shall report to the Health
Care Standards Commission, at such time and in such
manner as the Commission specifies, such information as
the Commission may require in order to evaluate the
performance of the HPPC in accordance with the criteria
developed under subparagraph (A).
(C) Publication.--The Health Care Standards
Commission shall publish annually a report that
provides a comparison of the relative performance of
each HPPC, based on such criteria.
(f) Education and Development Grants.--There are authorized to be
appropriated $25,000,000 for fiscal year 1994 for grants to assist
States in the development of HPPCs.
SEC. 1102. AGREEMENTS WITH ACCOUNTABLE HEALTH PLANS (AHPS).
(a) Agreements.--
(1) Open ahps.--Each HPPC for a HPPC area shall enter into
an agreement under this section with each open accountable
health plan (described in section 1701(b)(4)(B)) that serves
residents of the area. Each such agreement under this section
shall include (as specified by the Health Care Standards
Commission) provisions consistent with the requirements of the
succeeding subsections of this section. A HPPC may not
terminate such an agreement except as provided in paragraph
(3)(A).
(2) Closed ahps.--Each HPPC for a HPPC area shall enter
into a special agreement under this paragraph with each closed
AHP that serves residents of the area, in order to carry out
subsection (e). Except as otherwise specifically provided, any
reference in this Act to an agreement under this section shall
not be considered to be a reference to an agreement under this
paragraph.
(3) Termination of agreement.--In accordance with
regulations of the Health Care Standards Commission--
(A) the HPPC may terminate an agreement under
paragraph (1) or (2) if--
(i) the AHP's registration under part 1 of
subtitle C is revoked, or
(ii) the AHP is determined (in accordance
with rules established by the Commission)
substantially to have violated the conditions
of such agreement; and
(B) the AHP may terminate either such agreement
only upon sufficient notice in order to provide for the
orderly enrollment of enrollees under other AHPs.
The Commission shall establish a process for the termination of
agreements under this paragraph.
(b) Offer of Enrollment of Individuals.--
(1) In general.--Under an agreement under this section
between an AHP and a HPPC, the HPPC shall offer, on behalf of
the AHP, enrollment in the AHP to eligible individuals (as
defined in section 1701(a)(1)) at the applicable monthly
premium rates (specified under section 1105(a)).
(2) Timing of offer.--The offer of enrollment shall be
available--
(A) to eligible individuals who are employees of
small employers, during the 30-day period beginning on
the date of commencement of employment, and
(B) to other eligible individuals, at such time
(including an annual open enrollment period specified
by the Health Care Standards Commission) as the HPPC
shall specify, consistent with section 1104(b).
(3) Outreach.--In carrying out the responsibilities under
paragraph (1), a HPPC shall perform such activities, including
outreach, as may be necessary to seek actively the enrollment
of eligible individuals, including individuals who are eligible
for low-income assistance or who reside in medically
underserved areas.
(c) Receipt of Gross Premiums.--
(1) In general.--Under an agreement under this section
between a HPPC and an AHP, payment of premiums shall be made,
by individuals or employers on their behalf, directly to the
HPPC for the benefit of the AHP.
(2) Timing of payment of premiums.--Premiums shall be
payable on a monthly basis (or, at the option of an eligible
individual described in paragraph (2)(B), on a quarterly
basis). The HPPC may provide for penalties and grace periods
for late payment.
(3) AHPs retain risk of nonpayment.--Nothing in this
subsection shall be construed as placing upon a HPPC any risk
associated with failure to make prompt payment of premiums
(other than the portion of the premium representing the HPPC
overhead amount). Each eligible individual who enrolls with an
AHP through the HPPC is liable to the AHP for premiums.
(d) Forwarding of Adjusted Premiums.--
(1) In general.--Under an agreement under this section
between an AHP and a HPPC, subject to section 1205(c), the HPPC
shall forward to each AHP in which an eligible individual in an
enrollee unit has been enrolled an amount equal to the sum of--
(A) the standard premium rate (established under
section 1205) received for the premium class, and
(B) the product of (i) the lowest standard premium
rate offered by an open AHP for the premium class, and
(ii) a risk-adjustment factor (determined and adjusted
in accordance with section 1306(b)) for the enrollee
unit.
(2) Payments.--Payments shall be made by the HPPC under
this subsection within a period (specified by the Health Care
Standards Commission and not to exceed 3 business days) after
the time of receipt of the premium from the employer of the
eligible individual or the eligible individual, as the case may
be, based on estimates of applicable risk-adjustment factors.
Subsequent payments shall be adjusted as appropriate to reflect
differences between the payments that were made based on
estimates and the payments that should have been made based on
reported (and audited) information.
(3) Adjustments for differences in nonpayment rates.--In
accordance with rules established by the Health Care Standards
Commission, each agreement between an AHP and a HPPC under this
section shall provide that, if a HPPC determines that the rates
of nonpayment of premiums during grace periods established
under subsection (c)(2) vary appreciably among AHPs, the HPPC
shall provide for such adjustments in the payments made under
this subsection as will place each AHP in the same position as
if the rates of nonpayment were the same.
(e) Reconciliation of Low-Income Assistance Among Accountable
Health Plans.--
(1) In general.--Each agreement between an AHP and a HPPC
under this section (including a special agreement entered into
under subsection (a)(2)) shall provide for such payments from
the AHP to the HPPC, and such payments from the HPPC to the
AHP, as the Health Care Standards Commission determines is
necessary in order to assure the equitable distribution among
all AHPs, nationwide, of reductions in premiums and cost-
sharing under section 1205(c) and section 1202(c),
respectively.
(2) Inter-hppc coordination.--For inter-HPPC coordination
of reconciliation processes under paragraph (1), see section
1106(c).
(f) Notice of Disenrollment.--Within 3 business days after
receiving a notice of disenrollment of an individual from an AHP
offered by a HPPC, the HPPC shall notify the AHP of such notice.
(g) Limitation on Employment.--An AHP agrees not to employ (or
enter into a consulting or similar contract with) any individual who
was, within the previous 2 years, an employee of the HPPC with which
the AHP has an agreement in effect under this section.
(h) Standards for Operational Software.--The Health Care Standards
Commission shall establish standards for operational software that may
be used by HPPCs and AHPs in carrying out agreements under this
section.
SEC. 1103. AGREEMENTS WITH SMALL EMPLOYERS.
(a) In General.--Each HPPC for a HPPC area shall enter into an
agreement under this section with each small employer that employs
individuals in the area. Each agreement under this section, between a
small employer and a HPPC shall include (as specified by the Health
Care Standards Commission) provisions consistent with the requirements
specified in the succeeding subsections of this section.
(b) Forwarding Information on Eligible Employees.--
(1) In general.--Under an agreement under this section
between a small employer and a HPPC, the employer must forward
to the appropriate HPPC the name and address (and other
identifying information required by the HPPC) of each employee
(including part-time and seasonal employees).
(2) Appropriate hppc.--In this subsection, the term
``appropriate HPPC'' means the HPPC for the principal place of
business of the employer or (at the option of an employee) the
HPPC serving the place of residence of the employee.
(c) Payroll Deduction.--
(1) In general.--Under an agreement under this section
between a small employer and a HPPC, if the HPPC notifies the
employer that an eligible employee is enrolled in an AHP
through the HPPC, the employer shall provide for--
(A) the deduction, from the employee's wages or
other compensation, of the amount of the premium due
(less the amount of any employer contribution), and
(B) payment of such amount (including any such
contribution) to the HPPC.
In the case of an employee who is paid wages or other
compensation on a monthly or more frequent basis, an employer
shall not be required to provide for payment of amounts to a
HPPC other than at the same time at which the amounts are
deducted from wages or other compensation. In the case of an
employee who is paid wages or other compensation less
frequently than monthly, an employer may be required to provide
for payment of amounts to a HPPC on a monthly basis.
(2) Additional premiums.--If the sum of the amount of the
employer contribution and the amount withheld under paragraph
(1) is not sufficient to cover the entire cost of the premiums,
the employee shall be responsible for paying directly to the
HPPC the difference between the amount of such premiums and
such sum.
(d) Limited Employer Obligations.--Nothing in this section shall be
construed as--
(1) requiring an employer to provide directly for
enrollment of eligible employees under an accountable health
plan or other health plan,
(2) requiring an employer to make, or preventing an
employer from making, information about such plans available to
such employees, or
(3) requiring an employer to make, or preventing an
employer from making, an employer contribution for coverage of
such individuals under such a plan.
SEC. 1104. ENROLLING INDIVIDUALS IN ACCOUNTABLE HEALTH PLANS THROUGH A
HPPC.
(a) Offer of Enrollment.--
(1) In general.--Each HPPC shall offer in accordance with
this section eligible individuals the opportunity to enroll in
an AHP for the HPPC area in which the individual resides.
(2) Freezing enrollment in insolvent plans.--If a State
superintendent of insurance, State insurance commissioner, or
other State official with regulatory authority over an AHP has
determined that the AHP is insolvent, a HPPC may discontinue
offering enrollment in the AHP to individuals not previously
enrolled in the plan.
(b) Enrollment Process.--
(1) In general.--Each HPPC shall establish an enrollment
(and disenrollment) process in accordance with rules
established by the Health Care Standards Commission consistent
with this subsection.
(2) Initial enrollment period.--For each eligible
individual, at the time the individual first becomes an
eligible individual in a HPPC area of a HPPC, there shall be an
initial enrollment period (of not less than 30 days) during
which the individual may enroll in an AHP.
(3) General enrollment period.--Each HPPC shall establish
an annual period, of not less than 30 days, during which
eligible individuals may enroll in an AHP or change the AHP in
which the individual is enrolled.
(4) Special enrollment periods.--In the case of individuals
who--
(A) through marriage, divorce, birth or adoption of
a child, or similar circumstances, experience a change
in family composition, or
(B) experience a change in employment status
(including a significant change in the terms and
conditions of employment),
each HPPC shall provide for a special enrollment period in
which the individual is permitted to change the individual or
family basis of coverage or the AHP in which the individual is
enrolled. The circumstances under which such special enrollment
periods are required and the duration of such periods shall be
specified by the Health Care Standards Commission.
(5) Transitional enrollment period.--Each HPPC shall
provide for a special transitional enrollment period (during a
period beginning in the Fall of 1994 specified by the Health
Care Standards Commission) during which eligible individuals
may first enroll.
(6) No duplicate enrollment.--No HPPC shall permit an
individual to be enrolled in more than one AHP at a time.
(7) Individual enrollment of family members permitted.--
Nothing in this section shall be construed as preventing an
eligible individual who is an eligible family member of an
eligible employee or other principal enrollee from electing to
enroll on an individual basis in a plan.
(c) Analysis and Distribution of Comparative Information.--
(1) Analysis of information.--Each HPPC shall analyze the
information reported under section 1203(a) on AHPs for which
the HPPC is offering enrollment (and may analyze such
information on closed AHPs serving residents of the HPPC area)
in order to distribute the information under paragraph (2) in a
form, consistent with section 1307(a)(2), that permits the
direct comparison of different AHPs on the basis of the ability
of the AHPs--
(A) to maintain and improve clinical health,
functional status, and well-being, and
(B) to satisfy enrolled individuals.
Such comparison may also be made to show changes in the
performance of AHPs over time.
(2) Distribution of information.--
(A) In general.--Each HPPC shall distribute, to
eligible individuals and employers, information, in
comparative form, on the prices, health outcomes, and
enrollee satisfaction of the different AHPs for which
it is offering enrollment and may provide other
information pertaining to the quality of such AHPs.
Such distribution shall occur at least annually before
each general enrollment period. Each HPPC also shall
make such information available to other interested
persons.
(B) Additional information.--Such information shall
include--
(i) a summary of the analysis of
information collected under paragraph (1) and
information collected under section 1108(a)(2),
and
(ii) a breakdown of the portion of AHP
premiums attributable to the HPPC overhead
amount (specified under section 1105(b)(3)).
(d) Period of Coverage.--
(1) Initial enrollment period.--In the case of an eligible
individual who enrolls with an AHP through a HPPC during an
initial enrollment period, coverage under the plan shall begin
on such date (not later than the first day of the first month
that begins at least 15 days after the date of enrollment) as
the Health Care Standards Commission shall specify.
(2) General enrollment periods.--In the case of an eligible
individual who enrolls with an AHP through a HPPC during a
general enrollment period, coverage under the plan shall begin
on the first day of the first month beginning at least 15 days
after the end of such period.
(3) Special enrollment periods.--
(A) In general.--In the case of an eligible
individual who enrolls with an AHP during a special
enrollment period described in subsection (b)(4),
coverage under the plan shall begin on such date (not
later than the first day of the first month that begins
at least 15 days after the date of enrollment) as the
Commission shall specify, except that coverage of
family members shall begin as soon as possible on or
after the date of the event that gives rise to the
special enrollment period.
(B) Transitional special enrollment period.--In the
case of an eligible individual who enrolls with an AHP
during the transitional special enrollment period
described in subsection (b)(5), coverage under the plan
shall begin on January 1, 1995.
(4) Minimum period of enrollment.--In order to avoid
adverse selection, each HPPC may require, consistent with rules
of the Health Care Standards Commission, that enrollments with
AHPs be for not less than a specified minimum enrollment period
(with exceptions permitted for such exceptional circumstances
as the Commission may recognize).
SEC. 1105. RECEIPT OF PREMIUMS.
(a) Enrollment Charge.--The amount charged by a HPPC for coverage
under an AHP in a HPPC area is equal to the sum of--
(1) the amount of the premium applicable to the individual
under section 1205(a)(1)(B) for such coverage, and
(2) the HPPC overhead amount established under subsection
(b)(3) for enrollment of individuals in the HPPC area.
(b) HPPC Overhead Amount.--
(1) HPPC budget.--Each HPPC shall establish a budget for
each year for each HPPC area in accordance with regulations
established by the Health Care Standards Commission.
(2) HPPC overhead percentage.--The HPPC shall compute for
each HPPC area an overhead percentage which, when applied for
each enrollee unit (whether enrolled on a family or individual
basis) to the weighted average of the standard premium amounts
for premium classes for enrollment on an individual basis
(taking into account any reduction in premiums attributable to
low-income assistance under section 2002), will provide for
revenues equal to the budget for the HPPC area for the year.
Such percentage may in no case exceed 1 percentage point.
(3) HPPC overhead amount.--The HPPC overhead amount for
enrollment, whether on an individual or family basis, in an AHP
for a HPPC area for a month is equal to the applicable HPPC
overhead percentage (computed under paragraph (2)) multiplied
by the weighted average of the standard premium amounts for
premium classes for enrollment on an individual basis under the
AHP for the month (taking into account any reduction in
premiums attributable to low-income assistance under section
2002).
SEC. 1106. COORDINATION AMONG HPPCS.
(a) In General.--The Health Care Standards Commission shall
establish rules consistent with this section for--
(1) coordination among HPPCs in cases where small employers
are located in one HPPC area and their employees reside in a
different HPPC area (and are eligible for enrollment with AHPs
located in the other area), and
(2) coordination among HPPCs in the low-income assistance
reconciliation processes under section 1102(e)(1).
The Commission shall establish standards for operational software in
order to promote coordination among HPPCs under this title.
(b) Coordination Rules.--Under the rules established under
subsection (a)(1)--
(1) HPPC for employer.--The HPPC for the principal place of
business of a small employer shall be responsible--
(A) for providing information to the employer's
employees on AHPs for areas in which employees reside;
(B)(i) for enrolling employees under the AHP
selected (even if the AHP selected is not in the same
HPPC area as the HPPC) and (ii) if the AHP chosen is
not in the same HPPC area as the HPPC, for forwarding
the enrollment information to the HPPC for the area in
which the AHP selected is located; and
(C) in the case of premiums to be paid through
payroll deduction, or employer contribution, or both,
to receive such premiums and forward them to the HPPC
for the area in which the AHP selected is located.
(2) HPPC for employee residence.--The HPPC for the HPPC
area in which an employee resides shall be responsible for
providing other HPPCs with information concerning AHPs being
offered in such HPPC area.
(c) Coordination of Reconciliation of Low-Income Assistance.--Under
the rules established under subsection (a)(2), the Commission shall
provide for such payments among the different HPPCs as the Commission
determines is necessary in order to assure the equitable distribution
among AHPs in different HPPC areas of adjustments in premiums and cost-
sharing under section 1205(c) and section 1202(c), respectively.
SEC. 1107. COMPLAINT PROCESS; OMBUDSMAN.
(a) Complaint Process.--Each HPPC shall establish a process for the
receipt and disposition of complaints regarding the performance of its
duties.
(b) Ombudsman.--
(1) In general.--Each HPPC shall provide--
(A) for the appointment of an ombudsman, and
(B) for a reasonable salary and staff for the
ombudsman.
(2) Duties and authorities.--Each ombudsman shall have the
duty and authority to do the following:
(A) Relating to hppcs.--(i) To investigate
complaints regarding the failure of a HPPC to perform
its duties.
(ii) To assist AHPs and eligible individuals in
resolving grievances with the HPPC.
(iii) To issue public reports and reports to the
Health Care Standards Commission on the HPPC's
performance of such duties.
(B) Relating to ahps.--(i) To investigate
complaints concerning the failure of an AHP to meet the
applicable requirements of part 1 of subtitle C.
(ii) To assist enrollees in AHPs in resolving
grievances with such plans.
(iii) To issue public reports and reports to the
Health Care Standards Commission on any finding that an
AHP has failed to meet the applicable requirements of
part 1 of subtitle C.
(3) Access to information.--The HPPC shall provide the
ombudsman and the ombudsman's staff with access to such
information as may be necessary to carry out such duties.
SEC. 1108. ENROLLEE SATISFACTION SURVEYS; MONITORING ENROLLEE
DISENROLLMENT.
(a) Enrollee Satisfaction Surveys.--
(1) In general.--Each HPPC, using a standard survey
instrument prescribed by the Health Care Standards Commission,
shall collect information on the satisfaction of eligible
individuals with--
(A) the performance of the HPPC, and
(B) the performance of the AHP in which they are
enrolled.
(2) Analysis.--Each HPPC shall--
(A) analyze the information collected under
paragraph (1),
(B) submit to the Health Care Standards Commission
an annual report that summarizes such analysis, and
(C) make a summary of such analysis available to
enrollees under section 1104(c)(2).
(b) Monitoring Enrollee Disenrollment.--Each HPPC shall monitor
enrollee disenrollment from AHPs in order to determine whether there is
a pattern of disenrollment which does not reflect the distribution of
age, income, health condition, place of residence, and other potential
risk characteristics of their enrollees. If a HPPC determines that such
a pattern exists, the HPPC shall provide the Health Care Standards
Commission with such information on such pattern as the Commission may
specify and may petition under section 1305(c)(2) for the revocation of
the registration of the AHP.
Subtitle C--Accountable Health Plans (AHPs)
PART 1--REQUIREMENTS FOR ACCOUNTABLE HEALTH PLANS
SEC. 1201. REGISTRATION PROCESS; QUALIFICATIONS.
(a) In General.--The Health Care Standards Commission shall provide
a process whereby a health plan (as defined in section 1701(c)(1)) may
be registered with the Commission by its sponsor as an accountable
health plan. Such a registered AHP is authorized to allocate its
resources (except as otherwise specifically required under this
subtitle) to maximize the health of its enrollees.
(b) Qualifications.--In order to be eligible to be registered, a
plan must--
(1) provide, in accordance with section 1202, for coverage
of the uniform set of effective benefits specified by the
Commission, for adjustments in cost-sharing in the case of low-
income individuals, and for meeting quality standards
established by the Commission;
(2) provide, in accordance with section 1203, for the
collection and provision to the Commission and HPPCs of certain
information regarding its enrollees and provision of services;
(3) not discriminate in enrollment or benefits, as required
under section 1204;
(4) establish standard premiums for the uniform set of
effective benefits, in accordance with section 1205;
(5) meet financial solvency requirements, in accordance
with section 1206;
(6) meet requirements relating to grievance procedures,
physician incentive plans, advance directives, and agent
commissions, in accordance with section 1207;
(7) in the case of an open plan (as defined in section
1701(b)(4)(B)), meet certain additional requirements under
section 1208 (relating to offering of plans, acceptance of
enrollees, and participation as a plan under the medicare
program and under the Federal employees health benefits
program);
(8) provide for coordination of benefits with low-income
assistance under subtitle A of title II, in accordance with
section 1209;
(9) provide for any required medicare adjustment payments,
in accordance with section 1210;
(10) pay certain premiums to the National Medical Education
Fund, in accordance with section 1211; and
(11) pay registration fees imposed under sections
1303(d)(1) and 1304(d).
(c) Minimum Size for Closed Plans.--No plan may be registered as a
closed AHP under this section unless the plan covers at least a number
of employees greater than the applicable number of employees specified
in or under section 1701(c)(2).
SEC. 1202. SPECIFIED UNIFORM SET OF EFFECTIVE BENEFITS; REDUCTION IN
COST-SHARING FOR LOW-INCOME INDIVIDUALS; QUALITY
STANDARDS.
(a) Benefits.--The Health Care Standards Commission shall not
accept the registration of a health plan as an AHP unless, subject to
subsection (b), the plan--
(1) offers only the uniform set of effective benefits,
established under section 1302(a)(1);
(2) has entered into arrangements with a sufficient number,
distribution, and variety of providers to assure that the
uniform set of effective benefits is--
(A) available and accessible to each enrollee,
within the area served by the plan, with reasonable
promptness and in a manner which assures continuity,
and
(B) when medically necessary, available and
accessible twenty-four hours a day and seven days a
week,
without imposing cost-sharing in excess of the cost-sharing
described in paragraph (4);
(3) provides for the application of coverage standards,
with respect to the uniform set of effective benefits, which
are disclosed by the plan to plan enrollees (in a manner
specified by the Commission) and which are consistent with
coverage criteria under section 1302(b) (as interpreted by the
Commission);
(4) if it is a network plan (as defined in section
1222(b)(1)), (A) selects providers of each type of good or
service offered by the plan based on a competitive criteria,
including price, quality, and services offered, and (B)
publicizes and makes available, upon request, before the
selection of participating providers such competitiive
criteria;
(5)(A) provides, subject to subsection (c), for imposition
of uniform cost-sharing, specified under such section as part
of such set of benefits; and
(B) does not permit providers participating in the plan
under paragraph (2) to charge for services included in the
uniform set of effective benefits services amounts in excess of
such cost-sharing; and
(6) does not accept enrollment of an individual who is
enrolled under another AHP unless, as of the effective date of
the enrollment, the enrollment under the other plan will be
terminated.
(b) Treatment of Additional Benefits.--
(1) In general.--Subject to paragraphs (2) and (3),
subsection (a) shall not be construed as preventing an AHP from
offering benefits in addition to the uniform set of effective
benefits, if such additional benefits are offered, and priced,
separately from the benefits described in subsection (a).
(2) No duplicative benefits or coverage of cost-sharing.--
An AHP or other entity may not offer under paragraph (1) or
otherwise any additional benefits or plan that has the effect--
(A) of duplicating the benefits required under
subsection (a), or
(B) of reducing the cost-sharing below the uniform
cost-sharing.
The Health Care Standards Commission may file an action, in any
appropriate court, to enjoin an entity (other than an AHP) that
violates this paragraph.
(c) Reduction in Cost-Sharing for Low-Income Individuals.--In the
case of a low-income individual (as defined in section 2009(a)(1))
eligible for cost-sharing assistance under section 2003(a) and enrolled
with an AHP, the AHP shall reduce the cost-sharing otherwise applicable
to amounts that are nominal (as specified for purposes of section
2003(a)(1)).
(d) Limitation on Imposition of Cost-Sharing.--In order to assure
that providers of services for which benefits are available through an
AHP do not impose cost-sharing in excess of that permitted under
subsection (a)(5), each AHP may not provide payment for services (other
than emergency services) furnished by a provider with an arrangement
described in subsection (a)(2) to meet the uniform set of effective
benefits unless the provider has agreed (in a manner specified by the
Health Care Standards Commission) not to impose cost-sharing in excess
of that so specified.
(e) Quality Standards.--The Health Care Standards Commission shall
establish standards relating to the minimum level of acceptable quality
for an AHP's provision of the uniform set of effective benefits. In
order for a plan to be registered under this subtitle, the plan must
agree to provide benefits in a manner that complies with such
standards.
SEC. 1203. COLLECTION AND PROVISION OF STANDARDIZED INFORMATION.
(a) Provision of Information.--
(1) In general.--Each AHP must provide the applicable HPPC
and the Health Care Standards Commission (at a time, not less
frequently than annually, and in an electronic, standardized
form and manner specified by the Commission) such information
as the Commission determines to be necessary, consistent with
this subsection and sections 1104(c) and 1307, to forward
payments to AHPs under section 1102(d) and to evaluate the
performance of the AHP in providing the uniform set of
effective benefits to enrollees in each HPPC area.
(2) Information to be included.--Subject to paragraph (3),
information to be provided under this subsection shall include
at least the following:
(A) Information on the characteristics of enrollees
that may affect their need for or use of health
services and the determination of risk-adjustment
factors for enrollee units.
(B) Information on the types of treatments and
outcomes of treatments with respect to the clinical
health, functional status, and well-being of enrollees.
(C) Information on health care expenditures, volume
and prices of procedures, and use of specialized
centers of care (for which information is submitted
under section 1308).
(D) Information on the flexibility permitted by
plans to enrollees in their selection of providers.
(3) Special treatment.--The Commission may waive the
provision of such information under paragraph (2), or require
such other information, as the Commission finds appropriate in
the case of a newly established AHP for which such information
is not available.
(b) Conditioning Certain Provider Payments.--
(1) In general.--In order to assure the collection of all
information required from the direct providers of services for
which benefits are available through an AHP, each AHP may not
provide payment for services (other than emergency services)
furnished by a provider to meet the uniform set of effective
benefits unless the provider has given the AHP (or has given
directly to the Health Care Standards Commission and the
applicable HPPC) standard information (specified by the
Commission) respecting the services.
(2) Forwarding information.--If information under paragraph
(1) is given to the AHP, the AHP is responsible for forwarding
the information to the Commission and the applicable HPPC.
(c) Auditing.--Each AHP shall provide, in accordance with standards
established by the Commission, for the auditing of information provided
under this section.
SEC. 1204. PROHIBITION OF DISCRIMINATION BASED ON HEALTH STATUS FOR
CERTAIN CONDITIONS; LIMITATION ON PRE-EXISTING CONDITION
EXCLUSIONS.
(a) In General.--Except as provided under subsection (b), an AHP
may not deny, limit, or condition the coverage under (or benefits of)
the plan based on the health status of an individual, claims experience
of an individual, receipt of health care by an individual, medical
history of an individual, receipt of public subsidies by an individual,
lack of evidence of insurability of an individual, or any other
characteristic of the individual that may relate to the need for health
care services.
(b) Treatment of Preexisting Condition Exclusions for Services.--
(1) In general.--Subject to the succeeding provisions of
this subsection, an AHP may exclude coverage with respect to
services related to treatment of a preexisting condition, but
the period of such exclusion may not exceed 6 months beginning
on the date of coverage under the plan. The exclusion of
coverage shall not apply to services furnished to newborns and
to pregnant women.
(2) Crediting of previous coverage.--
(A) In general.--An AHP shall provide that if an
enrollee is in a period of continuous coverage (as
defined in subparagraph (B)(i)) as of the date of
initial coverage under such plan, any period of
exclusion of coverage with respect to a preexisting
condition for such services or type of services shall
be reduced by 1 month for each month in the period of
continuous coverage.
(B) Definitions.--As used in this paragraph:
(i) Period of continuous coverage.--
(I) In general.--The term ``period
of continuous coverage'' means the
period beginning on the date an
individual is enrolled under an AHP and
ends on the date the individual is not
so enrolled for a continuous period of
more than 3 months.
(II) Transitional amnesty at time
of initial enrollment.--For purposes of
this clause, each individual who
enrolls in an AHP before July 1, 1995,
is considered to have had a period of
continuous coverage during the 6 months
ending January 1, 1995.
(ii) Preexisting condition.--The term
``preexisting condition'' means, with respect
to coverage under an AHP, a condition which has
been diagnosed or treated during the 3-month
period ending on the day before the first date
of such coverage (without regard to any waiting
period).
(3) Limitation to uniform set of effective benefits.--This
subsection shall not apply to treatment which is not within the
uniform set of effective benefits.
(4) Special rule for certain health maintenance
organizations.--A health maintenance organization that is an
AHP shall not be considered as failing to meet the requirements
of section 1301 of the Public Health Service Act
notwithstanding that it provides for an exclusion of the type
described in paragraph (1) so long as such exclusion is applied
consistent with the previous provisions of this subsection.
SEC. 1205. USE OF STANDARD PREMIUMS.
(a) Standard Premiums for Open AHPs.--
(1) In general.--
(A) Establishment.--Subject to subsection (c), each
open AHP shall establish a standard premium for the
uniform set of effective benefits within each HPPC area
in which the plan is offered.
(B) Applicable premium.--The amount of premium
applicable for all individuals within a premium class
(established under paragraph (2)) is the standard
premium amount multiplied by the premium class factor
specified by the Commission for that class under
paragraph (2)(B).
(C) Uniformity within a year.--Within a HPPC area
for individuals within a premium class for months in a
calendar year, the standard premium for all individuals
in the class for each month shall be the same.
(2) Premium classes.--
(A) In general.--The Health Care Standards
Commission shall establish premium classes--
(i) based on types of enrollment (described
in section 1701(c)(6)), and
(ii) within each type of enrollment, based
on the age of the principal enrollee (or based
on the age of another family member of such
enrollee in such cases as the Commission may
provide).
In carrying out clause (ii), the Commission shall
establish reasonable age bands within which premium
amounts will not vary for a type of enrollment.
(B) Premium class factors.--
(i) In general.--For each premium class
established under subparagraph (A), the Health
Care Standards Commission shall establish a
premium class factor that reflects, subject to
clause (ii), the relative actuarial value of
benefits for that class compared to the
actuarial value of benefits for an average
class. The weighted average of the premium
class factors shall be 1. Such premium class
factors shall be computed based on the
actuarial value of benefits for such population
group within the class (which shall include the
population eligible to enroll with open AHPs
through HPPCs) as the Commission determines to
be appropriate.
(ii) Limit on variation in premium class
factors within a type of enrollment.--The
highest premium class factor within a type of
enrollment may not exceed twice the lowest
premium class factor for that type of
enrollment. The previous sentence shall not
apply to premiums imposed pursuant to a risk-
sharing contract under section 1876 of the
Social Security Act.
(3) Methodology.--The amount of premiums forwarded to AHPs
is adjusted in accordance with section 1102(d)(1).
(b) Standard Premiums for Closed AHPs.--
(1) Establishment.--Subject to subsection (c) and paragraph
(3), each closed AHP shall establish a standard premium for the
uniform set of effective benefits within each HPPC area in
which the plan is offered.
(2) Application by premium class.--Subject to paragraph
(3)--
(A) the amount of premium applicable for all
individuals within a premium class is the standard
premium amount multiplied by the premium class factor
specified by the Commission for that class under
subsection (a)(2)(B), and
(B) within a HPPC area for individuals within a
premium class, the standard premium for all individuals
in the premium class shall be the same.
(3) Community rating permitted.--
(A) Same rates within type of enrollment without
regard to age.--A closed AHP may elect (in a manner
specified by the Health Care Standards Commission) to
apply this subsection on the basis of type of
enrollment rather than premium class. In such case, all
references in this subsection to premium class are
deemed a reference to type of enrollment and the
reference to premium class factor (for a type of
enrollment) is the weighted average of such factors for
the plan within the type of enrollment.
(B) Community rating across hppc areas.--A closed
AHP may elect (in a manner specified by the Commission)
to apply this subsection by treating two or more HPPC
areas as a single HPPC area. In such case, subject to
subparagraph (A), the premium class factor to be
applied shall be the weighted average of such factors
for the plan for the HPPC areas involved.
(c) Adjustment of Premiums for Low-Income Individuals.--
(1) Very low-income individuals.--In the case of a very
low-income individual (as defined in section 2009(a)(3))
eligible for premium assistance under section 2002 and enrolled
with an AHP--
(A) the AHP shall adjust the premium otherwise
applicable so that the premium does not exceed the sum
of--
(i) the base Federal premium amount (as
defined in section 2005(a)(1)) for enrollment
under the plan, and
(ii) 10 percent of the amount (if any) by
which (I) the premium for the AHP in which the
individual is enrolled exceeds (II) the
reference premium rate (as defined in section
2009(c)(4)); and
(B) the AHP shall credit against the premium owed
the applicable Federal assistance amount (as defined in
section 2009(c)(1)) provided the plan under section
2002(a)(1)(B).
(2) Moderately low-income individuals.--In the case of a
moderately low-income individual (as defined in section
2009(a)(2)) eligible for premium assistance under section 2002
and enrolled with an AHP--
(A) the AHP shall adjust the premium otherwise
applicable so that the premium does not exceed the sum
of--
(i) applicable low-income premium amount
(as defined in section 2009(c)(2)) for
enrollment under the plan, plus
(ii) the individual responsibility
percentage (as defined in section 2009(c)(5),
or 10 percentage points, whichever is greater)
of the amount by which (I) the premium for the
AHP in which the individual is enrolled exceeds
(II) the reference premium rate (as defined in
section 2009(c)(4)) for the individual; and
(B) the AHP shall credit against the premium owed
the applicable Federal assistance amount (as defined in
section 2009(c)(1)) provided the plan under section
2002(a)(2)(B).
If the premium reduction under subparagraph (A) is not a
multiple of $1, the Commission may provide for the rounding of
such reduction to a multiple of $1.
SEC. 1206. FINANCIAL SOLVENCY REQUIREMENTS.
(a) Solvency Protection.--
(1) For insured plans.--In the case of an AHP that is an
insured plan (as defined by the Health Care Standards
Commission) and is issued in a State, in order for the plan to
be registered under this subtitle the Commission must find that
the State has established satisfactory protection of enrollees
with respect to potential insolvency of the plan.
(2) For other plans.--In the case of an AHP that is not an
insured plan, the Commission may require the plan to provide
for such bond or provide other satisfactory assurances that
enrollees under the plan are protected with respect to
potential insolvency of the plan.
(b) Protection Against Provider Claims.--In the case of a failure
of an AHP to make payments with respect to the uniform set of effective
benefits, under standards established by the Commission, an individual
who is enrolled under the plan is not liable to any health care
provider or practitioner with respect to the provision of health
services within such uniform set for payments in excess of the amount
for which the enrollee would have been liable if the plan were to have
made payments in a timely manner.
SEC. 1207. GRIEVANCE MECHANISMS; ENROLLEE PROTECTIONS; WRITTEN POLICIES
AND PROCEDURES RESPECTING ADVANCE DIRECTIVES; AGENT
COMMISSIONS.
(a) Effective Grievance Procedures.--
(1) In general.--Each AHP shall provide for effective
procedures for hearing and resolving grievances between the
plan and individuals enrolled under the plan, which procedures
meet standards specified by the Health Care Standards
Commission.
(2) Access of ombudsman to information.--Each AHP shall
provide the ombudsman, appointed under section 1107(b) for the
HPPC area in which the AHP operates, and the ombudsman's staff
with access to such information as may be necessary for the
ombudsman to carry out duties under such section.
(b) Restriction on Certain Physician Incentive Plans.--
(1) In general.--A health plan may not be registered as an
AHP if it operates a physician incentive plan (as defined in
paragraph (2)) unless the requirements specified in clauses (i)
through (iii) of section 1876(i)(8)(A) of the Social Security
Act are met (in the same manner as they apply to eligible
organizations under section 1876 of such Act).
(2) Physician incentive plan defined.--In this subsection,
the term ``physician incentive plan'' means any compensation or
other financial arrangement between the AHP and a physician or
physician group that may directly or indirectly have the effect
of reducing or limiting services provided with respect to
individuals enrolled under the plan.
(c) Written Policies and Procedures Respecting Advance
Directives.--A health plan may not be registered as an AHP unless the
plan meets the requirements of section 1866(f) of the Social Security
Act (relating to maintaining written policies and procedures respecting
advance directives), insofar as such requirements would apply to the
plan if the plan were an eligible organization.
(d) Payment of Agent Commissions.--An AHP--
(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.
SEC. 1208. ADDITIONAL REQUIREMENTS OF OPEN AHPS.
(a) Requirement of Agreement with HPPC.--In the case of a health
plan which is an open plan (as defined in section 1701(b)(4)(B)), in
order to be registered as an AHP the plan must have in effect an
agreement (described in section 1102) with each HPPC for each HPPC area
in which it is offered.
(b) Requirement of Open Enrollment.--
(1) In general.--In the case of a health plan which is an
open health plan, in order to be registered as an AHP the plan
must, subject to paragraph (3), not reject the enrollment of
any eligible individual whom a HPPC is authorized to enroll
under an agreement referred to in subsection (a) if the
individual applies for enrollment during an enrollment period.
(2) Limitation on termination.--Subject to paragraph (3),
coverage of eligible individuals under an open AHP may not be
refused nor terminated except for--
(A) nonpayment of premiums,
(B) fraud or misrepresentation, or
(C) termination of the plan at the end of a year
(after notice and in accordance with standards
established by the Health Care Standards Commission).
(3) Treatment of network plans.--
(A) Geographic limitations.--
(i) In general.--An AHP which is a network
plan (as defined in subparagraph (D)) may deny
coverage under the plan to an eligible
individual who is located outside a service
area of the plan, but only if such denial is
applied uniformly, without regard to health
status or insurability of individuals.
(ii) Service areas.--The Health Care
Standards Commission shall establish standards
for the designation by network plans of service
areas in order to prevent discrimination based
on health status of individuals or their need
for health services.
(B) Size limits.--Subject to subparagraph (C), an
AHP which is a network plan may apply to the Commission
to cease enrolling eligible individuals under the AHP
(or in a service area of the plan) if--
(i) it ceases to enroll any new eligible
individuals, and
(ii) it can demonstrate that its financial
or administrative capacity to serve previously
covered groups or individuals (and additional
individuals who will be expected to enroll
because of affiliation with such previously
covered groups or individuals) will be impaired
if it is required to enroll other eligible
individuals.
(C) First-come-first-served.--A network plan is
only eligible to exercise the limitations provided for
in subparagraphs (A) and (B) if it provides for
enrollment of eligible individuals on a first-come-
first-served basis, except that the plan, under rules
of the Commission, shall provide preference for
eligible individuals who are not eligible to enroll in
another network plan.
(D) Network plan.--In this paragraph, the term
``network plan'' means an eligible organization (as
defined in section 1876(b) of the Social Security Act)
and includes a similar organization, specified in
regulations of the Commission, that requires a
limitation on enrollment of employer groups or
individuals due to the manner in which the organization
provides health care services.
(c) Requirement of Participation in Medicare Risk-Based
Contracting.--
(1) In general.--In the case of a health plan which is an
open health plan and which is an eligible organization (as
defined in section 1876(b) of the Social Security Act), in
order to be registered as an AHP the plan must enter into a
risk-sharing contract under section 1876 of the Social Security
Act for the offering of benefits to medicare beneficiaries in
accordance with such section.
(2) Expansion of medicare select program.--Subsection (c)
of section 4358 of the Omnibus Budget Reconciliation Act of
1990 (104 Stat. 1388-137) is amended by striking ``only apply
in 15 States'' and all that follows through the end and
inserting ``on and after January 1, 1992.''.
(3) Eligibility for payment.--An AHP that meets the
requirement of paragraph (1) is eligible to receive adjustment
payments under section 1210(b).
(d) Participation in FEHBP.--
(1) In general.--In the case of a health plan which is an
open health plan, in order to be registered as an AHP the plan
must have entered into an agreement with the Office of
Personnel Management to offer a health plan to Federal
employees and annuitants, and family members, under the Federal
Employees Health Benefits Program under chapter 89 of title 5,
United States Code, under the same terms and conditions (other
than the amount of premiums) offered by the AHP for enrollment
of eligible individuals through HPPCs.
(2) Change in contribution and other fehbp rules.--
Notwithstanding any other provision of law, effective January
1, 1995--
(A) enrollment shall not be permitted under a
health benefits plan under chapter 89 of title 5,
United States Code, unless the plan is an AHP; and
(B) the amount of the Federal Government
contribution under such chapter--
(i) for any premium class shall be the same
for all AHPs in a HPPC area,
(ii) for any individual in a premium class
shall not exceed the base individual premium
(as defined in section 2009(c)(3)), and
(iii) in the aggregate for any fiscal year
shall be equal to the aggregate amount of
Government contributions that would have been
made but for this subsection.
SEC. 1209. COORDINATION OF BENEFITS WITH LOW-INCOME ASSISTANCE.
(a) In General.--Each AHP shall provide for--
(1) acceptance of information, electronically, from the
Health Care Standards Commission on the eligibility of
individuals (and family members) for low-income assistance
under subtitle A of title II,
(2) an adjustment, in accordance with sections 1202(c) and
1205(c), in the cost-sharing or premium amounts otherwise
imposed to reflect the cost-sharing and premium assistance
provided under such subtitle, and
(3) such reconciliation payments as may be required under
section 1102(e).
(b) Requirement of Special Agreements for Non-Open Plans.--In the
case of a health plan which is not an open health plan, in order to be
registered as an AHP the plan must have in effect a special agreement
(described in section 1102(a)(2)) with each HPPC for each HPPC area in
which it is offered.
SEC. 1210. ADDITIONAL REQUIREMENT OF CERTAIN AHPS.
(a) Medicare Adjustment Payment Required.--Each AHP which is not
described in section 1208(c)(1) shall provide for payment to the Health
Care Standards Commission of such amounts as may be required as to put
the plan in the same financial position as the AHP would be in if it
was required to meet the requirement of such section.
(b) Redistribution of Payments to Plans.--The Commission shall
provide for the distribution of amounts to be paid under subsection (a)
among AHPs meeting the requirement of section 1208(c)(1) in such manner
as reflects the relative financial impact of such requirement among
such plans.
SEC. 1211. FUNDING FOR APPROVED MEDICAL RESIDENCY TRAINING PROGRAMS AND
PHYSICIAN RETRAINING PROGRAMS.
(a) Requirement.--Each AHP shall provide for payment of 1 percent
of gross premium receipts (as defined in subsection (c)) to the
National Medical Education Fund established under section 3005.
(b) Payment Method.--
(1) Open ahps.--In the case of an open AHP, the payment
under subsection (a) shall be made through a reduction of 1
percent in the payments made by each HPPC to the AHP.
(2) Closed ahps.--In the case of a closed AHP, the payment
under subsection (a) shall be made on a monthly (or other
basis) as specified by the Commission. Failure of a closed AHP
to make such a payment on a timely basis is grounds for
revocation of the registration of the AHP under this part.
(c) Gross Premium Receipts Defined.--In this section, the term
``gross premium receipts'' means, with respect to--
(1) an open AHP, the payment amounts otherwise payable by a
HPPC to the AHP, or
(2) a closed AHP, an actuarial equivalent value (as
established in accordance with rules of the Commission, similar
to the rules established for purposes of section 4980C(d)(1) of
the Internal Revenue Code of 1986).
PART 2--PREEMPTION OF STATE LAWS FOR ACCOUNTABLE HEALTH PLANS
SEC. 1221. PREEMPTION FROM STATE BENEFIT MANDATES.
Effective as of January 1, 1995, no State shall establish or
enforce any law or regulation that--
(1) requires the offering, as part of an AHP, of any
services, category of care, or services of any class or type of
provider that is different from the uniform set of effective
benefits;
(2) specifies the individuals to be covered under an AHP or
the duration of such coverage; or
(3) requires a right of conversion from a group health plan
that is an AHP to an individual health plan.
SEC. 1222. PREEMPTION OF STATE LAW RESTRICTIONS ON NETWORK PLANS.
(a) Limitation on Restrictions on Network Plans.--Effective as of
January 1, 1995--
(1) a State may not prohibit or limit a network plan from
including incentives for enrollees to use the services of
participating providers;
(2) a State may not prohibit or limit a network plan from
limiting coverage of services to those provided by a
participating provider;
(3) a State may not prohibit or limit the negotiation of
rates and forms of payments for providers under a network plan;
(4) a State may not prohibit or limit a network plan from
limiting the number of participating providers;
(5) a State may not prohibit or limit a network plan from
requiring that services be provided (or authorized) by a
practitioner selected by the enrollee from a list of available
participating providers; and
(6) a State may not prohibit or limit the corporate
practice of medicine.
(b) Definitions.--In this section:
(1) Network plan.--The term ``network plan'' means an AHP--
(A) which--
(i) limits coverage of the uniform set of
effective benefits to those provided by
participating providers, or
(ii) provides, with respect to such
services provided by persons who are not
participating providers, for cost-sharing which
are in excess of those permitted under the
uniform set of effective benefits for
participating providers;
(B) which has a sufficient number and distribution
of participating providers to assure that the uniform
set of effective benefits (i) is available and
accessible to each enrollee, within the area served by
the plan, with reasonable promptness and in a manner
which assures continuity, and (ii) when medically
necessary, is available and accessible twenty-four
hours a day and seven days a week; and
(C) which provides benefits for the uniform set of
effective benefits not furnished by participating
providers if the services are medically necessary and
immediately required because of an unforeseen illness,
injury, or condition.
(2) Participating provider.--The term ``participating
provider'' means an entity or individual which provides, sells,
or leases health care services under a contract with a network
plan, which contract does not permit--
(A) cost-sharing in excess of the cost-sharing
permitted under the uniform set of effective benefits,
and
(B) any enrollee charges (for such services covered
under such set) in excess of such cost-sharing.
SEC. 1223. PREEMPTION OF STATE LAWS RESTRICTING UTILIZATION REVIEW
PROGRAMS.
(a) In General.--Effective January 1, 1995, no State law or
regulation shall prohibit or regulate activities under a utilization
review program (as defined in subsection (b)).
(b) Utilization Review Program Defined.--In this section, the term
``utilization review program'' means a system of reviewing the medical
necessity and appropriateness of patient services (which may include
inpatient and outpatient services) using specified guidelines. Such a
system may include preadmission certification, the application of
practice guidelines, continued stay review, discharge planning,
preauthorization of ambulatory procedures, and retrospective review.
PART 3--ANTITRUST PROVISIONS
SEC. 1231. PUBLICATION OF GUIDELINES FOR ACCOUNTABLE HEALTH PLANS.
(a) In General.--The President shall provide for the development
and publication of explicit guidelines on the application of Federal
antitrust laws to AHPs. The guidelines shall be designed to facilitate
AHP development and operation, consistent with the Federal antitrust
laws.
(b) Review Process.--The Attorney General shall establish a review
process under which an AHP (or organization that proposes to establish
an AHP) may obtain a prompt opinion from the Department of Justice on
the plan's conformity with the Federal antitrust laws.
(c) Antitrust Laws Defined.--In this section, the term ``antitrust
laws'' has the meaning given it in subsection (a) of the first section
of the Clayton Act (15 U.S.C. 12(a)), except that such term includes
section 5 of the Federal Trade Commission Act (15 U.S.C. 45) to the
extent such section applies to unfair methods of competition.
SEC. 1232. ISSUANCE OF HEALTH CARE CERTIFICATES OF PUBLIC ADVANTAGE.
(a) Issuance and Effect of Certificate.--The Attorney General,
after consultation with the Secretary, shall issue in accordance with
this section a certificate of public advantage to each eligible health
care joint venture that complies with the requirements in effect under
this section on or after the expiration of the 1-year period that
begins on the date of the enactment of this Act (without regard to
whether or not the Attorney General has promulgated regulations to
carry out this section by such date). Such venture, and the parties to
such venture, shall not be liable under any of the antitrust laws for
conduct described in such certificate and engaged in by such venture if
such conduct occurs while such certificate is in effect.
(b) Requirements Applicable to Issuance of Certificates.--
(1) Standards to be met.--The Attorney General shall issue
a certificate to an eligible health care joint venture if the
Attorney General finds that--
(A) the benefits that are likely to result from
carrying out the venture outweigh the reduction in
competition (if any) that is likely to result from the
venture, and
(B) such reduction in competition is reasonably
necessary to obtain such benefits.
(2) Factors to be considered.--
(A) Weighing of benefits against reduction in
competition.--For purposes of making the finding
described in paragraph (1)(A), the Attorney General
shall consider whether the venture is likely --
(i) to maintain or to increase the quality
of health care,
(ii) to increase access to health care,
(iii) to achieve cost efficiencies that
will be passed on to health care consumers,
such as economies of scale, reduced transaction
costs, and reduced administrative costs,
(iv) to preserve the operation of health
care facilities located in underserved
geographical areas,
(v) to improve utilization of health care
resources, and
(vi) to reduce inefficient health care
resource duplication.
(B) Necessity of reduction in competition.--For
purposes of making the finding described in paragraph
(1)(B), the Attorney General shall consider--
(i) the ability of the providers of health
care services that are (or likely to be)
affected by the health care joint venture and
the entities responsible for making payments to
such providers to negotiate societally optimal
payment and service arrangements,
(ii) the effects of the health care joint
venture on premiums and other charges imposed
by the entities described in clause (i), and
(iii) the availability of equally
efficient, less restrictive alternatives to
achieve the benefits that are intended to be
achieved by carrying out the venture.
(c) Establishment of Criteria and Procedures.--Subject to
subsections (d) and (e), not later than 1 year after the date of the
enactment of this Act, the Attorney General and the Secretary shall
establish jointly by rule the criteria and procedures applicable to the
issuance of certificates under subsection (a). The rules shall specify
the form and content of the application to be submitted to the Attorney
General to request a certificate, the information required to be
submitted in support of such application, the procedures applicable to
denying and to revoking a certificate, and the procedures applicable to
the administrative appeal (if such appeal is authorized by rule) of the
denial and the revocation of a certificate. Such information may
include the terms of the health care joint venture (in the case of a
venture in existence as of the time of the application) and
implementation plan for the joint venture.
(d) Eligible Health Care Joint Venture.--To be an eligible health
care joint venture for purposes of this section, a health care joint
venture shall submit to the Attorney General an application that
complies with the rules in effect under subsection (c) and that
includes--
(1) an agreement by the parties to the venture that the
venture will not foreclose competition by entering into
contracts that prevent health care providers from providing
health care in competition with the venture,
(2) an agreement that the venture will submit to the
Attorney General annually a report that describes the
operations of the venture and information regarding the impact
of the venture on health care and on competition in health
care, and
(3) an agreement that the parties to the venture will
notify the Attorney General and the Secretary of the
termination of the venture not later than 30 days after such
termination occurs.
(e) Review of Applications for Certificates.--Not later than 30
days after an eligible health care joint venture submits to the
Attorney General an application that complies with the rules in effect
under subsection (c) and with subsection (d), the Attorney General
shall issue or deny the issuance of such certificate. If, before the
expiration of such 30-day period, the Attorney General fails to issue
or deny the issuance of such certificate, the Attorney General shall be
deemed to have issued such certificate.
(f) Revocation of Certificate.--Whenever the Attorney General finds
that a health care joint venture with respect to which a certificate is
in effect does not meet the standards specified in subsection (b), the
Attorney General shall revoke such certificate.
(g) Written Reasons; Judicial Review.--
(1) Denial and revocation of certificates.--If the Attorney
General denies an application for a certificate or revokes a
certificate, the Attorney General shall include in the notice
of denial or revocation a statement of the reasons relied upon
for the denial or revocation of such certificate.
(2) Judicial review.--
(A) After administrative proceeding.--(i) If the
Attorney General denies an application submitted or
revokes a certificate issued under this section after
an opportunity for hearing on the record, then any
party to the health care joint venture involved may
commence a civil action, not later than 60 days after
receiving notice of the denial or revocation, in an
appropriate district court of the United States for
review of the record of such denial or revocation.
(ii) As part of the Attorney General's answer, the
Attorney General shall file in such court a certified
copy of the record on which such denial or revocation
is based. The findings of fact of the Attorney General
may be set aside only if found to be unsupported by
substantial evidence in such record taken as a whole.
(B) Denial or revocation without administrative
proceeding.--If the Attorney General denies an
application submitted or revokes a certificate issued
under this section without an opportunity for hearing
on the record, then any party to the health care joint
venture involved may commence a civil action, not later
than 60 days after receiving notice of the denial or
revocation, in an appropriate district court of the
United States for de novo review of such denial or
revocation.
(h) Exemption.--A person shall not be liable under any of the
antitrust laws for conduct necessary--
(1) to prepare, agree to prepare, or attempt to agree to
prepare an application to request a certificate under this
section, or
(2) to attempt to enter into any health care joint venture
with respect to which such a certificate is in effect.
(i) Definitions.--In this section:
(1) The term ``antitrust laws''--
(A) has the meaning given it in subsection (a) of
the first section of the Clayton Act (15 U.S.C. 12(a)),
except that such term includes section 5 of the Federal
Trade Commission Act (15 U.S.C. 45) to the extent such
section applies to unfair methods of competition; and
(B) includes any State law similar to the laws
referred to in subparagraph (A).
(2) The term ``certificate'' means a certificate of public
advantage authorized to be issued under subsection (a).
(3) The term ``health care joint venture'' means an
agreement (whether existing or proposed) between 2 or more
providers of health care services that is entered into solely
for the purpose of sharing in the provision of health care
services and that involves substantial integration or financial
risk-sharing between the parties, but does not include the
exchanging of information, the entering into of any agreement,
or the engagement in any other conduct that is not reasonably
required to carry out such agreement.
(4) The term ``health care services'' includes services
related to the delivery or administration of health care
services.
(5) The term ``liable'' means liable for any civil or
criminal violation of the antitrust laws.
(6) The term ``provider of health care services'' means any
individual or entity that is engaged in the delivery of health
care services in a State and that is required by State law or
regulation to be licensed or certified by the State to engage
in the delivery of such services in the State.
Subtitle D--Health Care Standards Commission
SEC. 1301. ESTABLISHMENT OF HEALTH CARE STANDARDS COMMISSION.
(a) In General.--There is hereby established, as an independent
agency in the Executive Branch, a Health Care Standards Commission (in
this title referred to as the ``Commission'').
(b) Composition and Terms.--
(1) Appointment.--The Commission shall be composed of 5
members appointed by the President by and with the advice and
consent of the Senate. In appointing members to the Commission,
the President shall provide that all members shall demonstrate
experience with and knowledge of the health care system.
(2) Chairman.--The President shall designate one of the
members to be Chairman of the Commission.
(3) Terms.--Each member of the Commission shall be
appointed for a term of 7 years, except that, of the members
first appointed, 1 shall each be appointed for terms of 3, 4,
5, 6, and 7 years, as designated by the President at the time
of appointment. Members appointed to fill vacancies shall serve
for the remainder of the terms of the vacating members.
(4) Party affiliation.--Not more than 3 members of the
Commission shall be of the same political party.
(5) Other employment prohibited.--A member of the
Commission may not, during the term as a member, engage in any
other business, vocation, profession, or employment.
(6) Quorum.--Three members of the Commission shall
constitute a quorum, except that 2 members may hold hearings.
(7) Meetings.--The Commission shall meet at the call of the
Chairman or 3 members of the Commission.
(8) Compensation.--Each member of the Commission shall be
entitled to compensation at the rate provided for level II of
the Executive Schedule, subject to such amounts as are provided
in advance in appropriation Acts.
(c) Personnel.--
(1) In general.--The Commission shall appoint an Executive
Director and such additional officers and employees as it
considers necessary to carry out its functions under this Act.
Except as otherwise provided in any other provision of law,
such officers and employees shall be appointed, and their
compensation shall be fixed, in accordance with title 5, United
States Code.
(2) Experts and consultants.--The Commission may procure
the services of experts and consultants in accordance with the
provisions of section 3109 of title 5, United States Code.
(d) Use of U.S. Mail.--The Commission may use the United States
mails in the same manner and under the same conditions as other
departments and agencies of the United States.
SEC. 1302. SPECIFICATION OF UNIFORM SET OF EFFECTIVE BENEFITS.
(a) Specification of Uniform Set of Effective Benefits;
Congressional Consideration.--
(1) Transmittal of recommendations to congress.--
(A) For 1995.--The Commission shall transmit to
Congress, by not later than July 1, 1994,
recommendations for the uniform set of effective
benefits to apply under this title for 1995 and,
subject to subparagraph (B), subsequent years.
(B) Later years.--The Commission may transmit to
Congress, by not later than July 1 of a subsequent
year, recommendations for changes in the uniform set of
effective benefits to apply under this title for the
following year (and, subject to this subparagraph,
subsequent years).
(C) Congressional consideration.--
(i) In general.--Recommendations
transmitted under subparagraph (A) or (B) shall
apply under this title unless a joint
resolution (described in clause (ii))
disapproving such recommendations is enacted,
in accordance with the provisions of clause
(iii), before the end of the 44-day period
beginning on the date on which such
recommendations were transmitted. For purposes
of applying the preceding sentence and clauses
(ii) and (iii), 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.
(ii) Joint resolution of disapproval.--A
joint resolution described in this clause means
only a joint resolution which is introduced
within the 10-day period beginning on the date
on which the Commission transmits
recommendations under subparagraph (A) or (B)
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 Health Care
Standards Commission concerning the
uniform set of effective benefits as
transmitted by the Commission on
______________.'', the blank space
being filled in with the appropriate
date; and
(III) the title of which is as
follows: ``Joint resolution
disapproving the recommendations of the
Health Care Standards Commission
concerning the uniform set of effective
benefits as transmitted by the
Commission on ______________.'', the
blank space being filled in with the
appropriate date.
(iii) Procedures for consideration of
resolution of disapproval.--Subject to clause
(iv), 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 clause (ii) in the same manner as
such provisions apply to a joint resolution
described in section 2908(a) of such Act.
(iv) Special rules.--For purposes of
applying clause (iii) 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 the Committee on Energy
and Commerce of the House of
Representatives and any reference to
the Committee on Armed Services of the
Senate shall be deemed a reference to
the Committee on Finance of the Senate;
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 Commission transmits a
recommendation under subparagraph (A)
or (B).
(D) Treatment of disapproval.--
(i) For 1995.--If recommendations
transmitted under subparagraph (A) are
disapproved by joint resolution under
subparagraph (C), then the Commission shall
transmit to Congress, by not later than 15 days
after the date of adoption of the resolution,
recommendations for the uniform set of
effective benefits to apply under this title
for 1995 and, subject to subparagraph (B),
subsequent years. The provisions of
subparagraph (C) shall apply to such new
recommendations in the same manner as they
applied to the recommendations previously
transmitted under subparagraph (A), except that
any time period specified in such subparagraph
shall be half the period otherwise provided.
(ii) For subsequent years.--If
recommendations transmitted under subparagraph
(B) are disapproved by joint resolution under
subparagraph (C), then such recommendations
shall not take effect and the recommendations
not previously disapproved under this paragraph
shall continue in effect until otherwise
changed.
(2) Specification of all medically appropriate
treatments.--
(A) Medically appropriate treatments.--The uniform
set of effective benefits submitted under paragraph (1)
shall include such categories of health care services
that the Commission determines will provide for the
delivery of medically appropriate treatment by AHPs.
(B) Coverage of clinical preventive services.--Such
benefits shall include the full range of effective
clinical preventive services (including appropriate
screening, counseling, and immunization and
chemoprophylaxis), specified by the Commission,
appropriate to age and other risk factors.
(C) Coverage of diagnostic services.--Such benefits
shall include a full range of diagnostic services not
covered under subparagraph (B).
(D) Guidelines.--Nothing in this paragraph shall
prohibit the Commission from developing guidelines that
would specify the appropriate uses of treatment in
greater detail.
(D) Additional coverage.--Nothing in this paragraph
shall be construed as preventing a plan from providing
coverage of treatment that has not been determined
(under subsection (b)) by the Commission to be
medically appropriate for purposes of this paragraph.
(3) Cost-sharing.--
(A) In general.--Subject to subparagraph (B), such
set shall include uniform cost-sharing associated with
such benefits consistent with subsection (c).
(B) Treatment of network plans.--In the case of a
network plan (as defined in section 1222(b)), the plan
may provide for charging cost-sharing in excess of the
uniform cost-sharing under subparagraph (A) in the case
of services provided by providers that are not
participating providers (as defined in such section).
(b) Criteria for Determination of Medically Appropriateness for
Benefit Coverage.--
(1) In general.--An AHP is required to provide for coverage
of the uniform set of effective benefits only for treatments
and diagnostic procedures that are medically appropriate.
Subject to the succeeding provision of this subsection, for
purposes of this section, a treatment (as defined in paragraph
(6)(A)) or diagnostic procedure is considered to be ``medically
appropriate'' if the following criteria are met (as interpreted
by the Commission):
(A) Treatment or diagnosis of medical condition.--
(i) In general.--The treatment or
diagnostic procedure is for a medical
condition.
(ii) Medical condition defined.--The term
``medical condition'' means a disease, illness,
injury, or biological or psychological
condition or status for which treatment is
indicated to improve, maintain, or stabilize a
health outcome (as defined in paragraph (6)(B))
or which, in the absence of treatment, could
lead to an adverse change in a health outcome.
(iii) Adverse change in health outcome
defined.--In clause (ii), an adverse change in
a health outcome occurs if there is a
biological or psychological decremental change
in a health status or if the original endowment
for a feature lies outside the normal range.
(B) Not investigational.--There must be sufficient
evidence on which to base conclusions about the
existence and magnitude of the change in health outcome
resulting from the treatment or diagnostic procedure
compared with the best available alternative (or with
no treatment or diagnostic procedure if no alternative
treatment or procedure is available).
(C) Effective and safe.--The evidence must
demonstrate that the treatment or diagnostic procedure
can reasonably be expected to produce the intended
health result or provide intended health information
and is safe and the treatment or diagnostic procedure
provides a clinically meaningful benefit with respect
to safety and effectiveness in comparison to other
available alternatives.
(2) Treatment or diagnostic procedure consistent with
practice guidelines.--A treatment or diagnostic procedure that
is provided consistent with a practice guideline established by
the Agency for Clinical Evaluations, established under section
1309, (or its predecessor) is deemed to be medically
appropriate.
(3) Relationship to fda review.--
(A) Approved drugs, biologicals, and medical
devices.--
(i) Drugs.--A drug that has been found to
be safe and effective under section 505 of the
Federal Food, Drug, and Cosmetic Act is deemed
to meet the requirements of paragraphs (1)(B)
and (1)(C) (relating to not investigational and
safety and effectiveness).
(ii) Biologicals.--A biological that has
been found to be safe and effective under
section 351 of the Public Health Service Act is
deemed to meet the requirements of paragraphs
(1)(B) and (1)(C) (relating to not
investigational and safety and effectiveness).
(iii) Medical devices.--A medical device
that is marketed after the provision of a
notice under section 510(k) of the Federal
Food, Drug, and Cosmetic Act or that has an
application for premarket approval approved
under section 515 of such Act is deemed to meet
the requirements of paragraphs (1)(B) and
(1)(C) (relating to not investigational and
safety and effectiveness).
(B) Other drugs, biologicals, and devices.--A drug,
biological, or medical device not described in
subparagraph (A) shall be considered to be
investigational. Nothing shall prohibit a AHP from
covering such drugs, biologicals, and medical devices,
including treatment investigational new drugs (IND).
(C) Off-label use.--An off-label use for a drug
described in subparagraph (A)(i) is presumed to meet
the requirements of paragraph (1)(C) if the medical
indication for which it is used is listed in one of the
following 3 compendia: the American Hospital Formulary
Service-Drug Information, the American Medical
Association Drug Evaluations, and the United States
Pharmacopeia-Drug Information.
(4) Coverage of investigational treatments in approved
research trials.--
(A) In general.--Coverage of the routine medical
costs (as defined in subparagraph (C)) associated with
the delivery of investigational treatments (as defined
in subparagraph (B)) shall be considered to be
medically appropriate only if the treatment is part of
an approved research trial (as defined in subparagraph
(D)).
(B) Investigational treatment defined.--In
subparagraph (A), the term ``investigational
treatment'' means a treatment for which there is not
sufficient evidence to determine the health outcome of
the treatment compared with the best available
alternative treatment (or with no treatment if there is
no alternative treatment).
(C) Routine medical costs defined.--In subparagraph
(A), the term ``routine medical costs'' means the cost
of health services required to provide treatment
according to the design of the trial, except those
costs normally paid for by other funding sources (as
defined by the Commission). Such costs do not include
the cost of the investigational agent, devices or
procedures themselves, the costs of any nonhealth
services that might be required for a person to receive
the treatment, or the costs of managing the research.
(D) Approved research trial defined.--In
subparagraph (A), the term ``approved research trial''
means a trial--
(i) conducted for the primary purpose of
determining the safety, effectiveness,
efficacy, or health outcomes of a treatment,
compared with the best available alternative
treatment, and
(ii) approved by the Secretary of Health
and Human Services.
A trial is deemed to be approved under clause (ii) if
it is approved by the National Institutes of Health,
the Food and Drug Administration (through an
investigational new drug exemption), the Department of
Veterans Affairs, or by a qualified nongovernmental
research entity (as identified in guidelines issued by
one or more of the National Institutes of Health).
(5) Documentation.--
(A) In general.--Each AHP is responsible for
maintaining documentary evidence supporting the plan's
decisions to cover or to deny coverage based on the
criteria specified in this subsection.
(B) References.--The evidence that may be used in
making such coverage decisions includes--
(i) published peer-reviewed literature,
(ii) opinions of medical specialty groups
and other medical experts,
(iii) evidence of general acceptance by the
medical community, and
(iv) recommendations of the Commission.
(C) Disclosure.--Each AHP shall disclose to its
members, in a manner specified by the Commission, its
coverage decisions and must submit information on such
decisions to the Benefits, Evaluations, and Data
Standards Board.
(6) Treatment and health outcome defined.--In this
subsection (and subsection (a)(2)):
(A) In general.--The term ``treatment'' means any
health care intervention undertaken, with respect to a
specific indication, to improve, maintain, or stabilize
a health outcome or to prevent or mitigate an adverse
change in a health outcome.
(B) Health outcome defined.--The term ``health
outcome'' means an outcome that affects the length or
quality of an enrollee's life.
(c) Basis for Cost-Sharing.--In establishing cost-sharing that is
part of the uniform set of effective benefits, the Commission shall--
(1) include only such cost-sharing as will restrain
consumers from seeking unnecessary services,
(2) not impose cost-sharing for covered clinical preventive
services,
(3) balance the effect of the cost-sharing in reducing
premiums and in affecting utilization of appropriate services,
(4) establish a limit on the total cost-sharing that may be
incurred by an individual (or enrollee unit) in a year, and
(5) incorporate, consistent with the previous provisions,
incentives for individuals to control their utilization of
health care services and shall (for this purpose) consider
incorporating the concepts of medical savings accounts and
wellness dividends.
To the extent consistent with the previous provisions, the Commission
shall design such cost-sharing in a manner so to maintain overall
utilization levels at a level no higher than current overall
utilization levels.
(d) Authority Respecting Providers.--
(1) No authority to restrict use of providers.--In the case
of treatment included in the uniform set of effective benefits,
the Commission is not authorized--
(A) to restrict the coverage of such treatment only
to, or
(B) to require an AHP to provide coverage of such
treatment by,
a particular class (or classes) of providers, among the
providers that are legally authorized to provide such
treatment.
(2) Authority with respect to scope of practice of
qualified providers.--A State may not prohibit or limit the
scope of practice of a provider of health services, with
respect to the provision of the uniform set of effective
benefits by an AHP, to the extent that the Commission finds
that such prohibition or limitation restricts the utilization
of qualified providers.
SEC. 1303. BENEFITS, EVALUATIONS, AND DATA STANDARDS BOARD.
(a) Establishment.--The Commission shall provide for the initial
organization, as a nonprofit corporation in the District of Columbia,
of the Benefits, Evaluations, and Data Standards Board (in this section
referred to as the ``BEDS Board''), under the direction of a board of
directors consisting of 5 directors.
(b) Appointment of Directors.--
(1) Solicitation.--The Commission shall solicit nominations
for the initial board of directors of the BEDS Board from
organizations that represent the various groups with an
interest in the health care system and the functions of the
Board.
(2) Continuation.--The by-laws of the BEDS Board shall
provide for the board of directors subsequently to be appointed
by the board in a manner that ensures a broad range of
representation of through groups with an interest in providing
and purchasing health care.
(3) Terms of directors.--The term of each member of the
board of directors shall be for 7 years, except that in order
to provide for staggered terms, the terms of the members
initially appointed shall be for 3, 4, 5, 6, and 7 years. In
the case of a vacancy by death or resignation, the replacement
shall be appointed for the remainder of the term. No individual
may serve as a director of the board for more than 14 years.
(c) Functions.--
(1) In general.--The BEDS Board shall make recommendations
to the Commission concerning each of the following:
(A) The uniform set of effective benefits.
(B) The standards for information to be provided by
AHPs.
(C) Auditing standards to ensure the accuracy of
such information.
(D) Aggregate data on coverage decisions made by
AHPs and recommendations for evaluations of particular
technologies.
Before making recommendations described in subparagraphs (B)
and (D), the BEDS Board shall consult with the Agency for
Clinical Evaluations regarding the need for information in
performing its activities.
(2) Evaluations.--The BEDS Board shall advise the
Commission on--
(A) matters related to the evaluation of health
care services, including information from clinical and
epidemiological studies, and
(B) information provided by AHPs, including AHP-
specific information on clinical health, functional
status, well-being, and plan satisfaction of enrolled
individuals.
(3) National health data system.--The BEDS Board shall
provide the Commission with its assistance in the development
of the standards for the national health data system under
section 1307.
(d) Funding.--
(1) In general.--In order to provide funding for the BEDS
Board, the Health Care Standards Commission shall establish an
annual registration fee for AHPs which is imposed on a per-
covered-individual-basis and is sufficient, in the aggregate,
to provide each year for not more than the amount specified in
paragraph (2) for the operation of the BEDS Board.
(2) Amount of funds.--The amount specified in this
paragraph for each of fiscal years 1994 and 1995, is
$50,000,000, and, for each succeeding fiscal year, is
$25,000,000.
SEC. 1304. HEALTH PLAN STANDARDS BOARD.
(a) Establishment.--The Commission shall provide for the initial
organization, as a nonprofit corporation in the District of Columbia,
of the Health Plan Standards Board (in this section referred to as the
``Plan Standards Board''), under the direction of a board of directors
consisting of 5 directors.
(b) Appointment of Directors.--
(1) Solicitation.--The Commission shall solicit nominations
for the initial board of directors of the Plan Standards Board
from organizations that represent the various groups with an
interest in the health care system and the functions of the
Board.
(2) Continuation.--The by-laws of the Plan Standards Board
shall provide for the board of directors subsequently to be
appointed by the board in a manner that ensures a broad range
of representation of through groups with an interest in
providing and purchasing health care.
(3) Terms of directors.--The term of each member of the
board of directors shall be for 7 years, except that in order
to provide for staggered terms, the terms of the members
initially appointed shall be for 3, 4, 5, 6, and 7 years. In
the case of a vacancy by death or resignation, the replacement
shall be appointed for the remainder of the term. No individual
may serve as a director of the board for more than 12 years.
(c) Functions.--
(1) In general.--The Plan Standards Board shall make
recommendations to the Commission concerning the standards for
AHPs (other than standards relating to the uniform set of
effective benefits and the national health data system) and for
HPPCs.
(2) Assessment of risk-adjustment factors.--The Plan
Standards Board shall provide the Commission with its
assessment of the risk-adjustment factors under section 1306.
(d) Funding.--In order to provide funding for the Plan Standards
Board, the Health Care Standards Commission shall establish an annual
registration fee for AHPs which is imposed on a per-covered-individual-
basis and is sufficient, in the aggregate, to provide each year for not
more than 60 percent of the amount specified in section 1303(d)(2) for
the operation of the Plan Standards Board.
SEC. 1305. REGISTRATION OF ACCOUNTABLE HEALTH PLANS.
(a) In General.--The Commission shall register those health plans
that meet the standards under part 1 of subtitle C.
(b) Treatment of State Certification.--If (and so long as) the
Commission determines that a State superintendent of insurance, State
insurance commissioner, or other State official provides for the
imposition of standards that the Commission finds are equivalent to the
standards established under part 1 of subtitle C for registration of a
health plan as an AHP, the Commission may provide for registration as
AHPs of health plans that such official certifies as meeting the
standards for registration. Nothing in this subsection shall require a
health plan to be certified by such an official in order to be
registered by the Commission.
(c) Revocation of Registration.--
(1) In general.--The Commission shall provide for a process
for revocation of such registration in cases where the
Commission finds, after notice to the plan and appropriate due
process specified by the Commission, that a health plan no
longer substantially meets the standards for such registration
or has failed to comply with a requirement under section
1402(a).
(2) Initiation of process.--Such process may be initiated
upon the petition of a HPPC, the ombudsman for a HPPC, or by
the Commission itself. If the process is not initiated by a
HPPC or ombudsman, the Commission shall notify each HPPC
involved that such a process has been initiated. A HPPC may
provide notice to enrollees of an AHP at the time such a
process is initiated with respect to the AHP.
(3) Notice to hppc and enrollees.--No registration of an
AHP may be revoked unless the Commission has provided for
appropriate notice to the HPPC and enrollees involved.
SEC. 1306. SPECIFICATION OF RISK-ADJUSTMENT FACTORS.
(a) In General.--The Commission shall establish rules for the
process of risk-adjustment of premiums among AHPs by HPPCs under
section 1102(d)(1).
(b) Process.--
(1) Identification of relative risk.--The Commission shall
determine risk-adjustment factors for types of enrollment that
are correlated with increased or diminished risk for
consumption of the type of health services included in the
uniform set of effective benefits, taking into account
differences in utilization resulting from low-income cost-
sharing assistance provided under section 2003. To the maximum
extent practicable, such factors shall be determined without
regard to the methodology used by individual AHPs in the
provision of such benefits. In determining such factors, with
respect to an individual (in an enrollee unit) identified as
having--
(A) a lower-than-average risk for consumption of
the services, the factor shall be a number, less than
zero, reflecting the degree of such lower risk;
(B) an average risk for consumption of the
services, the factor shall be zero; or
(C) a higher-than-average risk for consumption of
the services, the factor shall be a number, greater
than zero, reflecting the degree of such higher risk.
For an enrollee unit, the factor to be applied (pursuant to
section 1402(b)) shall reflect the factors applicable to all
covered individuals in the unit.
(2) Adjustment of factors.--In applying under section
1102(d)(1)(B) the risk-adjustment factors determined under
paragraphs (1) and (3), each HPPC shall adjust such factors, in
accordance with a methodology established by the Commission, so
that the sum of such factors is zero for all enrollee units in
each HPPC area for which a premium payment is forwarded under
section 1102(d) for each premium payment period.
(3) Special risk-adjustment factors for underserved
areas.--The Commission shall determine the special risk-
adjustment factors that may be applied in the case of
individuals residing in areas designated as rural or urban
underserved areas under section 1401.
SEC. 1307. NATIONAL HEALTH DATA SYSTEM.
(a) Standardization of Information.--
(1) In general.--The Commission shall establish standards
for the periodic provision by AHPs of information under section
1203(a) and the auditing of the information so provided.
(2) Patient confidentiality.--The standards shall be
established in a manner that protects the confidentiality of
individual enrollees, but may provide for the disclosure of
information which discloses particular providers within an AHP.
(b) Analysis of Information.--
(1) In general.--The Commission shall analyze the
information provided to the Commission under section 1203(a)
with respect to AHPs for which a HPPC is not performing an
analysis under section 1104(c)(1).
(2) Central access.--The Commission shall make available,
in a central location and consistent with subsection (a)(2),
all of such analyses.
(3) Distribution of analyses.--The Commission shall
distribute the analyses in a form, consistent with subsection
(a)(2), that reports, on a national, State, and community
basis, the levels and trends of health care expenditures, the
rates and trends in the provision of individual procedures, and
(to the extent such procedures are priced separately) the price
levels and rates of price change for such procedures. The
reports shall include both aggregate and per capita measures
for areas and shall include comparative data for different
areas.
(c) Distribution of Information.--
(1) Annual report on expenditures.--The Commission shall
publish annually (beginning with 1996) a report on expenditures
on procedures, volumes of procedures, and, to the extent such
procedures are priced separately, the prices of procedures.
Such report shall be distributed to each AHP, each HPPC, each
Governor, and each State legislature.
(2) Annual reports.--The Commission shall also publish an
annual report, based on analyses under this section, that
identifies--
(A) procedures for which, as reflected in
variations in use or rates of increase, there appear to
be the greatest need to develop valid clinical
protocols for clinical decision-making and review,
(B) procedures for which, as reflected in price
variations and price inflation, there appear to be the
greatest need for strengthening competitive purchasing,
and
(C) States and localities for which, as reflected
in expenditure levels and rates of increase, there
appear to be the greatest need for additional cost
control measures.
(3) Special distributions.--The Commission may, whenever it
deems appropriate, provide for the distribution--
(A) to an AHP of such information relating to the
plan as may be appropriate in order to encourage the
plan to improve its delivery of care, and
(B) to business, consumer, and other groups and
individuals of such information as may improve their
ability to effect improvements in the outcomes,
quality, and efficiency of health services.
(4) Access by agency for health care policy and research.--
The Commission shall make available to the Agency for Clinical
Evaluations information obtained under section 1203(a) in a
manner consistent with subsection (a)(2).
SEC. 1308. MEASURES OF QUALITY OF CARE OF SPECIALIZED CENTERS OF CARE.
(a) Collection of Information.--The Commission shall provide a
process whereby a specialized center of care (as defined in subsection
(d)) may submit to the Commission such clinical and other information
bearing on the quality of care provided with respect to the uniform set
of effective benefits at the center as the Commission may specify. Such
information shall include sufficient information to take into account
outcomes and the risk factors associated with individuals receiving
care through the center. Such information shall be provided at such
frequency (not less often than annually) as the Commission specifies.
(b) Measures of Quality.--Using information submitted under
subsection (a) and information reported under section 1307, the
Commission shall--
(1) analyze the performance of such centers with respect to
the quality of care provided,
(2) rate the performance of such a center with respect to a
class of services relative to the performance of other
specialized centers of care and relative to the performance of
AHPs generally, and
(3) publish such ratings.
(c) Use of Service Mark for Specialized Centers of Care.--The
Commission may establish a service mark for specialized centers of care
the performance of which has been rated under subsection (b). Such
service mark shall be registrable under the Trademark Act of 1946, and
the Commission shall apply for the registration of such service mark
under such Act. For purposes of such Act, such service mark shall be
deemed to be used in commerce. For purposes of this subsection, the
``Trademark Act of 1946'' refers to the Act entitled ``An Act to
provide for the registration and protection of trademarks used in
commerce, to carry out the provisions of international conventions, and
for other purposes'', approved July 5, 1946 (15 U.S.C. 1051 and
following).
(d) Specialized Center of Care Defined.--In this section, the term
``specialized center of care'' means an institution or other organized
system for the provision of specific services, which need not be multi-
disciplinary, and does not include (except as the Commission may
provide) individual practitioners.
SEC. 1309. AGENCY FOR CLINICAL EVALUATIONS.
(a) Establishment.--There is established within the Department of
Health and Human Services an agency to be known as the Agency for
Clinical Evaluations (in this section referred to as the ``Agency'').
(b) Appointment of Administrator.--There shall be at the head of
the Agency an official to be known as the Administrator for Clinical
Evaluations (in this section referred to as the ``Administrator''). The
Administrator shall be appointed by the President, by and with the
advice and consent of the Senate.
(c) Duties.--
(1) In general.--The Administrator shall assume the
following responsibilities:
(A) Responsibilities of the Administrator for
Health Care Policy and Research, under title IX of the
Public Health Service Act and under section 1142 of the
Social Security Act.
(B) Responsibilities of the Director of the
National Center for Health Statistics (under section
306 of the Public Health Service Act).
(C) Responsibilities of the Director of the Office
of Medical Applications of Research at the National
Institutes of Health.
(D) Responsibilities of the Director of the Office
of Research and Demonstrations of the Health Care
Financing Administration, insofar as such
responsibilities relate to clinical evaluations.
(2) Specific duties.--In carrying out responsibilities
under paragraph (1), the Administrator shall--
(A) set priorities for the research community to
strengthen the research base;
(B) support research and evaluation (both on a
contract and investigator-initiated basis) on medical
effectiveness through technology assessment, consensus
development, outcomes research practice guidelines, and
other appropriate activities;
(C) conduct effectiveness trials in collaboration
with medical specialty societies, medical educators,
and AHPs;
(D) maintain a clearinghouse and other registries
on clinical trials and outcomes research data;
(E) assure the systematic evaluation of existing as
well as new treatments and diagnostic technologies in a
constant, continuous effort to upgrade the knowledge
base for clinical decisionmaking and policy choice; and
(F) design a computerized dissemination system for
providers to provide an interactive system of
information on outcomes research, practice guidelines,
and other information.
(3) Assistance.--The Administrator shall provide the
Benefits, Evaluations, and Data Standards Board with such
information, on evaluations related to the uniform set of
effective benefits and any other information developed in the
scope of carrying out the Administrator's responsibilities, as
may be appropriate.
(4) Cooperation with other agencies.--In carrying out
responsibilities under this subsection, the Administrator shall
cooperate and consult with the Director of the National
Institutes of Health, the Commissioner of Food and Drugs, the
Secretary of Veterans Affairs, and the heads of any other
interested Federal department or agency.
(d) References.--Any reference in any law to the Administrator for
Health Care Policy and Research or to the Agency for Health Care Policy
and Research is deemed a reference to the Administrator and Agency,
respectively, under this section.
(e) Transfers.--There are hereby transferred to the Agency the
staff, funds, and other assets of the agencies for which the Agency is
assuming responsibilities under subsection (c)(1).
(f) Additional Authorization of Appropriations.--In addition to the
amounts transferred under subsection (e), there are authorized to be
appropriated to the Agency $250,000 for each fiscal year (beginning
with fiscal year 1995).
SEC. 1310. REPORT AND RECOMMENDATIONS ON ACHIEVING UNIVERSAL COVERAGE.
(a) Factors Affecting Coverage.--
(1) Collection of information.--The Commission, on a
continuing basis, shall collect information concerning and
analyze the number and characteristics of eligible individuals
(as defined in subsection (c)) who are not enrolled with AHPs
compared to such number and characteristics of individuals
enrolled. Such characteristics shall include age, sex, race,
ethnicity, family status, employment status, whether the
individual is an eligible employee, income, health status,
health risk factors, geography, whether the individual resides
in a rural or medically underserved area, and such other
factors as may affect the election of an eligible individual to
obtain health coverage.
(2) Report.--By not later than April 1 of each year
(beginning with 1996), the Commission shall submit to Congress
a report analyzing the information collected under paragraph
(1). Such report shall include a description of the primary
factors contributing to lack of coverage of identifiable groups
of eligible individuals.
(b) Recommendations for Increasing Coverage.--
(1) In general.--By not later than January 1, 1997, the
Commission shall submit to Congress recommendations on the
feasibility, cost-effectiveness, and the economic impact of
using different voluntary and other methods for increasing the
coverage of eligible individuals.
(2) Individual mandate.--The Commission shall specifically
make recommendations under paragraph (1) regarding establishing
a requirement that all eligible individuals obtain health
coverage through enrollment with an AHP.
(c) Eligible Individual Defined.--In this section, the term
``eligible individual''--
(1) includes individuals who would be eligible individuals
but for section 1701(a)(4)(B), but
(2) does not include individuals eligible to enroll for
benefits under part B of title XVIII of the Social Security
Act.
SEC. 1311. NO AUTHORITY TO IMPOSE CONTROLS RELATING TO HEALTH CARE
SPENDING.
The Commission is not authorized to establish or enforce any
controls (such as global budgets, price controls, or premium
limitations) on health care spending.
SEC. 1312. MONITORING REINSURANCE MARKET.
(a) In General.--The Commission shall monitor the reinsurance
market for AHPs.
(b) Periodic Reports.--The Commission shall periodically report to
Congress respecting the availability of reinsurance for AHPs at
reasonable rates and the impact of such availability on the
establishment of new plans and on the financial solvency of current
plans.
SEC. 1313. AUTHORIZATION OF APPROPRIATIONS; SUNSET.
(a) Authorization of Appropriations.--There are authorized to be
appropriated to the Health Care Standards Commission for each of fiscal
years 1994 through 2000 such sums as may be necessary to carry out
activities under this Act.
(b) Sunset.--Unless otherwise provided by law, the Health Care
Standards Commission shall terminate on December 31, 1999.
Subtitle E--Managed Competition in Rural and Urban Underserved Areas
PART 1--SPECIAL TREATMENT OF DESIGNATED UNDERSERVED AREAS
SEC. 1401. DESIGNATION OF UNDERSERVED AREAS.
(a) In General.--The Governor of any State may, subject to
subsection (b), designate rural and urban areas of a State as
underserved areas for purposes of this part. In designating such areas,
the Governor shall take into account--
(1) financial and geographic access to AHPs by residents of
such areas, and
(2) the availability, adequacy, and quality of qualified
providers and health care facilities in such areas.
(b) Review by Commission.--No designation under subsection (a)
shall take effect under this subsection unless the Commission--
(1) has been notified of the proposed designation, and
(2) has not, within 60 days after the date of receipt of
the notice, disapproved the designation.
(c) Construction.--An area need not be designated as a medically
underserved area (under section 330(b)(3) of the Public Health Service
Act) or as a health professional shortage area (under section 332(a) of
such Act) in order to be designated as an underserved area under this
section.
(d) Period of Designation.--A designation under this section shall
be effective for a period, specified by the Governor, of not longer
than 3 years, except that such designation may be extended for
additional 3-year periods.
SEC. 1402. SPECIAL TREATMENT.
(a) Inclusion in Plan Service Area.--The HPPC serving an area
designated under section 1401 may require AHPs, offered by the HPPC and
with a service area adjoining such area, to include the area as part of
their service area. The Commission may revoke under section 1305(c)
registration of an AHP that fails to comply with such requirement.
(b) Application of Special Risk Adjustment Factors.--In accordance
with rules established by the Commission, for eligible individuals
residing in an area designated under section 1401 and enrolled with an
AHP, the HPPC may apply special risk-adjustment factors (determined
under section 1306(b)(3)) in order to increase the compensation
available to AHPs serving such individuals.
(c) Direct State Subsidies.--The HPPC shall increase the amount of
the payments made to AHPs serving individuals residing in an area
designated under section 1401 by such amounts as the State makes
available for this purpose.
(d) Technical Assistance in Antitrust Matters.--The Department of
Justice shall provide ongoing technical assistance to organizations in
relation to the application of the Federal antitrust laws to the
establishment of an AHP in an area designated under section 1401. Such
assistance shall be in addition to the review process provided under
section 1231(b).
PART 2--TRANSITIONAL SUPPORT FOR DEVELOPMENT OF ACCOUNTABLE HEALTH
PLANS IN UNDERSERVED AREAS
SEC. 1411. TECHNICAL ASSISTANCE FUNDING.
(a) In General.--The Secretary of Health and Human Services shall
make funds available under this section to provide technical assistance
and advice for entities (including Federally qualified health centers
and rural health clinics) seeking to establish a network plan (as
defined in section 1222(b)(1)) in an underserved rural or urban area.
(b) Use of Funds.--Funds made available under this section may be
used for--
(1) assistance in network development, utilizing existing
local providers and facilities where appropriate;
(2) advice on obtaining the proper balance of primary and
secondary facilities for the local population;
(3) assistance in coordinating arrangements for tertiary
care;
(4) assistance in recruitment and retention of health care
professionals; and
(5) assistance in coordinating the delivery of emergency
services with the provision of services by an AHP.
(c) Use of Rural Health Offices.--In carrying out this section with
respect to entities in rural areas--
(1) the Secretary shall make funds available through the
Office of Rural Health Policy, and
(2) priority shall be given to making funds available to
State Offices of Rural Health.
(d) Authorization of Appropriations.--There are authorized to be
appropriated $5,000,000 for each of fiscal years 1995 through 1999 to
carry out this section. Of the amounts appropriated to carry out this
section, one-half of such amounts shall be made available to entities
for the establishment of network plans in rural areas and one-half of
such amounts shall be made available to entities for the establishment
of network plans in urban areas. Amounts appropriated under this
section shall be available until expended.
SEC. 1412. RURAL DEVELOPMENT GRANTS.
(a) In General.--The Secretary of Health and Human Services shall
provide financial assistance to eligible entities in order to provide
for the development and implementation of AHPs in rural areas.
(b) Eligible Entities.--
(1) In general.--An entity is eligible to receive financial
assistance under this section only if the entity--
(A) is based in a rural area, and
(B) is undertaking to develop and implement an AHP
in a rural area with the active participation of at
least 3 health care providers or facilities in the
area.
(2) Federally qualified health centers and rural health
clinics.--Nothing in this section shall be construed as
preventing a Federally qualified health center or rural health
clinic from qualifying for financial assistance under this
section.
(c) Use of Funds.--
(1) In general.--Financial assistance made available to
eligible entities under this section may only be used for the
following:
(A) For development and implementation.
(B) For information systems, including
telecommunications.
(C) For meeting solvency requirements for an AHP.
(D) For recruiting health care providers.
(2) Limitations.--Financial assistance made available under
this section may not be used for any of the following:
(A) For a telecommunications system unless such
system is coordinated with, and does not duplicate,
such a system existing in the area.
(B) For construction or remodeling of health care
facilities.
(d) Application.--
(1) In general.--No financial assistance shall be provided
under this section to an entity unless the entity has submitted
to the Secretary, in a time and manner specified by the
Secretary, and had approved by the Secretary an application.
(2) Information to be included.--Each such application
shall include--
(A) a description of the proposed AHP, including
service area and capacity,
(B) a plan for providing the continuum of services
included in the uniform set of effective benefits, and
(C) a description of how the proposed AHP will
utilize existing health care facilities in a manner
that avoids unnecessary duplication.
(e) Authorization of Appropriations.--
(1) In general.--There are authorized to be appropriated
$75,000,000 for each of fiscal years 1995 through 1999 to carry
out this section. Amounts appropriated under this section shall
be available until expended.
(2) Integration of other authorizations.--In order to
provide for the authorization of appropriations under paragraph
(1), notwithstanding any other provision of law, no funds are
authorized to be appropriated to carry out the following
programs in fiscal years after fiscal year 1994:
(A) The rural health transition grant program
(under section 4005(e) of the Omnibus Budget
Reconciliation Act of 1987).
(B) The rural health outreach program (for which
appropriations were annually provided under the
Departments of Labor, Health and Human Services, and
Education, and Related Agencies Appropriation Acts).
SEC. 1413. MIGRANT HEALTH CENTERS.
Section 329(h) of the Public Health Service Act (42 U.S.C. 254b(h))
is amended--
(1) in paragraph (1)(A), by striking ``through 1994'' and
inserting ``through 1999'',
(2) in paragraph (2)(A), by striking ``through 1994'' and
inserting ``through 1999'', and
(3) by redesignating paragraph (3) as paragraph (4) and by
inserting after paragraph (2) the following new paragraph:
``(3)(A) For the purpose of carrying out subparagraph (B), there
are authorized to be appropriated $11,500,000 for each of the fiscal
years 1995 through 1999.
``(B) The Secretary may make grants to migrant health centers for
the purpose of assisting such centers in integrating with AHPs and in
providing (and coordinating the provision of) the uniform set of
effective benefits under such a plan.''.
SEC. 1414. COMMUNITY HEALTH CENTERS.
Section 330(g) of the Public Health Service Act (42 U.S.C. 254c(g))
is amended--
(1) in paragraph (1)(A), by striking ``through 1994'' and
inserting ``through 1999'',
(2) in paragraph (2)(A), by striking ``through 1994'' and
inserting ``through 1999'', and
(3) by redesignating paragraph (3) as paragraph (4) and by
inserting after paragraph (2) the following new paragraph:
``(3)(A) For the purpose of carrying out subparagraph (B), there
are authorized to be appropriated $88,500,000 for each of the fiscal
years 1995 through 1999.
``(B) The Secretary may make grants to community health centers for
the purpose of assisting such centers in developing and integrating
with accountable health plans and in providing (and coordinating the
provision of) the uniform set of effective benefits under such a
plan.''.
PART 3--ESTABLISHMENT OF RURAL EMERGENCY ACCESS CARE HOSPITALS
SEC. 1421. RURAL EMERGENCY ACCESS CARE HOSPITALS DESCRIBED.
Section 1861 of the Social Security Act (42 U.S.C. 1395x) is
amended by adding at the end the following new subsection:
``Rural Emergency Access Care Hospital; Rural Emergency Access Care
Hospital Services
``(oo)(1) The term `rural emergency access care hospital' means,
for a fiscal year, a facility with respect to which the Secretary finds
the following:
``(A) The facility is located in a rural area (as defined
in section 1886(d)(2)(D)).
``(B) The facility was a hospital under this title at any
time during the 5-year period that ends on the date of the
enactment of this subsection.
``(C) The facility is in danger of closing due to low
inpatient utilization rates and negative operating losses, and
the closure of the facility would limit the access of
individuals residing in the facility's service area to
emergency services.
``(D) The facility has entered into (or plans to enter
into) an agreement with a hospital with a participation
agreement in effect under section 1866(a), and under such
agreement the hospital shall accept patients transferred to the
hospital from the facility and receive data from and transmit
data to the facility.
``(E) There is a practitioner who is qualified to provide
advanced cardiac life support services (as determined by the
State in which the facility is located) on-site at the facility
on a 24-hour basis.
``(F) A physician is available on-call to provide emergency
medical services on a 24-hour basis.
``(G) The facility meets such staffing requirements as
would apply under section 1861(e) to a hospital located in a
rural area, except that--
``(i) the facility need not meet hospital standards
relating to the number of hours during a day, or days
during a week, in which the facility must be open,
except insofar as the facility is required to provide
emergency care on a 24-hour basis under subparagraphs
(E) and (F) of this paragraph; and
``(ii) the facility may provide any services
otherwise required to be provided by a full-time, on-
site dietician, pharmacist, laboratory technician,
medical technologist, or radiological technologist on a
part-time, off-site basis.
``(H) The facility meets the requirements applicable to
clinics and facilities under subparagraphs (C) through (J) of
paragraph (2) of section 1861(aa) and of clauses (ii) and (iv)
of the second sentence of such paragraph (or, in the case of
the requirements of subparagraph (E), (F), or (J) of such
paragraph, would meet the requirements if any reference in such
subparagraph to a `nurse practitioner' or to `nurse
practitioners' was deemed to be a reference to a `nurse
practitioner or nurse' or to `nurse practitioners or nurses');
except that in determining whether a facility meets the
requirements of this subparagraph, subparagraphs (E) and (F) of
that paragraph shall be applied as if any reference to a
`physician' is a reference to a physician as defined in section
1861(r)(1).
``(2) The term `rural emergency access care hospital services'
means medical and other health services furnished by a rural emergency
access care hospital.''.
SEC. 1422. COVERAGE OF AND PAYMENT FOR SERVICES.
(a) Coverage Under Part B.--Section 1832(a)(2) of the Social
Security Act (42 U.S.C. 1395k(a)(2)) is amended--
(1) by striking ``and'' at the end of subparagraph (I);
(2) by striking the period at the end of subparagraph (J)
and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(K) rural emergency access care hospital services
(as defined in section 1861(oo)(2)).''.
(b) Payment Based on Payment for Outpatient Rural Primary Care
Hospital Services.--
(1) In general.--Section 1833(a)(6) of the Social Security
Act (42 U.S.C. 1395l(a)(6)) is amended by striking
``services,'' and inserting ``services and rural emergency
access care hospital services,''.
(2) Payment methodology described.--Section 1834(g) of such
Act (42 U.S.C. 1395m(g)) is amended--
(A) in the heading, by striking ``Services'' and
inserting ``Services and Rural Emergency Access Care
Hospital Services'';
(B) in paragraph (1), by striking ``during a year
before 1993'' and inserting ``during a year before the
prospective payment system described in paragraph (2)
is in effect'';
(C) in paragraph (1), by adding at the end the
following:
``The amount of payment shall be determined under either method
without regard to the amount of the customary or other
charge.'';
(D) in paragraph (2), by striking ``January 1,
1993,'' and inserting ``January 1, 1996,''; and
(E) by adding at the end the following new
paragraph:
``(3) Application of methods to payment for rural emergency
access care hospital services.--The amount of payment for rural
emergency access care hospital services provided during a year
shall be determined using the applicable method provided under
this subsection for determining payment for outpatient rural
primary care hospital services during the year.''.
SEC. 1423. EFFECTIVE DATE.
The amendments made by this part shall apply to fiscal years
beginning on or after October 1, 1994.
PART 4--TRANSITIONAL ASSISTANCE FOR SAFETY NET HOSPITALS
SEC. 1431. PAYMENTS TO HOSPITALS.
(a) In General.--The Secretary of Health and Human Services shall
make payments for transitional assistance to eligible hospitals whose
applications for assistance have been approved under this part.
(b) General Eligibility Requirements for Assistance.--
(1) Hospitals described.--
(A) In general.--A hospital shall be generally
eligible for assistance under this part if the
hospital--
(i) receives an additional payment under
section 1886(d)(5)(F) of the Social Security
Act and is described in clause (i)(II) or
clause (vii)(I) of such section, or is deemed a
disproportionate share hospital under a State
plan for medical assistance under title XIX of
such Act on the basis described in section
1923(b)(1) of such Act; or
(ii) is a hospital that the Secretary
otherwise determines to be an appropriate
recipient of assistance under this part on the
basis of the existence of a patient care
operating deficit, a demonstrated inability to
secure or repay financing for a qualifying
project on reasonable terms, or such other
criteria as the Secretary considers
appropriate.
(B) Development of criteria.--For purposes of
subparagraph (A)(ii), with respect to rural hospitals
which are at risk or critical to health care access,
the Prospective Payment Review Commission, not later
than 6 months after the date of the enactment of this
Act, shall develop criteria to assist the Secretary in
deciding which such hospitals deserve assistance.
(2) Ownership requirements.--In order to qualify for
assistance under this part, a hospital must--
(A) be owned or operated by a unit of State or
local government;
(B) be a quasi-public corporation, defined as a
private, nonprofit corporation or public benefit
corporation which is formally granted one or more
governmental powers by legislative action through (or
is otherwise partially funded by) the State
legislature, city or county council; or
(C) be a private nonprofit hospital which has
contracted with, or is otherwise funded by, a
governmental agency to provide health care services to
low income individuals not eligible for benefits under
title XVIII or title XIX of the Social Security Act,
where revenue from such contracts constitute at least
10 percent of the hospital's operating revenues over
the prior 3 fiscal years.
(c) Meeting Additional Specific Criteria.--Hospitals that are
generally eligible for assistance under this part under subsection (b)
may apply for the specific programs described in this part and must
meet any additional criteria for participation in such programs.
SEC. 1432. APPLICATION FOR ASSISTANCE.
(a) In General.--No hospital may receive assistance for a project
under this part unless the hospital--
(1) has filed with the Secretary, in a form and manner
specified by the Secretary an application for assistance under
this part;
(2) establishes in its application (for its most recent
cost reporting period) that it meets the criteria for general
eligibility under this part;
(3) includes a description of the project, including the
community in which it is located, and describes utilization and
services characteristics of the project and the hospital, and
the patient population that is to be served;
(4) describes the extent to which the project will include
the financial participation of State and local governments, and
all other sources of financing sought for the project; and
(5) establishes, to the satisfaction of the Secretary, that
the project meets the additional criteria for assistance under
this part.
(b) Criteria for Approval.--The Secretary shall determine for each
application for assistance under this part--
(1) whether the hospital meets the general eligibility
criteria under section 1431(b);
(2) whether the hospital meets any additional eligibility
criteria;
(3) whether the project for which assistance is being
requested meets the requirements of this part; and
(4) whether funds are available, pursuant to the
limitations of each program, to fully fund the request for
assistance.
SEC. 1433. PUBLIC SERVICE RESPONSIBILITIES.
(a) In General.--Any hospital accepting assistance under this part
shall agree--
(1) to make the services of the facility or portion thereof
to be constructed, acquired, or modernized available to all
persons residing in the territorial area of the applicant; and
(2) to provide a significant volume of services to persons
unable to pay therefore, consistent with other provisions of
this Act.
(b) Enforcement.--The Director of the Office of Civil Rights of the
Department of Health and Human Services shall be given the power to
enforce the public service responsibilities described in this section.
SEC. 1434. AUTHORIZATION OF APPROPRIATIONS.
There is authorized to be appropriated $50,000,000 for each of the
fiscal years 1995 through 1999 to carry out this part.
Subtitle F--Treatment of Chronically Underserved Areas
SEC. 1501. PROMOTING STATE ACTION.
(a) Standards for Identification of Chronically Underserved
Areas.--The Health Care Standards Commission shall develop, not later
than 2 years after the date of the enactment of this Act, standards for
the identification of chronically underserved areas in which the
special treatment provided under subsection (b) may be appropriate.
Such standards shall be based on--
(1) inadequate access in an area to services included
within the uniform set of effective benefits,
(2) insufficient price competition for such services in an
area, and
(3) poor quality of such services in an area.
(b) State Identification of Areas and Plan.--On and after 3 years
after the date of the enactment of this Act, a State may submit to the
Commission--
(1) a finding that an area within the State meets the
standards developed under subsection (a) to be identified as a
chronically underserved area, and
(2) a plan for addressing the problem of health care
delivery in such area.
No plan may be submitted under paragraph (2) for an area unless the
plan has been developed in cooperation with each HPPC serving any
portion of the area.
(c) Contents of Plan.--A plan under subsection (b)(2) for a
chronically underserved area may provide for the limitation of
agreements under section 1102 to a single AHP, with such contract
awarded on a competitive basis.
(d) Review.--With respect to submissions under subsection (b), the
Commission shall review--
(1) each finding described in subsection (b)(1), and
(2) each plan submitted under subsection (b)(2).
The Commission shall approve or disapprove such a finding and such a
plan within 60 days of the date of its submission and shall notify the
State of its decision. If the Commission disapproves the finding or the
plan, the Commission shall provide the State with the reasons for the
disapproval. If the Commission does not act within such period, the
Commission is deemed to have approved the finding and the plan.
Subtitle G--Repeal of COBRA Continuation Requirements
SEC. 1601. REPEAL OF COBRA CONTINUATION REQUIREMENTS.
(a) Internal Revenue Code Provisions.--
(1) In general.--Section 4980B of the Internal Revenue Code
of 1986 is repealed.
(2) Conforming amendments.--Section 414 of such Code is
amended--
(A) in subsection (n)(3)(C), by striking ``505, and
4980B'' and inserting ``and 505'', and
(B) in subsection (t)(2), by striking ``505, or
4980B'' and inserting ``or 505''.
(b) ERISA.--
(1) In general.--Part 6 of subtitle B of title I of the
Employee Retirement Income Security Act of 1974 is amended--
(A) by striking sections 601 through 606, and
(B) in section 609, as added by section 4301 of the
Omnibus Budget Reconciliation Act of 1993, by striking
subsection (d).
(2) Conforming amendment.--Section 502(c)(1) of such Act
(29 U.S.C. 1132(c)(1)) is amended by striking ``paragraph (1)
or (4) of section 606 or''.
(c) Public Health Service Act.--Title XXII of the Public Health
Service Act is repealed.
(d) Effective Date.--The repeals and amendments made by this
section shall apply to health plans of employers as of the January 1,
1995.
(e) Notice of Benefits.--In the case of continuation coverage which
is in effect on January 1, 1995, under a provision of law repealed by
this section, such continuation may not be discontinued without 30-day
notice to the individual of such discontinuation. Such notice shall
include such information with respect to continuation of coverage
through a health plan purchasing cooperative as the Health Care
Standards Commission shall specify.
Subtitle H--Definitions
SEC. 1701. DEFINITIONS.
(a) Eligibility.--In this title and title II:
(1) Eligible individual.--The term ``eligible individual''
means, with respect to a HPPC area, an individual who--
(A) is an eligible employee,
(B) is an eligible resident, or
(C) an eligible family member of an eligible
employee or eligible resident.
(2) Eligible employee.--The term ``eligible employee''
means, with respect to a HPPC area, an individual residing in
the area who is the employee of a small employer.
(3) Eligible family member.--The term ``eligible family
member'' means, with respect to an eligible employee or other
principal enrollee, an individual who--
(A)(i) is the spouse of the employee or principal
enrollee, or
(ii) is an unmarried dependent child under 22 years
of age, including--
(I) an adopted child or recognized natural
child, and
(II) a stepchild or foster child but only
if the child lives with the employee or
principal enrollee in a regular parent-child
relationship,
or such an unmarried dependent child regardless of age
who is incapable of self-support because of mental or
physical disability which existed before age 22;
(B) is a citizen or national of the United States,
an alien lawfully admitted to the United States for
permanent residence, or an alien otherwise lawfully
residing permanently in the United States under color
of law; and
(C) with respect to an eligible resident, is not a
medicare-eligible individual.
(4) Eligible resident.--
(A) In general.--The term ``eligible resident''
means, with respect to a HPPC area, an individual who
is not an eligible employee, is residing in the area,
and is a citizen or national of the United States, an
alien lawfully admitted for permanent residence, and an
alien granted asylum, admitted as a refugee, or whose
deportation has been withheld.
(B) Exclusion of certain individuals offered
coverage through a large employer.--
(i) In general.--The term ``eligible
resident'' does not include an individual who--
(I) is covered under an AHP
pursuant to an offer made under section
1005(b)(1)(A), or
(II) subject to clause (ii), could
be covered under an AHP as the
principal enrollee pursuant to such an
offer if such offer had been accepted.
(ii) Exception for part-time, seasonal, and
temporary employees.--Subclause (II) of clause
(i) shall not apply to an individual who is
offered coverage under an AHP by an employer
and who is only a part-time, seasonal, or
temporary employee of that employer. For
purposes of the previous sentence, the term
``part-time'' means employment for an average
of less than 25 hours a week on a monthly basis
and an employee who is employed for more than 8
weeks in a 12-month period for an employer
shall not be considered to be seasonal or
temporary employee.
(C) Treatment of medicare beneficiaries.--The term
``eligible resident'' does not include a medicare-
eligible beneficiary.
(5) Enrollee unit.--The term ``enrollee unit'' means one
unit in the case of coverage on an individual basis or in the
case of coverage on a family basis.
(6) Medicare beneficiary.--The term ``medicare
beneficiary'' means an individual who is entitled to benefits
under part A of title XVIII of the Social Security Act,
including an individual who is entitled to such benefits
pursuant to an enrollment under section 1818 or 1818A of such
Act.
(7) Medicare-eligible individual.--The term ``medicare-
eligible individual'' means an individual who--
(A) is a medicare beneficiary, or
(B) is not a medicare beneficiary but is eligible
to enroll under part A or part B of title XVIII of the
Social Security Act.
(b) Abbreviations.--In this Act, except as otherwise provided:
(1) AHP; accountable health plan.--The terms ``accountable
health plan'' and ``AHP'' mean a health plan registered with
the Commission under section 1201(a).
(2) Commission.--The term ``Commission'' means the Health
Care Standards Commission established under subtitle D.
(3) HPPC; health plan purchasing cooperative.--The terms
``health plan purchasing cooperative'' and ``HPPC'' mean a
health plan purchasing cooperative established under subtitle
B.
(4) Closed and open plans.--
(A) Closed.--
(i) In general.--A plan is ``closed'' if
the plan is limited by structure or law to one
or more large employers.
(ii) Grandfather for taft-hartley plans.--A
plan not described in clause (i) that is
maintained pursuant to one or more collective
bargaining agreements between one or more
employee organizations and one or more
employers and that was established as of
September 7, 1993, shall be considered to be a
closed plan.
(iii) University plans.--Nothing in this
subparagraph shall be construed as preventing a
university from offering enrollment, in a
closed plan maintained by a university, to
students matriculating at the university.
(iv) Small employers.--Subject to clause
(ii), a plan is not a ``closed'' plan if the
plan was formed by one or more small employers
or for the benefit of employees of such an
employer.
(B) Open.--A plan is ``open'' if the plan is not
closed (within the meaning of subparagraph (A)).
(c) Other Terms.--In this title and titles II and VI:
(1) Health plan.--The term ``health plan'' means a plan
that provides health benefits, whether through directly,
through insurance, or otherwise, and includes a policy of
health insurance, a contract of a service benefit organization,
or a membership agreement with a health maintenance
organization or other prepaid health plan, and also includes an
employee welfare benefit plan or a multiple employer welfare
plan (as such terms are defined in section 3 of the Employee
Retirement Income Security Act of 1974).
(2) Small employer; large employer.--
(A) In general.--Subject to subparagraph (B), the
term ``small employer'' means an employer that normally
employed fewer than 101 employees during a typical
business day in the previous year and the term ``large
employer'' means an employer that is not a small
employer.
(B) Special rule for large employers.--Subject to
subparagraph (C), the Commission shall provide a
procedure by which, in the case of an employer that is
not a small employer but normally employs fewer than
101 employees (or, in the case of a State making an
election described in subparagraph (C)(i), the number
of employees specified under the State law) in a HPPC
area (or other locality identified by the Commission)
during a typical business day, the employer, upon
application, would be considered to be a small employer
with respect to such employees in the HPPC area (or
other locality). Such procedure shall be designed so as
to prevent the adverse selection of employees with
respect to which the previous sentence is applied.
(C) State election.--
(i) In general.--Subject to section
1101(a)(3) and clause (ii), a State may by law,
with respect to employers in the State,
substitute for ``101'' in subparagraphs (A) and
(B) any greater number, so long as--
(I) such number is applied
uniformly to all employers (other than
employers described in clause (ii)) in
a State, and
(II) the State demonstrates, to the
satisfaction of the Commission, that as
of the time of enactment of the State
law not more than 50 percent of all
employees in the State are employees of
small employers (as determined based
upon such substitution).
(ii) Exception for certain large multi-
state employers.--Clause (i) shall not apply to
an employer that normally employed at least 500
employees during a typical business day in the
previous year in each of at least 2 different
States.
(3) Premium class.--The term ``premium class'' means a
class established under section 1205(a)(2).
(4) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(5) State.--The term ``State'' includes the District of
Columbia, Puerto Rico, the Virgin Islands, Guam, American
Samoa, and the Northern Mariana Islands.
(6) Type of enrollment.--There are 4 ``types of
enrollment'':
(A) Coverage only of an individual (referred to in
this title as enrollment ``on an individual basis'').
(B) Coverage of an individual and the individual's
spouse.
(C) Coverage of an individual and one child.
(D) Coverage of an individual and more than one
eligible family member.
The types of coverage described in subparagraphs (B) through
(D) are collectively referred to in this title as enrollment
``on a family basis''.
(7) Uniform set of effective benefits.--The term ``uniform
set of effective benefits'' means, for a year, such set of
benefits as recommended by the Commission under section
1302(a), if not disapproved under such section.
TITLE II--LOW-INCOME ASSISTANCE FOR HEALTH COVERAGE
Subtitle A--Low-Income Assistance
SEC. 2001. ELIGIBILITY.
(a) Enrollees Under Accountable Health Plans.--Each low-income
individual (as defined in section 2009(a)(1)(A)) who is not a medicare-
eligible individual is eligible--
(1) for assistance under section 2002(a) with respect to
premiums,
(2) for assistance under section 2003(a) with respect to
cost-sharing otherwise imposed by the plan, and
(3) in the case of a very low-income individual, for
assistance under section 2004 with respect to certain items and
services.
(b) Medicare-Eligible Individuals.--Each medicare-eligible
individual who is a low-income individual is eligible--
(1) for assistance under section 2002(b) with premiums
under the medicare program, and
(2) in the case of a very low-income individual, for
assistance under section 2003(b) with respect to other medicare
cost-sharing and for assistance under section 2004 with respect
to certain items and services.
SEC. 2002. PREMIUM ASSISTANCE.
(a) In General.--
(1) Very low-income individuals.--In the case of a very
low-income individual (as defined in section 2009(a)(3)) who is
enrolled in an AHP, the premium assistance under this section
consists of--
(A) an adjustment in premiums charged the
individual under the plan, in accordance with section
1205(c)(1); and
(B) payment to the accountable health plan (on
behalf of the individual and family members) of the
applicable Federal assistance amount (as defined in
section 2009(c)(1)) for enrollment under the plan.
(2) Moderately low-income individuals.--In the case of a
moderately low-income individual (as defined in section
2009(a)(2)) who is enrolled in an AHP, the premium assistance
under this section consists of--
(A) an adjustment in premiums charged the
individual under the plan, in accordance with section
1205(c)(2); and
(B) payment to the accountable health plan (on
behalf of the individual and family members) of the
applicable Federal assistance amount (as defined in
section 2009(c)(1)) for enrollment under the plan.
(b) Medicare-Eligible Individuals.--In the case of a medicare-
eligible individual described in section 2001(b), the premium
assistance under this subsection shall consist of payment for premiums
imposed under part A (if any) or part B of title XVIII of the Social
Security Act. Such assistance shall be provided in a manner so that no
such premium amount is deducted from monthly benefits or transfers
under section 1818 or 1840 of such Act.
SEC. 2003. COST-SHARING ASSISTANCE.
(a) Nominal Cost-Sharing for Low-Income Individuals.--
(1) In general.--In the case of a low-income individual
described in section 2001(a) who is enrolled in an AHP in an
enrollee unit, the cost-sharing assistance under this
subsection shall consist of--
(A) an accountable health plan's reduction, in
accordance with section 1202(c), in the cost-sharing
otherwise imposed to amounts that are nominal (as
specified by the Commission, consistent with paragraph
(2)); and
(B) payment to the accountable health plan (on
behalf of the individual and family members) by the
Commission of the adjusted per enrollee cost-sharing
assistance amount determined under paragraph (3).
(2) Nominal.--In establishing what is ``nominal'' for
purposes of paragraph (1), the Commission shall consider
regulations established to carry out section 1916(a)(3) of the
Social Security Act (as in effect before the date of the
enactment of this Act).
(3) Adjusted per enrollee cost-sharing assistance amount.--
(A) In general.--For purposes of this section, the
term ``adjusted per enrollee cost-sharing assistance
amount'' means, for a year, the product of--
(i) the amount determined under
subparagraph (B)(i), divided by the number
determined under subparagraph (B)(ii); and
(ii) the premium class assistance factor
established under subparagraph (C).
(B) Determination of average per enrollee cost-
sharing amount.--Before the beginning of each year the
Commission shall estimate--
(i) the total amount of cost-sharing
assistance to be provided under this section to
enrollee units in the year, and
(ii) the average number of enrollee units
(as defined in section 1701(a)(5)) to be
provided such assistance in the year.
(C) Premium class assistance factor.--The
Commission shall establish a factor, for each premium
class, that reflects the ratio of the--
(i) the average value of the cost-sharing
assistance furnished under this section to
individuals within the premium class, to
(ii) the average value of the cost-sharing
assistance furnished under this subsection to
individuals within all the premium classes.
(b) Certain Medicare-Eligible Individuals.--In the case of a very
low-income individual described in section 2001(b), the cost-sharing
assistance under this subsection shall consist of payment being made
under title XVIII of the Social Security Act--
(1) without regard to coinsurance under such title
(including coinsurance described in section 1813 of such
title);
(2) without regard to deductibles established under such
title (including those described in section 1813 and section
1833(b) of such title); and
(3) as though any reference to ``80 percent'' in section
1833(a) of such title were a reference to ``100 percent''.
(c) Appropriation To Cover Part A Assistance.--Section 1817(a) of
the Social Security Act (42 U.S.C. 1395i(a)) is amended by adding at
the end the following new sentence: ``In addition to the amounts
appropriated under this subsection, there are hereby appropriated to
the Trust Fund, out of any moneys in the Treasury not otherwise
appropriated, amounts equivalent to the reductions in the deductibles
and coinsurance established under section 1813 effected under section
2003(b) of the Managed Competition Act of 1993.''.
SEC. 2004. ASSISTANCE FOR CERTAIN ITEMS AND SERVICES.
(a) In General.--In the case of a very low-income individual, the
special assistance under this section consists of payment under this
section with respect to items and services described in subsection (b),
subject to subsection (c).
(b) Items and Services Covered.--
(1) In general.--Subject to paragraph (2), the items and
services described in this subsection are--
(A) prescription drugs,
(B) eyeglasses and hearing aids, and
(C) such other items and services as the Commission
determines were commonly provided to individuals
described in section 1902(a)(10)(A)(i) of the Social
Security Act under State medicaid plans under title XIX
of such Act (as in effect as of the date of the
enactment of this Act).
(2) Exclusions.--Items and services described in this
subsection shall not include--
(A) items and services included in the uniform set
of effective benefits, and
(B) services described in section 2101(c)(1)(A) and
similar services.
(c) Nominal Copayments.--The Commission shall provide for cost-
sharing under this section in an amount that is nominal (within the
meaning of section 1916(a)(3) of the Social Security Act, as in effect
as of the date of the enactment of this Act).
(d) Payment Rules.--The Commission shall provide for such rules
relating to--
(1) qualifications of providers of items and services, and
(2) use of carriers in the administration of this section,
as may be appropriate to carry out this section.
SEC. 2005. COMPUTATION OF BASE FEDERAL PREMIUM AMOUNT.
(a) Formula.--
(1) In general.--For purposes of this Act, the ``base
Federal premium amount'' for an individual residing in a HPPC
area is equal to the product of--
(A) reference premium rate (as defined in section
2009(c)(4)) for the individual, and
(B) the national subsidy percentage (computed under
paragraph (2)).
(2) National subsidy percentage.--In paragraph (1)(B), the
term ``national subsidy percentage'' means, for a year--
(A) the amount specified under subsection (b)(1),
divided by
(B) the total amount of low-income assistance that
would be provided if the national subsidy percentage
were equal to 100 percent;
expressed as a percentage.
(b) Computation of Total Federal Amount Available for Low-Income
Assistance.--
(1) In general.--The amount specified in this paragraph for
a year is--
(A) the sum determined under paragraph (2) for the
year, reduced by
(B) the total amount of reductions under paragraph
(3) for the year.
(2) Available federal funds.--
(A) 1995 through 1999.--The Health Care Standards
Commission shall compute, in consultation with the
Secretary of Health and Human Services and the Director
of the Office of Management and Budget, before the
beginning of each of years 1995, 1996, 1997, 1998, and
1999, the sum of--
(i) the total dollar amount of Federal
financial participation that would have been
payable to States under section 1903 of the
Social Security Act (including such a plan
operating under a waiver under section 1115 of
such Act) for calendar quarters during the
year, based on their plans in effect as of the
date of the enactment of this Act, taking into
account changes scheduled to occur in such a
plan as of such date; and
(ii) subject to paragraph (4)(A), the total
net amount of additional revenues estimated by
the Secretary of the Treasury to be received
during the year due to the amendments made by
subtitle A of title I and subtitle C of this
title.
(B) After 1999.--The Health Care Standards
Commission shall compute, in consultation with the
Secretary of Health and Human Services and the Director
of the Office of Management and Budget, before the
beginning of 2000 and each subsequent year the sum of--
(i) the total dollar amount computed under
subparagraph (A)(i) (or this clause) for the
previous year, increased by the percentage
increase in the gross domestic product (as
determined by the Secretary of Commerce) for
the 4-quarter period ending in June of the
previous year; and
(ii) subject to paragraph (4)(A), the total
net amount of additional revenues estimated by
the Secretary of the Treasury to be received
during the year due to the amendments made by
subtitle A of title I and subtitle C of this
title.
(3) Reductions.--Subject to paragraph (4)(B), the total
amount of reductions described in this paragraph for a year are
the sum of the following:
(A) Long-term care phase-down assistance.--The
total amount of long-term care phase-down assistance to
which States are entitled under section 2101 for
calendar quarters during the year.
(B) Medicare low-income assistance.--The total
amount, estimated by the Commission, of the assistance
to be provided under sections 2002(b) and 2003(b)
during the year.
(C) Cost-sharing.--The total amount, estimated by
the Commission, of the cost-sharing assistance to be
provided under section 2003(a) during the year.
(D) Special low-income assistance.--The total
amount, estimated by the Commission, of the special
assistance to be provided under section 2004 during the
year.
(E) Grants and other expenditures.--In order to
provide for grants under section 2006(g) and additional
expenditures under subtitle E of title I, subtitle B of
title III, subtitle A of title IV, and title V,
$523,000,000.
(4) Adjustment for over- and under-estimates.--
(A) Funds available.--The amounts determined under
subparagraphs (A)(ii) and (B)(ii) of paragraph (2) for
a year shall be increased or decreased by the amount by
which the amount estimated under such respective
subparagraph for the preceding year was below, or
above, the actual amount of revenues for such year.
(B) Reductions.--The amounts specified in
subparagraphs (A) through (D) of paragraph (3) for a
year shall be increased or decreased by the amount by
which the respective amount estimated under such
subparagraph for the preceding year was below, or
above, the actual amount described in such subparagraph
for such year.
SEC. 2006. APPLICATIONS FOR ASSISTANCE.
(a) In General.--Subject to section 2008, any individual who seeks
assistance under this subtitle (with respect to himself or herself or a
family member) shall submit a written application, by person or mail,
to the Commission.
(b) Basis for Determination.--Subject to section 2008 and
reconciliation under section 2007(b), eligibility for assistance under
this subtitle shall be based on 4 times the family adjusted total
income (as defined in section 2009(b)(1)) during the 3 months preceding
the month in which the application is filed.
(c) Form and Contents.--An application for assistance under this
subtitle shall be in a form and manner specified by the Commission and
shall require--
(1) the provision of information necessary to make the
determinations described in subsection (b),
(2) the provision of information respecting the AHP in
which the individual is enrolled (or is in the process of
enrolling), and
(3) the individual to assign rights to assistance under
section 2003 to such plan.
Such form also shall include notice that the subsidies under this
subtitle will be made as a direct reduction of premiums and cost-
sharing under the AHP involved.
(d) Frequency of Applications.--
(1) In general.--An application for assistance under this
subtitle may be filed at any time during the year and may be
resubmitted (but, except as provided in paragraph (3), not more
frequently than once every 3 months) based upon a change of
income or family composition.
(2) Need to reapply.--In the case of an individual who--
(A) is entitled to assistance under this subtitle
in September of a year, and
(B) wishes to remain eligible for assistance for
months beginning with January of the following year,
the individual (or a family member) must file with the
Commission in October of that preceding year a new application
for assistance. If a new application under this paragraph is
not filed with respect to an individual, an application for
such assistance with respect to the individual may not be filed
during November or December of that preceding year.
(3) Correction of income.--Nothing in paragraph (1) shall
be construed as preventing an individual or family from, at any
time, submitting an application to reduce the amount of
assistance under this subtitle based upon an increase in income
from that stated in the previous application.
(e) Timing of Assistance.--
(1) In general.--If an application for assistance under
this subtitle is filed--
(A) on or before the 15th day of a month,
assistance under this subtitle shall be available for
premiums for months after such month and, with respect
to the cost-sharing, for expenses incurred after such
month, and, with respect to special assistance, for
items and services furnished after such month; or
(B) after the 15th day of a month, assistance under
this subtitle shall be available for premiums for
months after the month following such month and, with
respect to the cost-sharing, for expenses incurred
after such following month, and, with respect to
special assistance, for items and services furnished
after such following month.
(2) Welfare recipients.--In the case of an individual or
family with respect to whom an application for assistance is
not required because of section 2008, in applying paragraph
(1), the date of approval of aid or benefits described in such
section shall be considered the date of filing of an
application for assistance under this subtitle.
(f) Verification.--The Commission shall provide for verification,
on a sample basis or other basis, of the information supplied in
applications under this subtitle. This verification shall be separate
from the reconciliation provided under section 2007.
(g) Help in Completing Applications.--The Commission shall provide,
from funds appropriated to carry out this subtitle, for grants to
public or private nonprofit entities that will make available
assistance to individuals and families in filing applications for
assistance under this subtitle. The Commission shall make grants in a
manner that provides such assistance at a variety of sites (such as
low-income housing projects and shelters for homeless individuals) that
are readily accessible to individuals and families eligible for
assistance under this subtitle. The total amount of the funds provided
in any fiscal year under grants under this subsection may not exceed
$10,000,000.
(h) Penalties for Inaccurate Information.--
(1) Interest for understatements.--Each individual who
knowingly understates income reported in an application for
assistance under this subtitle or otherwise makes a material
misrepresentation of information in such an application shall
be liable to the Health Care Standards Commission for excess
payments made based on such understatement or
misrepresentation, and for interest on such excess payments at
a rate specified by the Commission.
(2) Penalties for misrepresentation.--Each individual who
knowingly misrepresents material information in an application
for assistance under this subtitle shall be liable to the
Health Care Standards Commission for $1,000 or, if greater,
three times the excess payments made based on such
misrepresentation.
(i) Filing of Application Defined.--Except as provided in
subsection (e)(2), for purposes of this subtitle, an application under
this subtitle is considered to be ``filed'' on the date on which the
complete application, including all documentation required to act on
the application, has been filed with the Commission.
SEC. 2007. RECONCILIATION OF PREMIUM ASSISTANCE THROUGH USE OF INCOME
STATEMENTS.
(a) Requirement for Filing of Income Statement.--
(1) In general.--Subject to section 2008, in the case of a
family which is receiving low-income assistance under this
subtitle for any month in a year, a member of the family shall
file with the Commission, by not later than April 15 of the
following year, a statement that verifies the family's total
adjusted family income for the taxable year ending during the
previous year. Such a statement shall provide information
necessary to determine the family adjusted total income during
the year and the number of family members in the family as of
the last day of the year.
(2) Use of income tax return.--The Commission shall provide
a process under which the filing of a Federal income tax return
shall constitute the filing of a income statement under
paragraph (2).
(3) Extension.--The Commission shall permit the extension
of the filing deadline under paragraph (1) in such cases as the
Commission determines to be appropriate. The Commission shall
take into account the extensions permitted for the filing of
Federal income tax returns.
(b) Reconciliation of Premium Assistance Based on Actual Income.--
Based on and using the income reported in the statement filed under
subsection (a) with respect to a family or individual, subject to
section 2008, the Commission shall compute the amount of assistance
that should have been provided under section 2002 with respect to
premiums for the family in the year involved. If the amount of such
assistance computed is--
(1) greater than the amount of premium assistance provided,
the Commission shall provide for payment to the family or
individual involved of an amount equal to the amount of the
deficit, or
(2) less than the amount of assistance provided, the
Commission shall require the family or individual to pay to the
Commission (to the credit of the program under this subtitle)
an amount equal to the amount of the excess payment.
(c) Disqualification for Failure To File.-- Subject to section
2008, in the case of any individual with respect to whom an information
statement under subsection (a) is required to be filed in a year and
that fails to file such a statement by the deadline specified in such
subsection, the individual is not eligible for assistance under this
subtitle after May 1 of such year. The Commission shall waive the
application of this subsection if there is established, to the
satisfaction of the Commission, good cause for the failure to file the
statement on a timely basis.
(d) Penalties for False Information.--Any individual that provides
false information in a statement under subsection (a) is subject to a
criminal penalty to the same extent as a criminal penalty may be
imposed under section 1128B(a) of the Social Security Act with respect
to a person described in clause (ii) of such section.
(e) Notice of Requirement.--The Commission shall provide for
written notice, in March of each year, of the requirement of subsection
(a) to each family which received assistance under this subtitle in any
month during the preceding year and to which such requirement applies.
(f) Transmittal of Information.--The Commission of the Treasury
shall transmit annually to the Commission such information relating to
the adjusted total income of individuals for the taxable year ending in
the previous year as may be necessary to verify the reconciliation of
assistance under this section.
(g) Construction.--Nothing in this section shall be construed as
authorizing reconciliation of assistance provided with respect to cost-
sharing assistance under section 2003 or special assistance under
section 2004.
SEC. 2008. TREATMENT OF CERTAIN CASH ASSISTANCE RECIPIENTS.
In the case of a family that has been determined to be eligible for
aid under part A or E of title IV of the Social Security Act or an
individual who has been determined to be eligible for supplemental
security income benefits under title XVI of such Act--
(1) the family or individual is deemed, without the need to
file an application for assistance under section 2006, to have
adjusted total income below 100 percent of the State-adjusted
poverty level for the State,
(2) the family or individual need not file a statement
under section 2007(a), and
(3) the assistance received by the family is not subject to
reconciliation under section 2007(b).
SEC. 2009. DEFINITIONS.
(a) Definitions Relating to Low-Income Individuals.--In this
subtitle:
(1) Low-income individual.--
(A) In general.--The term ``low-income individual''
means, in the case of--
(i) a medicare-eligible individual residing
in a State, such an individual whose family
adjusted total income (as defined in subsection
(b)(1)) is less than 120 percent of the State-
adjusted poverty level for the State; or
(ii) an individual who is not a medicare-
eligible individual and who resides in a State,
an eligible individual (as defined in section
1701(a)(1)) whose family adjusted total income
is less than 200 percent of the State-adjusted
poverty level for the State.
(2) Moderately low-income individual.--The term
``moderately low-income individual'' means a low-income
individual (as defined in paragraph (1)) who is not a very low-
income individual (as defined in paragraph (3).
(3) Very low-income individual.--The term ``very low-income
individual'' means, with respect to an individual residing in a
State, a low-income individual whose family adjusted total
income is less than 100 percent of the State-adjusted poverty
level for the State.
(b) Definitions Relating to Income and Poverty Line.--In this
subtitle:
(1) Family adjusted total income.--The term ``family
adjusted total income'' means, with respect to an individual,
the sum of the modified total income for the individual and all
the other eligible family members.
(2) Modified family income.--The term ``modified family
income'' means the sum of--
(A) the adjusted gross income (as defined in
section 62(a) of the Internal Revenue Code of 1986) of
the taxpayer and family members for the taxable year
determined without regard to sections 911, 931, and 933
of such Code, determined without the application of
paragraphs (6) and (7) of section 62(a) of such Code
and without the application of section 162(l) of such
Code, plus
(B) the interest received or accrued by the
taxpayer and family members during such taxable year
which is exempt from income, plus
(C) the amount of social security benefits
(described in section 86(d) of such Code) which is not
includable in gross income of the taxpayer and family
members under section 86 of such Code.
(3) State-adjusted poverty level defined.--
(A) In general.--The term ``State-adjusted poverty
level'' means, with respect to an individual resident
in a State, the poverty line (as defined in paragraph
(4)) multiplied by the State adjustment factor
(established under subparagraph (B)) for the State.
(B) State adjustment factors.--The Health Care
Standards Commission shall establish, for each State, a
State adjustment factor that reflects the relative
cost-of-living in the State compared to the cost-of-
living in the continental United States (including
Alaska) and Hawaii. The weighted average of such
factors shall be 1. Such factors shall be updated
annually.
(4) Poverty line.--The term ``poverty line'' means the
income official poverty line as defined by the Office of
Management and Budget, and revised annually in accordance with
section 673(2) of the Omnibus Budget Reconciliation Act of
1981.
(5) Family size.--The family size to be applied under this
subtitle, with respect to family adjusted total income, is the
number of eligible family members (as defined in section
1701(a)(3)).
(c) Definitions Relating to Assistance and Premium Amounts.--In
this Act:
(1) Applicable federal assistance amount.--The term
``applicable Federal assistance amount'' means, with respect
to--
(A) a very low-income individual, the base Federal
premium amount (as determined under section
2005(a)(1)), or
(B) a moderately low-income individual, the amount
by which (i) the applicable low-income premium amount
(as defined in paragraph (2)), exceeds (ii) the base
individual premium (as defined in paragraph (3)),
reduced by the amount of any contribution made by an employer
with respect to coverage of the individual.
(2) Applicable low-income premium amount.--The term
``applicable low-income premium amount'' means, with respect to
a low-income individual, the base Federal premium amount
(determined under section 2005(a)(1)) plus the product of--
(A) the individual responsibility percentage (as
defined in paragraph (5)), and
(B) the amount by which (i) the reference premium
rate (as defined in paragraph (4)), exceeds (ii) the
base Federal premium amount.
(3) Base individual premium.--The term ``base individual
premium'' means, with respect to an individual, the product
of--
(A) the individual responsibility percentage (as
defined in paragraph (5)), and
(B) the reference premium rate (as defined in
paragraph (4)).
(4) Reference premium rate.--The term ``reference premium
rate'' means, with respect to an individual residing in a HPPC
area, the lowest premium--
(A) established by an open AHP which enrolls at
least such proportion of eligible individuals in the
HPPC area as the Commission shall specify, and
(B) offered in the area for the premium class
applicable to such individual (including the HPPC
overhead amount established under section 1105(b)(3)).
(5) Individual responsibility percentage.--The term
``individual responsibility percentage'' means--
(A) with respect to a very low-income individual, 0
percentage points,
(B) with respect to a moderately low-income
individual, the number of percentage points by which
the family's family adjusted total income (expressed as
a percent of the applicable poverty line) exceeds 100
percentage points, and
(C) with respect to any other individual, 100
percentage points.
Subtitle B--Long-Term Care Phase-Down Assistance to States
SEC. 2101. LONG-TERM CARE PHASE-DOWN ASSISTANCE.
(a) In General.--Subject to subsection (b), if the excess
percentage (as defined in subsection (c)(3)) for a State is greater
than 0 percentage points, the State is entitled for each calendar
quarter in 1995 through 1998 to payment equal to \1/4\ of the product
of--
(1) such excess percentage,
(2) the applicable phase-down percentage for the year,
described in subsection (c)(4)), and
(3) \1/2\ of the amount described in subsection (c)(1)(B).
(b) Maintenance of Effort Required.--A State is not eligible for
assistance under subsection (a) for a calendar quarter unless the State
provides assurances satisfactory to the Commission that the State is
incurring expenses (for services described in subsection (c)(1)(A)) in
an amount not less than the sum of--
(1) the amount of assistance under subsection (a), and
(2) \1/4\ of the product of--
(A) the State's effective State medicaid percentage
(as defined in subsection (c)(2)), and
(B) \1/2\ of the amount described in subsection
(c)(1)(B).
(c) Definitions.--For purposes of this section:
(1) Long-term care percentage.--The ``long-term care
percentage'' for a State is--
(A) the portion of the amount described in
subparagraph (B) that is are attributable to medical
assistance for nursing facility services, intermediate
care facility services for the mentally retarded, home
health care services, and home and community-based
services, divided by
(B) the total amount of Federal and State
expenditures for medical assistance under the State
plan under title XIX of the Social Security Act for
calendar quarters during fiscal years 1992 and 1993;
expressed as a percentage.
(2) Effective state medicaid percentage.--The ``effective
State medicaid percentage'' for a State is--
(A)(i) the amount described in subparagraph (B),
reduced by (ii) the sum of the amount of the Federal
financial participation under section 1903(a) of the
Social Security Act paid to the State for calendar
quarters during fiscal years 1992 and 1993 and the
amount of health-care related taxes (as defined in
section 1903(w)(3)(A) of such Act) received by the
State during such fiscal years, divided by
(B) the total amount of the Federal and State
expenditures under its plan under title XIX of the
Social Security Act during calendar quarters in fiscal
years 1992 and 1993.
(3) Excess percentage.--The term ``excess percentage''
means, for a State, percentage by which (A) the long-term care
percentage (as defined in paragraph (1)) exceeds (B) 2
percentage points plus the effective State medicaid percentage
(as defined in paragraph (2)).
(4) Applicable phase-down percentage.--The ``applicable
phase-down percentage'' for--
(A) 1995, is 80 percent,
(B) 1996, is 60 percent,
(C) 1997, is 40 percent, and
(D) 1998, is 20 percent.
Subtitle C--Financing
PART 1--MEDICARE SAVINGS
SEC. 2201. REDUCTION IN UPDATE FOR INPATIENT HOSPITAL SERVICES.
(a) PPS Hospitals.--Section 1886(b)(3)(B)(i) of the Social Security
Act (42 U.S.C. 1395ww(b)(3)(B)(i)), as amended by section 13501(a)(1)
of the Omnibus Budget Reconciliation Act of 1993 (hereafter in this
part referred to as ``OBRA-1993''), is amended--
(1) in subclause (XII), by striking ``fiscal year 1997, the
market basket percentage increase minus 0.5 percentage point''
and inserting ``each of the fiscal years 1997, 1998, and 1999,
the market basket percentage increase minus 2.5 percentage
points''; and
(2) in subclause (XIII), by striking ``fiscal year 1998''
and inserting ``fiscal year 2000''.
(b) PPS-Exempt Hospitals.--Section 1886(b)(3)(B)(ii)(V) of such Act
(42 U.S.C. 1395ww(b)(3)(B)(ii)(V)), as amended by section 13502(a)(1)
of OBRA-1993, is amended by striking ``through 1997'' and inserting
``through 1999''.
SEC. 2202. REDUCTION IN CONVERSION FACTOR FOR PHYSICIAN FEE SCHEDULE
FOR NON-PRIMARY CARE SERVICES.
Section 1848(d)(3)(A) of the Social Security Act (42 U.S.C. 1395w-
4(d)(3)(A)), as amended by section 13511(a)(1) of OBRA-1993, is
amended--
(1) in clause (i), by striking ``through (v)'' and
inserting ``through (vi)'';
(2) in clause (vi), by striking ``(iv) and (v)'' and
inserting ``(iv), (v), and (vi)'';
(3) by redesignating clause (vi) as clause (vii); and
(4) by inserting after clause (v) the following new clause:
``(vi) Adjustment in percentage increase
for years from 1996 through 1999.--In applying
clause (i) for services furnished during the
period beginning January 1, 1996, and ending
December 31, 1999, the percentage increase in
the appropriate update index shall be reduced
by such percent as the Secretary determines
will result in a reduction in aggregate
payments for physicians' services under this
part during such period of at least
$6,300,000,000 from the amount of aggregate
payments for such services that would otherwise
have been made during the period.''.
SEC. 2203. REDUCTION IN HOSPITAL OUTPATIENT SERVICES THROUGH
ESTABLISHMENT OF PROSPECTIVE PAYMENT SYSTEM.
(a) In General.--Section 1833(a)(2)(B) of the Social Security Act
(42 U.S.C. 1395l(a)(2)(B)) is amended by striking ``section 1886)--''
and all that follows and inserting the following: ``section 1886), an
amount equal to a prospectively determined payment rate established by
the Secretary that provides for payments for such items and services to
be based upon a national rate adjusted to take into account the
relative costs of furnishing such items and services in various
geographic areas, except that for items and services furnished during
cost reporting periods (or portions thereof) in years beginning with
1995, such amount shall be equal to 90 percent of the amount that would
otherwise have been determined;''.
(b) Establishment of Prospective Payment System.--Not later than
July 1, 1994, the Secretary of Health and Human Services shall
establish the prospective payment system for hospital outpatient
services necessary to carry out section 1833(a)(2)(B) of the Social
Security Act (as amended by subsection (a)).
(c) Effective Date.--The amendment made by subsection (a) shall
apply to items and services furnished on or after January 1, 1995.
SEC. 2204. INCREASE IN MEDICARE PART B PREMIUM FOR INDIVIDUALS WITH
HIGH INCOME.
(a) In General.--Subchapter A of chapter 1 of the Internal Revenue
Code of 1986 is amended by adding at the end thereof the following new
part:
``PART VIII--MEDICARE PART B PREMIUMS FOR HIGH-INCOME INDIVIDUALS
``Sec. 59B. Medicare part B premium tax.
``SEC. 59B. MEDICARE PART B PREMIUM TAX.
``(a) Imposition of Tax.--In the case of an individual to whom this
section applies for the taxable year, there is hereby imposed (in
addition to any other tax imposed by this subtitle) a tax for such
taxable year equal to the aggregate of the Medicare part B premium
taxes for each of the months during such year that such individual is
covered by Medicare part B.
``(b) Individuals to Whom Section Applies.--This section shall
apply to any individual for any taxable year if--
``(1) such individual is covered under Medicare part B for
any month during such year, and
``(2) the modified adjusted gross income of the taxpayer
for such taxable year exceeds the threshold amount.
``(c) Medicare Part B Premium Tax for Month.--
``(1) In general.--The Medicare part B premium tax for any
month is the applicable percentage (as defined in paragraph
(2)) of the amount equal to the excess of--
``(A) 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
``(B) 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).
``(2) Phase-in of tax.--If the modified adjusted gross
income of the taxpayer for any taxable years exceeds the
threshold amount by--
``(A) less than $25,000, the applicable percentage
under this paragraph is 33\1/3\ percent;
``(B) at least $25,000, but less than $50,000, the
applicable percentage under this paragraph is 66\2/3\
percent,
``(C) at least $50,000, but less than $75,000, the
applicable percentage under this paragraph is 65/75
(expressed as a percent), or
``(D) at least $75,000, the applicable percentage
under this paragraph is 100 percent.
``(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, $75,000,
``(B) $100,000 in the case of a joint return, and
``(C) zero in the case of a taxpayer who--
``(i) is married at the close of the
taxable year 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) Medicare part b coverage.--An individual shall be
treated as covered under Medicare part B for any month if a
premium is paid under part B of title XVIII of the Social
Security Act for the coverage of the individual under such part
for the month.
``(4) Married individual.--The determination of whether an
individual is married shall be made in accordance with section
7703.''.
(b) Clerical Amendment.--The table of parts for subchapter A of
chapter 1 of such Code is amended by adding at the end thereof the
following new item:
``Part VIII. Medicare Part B Premiums For
High-Income Individuals.''.
(c) Effective Date.--The amendments made by this section shall
apply to months after December 1993 in taxable years ending after
December 31, 1993.
SEC. 2205. PHASED-IN ELIMINATION OF MEDICARE HOSPITAL DISPROPORTIONATE
SHARE ADJUSTMENT PAYMENTS.
Section 1886(d)(5)(F) of the Social Security Act (42 U.S.C.
1395ww(d)(5)(F)) is amended--
(1) in clause (i), by inserting ``and before September 30,
1998,'' after ``1986,'';
(2) in clause (ii), by striking ``The amount of such
payment'' and inserting ``Subject to clause (ix), the amount of
such payment''; and
(3) by adding at the end the following new clause:
``(ix) The amount of the additional payment made under this
paragraph for a discharge shall be equal to--
``(I) for discharges occurring during fiscal year 1995, 80
percent of the amount otherwise determined for the discharge
under clause (ii);
``(II) for discharges occurring during fiscal year 1996, 60
percent of the amount otherwise determined for the discharge
under clause (ii);
``(III) for discharges occurring during fiscal year 1997,
40 percent of the amount otherwise determined for the discharge
under clause (ii); and
``(IV) for discharges occurring during fiscal year 1998, 20
percent of the amount otherwise determined for the discharge
under clause (ii).''.
SEC. 2206. REDUCTION IN ROUTINE COST LIMITS FOR HOME HEALTH SERVICES.
Section 1861(v)(1)(L)(i) of the Social Security Act (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)--
(A) by inserting ``and before July 1, 1995,'' after
``1977,'', and
(B) by adding ``or'' at the end; and
(3) by inserting after subclause (III) the following new
subclause:
``(IV) July 1, 1995, 103 percent,''.
SEC. 2207. REDUCTION IN ROUTINE COST LIMITS FOR EXTENDED CARE SERVICES.
(a) In General.--Section 1888(a) of the Social Security Act (42
U.S.C. 1395yy(a)) is amended--
(1) by striking ``112 percent'' and inserting ``102
percent'' each place it appears.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to cost reporting periods beginning on or after October 1, 1994.
SEC. 2208. REDUCTIONS IN PAYMENTS FOR HOSPICE SERVICES.
Section 1814(i)(1)(C)(ii) of the Social Security Act (42 U.S.C.
1395f(i)(1)(C)(ii)), as amended by section 13504 of OBRA-1993, is
amended--
(1) in subclause (III), by striking ``1.5 percentage
points'' and inserting ``2.5 percentage points'';
(2) in subclause (IV), by striking ``1.5 percentage
points'' and inserting ``2.5 percentage points'';
(3) in subclause (V), by striking ``0.5 percentage point''
and inserting ``1.5 percentage points'' and by striking ``and''
at the end;
(4) by redesignating subclause (VI) as subclause (VIII) ;
and
(5) by inserting after subclause (V) the following new
subclauses:
``(VI) for fiscal year 1998, the market basket percentage
increase for the fiscal year minus 1.0 percentage point;
``(VII) for fiscal year 1999, the market basket percentage
increase for the fiscal year minus 1.0 percentage point; and''.
PART 2--OTHER SAVINGS
SEC. 2211. REQUIREMENT THAT CERTAIN AGENCIES PREFUND GOVERNMENT HEALTH
BENEFITS CONTRIBUTIONS FOR THEIR ANNUITANTS.
(a) Definitions.--For the purpose of this section--
(1) the term ``agency'' means any agency or other
instrumentality within the executive branch of the Government,
the receipts and disbursements of which are not generally
included in the totals of the budget of the United States
Government submitted by the President;
(2) the term ``health benefits plan'' means, with respect
to an agency, a health benefits plan, established by or under
Federal law, in which employees or annuitants of such agency
may participate;
(3) the term ``health-benefits coverage'' means coverage
under a health benefits plan'';
(4) an individual shall be considered to be an ``annuitant
of an agency'' if such individual is entitled to an annuity,
under a retirement system established by or under Federal law,
by virtue of--
(A) such individual's service with, and separation
from, such agency; or
(B) being the survivor of an annuitant under
subparagraph (A) or of an individual who died while
employed by such agency; and
(5) the term ``Office'' means the Office of Personnel
Management.
(b) Prefunding Requirement.--
(1) In general.--Effective as of October 1, 1994, each
agency (or February 1, 1995, in the case of the agency with the
greatest number of employees, as determined by the Office)
shall be required to prepay the Government contributions which
are or will be required in connection with providing health-
benefits coverage for annuitants of such agency.
(2) Regulations.--The Office shall prescribe such
regulations as may be necessary to carry out this section. The
regulations shall be designed to ensure at least the following:
(A) Amounts paid by each agency shall be sufficient
to cover the amounts which would otherwise be payable
by such agency (on a ``pay-as-you-go'' basis), on or
after the applicable effective date under paragraph
(1), on behalf of--
(i) individuals who are annuitants of the
agency as of such effective date; and
(ii) individuals who are employed by the
agency as of such effective date, or who become
employed by the agency after such effective
date, after such individuals have become
annuitants of the agency (including their
survivors).
(B)(i) For purposes of determining any amounts
payable by an agency--
(I) this section shall be treated as if it
had taken effect at the beginning of the 20-
year period which ends on the effective date
applicable under paragraph (1) with respect to
such agency; and
(II) in addition to any amounts payable
under subparagraph (A), each agency shall also
be responsible for paying any amounts for which
it would have been responsible, with respect to
the 20-year period described in subclause (I),
in connection with any individuals who are
annuitants or employees of the agency as of the
applicable effective date under paragraph (1).
(ii) Any amounts payable under this subparagraph
for periods preceding the applicable effective date
under paragraph (1) shall be payable in equal
installments over the 20-year period beginning on such
effective date.
(c) FASB Standards.--Regulations under subsection (b) shall be in
conformance with the provisions of standard 106 of the Financial
Accounting Standards Board, issued in December 1990.
(d) Clarification.--Nothing in this section shall be considered to
permit or require duplicative payments on behalf of any individuals.
(e) Draft Legislation.--The Office shall prepare and submit to
Congress any draft legislation which may be necessary in order to carry
out this section.
Subtitle D--Repeal of Medicaid Program
SEC. 2301. REPEAL OF MEDICAID PROGRAM.
(a) In General.--Title XIX of the Social Security Act is repealed.
(b) Report on Conforming Changes.--By not later than May 1, 1994,
the Health Care Standards Commission shall submit to Congress a report
on--
(1) changes in laws that should be made in order to conform
those laws to the repeal in the medicaid program effected under
subsection (a), and
(2) the need for any special or transitional provisions
that should be made in order to ensure continuous assistance
for the medical needs of the medicaid population.
(c) Effective Date.--The repeal made by subsection (a) shall apply
to items and service furnished on or after January 1, 1995.
TITLE III--TRAINING AND EDUCATION OF HEALTH CARE PROFESSIONALS
Subtitle A--Reform of Federal Funding for Medical Residency Training
SEC. 3001. DEFINITIONS.
In this subtitle, the following definitions shall apply:
(1) The term ``entry position'' means, with respect to a
medical residency training program, a position as a resident in
the initial year of study in the program.
(2) The term ``Fund'' means the National Medical Education
Fund established under section 3005.
(3) The term ``medical residency training program'' means a
residency or other postgraduate medical training program
participation in which may be counted toward certification in a
specialty or subspecialty and includes formal postgraduate
training programs in geriatric medicine approved by the Health
Care Standards Commission.
(4) The term ``primary care resident'' means a resident
enrolled in a medical residency training program in family
medicine, general internal medicine, general pediatrics,
preventive medicine, geriatric medicine, or osteopathic general
practice.
(5) The term ``resident'' includes any participant in a
medical residency training program (or, for purposes of section
3003, a physician retraining program).
(6) The term ``United States medical graduate'' means a
resident who is a graduate of --
(A) a school of medicine accredited by the Liaison
Committee on Medical Education of the American Medical
Association (or approved by such Committee as meeting
the standards necessary for such accreditation); or
(B) a school of osteopathy accredited by the
American Osteopathic Association (or approved by such
Association as meeting the standards necessary for such
accreditation).
SEC. 3002. APPROVAL OF MEDICAL RESIDENCY TRAINING POSITIONS.
(a) In General.--The Health Care Standards Commission shall approve
a resident training position in a medical residency training program
for purposes of funding under section 3003(a) if--
(1) the program submits an application for approval of the
position to the Commission (at such time and in such manner as
the Commission may require); and
(2) the Commission determines that the entry position
relating to such resident training position in the program has
been allocated to the program under subsection (b).
(b) Allocation of Entry Positions Among Programs.--
(1) In general.--For purposes of subsection (a)(2), the
Commission shall establish a process for the allocation of
entry positions among medical residency training programs
consistent with this subsection.
(2) Total number of funded positions.--
(A) In general.--In consultation with accountable
health plans, medical societies, and medical specialty
societies, the Commission shall determine the
appropriate total number of entry positions that will
be allocated to medical residency training programs
under this subsection in the United States for each
residency year. In this subsection, the term
``residency year'' means a 12-month period beginning
with July of the year in which the program begins.
(B) Basis for total number of entry positions.--
Subject to subparagraph (C), such total number of entry
positions shall be based on the need for health care
professionals to provide cost effective health care
services in the United States. In determining such
number the Commission shall take into account the
population-to-physician ratio, consistent with demand
for health care services.
(C) Limit on total number of entry positions.--The
total number of entry positions determined under this
paragraph for any residency year shall not exceed 110
percent of the number of United States medical
graduates who complete undergraduate medical education
in the previous year.
(D) No application to residents who have completed
another training program.--The total number determined
under this paragraph shall only apply to residents who
may enroll in a program without having previously
completed another medical residency training program.
(3) General distribution of positions among specialities.--
(A) In general.--In consultation with accountable
health plans, medical societies, and medical specialty
societies, the Commission shall determine the
appropriate distribution of the total number of entry
positions determined under paragraph (2) among the
various medical specialties.
(B) Basis for distribution.--Such distribution
shall be based on the need for health care
professionals in different medical specialities to
provide cost effective health care services in the
United States. In determining such distribution the
Commission shall take into account the population-to-
physician ratio with respect to each medical specialty,
consistent with demand for health care services, and
the specific needs of accountable health plans.
(4) Allocation among programs.--
(A) In general.--The Commission shall allocate
entry positions, distributed among medical specialties
under paragraph (3), among specific medical residency
training programs.
(B) Basis for allocation.--Such allocation shall be
based on the recommendations (if any) submitted by the
Accreditation Council for Graduate Medical Education
and the Residency Review Committees of such Council and
the following objectives:
(i) Allocating positions among programs on
the basis of quality.
(ii) Allocating positions among programs to
avoid an inappropriate geographic distribution
of physicians.
(iii) Allocating positions among programs
to assure a sufficient number of residents in
outpatient settings.
SEC. 3003. FUNDING FOR APPROVED MEDICAL RESIDENCY TRAINING PROGRAMS AND
PHYSICIAN RETRAINING PROGRAMS.
(a) In General.--In the case of an entry position in a medical
residency training program that is approved by the Commission under
section 3002(a) and in the case of an entry position in a physician
retraining program described in subsection (d)(1) for a residency year,
the Commission shall provide a payment to the program on the first day
of each month of the year from the National Medical Education Fund
established under section 3005 in the amount determined under
subsection (b). This subsection constitutes budget authority in advance
of appropriations Acts, and represents the obligation of the Federal
Government to make payments to such programs in accordance with this
subtitle. No payment shall be made under this subsection for a month
before July 1995.
(b) Payment Amount.--
(1) In general.--Subject to subsection (e), the amount of
payment made to an approved medical residency training program
or a physician retraining program for each approved entry
position for a full-time equivalent resident, shall be equal to
the applicable percentage (as defined in paragraph (3)) of the
base per resident amount established by the Commission for the
year under paragraph (2) for that resident.
(2) Base per resident amount.--The Commission shall
establish a base per resident amount for each year (beginning
with 1995) that reflects an appropriate measure of the salary
and benefits paid to residents in medical residency training
programs during the year. The Commission may vary such amount
for residents to take into account--
(A) increases provided in the salaries and benefits
of residents on the basis of the length of service in
the program; and
(B) the relative wages and other costs of goods and
services among the various geographic areas in which
such programs are operated.
(3) Applicable percentage defined.--In paragraph (1), the
``applicable percentage'' with respect to a resident is equal
to--
(A) 175 percent, in the case of a primary care
resident; and
(B) 150 percent, in the case of a resident who is
not a primary care resident.
(c) Limit on Length of Service of Resident.--
(1) In general.--No payment shall be made under subsection
(a) for any resident who has completed 4 years of medical
residency training in any program.
(2) Exception.--Paragraph (1) shall not apply to a resident
enrolled in a physician retraining program described in
subsection (d)(1).
(d) Funding of Physician Retraining Programs.--
(1) Program Described.--A physician retraining program
described in this paragraph is a program that--
(A) provides training over a period of not to
exceed 2 years for primary care residents for
physicians who have completed training in a medical
residency training program (other than as a primary
care resident); and
(B) meets such other requirements as the Commission
(in consultation with the Accreditation Council for
Graduate Medical Education) may impose.
(2) Funding for pilot programs.--The Health Care Standards
Commission shall make payments from the Fund to assist the
development of physician retraining programs described in
paragraph (1).
(e) Limit on Expenditures for Programs.--The amounts otherwise
payable under this section shall be reduced, in a pro rata manner, to
the extent necessary to assure that the total amount expended by the
Health Care Standards Commission during a year for payments under this
section do not exceed the Commission's estimate of the amount of funds
available for expenditure from the Fund in the year.
SEC. 3004. FINANCING.
(a) Assessment Against Premiums of Accountable Health Plans.--For
requirement of payment by accountable health plans to the National
Medical Education Fund of 1 percent of gross premium receipts, see
section 1211.
(b) Payments From Medicare.--Title XVIII of the Social Security Act
(42 U.S.C. 1395 et seq.) is amended by inserting after section 1889 the
following new section:
``payments to national medical education fund
``Sec. 1890. (a) Annual Payment Required.--For each month
(beginning with July 1995), the Secretary shall make a payment to the
National Medical Education Fund established under section 3005 of the
Managed Competition Act of 1993 in an amount that is equal, for a month
in a fiscal year, to \1/12\ of 1 percent of the Secretary's estimate of
the total expenditures made by the Secretary under this title during
the preceding fiscal year, adjusted to the extent of any overpayment or
underpayment which the Secretary determines was made under this section
for any prior fiscal year and with respect to which adjustment has not
already been made under this subsection.
``(b) Allocation Among Trust Funds.--The Secretary shall provide
for an allocation of the payment made under subsection (a) between the
Federal Hospital Insurance Trust Fund and the Federal Supplementary
Medical Insurance Trust Fund in a proportion that reasonably reflects
the proportion of medical education costs of hospitals for which
payment was made under this title for cost reporting periods during
fiscal year 1993 that are associated with the provision of services
under part A and part B.''.
SEC. 3005. NATIONAL MEDICAL EDUCATION FUND.
(a) Establishment.--There is hereby established in the Treasury of
the United States a fund to be known as the ``National Medical
Education Fund'', which shall consist of--
(1) amounts paid into the Fund by (or on behalf of)
accountable health plans pursuant to section 1211;
(2) amounts paid into the Fund by the Secretary of Health
and Human Services under section 1890 of the Social Security
Act (as added by section 3004(b)); and
(3) such other amounts that may otherwise be deposited in
or appropriated to the Fund.
(b) Use of Amounts in Fund.--Amounts in the Fund shall be used by
the Health Care Standards Commission to make payments to medical
residency training programs and physician retraining programs under
section 3003(b).
(c) Management of Fund.--
(1) In general; reports on operation.-- The Secretary of
the Treasury shall, in consultation with the Health Care
Standards Commission, manage the Fund, and shall report to
Congress each year on the financial condition and the results
of the operation of the Fund during the preceding year and on
the expected condition and operations of the Fund during the
next 5 years.
(2) Investment.--The Secretary of the Treasury shall invest
the portion of the Fund that is not, in the judgment of the
Secretary and of the Health Care Standards Commission, required
to meet current withdrawals. Any investments of monies in the
Fund may be made only in interest-bearing obligations of the
United States.
SEC. 3006. REPEAL OF SEPARATE MEDICAL EDUCATION PAYMENTS UNDER
MEDICARE.
(a) Prohibiting Recognition of Medical Education Costs Under Part
B.--Section 1861(v)(1) of the Social Security Act (42 U.S.C.
1395x(v)(1)) is amended by adding at the end the following new
subparagraph:
``(T) In determining such reasonable costs, the Secretary may not
include any costs incurred by a provider for graduate medical
education.''.
(b) Repeal of Adjustment for Indirect Medical Education Costs.--
Section 1886(d)(5) of such Act (42 U.S.C. 1395ww(d)(5)) is amended by
striking subparagraph (B).
(c) Repeal of Payments for Direct Graduate Medical Education
Costs.--Section 1886 of such Act (42 U.S.C. 1395ww) is amended by
striking subsection (h) and redesignating subsection (i) as subsection
(h).
(d) Conforming Amendments.--Section 1886(d) of such Act (42 U.S.C.
1395ww(d)) is amended--
(1) in paragraph (3)(C)(ii)--
(A) by inserting ``and before October 1, 1994,''
after ``September 30, 1986,''; and
(B) by inserting ``and on or before September 30,
1994,'' after ``October 1, 1986,''; and
(2) in paragraph (9)(D), by striking clause (ii) and
redesignating clauses (iii) and (iv) as clauses (ii) and (iii).
(e) Effective Dates.--
(1) Reasonable costs.--The amendment made by subsection (a)
shall apply to costs incurred on or after July 1, 1995.
(2) Indirect medical education adjustment.--The amendments
made by subsections (b) and (d) shall apply to discharges
occurring on or after July 1, 1995.
(3) Direct medical education.--The amendment made by
subsection (c) shall apply to portions of cost reporting
periods beginning on or after July 1, 1995.
Subtitle B--Other Medical Education Grants and Programs
SEC. 3101. SCHOLARSHIP AND LOAN REPAYMENT PROGRAMS OF NATIONAL HEALTH
SERVICE CORPS.
Section 338H(b)(1) of the Public Health Service Act (42 U.S.C.
254q(b)(1)) is amended--
(1) by striking ``and'' after ``1991,''; and
(2) by striking ``through 2000.'' and inserting ``through
1994, $150,000,000 for fiscal year 1995, $175,000,000 for
fiscal year 1996, $200,000,000 for fiscal year 1997,
$225,000,000 for fiscal year 1998, and $250,000,000 for fiscal
year 1999.''.
SEC. 3102. AREA HEALTH EDUCATION CENTERS.
Section 746(i)(1)(A) of the Public Health Service Act (42 U.S.C.
293j(i)(1)(A)) is amended by striking ``through 1995'' and inserting
``through 1994 and $30,000,000 for each of the fiscal years 1995
through 1999''.
SEC. 3103. PUBLIC HEALTH AND PREVENTIVE MEDICINE.
Section 765(a) of the Public Health Service Act (42 U.S.C. 294c(a))
is amended by striking ``through 1995'' and inserting ``through 1999''.
SEC. 3104. FAMILY MEDICINE.
Section 747(d)(1) of the Public Health Service Act (42 U.S.C.
293k(d)(1)) is amended by striking ``through 1995'' and inserting
``through 1999''.
SEC. 3105. GENERAL INTERNAL MEDICINE AND PEDIATRICS.
Section 748(c) of the Public Health Service Act (42 U.S.C. 293l(c))
is amended by striking ``through 1995'' and inserting ``through 1999''.
SEC. 3106. PHYSICIAN ASSISTANTS.
Section 750(d)(1) of the Public Health Service Act (42 U.S.C.
293n(d)(1)) is amended by striking ``through 1995'' and inserting
``through 1999''.
SEC. 3107. ALLIED HEALTH PROJECT GRANTS AND CONTRACTS.
Section 767(d) of the Public Health Service Act (42 U.S.C. 294e(d))
is amended by striking ``through 1995'' and inserting ``through 1999''.
SEC. 3108. NURSE ALLIED HEALTH PROJECT GRANTS AND CONTRACTS.
Section 767(d) of the Public Health Service Act (42 U.S.C. 294e(d))
is amended by striking ``through 1995'' and inserting ``through 1999''.
SEC. 3109. NURSE PRACTITIONER AND NURSE MIDWIFE PROGRAMS.
Section 822(d) of the Public Health Service Act (42 U.S.C. 296m(d))
is amended by striking ``and 1994'' and inserting ``through 1999''.
SEC. 3110. USE OF HEALTH CARE POLICY AND RESEARCH FUNDS FOR PRIMARY
CARE.
Section 926 of the Public Health Service Act (42 U.S.C. 299c-5), as
amended by section 10 of Public Law 102-410 (106 Stat. 2101), is
amended by adding at the end the following subsection:
``(f) Allocation Regarding Primary Care.--Of the amounts made
available for a fiscal year for carrying out this title, the Secretary
shall obligate not less than 15 percent for carrying out section 902
with respect to primary care.''.
TITLE IV--PREVENTIVE HEALTH AND INDIVIDUAL RESPONSIBILITY
Subtitle A--Expansion of Public Health Programs
SEC. 4001. IMMUNIZATIONS AGAINST VACCINE-PREVENTABLE DISEASES.
Section 317(j)(1)(A) of the Public Health Service Act (42 U.S.C.
247b(j)(1)(A)) is amended by striking ``through 1995'' and inserting
``through 1999''.
SEC. 4002. PREVENTION, CONTROL, AND ELIMINATION OF TUBERCULOSIS.
Section 317(j)(2) of the Public Health Service Act (42 U.S.C.
247b(j)(2)) is amended by striking ``through 1995'' and inserting
``through 1999''.
SEC. 4003. LEAD POISONING PREVENTION.-
Section 317A(l)(1) of the Public Health Service Act (42 U.S.C.
247b-1(l)(1)) is amended by striking ``through 1997'' and inserting
``through 1999''.
SEC. 4004. PREVENTIVE HEALTH MEASURES WITH RESPECT TO BREAST AND
CERVICAL CANCERS.
Section 1509(a) of the Public Health Service Act (42 U.S.C. 300n-
5(a)) is amended--
(1) by striking ``and'' after ``1991,'', and
(2) by striking ``1993.'' and inserting ``1993,
$100,000,000 for each of the fiscal years 1994 through 1996,
and such sums as may be necessary for each of the fiscal years
1997 through 1999.''.
SEC. 4005. OFFICE OF DISEASE PREVENTION AND HEALTH PROMOTION.
(a) In General.--Section 1701(b) of the Public Health Service Act
(42 U.S.C. 300u(b)) is amended by striking ``through 1996'' and
inserting ``through 1999''.
(b) Promotion of Individual Responsibility.--Section 1701(a)(11) of
such Act (42 U.S.C. 300u(a)(11)) is amended--
(1) by striking ``and'' at the end of subparagraph (C),
(2) by redesignating subparagraph (D) as subparagraph (E),
and
(3) by inserting after subparagraph (C) the following new
subparagraph:
``(D) promote individual responsibility in personal
health care and in the use of valuable health care
resources; and''.
(c) Minority Health.--Section 1707(f) of such Act (42 U.S.C. 300u-
6(f)) is amended by striking ``1993.'' and inserting ``1993,
$35,000,000 for each of the fiscal years 1994 through 1996, and such
sums as may be necessary for each of the fiscal years 1997 through
1999.''.
SEC. 4006. PREVENTIVE HEALTH AND HEALTH SERVICES BLOCK GRANT.
Section 1901(a) of the Public Health Service Act (42 U.S.C.
300w(a)) is amended by striking ``through 1997'' and inserting
``through 1999''.
SEC. 4007. CATEGORICAL GRANTS FOR EARLY INTERVENTION REGARDING ACQUIRED
IMMUNE DEFICIENCY SYNDROME.
Section 2655 of the Public Health Service Act (42 U.S.C. 300ff-55)
is amended by striking ``through 1995'' and inserting ``through 1999''.
SEC. 4008. PROGRAMS OF OFFICE OF SMOKING AND HEALTH.
In addition to any other authorization of appropriations that is
available for programs of the Centers for Disease Control regarding the
smoking of tobacco products, there is authorized to be appropriated for
such programs $10,000,000 for each of the fiscal years 1995 through
1999.
Subtitle B--Medicare
PART 1--COVERAGE OF PREVENTIVE SERVICES
SEC. 4101. COVERAGE OF COLORECTAL SCREENING.
(a) In General.--Section 1834 of the Social Security Act (42 U.S.C.
1395m) is amended by inserting after subsection (c) the following new
subsection:
``(d) Frequency and Payment Limits for Screening Fecal-Occult Blood
Tests and Screening Flexible Sigmoidoscopies.--
``(1) Screening fecal-occult blood tests.--
``(A) Payment limit.--In establishing fee schedules
under section 1833(h) with respect to screening fecal-
occult blood tests provided for the purpose of early
detection of colon cancer, except as provided by the
Secretary under paragraph (3)(A), the payment amount
established for tests performed--
``(i) in 1995 shall not exceed $5; and
``(ii) in a subsequent year, shall not
exceed the limit on the payment amount
established under this subsection for such
tests for the preceding year, adjusted by the
applicable adjustment under section 1833(h) for
tests performed in such year.
``(B) Frequency limit.--Subject to revision by the
Secretary under paragraph (3)(B), no payment may be
made under this part for a screening fecal-occult blood
test provided to an individual for the purpose of early
detection of colon cancer--
``(i) if the individual is under 50 years
of age; or
``(ii) if the test is performed within the
11 months after a previous screening fecal-
occult blood test.
``(2) Screening flexible sigmoidoscopies.--
``(A) Payment amount.--The Secretary shall
establish a payment amount under section 1848 with
respect to screening flexible sigmoidoscopies provided
for the purpose of early detection of colon cancer that
is consistent with payment amounts under such section
for similar or related services, except that such
payment amount shall be established without regard to
subsection (a)(2)(A) of such section.
``(B) Frequency limit.--Subject to revision by the
Secretary under paragraph (3)(B), no payment may be
made under this part for a screening flexible
sigmoidoscopy provided to an individual for the purpose
of early detection of colon cancer--
``(i) if the individual is under 50 years
of age; or
``(ii) if the procedure is performed within
the 59 months after a previous screening
flexible sigmoidoscopy.
``(3) Reductions in payment limit and revision of
frequency.--
``(A) Reductions in payment limit.--The Secretary
shall review from time to time the appropriateness of
the amount of the payment limit established for
screening fecal-occult blood tests under paragraph
(1)(A). The Secretary may, with respect to tests
performed in a year after 1997, reduce the amount of
such limit as it applies nationally or in any area to
the amount that the Secretary estimates is required to
assure that such tests of an appropriate quality are
readily and conveniently available during the year.
``(B) Revision of frequency.--
``(i) Review.--The Secretary, in
consultation with the Director of the National
Cancer Institute, shall review periodically the
appropriate frequency for performing screening
fecal-occult blood tests and screening flexible
sigmoidoscopies based on age and such other
factors as the Secretary believes to be
pertinent.
``(ii) Revision of frequency.--The
Secretary, taking into consideration the review
made under clause (i), may revise from time to
time the frequency with which such tests and
procedures may be paid for under this
subsection, but no such revision shall apply to
tests or procedures performed before January 1,
1998.
``(4) Limiting charges of nonparticipating physicians.--
``(A) In general.--In the case of a screening
flexible sigmoidoscopy provided to an individual for
the purpose of early detection of colon cancer for
which payment may be made under this part, if a
nonparticipating physician provides the procedure to an
individual enrolled under this part, the physician may
not charge the individual more than the limiting charge
(as defined in subparagraph (B), or, if less, as
defined in section 1848(g)(2)).
``(B) Limiting charge defined.--In subparagraph
(A), the term `limiting charge' means 115 percent of
the payment limit established under paragraph (2)(A).
``(C) Enforcement.--If a physician or supplier
knowing and willfully imposes a charge in violation of
subparagraph (A), the Secretary may apply sanctions
against such physician or supplier in accordance with
section 1842(j)(2).''.
(b) Conforming Amendments.--(1) Paragraphs (1)(D) and (2)(D) of
section 1833(a) of such Act (42 U.S.C. 1395l(a)) are each amended by
striking ``subsection (h)(1),'' and inserting ``subsection (h)(1) or
section 1834(d)(1),''.
(2) Section 1833(h)(1)(A) of such Act (42 U.S.C. 1395l(h)(1)(A)) is
amended by striking ``The Secretary'' and inserting ``Subject to
paragraphs (1) and (3)(A) of section 1834(d), the Secretary''.
(3) Clauses (i) and (ii) of section 1848(a)(2)(A) of such Act (42
U.S.C. 1395w-4(a)(2)(A)) are each amended by striking ``a service'' and
inserting ``a service (other than a screening flexible sigmoidoscopy
provided to an individual for the purpose of early detection of colon
cancer)''.
(4) Section 1862(a) of such Act (42 U.S.C. 1395y(a)) is amended--
(A) in paragraph (1)--
(i) in subparagraph (E), by striking ``and'' at the
end,
(ii) in subparagraph (F), by striking the semicolon
at the end and inserting ``, and'', and
(iii) by adding at the end the following new
subparagraph:
``(G) in the case of screening fecal-occult blood tests and
screening flexible sigmoidoscopies provided for the purpose of
early detection of colon cancer, which are performed more
frequently than is covered under section 1834(d);''; and
(B) in paragraph (7), by striking ``paragraph (1)(B) or
under paragraph (1)(F)'' and inserting ``subparagraphs (B),
(F), or (G) of paragraph (1)''.
(c) Effective Date.--The amendments made by this section shall
apply to screening fecal-occult blood tests and screening flexible
sigmoidoscopies performed on or after January 1, 1995.
SEC. 4102. COVERAGE OF CERTAIN IMMUNIZATIONS.
(a) In General.--Section 1861(s)(10) of the Social Security Act (42
U.S.C. 1395x(s)(10)) is amended--
(1) in subparagraph (A)--
(A) by striking ``, subject to section 4071(b) of
the Omnibus Budget Reconciliation Act of 1987,'', and
(B) by striking ``; and'' and inserting a comma;
(2) in subparagraph (B), by striking the semicolon at the
end and inserting ``, and''; and
(3) by adding at the end the following new subparagraph:
``(C) tetanus-diphtheria booster and its administration;''.
(b) Limitation on Frequency.--Section 1862(a)(1) of such Act (42
U.S.C. 1395y(a)(1)), as amended by section 4101(b)(4)(A) of this Act,
is amended--
(1) in subparagraph (F), by striking ``and'' at the end;
(2) in subparagraph (G), by striking the semicolon at the
end and inserting ``, and''; and
(3) by adding at the end the following new subparagraph:
``(H) in the case of an influenza vaccine, which is
administered within the 11 months after a previous influenza
vaccine, and, in the case of a tetanus-diphtheria booster,
which is administered within the 119 months after a previous
tetanus-diphtheria booster;''.
(c) Conforming Amendment.--Section 1862(a)(7) of such Act (42
U.S.C. 1395y(a)(7)), as amended by section 4101(b)(4)(B) of this Act,
is amended by striking ``or (G)'' and inserting ``(G), or (H)''.
(d) Effective Date.--The amendments made by this section shall
apply to influenza vaccines and tetanus-diphtheria boosters
administered on or after January 1, 1995.
SEC. 4103. COVERAGE OF WELL-CHILD CARE.
(a) In General.--Section 1861(s)(2) of the Social Security Act (42
U.S.C. 1395x(s)(2)), as amended by section 13553(a) of the Omnibus
Budget Reconciliation Act of 1993, is amended--
(1) by striking ``and'' at the end of subparagraph (P);
(2) by striking the semicolon at the end of subparagraph
(Q) and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(R) well-child services (as defined in subsection
(ll)(1)) provided to an individual entitled to benefits under
this title who is under 7 years of age;''.
(b) Services Defined.--Section 1861 of such Act (42 U.S.C. 1395x)
is amended--
(1) by redesignating the subsection (jj) added by section
4156(a)(2) of the Omnibus Budget Reconciliation Act of 1990 as
subsection (kk); and
(2) by inserting after subsection (kk) (as so redesignated)
the following new subsection:
``Well-Child Services
``(ll)(1) The term `well-child services' means well-child care,
including routine office visits, routine immunizations (including the
vaccine itself), routine laboratory tests, and preventive dental care,
provided in accordance with the periodicity schedule established with
respect to the services under paragraph (2).
``(2) The Secretary, in consultation with the American Academy of
Pediatrics, the Advisory Committee on Immunization Practices, and other
entities considered appropriate by the Secretary, shall establish a
schedule of periodicity which reflects the appropriate frequency with
which the services referred to in paragraph (1) should be provided to
healthy children.''.
(c) Conforming Amendments.--(1) Section 1861(s)(2)(O) of such Act
(42 U.S.C. 1395x(s)(2)(O)) is amended by striking ``subsection (jj)''
and inserting ``subsection (kk)''.
(2) Section 1862(a)(1) of such Act (42 U.S.C. 1395y(a)(1)), as
amended by sections 4101(b)(4)(A) and 4102(b) of this Act, is amended--
(A) in subparagraph (G), by striking ``and'' at the end;
(B) in subparagraph (H), by striking the semicolon at the
end and inserting ``, and''; and
(C) by adding at the end the following new subparagraph:
``(I) in the case of well-child services, which are
provided more frequently than is provided under the schedule of
periodicity established by the Secretary under section
1861(ll)(2) for such services;''.
(3) Section 1862(a)(7) of such Act (42 U.S.C. 1395y(a)(7)), as
amended by sections 4101(b)(4)(B) and 4102(c) of this Act, is amended
by striking ``or (H)'' and inserting ``(H), or (I)''.
(d) Effective Date.--The amendments made by this section shall
apply to well-child services provided on or after January 1, 1995.
SEC. 4104. ANNUAL SCREENING MAMMOGRAPHY.
(a) Annual Screening Mammography for Women Over Age 64.--Section
1834(c)(2)(A) of the Social Security Act (42 U.S.C. 1395m(b)(2)(A)) is
amended--
(1) in clause (iv), by striking ``but under 65 years of
age,'', and
(2) by striking clause (v).
(b) Effective Date.--The amendments made by subsection (a) shall
apply to screening mammography performed on or after January 1, 1995.
SEC. 4105. FINANCING OF ADDITIONAL BENEFITS.
(a) Premium for 1995.--Section 1839(e)(1)(B)(v) of the Social
Security Act (42 U.S.C. 1395r(e)(1)(B)(v)) is amended by striking
``$46.10'' and inserting ``$47.50''.
(b) Premiums for 1996-1998.--(1) Section 1839 of such Act (42
U.S.C. 1395r) is amended by adding at the end the following new
subsection:
``(g) Except as provided in subsections (b) and (f), the monthly
premium otherwise determined, without regard to this subsection, for
each individual enrolled under this part shall be increased by $1.40
for each month in 1996, 1997, and 1998.''.
(2) Section 1839 of such Act (42 U.S.C. 1395r) is amended--
(A) in subsection (a)(2), by striking ``(b) and (e)'' and
inserting ``(b), (e), and (g)'',
(B) in subsection (a)(3), by striking ``subsection (e)''
and inserting ``subsections (e) and (g)'', and
(C) in subsection (b), by striking ``determined under
subsection (a) or (e)'' and inserting ``otherwise determined
under this section (without regard to subsection (f))''.
PART 2--NOTICE OF ADVANCE DIRECTIVE RIGHTS
SEC. 4111. PROVIDING NOTICE OF RIGHTS REGARDING MEDICAL CARE TO
INDIVIDUALS ENTERING MEDICARE.
(a) In General.--Section 1804 of the Social Security Act (42 U.S.C.
1395b-2) is amended--
(1) in paragraph (2), by striking ``and'' at the end;
(2) in paragraph (3), by striking the period at the end and
inserting ``, and''; and
(3) by inserting after paragraph (3) the following new
paragraph:
``(4) a description of an individual's rights under State
law to make decisions concerning medical care, including the
right to accept or refuse medical or surgical treatment and the
right to formulate advance directives (as defined in section
1866(f)(3)).''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to notices provided under section 1804 of the Social Security Act
on or after January 1 of the first year beginning after the date of the
enactment of this Act.
TITLE V--MALPRACTICE REFORM
Subtitle A--Findings; Purpose; Definitions
SEC. 5001. FINDINGS; PURPOSE.
(a) Findings.--Congress finds that--
(1) the health care and insurance industries are industries
affecting interstate commerce and the medical malpractice
litigation systems existing throughout the United States affect
interstate commerce by contributing to the high cost of health
care and premiums for malpractice insurance purchased by health
care providers; and
(2) the Federal Government has a major interest in health
care as a direct provider of health care and as a source of
payment for health care, and has a demonstrated interest in
assessing the quality of care, access to care, and the costs of
care through the evaluative activities of several Federal
agencies.
(b) Purpose.--It is the purpose of this title to--
(1) provide grants to States to develop alternative dispute
resolution procedures to attain a more efficient, expeditious,
and equitable resolution of health care malpractice disputes;
(2) enhance general knowledge concerning the benefits of
different forms of alternative dispute resolution mechanisms;
and
(3) establish uniformity and curb excesses in the State-
based medical liability systems through Federally-mandated
reforms.
SEC. 5002. DEFINITIONS.
As used in this title:
(1) Alternative dispute resolution system.--The term
``alternative dispute resolution system'' means a system that
is enacted or adopted by a State to resolve medical malpractice
claims other than through a medical malpractice liability
action.
(2) Claimant.--The term ``claimant'' means any person who
brings a health care liability action and, in the case of an
individual who is deceased, incompetent, or a minor, the person
on whose behalf such an action is brought.
(3) Clear and convincing evidence.--The term ``clear and
convincing evidence'' is that measure or degree of proof that
will produce in the mind of the trier of fact a firm belief or
conviction as to the truth of the allegations sought to be
established, except that such measure or degree of proof is
more than that required under preponderance of the evidence,
but less than that required for proof beyond a reasonable
doubt.
(4) Economic damages.--The term ``economic damages'' means
damages paid to compensate an individual for losses for
hospital and other medical expenses, lost wages, lost
employment, and other pecuniary losses.
(5) Health care professional.--The term ``health care
professional'' means any individual who provides health care
services in a State and who is required by State law or
regulation to be licensed or certified by the State to provide
such services in the State.
(6) 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 that
is required by State law or regulation to be licensed or
certified by the State to engage in the delivery of such
services in the State.
(7) Injury.--The term ``injury'' means any illness,
disease, or other harm that is the subject of a medical
malpractice claim.
(8) Medical malpractice liability action.--The term
``medical malpractice liability action'' means any civil action
brought pursuant to State law in which a plaintiff alleges a
medical malpractice claim against a health care provider or
health care professional, but does not include any action in
which the plaintiff's sole allegation is an allegation of an
intentional tort.
(9) Medical malpractice claim.--The term ``medical
malpractice claim'' means any claim relating to the provision
of (or the failure to provide) health care services or the use
of a medical product, without regard to the theory of liability
asserted, and includes any third-party claim, cross-claim,
counterclaim, or contribution claim in a medical malpractice
liability action.
(10) Medical product.--
(A) In general.--The term ``medical product''
means, with respect to the allegation of a claimant, a
drug (as defined in section 201(g)(1) of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 321(g)(1)) or a
medical device (as defined in section 201(h) of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321(h))
if--
(i) such drug or device was subject to
premarket approval under section 505, 507, or
515 of the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 355, 357, or 360e) or section 351 of
the Public Health Service Act (42 U.S.C. 262)
with respect to the safety of the formulation
or performance of the aspect of such drug or
device which is the subject of the claimant's
allegation or the adequacy of the packaging or
labeling of such drug or device, and such drug
or device is approved by the Food and Drug
Administration; or
(ii) the drug or device is generally
recognized as safe and effective under
regulations issued by the Secretary of Health
and Human Services under section 201(p) of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C.
321(p)).
(B) Exception in case of misrepresentation or
fraud.--Notwithstanding subparagraph (A), the term
``medical product'' shall not include any product
described in such subparagraph if the claimant shows
that the product is approved by the Food and Drug
Administration for marketing as a result of withheld
information, misrepresentation, or an illegal payment
by manufacturer of the product.
(11) Noneconomic damages.--The term ``noneconomic damages''
means damages paid to compensate an individual for losses for
physical and emotional pain, suffering, inconvenience, physical
impairment, mental anguish, disfigurement, loss of enjoyment of
life, loss of consortium, and other nonpecuniary losses, but
does not include punitive damages.
(12) Punitive damages.--The term ``punitive damages'' means
compensation, in addition to compensation for actual harm
suffered, that is awarded for the purpose of punishing a person
for conduct deemed to be malicious, wanton, willful, or
excessively reckless.
(13) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(14) State.--The term ``State'' means each of the several
States, the District of Columbia, the Commonwealth of Puerto
Rico, the Virgin Islands, and Guam.
Subtitle B--Uniform Standards for Malpractice Claims
SEC. 5101. APPLICABILITY.
Except as provided in section 5111, this subtitle shall apply to
any medical malpractice liability action brought in a Federal or State
court, and to any medical malpractice claim subject to an alternative
dispute resolution system, that is initiated on or after January 1,
1995.
SEC. 5102. REQUIREMENT FOR INITIAL RESOLUTION OF ACTION THROUGH
ALTERNATIVE DISPUTE RESOLUTION.
(a) In General.--
(1) State cases.--A medical malpractice liability action
may not be brought in any State court during a calendar year
unless the medical malpractice liability claim that is the
subject of the action has been initially resolved under an
alternative dispute resolution system certified for the year by
the Secretary under section 5202(a), or, in the case of a State
in which such a system is not in effect for the year, under the
alternative Federal system established under section 5202(b).
(2) Federal diversity actions.--A medical malpractice
liability action may not be brought in any Federal court under
section 1332 of title 28, United States Code, during a calendar
year unless the medical malpractice liability claim that is the
subject of the action has been initially resolved under the
alternative dispute resolution system referred to in paragraph
(1) that applied in the State whose law applies in such action.
(3) Claims against united states.--
(A) Establishment of process for claims.--The
Attorney General shall establish an alternative dispute
resolution process for the resolution of tort claims
consisting of medical malpractice liability claims
brought against the United States under chapter 171 of
title 28, United States Code. Under such process, the
resolution of a claim shall occur after the completion
of the administrative claim process applicable to the
claim under section 2675 of such title.
(B) Requirement for initial resolution under
process.--A medical malpractice liability action based
on a medical malpractice liability claim described in
subparagraph (A) may not be brought in any Federal
court unless the claim has been initially resolved
under the alternative dispute resolution process
established by the Attorney General under such
subparagraph.
(b) Initial Resolution of Claims Under ADR.--For purposes of
subsection (a), an action is ``initially resolved'' under an
alternative dispute resolution system if--
(1) the ADR reaches a decision on whether the defendant is
liable to the plaintiff for damages; and
(2) if the ADR determines that the defendant is liable, the
ADR reaches a decision on the amount of damages assessed
against the defendant.
(c) Procedures for Filing Actions.--
(1) Notice of intent to contest decision.--Not later than
60 days after a decision is issued with respect to a medical
malpractice liability claim under an alternative dispute
resolution system, each party affected by the decision shall
submit a sealed statement to a court of competent jurisdiction
indicating whether or not the party intends to contest the
decision.
(2) Deadline for filing action.--A medical malpractice
liability action may not be brought by a party unless--
(A) the party has filed the notice of intent
required by paragraph (1); and
(B) the party files the action in a court of
competent jurisdiction not later than 90 days after the
decision resolving the medical malpractice liability
claim that is the subject of the action is issued under
the applicable alternative dispute resolution system.
(3) Court of competent jurisdiction.--For purposes of this
subsection, the term ``court of competent jurisdiction''
means--
(A) with respect to actions filed in a State court,
the appropriate State trial court; and
(B) with respect to actions filed in a Federal
court, the appropriate United States district court.
(d) Legal Effect of Uncontested ADR Decision.--The decision reached
under an alternative dispute resolution system shall, for purposes of
enforcement by a court of competent jurisdiction, have the same status
in the court as the verdict of a medical malpractice liability action
adjudicated in a State or Federal trial court. The previous sentence
shall not apply to a decision that is contested by a party affected by
the decision pursuant to subsection (c)(1).
SEC. 5103. PROCEDURAL REQUIREMENTS FOR FILING OF ACTIONS.
(a) Certificate of Merit.--
(1) In general.--Each individual who files a medical
malpractice liability action shall, not later than 90 days
after filing the action--
(A) submit a certificate of merit described in
subsection (b); or
(B) post a surety (or equivalent security) bond of
$4,000 (or, during the 45-day period that begins on the
date the action is filed, a cost bond of $2,000) with
the court.
(2) Extension of deadline.--On the motion of any party to
the action or upon a written agreement of the parties filed
with the court, the court may extend the deadline specified in
paragraph (1) for a period not to exceed 30 days.
(3) Dismissal for failure to meet requirement.--If an
individual filing a medical malpractice liability action fails
to meet the requirements of paragraph (1)--
(A) the court shall dismiss the action without
prejudice to the refiling of the action by the
individual; and
(B) require the individual to pay any court costs
incurred by the defendants as a result of the filing of
the action.
(4) Waiver for good cause.--The court may waive the
application of paragraph (1) to a plaintiff if the plaintiff
shows good cause that such paragraph should not apply.
(5) Certificate of merit described.--In paragraph (1), a
``certificate of merit'' is, with respect to an individual
filing a medical malpractice liability action, an affidavit
declaring that the individual (or the individual's attorney)
has obtained a written opinion from a medical expert who is
knowledgeable of the relevant medical issues involved in the
action that the defendant was negligent and the defendant's
conduct was a proximate cause of the alleged injury that is the
subject of the action.
(b) Response to Standard Interrogatories and Requests for
Documents.--
(1) Deadline.--Each party to a medical malpractice
liability action shall respond to the standard set of
interrogatories and requests for production of documents
developed pursuant to paragraph (4) as follows:
(A) In the case of a plaintiff, the party shall
provide the defendant (or the defendant's attorney)
with full and complete responses not later than 45 days
after filing the action.
(B) In the case of a defendant, the party shall
provide the plaintiff (or the plaintiff's attorney)
with full and complete responses not later than 45 days
after receiving the plaintiff's responses under
subparagraph (A).
(C) In the case of a party who is added to the
action after the action is filed, the party shall
provide all other parties (or such parties' attorneys)
with full and complete responses not later than 45 days
after the date of the filing of the pleading by which
the party is added to the action.
(2) Extension of deadline.--On the motion of any party to
the action that is supported by good cause, or upon a written
agreement of the parties filed with the court, the court shall
extend the deadline specified in paragraph (1) for a period not
to exceed 30 days.
(3) Imposition of sanctions for failure to respond.--If a
party to a medical malpractice liability action fails to
respond to the standard set of interrogatories and requests for
production of documents as required under paragraph (1), the
party shall be subject to sanctions by the court under any
applicable laws, rules, and regulations governing the
imposition of sanctions by the court.
(4) Development of standard interrogatories and requests.--
(A) Appointment of expert panels.--The Governor of
each State shall appoint a panel to develop the
standard set of interrogatories and requests for
production of documents that will be used for purposes
of this subsection in the courts of the State. The set
shall be comprehensive and designed to expedite the
discovery process in the courts. The Attorney General
shall appoint a panel to develop such set that will be
used for purposes of this subsection in the Federal
courts.
(B) Composition.--Each panel appointed pursuant to
subparagraph (A) shall consist of not less than 6 and
not more than 12 members, of whom an equal number shall
be attorneys who customarily represent plaintiffs in
medical malpractice liability actions and attorneys who
customarily represent defendants in such actions.
(C) Deadlines.--Not later than October 1, 1994,
each panel appointed pursuant to subparagraph (A) shall
complete and publish the standard set of
interrogatories and requests for production of
documents.
SEC. 5104. TREATMENT OF NONECONOMIC AND PUNITIVE DAMAGES.
(a) Limitation on Noneconomic Damages.--The total amount of
noneconomic damages that may be awarded to a claimant and the members
of the claimant's family for losses resulting from the injury which is
the subject of a medical malpractice liability action may not exceed
$250,000, regardless of the number of parties against whom the action
is brought or the number of actions brought with respect to the injury.
(b) No Award of Punitive Damages Against Manufacturer of Medical
Product.--In the case of a medical malpractice liability action in
which the plaintiff alleges a claim against the manufacturer of a
medical product, no punitive or exemplary damages may be awarded
against such manufacturer.
(c) Several Liability for Noneconomic Damages.--The liability of
each defendant for noneconomic damages shall be several only and shall
not be joint, and each defendant shall be liable only for the amount of
noneconomic damages allocated to the defendant in direct proportion to
the defendant's percentage of responsibility (as determined by the
trier of fact).
(d) Allocation of Punitive Damage Awards for Provider Licensing and
Disciplinary Activities.--
(1) In general.--The total amount of any punitive damages
awarded in a medical malpractice liability action shall be paid
to the State in which the action is brought (or, in a case
brought in Federal court, in the State in which the health care
services that caused the injury that is the subject of the
action were provided) for the purposes of carrying out the
activities described in paragraph (2).
(2) Activities described.--A State shall use amounts paid
pursuant to paragraph (1) to carry out activities to assure the
safety and quality of health care services provided in the
State, including (but not limited to)--
(A) licensing or certifying health care
professionals and health care providers in the State;
(B) implementing health care quality assurance
programs;
(C) carrying out public education programs to
increase awareness of the availability of comparative
quality information on accountable health plans;
(D) carrying out programs to reduce malpractice-
related costs for providers volunteering to provide
services in medically underserved areas; and
(E) implementing and operating a State alternative
dispute resolution system certified by the Secretary
under section 5202.
(3) Maintenance of effort.--A State shall use any amounts
paid pursuant to paragraph (1) to supplement and not to replace
amounts spent by the State for the activities described in
paragraph (2).
(e) Development of Alternative Limits on Noneconomic Damages.--
(1) In general.--Not later than 1 year after the date of
the enactment of this Act, the Health Care Standards Commission
shall develop and transmit to Congress alternative limits on
the amount of noneconomic damages that may be awarded with
respect to medical malpractice liability claims, together with
legislative specifications necessary to replace the limit
imposed under subsection (a) on the amount of such damages with
such alternative limits. The purpose of the development of the
limits is to provide certainty and fairness in malpractice
awards and to avoid unwarranted disparities among health care
providers and health care professionals who have engaged in
similar conduct.
(2) Establishment of separate limits for categories of
injuries.--In developing limits under paragraph (1), the
Commission shall establish separate limits for noneconomic
damages resulting from each of the following categories of
injuries:
(A) Non-physical injuries.
(B) Insignificant physical injuries.
(C) Temporary minor physical injuries.
(D) Temporary major physical injuries.
(E) Permanent minor physical injuries.
(F) Permanent substantial physical injuries.
(G) Permanent major physical injuries.
(H) Permanent grave physical injuries.
(I) Death.
(3) Factors considered.--In developing limits under
paragraph (1) for each of the categories described in paragraph
(2), the Commission shall--
(A) examine the most recent available data on the
amount of damages awarded with respect to such claims;
and
(B) set specific limits that reasonably compensate
most injured parties at the level of compensation
currently provided, excluding those levels of
compensation that the Commission finds unreasonably
large.
(4) Consultation.--In developing limits under this
subsection, the Commission shall consult with representatives
of each of the following:
(A) Attorneys who represent plaintiffs in medical
malpractice liability actions.
(B) Attorneys who represent health care
professionals and health care providers in medical
malpractice liability actions.
(C) Physicians and other health care professionals
and providers.
(D) Individuals who have suffered injury as a
result of medical malpractice.
(E) Judges who preside over medical malpractice
liability actions.
(F) Medical ethicists.
(G) Health care economists.
(H) Liability insurers.
(5) Guidance to entities resolving claims.--If Congress
enacts legislation that imposes the limits developed by the
Commission under this subsection on the amount of noneconomic
damages that may be awarded with respect to medical malpractice
liability claims, the Commission shall prepare and disseminate
guidelines to assist courts and other entities resolving such
claims in the determination of the particular category of
injury specified in paragraph (2) to which a claimant's injury
shall be assigned for purposes of applying the appropriate
limit on such damages.
SEC. 5105. PERIODIC PAYMENTS FOR FUTURE LOSSES.
(a) In General.--In any medical malpractice liability action in
which the damages awarded for future economic loss exceeds $100,000, a
defendant may not be required to pay such damages in a single, lump-sum
payment, but may be permitted to make such payments on a periodic
basis. The periods for such payments shall be determined by the court,
based upon projections of when such expenses are likely to be incurred.
(b) Waiver.--A court may waive the application of subsection (a)
with respect to a defendant if the court determines that it is not in
the best interests of the plaintiff to receive payments for damages on
such a periodic basis.
SEC. 5106. TREATMENT OF ATTORNEY'S FEES AND OTHER COSTS.
(a) Limitation on Amount of Contingency Fees.--
(1) In general.--An attorney who represents, on a
contingency fee basis, a claimant in a medical malpractice
liability claim may not charge, demand, receive, or collect for
services rendered in connection with such claim in excess of
the following amount recovered by judgment or settlement under
such claim:
(A) 25 percent of the first $150,000 (or portion
thereof) recovered, plus
(B) 10 percent of any amount in excess of $150,000
recovered.
(2) 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 paragraph (1) shall be
based on the cost of the annuity or trust established to make
the payments. In any case in which an annuity or trust is not
established to make such payments, such amount shall be based
on the present value of the payments.
(b) Requiring Party Contesting ADR Ruling To Pay Attorney's Fees
and Other Costs.--
(1) In general.--The court in a medical malpractice
liability action shall require the party that (pursuant to
section 5102(c)(1)) contested the ruling of the alternative
dispute resolution system with respect to the medical
malpractice liability claim that is the subject of the action
to pay to the opposing party the costs incurred by the opposing
party under the action, including attorney's fees, fees paid to
expert witnesses, and other litigation expenses (but not
including court costs, filing fees, or other expenses paid
directly by the party to the court, or any fees or costs
associated with the resolution of the claim under the
alternative dispute resolution system), but only if--
(A) in the case of an action in which the party
that contested the ruling is the claimant, the amount
of damages awarded to the party under the action is not
greater than the amount of damages awarded to the party
under the ADR system; and
(B) in the case of an action in which the party
that contested the ruling is the defendant, the amount
of damages assessed against the party under the action
is not less than the amount of damages assessed under
the ADR system.
(2) Exceptions.--Paragraph (1) shall not apply if--
(A) the party contesting the ruling made under the
previous alternative dispute resolution system shows
that--
(i) the ruling was procured by corruption,
fraud, or undue means,
(ii) there was partiality or corruption
under the system,
(iii) there was other misconduct under the
system that materially prejudiced the party's
rights, or
(iv) the ruling was based on an error of
law;
(B) the party contesting the ruling made under the
alternative dispute resolution system presents new
evidence before the trier of fact that was not
available for presentation under the ADR system;
(C) the medical malpractice liability action raised
a novel issue of law; or
(D) the court finds that the application of such
paragraph to a party would constitute an undue
hardship, and issues an order waiving or modifying the
application of such paragraph that specifies the
grounds for the court's decision.
(3) Limit on attorney's fees paid.--Attorneys' fees that
are required to be paid under paragraph (1) by the contesting
party shall not exceed the amount of the attorneys' fees
incurred by the contesting party in the action. If the
attorneys' fees of the contesting party are based on a
contingency fee agreement, the amount of attorneys' fees for
purposes of the preceding sentence shall not exceed the
reasonable value of those services.
(4) Records.--In order to receive attorneys' fees under
paragraph (1), counsel of record in the medical malpractice
liability action involved shall maintain accurate, complete
records of hours worked on the action, regardless of the fee
arrangement with the client involved.
(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. 5107. UNIFORM STATUTE OF LIMITATIONS.
(a) In General.--No medical malpractice claim may be initiated
after the expiration of the 2-year period that begins on the date on
which the alleged injury that is the subject of such claim was
discovered or the date on which such injury should reasonably have been
discovered, whichever is earlier.
(b) Exception for Minors.--In the case of an alleged injury
suffered by a minor who has not attained 6 years of age, a medical
malpractice claim may be initiated after the expiration of the period
described in subsection (a) if the claim is initiated before the minor
attains 8 years of age.
SEC. 5108. SPECIAL PROVISION FOR CERTAIN OBSTETRIC SERVICES.
(a) In General.--In the case of a medical malpractice claim
relating to services provided during labor or the delivery of a baby,
if the health care professional or health care provider against whom
the claim is brought did not previously treat the claimant for the
pregnancy, the trier of fact may not find that such professional or
provider committed malpractice and may not assess damages against such
professional or provider unless the malpractice is proven by clear and
convincing evidence.
(b) Applicability to Group Practices or Agreements Among
Providers.--For purposes of subsection (a), a health care professional
shall be considered to have previously treated an individual for a
pregnancy if the professional is a member of a group practice whose
members previously treated the individual for the pregnancy or is
providing services to the individual during labor or the delivery of a
baby pursuant to an agreement with another professional.
SEC. 5109. UNIFORM STANDARD FOR DETERMINING LIABILITY IN ACTIONS BASED
ON NEGLIGENCE.
(a) Standard of Reasonableness.--Except as provided in subsection
(b), a defendant in a medical malpractice liability action may not be
found to have committed malpractice unless the defendant's conduct at
the time of providing the health care services that are the subject of
the action was not reasonable.
(b) Actions Brought Under Strict Liability.--Subsection (a) shall
not apply with respect to a medical malpractice action if (in
accordance with applicable State law) the theory of liability upon
which the action is based is a theory of strict liability.
SEC. 5110. JURISDICTION OF FEDERAL COURTS.
Nothing in this subtitle shall be construed to establish
jurisdiction over any medical malpractice liability action in the
district courts of the United States on the basis of sections 1331 or
1337 of title 28, United States Code.
SEC. 5111. PREEMPTION.
(a) In General.--This subtitle supersedes any State law only to the
extent that the State law permits the recovery by a claimant or the
assessment against a defendant of a greater amount of damages or
establishes a less strict standard of proof for determining whether a
defendant has committed malpractice, than the provisions of this
subtitle.
(b) Effect on Sovereign Immunity and Choice of Law or Venue.--
Nothing in this subtitle shall be construed to--
(1) waive or affect any defense of sovereign immunity
asserted by any State under any provision of law;
(2) waive or affect any defense of sovereign immunity
asserted by the United States;
(3) affect the applicability of any provision of the
Foreign Sovereign Immunities Act of 1976;
(4) preempt State choice-of-law rules with respect to
claims brought by a foreign nation or a citizen of a foreign
nation; or
(5) affect the right of any court to transfer venue or to
apply the law of a foreign nation or to dismiss a claim of a
foreign nation or of a citizen of a foreign nation on the
ground in inconvenient forum.
Subtitle C--Requirements for State Alternative Dispute Resolution
Systems (ADR)
SEC. 5201. BASIC REQUIREMENTS.
(a) In General.--A State's alternative dispute resolution system
meets the requirements of this section if the system--
(1) applies to all medical malpractice liability claims
under the jurisdiction of the courts of that State;
(2) requires that a written opinion resolving the dispute
be issued not later than 6 months after the date by which each
party against whom the claim is filed has received notice of
the claim (other than in exceptional cases for which a longer
period is required for the issuance of such an opinion), and
that the opinion contain--
(A) findings of fact relating to the dispute, and
(B) a description of the costs incurred in
resolving the dispute under the system (including any
fees paid to the individuals hearing and resolving the
claim), together with an appropriate assessment of the
costs against any of the parties;
(3) requires individuals who hear and resolve claims under
the system to meet such qualifications as the State may require
(in accordance with regulations of the Secretary);
(4) is approved by the State or by local governments in the
State;
(5) with respect to a State system that consists of
multiple dispute resolution procedures--
(A) permits the parties to a dispute to select the
procedure to be used for the resolution of the dispute
under the system, and
(B) if the parties do not agree on the procedure to
be used for the resolution of the dispute, assigns a
particular procedure to the parties;
(6) provides for the transmittal to the State agency
responsible for monitoring or disciplining health care
professionals and health care providers of any findings made
under the system that such a professional or provider committed
malpractice, unless, during the 90-day period beginning on the
date the system resolves the claim against the professional or
provider, the professional or provider brings an action
contesting the decision made under the system; and
(7) provides for the regular transmittal to the
Administrator for Health Care Policy and Research of
information on disputes resolved under the system, in a manner
that assures that the identity of the parties to a dispute
shall not be revealed.
(b) Application of Malpractice Liability Standards to Alternative
Dispute Resolution.--The provisions of subtitle B (other than sections
5102 and 5103) shall apply with respect to claims brought under a State
alternative dispute resolution system or the alternative Federal system
in the same manner as such provisions apply with respect to medical
malpractice liability actions brought in the State.
SEC. 5202. CERTIFICATION OF STATE SYSTEMS; APPLICABILITY OF ALTERNATIVE
FEDERAL SYSTEM.
(a) Certification.--
(1) In general.--Not later than October 1 of each year
(beginning with 1994), the Secretary, in consultation with the
Attorney General, shall determine whether a State's alternative
dispute resolution system meets the requirements of this part
for the following calendar year.
(2) Basis for certification.--The Secretary shall certify a
State's alternative dispute resolution system under this
subsection for a calendar year if the Secretary determines
under paragraph (1) that the system meets the requirements of
section 5201.
(b) Applicability of Alternative Federal System.--
(1) Establishment and applicability.--Not later than
October 1, 1994, the Secretary, in consultation with the
Attorney General, shall establish by rule an alternative
Federal ADR system for the resolution of medical malpractice
liability claims during a calendar year in States that do not
have in effect an alternative dispute resolution system
certified under subsection (a) for the year.
(2) Requirements for system.--Under the alternative Federal
ADR system established under paragraph (1)--
(A) paragraphs (1), (2), (6), and (7) of section
5201(a) shall apply to claims brought under the system;
(B) if the system provides for the resolution of
claims through arbitration, the claims brought under
the system shall be heard and resolved by arbitrators
appointed by the Secretary in consultation with the
Attorney General; and
(C) with respect to a State in which the system is
in effect, the Secretary may (at the State's request)
modify the system to take into account the existence of
dispute resolution procedures in the State that affect
the resolution of medical malpractice liability claims.
(3) Treatment of States with alternative system in
effect.--If the alternative Federal ADR system established
under this subsection is applied with respect to a State for a
calendar year, the State shall make a payment to the United
States (at such time and in such manner as the Secretary may
require) in an amount equal to 110 percent of the costs
incurred by the United States during the year as a result of
the application of the system with respect to the State.
SEC. 5203. GRANTS TO STATES.
(a) In General.--The Secretary shall make grants to States for a 2-
year period to assist States in implementing and operating alternative
dispute resolution systems that meet the requirements of section 5201.
(b) Eligibility.--A State is eligible to receive a grant under this
section if the Secretary has certified the State's alternative dispute
resolution system under section 5202(b).
(c) Limitation on Amount of Grant.--The amount of funds provided to
a State under a grant under this section may not exceed $5,000,000
during the 2-year period of the grant.
SEC. 5204. REPORTS ON IMPLEMENTATION AND EFFECTIVENESS OF ALTERNATIVE
DISPUTE RESOLUTION SYSTEMS.
(a) In General.--Not later than 5 years after the date of the
enactment of this Act, the Secretary shall prepare and submit to the
Congress a report describing and evaluating State alternative dispute
resolution systems operated pursuant to this subtitle and the
alternative Federal system established under section 5202(b).
(b) Contents of Report.--The Secretary shall include in the report
prepared and submitted under subsection (a)--
(1) information on--
(A) the effect of the alternative dispute
resolution systems on the cost of health care within
each State,
(B) the impact of such systems on the access of
individuals to health care within the State, and
(C) the effect of such systems on the quality of
health care provided within the State; and
(2) to the extent that such report does not provide
information on no-fault systems operated by States as
alternative dispute resolution systems pursuant to this part,
an analysis of the feasibility and desirability of establishing
a system under which medical malpractice liability claims shall
be resolved on a no-fault basis.
Subtitle D--Grants to States for Development of Practice Guidelines
SEC. 5301. GRANTS TO STATES.
(a) In General.--The Secretary shall make grants to States for a 2-
year period for the development of medical practice guidelines for
health care professionals (including mid-level practitioners) that may
be applied to resolve medical malpractice liability claims and actions
in the State.
(b) Eligibility.--A State is eligible to receive a grant under this
section if the State submits to the Secretary an application at such
time, in such form, and containing such information and assurances as
the Secretary may require, including assurances that the State will
submit such periodic reports on the development and application of the
State's medical practice guidelines as the Secretary may require.
(c) Number of Grants.--
(1) In general.--Except as provided in paragraph (2), the
Secretary shall award not less than 10 grants under this
section.
(2) Exception.--Notwithstanding paragraph (1), the
Secretary may award less than 10 grants under this section if
the Secretary determines that there are an inadequate number of
applications submitted that meet the eligibility and approval
requirements of this section.
(d) Limitation on Amount of Grant.--The amount of funds provided to
a State under a grant under this section may not exceed $5,000,000
during the 2-year period of the grant.
TITLE VI--PAPERWORK REDUCTION AND ADMINISTRATIVE SIMPLIFICATION
SEC. 6001. PREEMPTION OF STATE QUILL PEN LAWS.
After 1994, no effect shall be given to any provision of State law
that requires medical or health insurance records (including billing
information) to be maintained in written, rather than electronic, form.
SEC. 6002. CONFIDENTIALITY OF ELECTRONIC HEALTH CARE INFORMATION.
(a) Promulgation of Requirements.--
(1) In general.--The Health Care Standards Commission shall
promulgate, and may modify from time to time, requirements to
facilitate and ensure the uniform, confidential treatment of
individually identifiable health care information in electronic
environments.
(2) Items to be included.--The requirements under this
subsection shall--
(A) provide for the preservation of confidentiality
and privacy rights in electronic health care claims
processing and payment;
(B) apply to the collection, storage, handling, and
transmission of individually identifiable health care
data (including initial and subsequent disclosures) in
electronic form by all accountable health plans, public
and private third-party payers, providers of health
care, and all other entities involved in the
transactions;
(C) not apply to public health reporting required
under State or Federal law;
(D) delineate protocols for securing electronic
storage, processing, and transmission of health care
data;
(E) specify fair information practices that assure
a proper balance between required disclosures and use
of data, including--
(i) creating a proper balance between what
an individual is expected to divulge to a
record-keeping organization and what the
individual seeks in return,
(ii) minimizing the extent to which
information concerning an individual is itself
a source of unfairness in any decision made on
the basis of such information, and
(iii) creating and defining obligations
respecting the uses and disclosures that will
be made of recorded information about an
individual;
(F) require publication of the existence of health
care data banks;
(G) establish appropriate protections for highly
sensitive data (such as data concerning mental health,
substance abuse, and communicable and genetic
diseases);
(H) encourage the use of alternative dispute
resolution mechanisms (where appropriate); and
(I) provide for the deletion of information that is
no longer needed to carry out the purpose for which it
was collected.
(3) Consultation with working group.--In promulgating and
modifying requirements under this subsection, the Commission
shall consult with a working group of knowledgeable individuals
representing all interested parties (including third-party
payers, providers, consumers, employers, information managers,
and technical experts).
(4) Deadline.--The Commission shall first promulgate
requirements under this subsection by not later than six months
after the date of the enactment of this Act.
(b) Application of Requirements.--
(1) State enforcement of similar requirements.--The
requirements promulgated under subsection (a) shall not apply
to health care information in a State if--
(A) the State has applied to the Health Care
Standards Commission for a determination that the State
has in effect a law that provides for the application
of requirements with respect to such information (and
enforcement provisions with respect to such
requirements) consistent with such requirements (and
with the enforcement provisions of subsection (c)), and
(B) the Commission determines that the State has
such a law in effect.
(2) Application to current information.--The Health Care
Standards Commission shall specify the extent to which (and
manner in which) the requirements promulgated under subsection
(a) apply to information collected before the effective date of
the requirements.
(c) Defense for Proper Disclosures.--An entity that establishes
that is has disclosed health care information in accordance with the
requirements promulgated under subsection (a) has established a defense
in an action brought for improper disclosure of such information.
(d) Penalties for Violations.--An entity that collects, stores,
handles, transmits, or discloses health care information in violation
of the requirements promulgated under subsection (a) is liable for
civil damages, equitable remedies, and attorneys' fees (if
appropriate), in accordance with regulations of the Health Care
Standards Commission.
SEC. 6003. STANDARDIZATION FOR THE ELECTRONIC RECEIPT AND TRANSMISSION
OF HEALTH PLAN INFORMATION.
(a) Goals.--The Health Care Standards Commission shall establish
national goals, and time frameworks, respecting the progress to be made
by the health care industry in eliminating unnecessary paperwork and
achieving appropriate standardization in the areas of electronic
receipt and transmission of health care claims and health plan
information and eligibility verification (consistent with the
requirements promulgated under section 6002(a)).
(b) Contingent Requirements.--If the Commission determines that the
health care industry has failed to meet the goals established under
subsection (a) by the deadlines established by the Commission under
such subsection, the Commission shall promulgate (and may, from time to
time, modify) standards and requirements concerning the electronic
receipt and transmission of health plan claims forms and other health
plan information.
(c) Consultation.--The Commission shall conduct activities under
this section in consultation with the Accredited Standards Committee X-
12 of the American National Standards Institute, insurers, providers,
and others.
SEC. 6004. USE OF UNIFORM HEALTH CLAIMS FORMS AND IDENTIFICATION
NUMBERS.
(a) Goals.--The Health Care Standards Commission shall establish
national goals, and time frameworks, respecting the progress to be made
by the health care industry in achieving uniformity--
(1) in the format and content of basic claims forms under
health plans, and
(2) in the use of common identification numbers for
beneficiaries and providers of health care items or services
under health plans.
(b) Contingent Requirements.--If the Commission determines that the
health care industry has failed to meet the goals established under
subsection (a) by the deadlines established by the Commission under
such subsection, the Commission shall promulgate (and may, from time to
time, modify) standards and requirements concerning--
(1) the format and content of basic claims forms under
health plans, and
(2) the common identification numbers to be used by health
plans to identify health plan beneficiaries and health care
providers.
(c) Consultation.--The Commission shall conduct activities under
this section in consultation with the Workgroup for Electronic Data
Interchange and with insurers, providers, and others.
SEC. 6005. PRIORITY AMONG INSURERS.
(a) Goals.--The Health Care Standards Commission shall establish
national goals, and time frameworks, respecting the progress to be made
by the health care industry in achieving uniformity in the rules for
determining the liability of insurers when benefits are payable under
two or more health plans.
(b) Contingent Requirements.--If the Commission determines that the
health care industry has failed to meet the goals established under
subsection (a) by the deadlines established by the Commission under
such subsection, the Commission shall promulgate (and may, from time to
time, modify) rules for determining the liability of health plans when
benefits are payable under two or more health plans.
(c) Consultation.--The Commission shall conduct activities under
this section in consultation with health plans.
SEC. 6006. FURNISHING OF INFORMATION AMONG HEALTH PLANS.
(a) Goals.--The Health Care Standards Commission shall establish
national goals, and time frameworks, respecting the progress to be made
by the health care industry in achieving uniformity in the availability
of information among health plans when benefits are payable under two
or more health plans.
(b) Contingent Requirements.--If the Commission determines that the
health care industry has failed to meet the goals established under
subsection (a) by the deadlines established by the Commission under
such subsection, the Commission shall promulgate (and may, from time to
time, modify) requirements concerning the transfer among health plans
(and annual updating) of appropriate information (which may include
requirements for the use of unique identifiers, and for the listing of
all individuals covered under a health plan).
(c) Consultation.--The Commission shall conduct activities under
this section in consultation with health plans.
SEC. 6007. FAILURE TO SATISFY CERTAIN HEALTH PLAN REQUIREMENTS.
(a) In General.--Chapter 47 of the Internal Revenue Code of 1986
(relating to taxes on group health plans) is amended by adding at the
end the following new section:
``SEC. 5000A. FAILURE TO SATISFY CERTAIN HEALTH PLAN REQUIREMENTS.
``(a) General Rule.--There is hereby imposed, on any administrator
of a health plan, a tax on any failure to comply with an applicable
requirement of sections 6003 through 6006 of the Managed Competition
Act of 1993. The Health Care Standards Commission shall determine
whether any such administrator meets the requirements of those
sections.
``(b) Amount of Tax.--The amount of tax imposed by subsection (a)
for a taxable year in which an administrator fails to comply with a
requirement described in that subsection shall be equal to $100 for
each such failure.
``(c) Controlled Groups.--
``(1) Employers.--In the case of an administrator that is
an employer, for purposes of this section all persons that are
treated as part of the same employer (within the meaning of
section 414) as the administrator shall be treated as the same
person.
``(2) Other administrators.--In the case of an
administrator that is not an employer, for purposes of this
section--
``(A) Controlled group of corporations.--All
corporations which are members of the same controlled
group of corporations shall be treated as 1 person. For
purposes of the preceding sentence, the term
`controlled group of corporations' has the meaning
given to such term by section 1563(a), except that--
``(i) `more than 50 percent' shall be
substituted for `at least 80 percent' each
place it appears in section 1563(a)(1), and
``(ii) the determination shall be made
without regard to subsections (a)(4) and
(e)(3)(C) of section 1563.
``(B) Partnerships, proprietorships, etc., which
are under common control.--Under regulations prescribed
by the Secretary, all trades or businesses (whether or
not incorporated) which are under common control shall
be treated as 1 person. The regulations prescribed
under this subparagraph shall be based on principles
similar to the principles which apply in the case of
subparagraph (A).
``(d) Limitations on Tax.--
``(1) Tax not to apply where failure not discovered
exercising reasonable diligence.--No tax shall be imposed by
subsection (a) with respect to any failure for which it is
established to the satisfaction of the Secretary that the
person liable for tax did not know, and by exercising
reasonable diligence would not have known, that the failure
existed.
``(2) Tax not to apply to failures corrected within 30
days.--No tax shall be imposed by subsection (a) on any failure
if--
``(A) the failure was due to reasonable cause and
not to willful neglect, and
``(B) the failure is corrected during the 30-day
period beginning on the 1st date the person liable for
the tax knew, or by exercising reasonable diligence
would have known, that the failure existed.
``(3) Waiver by secretary.--In the case of a failure which
is due to reasonable cause and not to willful neglect, the
Secretary may waive part or all of the tax imposed by
subsection (a) to the extent that the payment of that tax would
be excessive relative to the failure involved.''
(b) Nondeductibility of Tax.--Paragraph (6) of section 275(a) of
that Code (relating to nondeductibility of certain taxes) is amended by
inserting ``47,'' after ``46,''.
(c) Clerical Amendments.--The table of sections for chapter 47 of
that Code is amended by adding at the end the following new item:
``5000A. Failure to satisfy certain
health plan requirements.''.
SEC. 6008. DEFINITIONS.
For purposes of this title--
(1) The term ``health plan'' means any contract or
arrangement under which an entity bears all or part of the cost
of providing health care items and services, including a
hospital or medical expense incurred policy or certificate,
hospital or medical service plan contract, or health
maintenance subscriber contract (including any closed
accountable health plan), but does not include (except for
purposes of sections 6005 and 6006)--
(A) coverage only for accident, dental, vision,
disability, or long term care, medicare supplemental
health insurance, or any combination thereof,
(B) coverage issued as a supplement to liability
insurance,
(C) workers' compensation or similar insurance, or
(D) automobile medical-payment insurance.
(2) The term ``provider'' means a physician, hospital,
pharmacy, laboratory, or other person licensed or otherwise
authorized under applicable State laws to furnish health care
items or services.
TITLE VII--ADDITIONAL BENEFITS ON A PAY-AS-YOU-GO BASIS
SEC. 7001. SENSE OF CONGRESS.
It is the sense of Congress that additional benefits should be
provided by the Federal Government to the extent that additional
financing is made available for such benefits on a pay-as-you-go basis,
including the following benefits:
(1) Providing tax preferences for expenses for long-term
care, including tax deductibility of employer contributions for
long-term care insurance.
(2) Providing direct Federal subsidies for expenses for
long-term care.
(3) Expanding coverage under the medicare program,
including coverage of outpatient prescription drugs and
coverage of long-term care services.
(4) Increasing the income threshold for eligibility for
premium assistance (under section 2002).
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